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Facts
The assessee, an LLP in advertising film production, filed its ITR for AY 2017-18. During scrutiny, the AO found unexplained cash deposits totaling Rs. 35,20,863/- in Standard Chartered Bank and Vijaya Bank accounts during FY 2016-17, which the assessee attributed to redepositing unutilized business withdrawals, some during demonetization. The AO made an addition under Section 69A, which was sustained by the CIT(A).
Held
The Tribunal noted the assessee's request to admit additional evidence (Vijaya Bank statements) under Rule 29 of ITAT Rules, which was not available to lower authorities. Considering the importance of this evidence for a fair decision, the Tribunal set aside the CIT(A)'s order and restored the disputed issues, along with the additional evidence, to the AO for fresh adjudication on merits, granting the assessee an opportunity to be heard.
Key Issues
Whether the cash deposits in bank accounts were satisfactorily explained, and whether additional evidence for substantiating sources should be admitted and considered for fresh adjudication.
Sections Cited
143(3), 250, 69A, 143(2), 142(1)
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Income Tax Appellate Tribunal, “C” BENCH
Before: SHRI PAVAN KUMAR GADALE & SHRI OMKARESHWAR CHIDARA
ORDER PER PAVAN KUMAR GADALE, JM: “ The assessee has filed the appeal against the order of the National Faceless Appeal Centre, Delhi / CIT(A) passed u/sec 143(3) and 250 of the Act. The assesse has raised the following sole ground of appeal: “On the facts of the case the Ld. AO erred in holding and Ld. CIT(A) erred in confirming that cash deposits in the bank account were not satisfactorily explained and added the same as unexplained credit u/s 69A.”
(A.Y.2017-18) Chrome Pictures Media LLP, Mumbai
The brief facts of the case that, the assessee is an LLP and is engaged in the business of production, promotion, developing and edition all kinds of advertising films by providing production and direction services including recording, mastering, duplicating, shooting, editing and modelling services. The assessee has filed the return of income for the A.Y 2017-18 on 06.10.2018 disclosing a total income of Rs.7,79,83,720/-. Subsequently the case was selected for scrutiny and notice u/sec 143(2) and u/sec 142(1) of the Act along with questionnaire are issued. In compliance to the notice, the assessee has filed the details and information. The Assessing Officer (AO) on perusal of the information found that, the assessee has made cash deposits in the bank accounts maintained with Standard Chartered Bank and Vijaya Bank in the F.Y.2016-17. During the course of assessment proceedings the assessee was called to explain the sources of cash deposits and genuineness of the transactions. Whereas the assesse has made cash deposits of Rs. 8,07,380/- in Standard Chartered Bank and Rs. 27,13,483/- in Vijaya Bank aggregating to Rs. 35,20,863/- The assessee has filed the submissions/ explanations referred at Page 2 Para 4.1 of the order as under:
“With regard to cash deposits made in Standard Chartered Bank, it was stated that:"Cash withdrawn from current bank account for business purposes, remaining unutilized amount, deposited back in the bank. All these deposits are NOT IN THE DEMONITISATION (A.Y.2017-18) Chrome Pictures Media LLP, Mumbai PERIOD. We will submit bank statement in a couple of days". Similarly with regard to the cash deposits made in Vijaya Bank, it was stated that: "Cash withdrawn from current bank account for business purposes, remaining unutilized amount, deposited back in the bank. These have been deposited during demonetisation period as it was mandatory since the old notes were demonetised by the Government. We will submit bank statement in a couple of days". It was further stated that "Cash has been deposited by the LLP from balance lying unutilised out of cash withdrawn from its own current bank accounts. We will submit. Bank statements in a couple of dauys”
Whereas the AO was not satisfied with the explanations and find that the asssessee could not substantiate with the material information/evidences supporting the sources of cash deposits in the bank accounts and are remained unexplained. Finally A.O invoked the provisions of section 69A of the Act and made addition of Rs.35,20,863/- and assessed the total income of Rs. 8,15,04,580/- and passed the order U/sec143(3) of the Act dated 24-12-2019.
Aggrieved by the order, the assessee has filed an appeal with the CIT(A). Whereas the CIT(A) has considered the grounds of appeal, statement of facts, submissions of the assessee and findings of the AO and dealt on the provisions of section 69A of the Act and judicial decisions but has sustained the addition made by the A.O and dismissed the appeal. Aggrieved by the CIT(A)order, the assessee has filed an appeal before the Honble Tribunal.
(A.Y.2017-18) Chrome Pictures Media LLP, Mumbai
At the time of hearing the Ld. AR submitted that the CIT(A) has erred in confirming the addition by the AO overlooking the factual information filed in the proceedings. Further the Ld.AR submitted that the assessee has a good case on merits and can substantiate with supporting sources for the cash deposits in the bank accounts and has filed an application for admission of the additional evidence under Rule 29 of ITAT rules. Per contra, the Ld. DR submitted that the evidences were not examined by the lower authorities and the Ld. DR supported the order of the CIT(A).
We heard the rival submissions and perused the material on record. The sole crux of the disputed issue envisaged by the Ld.AR that the CIT(A) has erred in confirming the additions by the A.O. as the transactions/ sources are not supported with the documentary evidences ignoring the reply filed by the assesee. The Ld.AR emphasized that the assessee has submitted the details as called for by the authorities and further the asssessee has submitted the bank statements of Standard Chartered Bank, where the amount was withdrawn and was deposited in other bank account.The assessee is filling the application for admission of additional evidences under Rule 29 of ITAT rules with the Vijaya bank account statements to substantiate the sources which was not available earlier and could not produce before the lower authorities. Further the evidences (A.Y.2017-18) Chrome Pictures Media LLP, Mumbai play a important role in decision making in the adjudicating proceedings. Therefore considering the facts, circumstances and additional evidences, the assessee should not suffer for non filing of material information, as the evidences played vital role in decision making and admit the additional evidence. Accordingly, to meet the ends of justice, we set aside the order of the CIT(A) and restore the entire disputed issues along with the additional evidence to the file of the assessing officer to decide afresh on merits and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. And we allow the grounds of appeal of the assessee for statistical purposes.
In the result, appeal filed by the assessee is allowed for statistical purposes.