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Facts
The assessee's appeal concerns additions made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, 1961, for unexplained cash deposits in bank accounts. This is a second round of appeal, with a previous remand by the Tribunal to the CIT(A) for fresh adjudication.
Held
The Tribunal found that the CIT(A)'s order was in gross contravention of the Tribunal's directions and contrary to the facts on record, as relevant details and submissions were not considered. The Tribunal also noted the assessee's alternative plea to restrict additions to a peak credit.
Key Issues
Whether the CIT(A) properly considered the assessee's submissions and evidence in the second round of appeal, and whether additions under Section 68 are justified when the total deposits are significantly less than the amount added, and if the additions should be restricted to the peak credit.
Sections Cited
68, 147, 148, 142(1), 115BBE, 271(1)(c), 271(1)(b), 271F
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Visakhapatnam Bench, Visakhapatnam
Before: Shri Vijay Pal Rao & Shri Manjunatha G.
PER VIJAY PAL RAO, VICE PRESIDENT:
This appeal filed by the assessee is directed against the order dated 29.01.2025 of the Commissioner of Income Tax (Appeals) [“Ld.CIT(A)”], National Faceless Appeal Centre, Delhi for the A.Y.2013-14.
The assessee has raised the following grounds of appeal :
3. At the outset, it is noted that this is second round of appeal filed by the assessee, as earlier, this Tribunal vide order dated 31.05.2024 in remanded the matter to the record of the Ld.CIT(A) for fresh adjudication after affording an opportunity of hearing to the assessee in para 8 as under :
“8. We have heard both the parties and perused the material available on record. In the instant case, assessment in the case of the assessee was completed u/s 68 of the Act and the addition made by the AO of Rs.1,29,26,227/- was sustained by the Ld.CIT(A). As contended by the Ld.AR that the total income was wrongly computed at Rs.2,58,52,454/- in the computation sheet while the total income assessed was only at Rs.1,29,26,227/- and the assessee was not given proper opportunity of being heard before the Ld.CIT(A) to controvert the findings of the revenue authorities therefore, pleaded for an opportunity of being heard before the Ld.CIT(A) in the interest of justice. Keeping in view the aforesaid facts and circumstances of the case and in order to meet the principles of natural justice, we are inclined to remit the matter back to the file of the Ld.CIT(A) with a direction to afford an opportunity of being heard to the assessee to present his case. The assessee is also directed to adhere to the notices issued by the revenue authorities and cooperate during the proceedings.”
The Ld.AR of the assessee has submitted that as per the directions of this Tribunal vide order dated 31.05.2024, the assessee has produced all the relevant details and evidences before the Ld.CIT(A), which includes the reply of the assessee, bank account statements as well as written submissions of the assessee. The Ld.AR has referred to bank account statements as well as the written submissions of the assessee and submitted that the assessee has pointed out the fact that the total deposit in two bank accounts of the assessee is only Rs.8,05,669/-, whereas the AO has made addition of Rs.1,20,57,658/- which is contrary to the record as facts evident from the bank account statement of the assessee. The Ld.AR has pointed out that the AO while making the additions has not given even the details of the bank account of the assessee, but has referred only the source of information, being AIR-001 and CIB-410 for a total amount of deposit of Rs.1,29,26,227/-. Despite all the relevant details and explanation of the assessee, the Ld.CIT(A) has passed the impugned order, confirming the original additions made by the AO. Thus, the Ld.AR has submitted that the impugned order passed by the Ld.CIT(A) is contrary to the directions of the Tribunal. He has referred to the finding of the Ld.CIT(A) in para 5 of the impugned order and submitted that what is referred by the Ld.CIT(A) in the impugned order are not the directions of this Tribunal and further the averments made in the findings are also contrary to the facts as well as submissions filed by the assessee. Thus, the Ld.AR has submitted that the impugned order passed by the Ld.CIT(A) is contrary to the directions of the Tribunal as well as the facts emerging from the record filed by the assessee and therefore, the same is liable to be set aside. The Ld.AR has further submitted that these additions were made by the AO on account of deposits in the bank account of the assessee and therefore, the additions made by the AO u/s 68 of the Act is not sustainable in law, when these are not in the nature of cash credit in the books of accounts of the assessee. In support of his contention, he has relied upon the following decisions :
(a) Sandhi Raja Sekhar Vs. ITO in dated 07.03.2025 (b) Smt.Asha Sanghvi Vs. ITO in dated 15.11.2019 4. On the other hand, the Ld.DR has submitted that the Ld.CIT(A) has given the finding of fact by considering all the submissions and record filed by the assessee. She has relied upon the impugned order.
We have considered the rival submissions as well as the material on record. In the first round of appeal, this Tribunal remanded the issue to the record of the Ld.CIT(A) for deciding the same afresh and also taken note of the fact that while computing the total income, the AO has wrongly calculated the amount at Rs.2,58,52,454/- as against Rs.1,29,26,227/- proposed to assess on account of deposits in the bank account. In the proceedings, as remanded by this Tribunal before the Ld.CIT(A), the assessee filed the bank account statements, which are placed at page No. 9 to 13 of the paper book, thus the assessee has given the details of the bank account Nos.076910100016983 and 076910100022805 and the total amount of deposit during the year under consideration in these two bank accounts is only Rs.8,05,669/-. These details were also submitted by the assessee in the written submission filed before the Ld.CIT(A), which are placed at page No.16 to 22 of the paper book. The assessee has explained that out of total deposit of Rs.8,05,669/-, a sum of Rs.3,28,472/- pertains to the fixed deposits of the earlier year credited in the bank account of the assessee on maturity. On careful perusal of these details and submissions of the assessee, we find that the assessee has produced all necessary details and evidences including the two bank account statements to show the total deposits in the bank account and further credit of Rs.3,28,472/- as maturity amount of fixed deposits made in the earlier years. Details of these credits are also reflected in the bank account statement of the assessee. The Ld.CIT(A) has passed the impugned order by making reference of the assessment order and notices issued by the AO at page No.4 to 6 as under :
Thus, it is manifest from the impugned order of the Ld.CIT(A) that relevant details filed by the assessee as well as the written submissions of the assessee were neither considered nor analysed while passing the impugned order. Therefore, the impugned order passed by the Ld.CIT(A) is in gross contravention of the directions of this Tribunal as well as contrary to the facts brought on record by the assessee. The assessee also pleaded in the written submissions as an alternative plea, that the additions may be restricted to a peak credit of Rs.2,24,485/-. Accordingly, in the facts and circumstances of the case, we restrict the addition to the peak credit of Rs.2,24,485/-.
In the result, appeal filed by the assessee is partly allowed.
Order pronounced in the Open Court on 30th July, 2025.