SMT. CHANDADEVI K RATHI,THANE vs. ITO WARD 18(1)(3), MUMBAI

PER OM PRAKASH KANT, AM This appeal has been preferred by the assessee against the order dated 20.06.2019 passed by the Ld. Commissioner of Income- tax (Appeals)-53, Mumbai [in short ‘the Ld. CIT(A)’], for assessment year 2014-15, raising following grounds:

Smt. Chandadevi K. Rathi 2 ITA No. 5547/M/2019

1.1 The Learned Commissioner of Income The Learned Commissioner of Income - tax (Appeals) tax (Appeals) - 53, Mumbai, ['"Id.CIT (A)"] Mumbai, ['"Id.CIT (A)"] erred in not granting proper, sufficient and erred in not granting proper, sufficient and adequate opportunity of adequate opportunity of being heard to the Appellant while framing being heard to the Appellant while framing the appellate order. the appellate order.

1.2 It is submitted that, in the facts and the circumstances of the It is submitted that, in the facts and the circumstances of the It is submitted that, in the facts and the circumstances of the case, and in law, case, and in law, the appellate order so framed be held as bad and d as bad and illegal, as:

(i)The same is framed in breach of the principl )The same is framed in breach of the principles of natural justice; es of natural justice; and

(ii)The same is passed without application of mind to the facts and )The same is passed without application of mind to the facts and )The same is passed without application of mind to the facts and the submissions brought on record by the Appellant. submissions brought on record by the Appellant.

WITHOUT PREJUDICE TO THE ABOVE WITHOUT PREJUDICE TO THE ABOVE

2.1 The Ld. CIT (A) erred in confirming the action of the A.0. in The Ld. CIT (A) erred in confirming the action of the A.0. in The Ld. CIT (A) erred in confirming the action of the A.0. in making addition, making addition, to the extent of Rs. 14,98,995/- out of Rs. out of Rs. 22,52,600/-, u/s. 69 of the Act on , u/s. 69 of the Act on account of alleged unexplained account of alleged unexplained cash deposits in the cash deposits in the bank.

2.2 It is submitted that in the facts and the circumstances of the It is submitted that in the facts and the circumstances of the It is submitted that in the facts and the circumstances of the case, and in law, case, and in law, no such addition was called for.

2.3 Without prejudice to the above, assuming Without prejudice to the above, assuming - - but not admitting - that some that some addition was called for, it is submitted that addition was called for, it is submitted that

Smt. Chandadevi K. Rathi 3 ITA No. 5547/M/2019

the computation of the addition tation of the addition made by the A.O. is arbitrary, made by the A.O. is arbitrary, excessive and not in accordance with the law. excessive and not in accordance with the law. 2. The brief facts of the case of the case are that in the case of the assessee in are that in the case of the assessee in view of cash deposits, the Ld. Assessing Officer made addition of view of cash deposits, the Ld. Assessing Officer made addition of view of cash deposits, the Ld. Assessing Officer made addition of ₹22,52,600/- to the returned income to the returned income vide his order dated his order dated 14.12.2016 in terms of section 143(3) of the Income 14.12.2016 in terms of section 143(3) of the Income 14.12.2016 in terms of section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’). On further appeal, the Ld. (in short ‘the Act’). On further appeal, the Ld. CIT(A) upheld the CIT(A) upheld the disallowance. The relevant finding of the Ld. CIT(A) is reproduced relevant finding of the Ld. CIT(A) is reproduced relevant finding of the Ld. CIT(A) is reproduced as under:

