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Facts
The assessee failed to provide details regarding cash deposits of Rs. 11,00,000/- during demonetization, leading to an addition under section 69A. The CIT(A) upheld the addition due to unsubstantiated claims. The assessee later provided additional evidence to the Tribunal.
Held
The Tribunal noted that the assessee failed to provide crucial evidence to lower authorities but admitted new evidence before it. In the interest of justice, the matter was restored to the Assessing Officer for verification of the additional evidence.
Key Issues
Whether cash deposits made during demonetization period are unexplained, and if additional evidence can be considered at the Tribunal stage.
Sections Cited
144, 143(3), 69A, 115BBE, 271AAC, 272A(1)(d)
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Income Tax Appellate Tribunal, “SMC” BENCH MUMBAI
आदेश / ORDER
PER MAKARAND VASANT MAHADEOKAR, AM:
1. This appeal is filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as "CIT(A)"], dated 02.01.2025, arising from the assessment order passed by the Assessing Officer under section 144 r.w.s. 143(3) of the Income
Amish Harenkumar Parikh Tax Act, 1961[hereinafter referred to as "the Act"] dated 21.12.2019 for A.Y. 2017–18. Facts of the Case 2. The assessee is an individual who filed his return of income for A.Y. 2017–18 on 01.08.2017 declaring total income of Rs. 2,99,070/-. The case was selected for limited scrutiny under CASS for the purpose of verification of “cash deposits during demonetization period”.
During the course of assessment proceedings, notice under section 143(2) was issued on 21.09.2018 followed by notices under section 142(1) dated 12.10.2019 and 12.11.2019 along with questionnaire. The assessee furnished certain bank statements; however, no details were furnished in respect of the bank account wherein cash deposits were noticed. On verification of ITS data and ITBA/360-degree profile, the Assessing Officer observed that the assessee had deposited cash of Rs. 11,00,000/- in Corporation Bank, Kandivali (West). A show cause notice dated 06.12.2019 was issued requiring the assessee to explain the source of such deposits. In response, the assessee submitted that the said bank account was opened and operated by his father and that he was not in talking terms with his parents and therefore was unable to furnish complete details. However, no supporting evidence was furnished to substantiate the claim. The Assessing Officer held that the assessee failed to explain the nature and source of the cash deposits and also failed to comply with statutory notices. Accordingly, the assessment was Amish Harenkumar Parikh completed under section 144 of the Act and the amount of Rs. 11,00,000/- was treated as unexplained money under section 69A r.w.s. 115BBE of the Act. The total income was assessed at Rs. 15,77,130/- as against returned income of Rs. 4,77,130/-. Penalty proceedings under section 271AAC and section 272A(1)(d) were also initiated.
Aggrieved, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee submitted that the cash deposits were out of earlier withdrawals and past savings. A tabular statement of cash withdrawals and deposits was furnished to demonstrate availability of cash. However, the CIT(A) observed that the assessee failed to substantiate the claim with credible documentary evidence and failed to establish nexus between withdrawals and deposits. It was further observed that the explanation regarding operation of bank account by the father was not supported by any evidence. Accordingly, the CIT(A) upheld the action of the Assessing Officer in making addition of Rs. 11,00,000/- under section 69A r.w.s. 115BBE of the Act and dismissed the appeal.
Aggrieved by the order of CIT(A), the assessee is in appeal before us.
During the course of hearing before us, the learned Authorised Representative submitted that the assessee has now placed on record a detailed cash flow statement along with bank statements demonstrating that the cash deposits during the demonetization period were sourced out of earlier withdrawals. It Amish Harenkumar Parikh was fairly submitted that these evidences could not be furnished before the lower authorities. Therefore, it was prayed that the matter may be restored to the file of the Assessing Officer for verification of the evidences now placed on record.
The learned Departmental Representative, while supporting the orders of the lower authorities, fairly submitted that the assessee had failed to furnish explanation before the Assessing Officer. However, the learned DR did not object to restoration of the matter for verification of additional evidences.
We have carefully considered the rival submissions and perused the material available on record. It is an admitted position that the addition of Rs. 11,00,000/- has been made by the Assessing Officer under section 69A of the Act on account of cash deposits during the demonetization period on the ground that the assessee failed to explain the source of such deposits.
From the record, it is evident that the assessee did not furnish necessary details before the Assessing Officer and the assessment was completed under section 144 of the Act. The CIT(A) has also confirmed the addition primarily on the ground that the explanation remained unsubstantiated.
However, before us, the assessee has placed on record a cash flow statement along with supporting bank statements purporting to explain that the cash deposits were out of earlier withdrawals. These evidences go to the root of the matter and require proper verification.
Amish Harenkumar Parikh 11. In our considered view, when material evidences which have a direct bearing on the issue are produced for the first time before the Tribunal, the same ought to be examined by the Assessing Officer so as to arrive at a proper conclusion in accordance with law. At the same time, it is also a fact that the assessee failed to furnish these details before the lower authorities despite opportunities.
Considering the entirety of facts and in the interest of justice, we deem it appropriate to restore the issue to the file of the Assessing Officer for the limited purpose of verification of the cash flow statement and supporting evidences now furnished by the assessee.
The Assessing Officer shall examine the evidences and decide the issue afresh in accordance with law after providing reasonable opportunity of being heard to the assessee. The assessee is also directed to cooperate and furnish all necessary details as may be called for.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 01.04.2026.