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Facts
The assessee's case for AY 2012-13 was re-opened u/s 147 after no return was filed. The AO added INR 6,42,928/- as unexplained investment from cash deposits in bank accounts, which was confirmed by the CIT(A), as the assessee failed to appear before both authorities. The assessee contended that deposits were from prior withdrawals and matured FDs, and lower authorities did not provide reasonable opportunity.
Held
The Tribunal held that the AO erred by not giving a set-off for cash withdrawals and matured fixed deposits against the cash deposits. The AO failed to establish that the withdrawn funds were utilized for other purposes, and therefore, the impugned addition was deleted.
Key Issues
The key issues were the justification of unexplained cash deposit additions without considering withdrawals and matured FDs, and whether reasonable opportunity was granted to the assessee.
Sections Cited
147, 151(2), 250
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Income Tax Appellate Tribunal, DELHI “SMC” BENCH: NEW DELHI
Before: SHRI KUL BHARAT & Dr.B.R.R.KUMAR
ORDER
PER KUL BHARAT, JM :
The present appeal filed by the assessee is directed against the order passed by Ld.CIT(A), National Faceless Appeal Centre (“NFAC”), Delhi dated 07.12.2023 for the assessment year 2012-13.
The assessee has raised following grounds of appeal:-
1. “That on the facts and in the circumstances of the case and in law, Ld. CIT(A) in dittoing the order of the Ld. AO and confirming the assessment order passed by the Ld. AO which is completely arbitrary, unjustified and illegal.
2. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) and Ld. AO erred in computing the income by merely totaling the credit entries (deposit side) of the bank accounts without going into the narrations and debit entries therein. 3. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in not affording reasonable opportunity to the assessee to present his case.
The appellant craves leave to add, amend, modify, rescind, supplement or alter any or more grounds of appeal
stated herein above either before or at the time of hearing of this appeal.”
3. Facts in brief are that in this case, the assessee had not filed return of income. The case was re-opened u/s 147 of the Income Tax Act, 1961 (“the Act”) after having obtained the necessary approval u/s 151(2) of the Act. Before Assessing Authority, there was no representation on behalf of the assessee. Therefore, the Assessing Officer (“AO”) made addition of INR 6,42,928/- in respect of cash deposited in his bank account, treating it to be unexplained investment.
4. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A). Before Ld.CIT(A) also, there was no representation on behalf of the assessee. Therefore, the addition made by the AO was sustained and appeal of the assessee was dismissed. Hence, the orders of lower authorities are ex-parte to the assessee.
5. Aggrieved against the order of Ld.CIT(A), the assessee preferred appeal before this Tribunal.
6. Ld. Counsel for the assessee contended that the authorities below without considering the facts in right perspective, made the impugned addition. Ld. Counsel for the assessee reiterated the submissions as made in the written submission. For the sake of clarity, the relevant contents of the written submission are reproduced as under:-
1. “That on the facts and in the circumstances of the case and in law, Ld. CIT(A) in dittoing the order of the Ld. AO and confirming the assessment order passed by the Ld. AO which is completely arbitrary, unjustified and illegal.
