UDHAVRAO RAGHUNATH KHARATE,AURANGABAD vs. ITO WARD-1(1), AURANGABAD, AURANGABAD
आयकर अपीलीय अधिकरण ”एस एम सी” न्यायपीठ पुणेमें।
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCHES “SMC” :: PUNE
BEFORE DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER
AND SHRI VINAY BHAMORE, JUDICIAL MEMBER
आयकर अपऩल सं. / ITA No.1470/PUN/2025
निर्धारण वषा / Assessment Year: 2011-12
Udhavrao Raghunath Kharate,
220/1, Raghunandini Niwas,
Near BSNL Tower,
At Post Maniknagar,
Teh. Sillod District,
Aurangabad – 431135. V s
The Income Tax Officer,
Ward-1(1), Aurangabad.
PAN: APUPK3432R
Appellant/ Assessee
Respondent / Revenue
Assessee by Shri Ramesh N. Thete –AR(Virtual)
Revenue by Shri Ajay D. Kulkarni – Addl.CIT(DR)
Date of hearing
06/08/2025
Date of pronouncement 08/08/2025
आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the assessee directed against the order of ld.Addl./Joint Commissioner of Income Tax(A)-1,
Gurugram passed under section 250 of the Income Tax Act, 1961
dated 24.04.2025 for the A.Y.2011-12 emanating from the Assessment Order under section 143(3) r.w.s 147 of the Income Tax
Act, 1961, dated 05.12.2018. ITA No.1470/PUN/2025 [A]
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Submission of ld.AR :
The ld.AR for the Assessee filed a paper book. Ld.AR submitted that sufficient opportunity has not been given by the Assessing Officer. Relevant part of the written submission filed by the assessee reproduced here as under : “B. Reopening Based Solely on Bank Deposits - Invalid Reason to Believe:
The AO initiated reassessment merely on the basis of cash deposits in the appellant's bank account.
The appellant is a wholesale trader in Bagasse, and this fact was within the knowledge of the AO even at the time of reopening.
Mere deposit of cash, without any further tangible material indicating escapement of income, does not constitute "reason to believe" within the meaning of Section 147. Thus, the reopening is bad in law and deserves to be quashed.
C. Business Nature of Deposits Evident from Records:
The cash deposits were proceeds from business sales and were declared under presumptive scheme u/s 44AD.
The AO himself observed that the withdrawals were "self" in nature, which is consistent with business operations.
The bank statement reveals deposits from multiple distant locations such as Pathari,
Hingoli, Pachora, RL Colony, Kannad, Bhadgaon, Pangaon, Kingaon, Jalgaon,
Pishior, and Jilha Peth Jalgaon.
It is impractical for the appellant to travel to deposit cash from so many locations, which clearly indicates deposits were made by purchasers of Bagasse.
Further, payments for purchases were made from the same account to material suppliers, indicating the business linkage of deposits. The following payments are made to the parties against the purchases.
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Sr.No.
Date
Party cqh no Amount
1
01-11-10
DharashivSakhar K
5767526
₹25,005.00
2
12-11-10
DharashivSakhar K
576529
₹25,005.00
3
15-11-10
Vaidyanath Sahakar
576531
₹50,005.00
4
16-11-10
DharashivSakhar K
576532
₹1,0005.00
5
19-11-10
DharashivSakhar K
576534
₹25,005.00
6
24-11-10
DharashivSakhar K
576536
₹20,005.00
7
24-11-10
DharashivSakhar K
576535
₹25,205.00
8
29-11-10
DharashivSakhar K
576538
₹25,005.00
9
01-12-10
DharashivSakhar K
576539
₹20,005.00
10
10-12-10
DharashivSakhar K
576544
₹60,005.00
11
05-01-11
Vishwa Krushi Urja
576553
₹40,005.00
12
06-01-11
DharashivSakhar K
576554
₹20,005.00
13
21-01-11
Vishwa Krushi Urja
576558
₹30,005.00
14
03-02-11
Vishwa Krushi Urja
576564
₹30,005.00
D. Reconciliation Ignored and Peak Credit Not Considered:
The CIT(A) erred in rejecting the reconciliation statement and explanation filed by the appellant without proper consideration.
The concept of peak credit - i.e., the maximum unexplained balance at any point was not applied by the AO, which is a standard principle when dealing with multiple cash deposits and withdrawals.
The peak cash balance was ₹ 3,12,100, which should have been considered while computing any possible addition, even if the explanation was not fully accepted.
Prayer:
In light of the above submissions, it is most respectfully prayed that:
The addition of ₹12,05,440 made u/s 68 be deleted in full as the same is based on bank statements and not books of account;
The reassessment u/s 147 itself be held invalid and void ab initio for want of valid "reason to believe";
The additional ground raised on legal issue may be kindly admitted and allowed;
Any other relief which this Hon'ble Tribunal deems fit in the facts and circumstances may be granted.
1 We specifically asked ld.AR to provide copy of the reasons recorded by the Assessing Officer for reopening of the Assessment.
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In response, Ld.AR submitted that copies of the reasons recorded have not been provided by the Assessing Officer.
