ITO (E) WARD 1 AHMEDABAD, AHMEDABAD vs. ACHARYA SHRI VIJAY SURENDRA SURISHWARJI JAIN TATWA GYAN SHALA, AHMEDABAD

Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(Appeals) with a delay, which was explained on the ground that the assessee was not aware of the assessment proceedings due to e- proceedings and communication gaps and that no effective notice or order came to its knowledge until receipt of demand notice. Considering the explanation and in the interest of justice, the CIT(Appeals) condoned the delay in filing of appeal.

The CIT(Appeals), in order to verify the correctness of the evidences, called for a remand report from the Assessing Officer. However, in the remand proceedings, the Assessing Officer failed to examine the additional evidences and merely reiterated the findings given in the ex parte assessment order, primarily reiterating the earlier non-compliance of the assessee rather than addressing the merits of the documents furnished.

On careful consideration of the evidences, remand report and rejoinder of the assessee, the CIT(Appeals) recorded detailed findings on merits. The CIT(A) observed that the fixed deposits reflected in the bank statements and ledger accounts were fully accounted for in the books and there was no material to suggest that these represented unexplained investments. In fact, the CIT(Appeals) noted that the total investments in fixed deposits as per the books were to the extent of Rs.3,21,55,000/-, which were properly recorded, whereas the Assessing Officer had made addition only on the basis of partial and unverified information of Rs.1,43,42,481/- available on the portal. This itself showed that the Assessing Officer had proceeded on incomplete and incorrect facts without proper verification.

The CIT(Appeals) further held that the addition under section 69A of the Act cannot be made merely on the basis of non-filing of return or non- compliance during assessment proceedings, especially when the assessee subsequently had furnished complete evidences explaining the nature and source of the deposits. The CIT(A) held that once the assessee discharges the primary onus by furnishing documentary evidences, the burden shifts on the Assessing Officer to rebut the same with cogent material, which was not done in the present case.

The CIT(Appeals) also observed was that the Assessing Officer, even at the remand stage, did not undertake any independent verification of the bank statements or ledger accounts and failed to point out any specific defect or discrepancy in the evidences furnished. Instead, the remand report was confined to reiteration of the ex parte assessment, which could not be sustained in law when detailed evidences were available on record.

Apart from the merits, the CIT(Appeals) also examined the validity of reassessment proceedings and held that the notices under section 148 and order under section 148A(d) were issued by the Jurisdictional Assessing Officer in violation of the faceless scheme prescribed under section 151A of the Act, thereby rendering the entire reassessment proceedings invalid. However, even independent of this legal issue, the CIT(Appeals) clearly held that on merits itself, the addition could not survive.

In view of these findings, the CIT(Appeals) allowed the appeal of the assessee, quashed the assessment order and deleted the addition, holding that both on facts and in law, the assessment framed by the Assessing Officer was unsustainable.

The Department is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

The undisputed facts of the case are that the assessment proceedings were initiated only on the basis that the assessee had not filed its return of income for the year under consideration, though information was available on the Insight Portal that the assessee had made time deposits aggregating to Rs.1,43,42,481/- and had earned interest income of Rs.40,47,828/-. In the

During the appellate proceedings before the Ld. CIT(Appeals), the assessee furnished complete details in support of the time deposits and interest income viz. bank statements, ledger accounts and reconciliation with Form 26AS. The Ld. CIT(Appeals) after calling for a remand report from the Assessing Officer and after considering the material placed on record, recorded a categorical finding that the investments in fixed deposits were duly reflected in the books and bank statements and stood fully explained. It was further observed that the interest income as per books substantially reconciled with Form 26AS and the difference was only marginal. The Ld. CIT(Appeals) also noted that the Assessing Officer, even in remand proceedings, failed to examine the evidences and merely reiterated the ex parte assessment order. On these facts, the Ld. CIT(Appeals) deleted the addition made under section 69A of the Act on merits.

We find that the approach adopted by the Assessing Officer in making addition of the entire time deposits and interest income merely on the basis of non-filing of return of income and absence of compliance, without bringing any material on record to establish that the deposits represented unexplained money, is not sustainable in law. It is well settled that addition under section 69A of the Act can be made only when the assessee is found to

The Hon’ble Supreme Court in the case of CIT vs. Orissa Corporation Pvt. Ltd. [1986] 159 ITR 78 (SC) / [1986] 25 Taxman 80 (SC) has held that where the assessee has furnished basic evidences, the onus shifts to the Department and no addition can be sustained merely on suspicion. Similarly, in CIT vs. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC), the Hon’ble Apex Court held that the onus to prove that a particular receipt is income lies on the Revenue. Further, the Hon’ble Supreme Court in Umacharan Shaw & Bros. vs. CIT [1959] 37 ITR 271 (SC) has held that suspicion, however strong, cannot take the place of proof. The Hon’ble Gujarat High Court in CIT vs. Rohini Builders [2002] 256 ITR 360 (Gujarat) / [2002] 122 Taxman 437 (Gujarat) has held that once the assessee has furnished complete details along with supporting evidences, no addition can be made without bringing contrary material on record. Similarly, the Hon’ble Delhi High Court in CIT vs. Kamdhenu Steel & Alloys Ltd. [2012] 206 Taxman 254 (Delhi) / [2012] 361 ITR 220 (Delhi) has held that addition cannot be sustained merely on the basis of non-compliance when evidences are subsequently furnished and remain uncontroverted.

In the present case, the Ld. CIT(Appeals) has recorded a finding of fact, based on examination of evidences and remand report, that the time deposits have been explained. But, in so far as interest income is concerned,

In the result, the appeal filed by the Department is partly allowed. This Order is pronounced in the Open Court on 21/04/2026