RAM MOHAN RAPALA,WARANGAL vs. INCOME TAX OFFICER, WARD-3, WARANGAL

Being aggrieved, the assessee preferred an appeal before the learned CIT (A) who, vide the impugned order dated 17/05/2019, dismissed the appeal filed by the appellant. On further appeal before the Tribunal, the Tribunal, vide order dated 30/09/2019 remitted the matter back to the file of the Assessing Officer for denovo assessment in accordance with law. Consequent to the revenue order passed by the Tribunal, the Assessing Officer, NFAC, Delhi, vide order reiterated the additions made in original assessment proceedings. But aggrieved, the Page 2 of 6 appellant filed an appeal before the learned CIT (A), who vide impugned order confirmed the action of the Assessing Officer by holding that the appellant had failed to furnish requisite documentary evidence in support of the contention that the cash deposits were made out of the business receipts of the appellant.

Aggrieved by the order of the learned CIT (A), the assessee is in appeal before the Tribunal.

The learned Counsel for the assessee took me through the statement of the Bank Account held by the appellant and submitted that the lower authorities have failed to give the benefit of the earlier withdrawals made by the assessee for the subsequent cash deposits. He further submitted that the lower authorities having accepted the income returned by the appellant, it is not open to the lower authorities to hold that the appellant had not carried on the business. Thus, he submitted that there was no case for making addition on account of cash deposits made in the Bank Account as unexplained money of his entire cash deposits, which are made out of the sale proceeds of the business of the appellant.

The learned DR, on the other hand, supporting the orders of the authorities below submitted that in the absence of proof of carrying on the business, the Assessing Officer was justified by making the entire cash deposits as unexplained money of the appellant.

I have heard both the parties, perused the material available on record and gone through the orders of the authorities below. The solitary issue in the present appeal is whether the Assessing Officer was justified in making addition of the entire cash deposits as unexplained money of the appellant by holding that there was no proof of the assessee carrying on the business of the appellant dealing with stationery and general stores. I carefully perused the copy of the statement of the bank account held by the appellant with ICICI Bank. From the perusal of the said statement, it would reveal that there was cash deposits followed by withdrawals as well. Without entering into any controversy, whether the appellant had really carried on the business or not, it would be suffice to hold that the amount withdrawn from the Bank account by cash, should be treated as available for the subsequent deposits in the bank account, in the absence of any evidence on record to show the utilization of the withdrawn amount. Thus, the lower authorities, i.e. the Assessing Officer as well as the learned CIT (A) should have given the benefit of telescoping of withdrawals against the subsequent deposits. Therefore, the approach adopted by the Assessing Officer as well as the learned CIT (A) is totally unjustified and unreasonable. In order to meet the ends of justice, I deem it proper to remand the matter back to the file of the Assessing Officer with a direction that the amount withdrawn from the Bank Account by way of cash should be treated as available against the subsequent deposits and the balance, if any, can be brought to Page 4 of 6 tax and the balance amount, if any, as reduced by the amount of returned income may be brought to tax.

In the result, appeals in & 1027/Hyd/2024 are also partly allowed for statistical purposes.