Submission of ld.DR :
Ld.DR for the Revenue relied on the order of Assessing Officer and ld.CIT(A).
1 We specifically asked ld.DR for the Revenue to explain why reasons recorded were not provided to the Assessee! Ld.DR could not answer our question.
Findings &Analysis :
We have heard both the parties and perused the records. In this case, the Assessee had filed Return of Income for A.Y.2011-12 on 20.06.2012. The copy of the acknowledgement for filing Return of Income has been filed by the ld.AR for the Assessee in the paper book. Ld.AR had submitted that Assessee had shown business income and offered Profit for Taxation u/s.44AD of the Act.
1 It is observed that the Assessing Officer issued notice u/s.148 on 20.03.2018. The assessee filed Return of Income in response to notice under section 148 on 14.06.2018 declaring total income of Rs.4,39,780/-. The Assessing Officer issued notice u/s.143(2) and ITA No.1470/PUN/2025 [A]
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notice u/s.142(1) of the Act. The Authorised Representative of the Assessee appeared during assessment proceedings and filed the details.
We have perused the assessment order and nowhere it is mentioned that copy of the reasons recorded for reopening were provided to the Assessee. We asked ld.AR regarding copy of the reasons recorded and he submitted that reasons recorded by the Assessing Officer have not been provided to the Assessee. However, Ld.AR could not show us the documentary evidence that the Assessee had made a request to the Assessing Officer to provide copy of reasons.
1 Ld.DR for the Revenue also could not confirm whether the reasons for reopening were provided or not! We have already reproduced that assessment order is silent about this. In this case, “Reasons recorded for reopening” becomes important, because the assessee has challenged the validity of reasons.
2 The Hon’ble Supreme Court in the case of G.K.N. Driveshaft Vs. ITO 259 ITR 19 has categorically stated that once assessee files Return of Income in response to notice u/s.148 of the Act, the ITA No.1470/PUN/2025 [A]
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reasons recorded shall be provided to the assessee and Assessee will be at liberty to file objections, if any.
In this case, the above referred direction of Hon’ble Supreme Court has not been followed by the Assessing Officer. However, since this is the procedural error, we set-aside the assessment order to the Assessing Officer for denovo adjudication.
1 We find support from the decision of Hon'ble Bombay High Court in the case of Rahul Suri vs ACIT, Writ Petition No.2016 of 2022 for A.Y.2018-19,Writ Petition No.2196 of 2022 for A.Y.2015- 16, Writ Petition No.2276 of 2022 for A.Y.2014-15, Writ Petition No.2822 of 2022 for A.Y.2013-14, wherein vide Order dated 14/11/2022 the Hon'ble Bombay High Court held as under: Quote, " In the response fled by the revenue, it is admittedthat the reasons sought for by the Petitioner were not furnisheddespite having fled the return in response to the notice underSection 148 of the Act and, therefore, under those circumstances, itis stated that the Order of assessment dated 3 March 2022 be setaside. Be that as it may, in view of the specific averments, whichremained un-controverted and rather admitted by theRespondents, the assessment Order 3 March 2022 is set aside and the matter remanded to juri ictional assessing officer for passing Orders afresh in accordance with law." Unquote.
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In this case in the Assessment Order at Page No.3, the Assessing Officer has referred to statement recorded u/s.131 dated 16.11.2018 of the Assessee. However, Assessing Officer has not reproduced the contents of the statements. Assessing Officer has merely stated as under: "In this regard a statement on oath u/s 131 of the LT Act was recorded on 16/11/2018. The assessee could not explain the cash deposits in his saving bank account."
1 Thus, Assessing Officer has not reproduced the contents of the statement. We specifically asked ld.AR and ld.DR to show us the statement, but both of them failed to do so.
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The Assessing Officer shall provide copy of reasons recorded for reopening along with copy of approval granted to the Assessee.
The Assessee shall be at liberty to raise objections if any. Assessing
Officer shall dispose of the objections raised by Assessee, if any.
Assessing Officer shall provide opportunity of hearing to the assessee. The Assessee shall file necessary details before the Assessing Officer.
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9. In the result, appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open Court on 08 Aug, 2025. VINAY BHAMORE
Dr.DIPAK P. RIPOTE
JUDICIAL MEMBER
ACCOUNTANT MEMBER
पपणे / Pune; ददिधंक / Dated : 08 Aug, 2025/ SGR
आदेशकीप्रनिनलनपअग्रेनषि / Copy of the Order forwarded to :
1. अपऩलधर्थी / The Appellant.
2. प्रत्यर्थी / The Respondent.
3. The CIT(A), concerned.
4. The Pr. CIT, concerned.
5. नवभधगऩयप्रनिनिनर्, आयकरअपऩलऩयअनर्करण, “एस एम सऩ” बेंच, पपणे
/ DR, ITAT, “SMC” Bench, Pune.
गधर्ाफ़धइल / Guard File. आदेशधिपसधर / BY ORDER,
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Senior Private Secretary
आयकरअपऩलऩयअनर्करण, पपणे/ITAT, Pune.