LADULAL HARAKCAND KANTHER,MUMBAI vs. ITO WARD 28(2)(1), MUMBAI

On facts and circumstances of the case and in law Ld. AO erred in making addition of cash deposits in bank accounts aggregating to Rs 81,28,815/-u/s 69A of the IT Act 1961. 3. On facts and circumstances of the case and in-laws Ld. AO erred in making addition of cash deposits in bank account of Rs 81,28,815/- u/s 69A without appreciating the fact that same or part of that (after adjustment) represents turnover of business of assessee. So only Ladulal Harakcand Kanther profit embedded in such adjusted turnover after reducing amount of cash re-deposited out of cash withdrawn in earlier dates or out of opening cash on hand, needs to be considered. Such profits need to be computed by applying provisions of section 44AD i.e. profits at the rate 8 percentage of adjusted turn over.

Without prejudice to the above- (i) On facts and circumstances of the case and in law Ld. AO erred in making addition of cash deposits in bank accounts aggregating to Rs 81,28,815/- u/s 68 of the IT Act 1961. 5. (ii) On facts and circumstances of the case and in law Ld. AO erred in making addition of cash deposits in bank account of Rs 81,28,815/- u/s 68 without appreciating the fact that same or part of that (after adjustment) represents turnover of business of assessee. So only profit embedded in such adjusted turnover after reducing amount of cash re-deposited out of cash withdrawn in earlier dates or out of opening cash on hand, needs to be considered. Such profits need to be computed by applying provisions of section 44AD i.e. profits at the rate 8 percent of adjusted turn over.”

Brief facts of the case are that the assessee is a Hindu Undivided Family (HUF) and had not filed his return of income for the year under consideration. The assessee’s case was selected for scrutiny based on the information available on ITBA module of Actionable Information Monitoring System (AIMS), where it was found that the assessee has deposited cash in the bank accounts during the period of demonetization i.e., from 09.11.2016 to 31.12.2016. The assessee has also not filed his return of income in response to notice u/s. 142(1) of the Act. The ld. Assessing Officer (ld. A.O. for short) passed the assessment order u/s. 144 of the Act, vide order dated 26.11.2019 being the best judgment assessment, for the reason that the assessee was non-compliant during the assessment proceedings and determined the total income at Rs. 81,28,815/- after making an addition u/s. 69A of the Act, being unexplained money. 4. Aggrieved the assessee was in appeal before the first appellate authority, challenging the assessment order. Ladulal Harakcand Kanther

The ld. CIT(A) vide an ex parte order dated 12.11.2024, upheld the order of the ld. A.O. on the ground that the assessee has failed to furnish any explanation or supporting documents to substantiate his claim. 6. The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A). 7. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has been non-compliant throughout the proceeding before the first appellate authority and had failed to furnish any explanation along with any supporting documentary evidence in support of his claim. The ld. CIT(A) has also not decided the issue on the merits of the case for the above mentioned reason. 8. The learned Authorised Representative (ld. AR for short) for the assessee contended that the assessee has got a good case on the merits and prayed that the assessee may be given one more opportunity to present his case before the lower authorities. 9. The learned Departmental Representative (ld. DR for short) vehemently opposed to setting aside the issue to the lower authorities for the reason that the assessee was given sufficient opportunity before the ld. AO as well as before the ld. CIT(A) but has not availed of the same. The ld. DR relied on the order of the lower authorities. 10. In the above facts of the case, it is observed that the assessee has been non-compliant before the lower authorities and has not furnished any documentary evidence to substantiate the source of the cash deposits made in his bank account during demonetization period. In the interest of justice, we are inclined to extend the assessee one more opportunity to present his case before the ld. AO by adhering to the principles of natural justice. The assessee is directed to cooperate in the proceeding before the ld. Ladulal Harakcand Kanther

The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER,