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Facts
The assessee, an individual, failed to file a return of income for AY 2017-18. The Assessing Officer (AO) initiated assessment proceedings based on information regarding substantial cash deposits in bank accounts, including during the demonetization period, leading to an addition of Rs. 40,80,193/- for unexplained sources. The assessee's first appeal before the CIT(A) was dismissed for non-prosecution.
Held
The Tribunal noted discrepancies between the deposits alleged by the AO and the actual bank statements, and that the CIT(A) dismissed the appeal without deciding on merits. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the matter back to the AO for fresh adjudication.
Key Issues
Whether the addition made by the AO on account of unexplained cash deposits in bank accounts is sustainable, and whether the assessee is entitled to TDS credit on salary income.
Sections Cited
142(1), 139, 144, 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Madhusudan Sawdia
Per Vijay Pal Rao, Vice President
This appeal filed by the assessee is directed against the order dated 26/12/2023 of the learned CIT (A)-NFAC Delhi, for the A.Y.2017-18.
The assessee has raised the following grounds of appeal: “1. The Order of the Learned Commissioner of Income Tax (Appeals) is against the law, weight of evidence and probabilities of the case.
2. The ld CIT(A) erred in calculation of the total cash deposits in each bank account. While the sum total of cash deposits in both the accounts put together is Rs.16,23,000/-, the ld CIT has wrongly added the entire cash deposits as unexplained investments without considering that there are cash withdrawals from the bank accounts.
3. The Assessing Officer erred in treating the c ash deposits and credits amounting to Rs. 40,80,193/- made in to the bank account during the financial year as unexplained income without giving further opportunity.
4. The assessing officer erred in arriving at the salary as Rs. 4,96,641/- and not allowed Deductions and TDS while arriving at total tax payable. 5. The assessing officer erred in arriving at the interest on SB Accounts. 6. The appellant carves leave to add to, amend or modify the above grounds of appeal either before or at the time of hearing of the appeal, if it is considered necessary”.
3. The assessee is an individual and did not file return of income for the year under consideration. On the basis of the information with the Department regarding deposits of substantial cash in the bank account, the Assessing Officer noticed that the assessee has deposited a cash of Rs.14,35,418/- in his bank account during the demonetization period and accordingly, issued notice u/s 142(1) on 9/3/2018 calling the assessee to furnish the return of income. However, the assessee failed to furnish any return of income either u/s 139 or in response to section 142(1) of the I.T. Act, 1961. The Assessing Officer, then proceeded to frame the assessment on the basis of “best judgment” u/s 144 of the Act
Page 2 of 7 and made an addition of Rs.40,80,193/- on account of deposits in the bank account from undisclosed sources.
The assessee challenged the order of the Assessing Officer before the learned CIT (A). However, there was no participation on behalf of the assessee before the learned CIT (A) and consequently, the appeal of the assessee was dismissed for non-prosecution.
Before the Tribunal, the learned AR of the assessee has submitted that the assessee was suffering from Parkinson Disorder and undergoing treatment of the same and therefore, could not participate in the assessement proceedings as well as before the learned CIT (A). He has further submitted that the Assessing Officer has made an addition of Rs.40,80,193/- by considering the deposits in Andhra Bank merged with the Union Bank of India of Rs.17,08,720/- and in the State Bank of India of Rs.23,71,469/- whereas there was no cash deposits in the Andhra Bank merged with the Union Bank of India. Therefore, the said addition of Rs.17,08,724/- is highly arbitrary and unjustified. He has referred to the bank account statement at page No.20 of the paper book and submitted that there was no deposit of cash during the year in this Bank Account. Similarly, in the SBI, the Assessing Officer has alleged deposits of Rs.23,71,469/- but the actual deposits in the SBI is only Rs.16,23,000/- as reflected in the bank account statement at Page 3 of 7 page Nos. 21 to 26 of the paper book. The learned AR has submitted that the additions were made by the Assessing Officer without considering the correct facts and therefore, the same is not sustainable. He has further submitted that though the Assessing Officer has considered the salary income of the assessee of Rs.4,96,641/-, however, the TDS credit was not given to the assessee. Thus, the learned AR has submitted that the assessee may be given one more opportunity to explain the facts and produce the relevant evidence to show the correct facts relevant for the assessment of income of the assessee.
On the other hand, the learned DR has submitted that the despite sufficient opportunities provided by the Assessing Officer as well as the learned CIT (A), the assessee failed to comply with any of the notices issued by the authorities below. She has relied upon the orders of the authorities below.
We have considered the rival submission as well as relevant material available on record. The Assessing Officer while making the addition on account of cash deposits in the Bank Account has given the details of the deposits in Para 7 as under:
Thus, the major addition was made by the Assessing Officer by considering the deposits of Rs.23,71,469/- in the State Bank of India and Rs.17,08,724/- in Andhra Bank merged with Union Bank of India. The learned AR of the assessee has invited our attention to the Bank account statement of Union Bank of India for the period from 1/4/2016 to 31/03/2017 to show that,
Page 5 of 7 there was no cash deposits in the said bank account, as alleged by the Assessing Officer. From the Bank Account statement placed at Page No.20 of the paper book, prima facie, it appears that, there was no cash deposits in the said bank account with Andhra Bank merged with Union Bank of India. Further, the learned AR has pointed out that, the total deposits in the SBI is only Rs.16,23,000/-, whereas the Assessing Officer has taken Rs.23,71,469/-. This fact is also matter of record, as reflected in the bank account of the assessee with the SBI and therefore, prima facie, it appears that the amounts which are added by the Assessing Officer, on account of unexplained cash deposits in the two bank accounts, are not matching with the actual deposits made in these two bank accounts. The assessee has also filed the medical reports to show that the assessee was suffering from Parkinson Disorder disease and was undergoing the treatment. Further, the assessee has also pleaded that the Assessing Officer has not given the credit of TDS of salary income whereas the addition on account of salary income is made by the Assessing Officer. Thus, in view of the facts and circumstances as discussed above, we are of the considered opinion that the matter requires a proper verification and examination to ascertain the correct facts about cash deposits in the bank accounts of the assessee. The learned CIT (A) has also not decided the issue raised by the assessee on merit, but dismissed the appeal of the assessee for non-prosecution. Accordingly, the impugned order of the learned CIT (A) is set aside and matter is remanded to the record of the Page 6 of 7 Assessing Officer for fresh adjudication after verification and examination of the relevant facts, to ascertain the correct amount of cash deposits in the Bank Accounts as well as to consider the claim of the assessee regarding the TDS credit of salary income. Needless to say, the assessee shall be given an appropriate opportunity of hearing before passing the fresh order.
In the result, appeal filed by the assessee is allowed for statistical purposes.