PRANAV WINE SHOP,SATARA vs. DCIT, SATARA

Although a number of grounds have been raised by the assessee, however, these all relate to the ex-parte order of the CIT(A) / NFAC in confirming the addition of Rs.55,30,080/- made by the Assessing Officer u/s 69 r.w.s. 115BBE of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

Facts of the case in brief, are that the assessee is a partnership firm engaged in the business of liquor trade. It filed its return of income on 30.03.2018 declaring total income of Rs.8,08,696/-. Since the assessee had made cash deposit of Rs.55,30,080/- in the bank account during the period of demonetization, the Assessing Officer reopened the case after recording reasons as per provisions of section 147 of the Act and thereafter notice u/s 148 of the Act was issued on 18.07.2022. However, no return was filed in response to the same. Subsequently, the Assessing Officer issued notices u/s 142(1) of the Act on various dates and the assessee made partial response but no documentary evidences were submitted. The Assessing Officer, therefore, completed the assessment u/s 144 of the Act and made addition of Rs.55,30,080/- u/s 69 r.w.s. 115BBE of the Act on the ground that the source of cash deposit of Rs.55,30,080/- remained undisclosed income in the hands of the assessee.

In appeal, the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer and dismissed the appeal filed by the assessee by observing as under: “7. Ground No 1, 2 and 3: These grounds have been raised against the action of the AO in treating the cash deposits in the bank account of Rs.55,30,080/- as unexplained and adding the same to the total income of the assessee u/s 69 of the Act. 7.1 From the assessment order it is seen that assessee did not provide documentary evidence to show that the source of the cash deposits was out of the sale proceeds of liquor sale. In the instant proceedings the appellant has not responded to any of the notices issued on 15.05.2024, 01.07.2024, 11.07.2024. The assessee has not provided any explanation or evidence to support the contentions raised in the grounds of appeal and contradict the findings of the AO in the assessment order. The appellant has submitted the cash book, trading account, balance sheet and sales register but it is not known whether these were before the A.O during the assessment proceedings and hence would amount to additional evidence for which no application has been given. Furthermore, the contention of the appellant that the cash deposits were out of sales, has to be specially shown by correlating the same with bank statement / bank book which is not provided and hence without a reconciliation the contention of the appellant cannot be accepted. Accordingly, I am left with no option but to confirm the addition made by the A.O. The Grounds of Appeal

The Ld. Counsel for the assessee at the outset submitted that the Ld. CIT(A)/ NFAC has given a finding that the assessee submitted Cash Book, Trading Account, Balance Sheet and Sales Register, etc. However, despite all these findings, he has decided the appeal against the assessee. He accordingly submitted that the addition made by the Assessing Officer and sustained by the Ld. CIT(A) / NFAC should be deleted.

The Ld. DR on the other hand while supporting the order of the Ld. CIT(A) / NFAC submitted that the assessee did not file any reply before the Assessing Officer for which he was constrained to pass the order u/s 144 of the Act. Despite number of opportunities granted by the Ld. CIT(A) / NFAC, the assessee neither filed any written submission nor any document to substantiate the source and nature of cash deposits in the bank account and therefore, under these circumstances, the Ld. CIT(A) / NFAC is fully justified in sustaining the addition made by the Assessing Officer. He accordingly submitted that the order of the Ld. CIT(A) / NFAC be upheld and the grounds raised by the assessee be dismissed.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and paper book filed on behalf of the assessee. It is an admitted fact that due to non submission of satisfactory details before the Assessing Officer he was constrained to pass the order u/s 144 of the Act wherein he made addition of Rs.55,30,080/- u/s 69 r.w.s. 115BBE of the Act on the ground that the assessee failed to substantiate the source of such cash deposits and therefore, the same remained undisclosed income in the hands of the assessee. We find the Ld. CIT(A) / NFAC sustained the addition made by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that the assessee has produced Cash Book, Trading Account, Balance Sheet and Sales Register, etc. before the Assessing Officer and therefore, the assessee has discharged the onus cast on it and the Ld. CIT(A) / NFAC should have deleted the addition. We find the assessee only made submissions before the Ld. CIT(A) / NFAC and the Ld. CIT(A) / NFAC has observed that the assessee has submitted the Cash Book, Trading Account, Balance Sheet and Sales Register, etc. before the Assessing Officer, but it is not known whether these documents were before the Assessing Officer before the assessment proceedings and therefore, in absence of any application for additional evidence filed before him, he rejected the same. It is an admitted fact that despite number of opportunities granted by the Ld. CIT(A) / NFAC on different dates (3 opportunities to be precise), the assessee did not file any submission before the Ld. CIT(A) / NFAC substantiating the nature and source of such cash deposits in the bank account. Since the Ld. CIT(A) / NFAC has passed the ex-parte order due to non submission of any details before him, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to submit the details and submission, if any, before the Ld. CIT(A) / NFAC on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(A) / NFAC is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, the appeal filed by the assessee is allowed for statistical purposes.