VARIS MAHENDRABHAI DOSHI,AHMEDABAD vs. THE ITO, WARD-4(2)(3), AHMEDABAD

Whether on facts and in circumstances of the case and in law, Ld. CIT(A) has erred in not accepting the cash deposit of Rs. 457,81,200/- as diversion of income and thus, not chargeable to tax under Income tax act? Asst.Year –2011-12 - 2–

Whether, on facts and in circumstances of the case and in law, Ld. Assessing officer has erred in issuing notice u/s. 148 of the act?

Whether, on facts and in circumstances of the case and in law, Ld. Assessing officer has erred in passing order u/s. 147 of the act?

The brief facts of the case are that the assessee, an individual, did not file his return of income for Assessment Year 2011–12. Based on information available in the Non-Filer Monitoring System (NMS) and AIR data on the ITD system, the Assessing Officer noticed that the assessee had made substantial cash deposits in his bank accounts during the financial year 2010–11. The AIR information showed that the assessee had made cash deposits amounting to ₹8,51,35,700/-. The assessee was asked to explain the source of such cash deposits along with documentary evidence. As there was no response, the Assessing Officer formed a belief that income chargeable to tax had escaped assessment due to non-filing of return. Accordingly, after recording reasons, the assessment was reopened under section 147 and notice under section 148 was issued on 26.03.2018. 4. In response to the notice under section 148, the assessee filed a return of income declaring total income of ₹1,50,000/-, which was subsequently revised on 16.05.2018 declaring income of ₹1,55,800/-. The reasons recorded for reopening were furnished to the assessee, and the assessee objected to the reopening on the ground that the actual cash deposits were less than ₹8,51,35,700/-. The objections were disposed of by the Assessing Officer vide order dated 06.09.2018. During the course of assessment proceedings, the Assessing Officer issued notices asking the Varis Mahendrabhai Doshi vs. ITO Asst.Year –2011-12 - 3–

Aggrieved, the assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals). Before the CIT(Appeals), the assessee contended that the Assessing Officer erred in treating the cash deposits as unexplained investment under section 69 of the Act and that the cash deposits were from transfer of inherited assets in terms of his father’s Will and therefore were not taxable as income in his hands. The assessee submitted that the Assessing Officer failed to appreciate the explanation regarding execution of the Will and transfer of amounts to the beneficiaries.

The CIT(Appeals) noted that during appellate proceedings, several notices under section 250 were issued to the assessee calling for supporting details; however, there was no compliance on behalf of the assessee. On merits, while adjudicating Ground No. 1, relating to the addition of ₹4,57,81,200/- as unexplained investment under section 69 of the Act, the CIT(Appeals) observed that the onus to prove the nature and source of cash deposits squarely lay on the assessee. Apart from producing a copy of the Will, the assessee had not furnished any corroborative evidence such as proof of ownership of jewellery by the father, quantitative details of valuables, locker statements, sale bills, details of purchasers, confirmation of beneficiaries, or evidence of payment of capital gains tax. The repeated non-appearance of the alleged beneficiaries despite summons further weakened the assessee’s claim. Relying on the settled legal position that mere explanation without supporting evidence is insufficient, the CIT(Appeals) held that the Assessing Officer was justified Asst.Year –2011-12 - 5–

While dealing with Ground No. 2, relating to the contention that the cash deposits represented diversion of income and were not chargeable to tax, the CIT(Appeals) held that in the absence of any credible evidence establishing the nature of the receipts and their linkage to a valid and executed Will, the argument of diversion of income could not be accepted. The CIT(Appeals) observed that the assessee had failed to demonstrate that the amounts deposited were never his income or that he merely acted as a conduit. In view of these findings, the CIT(Appeals) held that the assessee had failed to discharge the statutory onus cast upon him to explain the nature and source of the cash deposits. Finding no infirmity in the assessment order, the CIT(Appeals) upheld the addition of ₹4,57,81,200/- made under section 69 of the Act and dismissed all the grounds of appeal raised by the assessee. Asst.Year –2011-12 - 6–

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

Before us, the Counsel for the assessee submitted that if given another opportunity of hearing in the interest of justice and looking at the huge quantum of additions involved in the hands of the assessee, the assessee would produce relevant supporting material in support of his case. In response, the Ld. DR placed reliance on the observations made by the Assessing Officer and Ld. CIT(Appeals) in their respective orders.

We have heard the rival contentions and perused the material on record.

Considering the totality of facts and circumstances of the case, we note that the addition involved is substantial and the issue relates to examination of the nature and source of cash deposits, which essentially depends upon verification of factual material and supporting documentary evidence. We further take note of the submission of the learned counsel for the assessee that, if one more effective opportunity is granted, the assessee would place on record relevant material in support of his explanation. At the same time, we also note that the authorities below have proceeded to decide the issue primarily on account of non-furnishing of supporting evidence by the assessee. In the interest of justice and fair play, and without expressing any opinion on the merits of the addition, we are of the considered view that the issue requires fresh examination at the level of the Assessing Officer after affording one more effective opportunity to Varis Mahendrabhai Doshi vs. ITO Asst.Year –2011-12 - 7–

In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 16/12/2025 (DR. BRR KUMAR) JUDICIAL MEMBER Ahmedabad; Dated 16/12/2025