THE INCOME TAX OFFICER, WARD-8(1), PUNE, PUNE vs. SEEMA BHURARAM CHAUDHARY, PUNE

During the course of assessment proceedings the Assessing Officer noted that the total cash deposits made during the period from 01.04.2017 to 31.03.2018 as per the SFT information available in insights portal is amounting to Rs.109,94,15,371/-. On being asked by the Assessing Officer the assessee submitted his cash book for the period 01.04.2017 to 31.03.2018 furnishing only the month wise opening balances and closing balances. The Assessing Officer noted that as per the return of income the assessee is holding the following bank accounts:

However, during scrutiny proceedings, apart from the aforesaid bank accounts disclosed in the return of income, the assessee added two more accounts maintained with Axis Bank. The Assessing Officer further noted that as per the SFT information, apart from the above bank accounts disclosed by the assessee,

However, as per the Cash Book submitted by the assessee, the total cash deposits amount to Rs.89,89,17,527/-. He, therefore, asked the assessee to explain as to why the amount of Rs.22,17,22,044/- should not be added to the total income of the assessee. In absence of any proper explanation to his satisfaction, the 4 Assessing Officer made addition of Rs.22,17,22,044/- to the total income of the assessee u/s 68 of the Act and determined the total income at Rs.22,31,70,244/-.

Before the Ld. CIT(A) / NFAC the assessee filed detailed submissions and also filed certain additional evidences. The Ld. CIT(A) / NFAC forwarded those additional evidences to the file of the Assessing Officer calling for a remand report. However, despite number of reminders, the Assessing Officer failed to submit any remand report. Therefore, based on the arguments advanced by the assessee and in absence of any remand report from the Assessing Officer, the Ld. CIT(A) / NFAC deleted the addition by observing as under: “8. Upon perusal of the written submission, Cash Book, Bank Account statements and nature of business, it is evident that there were no such unexplained cash deposits noticed to invoke Sec 68 of the IT Act. Every cash deposited into the bank account of the appellant by the retailers were immediately transferred to the intermediate account of the Big Organizations. The claim of the appellant and the ground-wise submission clearly demonstrated the nature of the business.

In view of the above, the AO is directed to delete the addition made u/s 68 of the IT Act. Hence, the grounds taken by the appellant are allowed.”

Aggrieved with such order of the Ld. CIT(A) / NFAC, the Revenue is in appeal before the Tribunal by raising the following grounds: 1. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition made by the AO of Rs.22,17,22,044/- u/s 68 of the Act ignoring the fact that there was huge difference in the amount of cash deposit as per cash book and bank account of the assessee, which the assessee had failed to reconcile during the assessment proceedings. The Ld. CIT(A) has given relief to the assessee by merely holding that every cash deposited into the bank account of the assessee by the retailers were immediately transferred to the intermediate account of the Big Organizations, without actually verifying the nature and source of the transactions.

The appellant craves leave to add to, amend, alter any of the above grounds of appeal.

The Ld. DR strongly challenged the order of the Ld. CIT(A) / NFAC in deleting the addition of Rs.22,17,22,044/- made by the Assessing Officer. He submitted that before the Assessing Officer the assessee produced the cash book, according to which total cash deposits are Rs.89,89,17,527/- whereas the actual cash deposits in the bank accounts as per the information obtained by the Assessing Officer is Rs.112,06,39,571/- and the assessee failed to explain the nature and source of difference amount of Rs.22,17,22,044/-. Although the Ld. CIT(A) / NFAC called for a remand report from the Assessing Officer who failed to submit the same for the reasons best known to him, however, the Ld. CIT(A) / NFAC deleted the addition merely on the basis of written submissions filed by the assessee and the cash book and bank statements and nature of business. He has not thoroughly discussed as to the nature of source of the deposit of cash. Further, the Ld. CIT(A) / NFAC has also not given any reason as to why he is accepting the additional evidences filed before him. He accordingly submitted that the order of the Ld. CIT(A) / NFAC be reversed and that of the Assessing Officer be restored.

The Ld. Counsel for the assessee on the other hand strongly supported the order of the Ld. CIT(A) / NFAC. He submitted that due to the then prevailing Covid period the assessee could not produce certain details before the Assessing Officer which were filed before the Ld. CIT(A) / NFAC with an application under Rule 46A of IT Rules for accepting the additional evidences. The Ld. CIT(A) / NFAC forwarded all those details to the file of the Assessing Officer for his comments. However, despite five reminders by the Ld. CIT(A) / NFAC, the Assessing Officer did not send any remand report for which the Ld. CIT(A) / NFAC passed the order and deleted the addition on the basis of written submissions filed and the various other details filed. Further, the powers of the CIT(A) are coterminous with that of the powers of the Assessing Officer. Therefore, there is nothing wrong in accepting the evidences filed before him and appraisal of the facts properly. He submitted that since the order of the Ld. CIT(A)/ NFAC is in consonance with law the same should be upheld and the grounds raised by the Revenue be dismissed.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered various decisions cited before us. We find the Assessing Officer in the instant case made addition of 7 Rs.22,17,22,044/- being the difference between cash deposits as per the bank statement and the cash book submitted before the Assessing Officer. We find while doing so the Assessing Officer noted that the assessee had given initially five bank accounts in the return of income filed. Subsequently, during the assessment proceedings two more bank accounts were disclosed, then again one more bank account was disclosed and finally the Assessing Officer on the basis of various details furnished by the assessee noted that the assessee is maintaining total 9 bank accounts and the total deposits as per the said bank accounts comes to Rs.112,06,39,571/-. He further noted that the assessee failed to explain the nature and source of cash deposited of Rs.22,17,22,044/-. We find the assessee filed certain additional evidences before the Ld. CIT(A) / NFAC who called for a remand report from the Assessing Officer. However, the Assessing Officer for the reasons best known to him, failed to submit any remand report despite five reminders. It is also an admitted fact that the Ld. CIT(A) / NFAC in the order passed by him has not given any reason whatsoever for admitting the additional evidences which were not filed before the Assessing Officer during the course of assessment proceedings. Since during the course of assessment proceedings the assessee did not explain the nature and source of cash deposits of Rs.22,17,22,044/- which according to the assessee was prepared in a hurried manner and the difference could not be explained, therefore, the Ld. CIT(A) / NFAC in our opinion should have passed a detailed speaking order as to how this discrepancy occurred. We find the assessee in the written submissions filed before the Tribunal in the prayer has mentioned as under:

From the above it is noted that may be due to the then prevailing Covid circumstances the assessee had hurriedly prepared the cash book but how and when he rectified the cash book is not known. It is also not known as to whether the original cash book which was filed before the Assessing Officer or the recasted cash book rectifying the defects was produced before the Ld. CIT(A) / NFAC since nothing is coming out clearly in the order of the Ld. CIT(A) / NFAC. Since the order of the Ld. CIT(A) / NFAC is very cryptic one and does not address the issue in the manner in which it should have been, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the 9 issue to the file of the Assessing Officer with a direction to adjudicate the issue afresh. Needless to say, the Assessing Officer shall provide reasonable opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly. The grounds raised by the Revenue are accordingly allowed for statistical purposes.

In the result, the appeal filed by the Revenue is allowed for statistical purposes.

अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent

4. The concerned Pr.CIT, Pune DR, ITAT, „B‟ Bench, Pune 5. गार्ड फाईल / Guard file.