PRAMOD RAMAKANT TIWARI,NAVI MUMBAI vs. ITO 28 (2)(4), MUMBAI

The facts relating to the issue are that the assessee is an astrologer and was having his office in the premises of Mr. Pravin B Ahire, proprietor of M/s N R Enterprises. During the year under consideration, it was found that the assessee had made cash deposits aggregating to Rs.16,35,000/- into his bank account. Since the assessee had not filed his return of income, the AO reopened the assessment by issuing notice u/s 148 of the Act on 18-03-2016.

The assessee submitted that he had borrowed a sum of Rs.20,000/- from Shri Pravin B Ahire and had issued blank cheques to him as security. The assessee was not aware of the cash deposits. However, he received phone call

I heard the parties and perused the record. I noticed that the assessment of the assessee has been reopened by issuing notice u/s 148 of the Act on 18-03-2016. The impugned transactions have happened in the financial year 2008-09. The explanation of the assessee that the impugned deposits have not been made by him is corroborated by the fact that the Manager of the bank has also conducted enquiries, when he found that the cash deposits have been made using fake PAN numbers. In that enquiry, it was accepted that the deposits have been made by Shri Pravin B Ahire and Shri Shwet Kumar Dora. Thus, I notice that, prior to the initiation of reassessment proceedings, the veracity of the explanations given by the assessee has been established by the private enquiry conducted by the manager of the bank.

It is also a fact that the assessee is a small time astrologer having meagre income. He was not assessed to tax in any of the earlier years and the Ld A.R submitted that he has not been assessed subsequently also. Under the provisions of sec.68 of the Act, the initial onus to prove the nature and source of cash credit is placed upon the shoulders of the assessee, i.e., he has to prove the identity of the creditor, the credit worthiness of the creditor and genuineness of the transactions. If the assessee fails to prove the above said three main ingredients, then the AO “may” assess the cash credit as income of the assessee. It can be noticed that an option is given to the assessing officer u/s 68 not to assess cash credits as income of the assessee as the section uses the word “may”, meaning thereby, the AO has to examine each cash credit in an objective manner and take a decision on the facts of each case. This proposition is supported by the decision rendered by Hon’ble Supreme Court in the case of P K Noorjahan (AIR 1999 SC 1600). Viewed from this angle, in my view, the facts and circumstances of the case would suggest that the explanations given by the assessee with regard to the cash deposits cannot be found fault with. Accordingly, I am of the view the impugned deposits do not warrant making addition u/s 68 of the Act. Accordingly, I set aside the order passed by Learned CIT(A) and direct the AO to delete the addition of Rs.16,36,000/- made by the AO.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 21.07.2022.