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Facts
The assessee challenged reassessment orders for Assessment Years 2014-15 and 2015-16, where additions were made under Section 68 of the Income Tax Act for cash deposits in a bank account. The assessee had declared the relevant income under the Income Disclosure Scheme (IDS), 2016. There was a delay in filing the appeals, which the Tribunal addressed.
Held
The Tribunal condoned the delay in filing the appeals. It held that the additions for undisclosed transactions should be limited to the peak balance in the account for each year. The matter was remanded to the Assessing Officer to recalculate the peak balance, provide credit for income declared under IDS 2016, and allow telescoping benefit for A.Y. 2015-16.
Key Issues
Validity of reassessment proceedings under Section 147/148 despite IDS declaration and sustainability of addition under Section 68 for cash deposits, considering the claim for peak credit and telescoping benefit.
Sections Cited
250, 147, 144B, 148, 68, 153C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE
Before: DR. MANISH BORAD & SHRI VINAY BHAMORE
I.T.A.Nos.1415 & 1416/PUN/2024 (Assessment Year 2014-15 & 2015-16) Vinodkumar Dhanulalji ITO, Ward-1, Jalna Sawji, Plot No. F-5 II Phase Addl MIDC Area, Jalna, Dist. Jalna-431203, Maharashtra vs. PAN : BGKPS 1165 F (Appellant) (Respondent) For Assessee : Pratikh Jha, Advocate For Revenue : Shri Vinod Pawar, Addl.CIT (virtual) Date of Hearing : 11.12.2025 Date of Pronouncement : 16.12.2025 ORDER PER : MANISH BORAD, AM
These appeals at the instance of the assessee are directed against the separate orders of National Faceless Appeal Centre (NFAC)/Commissioner of Income Tax (Appeals), Delhi [“CIT(A)”] evenly dated 17/11/2023 passed under section 250 of the Income Tax Act, 1961 (“Act”) which are arising out of separate orders u/s. 147 r.w.s. 144B of the Act, dated 29/03/2022 & 28/03/2022 for the Assessment Years (AY) 2014-15 & 2015-16 respectively.
2 ITA.Nos.1415 & 1416/PUN./2024 (Vinodkumar Dhanulalji Sawji) 2. There is a delay of 163 and 164 days in filing of & 1416/PUN/2024. Applications for condonation of delay along with affidavits are placed on record. The main reason for delay is on account of illness of the assessee, who has been diagnosed with various types of ailments and was under medical treatment at Manik Hospital & Research Centre, Aurangabad. Considering the contentions made in the application for condonation of delay and also taking into consideration the judgments of Hon'ble Apex Court in the cases of of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. [(1987) 2 SCC 107] and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382), we hereby condone the delay of 163 & 164 days in filing of the instant appeals in & 1416/PUN/2024 respectively before this Tribunal and admit the appeals for adjudication.
Since the issues raised in both these appeals are common, first we take up for A.Y. 2014-15 as a lead case. The modified grounds of appeal raised by the assessee vide letter dated 13/06/2025 read as under:-
“1. The Ld CIT(A), NFAC, Delhi, erred in upholding the initiation of reassessment proceedings under section 148 r.w.s. 147 without appreciating that there was no escapement of income in the AY 2014-15 as the assessee had declared the transactions under consideration under the Income Disclosure Scheme (IDS), 2016 and the reassessment proceedings were bad in law.
3 ITA.Nos.1415 & 1416/PUN./2024 (Vinodkumar Dhanulalji Sawji) 2. The Ld CIT(A), NFAC, Delhi, erred in not appreciating that the reassessment order passed by the Ld AO pursuant to the unlawful reassessment proceedings initiated under section 147/148 were bad in law liable to be set aside.
3. The Ld CIT(A), NFAC, Delhi, erred in sustaining the addition of Rs. 1,48,59,085/- made under section 68 of the IT Act without appreciating that the amount represented trading transactions on which net profit was already declared by the assessee under the Income Disclosure Scheme (IDS), 2016.
Without prejudice to the Ground Nos. 1, 2 and 3, the Ld CIT(A), NFAC, Delhi, erred in not appreciating that the proceedings were initiated based on incriminating materials found during search proceedings on 25.05.2017 in the premises of Shri Renukamata Multistate Urban Co-operative Credit Society Ltd. and proceeding for assessment were to be initiated under section 153C of the 1 T Act which override the provisions of section 147 and 148, rendering the reassessment proceedings under section 147/148 bad in law liable to be set aside 5. The above grounds of appeal
are without prejudice to one another.
6. The appellant craves leave to furnish Additional Evidence which may be relevant to the above Grounds of Appeal in course of the appeal proceedings.”
4. The assessee also raised additional ground which reads as under:-
“The Ld CIT(A), NFAC, Delhi, erred in sustaining the addition of Rs.1,48,59,085/- made under section 68 in respect of cash amount deposited in the bank account of the assessee without appreciating that the bank statement/ bank passbook is not books maintained by the assessee within the meaning of section 68 of the IT Act.”
