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Facts
The assessee filed an income return for AY 2009-10, which was later revised after noticing cash deposits of Rs. 16,65,840 in the bank. The Assessing Officer treated these deposits as unexplained income under section 69A of the Act, leading to an assessment at Rs. 21,72,870. The assessee's first appeal before the CIT(A) was dismissed.
Held
The Tribunal noted that the assessee had disclosed the source of the cash deposits, naming individuals and providing confirmations. However, the Assessing Officer and the CIT(A) did not adequately verify these claims. The Tribunal decided to restore the matter to the CIT(A) for proper verification of the source of the deposits.
Key Issues
Whether the CIT(A) erred in confirming the addition of unexplained investment and whether the proceedings and assessment were valid without proper verification of the source of cash deposits.
Sections Cited
69A, 250, 147, 143(2), 151(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH, AGRA
Before: SHRI SUNIL KUMAR SINGH & SHRI BRAJESH KUMAR SINGH
ORDER Per Sunil Kumar Singh, Judicial Member:
This appeal has been preferred by assessee against the impugned order dated 30.06.2023 passed in Appeal no. CIT(A), Gwalior/10321/2017- 18 by the Ld. Commissioner of Income– tax(Appeals)/National Faceless Appeal Centre (NFAC) [hereinafter referred to as the “CIT(A)”] u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as "Act"] for the Assessment Year [A.Y.] 2009-10, wherein ld. CIT(A) has dismissed assessee’s first appeal.
Briefly stating, assessee filed his return of income on 09.09.2010, declaring total income of Rs.1,20,180/- for A.Y. 2009-10. It was noticed that the assessee deposited cash of Rs.16,65,840/- in the bank. After getting approval from PCIT, Gwalior u/s. 151(1) of the Act dated 30.03.2016, notice u/s. 148 of the Act was issued, which was duly served upon the assessee. Statutory notices were also issued with the questionnaire asking assessee to explain the source of cash deposited in bank account with supporting documents. Assessee submitted before ld. Assessing Officer that the cash deposited in the bank is from personal savings and receipts from family members and friends with specific mention of Shri Satish Kumar Mangal and Shri Dwarika Prasad Sharma. However, for want of confirmation certificates from the aforesaid persons, the Assessing Officer was not satisfied and further found that the assessee also deposited cash of Rs.3,86,850/- in another saving bank account of Bank of Maharashtra and treated aforesaid deposits as unexplained money u/s. 69A of the Act and assessed total income of the assessee at Rs.21,72,870/-.
Assessee preferred an appeal before ld. CIT(Appeals) where he could not succeed and assessee’s first appeal was dismissed.
Assessee has come before this Tribunal with the following grounds :
2 | P a g e “Ground No. 1:- On the facts and in the circumstances of the case the learned CIT appeal (NFAC) has erred in confirming the validity of proceeding initiated u/s 147 the proceeding u/s 147 may kindly be declared as unlawful and cancelled so also the assessment. Ground No.2:- That without prejudice ground no.1 above the learned CIT appeal NFAC was not justified in confirming the addition of Rs. 2052690/- as un-explained investment u/s 69A. Additional legal Ground No. 3- "3. That the order passed by the NFAC is bad in law being not passed in accordance with the provisions of Section 250 of the Income Tax Act, the order passed by the NFAC is liable to be set aside." Additional legal Ground No. 4- "4. That the provisions of Section 69A of the Income Tax Act are not attracted in the case of assessee, the AO has wrongly invoked the provisions of Section 69A of the Income Tax Act in the case of assessee, the assessment completed making of addition invoking of Section 69A of the Income Tax Act is against the provisions of Income Tax Act, the assessment so completed is bad in law. The NFAC while passing the order under Section 250 of the Income Tax Act has not considered the aforesaid facts and position of law, the order passed, sustaining the addition by NFAC is bad in law, liable to be set aside. The addition made by the AO is liable to be deleted." Additional legal Ground No. 5- "5. That while passing the appellate order under Section 250 of the Income Tax Act, the NFAC has completely ignored the fact that the AO while completing of the assessment has not issued the notice under Section 143(2) of the Income Tax Act which is required to be issued for completing of the assessment, therefore, the assessment completed, without issuing of notice under Section 143(2) of the Income Tax Act is not valid assessment. Order passed by the NFAC on this score is bad in law."
Perused the records and heard learned representatives for assessee and Revenue.
Learned representative for assessee, at the very first instance made an endorsement that he does not wish to press upon the additional ground No. 5. Hence, additional ground No. 5 stands rejected.
Learned representative for assessee has further submitted that the source of aforesaid cash deposit was disclosed before the Assessing Officer with specific names of the persons mentioned as above along with confirmation certificates. However, no endeavors were made by the Assessing Officer to verify the source. He further submitted that ld. CIT(Appeals) has also ignored the aforesaid evidence during the first appellate proceedings. Ld. AR for assessee has further requested that the matter be restored to the first appellate authority for verification of the source from which the assessee has mentioned and pass such order for verification.
Learned departmental representative has supported the impugned order.
It transpires from the perusal of the impugned order that learned Assessing Officer has stated in the assessment order that assessee submitted the name of Shri Satish Kumar Mangal and Dwarika Prasad Sharma, from whom the amount was received. Further, the confirmation certificates from these persons along with documents from bank and post 4 | P a g e office were not submitted. Perusal of the impugned order further shows that the assessee reiterated the names of aforesaid persons along with their confirmations. However, ld. CIT(Appeals) has suo moto framed four questions as to why Mr. Dwarika Prasad Sharma and Satish Kumar Mangal and another person Shri Magendra Kumar Tiwari lent money to the assessee. However, no efforts could be seen to have been made by first appellate authority to verify the claim of assessee either by seeking remand report from ld. Assessing Officer or to get such claim verified at its own. In such circumstances, we accede to the request of ld. Representative for assessee to restore the matter back to ld. CIT(Appeals) for verification of the aforesaid evidence adduced before the authorities below. We order accordingly.
In the result, the appeal is allowed for statistical purpose and the matter is restored back to the file of ld. CIT(Appeals) who shall pass order afresh in the light of observations made herein above. Needless to say that ld. CIT(Appeals) shall ensure compliance of the principles of natural justice.
Order pronounced in the open court on 22.04.2025.