SHRI DIGAMBER JAIN YUVAK SANGH,INDORE, M.P. vs. THE NFAC, DELHI, DELHI

PER SIDDHARTHA NAUTIYAL - JM: The present appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 05.06.2024 passed for A.Y. 2013-14. 2. The Assessee has raised the following grounds of appeal: “1. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the validity of reassessment proceedings initiated under section 147 of the Income-Tax Act, 1961 for Assessment Year 2013-14 even when notice under section 148 of the Act was issued on28-03-2021 i.e. after six years from the end of relevant assessment year and therefore, was barred by limitation of time as per section 149 of the Income-tax Act, 1961. 2. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the validity of reassessment proceedings initiated under section 147 of the Income-Tax Act, 1961 even when reopening was done in absence of any tangible A.Y. 2013-14 material and live link of concealment of income and merely for verification of source of cash deposits in the bank account. 3. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Ld. Assessing Officer in treating the income-tax return filed by the appellant in response to notice under section 148 of the Act as an invalid return merely for the reason that such return was not filed within time allowed in the notice issued under section1 48 of the Act even when the Ld. Assessing Officer has computed the total assessed income of the appellant by taking income as per Income-tax return filed by the appellant in response to notice under section 148 of the Act only. 4. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the validity of re-assessment proceedings concluded by the Ld. Assessing Officer in the case of the appellant for Assessment Year 2013-14 without issuance of notice under section 143(2) of the Act even when the appellant has fully filed Income-tax return in response to notice under section148 of the Act during the course of assessment proceedings. 5. That on the and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the validity of re-assessment proceedings concluded by the Ld. Assessing Officer in the case of the appellant for Assessment Year 2013-14 even when copy of reasons as recorded by the Ld. Assessing Officer prior to initiation of reassessment proceedings as specifically requested by the appellant was not provided by the Ld Assessing Officer. 6. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the action of the Ld Assessing Officer in passing exparte order under I section 144 r.w.s. 147 & 144B of the Income-I tax Act, 1981 even when the appellant has duly filed income-tax return in response to notice under section 148 of the Act and has duly filed submissions along with relevant supporting documents in response to notices issued during the course of re-assessment proceedings. 7. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred.in upholding the validity of reassessment proceedings initiated under section 147 of the Income-Tax Act, 1961 even when re-proceedings was initiated by the Ld. Assessing officer without obtaining proper sanction as per section 151 of the Act. 8. That on the facts and in the circumstances of the case and in law, the Ld. Assessing Officer erred in reopening the case of the appellant on the basis of factually incorrect facts recorded in the reasons wherein it was stated that the appellant has made cash deposits of Rs. 1,03,22,225/- during the year under consideration evenwhen the correct amount of cash deposits made by the appellant was of Rs. 1,12,14,171/-. 9. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 73,97,814/- made by the Assessing Officer to the total income of the appellant on account of cash deposited in the bank account by treating it as unexplained cash credits without properly appreciating the facts of the case and submissions filed before him/her even when the appellant has duly explained the source of cash deposits during the course of re-assessment proceedings itself. A.Y. 2013-14 10. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 73,97,814/- made by the Assessing Officer to the total income of the appellant on account of cash deposited in the bank account by treating it as unexplained cash credits even when the appellant during the course of assessment proceedings categorically explained that the said amount of cash deposit was made out of opening cash in hand as on 01-04-2012 generated during the previous Financial Year 2011-12 relevant to Assessment Year 2012-13 and therefore, addition, if any, could have been made during Assessment Year 2012-13 only and not in Assessment Year 2013-14. 