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Facts
The assessee, a doctor and proprietor of M/s United Medical Hall, deposited Rs. 15,50,000/- in cash during the demonetisation period. The assessment order made an addition of Rs. 18,50,000/-, which was partially sustained by the CIT(A) at Rs. 15,50,000/-.
Held
The Tribunal held that the matter needs to be remitted back to the AO for verification of the original returns and the balance sheet to ascertain the availability of cash as on 31.03.2016. The assessee is to be given a reasonable opportunity of being heard.
Key Issues
Whether the addition made on account of cash deposit during demonetisation is justified, and whether the assessee was provided with reasonable opportunity of being heard during the assessment proceedings.
Sections Cited
Section 147, Section 144B, Section 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: SH. UDAYAN DAS GUPTA & SH. KRINWANT SAHAY
ORDER Per: Udayan Das Gupta, JM This appeal is filed by the assessee against the order of the CIT(A) NFAC, Delhi, passed u/s 250 of the IT Act 1961 dated 26.06.2024 which has emanated from the order of the AO NFAC, Delhi passed u/s 147/144B of the Act dated 28.03.2022. 2. The grounds of appeal preferred by the assessee as per memorandum of appeal are as under;
1. That the assessment order dated 28.03.2022 passed by the assessing officer under Section 147 r.w.s 144B of the Income Tax Act, 1961 and the order of the Learned Commissioner of Income Tax (Appeals) National Faceless Appeal Centre (NFAC), Delhi dated 26.06.2024 thereby confirming the order of the Assessing Officer (AO) are both against the facts of this case and are untenable under the law.
2. That no reasonable and proper opportunity of being heard was allowed by the AO before passing the order u/s Section 147 r.w.s 144B of the Income Tax Act, 1961 thereby making the addition of Rs.18,50,000/-, as such, the order of the AO is liable to be cancelled. Similarly, the CIT(A) has also grossly erred in confirming the addition of Rs. 15,50,000/- out of the addition made of Rs.18,50,000/- by the assessing officer.
3. That this is case which has been reopened on the basis of borrowed satisfaction and there was no independent application of mind of the A.O which is not permissible under the law as such the reopening of the case is bad in the eyes of law and the same assessment may be cancelled.
That the case has been reopened under section 147/148 on the basis of reason to suspect and not reason to believe, as such, the assessment order is bad in the eyes of law and same may be cancelled.
5. That the Id. CIT(A) has grossly erred in not appreciating the facts that the reason recorded for the re-opening the case were not supplied to the assessee on repeated requests. The assessment framed without providing the reasons recorded for reopening the case is not a valid assessment of the case deserves to be quashed.
That under the same and similar circumstances Amritsar Bench has already quashed the assessment order where the reason recorded has not been supplied by the department on specified repeated requests of the assessee.
7. That the Id. CIT(A) did not appreciate that the cash was deposited in the bank out of cash available in hand as on 31.03.2016. The CIT(A) did not appreciate that the cash in hand as on 31.03.2016 at Rs.13,16,195/- was duly reported alongwith return of income filed for the assessment year 2016- 2017 and same has duly been accepted in the scrutiny assessment vide assessment order dated 29.03.2022, as such, the credit of the cash in hand as on 01.04.2016 should have been allowed while working out the addition. Moreover the request of assessee was genuine and reasonable and the same should have been accepted and no addition should have been made.
8. That there was no reason or occasion for invoking the provision of ' Section 69A of the Income Tax, 1961. The provision of section 69A are not at all applicable to the present facts and circumstances of the case.
9. That it is prayed that the addition of Rs.15,50,000/- confirmed by the CIT(A) may be deleted.
Alternatively, the addition made is very high & excessive.
That any other grounds of appeal which may be argued at the time of hearing of the appeal.”
Brief facts of the case are that the assessee is a doctor and the proprietor of M/s United Medical Hall and has deposited cash amounting to Rs.15,50,000/- in Jammu & Kashmir Bank and Vijaya Bank during the demonetisation period. Return of income has been filed in normal course, declaring total income of Rs.5,86,210/- which has been assessed at Rs.27,11,540/- (which included addition of Rs.15,50,000/-) being deposit of SBN during demonetisation period.
