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Facts
The assessee, a proprietor and partner in various businesses, filed an income return for AY 2018-19. During assessment, the AO treated cash deposits of Rs. 7,98,75,422/- in Vijaya Bank accounts as unexplained cash credits under Section 68 and taxed it under Section 115BBE.
Held
The Tribunal found that the assessee had provided partial explanations and some documents were missing, leading to the disallowance by the AO and CIT(A). However, to ensure natural justice and proper adjudication, the Tribunal decided to remit the matter back to the AO.
Key Issues
Whether the cash deposits in the assessee's bank accounts were correctly treated as unexplained cash credits and taxed accordingly. Whether the assessee was provided adequate opportunity to explain the nature and source of these deposits.
Sections Cited
68, 115BBE, 143(2), 142(1), 143(3), 44AB, 250, 234B
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Income Tax Appellate Tribunal, “B’’BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
O R D E R
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 12.12.2024 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1071137964(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2018-19.
The assessee has raised the following grounds of appeal:
ThotliRamakrishnappa Ananthkumar, Kolar District Page 3 of 7 3. Brief facts of the case are that the assessee being a proprietor of M/s Swamy Motors as well as Partner of the Firm namely M/s Swamy Balaji Indane Gas Agency filed his return of income for the AY 2018-19 on 9.10.2018 declaring total income at Rs.11,10,370/- .The books of Account of the assessee’s business were audited by a Chartered Accountant as per the provisions of section 44AB of the Act. The return was selected for Limited scrutiny assessment under the E-assessment Scheme 2019, on the issue “Cash deposit”. Accordingly, notices u/s 143(2) as well as 142(1) of the Act were issued on various dates requesting to furnish the details. However the assessee filed his reply on 10.04.21 & 16.04.21only in response to final Show cause notice. After perusing the reply and documents furnished, the AO noticed that the assessee has neither furnished proper bank statement nor any copy of bills/vouchers with regard to sales. Further, the assessee has also not furnished cash flow statement in support of his claim. The AO also observed that the assessee has not furnished proper reply and supporting document regarding cash deposit issue. Under the circumstances and in the absence of proper response from the assessee, the e-assessment u/s 143(3) r.w.s. 144B of the Act was completed as per the partial reply furnished by the assessee and information available with the department, the entire value of cash credits/deposits amounting to Rs. 7,98,75,422/- in different accounts of the Vijaya Bank was treated as unexplained cash credits as per provisions of section 68 of the Act and brought to tax under section 115BBE of the Act.
Aggrieved by the order of AO dated 26/04/2021 passed u/s 143(3) of the Act, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
With regard to the additions of Rs.1,97,94,502/- and Rs.1,99,000/-, the ld. CIT(A)/NFAC did not accept the submissions of the assessee for the following reasons & held that the nature & source of cash deposits are not explained-
i) The submission is not supported with any document. ii) No Books of Account furnished iii) Bills/Sale invoice of two wheelers not produced. iv) No details of persons who booked the motor Cycle & from whom the cash amount received. v) Bills/Voucher for service Charges receipts not produced. vi) No copy of agreement with the dealer furnished.
5.1 Further, with regard to the addition of Rs.5,98,81,920/-, the ld. CIT(A)/NFAC also did not accept the contention of the assessee for the following reasons & accordingly the addition of Rs.5,98,81,920/- as made by AO was confirmed- i) The submission is not supported with any document. ii) No Books of Account of Gas Agency furnished iii) Bills of Sales/Sale invoice in respect of Sales not produced. iv) No details of persons from whom the cash amount received. Accordingly, the appeal of the assessee was dismissed by the ld. CIT(A)/NFAC.
6. Aggrieved by the order of ld. CIT(A)/NFAC, the assessee has filed the present appeal before this Tribunal. The assessee has also filed the Paper Book comprising 133 pages containing therein the
Before us, the ld. A.R. submitted that the ld. CIT(A)/NFAC failed to consider the details provided in respect of the deposits made by the assessee. Further, the AR submitted that with regard to deposits of Rs.5,98,81,920/- in Vijaya Bank, it relates to a partnership firm namely M/s. Swamy Balaji Indane Gas Agency which is assessed separately under PAN ACSFS3733J, in which the assessee is a partner. Further, with regard to deposits of Rs.1,97,94,502/- and Rs.1,99,000/-, the AR of the assessee submitted that cash deposits of these two amounts are out of the sale proceeds of the proprietary business which are entered in the books of A/c. Lastly AR of the assessee requested to remit the matter back to the file of AO for giving one more opportunity to explain the issue on merits as the Order was passed by the AO only considering the partial reply of the assessee.
The ld. D.R. on the other hand relied on the orders of the lower authorities.
We have heard the rival submissions and perused the materials available on record. The assessee in the present case is a proprietor of M/s Swamy Motors as well as Partner of the Firm namely M/s Swamy Balaji Indane Gas Agency having PAN- ACSFS3733J. The books of Account of the assessee’s business were audited by a Chartered Accountant as per the provisions of section 44AB of the Act. During the course of the assessment proceedings, the assessee could file only the partial reply as observed by the AO & accordingly the AO passed an order after considering the partial reply & information available with the department.
ThotliRamakrishnappa Ananthkumar, Kolar District Page 6 of 7 9.1 On going through the Order of the AO passed u/s 143(3) of the Act, we take a note of the fact that the entire cash deposits in Vijaya Bank, Malur (now Bank of Baroda) in the following accounts was treated as unexplained cash credit u/s 68 of the Act-
Aggregate gross S.No. Details of Account Number Account amount credit to the Bank type account in cash (in Rs.) 1. Vijaya Bank 144200301000015 Current 1,97,94,502/- account 2. Vijaya Bank 144201011005078 Current 1,99,000/- account 3. Vijaya Bank 144200301000167 Current 5,98,81,920/- account Total 7,98,75,422/- 9.2 Further, on going through the order of the ld. CIT(A)/NFAC, we also take a note of the fact that the ld. CIT(A)/NFAC dismissed the appeal of the assessee due to the following reasons- i) The submission is not supported with any document. ii) No Books of Account furnished iii) Bills/Sale invoice not produced. iv) No details of persons from whom the cash amount received. v) Bills/Voucher for service Charges receipts not produced. vi) No copy of agreement with the dealer furnished 9.3 This being so, in the interest of justice and fair play and as requested by the AR of the assessee, we deem fit & proper to remit the entire issue in dispute to the file of AO for fresh consideration and to decide the same in accordance with law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to cooperate with the proceedings before the AO and file the relevant documents/ evidences/ submissions/ information as may be required by the AO ThotliRamakrishnappa Ananthkumar, Kolar District Page 7 of 7 along with the Audited books of A/c for proper adjudication of the case. We clarify that in case of further default the assessee shall not be entitled for any leniency. It is ordered accordingly.
In the result, appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 30th July, 2025