“4.1. The only ground of appeal is in respect of the addition The only ground of appeal is in respect of the addition The only ground of appeal is in respect of the addition made of Rs.22,52,600/ made of Rs.22,52,600/- in respect of cash deposited in bank in respect of cash deposited in bank account treated by the AO as unexplained. The case was selected account treated by the AO as unexplained. The case was selected account treated by the AO as unexplained. The case was selected for limited scrutiny in respect of large cash deposited in t for limited scrutiny in respect of large cash deposited in t for limited scrutiny in respect of large cash deposited in the same bank account. The assessee was asked to furnish the details of all bank account. The assessee was asked to furnish the details of all bank account. The assessee was asked to furnish the details of all the bank accounts maintained by her and to furnish copy of bank the bank accounts maintained by her and to furnish copy of bank the bank accounts maintained by her and to furnish copy of bank statement, bank book and cash book for AY 2013 statement, bank book and cash book for AY 2013-14 & 2014 14 & 2014-15. All the details called for were not furnished. Further, All the details called for were not furnished. Further, even though even though the assessee had 5 bank accounts, bank statement of only 1 bank the assessee had 5 bank accounts, bank statement of only 1 bank the assessee had 5 bank accounts, bank statement of only 1 bank account i.e. Corporation Bank A/c No.130011 was furnished. This i.e. Corporation Bank A/c No.130011 was furnished. This i.e. Corporation Bank A/c No.130011 was furnished. This bank statement bank statement did not have any cash deposit reflected. Hence, did not have any cash deposit reflected. Hence, notice u/s.133(6) was notice u/s.133(6) was issued to the Corporation Bank, Yogi Nagar , Yogi Nagar Branch, Mumbai to confirm Branch, Mumbai to confirm whether any cash deposit of whether any cash deposit of

Smt. Chandadevi K. Rathi 4 ITA No. 5547/M/2019

Rs.13,60,500/- - was appearing in the assessee's bank account. bank account. Corporation Bank informed in reply that the assessee had Corporation Bank informed in reply that the assessee had Corporation Bank informed in reply that the assessee had another bank a/c No.064800101015067 in which cash deposit of bank a/c No.064800101015067 in which cash deposit of bank a/c No.064800101015067 in which cash deposit of Rs.13,60,500/- - have been made. In this backdrop, a show cause have been made. In this backdrop, a show cause notice was issued to the assessee to explain the source of cash issued to the assessee to explain the source of cash issued to the assessee to explain the source of cash deposit in her bank deposit in her bank account. The assessee then submitted the copy account. The assessee then submitted the copy of bank statement of the of bank statement of the earlier not disclosed bank a/c with earlier not disclosed bank a/c with Corporation B Corporation Bank, account maintained with SBI Borivali Branch with SBI Borivali Branch and account maintained with Bank of Baroda, and account maintained with Bank of Baroda, Shimpoli Branch. Shimpoli Branch. The bank account with Bank of Baroda was not disclosed The bank account with Bank of Baroda was not disclosed The bank account with Bank of Baroda was not disclosed in the balance sheet filed by the assessee. The assessee did not file the balance sheet filed by the assessee. The assessee did not file the balance sheet filed by the assessee. The assessee did not file the copy of bank stat of bank statement of ICICI Bank and Sangli Coop. Bank. ement of ICICI Bank and Sangli Coop. Bank. Based on the bank Based on the bank statements furnished by the assessee, the statements furnished by the assessee, the position in respect of cash deposit position in respect of cash deposit was as follows :

As regards the source of deposit, the assessee submitted that the As regards the source of deposit, the assessee submitted that the As regards the source of deposit, the assessee submitted that the cash deposits are on account of deposits are on account of recovery of advance given, recovery of advance given, outstanding amount outstanding amount receivables, rent of shop and accumulated receivables, rent of shop and accumulated cash balance. No cash book, cash balance. No cash book, bank book, name of the parties from bank book, name of the parties from furnished. The AO observed that whom money was received was whom money was received was furnished. The AO observed that the assessee had shown rent income of the assessee had shown rent income of Rs.96,000/-, income from , income from home made products of Rs.1,28,860/ home made products of Rs.1,28,860/- and interest from bank interest from bank deposits of Rs.2,27,786/ deposits of Rs.2,27,786/-. In view of the persistent lack . In view of the persistent lack of

Smt. Chandadevi K. Rathi 5 ITA No. 5547/M/2019

cooperation and furnishing of details called for, the AO concluded cooperation and furnishing of details called for, the AO concluded cooperation and furnishing of details called for, the AO concluded that the cash deposit in the bank account of Rs.22 cash deposit in the bank account of Rs.22,52,600/ ,52,600/- was treated as unexplained and addition was, unexplained and addition was, made accordingly made accordingly.