4. The matter was carried in appeal before the ld. first appellate authority and the ld. CIT(A) allowed part relief to the assessee but sustained the addition of Rs.15,50,000/- on account of deposit of SBN notes.
Now, the matter is in appeal before the tribunal on the ground contained in the memorandum of appeal. 6. During the course of hearing, the assessee has file a short paper book containing judgments of various courts’ relied upon for the purpose of his arguments and copy of acknowledgement receipt of (ITR-4) for the assessment year 2016-17 filed on 16.07.2016 (the original return), copy of the computation of revised return for the same assessment year 2016-17 dated 09.08.2021 and copy of the assessment order dated 29.03.2022 passed u/s 147 r.w.s. 144B of the Act which is assessed on total income of Rs.9,94,270/-. 6.1 He further submitted a copy of the balance sheet as on 31.03.2016 (earlier year), showing a cash balance of Rs.13,16,196/- alongwith a hard copy of (ITR-4) for the assessment year 2016-17 which also show a closing cash balance of Rs.13,16,196/-. 6.2 In course of hearing before the Tribunal the ld. AR of the assessee relied upon the copy of the assessment order for the assessment year 2016-17 (the earlier year) and the copy of the balance sheet and the hard copy of the print out of the return to submit that the disclosed cash balance of the assessee as on 31.03.2016 was Rs.13,16,196/- and benefit of carry forward the said cash balance should be allowed to the assessee for the purpose of considering the deposit of SBN in bank a/c during the demonetisation period in the month of November 2016. 6.3 In other words the argument of the assessee is that benefit of the said cash availability as on 31.03.2016 has not been allowed by the AO and the same has also not been considered by the ld. first appellate authority. He further submitted that the assessee is a doctor by profession and is also engaged in the business of trading in medicine as a proprietor of M/s United Medical Hall and the availability of cash as on 01.04.2016 alongwith income generated till November 2016, has been utilised by the assessee for depositing the said amount in the bank during the demonetisation period in SBN currency. He further submits that neither the AO nor the ld. CIT(A) has allowed the benefit of the said cash availability which is brought forward from the earlier year.
The ld. DR relied on the order of the ld. CIT(A) and submitted that verification of the hard copy of the returns submitted by the assessee is required and the benefit of cash from 31.03.2016, can only be allowed after taking into consideration the receipt and corresponding expenditure that might have been expended during the period from April 2016 to November 2016, in his retail medical business.
We have heard the rival submissions and considered the materials on record and we find from the copy of the balance sheet which is submitted before us for the year ended 31.03.2016, that an amount of Rs.13,16,196/- is reflected as closing cash balance as on the date, and the said balance for all practical purpose will be brought forward as opening cash for the financial year under appeal. However, no further particulars are available before us regarding the total turnover of the business for the period from April 2016 to November 2016 and corresponding expenses, and no cash book has also been produced before us, to prove the availability of SBN notes on the date of demonetisation, even though the assessee has got a logical argument that the benefit of Rs.13.16 lac as available on 31.03.2016 should be allowed to him. 8.1 As such, we are of the opinion that justice will be best served if the matter is remitted back to the file of the AO for verification of the original returns already uploaded in the portal vis-a-vis the copy of the balance sheet submitted by the assessee and thereafter to give cognizance to the cash balance as reflected in the return of the earlier year as on 31.03.2016 for the purpose of determining the availability of cash on the date of demonetisation as reflected in cash book for F.Y.
2016-17, and allow corresponding benefits to the assessee. The assessee is also directed to file all necessary documentary evidence, and explanations before the AO in support of his contention. The assessee shall be allowed reasonable opportunity of being heard. Since, we have remanded the matter for fresh adjudication after legal grounds are not adjudicated and are kept open to be contested by the assessee.
In the result, the appeal of the assessee bearing is allowed for statistical purposes.