AKBARMIYA MAHAMMADMIYA MALEK,AHMEDABAD, GUJARAT vs. ITO WARD 1(1)(1), AHMEDABAD, VEJALPUR, AHMEDABAD

The Assessee has raised the following grounds of Appeal:-

The brief facts of the case are that the assessee filed the return of income for Assessment Year 2017-18 on 30.03.2018, declaring a total income of Rs. 8,15,360/-. Subsequently, information was received pursuant to a search and seizure operation conducted under section 132 of the Income-tax Act in the cases of certain political parties and charitable institutions, indicating that accommodation entries in the guise of donations to political parties were provided to various beneficiaries. The name of the assessee appeared as one of the beneficiaries who had allegedly claimed deduction under section 80GGC of the Act amounting to Rs. 2,00,000/- in respect of donation made to Rashtriya Samajwadi Party (Secular). The Assessing Officer further observed that the assessee had purchased an immovable - 3– property for Rs. 24,10,000/-, which, according to him, was disproportionate to the income declared by the assessee. Accordingly, the assessment was reopened by issuance of notice under section 148 of the Act dated 30.03.2021. Since no return of income was filed in response to the said notice, notices under section 142(1) of the Act were issued during the course of reassessment proceedings. In response, the assessee submitted that the investment in the immovable property was made out of income earned during Assessment Years 2015-16, 2016-17 and 2017-18 aggregating to Rs. 23,45,385/-. The assessee also furnished details of gifts received from friends and relatives. However, in respect of gifts aggregating to Rs. 4,28,750/-, the assessee could not furnish complete supporting evidence. The Assessing Officer, therefore, made an addition of Rs. 4,28,750/-, disallowed the deduction of Rs. 2,00,000/- claimed under section 80GGC of the Act, and further made an addition of Rs. 14,53,000/- under section 69A of the Act in respect of cash deposits in the bank accounts maintained with Central Bank of India and Union Bank of India. Consequently, the total income was assessed at Rs. 28,97,110/- vide order passed under sections 144/147 of the Act dated 29.03.2022. 4. At the outset, it is observed that the assessee has not pressed Ground Nos. 1 and 2 relating to the validity of reopening of assessment and the disallowance of deduction under section 80GGC of the Act. Accordingly, the said grounds stand dismissed as not pressed.

The surviving issue for adjudication pertains to Ground No. 5 relating to the addition of Rs. 14,53,000/- made under section 69A of - 4– the Income-tax Act, 1961 on account of cash deposits in the bank accounts of the assessee.

The learned counsel for the assessee drew our attention to the cash book and submitted that the source of the cash deposits was duly recorded therein. It was contended that the cash book clearly explained the source of the cash deposited in the respective bank accounts and that the Assessing Officer had made the addition without properly appreciating the documentary evidence furnished by the assessee. The details of the cash deposits are reproduced below:

The learned counsel further submitted that both the Assessing Officer as well as the learned CIT(A) failed to examine the cash book and other supporting evidences while making and confirming the impugned addition under section 69A of the Act. The learned counsel for the assessee submitted that the source of the cash deposits was duly recorded in the cash book maintained by the assessee and the same was furnished before the Assessing Officer during the course of assessment proceedings. It was argued that the cash deposits appearing in the bank accounts were made out of cash available as per the cash book and, therefore, the addition under section 69A was wholly unjustified. It was further submitted that neither the Assessing Officer nor the learned CIT(A) examined the cash book or reconciled the cash - 5– deposits with the cash balance available therein before treating the deposits as unexplained money.

On the other hand, the learned Departmental Representative supported the orders of the lower authorities and submitted that the assessee had failed to satisfactorily establish the source of the cash deposits during the assessment proceedings and, therefore, the Assessing Officer was justified in invoking the provisions of section 69A of the Act.

We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessee had furnished the cash book before the Assessing Officer explaining the source of the cash deposits made in the bank accounts. The cash deposits were stated to have been made out of the cash balance available as per the books of account. However, we find that neither the Assessing Officer nor the learned CIT(A) has examined the cash book or reconciled the cash deposits with the cash balance reflected therein before invoking the provisions of section 69A of the Act. The addition has been made merely on the basis of the cash deposits appearing in the bank accounts without properly appreciating the documentary evidence placed on record. In our considered opinion, once the assessee has produced the cash book explaining the source of the cash deposits, the same ought to have been verified by the Assessing Officer before drawing any adverse inference. In the absence of any material brought on record to disprove the entries in the cash book or to establish that the explanation offered by the assessee was false or - 6– incorrect, the addition made under section 69A of the Act cannot be sustained.

In the result, the appeal filed by the assessee is partly allowed.

""थ"/ The Respondent. 3. संबंिधतआयकरआयु"/ Concerned CIT 4. आयकरआयु"(अपील) /The CIT(A)- 5. िवभागीय"ितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड"फाईल /Guard file. आदेशानुसार/ BY ORDER,सहायकपंजीकार (Dy./Asstt.