At the outset, learned counsel for the assessee requested for not pressing the legal issues raised in the modified grounds of appeal filed in both the appeals for the years under consideration. Accordingly, ground Nos. 1, 2 & 4 are dismissed as not pressed.
4 ITA.Nos.1415 & 1416/PUN./2024 (Vinodkumar Dhanulalji Sawji) 6. So far as merits of the case are concerned, learned counsel for the assessee submitted that the impugned additions have been made on account of cash deposits in the bank account of the assessee held with Shri Renukamata Multistate Urban Co-operative Credit Society Ltd. and the additions have been made u/s. 68 of the Act for A.Y. 2014-15 at ₹ 1,48,59,085/- and for A.Y. 2015-16 at ₹ 2,28,33,930/-. He submitted that assessee has also filed application under the Income Disclosure Scheme, 2016 (IDS, 2016) for the undisclosed income for A.Y. 2014-15 & 2015-16 and also paid taxes. He further submitted that even though the assessee has carried out the alleged transactions of cash inflow and outflow in the course of carrying business, but in absence of proper details, the addition may be sustained for the peak credit for A.Y. 2014-15 and similarly for calculating the peak credit for A.Y. 2015-16, telescoping benefit of the peak credit calculated for A.Y. 2014-15 may please be allowed. He also submitted that out of the peak balance calculated for impugned assessment years relief may please be granted for the income declared under IDS, 2016.
On the other hand, ld. Ld. Departmental Representative (DR) supported the order of Ld. CIT(A).
We have heard rival contentions and perused the records placed before us. We observe that assessee is an individual and regular returns of income for A.Ys. 2014-15 & 2015-16 5 ITA.Nos.1415 & 1416/PUN./2024 (Vinodkumar Dhanulalji Sawji) have been filed on 19/06/2014 & 17/11/2015 disclosing the total income at ₹ 2,55,030/- and ₹ 2,99,790/- respectively. Based on the information about the credits/cash deposits in the bank account of the assessee held with Shri Renukamata Multistate Urban Co-operative Credit Society Ltd., the assessee’s case has been selected for re-assessment proceedings and valid notices have been served and assessment orders u/s. 147 r.w.s. 144B of the Act dated 29/03/2022 and 28/03/2022 have been framed for A.Ys. 2014-15 & 2015-16 after making addition u/s. 68 of the Act at ₹ 1 48,59,085/- and ₹ 2,28,33,930/- and assessing the income at ₹ 1,51,14,115/- and ₹ 2,31,33,720/- respectively. We further observe that the assessee has opted for IDS, 2016 and has offered income of ₹ 5,68,125/- and ₹ 3,92,110/- for A.Ys. 2014-15 & 2015-16 respectively and has paid due taxes and penalty thereon. This fact is verifiable from Form No.2 issued by the Income Tax Department placed in paper book at page Nos. 64-66 & 70-72 for the impugned assessment years respectively.
In the course of hearing, learned counsel for the assessee took us through ledger account of Shri Renukamata Multistate Urban Co-operative Credit Society Ltd. and perusal of the same indicates that there are regular deposits and cash withdrawals entries in this ledger account. Assessee has claimed to have carried out these transactions in the course of 6 ITA.Nos.1415 & 1416/PUN./2024 (Vinodkumar Dhanulalji Sawji) business of purchase/sale of scraps. We also find when there are regular inflow and outflow of funds and the transactions are of deposits and withdrawals of cash, then in such circumstances, it has been consistently held that the addition can be made for the peak balance of such account for the year.
We, therefore, under the given facts and circumstances of the case, hold that the income of the assessee from undisclosed transactions carried out with Shri Renukamata Multistate Urban Co-operative Credit Society Ltd. for A.Y. 2014-15 should be the peak balance in such account. Matter is restored to the file of Ld.JAO to calculate the peak balance for the year in accordance with law and also give the credit for amount of income declared by the assessee under IDS, 2016 and tax the remaining amount. Needless to mention that Ld.JAO shall grant fair opportunity of hearing to the assessee before framing assessment and assessee shall also not to take unnecessary adjournments unless otherwise required for reasonable cause. Grounds of appeal raised by the assessee are partly allowed for statistical purposes.
11. So far as A.Y. 2015-16 is concerned, similar exercise of calculating peak credit balance is to be carried out by the Ld.JAO, however assessee deserves telescoping benefit of the peak credit addition made for A.Y. 2014-15 and also deserves the benefit under IDS, 2016 declared for A.Y. 2015-16.
7 ITA.Nos.1415 & 1416/PUN./2024 (Vinodkumar Dhanulalji Sawji) Ld.JAO is directed to carry out the exercise. Needless to mention that Ld.JAO shall grant fair opportunity of hearing to the assessee before framing assessment and assessee shall also not to take unnecessary adjournments unless otherwise required for reasonable cause. Grounds of appeal on merits raised by the assessee are partly allowed for statistical purposes.
In the result, appeals of the Assessee are partly allowed for statistical purposes.
Order pronounced in the open Court on 16.12.2025.