ITO, ERODE vs. S.SHANTHI, ERODE

आदेश / O R D E R PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:

This is an appeal filed by the Revenue against the Order dated 29.10.2015 of Commissioner of Income Tax (Appeals)-3, Coimbatore, in for the AY 2011-12.

2.0 All the grounds of the appeal are related to the addition made u/s.68 of Income Tax Act (in short ‘the Act’). The assessee filed return of ITA No.72/Mds/2016 :- 2 -: income admitting total income of Rs.5,17,063/- on 30.09.2011. The case was selected for scrutiny and the Assessment was completed u/s.143(3) on total income of Rs.1,61,09,948/-. In the assessment proceedings, the Assessing Officer (in short ‘AO’) made the addition of Rs.1,47,89,000/- relating to deposits made in the bank account for which the source was not explained by the assessee.

3.0 Aggrieved by the order of the AO, the assessee went on appeal before the Learned Commissioner of Income Tax (Appeals) (hereinafter referred to as ‘Ld.CIT(A)’) and the Ld.CIT(A) deleted the addition.

Therefore, the Revenue is in appeal before this Tribunal.

4.0 Appearing for the Revenue, the Learned Departmental Representative (hereinafter referred to as ‘Ld.DR’) argued that the assessee made cash credits in the bank account to the tune of Rs.1,78,85,450/- which was not explained by the assessee before the AO.

It is burden on the assessee to explain the nature of source of deposits made during the year. The assessee also did not produce the books of accounts for verification before the Ld.CIT(A). It appears that the assessee has produced the Day Book from which the Ld.CIT(A) concluded that adequate cash balances were available for making deposits and accordingly the addition was deleted. In this connection, the Ld.DR argued that since the books of accounts are not produced before the AO, as per Rule 46A of the Income tax Rules Ld.CIT(A) ought to have given an ITA No.72/Mds/2016 :- 3 -: opportunity to the AO. In this case, Ld.CIT(A) has not given the opportunity to the AO. Therefore, the Ld.DR contended that the case should be remitted back to the file of the AO. On the other hand, the Ld.AR relied on the orders of the lower authorities.

5.0 We heard both the parties and perused the material placed before us.

The Ld.CIT(A) deleted the addition holding that there was adequate cash balances to make deposits in the bank account. We extract the relevant paragraphs of the Ld.CIT(A) for the sake of convenience:

“6.0 I have carefully considered the submissions of the appellant and the materials available on the record. In the grounds of appeal the main contention is that the addition of Rs.1,78,85,450/- which are deposits into bank as unexplained income of the assessee. In the Assessment Order, it is stated that the books have not been produced for verification. The AR states that the books have been audited u/s.44AB and the were available and can produced. He, however, states that for the assessment proceedings a different authorized representative represented the case but it was explained to the Assessing Officer that the deposits were out of cash generated by sales and other business activities. It was also stated that the assessee informed the Assessing Officer that the cash balances were adequate to make the deposits of each day. The day book of the assessee was perused and it is seen that adequate cash balances are available for making deposits. The issue is straight and simple. When the assessee had cash balances to make deposits and regular books of account are maintained and the same has been produced for verification. Hence, further comments from the Assessing Officer is not sought on this issue. The addition of unexplained investment to the tune of Rs.1.47 crores is not supported by any evidence and materials hence the same is not sustainable”.

6.0 From the order of the Ld.CIT(A), it is noticed that the assessee has not produced the books of accounts before the AO. The Day Book was produced before the Ld.CIT(A). The Ld.CIT(A) has not given any finding whether the deposits made in the bank accounts were accounted in the assessee’s regular books of accounts or not. Mere availability of cash is not sufficient and the amounts deposited in the bank account should be reflected in the regular books of accounts of the assessee. The Ld.CIT(A)

ITA No.72/Mds/2016 :- 4 -: has not called for the Remand Report and given an opportunity to the AO to revert the claim of the assessee. Therefore, we are of the considered opinion that the case should be remitted back to the file of the AO with a direction to examine the nature and source of the cash deposits with the books of accounts and other relevant material and decide the issue afresh on merits. Accordingly, the order of the Ld.CIT(A) is set-aside and remitted the matter back to the file of the AO to re-examine the deposits made in the bank account and decide the issue afresh on merits. The assessee should be given sufficient opportunity of being heard.

7.0 In the result, the appeal of the Revenue is allowed for statistical purposes.

Order pronounced in the Open Court on 15th March, 2017, at Chennai.