MRS. LALITA RAMESH PORWAL,LONAVLA vs. ITO WARD-9(5), PUNE

Aggrieved assessee preferred appeal before ld.CIT(A) but even though some details were furnished but as per ld.CIT(A) assessee failed to establish a clear link between the cash allegedly withdrawn in January 2014 and the cash deposited in November 2016 as there is no continuous cash flow statement or Mrs. Lalita Ramesh Porwal cash book covering the intervening period. Ld.CIT(A) affirmed the addition made by the Assessing Officer Aggrieved assessee is now in appeal before this Tribunal.

Ld. Counsel for the assessee vehemently argued referring to paper book running into 83 pages and has stated that the assessee was carrying on the business in the name of M/s. Porwal and sons and the said business has been closed on 31.01.2014 and as per capital account of Porwal and Sons assessee had capital balance of ₹38,22,841.13. He further submitted that the case of the assessee also selected for scrutiny for immediately preceding A.Y. 2016-17 and the same was concluded u/s.143(3) of the Act on 20.12.2018 and during the course of such assessment proceedings assessee has furnished the balance sheet and profit and loss account for A.Yrs. 2013- 14, 2014-15 and 2015-16 and also has furnished balance sheet as on 31.03.2016 exhibiting cash in hand at ₹20,17,317. He further submitted that the source of cash deposit has been duly explained. Further, with regard to the gap of 2 ½ years between such return filed and the alleged cash deposit referred and relied on the following decisions :

Kamlesh Kantilal Bhandari vs ITO, Ward-1, Ahmednagar by the Income Tax Appellate Tribunal SMC bench, Pune decided 29.07.2016 on 3. Mrs. Usha Narayan Chaware vs ITO, Ward-4(5), Pune by the Income Tax Appellate Tribunal SMC bench, Pune decided on 24/02/2023 4. Lalit R Jagawat HUF vs DCIT, 23(2), by the Income Tax Appellate Tribunal 'A' bench, Mumbai decided on 01/07/2025

I have heard the rival contentions and perused the record placed before me. I observe that the assessee is aggrieved with the addition for explained cash deposit of ₹19.90 lakh. There is no dispute to the fact that prior to the alleged cash deposit there is no immediate cash withdrawal by the assessee during the year from her bank account. Assessee is also not having any regular business and sale of goods to explain such cash deposit. The only source stated by the ld. Counsel for the assessee before this Tribunal is that assessee was having cash in hand of ₹20,17,317 as on 31.03.2016 which was brought forward after the closed business of M/s. Porwal and Sons on 31.01.2014 and such cash in hand was left with the assessee in her sole proprietary concern. Admittedly gap of 2 ½ years could not be well explained by the assessee, however, one important fact brought to my notice is that the assessee has been subjected to the scrutiny assessment for A.Y. 2016-17 and assessee has participated in this proceedings and the assessment has been framed on 10.12.2018 u/s.143(3) of the Act making Nil addition in the hands of assessee. Certain details which were called for by the Assessing Officer during such assessment proceedings for A.Y. 2016-17 were duly furnished which included the financial statements for A.Yrs. 2013-14 to 2015-16 as well as individual balance sheet of the assessee as on 31.03.2016. If this claim of ld. Counsel for the assessee is correct then this information Mrs. Lalita Ramesh Porwal about the assessee having cash in hand of ₹20,17,317 as on 31.03.2016 was very much in the knowledge of the Assessing Officer before concluding of the assessment proceedings on 10.12.1018 and there being no addition made by the Assessing Officer in A.Y. 2016017 then the claim of the assessee has merit that it has accumulated funds from the past which were not deposited in the bank account and kept in hand. However, this claim of the assessee needs verification. It is therefore deemed fit to remand the issue to the file of Assessing Officer. Ld. Assessing Officer in the set aside proceedings shall examine the assessment records for A.Y. 2016-17 and if these details of the asssessee’s balance sheet as on 31.03.2016 are found placed therein as has been placed before us at paper book 51, he shall consider such details and decided the issue denovo.

So far as the decisions referred and relied on by the ld. Counsel for the assessee are concerned, I find that the cases mentioned at Sl. No.1 and 2 are for the assessment years prior to 2017-18 therefore not applicable because the reason for scrutiny is on account of cash deposited during the demonetization period. So far as the decision in the case of Mrs. Usha Narayan Chaware VS. ITO is concerned, the source of cash deposit was from sale of agricultural land which has been accepted by the Assessing Officer. In case of Lalit R. Jagawat HUF Vs. DCIT, the source of cash deposit was through cash sales and the books of account were accepted by the Assessing Officer and therefore not applicable in the present case. In the case of Shri Shail Jayesh Shah Vs. ITO assessee had opening balance as on 01.04.2016 duly explained before the Assessing Officer through documentary evidence and the facts are also not similar to the present assessee’s case. In the case of Smt. Krishna Mrs. Lalita Ramesh Porwal Agarwal Vs ITO the assessee successfully explained the source of cash deposit from the cash withdrawals made in the past which is not the case in the present assessee. Therefore, the decisions relied on by ld. Counsel for the assessee will not help the assessee in the instant case. Even otherwise, I have already restored the issue to the file of Assessing Officer for the limited purpose of verification of closing cash balance as on 31.03.2016 appearing in the assessment records of the assessee for A.Y. 2016-17 available with ld. Assessing Officer. Finding of ld.CIT(A) is set aside and Grounds of appeal raised by the assessee are allowed for statistical purposes.

In the result, the appeal of the assessee is allowed for statistical purposes.