RADHAKISHAN S. NADAR,MUMBAI vs. ITO 19(2)2, MUMBAI

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ITA 1883/MUM/2014Status: DisposedITAT Mumbai22 December 2016AY 2009-105 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the matter to the Assessing Officer for fresh examination of the cash deposits, considering both deposits and withdrawals on a peak basis. The assessee was directed to cooperate with the Assessing Officer.

What were the facts?

The assessee made cash deposits of Rs. 21,40,093 in a savings bank account. The Assessing Officer treated this as unexplained cash credit as the assessee failed to provide any explanation. The Commissioner (Appeals) also confirmed the addition ex-parte.

What were the issues?

Whether the addition of cash deposits as unexplained cash credit under Section 68 is justified without considering withdrawals on a peak basis. Whether the assessee's failure to appear before the lower authorities warrants a complete dismissal or a remand for proper adjudication.

Which sections of the Income-tax Act were involved?

Section 68,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN

For Respondent: Shri Purshottam Kumar

Captioned appeal at the instance of the assessee is directed against the order dated 8th December 2013, passed by the learned Commissioner (Appeals)–18, Mumbai, for assessment year 2009–10.

2.

The only issue in dispute in the present appeal is in relation to the addition of an amount of ` 21,40,093, as unexplained cash credit under section 68 of the Income Tax Act, 1961 (for short "the Act").

2 Radhakishan S. Nadar 3. Brief facts are, the assessee an individual is engaged in the business activities through its proprietorship concern M/s. S.S. Threads Co. For the assessment year under consideration, assessee filed its return of income on 30th September 2009, declaring total income of ` 1,21,270. During the assessment proceedings, the Assessing Officer on the basis of information available on record, found that assessee has made cash deposits of ` 21,40,093 during the relevant previous year in a savings bank account maintained with ICICI Bank. He, therefore, called upon the assessee to explain the source of such cash deposits. As alleged by the Assessing Officer, the assessee did not comply to any of the statutory notices issued by him nor furnished any information to explain the source of cash deposits. He, therefore, proceeded to complete the assessment to the best of his judgment under section 144 of the Act. Observing that the assessee has not explained the source of cash deposit in the bank account, he treated the amount of ` 21,40,093, as unexplained cash credit under section 68 of the Act and added back to the income of the assessee. Being aggrieved of such addition, assessee preferred appeal before the learned Commissioner (Appeals).

4.

As it appears, before the first appellate authority also the assessee did not appear and represent its case. Therefore, the learned

3 Radhakishan S. Nadar Commissioner (Appeals) confirmed the addition made by the Assessing Officer in the absence of any explanation by the assessee.

5.

When the appeal was called for hearing, no one appeared on behalf of the assessee. On a perusal of the order sheet entries, it is noticed that on previous occasion also, when the appeal was fixed for hearing no one appeared on behalf of the assessee. In fact, a notice of hearing issued by RPAD in the address furnished in column no.10 of Form no.36, has also returned back un–served with the postal remark “left”. Therefore, we proceed to dispose off the appeal ex–parte qua the assessee after hearing the learned D.R.

6.

As could be seen, the issue in dispute in the present appeal is the addition of cash deposits made into the saving bank accounts in ICIC bank amounting to ` 21,40,093 as unexplained cash credit under section 68 of the Act. It is evident on record, the assessee has not furnished any explanation before the Assessing Officer to explain the source of cash deposits into the bank account. The appeal filed before the learned Commissioner (Appeals) was also decided ex–parte confirming the addition made by the Assessing Officer as the assessee did not appear and represent his case. Even before us also, the assessee has not appeared and explained the source of cash deposits in the bank account. From the aforesaid facts, prima–facie it appears the assessee is negligent in its approach. However, it is seen from the 4 Radhakishan S. Nadar grounds of appeal raised by the assessee that the Assessing Officer has not considered the withdrawals made from the bank and has only considered the deposits. If the assessee had made both deposits and withdrawals in cash then it is possible that some of the deposits may be out of withdrawals made. In that event, addition has to be made on peak basis. Therefore, the Assessing Officer has to consider both the deposits as well as withdrawals for quantifying the addition to be made. In view of the aforesaid, we consider it appropriate to restore the matter back to the file of the Assessing Officer for examining afresh the issue relating to addition of cash deposits made in the bank account. We also direct the assessee to co–operate with the Assessing Officer in finalising the assessment proceedings. In case, the assessee is able to explain the source of cash deposits with sufficient evidence no addition can be made. However, if the assessee fails to substantiate the cash deposits the Assessing Officer will be free to make the addition after examining whether it can be made on peak basis considering the withdrawal made by the assessee.

7.

In the result, appeal stands allowed for statistical purposes. Order pronounced in the open Court on 20.12.2016

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