RAVINDRA KUMAR GOEL SOORAJ GOEL,SALEM vs. DCIT, CIRCLE-1(1), SALEM

Brief facts of the case are that the assessee is an individual and filed his return of income for the assessment year 2017-18 on 07.11.2017 admitting total income of Rs.11,18,100/-. The case was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer noticed that the assessee has made huge cash deposits into 2 bank account during demonetization period. Therefore, the Assessing Officer called upon the assessee to explain source for cash deposits. In response, the assessee submitted that he is into the business of wholesale dealing in vegetables and source for cash deposits into bank account is out of sale proceeds. The assessee further contended that for the assessment year 2016-17, the CIT(A) has directed the Assessing Officer to estimate 2% net profit on cash deposits.

Therefore, the assessee submitted that for total cash deposits, reasonable profit may be estimated. The Assessing Officer was however, not convinced with the explanation furnished by the assessee and according to the Assessing Officer, the assessee could not explain source for cash deposits during demonetization period amounting to Rs.41,34,000/-, and thus, made additions u/s.69A of the Income Tax Act, 1961, as unexplained money. Insofar as remaining cash deposits, the Assessing Officer, by taking into account relevant facts estimated 8% profit on total credits in the bank account and made addition of Rs.1,96,13,672/-.

The assessee carried the matter in appeal before the First Appellate Authority, but could not succeed. The Ld.CIT(A), for 3 the reasons stated in their appellate order dated 20.10.2023 sustained additions made by the Assessing Officer towards cash deposits and also estimation of profit on total credits in bank accounts. Aggrieved by the CIT(A) order, the assessee is in appeal before us.

The learned counsel for the assessee referring to the CIT(A) order dated 20.10.2023 submitted that although, the assessee has submitted written submissions on the issue along with order passed by the CIT(A) for assessment year 2016-17, estimating 2% profit on total credits in the bank account, but the Ld.CIT(A) without considering the written submissions filed by the assessee has upheld additions made towards cash deposits and estimation of 8% profit on total credits in bank account. Therefore, the learned counsel for the assessee submitted that one more opportunity may be given to the assessee and the appeal may be set aside to the file of the CIT(A).

The learned DR, Shri P.Sajit Kumar, JCIT, present for the Revenue, supporting order of the Ld.CIT(A), submitted that 4 the assessee could not establish source for cash deposits made during the demonetization period. Further, the assessee could not explain as to why 2% profit should be estimated on total credits in bank account. Although, the CIT(A) has taken a view and estimated 2% profit for earlier assessment year, but, res judicata is not applicable to income-tax proceedings.

We have heard both the parties, perused material available on record and gone through orders of the authorities below. We find that the Ld.CIT(A) has disposed off the appeal filed by the assessee with cryptic observation without considering detailed written submissions filed by the assessee explaining source for cash deposits. We further noted that the assessee claims to have explained source for cash deposits made during demonetization period out of opening cash in hand. The assessee further contended that for earlier assessment year the CIT(A) has estimated 2% profit on total credits in bank account and this fact has been brought to the 5 notice of the CIT(A) along with copy of the order passed by the CIT(A). But the CIT(A), without considering written submissions filed by the assessee and also not giving any reasons for not following his predecessor CIT(A) order for earlier assessment year 2016-17 has sustained additions made by the Assessing Officer with general observation that the appellant did not submit any response to the notice issued by the Assessing Officer and also not furnishing relevant evidences, including bills, vouchers etc. In our considered view, finding of fact recorded by the Ld.CIT(A) is contrary to materials available on record which is clearly evident from the written submissions filed by the assessee and thus, the order the CIT(A) cannot be sustained. Therefore, we are of the considered view that appeal needs to go back to the file of the Ld.CIT(A) and thus, we set aside the order of the CIT(A) and restore the issue back to the file of the CIT(A) for fresh adjudication in accordance with law. Needles to say, the assessee shall furnish necessary evidences in support of its claim without seeking any adjournment.