ANAND SHETTY,MUMBAI vs. ITO WARD 26-1-1, MUMBAI

The Ld. CIT(A) erred in confirming addition of Rs.11,05,500/- treating bank deposits as unexplained income.

The Ld. CIT(A) failed to appreciate that income was already disclosed under correct PAN (AADPS7909P).

The addition based on PAN mismatch is erroneous and unsustainable in law.

The finding of deliberate concealment is without any evidence.

The assessment u/s 144 is bad in law due to lack of proper opportunity.

The burden of proof was wrongly shifted without adequate inquiry.

The addition u/s 68/69A is unjustified as:  No proper investigation was carried out  No effective opportunity was provided  No nexus with undisclosed income established

The order violates principles of natural justice.

The Ld. CIT(A) failed to exercise appellate powers judiciously.

Interest u/s 234A, 234B, 234C is wrongly levied.

Penalty proceedings u/s 271AAC(1) are unjustified.

Relevant facts of the case as culled from the records are that the assessee, an individual and did not file his return of income for A.Y. 2017-18 with PAN - CQJPS0188J. His case was selected for scrutiny under SOP for verification of huge cash deposited by him during demonetization period. Accordingly, notice u/s 142(1) of the Act was issued to him, directing to file the return of income for A.Y. 2017-18. But the assessee had neither filed his ITR nor filed any submission. During the assessment proceedings, the AO found that on verification of the bank statement of Abhyudaya co-op Bank that an amount of Rs.8,55,000/-was deposited in cash and Rs. 2,50,500/- was deposited in cash in Post office saving account, thereby totalling to cash deposits of P a g e | 3 A.Y. 2017-18 Anand Shetty, Mumbai Rs.11,05,500/-. The AO passed the order u/s 144 of the Act at assessed income of Rs.11,05,500/- u/s 69A of the Act on account of unexplained cash credit.

Aggrieved, the assessee has filed appeal before the ld.CIT(A) submitting that the assessee for the captioned assessment year filed Return of Income and declaring a total income of Rs.3,33,340/- on PAN NO.AADPS7909P. He had filed his Return of Income on above PAN in earlier years also disclosing all his relevant income. The assessee was not using PAN NO.CQJPS0188J and neither any income was concealed due to the aforesaid PAN. Relevant Income was disclosed and Income Tax Return was filed on Regular PAN NO. PAN NO.AADPS7909P.The assessee being kidney patient was living in medical care continuously since past one year and hence there was delay and the respective notices were not replied. The AO had not given reasonable opportunity to the assessee to present the facts of the case.

The ld.CIT(A) noted that while passing the assessment order u/s 144 of the Act, the AO found that the cash deposited amounting to Rs.8,55,000/- into his bank account No. SB/57150 maintained in Abhyudaya co-op Bank and Rs.2,50,500/- in his Post Office SB account No.3425830764 during the demonetization period. During the P a g e | 4 A.Y. 2017-18 Anand Shetty, Mumbai assessment proceedings, he had not responded. It was seen that the appellant had two PANs. He filed his ITR for A.Y.2017-18 with PAN – AADPS7909P, however, the assessee made cash deposit of Rs.11,05,500/- with PAN - CQJPS0188J during demonetization period. During the appeal proceedings, he had submitted the he was allotted second PAN - CQJPS0188J and the same was not been used for filing his ITR. However, by mistake, he had used the second PAN - CQJPS0188J for KYC purpose with Abhudaya Co. Op. Bank and Post Office Deposit. He also produced an application submitted by it for cancellation of PAN - CQJPS0188J. On perusal of his submission, the ld.CIT(A) observed that it was clear that the assessee had kept second PAN - CQJPS0188J deliberately for using unaccounted cash deposits. The deposits were made during the demonetization; however, the application for cancellation of duplicate PAN was submitted to the authorities on 27.12.2019. It was, therefore, an afterthought to avoid the penalty. Even there was no mention of the cash deposited in the return of income filed against other PAN. Thus, he failed to discharge the burden of proving the genuineness of the cash deposit made during the demonetization period and hence, the addition of Rs.11,05,500/- made by the AO u/s 68 of the Act was justified and upheld.

Before us, the ld.AR has agitated the orders of the lower authorities claiming that they failed to appreciate the facts of the case objectively. The replies filed were not considered where it was submitted that the addition resulted on account of the fact that the assessee had been allotted two PANs, one of which was used for filing of the return while the other was inadvertently used for used for KYC purposes with bank account and Post deposits wherein he had made certain deposits. It was added that he had made a request for cancellation of the second PAN. These facts were not duly taken into account as the AO passed the assessment order invoking the provisions of section 144 of the Act.

1 The ld.DR on other hand placed reliance on the orders of the authorities below.

On careful consideration of the relevant facts of the case, it is evident that the submissions made by the assessee were not considered by the lower authorities. Accordingly, in the interest of justice ad fair play following the principles of natural justice, we deem it appropriate to set aside the impugned orders and remit the entire issue to the file of the AO for framing fresh assessment de novo with a direction to allow reasonable opportunity of hearing to the assessee who, in turn, is directed to accord necessary cooperation to the AO.

In the result, the appeal of the assessee stands allowed for statistical purposes.