JANGAM RUMALA SOMA SHEKHARAIAH ,HYDERABAD vs. ITO, WARD 13(2), HYDERABAD

The brief facts of the case are that, the assessee, who is an individual, filed his return of income for the A.Y. 2017-18 on 31.07.2017 admitting total income at Rs. 3,59,740/-. The case of the assessee was selected for scrutiny to examine the cash deposits during the demonetisation period. During the course of assessment proceedings, the A.O. noticed that, the assessee had made cash deposits of Rs. 55,45,241/- in his Canara Bank account bearing No. 847910101002713. The A.O. called upon the assessee to furnish the relevant details to explain the source for cash deposits. The assessee neither explained the source nor filed any supporting evidence. Therefore, the A.O. treated the entire cash deposits of Rs. 21,49,050/- as unexplained money under Section 69A of the Income Tax Act, 1961. 3. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee stated that, the source for cash deposits was out of amounts received from his wife’s kirana business and all cash sales were deposited into the bank account. The Ld. CIT(A), after considering the relevant submissions of the assessee and also taking note of the reasons given by the A.O., called upon the assessee to file further evidences to justify the said kirana business carried on by the assessee’s wife. Since the assessee had not submitted any details, the Ld. CIT(A) rejected the explanation of the assessee and sustained the addition made by the A.O. towards cash deposits into the bank account under Section 69A of the Income Tax Act, 1961. 4. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.

The learned counsel for the assessee, Shri T. Chaitanya Kumar, Advocate, submitted that, the case was selected for limited scrutiny to verify cash deposits during the demonetisation period and the assessee had made cash deposits of Rs. 93,000/- from 10.11.2016 to 30.12.2016. However, the Ld. CIT(A) has sustained the addition towards total cash deposits from 01.04.2016 to 31.03.2017. Therefore, he submitted that, the addition made by the A.O. should be deleted. The learned counsel for the assessee further submitted that, the source for cash deposits in the bank account was out of kirana business receipts from the assessee’s wife. Therefore, he submitted that, the addition made by the A.O. should be deleted.

The learned Senior A.R. for the Revenue, Shri T. Sunil Gowtham, on the other hand, submitted that, assessee has not explained the source for cash deposits by filing credible evidences including proof of kirana business carried on by the assessee’s wife. He further submitted that, the case was selected for scrutiny which includes verification of total cash deposits for the entire financial year and not confined only to the demonetisation period. Therefore, the A.O. has rightly considered the total cash deposits into bank account and made addition under Section 69A of the Income Tax Act, 1961 after rejecting the explanation offered by the assessee. He further submitted that, before the Ld. CIT(A), the assessee had not filed any evidences except stating that the source for cash deposits was out of cash receipts from his wife’s kirana business. Therefore, the Ld. CIT(A) has rightly sustained the addition made by the A.O. and the order of the Ld. CIT(A) should be upheld.

We have heard both parties, perused the material available on record, and had gone through the orders of the lower authorities. There is no dispute with regard to the fact that the case was selected for limited scrutiny for verifying cash deposits during the year, which is evident from the relevant notice issued under Section 143(2) of the Act, dated 13.08.2019. It is also not in dispute that, the assessee could not explain the source for the total cash deposits into the bank account by filing relevant evidence to the satisfaction of the A.O. Although the assessee claims that, the source for cash deposits was out of kirana business receipts of his wife, but no evidence has been filed to prove the kirana business carried on by the assessee’s wife. In the absence of any credible evidence, the verbal arguments of the assessee that, his wife’s kirana business receipts have been deposited into his bank account cannot be accepted. Further, the assessee had not filed any details before the Ld. CIT(A), including proof of business carried on by his wife. Since the appellate proceedings before the Ld. CIT(A) were almost ex parte and the assessee, except filing written submissions without any documentary evidences, simply made a statement that, the source for cash deposits was out of business receipts of his wife, in our considered view, to verify the claim of the assessee along with supporting evidence, the matter needs to be set aside to the file of the A.O. Thus, we set aside the order of the Ld. CIT(A) and direct the A.O. to verify the claim of the assessee in light of any evidences that may be filed by the assessee to justify the kirana business carried on by the assessee’s wife, which is stated to be the source for cash deposits into the bank account of the assessee.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file