11. The appellant reserves the right to add, alter and modify the grounds of appeal as taken by it.” 3. The brief facts of the case are that the assessee, Shri Digambar Jain Yuvak Sangh, an Association of Persons engaged in religious and charitable activities, filed its return of income for A.Y. 2013–14. Subsequently, the case was reopened under section 147 of the Income-tax Act, 1961 (“the Act”) on the basis of information relating to cash deposits of ₹1,03,22,225/- during the relevant financial year. During the reassessment proceedings, the assessee submitted that the cash deposits were out of opening cash balance of ₹73,97,814/- as on 01.04.2012, which represented closing cash balance of the immediately preceding year and was duly reflected in the audited books of account. It was explained that the opening cash balance consisted of collections towards building fund, sale of Jain Sahitya, Gyan Dan and Avas Dan, all of which were properly recorded and supported by donor details. The Assessing Officer, however, was not satisfied with the explanation. According to the Assessing Officer, the assessee failed to produce satisfactory evidence regarding the source of the opening cash balance and there were discrepancies in relation to land purchase transactions and cheque receipts. The Assessing Officer therefore treated the opening cash balance of ₹73,97,814/- as unexplained cash credit under section 68 of the Act and completed the assessment under sections 144/147 A.Y. 2013-14 vide order dated 31.03.2022 by making an addition of ₹73,97,814/- to the total income of the assessee. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) and raised multiple grounds. On merits, the assessee strongly objected to the addition of ₹73,97,814/- by submitting that the opening cash balance cannot be treated as unexplained cash credit when it is duly reflected in the audited balance sheet of the earlier year and supported by books of account and donor receipts. Reliance was placed on various judicial precedents to contend that opening balances cannot be taxed in a subsequent year. The assessee also objected to initiation of penalty proceedings. The CIT(Appeals), after examining the matter, upheld the reopening proceedings and rejected the legal grounds raised by the assessee. On merits, the CIT(Appeals) agreed with the Assessing Officer that the assessee failed to satisfactorily explain the source of the opening cash balance and observed that there were inconsistencies and lack of convincing evidence regarding the utilisation and source of funds. The CIT(Appeals) held that the explanation of the assessee was not acceptable and confirmed the addition of ₹73,97,814/- made under section 68 of the Act. Accordingly, the appeal of the assessee was dismissed. 5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. 6. We have heard the rival contentions and perused the material on record. We note that the addition in the present case relates to the opening cash balance carried forward from the immediately preceding year, which the assessee claims to be duly reflected in audited books of account. At the Shri Digamber Jain Yuvak Sangh vs. NFAC A.Y. 2013-14 same time, it is also evident from the record that the explanation and supporting documents relating to the opening cash balance, donor-wise details and correlation with earlier year records were not examined in proper depth during the assessment as well as appellate proceedings. Before us, the Counsel for the assessee submitted sample copies of donation receipts which as per him were the basis/ source of opening balance. The Counsel for the assessee submitted that these receipts had been submitted on sample basis, but if given an opportunity of hearing, the assessee would be in a position to give evidence regarding source of opening balance reflecting in his books of accounts. In the interest of justice, we are of the considered view that the assessee should be afforded one more opportunity to substantiate the opening cash balance with complete supporting documents, audited financial statements of earlier years and donor details, and the same should be examined afresh by the Assessing Officer in accordance with law after granting due opportunity of being heard to the assessee. 7. Accordingly, the matter is restored to the file of the Assessing Officer for de novo consideration limited to the issue of addition of opening cash balance, after affording reasonable opportunity to the assessee to place all supporting documents and evidences on record. 8. In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced on 23 /12/2025 (BHAGIRATH MAL BIYANI) JUDICIAL MEMBER Indore; Dated 23 .12.2025 A.Y. 2013-14 Tanmay, Sr. PS आदेशकȧ ĤǓतͧलͪपअĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधतआयकरआयुÈत/ Concerned CIT(A) 4. आयकरआयुƅ(अपील) / The CIT(A)- 5. ͪवभागीयĤǓतǓनͬध, आयकरअपीलȣयअͬधकरण, अहमदाबाद/ DR, ITAT, Indore 6. गाडŊफाईल/ Guard file. आदेशानुसार/ BY ORDER, (Dy./Asstt.