4.2. In the appellate proceedings, it was submitted that the 4.2. In the appellate proceedings, it was submitted that the 4.2. In the appellate proceedings, it was submitted that the appellant is carrying out business of homemade products. The carrying out business of homemade products. The carrying out business of homemade products. The cash deposits of Rs.22,52,600 was explained as out of cash balance cash deposits of Rs.22,52,600 was explained as out of cash ba cash deposits of Rs.22,52,600 was explained as out of cash ba of Rs.735,605/ of Rs.735,605/-, amount collected from debtors, Rs. 519,500 and collected from debtors, Rs. 519,500 and refund of advances Rs. 7,07,000/ refund of advances Rs. 7,07,000/ - which totaled up to Rs. which totaled up to Rs. 19,62.105/- The balance sheet and P & L account The balance sheet and P & L account for AY 2014 for AY 2014-15 and balance sheet of 31.3.2013 was filed. It was noted that and balance sheet of 31.3.2013 was filed. It was noted that and balance sheet of 31.3.2013 was filed. It was noted that cash on hand as on 31.3.2014 as per the Balance Sheet filed is Rs. 68,145/ hand as on 31.3.2014 as per the Balance Sheet filed is Rs. 68,145/ hand as on 31.3.2014 as per the Balance Sheet filed is Rs. 68,145/- The sales as per the P & L account is only Rs. 5.72 lakhs on which The sales as per the P & L account is only Rs. 5.72 lakhs on which The sales as per the P & L account is only Rs. 5.72 lakhs on which profit of Rs. 1.28 lakhs is shown. The returned income is Rs. Rs. 1.28 lakhs is shown. The returned income is Rs. Rs. 1.28 lakhs is shown. The returned income is Rs. 218,530/- and no tax and no tax is payable. It was claimed that cash on hand sh on hand as on 31.3.2013 was Rs.7,53,605/ as on 31.3.2013 was Rs.7,53,605/-.

4.3. The learned AR was asked to file The learned AR was asked to file

(i) copy of bank statements of all the bank accounts held by the copy of bank statements of all the bank accounts held by the copy of bank statements of all the bank accounts held by the appellant, file copy of return of income, computation of income, appellant, file copy of return of income, computation of income, appellant, file copy of return of income, computation of income, balance sheet, capital a/c and receipts & balance sheet, capital a/c and receipts & payments account and payments account and trading a/c for AY 2010 trading a/c for AY 2010-11 to 2014-15.

(ii) Statement of receipt & payment of cash for AY 2014 Statement of receipt & payment of cash for AY 2014-15 clearly 15 clearly indicating the source of credit. indicating the source of credit.

(iii) Index Il and purchase agreement & Index Il and Sale Index Il and purchase agreement & Index Il and Sale Index Il and purchase agreement & Index Il and Sale agreement for the flat sold during the for the flat sold during the year.

(iv) Source of purchase of the flat was also called for. Source of purchase of the flat was also called for.

Smt. Chandadevi K. Rathi 6 ITA No. 5547/M/2019

(v) Purchase agreement of the new property and also statement of Purchase agreement of the new property and also statement of Purchase agreement of the new property and also statement of investment of capital gains. investment of capital gains.

This was called for in the hearing held on 08 This was called for in the hearing held on 08-05-2019.

