PREM PARKASH GUPTA ,DELHI vs. ITO WARD 50(5) , NEW DELHI

That the Learned CIT(A) erred in law and on facts in rejecting the explanation of the appellant merely on presumptions and conjectures, without pointing out any defect or inconsistency in the books of account.

That the addition made under section 69A is wholly unjustified, as the appellant had disclosed the source of the cash deposits and the same was duly verifiable from the income tax returns of the asessee filed for previous period.

That the assessment and the appellate orders are contrary to law. facts, and evidence on record and deserve to be quashed. Prem Parkash Gupta 2

That the assessment and the appellate orders are contrary to law, facts, and evidence on record and deserve to be quashed.

The appellant craves leave to add, amend, alter, or withdraw any ground of appeal at the time of hearing.”

Brief facts of the case are that assessee is individual, filed his return of income declaring income of Rs. 12,43,290/- on 22.01.2018. The case was selected for scrutiny. During assessment, the assessing officer noted that assessee has made cash deposit during demonetization period in Central Bank of India, overdraft account and Punjab National Bank of Rs. 17,37,550/- and Rs. 8,02,450/- respectively. On show cause notice, the assessee explained that cash was deposited from the cash available with the assessee as it was withdrawn from bank on earlier occasions. The assessing officer issued summon under section 131 dated 01.11.2019 for personal appearance and recording his statement. The statement of assessee was recorded on 15.11.2019. The contents of statement of assessee are recorded in para 2.3.1 of assessment order. In the statement, the assessee stated that his main source of income is rental income and commission income from business activities. The assessee disclosed that cash of Rs. 1.09 lakhs, Rs. 3.40 lakhs and Rs. 22 lakhs was deposited in Punjab National Bank, Federal Bank and Central Bank of India respectively. The withdrawal in F.Y. 2013-14, 2014-15 & 2015-16 were made for medical assistance and for the requirement of purchases for business in the name of his wife. The source of money was from the savings of his wife, son and from cash withdrawals from bank. After recording statement of assessee, the assessing officer again issued fresh show cause notice dated 16.11.2019. The contents of show Prem Parkash Gupta 3

Aggrieved by the additions in the assessment order, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed detail statement of fact. The statement of facts is recorded in para 2 of order of ld. CIT(A). In the statement of fact, the assessee stated that he has shown taxable income while filing return of income at Rs. 12,43,290/-. The assessing officer made addition under section 69A of Rs. 33,07,324/-. The assessing officer wrongly treated sales turnover of assessee of Rs. 6,58,324/- from business of sales of gold jewellery. The assessing officer wrongly treated the cash deposit during the demonetization period as unexplained money. The assessing officer failed to appreciate that assessee was having cash balance of Rs. 30,88,195/- as on 31.03.2016. Further, there was a cash balance in earlier financial year of Rs. 29,01,070/- which were disclosed by assessee in return of income while filing income tax return for respective assessment years. The assessee furnished bank statement and documentary proof bank cash withdrawal. The statement of assessee was recorded during assessment wherein the assessee fully cooperated. The assessing officer ignored the written submission furnished by assessee. The bank statement clearly reflects adequate cash withdrawal from time to time. On the basis of such submission, the assessee prayed for deleting the entire addition. However, in response to notice under section 250, no written submission was furnished. The ld. CIT(A) dismissed the appeal of assessee by holding that assessee remained non-responsive to his various notices. Further, aggrieved the assessee has filed appeal before Tribunal. Prem Parkash Gupta 5

I have heard the submissions of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the Revenue and also perused the orders of lower authorities carefully. The ld. AR of the assessee submits that during assessment, the assessee furnished complete evidence to substantiate the source of cash deposit as well as genuineness of business activities. The assessee was having cash balance of Rs. 30,88,195/- while filing return of income for A.Y. 2016-17, copy of return of income for A.Y. 2016-17 is placed on record. The ld. AR of the assessee submits that Hon’ble Chhattisgarh High Court in Nanakchand Agrawal vs ITO (TAXC No. 8 of 2024) held that cash in hand in preceding year cannot be taxed as unexplained money under section 69A. Further, to prove the genuine business activities, the assessee has placed on recorded the copy of registration and annual user charges for running a business concern. Thus, the rejection of the claim of assessee under section 44AD is not justified. Once, the assessee proved that facts that he was having sufficient opening cash balance in the relevant financial year no addition of cash deposit is justified. 5. On the other hand, the ld Sr DR for the revenue supported the orders of lower authorities. The ld Sr DR for the revenue submits that during assessment the assessee failed to furnish sufficient evidence to substantiate the cash deposits and his business activities. The order of ld CIT(A) is ex- parte as no written submissions were filed by assessee despite providing sufficient opportunity. The assessee is not eligible for any relief. Prem Parkash Gupta 6

I have considered the rival submissions of both the parties and material available on record. The main contention of the ld AR of the assessee is that assessee was having sufficient cash balance in his hand in the beginning of relevant financial year and that such cash balance in shown in the return of income of preceding return of income. On careful perusal of return of income for A.Y. 2016-17, I find that this return of income was filed only on 22.01.2018 that is much after the demonetization period. So showing cash in hand in such shown return of income for AY 2016-17 is not helpful to the assessee. Accordingly, the ratio of decision of Hon’ble Chhattisgarh High 7. However, I find that the ld. CIT(A) has passed ex-parte order. The order of ld CIT(A) is not in consonance with the mandate of section 250(6) of the Income Tax Act. The assessing officer is also made addition for the want of cash flow statement and other addition about existence of business. Though, the assessee is claiming that cash was from withdrawal from bank on earlier occasions, but copy of bank statement in not placed on record. On the contrary, I also find that the lower authorities have not allowed the benefit of CBDT Circular No. 3 of 2017, wherein, the field officers of department was directed to allow certain concession to individual and business man on the issues of cash deposits during demonetisation. Therefore, I deem it appropriate to restore the matter back to the file of assessing officer and reconsider both the additions afresh. Needless to direct that before passing the assessing officer shall provide reasonable opportunity assesse is directed Prem Parkash Gupta 7