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Facts
The assessee did not file an income tax return. The AO issued a notice under section 148 due to cash deposits in the bank account. Despite complying with the section 148 notice and filing a return, the assessee failed to respond to subsequent notices under sections 143(2) and 142(1). Consequently, the AO treated the cash deposits as unexplained money under section 69A and added differences in interest income. The Ld. CIT(A) allowed the assessee's appeal based on a remand report from the AO, leading to the revenue's appeal before the Tribunal.
Held
The Tribunal noted that the AO's remand report confirmed that all transactions, including cash deposits in Syndicate Bank and Kotak Mahindra Bank, were accounted for in the assessee's books of accounts. The Tribunal found the Ld. CIT(A)'s order allowing the appeal to be reasonable and correct, especially since the revenue failed to produce any evidence to contradict the CIT(A)'s findings. Therefore, the Tribunal upheld the order of the Ld. CIT(A).
Key Issues
Whether the CIT(A) was justified in deleting the addition made by the AO for unexplained cash deposits, considering the AO's own remand report confirmed that the transactions were accounted for in the assessee's books of accounts.
Sections Cited
148, 143(2), 142(1), 69A
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Income Tax Appellate Tribunal, COCHIN BENCH : COCHIN
Before: SHRI INTURI RAMA RAO & SHRI SOUNDARARAJAN K.
ORDER
PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the revenue challenging the order of the NFAC, Delhi dated 19/06/2024 in respect of the A.Y. 2017-18.
The brief facts of the case are that the assessee had not filed his return of income and based on the information available with the department about the cash deposits made into his bank account, the AO issued a notice u/s. 148 of the Act. The assessee had complied with the notice u/s. 148 and filed his return of income on 16/04/2021. Thereafter, notice u/s. 143(2) were issued seeking the various details and the documents in support of the cash deposits made into the bank account. The assessee had not responded to the said notice and thereafter a notice u/s. 142(1) was issued, for which also the assessee had not responded. Finally, the AO sent the notice through the verification unit but the assessee had not responded to the notice served through the verification unit. Thereafter a show cause notice was issued on 16/03/2022 and draft assessment order was also sent to the assessee but the assessee had not availed the said opportunities. Therefore the AO had treated the cash deposits as unexplained money u/s. 69A of the Act. The AO had also added the difference in the interest income received while computing the taxable income of the assessee. As against the said order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) based on the remand report given by the AO had accepted the case of the assessee and allowed the appeal filed by the assessee. As against the said order, the revenue is in appeal before this Tribunal.
At the time of hearing, the Ld.DR relied on the grounds raised in form 36 and prayed to allow the appeal filed by the assessee. The Ld.AR relied on the remand report of the AO and submitted that the order of the Ld.CIT(A) is in order and requires no interference and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
In this case the Ld.CIT(A) had sought for a remand report from the AO based on the written submissions and other documents filed before him for which the AO had furnished the remand report which has been extracted by the Ld.CIT(A) in page 4 of the order. In the last but one paragraph of the remand report, the AO had submitted as follows: “The assessee also stated that the assessee had made cash deposit of Rs.1,81,51,612/- in the bank Account No.40323070000068 (Current Account) with Syndicate Bank and Rs.69,80,041/- in the account No.514044039239 with Kotak Mahindra Snak Ltd. for the period from 01.04.2016 to 31.03.2017. All these transactions were accounted in the books of Account of the assessee. Assessee in his appeal petition stated the e-mail id to which the, communications were sent was that of his previous Auditor and as such he was not aware of the notices. It is also contented that had an opportunity of being heard been given to the assesse, the assesse would have explained with ease the Ground of Appeal.”
6. As seen from the said remand report, the AO had accepted that all these transactions were accounted for in the books of accounts of the assessee which includes the cash deposits made in the Syndicate Bank as well as in the Kotak Mahindra Bank Ltd. When admittedly, the AO had furnished a remand report,after going through the books of accounts as well as the documents filed by the assessee, to the effect that the entire cash deposits were accounted for in the books of accounts, the order of the Ld.CIT(A) seems to be a reasonable one. The Ld.CIT(A) had allowed the appeal after observing that “6.3 Further, noted that the appellant has shown in the audit report total sales/gross receipts of business of Rs.5,86,62,078/- and also noted that the appellant has deposited cash of Rs.1,81,51,612/- in bank account no. 40323070000068 at Syndicate bank current account and Rs.69,80,041/- in account no. 514044039239 in Kodak Mahindra Bank Limited for the period 01.04.2016 to 31.03.2017. These Bank accounts have been declared by the appellant in its return of income as well as books of account for the year under consideration. All these transactions were accounted in the books of account of the appellant and the same has been verified by the AO and accepted vide remand report dated 19.02.2024. Therefore, the AO is directed to delete the addition of Rs.2,51,39,318/-. Thus, the ground no. 1 & 3 are allowed.”
7. In such circumstances, the ground raised by the revenue that the assessee had not declared the bank account maintained in the Syndicate Bank and therefore the said deposits could not be treated as business receipts cannot be accepted. If there is no remand report available with the Ld.CIT(A), the order of the Ld.CIT(A) may not be correct. But in this case, there is a remand report in which the AO had accepted all the transactions were accounted for and therefore the finding given by the Ld.CIT(A) for allowing the appeal filed by the assessee is a correct finding. In order to disagree with the view taken by the ld CIT, the revenue had not produced any evidences / documents to show that the finding given by the Ld.CIT(A) is incorrect. In such circumstances, we uphold the order passed by the Ld.CIT(A).
In the result, the appeal filed by the revenue is dismissed.
Order pronounced in the open court on 11th March, 2025.