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Facts
The assessee declared a total income of Rs.99,48,570/-. The Assessing Officer (AO) made an addition of Rs.13,20,000/- on account of cash deposited during demonetization, treating it as unexplained income under section 69A. The CIT(A) upheld the addition.
Held
The Tribunal noted that the assessee had declared a closing cash balance of Rs.13,74,587/- in the preceding assessment year, which was also supported by the ITR-4. The Tribunal found that this documentation was not properly considered by the CIT(A).
Key Issues
Whether the addition made under Section 69A for cash deposits during demonetization is warranted when the assessee provided evidence of opening cash balance from the previous year, and whether the CIT(A) properly considered this evidence.
Sections Cited
69A, 143(2), 142(1), 144
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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
Assessment Year : 2017-18 Sachin Jagdishprasad Agarwal, Vs. ITO, Ward-6(5), Pune. O.No.2, Metropole, Near Inox Multiplex, Bund Garden Road, Pune- 411001. PAN : AAPPA6250R Appellant Respondent Assessee by : Shri Krishna Gujarathi Revenue by : Shri Arvind Desai Date of hearing : 15.01.2025 Date of pronouncement : 08.04.2025 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 27.05.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2017-18.
The appellant has raised the following grounds of appeal :- “1) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in confirming the addition made by AO to the tune of Rs.13,20,000 made under section 69A on account of cash deposited during the demonetization period in his bank account out of the opening cash balance available with him which has been arbitrarily alleged to be unexplained. The appellant hereby prays that the disallowance of Rs. 13,20,000/- may please be deleted.
2) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in making addition by overlooking the return of income filed by the appellant for earlier years wherein there was opening cash balance of Rs.13,74,587 which has been duly disclosed in income tax return for AY 16-17. The appellant hereby prays that the disallowance of Rs. 13,20,000/- may please be deleted. 3) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) ought to have deleted the whole of the addition which was arbitrarily made by the assessing officer as the appellant has duly furnished complete and verifiable explanation regarding the cash in hand available with him. 4) The appellant hereby reserves the right to add, alter, amend or delete any ground/s of appeal.”
Facts of the case, in brief, are that the assessee is an individual deriving income being partner in various firms and has furnished return of income declaring total income at Rs.99,48,570/-. The case was selected for scrutiny and notices u/s 143(2) and 142(1) respectively were issued to the assessee. The Assessing Officer found that the assessee has deposited cash amounting to Rs.13,20,000/- in his bank accounts during the demonetization period. Since the assessee did not comply to any of the notices, the Assessing Officer completed the assessment u/s 144 of the Act by determining the total income at Rs.1,12,68,570/- as against the income returned by the assessee at Rs.99,48,570/-. The above assessed income includes addition u/s 69A of Rs.13,20,000/- cash deposited during demonetisation.
4. After considering the reply of the assessee, Ld. CIT(A)/NFAC dismissed the appeal by observing as under :- “6.2 I have gone through the facts of the case, the assessment order and the submissions filed by the appellant. During the course of appellate proceedings, the appellant submitted that he had closing balance of cash as on 31.03.2016 at Rs. 13,74,587/- which was shown in ITR-4 filed for the Asst. Year 2016-17 filed on 30.09.2016. And the cash deposit of Rs.13,20,000/- was made out of previous withdrawals. But it is noticed that the appellant had not produced any documentary evidence to show that the cash deposits was from previous withdrawals. The onus lies on the appellant to substantiate his claim that the cash deposits were from explainable sources. In the absence of satisfactory explanation and sufficient documentary evidence, the decision of the Assessing Officer in making addition of the cash deposits of Rs. 13,20,000/- as unexplained money of the appellant u/s 69A of the Act is justified and no interference is called for.”
It is this order against which the assessee is in appeal before this Tribunal.
Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A)/NFAC is unjustified. Ld. AR further submitted that the assessee is a regular income tax assessee since long and filing his return of income every year. The assessee has also furnished return of income for the assessment year 2016-17 and in this return of income the closing cash balance of Rs.13,74,587/- was declared by him. In subsequent assessment year i.e. the period under consideration i.e. assessment year 2017- 18, the assessee utilized this amount which was available with him as closing cash in hand as on 31.03.2016 and as an opening 01.04.2016. Ld. AR submitted before the Bench that the documents in support of above contentions was furnished before Ld. CIT(A)/NFAC but Ld. CIT(A)/NFAC has ignored these documents and proceeded to dismiss the appeal of the assessee. Accordingly, it was prayed by Ld. Counsel of the assessee that the addition made u/s 69A regarding unexplained money of Rs.13,20,000/- being cash deposited during the demonetization period may kindly be deleted, since sufficient cash was available with the assessee.
Ld. DR appearing from the side of the Revenue relied on the orders passed by the subordinate authorities and requested to confirm the same.
We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book. In this regard, we find that admittedly the assessee had shown opening cash in hand of Rs.13,14,587/- as on 01.04.2016, it was also the contention of Ld. Counsel of the assessee that apart from such sufficient opening cash balances, other cash receipt was also there and accordingly it was the contention that sufficient cash balance was available with the assessee, which was utilized to deposit cash of Rs.13,20,000/- during the demonetization period. It was also Ld. Counsel of the assessee that the copy of income tax return of immediately prior assessment year i.e. for assessment year 2016-17 was produced before Ld. CIT(A)/NFAC wherein closing cash balance of Rs.13,74,587/- was specifically mentioned in the ITR-4 filed by the assessee but the same was not considered by Ld. CIT(A)/NFAC, which should have been considered by Ld. CIT(A)/NFAC, but he failed to do so which resulted in dismissal of appeal. We find force in the arguments of Ld. Counsel of the assessee that since the assessee could not appear before Assessing Officer, no supporting documents could be filed before the Assessing Officer and since Ld. CIT(A)/NFAC has not considered the copy of income return i.e. ITR-4 where specific entry was shown regarding availability of closing balance of cash in hand of Rs.13,74,587/-, the addition was not warranted. Accordingly considering the totality of the facts of the case & in the interest of justice we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and remand the matter back to the file of the Assessing Officer to pass assessment order afresh as per fact & law on the limited issue of cash deposited during demonetisation after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to