RAMESH SHANTILAL DALAL,MUMBAI vs. ITO, MUMBAI

The assessee has raised the following grounds of appeal:

The learned CIT(A) erred in upholding taxation under section 115BBE and consequential penalty proceedings under section 271AAC, which is not justified in the facts and circumstances of the case.

The appellant craves leave to add, amend, alter or withdraw any of the grounds of appeal at the time of hearing. Facts in brief

The relevant facts, as emanating from the material placed before us, are that the assessee had not originally filed his return of income for the assessment year under consideration. Pursuant to initiation of reassessment proceedings under section 147 of the Act and issuance of notice under section 148 dated 29.03.2019, the assessee filed his return of income on 27.08.2019 declaring total income of Rs.2,07,500/-. The reassessment proceedings were initiated, inter alia, on the basis of information regarding cash deposits aggregating to Rs.15,35,000/-.

During the course of assessment proceedings, the assessee explained that he was a senior citizen and that the cash deposited in the bank account during the demonetisation period represented amounts saved in earlier years. The Assessing Officer was, however, not satisfied with the explanation and observed that documentary evidence regarding past savings, withdrawals and availability of cash had not been satisfactorily brought on record. Consequently, the cash deposits of Rs.15,35,000/- were treated as unexplained money under section 69A of the Act.

Before the learned CIT(A), the assessee sought to explain the source of the cash deposits with reference to past savings and withdrawals from his bank accounts. The learned CIT(A) has 3 Mr. Ramesh Shantilal Dalal recorded that the assessee had furnished bank statements relating to his HDFC Bank and Axis Bank accounts and claimed that the impugned deposits were sourced out of cash withdrawals made in financial years 2015-16 and 2016-17, apart from past savings of Rs.3,75,000/-. The learned CIT(A), however, found discrepancies between the explanation furnished in the written submissions and the earlier cash transaction statement. The learned CIT(A) was also not satisfied that the cash withdrawn earlier continued to remain available with the assessee for redeposit during the demonetisation period. Accordingly, the addition made by the Assessing Officer was upheld and the appeal was dismissed.

In the Statement of Facts filed before us, the assessee has furnished a cash availability working. According to the assessee, the cash balance as on 01.04.2016 was Rs.6,45,000/- and further withdrawals of Rs.9,64,000/- were made during financial year 2016-17, resulting in alleged cash availability of Rs.16,09,000/- against cash deposits of Rs.15,35,000/-. The assessee has further stated that the withdrawals were from his HDFC Bank and Axis Bank accounts and that the cash was retained, inter alia, for meeting possible medical emergencies.

During the course of hearing before us, the learned Authorised Representative ("AR") of the assessee reiterated the facts and contentions set out in the Statement of Facts filed along with the appeal. The learned AR also placed on record copies of the relevant bank statements in support of the assessee's explanation regarding the cash withdrawals and the availability of cash for making the impugned deposits.

The learned AR submitted that the assessee had not been afforded an effective opportunity of hearing before the learned CIT(A). It was submitted that the assessee had specifically sought a 4 Mr. Ramesh Shantilal Dalal hearing through video conferencing so as to explain the factual position and reconcile the withdrawals and subsequent cash deposits, but such opportunity was not afforded. We notice that in the Statement of Facts filed before us, the assessee has specifically stated that he had pleaded for a video conferencing/virtual hearing for explaining his case with greater clarity.

In view of the above, the learned AR submitted that the matter may be restored to the file of the learned CIT(A) for fresh adjudication after granting the assessee an effective opportunity of being heard and after considering the bank statements and other supporting material.

The learned Departmental Representative ("DR") raised no objection to the prayer of the assessee for restoration of the matter to the file of the learned CIT(A).

We have heard the rival submissions and perused the material available on record.

The substantive dispute concerns the addition of Rs.15,35,000/- under section 69A of the Act on account of cash deposited in the assessee's bank account during financial year 2016-17. The assessee's case essentially is that the deposits were made out of cash available from earlier savings and cash withdrawals from his bank accounts. The Assessing Officer did not accept such explanation for want of satisfactory supporting evidence. The learned CIT(A), while considering the bank statements and the explanation furnished by the assessee, noticed certain inconsistencies in the source of cash stated by the assessee and, therefore, confirmed the addition.

At the same time, the controversy before us is predominantly factual in nature. The explanation of the assessee necessarily

Considering the totality of the facts and circumstances of the case, and particularly having regard to the fact that the learned DR has raised no objection to restoration of the matter, we are of the considered view that the ends of justice would be adequately met by granting the assessee one more effective opportunity to substantiate his explanation before the first appellate authority.

We, therefore, set aside the impugned order of the learned CIT(A) on the issues raised in the present appeal and restore the matter to his file for adjudication afresh in accordance with law. The learned CIT(A) shall consider the bank statements, cash- flow/reconciliation statement and such other documentary evidence as may be produced by the assessee in support of the source and availability of cash. The assessee shall also be afforded an effective opportunity of being heard, including through video conferencing, if permissible and sought in accordance with the applicable procedure.

We make it clear that we have not expressed any opinion on the merits of the addition under section 69A or the consequential application of section 115BBE of the Act. All factual and legal contentions of both sides are left open for consideration by the learned CIT(A). The learned CIT(A) shall decide the matter

The assessee, on his part, is directed to extend due cooperation in the appellate proceedings and furnish the requisite explanations and documentary evidence as and when called upon.

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

Mumbai 6. गाड" फाईल / Guard file.