MAHENDRA KUMAR SARAOGI,KOLKATA vs. ITO,WARD-9(3), KOLKATA
What did the Tribunal hold?
The ITAT found that the Ld. CIT(A) had not adequately considered the assessee's submissions, particularly the claim that some cash deposits belonged to his wife and that other amounts had genuine explanations. Therefore, the ITAT remanded the matter back to the Ld. CIT(A) for fresh adjudication, allowing the assessee to file additional documents under Rule 46A for consideration and a remand report.
What were the facts?
The Assessing Officer (AO) made additions totaling Rs. 1.55 crore for unexplained cash deposits in bank accounts and Rs. 1.92 lakhs for unexplained investment in shares, under Section 143(3) of the Income Tax Act. The Ld. CIT(A) confirmed the addition related to cash deposits, noting the assessee's failure to provide satisfactory explanations during assessment and appellate proceedings. The assessee subsequently appealed to the ITAT.
What were the issues?
Whether the Ld. CIT(A) erred in confirming additions for unexplained cash deposits without proper consideration of the assessee's explanations, including the source of funds belonging to his wife, necessitating a remand for fresh adjudication and consideration of additional evidence under Rule 46A.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH KOLKATA
Appearances by: Assessee represented by : Sh. Rip Das, FCA Department represented by : Sh. Chandan Das, Addl. CIT, Sr. DR Date of concluding the hearing : 16.01.2025 Date of pronouncing the order : 04.02.2025 O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
The present appeal arises from the order of Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereafter “the Ld. CIT(A)], passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”).
1.1 In this case, the Ld. AO, vide order dated 13.12.2016, passed u/s 143(3) of the Act made the following additions:
(a) Alleged unexplained cash deposit in two bank accounts for Rs. 60,31,100/- and Rs. 94,77,000/-.
(b) Unexplained investment of Rs. 1,92,375/- pertaining to purchase of shares of Power Grid Corporation of India.
Mahendra Kumar Saraogi Even though, the Ld. AO has passed an order u/s 143(3) of the Act, but it is recorded against both of the impugned additions that the assessee did not file any response to justify the impugned amounts. Thus, admittedly, the Ld. AO’s order was passed without the benefit of any worthwhile response from the assessee.
1.1 Aggrieved with this action of Ld. AO, the assessee approached the CIT(A) with a grievance regarding the additions made on account of cash deposit in the bank. Admittedly, the ground regarding unexplained investment in the shares Power Grid Corporation have not been challenged before the First Appellate Authority. The Ld. CIT(A) has recorded the following findings against the assessee.
7.1.2 As can be seen from the above, the appellant did not furnish any information before the AO. So, the addition was accordingly made. During the appellate proceedings, the appellant gave a brief and unclear submission on this issue. He also enclosed un-audited Balance Sheet with his replies. According to him, the cash credits are due to his transactions in share trading which is done alongwith his wife. All other documents submitted by him, pertaining to share trading only. The appellant also furnished bank statement in his name and in the name of his wife pertaining to bank account no XXX001 and XXX233 The entries of cash deposits in these bank accounts are in bulk and do not reflect related to a trading account The cash deposit is in bulk and the withdrawals are made in cheques only it appears that the appellant is depositing unaccounted cash in his bank account (also bank account of wife and the cheques were issued for unknown purposes and some of the recipients has also been shown in the list of sundry creditors, but relationship is not established. The balance sheet submitted by him is unreliable and unaudited as no sales turn-over has been shown in his profit and loss account by going through the documents submitted by the appellant, I noticed that cash deposit in such accounts was not explained by him I hold that the addition of un-accounted cash made by AO is justifiable. The ground of the appellant is dismissed.
2. Further, aggrieved with this action, the assessee has approached the ITAT with the following grounds:
“1. For that the assessee has duly disclosed by default through depositing of all cash into the Bank account 95412010019001 and Bank Account number 9541220021233. Therefore, the addition of cash deposits as unexplained income is not sustainable as all transactions are duly recorded in the said bank accounts.
For that the assessee had sold some shares of unlisted companies amounting to Rs. 5415000.00 at cost and that is why the said transactions did not reflect in the statement of income filed by the assessee. If there was any profit or loss on such transactions, the same must have been reflected in the statement of income as loss or profit. But in the present case, there was no loss or no profit in the said transactions. The entire sales proceeds were directly deposited into bank A/cs.
Mahendra Kumar Saraogi 3. For that the said unlisted investments were duly reflected on the asset side of the assesse's balance sheet of the immediately preceding previous year (2012-13).
4. For that the assessee had also purchased some unlisted shares during the current financial year and those were sold in the same year, the statement of which is annexed hereto for kind consideration.
For that the account number 95412200021233 with the Syndicate Bank is a Joint account with the wife of the assessee, Smt. Savita Jain. In the said joint account she had deposited some cash amounting to Rs. 9477000.00 from her own sources like sales of securities, from opening cash balance, from Salary income and withdrawals from her other Account Number 95411240000076. Those sources of deposit should be treated separately. A reconciliation statement has been attached herewith from which her (Smt. Savita Jain) personal sources can be detected.
For that the assessee had deposited Rs. 7178200.00 in the said 2 Bank accounts from cash withdrawals from his own bank account as well as the joint bank account with his wife Please vide the cash reconciliation statements and separate bank statements for explanations 7. For that the assessee craves to put forth any additional grounds or submissions if required.” 2.1 Before us, the Ld. AR stated that one of the bank accounts is in the join name of assessee and his wife, but the addition has been made in the hands of the assessee only. The Ld. AR read out extensively from the statement of facts to argue that the source of such cash deposit was explained and some of that deposit has been made by the wife of the assessee (Smt. Savita Jain). He assailed the action of Ld. CIT(A) and stated that submissions made before him have not been duly considered.
2.2 The Ld. DR read out para 7.1.2 of the Ld. CIT(A) order (supra) and stated that the assessee had failed to make out any worthwhile case regarding the impugned deposits in cash.
We have carefully considered the rival submissions and also gone through the documents before us. It is seen that the Ld. CIT(A) has not really considered that some of the impugned amounts could belong to the wife of the assessee and that other amounts could have a genuine explanation. Accordingly, it is felt that this matter deserves to be remanded back to the file of Ld. CIT(A) for fresh adjudication. It would be desirable for the assessee to file documents, not filed before the Ld. AO, through a
In the result, the appeal filed by the assessee is allowed for statistical purposes.
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