KANUBHAI RAHABHAI BHARVAD,VADODARA vs. THE DY.CIT, CIRCLE-2(1)(1), VADODARA

The brief facts of the case are that the assessee had filed his return of income for the A.Y. 2017-18 on 31.03.2018 declaring income of Rs.32,78,060/-. The case of the assessee was selected for complete scrutiny under CASS. In the course of assessment, no compliance was made by the assessee. From SFT data available in ITBA portal, AO had the information that huge cash deposits were made in the bank accounts of the assessee during demonetization period. During assessment, the AO had made enquiries u/s 133(6) of the Act from the bank and found that total deposit of Rs.11,07,13,730/- was appearing in the two bank accounts of the assessee. In the absence of any explanation on the part of the assessee, the Assessing Officer treated the entire deposits/credit entries in the bank accounts as unexplained money of the assessee under section 69A of the Act. The assessment was completed under Section 143(3) of the Act on 16.12.2019 at total income of Rs.11,39,91,790/-.

Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided vide the impugned order and the appeal of the assessee was dismissed.

The assessee is now in second appeal before us. The following grounds have been taken in this appeal: - “1 The Ld. CIT (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in law and in facts in passing the order without giving proper opportunity of being heard and thus, the order so passed is prayed to be set aside.

The Ld. CIT (Appeals), NFAC has erred in law and in facts in confirming the action of the Ld. A.O. in holding that the amount of Rs.11,07,13,730/- deposited in the bank account during the year under consideration represents unexplained credit uls. 69A of the I.T. Act r.w.s. 115BBE. The addition of Rs.11,07,13,730/-being in complete disregard of the fact and the law is prayed to be deleted.

Shri Hemant Suthar, Ld. AR of the assessee submitted that the Ld. CIT(A) has dismissed the appeal of the assessee without examining the merits of the addition. He explained that no compliance could be made by the assessee before the Ld. CIT(A) and for this reason the appeal was dismissed. He, therefore, requested that the assessee may be allowed another opportunity to explain the deposits in the bank account and the matter may be set aside to the file of the Assessing Officer. The ld. AR submitted that the entire deposits in the bank accounts were included in the sales of the assessee and, therefore, the AO was not correct in treating the total deposits as unexplained money and making the addition.

Per contra, Shri Rignesh Das, Ld. CIT-DR submitted that the assessee neither made compliance before the Assessing Officer nor before the ld. CIT(A). He further submitted that the ld. CIT(A) had allowed as many as nine opportunities to the assesses but no compliance was made by the assessee on any of these occasions. The ld. CIT-DR, therefore, strongly supported the orders of the lower authorities.

We have considered the rival submissions. The undisputed fact is that the assessee neither complied before the Assessing Officer nor before the Ld. CIT(A) and the source of the credits appearing in the bank account was not explained. We, therefore, deem it proper to impose a cost of Rs.10,000/- on the assessee which should be paid to the Prime Minister National Relief Fund within 15 days of the receipt of this order. We are also of the opinion that the Assessing Officer was not correct in treating the entire deposits/credit entries in the bank account as income of the assessee without taking into account the debit transactions. The ld. AR of the assessee has submitted that deposits in the bank accounts were included in the sales of the assessee but no evidence in this regard had been brought on record. The assessee had filed a copy of ITR for A.Y. 2017-18 as per which sales of Rs.15,70,96,009/- was disclosed therein. However, the books of the assessee were not audited in spite of this huge turnover. Be that as it may, the contention of the assessee that the deposits/credit entries in the bank account represented his turnover, requires to be verified. We, therefore, deem it proper to set aside the matter to the file of the Jurisdictional Assessing Officer with a direction to allow another opportunity to the assessee to explain the source of cash deposits and the credit entries appearing in the bank accounts. The assessee will be free to bring on record the evidences before the Assessing Officer, to explain the cash & credit entries as appearing in the bank accounts. The assessee is also directed to appear before the Assessing Officer and not to seek any adjournment. The AO will proceed in the matter after verifying that the cost as imposed on the assessee is paid by him. The grounds taken by the assessee are allowed for statistical purpose.

In the result, the appeal of the assessee is allowed for statistical purpose.