V MURUGAN,VILLUPURAM vs. ITO, WARD-1, VILLUPURAM

Aforesaid appeal by assessee for Assessment Year [AY] 2010-11 arises out of the order of learned Commissioner of Income Tax (Appeals), Puducherry, [CIT(A)] dated 11/12/2018 in the matter of assessment framed by Ld. Assessing Officer [AO], u/s.143(3) r.w.s 147 of the Act on 24/03/2015. The ground read as under: - 1. The order of the Commissioner of Income Tax (Appeals), Puducherry dated 11.12.2018 in I.T.A.No.36/CIT(A)-PDY/2015-16 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case.

The CIT (Appeals) erred in confirming the assessment of cash deposits while enhancing the addition to Rs.26,65,410/- resulting in the total addition of Rs.28,15,140/- on the application of section 69 of the Act in the computation of taxable total income without assigning proper reasons and justification.

The CIT (Appeals) failed to appreciate that the explanation offered for the cash deposits was not properly understood and ought to have appreciated that the enhancement of the assessable income was wholly unjustified while vitiating the said action in view of the failure in adhering to the process statutorily envisaged in relation thereto. 4. The CIT (Appeals) failed to appreciate that the bank statements would clearly indicate the wrong direction in making the assessment of such income including the enhanced income on the presumption of lack of source/explanation for source and ought to have appreciated that the explanation offered before him as well as in response to the remand report obtained would fortify the plea for deletion of the entire addition. 5. The CIT (Appeals) failed to appreciate that the order of re-assessment under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 6. The CIT(Appeals) failed appreciate that there was no proper opportunity given before passing the impugned order and ought to have appreciated that any order passed in violation of the principles of natural justice should be reckoned as nullity in law. As evident, the assessee is aggrieved by confirmation of certain addition u/s 69 for Rs.26.65 Lacs. 2. The Ld. AR assailed the impugned order, inter-alia, by submitting that enhancement was made by Ld. CIT(A) without issuing any notice to the assessee and therefore, the additions are unsustainable. The Ld. AR also submitted that the assessee could prove the source of cash deposit in the bank account, if another opportunity is provided. The Ld. Sr. DR, on the other hand, submitted that the assessee could not prove the source of cash deposit and therefore, the additions are sustainable. Having heard rival submissions, our adjudication would be as under. 3. The material facts are that the assessee being resident individual is stated to be engaged in the business of real estate agency. It transpired that the assessee deposited cash of Rs.1.50 Lacs and another deposit of Rs.10 Lacs in saving bank account maintained with Indian Bank, Villupuram. The deposits were withdrawn subsequently. Regarding the source of deposit, the assessee submitted that it was arranging transaction of sale of land against commission. The assessee would give advance for purchase of properties and search for prospective buyers and after the transactions were over, he would get his advance back from the parties. However, no evidence / details of real agency business could be furnished and it was noted that the assessee had not filed any return of income since the year 1994. Therefore, finding that the assessee miserably failed to establish the source of deposits, the peak deposit of Rs.9.75 Lacs was added to the income of the assessee u/s 69.

During appellate proceedings, it transpired that the assessee had another bank account with Indian Overseas Bank which was not disclosed to Ld. AO. Accordingly, a remand report was sought from Ld. AO after examining all the transactions. The same revealed that there were cash deposits of Rs.26.65 Lacs in this account. In the absence of any satisfactory explanation forthcoming from the assessee, Ld. CIT(A) sustained additions of Rs.28.15 Lacs. Aggrieved, the assessee is in further appeal before us.

Upon due consideration of material facts, it could be gathered that the assessee deposited cash in two bank accounts. The onus to prove the source of the same was on assessee. However, the assessee could not file satisfactory documentary evidences during assessment proceedings as well as during appellate proceedings. The Ld. AR has submitted that given another opportunity, the assessee would be able to explain the source of deposit with sufficient documentary evidences.

The appeal stand allowed for statistical purposes.