4.4. From further details filed it was note 4.4. From further details filed it was noted that Return of income d that Return of income was Rs.186,610 for AY 2010 was Rs.186,610 for AY 2010-11, Rs. 108,868 for AY 2011 11, Rs. 108,868 for AY 2011-12, Rs. 179850 for AY 179850 for AY 2012-13 and Rs. 194,390 for AY 2013-14. No tax 14. No tax was payable in any of was payable in any of these years as income was below taxable these years as income was below taxable limit. The appellant had hardly any limit. The appellant had hardly any income in these years. Balance these years. Balance Sheet for each of the year was filed. It is not Sheet for each of the year was filed. It is not clear whether Balance clear whether Balance Sheet was filed with the returns of income or whether Sheet was filed with the returns of income or whether they were they were prepared only at the time or after the assessment. No P & L prepared only at the time or after the assessment. No P & L prepared only at the time or after the assessment. No P & L account was filed. The cash book was a su account was filed. The cash book was a summarized one with no mmarized one with no date wise details and no name of persons/parties to allow for details and no name of persons/parties to allow for details and no name of persons/parties to allow for verification. In many verification. In many years gifts were claimed reflected in the years gifts were claimed reflected in the balance sheet. There was reduction balance sheet. There was reduction of investment in shares of of investment in shares of Rs.15.16 lakhs as on 31.3.2011 to Rs. 7.64 lakh Rs.15.16 lakhs as on 31.3.2011 to Rs. 7.64 lakhs as on 31.3.2012 as on 31.3.2012 but no capital gains or loss shown in the return for AY but no capital gains or loss shown in the return for AY 2012 2012-13. All in all the returns show a pattern of capital build up with in all the returns show a pattern of capital build up with in all the returns show a pattern of capital build up with utilization of basic exemption limit and no taxes payable. Hence utilization of basic exemption limit and no taxes payable. Hence utilization of basic exemption limit and no taxes payable. Hence appellant was asked to file P & L account for was asked to file P & L account for each of the AY and each of the AY and detailed cash book/statement for AY 2014 book/statement for AY 2014-15 for verification. The 15 for verification. The same was not filed. same was not filed.

4.5. There are no details filed of debtors and advances claimed to 4.5. There are no details filed of debtors and advances claimed to 4.5. There are no details filed of debtors and advances claimed to be returned and the same remains unverified. In any case the returned and the same remains unverified. In any case the returned and the same remains unverified. In any case the volume of trade volume of trade in home made products do not support such large e made products do not support such large debtors and advances. debtors and advances. The balance sheet as on 31.3.2013 shows The balance sheet as on 31.3.2013 shows

Smt. Chandadevi K. Rathi 7 ITA No. 5547/M/2019

cash on hand of Rs.7,53,605/ cash on hand of Rs.7,53,605/- There is no explanation as to why There is no explanation as to why large cash balance on hand was built up large cash balance on hand was built up disproportionate to disproportionate to drawings or business. drawings or business. Further why the same was deposited in bank deposited in bank not at one go but later and spread out over the year. This not at one go but later and spread out over the year. This not at one go but later and spread out over the year. This is certainly doubtful. At best this can be considered as the source of certainly doubtful. At best this can be considered as the source of certainly doubtful. At best this can be considered as the source of cash deposits in bank. The addition is sustained at Rs.14,98,995/ deposits in bank. The addition is sustained at Rs.14,98,995/ deposits in bank. The addition is sustained at Rs.14,98,995/-. The grounds of grounds of appeal are partly allowed.” 3. We have heard rival submissions of the parties on the issue-in- We have heard rival submissions of the parties on the issue We have heard rival submissions of the parties on the issue dispute and perused the relevant material on record. dispute and perused the relevant material on record. dispute and perused the relevant material on record.

