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Facts
The assessee, engaged in textile trading, filed a return of income. The Assessing Officer (AO) selected the return for scrutiny and noticed cash deposits amounting to Rs.37,33,500/- during the demonetization period. The assessee's explanation regarding the source of these deposits was found to be unsubstantiated.
Held
The tribunal held that the documents produced by the assessee prima facie appear essential for adjudicating the issue. Therefore, in the interest of justice, the case is remanded to the Commissioner for consideration of these documents.
Key Issues
Whether the cash deposits made during demonetization period are unexplained and can be added to the assessee's income? Whether opportunity should be given to the assessee to produce further evidence?
Sections Cited
250, 143(2), 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 19.02.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2017-18.
In the instant case, the Assessee being engaged in the business of trading and manufacturing of textile items under his propriety concern M/s. Narain Ribbon & Scarf Work, had filed its return of income dated 07.11.2017 declaring total income at Rs.9,67,180/- and net profit of Rs.10,33,250/-. Return filed by the Assessee was selected for scrutiny under CASS and consequently notice u/s 143(2) of the Act dated 22.09.2018 was issued to the Assessee. Thereafter, other statutory notices were issued. The Assessee in response to the notices submitted the details called for and also submitted the copy of return of income, account statement etc. The Assessing Officer (AO) by perusing the details filed by the Assessee observed as under: -
“From the bank statement of account No.1129090265 and 3257793890 maintained with Central Bank of India. It is noticed that the cash amounting to Rs.37,33,500/- in specified bank notes were deposited during the year under consideration. On enquiring about the source of above mentioned cash deposit in specified bank notes, the Assessee has stated that out of total deposit of Rs.37,33,500/-, cash amounting to Rs.9,59,000/- was only deposited in SBN notes and source of the same was out of sale proceeds and cash withdrawn earlier. The Assessee further stated that he is unable to trace the cash of Rs.3,00,000/- deposited on 09.12.2016 whether the same is old currency or new currency. The Assessee also submitted the copy of bank deposit slip and in the letter dated 23.12.2019 mentioned that he has submitted cash book, however, no cash book has been submitted during the assessment proceedings. The AO, therefore, considering the aforesaid peculiar facts and circumstances and the certificate issued by Central Bank of India in respect of cash deposit made during demonetisation period as submitted by the Assessee vide response dated 03.12.2019 wherein it was mentioned that an amount of Rs.37,33,500/- was deposited by the Assessee during the period 09.11.2016 to 31.12.2016”.
The AO ultimately by holding “that the Assessee has nothing substantial to prove his claim regarding deposit of old demonetisation currency made during demonetisation period amounting to Rs.37,33,500/- and thus, the same remained unexplained”, added the said amount of Rs.37,33,500/- to the total income of the Assessee u/s 69A of the Act.
The Assessee, being aggrieved, challenged the said addition before the Ld. Commissioner, who mainly by observing “that the Assessee failed to provide details/evidences explaining the source of cash deposits either before the AO during the course of assessment proceedings or before him during the appellate proceedings. Therefore, he is of the considered view that the AO has rightly treated the cash deposits as income u/s 69A of the Act, affirmed the addition made and dismissed the appeal of the Assessee.
The Assessee before this Court has filed certain documents in support of his claim, such certificates from the Central Bank of India dated 02.12.2019 and 17.03.2020 and other bank statements etc. The Assessee has claimed that though some of the documents were filed before the authorities below, however, the said documents were not traceable, somehow the same have been traced now which are paramount for adjudication of the issue involved. Thus, in the interest of justice, one opportunity may be given to the Assessee to substantiate its claim, by producing relevant bank certificates and statements etc..
On the contrary, the Ld. D.R. refuted the claim of the assessee.
This Court has given thoughtful considerations to the peculiar facts and circumstances of the case and rival contentions of the parties. The aforesaid documents prima-facie appears to be essential for adjudication of the issue involved a the same goes to the root of the case. Thus, for just and proper decision of the case and substantial justice, this Court is inclined to remand the instant case to the file of the Ld. Commissioner for consideration of the documents filed by the Assessee before this Court, as directed to be filed before the Ld. Commissioner. Suffice to say, the Ld. Commissioner shall provide reasonable opportunity of being heard to the Assessee.
In the result, the Assessee’s appeal is allowed for statistical purposes.
Order pronounced in the open court on 31.07.2025.