SHRI JITENDRA ARVIND PATHAK,PUNE vs. INCOME TAX OFFICER, WARD-3(1), PUNE, PUNE
What did the Tribunal hold?
The Tribunal, noting the lack of substantiation, decided to give the assessee one final opportunity to explain the source of the cash deposit. The matter was remanded back to the NFAC for fresh adjudication.
What were the facts?
The assessee deposited cash of Rs. 21,51,450/- in his bank accounts. He claimed the cash was from a property sale where the buyer's cheque bounced and payment was made in cash. However, the assessee failed to provide documentary evidence to substantiate this claim.
What were the issues?
Whether the cash deposits in the assessee's bank accounts were explained and substantiated with documentary evidence, and if not, whether they constitute unexplained money.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE „SMC‟ BENCHES :: PUNE
ORDER
Per PARTHA SARATHI CHAUDHURY, JM:
This appeal preferred by the assessee emanates from the order of National Faceless Appeal Centre [NFAC], Delhi, dated 25.09.2023 for A.Y.2017-18 as per the grounds of appeal on record.
Brief facts of the case are that assessee is an individual deriving income from business in the capacity of partner in two firms. He e-filed his return of income declaring total income of Rs. 10,08,520/-. The case of the assessee was selected for scrutiny under CASS. The AO noted from the ITS data that assessee had deposited cash in Saraswat Bank of Rs.21,51,450/-. On perusal of the bank statements maintained with Sarawswat Bank, it was revealed that assessee had Jitendra Arvind Pathak deposited cash in his three bank accounts of Rs. 21,51,450/-. The assessee‟s explanation did not find favour with the AO. Therefore, the AO added the same to the total income of the assessee u/sec. 69A of the Act as unexplained money.
Being aggrieved by the order of the AO, the assessee filed appeal before the NFAC. As the assessee failed to substantiate his claim with documentary evidences, the NFAC dismissed the appeal of the assessee. Now, the assessee is in appeal before this Tribunal.
We have heard the submissions of the parties, considered the materials/documents on record and have analysed the facts and circumstances in this case. That, as evident from record, the assessee claimed to have been involved in a sale transaction of property and therein, the prospective buyer of the property had made the payment through cheque which was bounced and, therefore, the proposed buyer had made the payment in cash to the assessee which was deposited in his bank account. That, as evident from para 5.7 of the NFAC‟s order that assessee could not furnish any evidence in support of the source of such cash deposit. It was not demonstrated by the assessee whether these cash deposits were from the prospective buyer of the same property for which the earlier cheque got bounced. The assessee also could not explain through evidences whether these cash payments were made by the prospective buyer and when this money
Jitendra Arvind Pathak has been routed through bank account of the assessee and what is the tax implication and whether the payable amount of tax has been carefully offered to the Department or not, has also not been explained by the assessee. Accordingly, the appeal of the assessee was dismissed by the NFAC. The relevant para 5.7 is extracted, for the sake of completeness, as follows:-
“5.7 The contention of the appellant that due to cheque bounce the proposed buyer of the property made the payment in cash is not substantiated by any documentary evidence. The appellant simply claimed that the cash is related to his firm's business activities while the same is not justified and substantiated by any documentary evidence. The appellant has submitted various documents which are examined but it is seen that even during the appellate proceedings, the appellant has failed to furnish any explanation/evidence in support of the sources of cash deposits. There is no evidence to substantiate that the prospective buyer made the cash payments against the bounced cheques to the appellant. It is also not understandable as to why the money has been routed through the bank account of the appellant. Therefore, the undersigned finds that there is no reason to interfere in the order passed by the AO. Accordingly, the ground raised by the appellant is dismissed.”
We are of the considered view, in the facts and circumstances that one final opportunity should be given to the assessee to explain the source of cash deposit in the bank account and whether at all it has been paid by the prospective buyer of the property. If it has been paid by the buyer to the assessee, the requisite taxes shall be levied and if in case the source of cash deposit is not explained, then the entire amount has to be added as unexplained money of the assessee u/sec. 69A of the Act. In view thereof, we set aside the order of NFAC and remand the matter back to its file for de novo adjudication complying with the principles of natural justice and at the same time, 3
Jitendra Arvind Pathak we direct the assessee to file all relevant details/documents before NFAC and represent his case on merits as being the final opportunity. The grounds of appeal stands allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in open Court on 21st February, 2024.
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