2. That on the facts and in the circumstances of the case and in law, Ld. CIT(A) and Ld. AO erred in computing the income by merely totaling the credit entries (deposit side) of the bank accounts without going into the narrations and debit entries therein. The Ld. CIT(A) and Ld. AO has not gone through the entries of the bank statement, narration thereto and made additions to the income of the assessee without there being any basis for the same purely on presumptions and therefore the addition deserved to be deleted in entirety. (A) ACCOUNT NO.3072, VAISH CO-PERATIVE ADARSH BANK LTD. The assessing officer has added the maturity/refund of STD/RD amount crediting in bank account of the assessee. Entries of Rs.35395/- on 28.04.2011, Rs.10084/- on 13.05.2011 have been added to the income of the assessee. The entries can not be treated as income of the assessee in the circumstances of the case. It is further important to mention that the assessee had withdrawn the cash of Rs.545,000/- from 24.01.2011 to 26.03.2011 and as such he was having sufficient cash in hand as on 01.04.2011 out of which the assessee has deposited cash in his accounts on different dates. Therefore it is most respectfully prayed that additions made of Rs.102556/- to the income of the assessee may kindly be deleted. (B) ACCOUNT NO.043900078601, VAISH CO-PERATIVE ADARSH BANK LTD. The assessing Officer has made addition of Rs.194,450/- to the income of the assessee for the reason of total credits and cash deposits in bank account above mentioned. In this regard it is submitted that the assessee has made cash deposits of Rs.40,000/- each on 9.04.2011, 27.04.20211 Page | 3 and 04.05.2011 (total Rs.120,000/-) out of the cash in hand available with the assessee (out of cash of Rs.545,000/- from account No.3072). It is further submitted that the credit entry of Rs.59,076/- is maturing amount of FD/STDR No.035638 and the same can not be added as income of the assessee for year. Therefore it is most respectfully prayed that additions made of Rs.120,000/- and that of Rs.59,076/- may kindly be deleted. (C) ACCOUNT NO.004006000081, VAISH CO-PERATIVE ADARSH BANK LTD. The assessee had been maintaining bank account No. 043900078601 with Vaish Co-Operative Adarsh Bank Ltd. which converted into account No. (Senior Citizen) No. 00400600081 on 24.11.2011 when the assessee become senior citizen and all his STDs were transferred to STD (senior citizen) account No. 00400600081. That the assessing officer made addition of Rs.345,922/- by totaling the total credit entries of STD (Senior Citizen) No.00400600081 without appreciating the corresponding entries of A/c No. 043900078601. Therefore addition of Rs.345,922/- to the income of the assessee deserves to be quashed in the circumstances of the case. (3) That on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in not affording reasonable opportunity to the assessee to present his case. The Ld. CIT(A) dismissed the appeal by making observation that the notice issued u/s 250 for hearing of the appeal remained uncomplied. The Ld. CIT(A) failed to appreciate that the assessee has sought adjournments of the hearing vide his requests dated 13.02.2023 and 29.11.2023 and therefore the dismissal of the appeal is not justified in the circumstances of the case. For the foregoing it is most respectfully prayed that your goodself may kindly allow the appeal in the interest of justice.”
7. On the other hand, Ld. Sr. DR for the Revenue opposed these submissions and supported the orders of the authorities below. He submitted that the Page | 4 assessee was provided sufficient opportunity to represent his case. He failed to explain the source of cash deposits. Hence, the AO in the absence of any evidence supporting the source of investment was justified in treating such amount as unexplained.
8. In re-joinder, Ld. Counsel for the assessee contended that the AO failed to appreciate the fact that the deposits were made out of the withdrawals. The AO has made addition of the credit entries but did not give set off of the debit entries. He drew our attention to the statement of the bank account of the assessee held with Vaish Cooperative Adarsh Bank Ltd., Azadpur, Delhi.
We have heard Ld. Authorized Representatives of the parties and perused the material available on record and gone through the orders of the authorities below. The Revenue could not controvert the submissions by the assessee that the bank statements reflected both debit and credit entries. The AO ought to have given set off of debit entries. Moreover, it is seen from the bank statement of the assessee that there was cash withdrawals as well as the fixed deposits matured during the year. Therefore, it is not the case where the assessee could not explain the source of income. Moreover, the assessee is a senior citizen having small business. Therefore, considering the totality of the facts, we are of the considered view that the AO ought to have been given set off of the withdrawals and had the AO given set off of withdrawals, the impugned additions could not have been made without bringing adverse material on records, suggesting that the money withdrew from bank, had been utilized for some other purpose. The assessee thus, was not having the amount to withdraw from his bank account for re-deposit of such amount. The AO has not recorded any finding in this regard. We therefore, delete the impugned addition. Grounds raised by the assessee are accordingly, allowed.
In the result, the appeal of the assessee is allowed.