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Facts
The assessee's total income was determined at Rs.27,66,650/- against a returned income of Rs.8,35,650/-, with an addition of Rs.19,31,000/- on account of cash deposits during demonetization. The CIT(A) dismissed the assessee's appeal against this addition. The assessee had submitted cash book, bank statements, and explanations for cash deposits.
Held
The Tribunal held that both the CIT(A) and the Assessing Officer failed to discuss the assessee's submissions and evidence in detail. Without sufficient evidence to contradict the assessee's explanation, the addition of Rs.19,31,000/- could not be sustained.
Key Issues
Whether the addition of cash deposits of Rs.19,31,000/- made during demonetization is sustainable without proper discussion of assessee's evidence and explanation by the lower authorities.
Sections Cited
250, 68, 143(3]
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Income Tax Appellate Tribunal, LUCKNOW BENCH “SMC”, LUCKNOW
PER ANADEE NATH MISSHRA, A.M.: 1. The present appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi u/s 250 of the Income Tax Act, 1961 (hereinafter referred as to “the Act”) dated 16.10.2024 for the assessment year 2017-18. The grounds of appeal
of the assessee are as under: -
1. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad in law and deserves to be quashed being illegal.
1. 2. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is erred in law and on facts in adding an amount of Rs.19,31,000/- under section 68 of the Income Tax Act, 1961 being cash deposited during demonetization period without considering the fact that such deposits were duly incorporated in the audited books of account of the assessee which were accepted by the Ld. Assessing Officer and such deposits were out of the bank withdrawals of the assessee and also cash receipts of the assessee.
3. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad in law as the Assessing Officer has been added the addition of Rs.19,31,000/- without considering the reply of the assessee therefore the order deserves to be set aside and quashed.
4. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) has passed the order without providing the assessee with Page 2 of 4 a due and proper opportunity of hearing therefore the impugned order deserves to be set aside being bad in law.
The appellant craves for leave to add, modify, amend or delete any other and further grounds of appeal
with permission.”
2. In this case, assessment order dated 28.12.2019 was passed by the Assessing Officer (“AO”), u/s 143(3) of the Act whereby the assessee’s total income was determined at Rs.27,66,650/- as against returned income of Rs.8,35,650/-. In the aforesaid assessment order, addition of Rs.19,31,000/- was made on account of cash deposit in the assessee’s bank account. The assessee’s appeal against the aforesaid addition was dismissed by the Ld. CIT(A) vide impugned appellate order dated 16.10.2024. Aggrieved, the assessee filed this present appeal in Income Tax Appellate Tribunal (ITAT) against the aforesaid impugned appellate order dated 16.10.2024 of the Ld. CIT(A). In the course of appellate proceedings in ITAT, running into 97 page containing the following particulars from the assessee’s side: - S.I. No Particulars 1 Copy of replies filed by the assessee during the assessment proceedings on various dates 2 Copy of replies filed by assessee during the First Appeal Proceedings
3. At the time of hearing, the Ld. Authorized Representative for the assessee relied on the aforesaid paper book and the Ld. Departmental Representative for Revenue relied on the aforesaid impugned appellate order dated 16.10.2024 of the Ld. CIT(A) and the assessment order of the Assessing Officer.
Both sides have been heard. Materials on record have been perused. On perusal of the record, it is found that the assessee has multiple sources of income including from Astrology (including teaching & astrologer); (i) Selling Research Reports, Books & Consultation on Technical Analysis, Fundamental Analysis & Astrological Analysis for Stock Market Forecasting (ii)
Page 3 of 4 Teaching Training & Tutoring of Technical Analysis, Fundamental Analysis & Astrological Analysis for Stock Market Forecasting and (iii) Astrological Consultation and Teaching Astrology. During the assessment proceedings, the assessee had submitted cash book to the Assessing Officer showing how the cash deposited by the assessee in bank was accumulated. The cash book included both receipts and utilization of cash. Further, on perusal of record, it is found that the cash accumulation in the hands of the assessee also included receipt amount of fixed deposit of the bank. It is also found on perusal of record that the assessee submitted details of addition to Capital Account, amounting to Rs.40,18,920/-, during the assessment proceedings. Further, the assessee had filed copies of bank statements, month-wise details of sales/receipt and had also explained debit entries of Rs.50,000/- or more during the assessment proceedings. The assessee also had provided reasons and justification for increase in ratio of cash sales to total sales. On perusal of the impugned order of the Ld. CIT(A) and the assessment order passed by the Assessing Officer, it is found that they have not discussed in detail the submissions made by the assessee and the details filed by the assessee during the respective proceedings before him. Moreover, they have passed a brief orders lacking in detailed discussion of the issue at hand. Further, they have failed to make strong case for addition of the aforesaid amount of Rs.19,31,000/-. In the absence of any evidence to contradict the explanation furnished by the assessee, the aforesaid impugned addition cannot be sustained. Accordingly, the impugned order of the Ld. CIT(A) dated 16.10.2024 is hereby set aside and the assessing Officer is directed to delete the aforesaid addition of Rs.19,31,000/-.