MADHUSUDHAN HIRLAL MALU,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CRICLE 1(1), PUNE

Briefly stated the facts of the case are that; the assessee made cash deposit on six occasions totalling to ₹45,78,300/- into his SB a/c No. SB/4620 maintained with Mahesh Co-op Bank Nana Peth Branch Pune. The Ld. AO pinpointing variation in explanation about the source thereof offered in a statement u/s 131 of the Act vis-à-vis during assessment proceedings, has made addition of entire cash deposit u/s 68 as unexplained by an order u/s 143(3) of the Act dt. 30/12/2016. The assessee carried the matter before the Ld. CIT(A) in an appeal, however the Ld. FAA not appreciating the time gap between huge cash withdrawals and its subsequent deposits in the light of Hon’ble Apex Court decision in ‘Sreelekha Banerjee & Ors. Vs CIT’ reported in 49 ITR 112 (SC), confirmed the addition u/s 68 of the Act.

In the course of hearing, the Ld. AR adverting to page 6-16 of paper book containing 121 pages, has reiterated all submissions made before the tax authorities to support appellant’s claim of having pre- ITAT-Pune Page 2 of 4

Madhusudhan Hiralal Malu held sufficient cash balance arising out of earlier withdrawals from the same bank where cash was subsequently re-deposited. Per contra, the Ld. DR relied upon the order of tax authorities below and submitted that, the assessee indeed failed to explain the true source of cash deposit, hence the addition is justified.

We have heard the rival contentions of both the parties; and subject to the provisions of rule 18 of ITAT Rules, 1963 perused the material placed on record and we note the appellant raised four grounds in all, wherein first three grounds in substance are directed against sole impugned addition made u/s 68 and ground no. 4 is general in nature calling no adjudication.

On a careful consideration of peculiar facts of the case and submission, we are of the view that the matter requires re-consideration at the level of assessing officer for the reason brushing aside the cash reconciliation statement brought on record by the assessee, whereby he tried to explain pre-deposit cash balance held by him.

In the extant we observed that, certain cash withdrawals were preceded the cash deposits to which the Ld. AO turned blind eye without first brining out on record the utilization thereof so has to reject the claim cash balance pre-available. For the reason following the ration laid down by Hon’ble Punjab & Haryana High Court, in ‘Shivcharan Dass Vs CIT’ [1980] 126 ITR 263, the Ld. AO is directed to reframe the assessment de-nova considering the link between cash withdrawal within three months prior to its deposit into bank, however after giving reasonable opportunity of being heard to the assessee.