3.1 Before us, the assessee has filed an application for additional Before us, the assessee has filed an application for additional Before us, the assessee has filed an application for additional evidence containing copy of confirmation evidence containing copy of confirmation of the debtors along with of the debtors along with their PAN cards. The Ld. counsel of the assessee submitted that the their PAN cards. The Ld. counsel of the assessee submitted that the their PAN cards. The Ld. counsel of the assessee submitted that the cash deposit was out of the realization of the opening amount of the cash deposit was out of the realization of the opening amount of the cash deposit was out of the realization of the opening amount of the debtors and income earned during the year under consideration. debtors and income earned during the year under consideration. debtors and income earned during the year under consideration. The Ld. counsel of the assess The Ld. counsel of the assessee gave an undertaking that if the undertaking that if the matter is restored back to the Ld. CIT(A) or the Assessing Officer, matter is restored back to the Ld. CIT(A) or the Assessing Officer, matter is restored back to the Ld. CIT(A) or the Assessing Officer, the assessee would co-operate and produce all the parties all the parties i.e.

Smt. Chandadevi K. Rathi 8 ITA No. 5547/M/2019

debtors before the authorities for confirmation of the realization of before the authorities for confirmation of the realization of before the authorities for confirmation of the realization of the amount from them the amount from them.

3.2 We find that core issue in the dispute is We find that core issue in the dispute is whether whether the cash deposits are out of recovery of advance given/ ut of recovery of advance given/ ut of recovery of advance given/outstanding amount/accumulated cash balance etc. accumulated cash balance etc. or not. The assessee in her The assessee in her application for admitting the additional evidence has submitted that admitting the additional evidence has submitted that admitting the additional evidence has submitted that evidence could not be furnished before the Ld. CIT(A) evidence could not be furnished before the Ld. CIT(A) evidence could not be furnished before the Ld. CIT(A) on same were collected after the proceeding before the Ld. CIT(A) collected after the proceeding before the Ld. CIT(A) collected after the proceeding before the Ld. CIT(A) and therefore same may be admitted. same may be admitted.

3.3 Though the confirmation from the debtors hav Though the confirmation from the debtors have been collected e been collected subsequent to the order of Ld. CIT(A) but s o the order of Ld. CIT(A) but same are crucial to the me are crucial to the determination of issue determination of issue-in-dispute whether the cash deposits are out dispute whether the cash deposits are out of debtors realized in the year under consideration. of debtors realized in the year under consideration. of debtors realized in the year under consideration. In view of the facts and circumstances of the case a facts and circumstances of the case and interest of the substantial nd interest of the substantial justice, we admit the additional evidence in the form of justice, we admit the additional evidence in the form of justice, we admit the additional evidence in the form of

Smt. Chandadevi K. Rathi 9 ITA No. 5547/M/2019

confirmations of the debtors and their PAN cards filed as additional confirmations of the debtors and their PAN cards filed as additional confirmations of the debtors and their PAN cards filed as additional evidence in terms of Rule 29 of the ITAT Rules, 1963. The order of evidence in terms of Rule 29 of the ITAT Rules, 1963. The order of evidence in terms of Rule 29 of the ITAT Rules, 1963. The order of the Ld. CIT(A) on the issue n the issue-in-dispute is accordingly set aside and ispute is accordingly set aside and matter is restored back to the matter is restored back to the Ld. CIT(A) for deciding afresh, Ld. CIT(A) for deciding afresh, in the light of the additional evidence filed by the assessee light of the additional evidence filed by the assessee. It is needless to mention that both the assessee and Assessing Officer mention that both the assessee and Assessing Officer mention that both the assessee and Assessing Officer shall be afforded adequate opportunity of being heard. The grounds raised ate opportunity of being heard. The grounds raised ate opportunity of being heard. The grounds raised by the assessee are accordingly allowed for statistical purposes. by the assessee are accordingly allowed for statistical purposes. by the assessee are accordingly allowed for statistical purposes.

Order pronounced in the ounced in the Court on 07/07/2022. Sd/- Sd/- (SANDEEP SINGH KARHAIL SANDEEP SINGH KARHAIL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 07/07/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)-

Smt. Chandadevi K. Rathi 10 ITA No. 5547/M/2019