PRAHLADBHAI DAHYABHAI PATEL L/H. OF LATE DAHYABHAI ISHWARBHAI PATEL,MEHSANA vs. THE ITO, WARD-1, PATAN

Grounds raised by the assessee are as under:-

Ld. NFAC erred in law and on facts in confirming addition of Rs. 10,30,508/-by invoking section 69A of the Act.

Ld. NFAC erred in law and on facts in passing order on dead person which is not permissible in law.

Ld. NFAC erred in law and on facts in passing assessment order without bringing legal heir on record and accordingly order passed by AO confirmed by CIT(A) is required to be quashed.

Ld. NFAC erred in law and on facts in confirming action of AO ignoring fact that proper opportunities were not granted during appellate stage and against same, the grievance application was also filed.

Without prejudice to above and in alternative, Ld. NFAC ought to have estimated profit margin considering activity of appellant as agriculture trading in nature.

Without prejudice to above and in alternative, Ld. NFAC ought to have make addition of peak balance of cash deposited in bank.

Without prejudice to above and in alternative, Ld. NFAC ought to have granted credit of cash withdrawals which is redeposited in bank.

Ld. NFAC erred in taxing addition made by him on special rate as per section 115BBE of the Act.

Initiation of penalty proceedings u/s 271AAC is unjustified.

Charging of Interest u/s 234A,234B,234C and 234D are unjustified.”

At the outset, it is noted that there is a delay of 59 days on the part of the assessee in filing the appeal before the Tribunal. In this regard, the assessee has filed an affidavit dated 29.07.2024 seeking condonation of the said delay on the following grounds:-

The ld. Counsel for the assessee contended that both the assessment order and the ld. CIT(A)’s order were ex-parte, but he stated that the addition made to the income of the assessee was not warranted since all facts relating to the issue demonstrating that the addition were there before the Revenue Authorities.

Before the ld. CIT(A), none appeared on behalf of the assessee; and after giving three opportunities of hearing from 01.09.2023 to 16.10.2023 – that is in a span of 1½ months, ld. CIT(A) passed the order ex-parte confirming the addition made by the Assessing Officer.

The ld. Counsel for the assessee pointed out that the amount of cash found deposited in his bank account was attributable to the agricultural loan received by the assessee which was withdrawn and thereafter redeposited in his account, and all these facts were evident from the copy of his bank account statement which was there before the Assessing Officer. The ld. Counsel for the assessee pointed out that this cash of Rs.10 lakhs was found deposited in his account No.30992199308 which fact he pointed out from the assessment order noted therein. This account, he contended, was the agricultural loan account of the assessee – copy of the same was filed before us wherein it was mentioned “MC-Revised KCC” [Revised Kisan Credit Card Scheme] and the account was an overdraft account wherein agricultural loan against Kisan Credit Card was given to the assessee as per the scheme of the Government. He pointed out from the bank statement of the said account that an amount of Rs.9,90,000/- was granted as a loan to the assessee on 22.04.2016 and debited to his savings account No.10727124336. Copy of this account was also placed before us. He, therefore, pointed out that the loan was granted to him on 22.04.2016 and debited in his savings account on the same date, i.e. on 22.04.2016. The entire amount of Rs.9,90,000/- was withdrawn in cash by the assessee which was reflected in his saving bank account statement. The ld. Counsel for the assessee, thereafter, stated that from the loan account statement on 03.09.2016, the assessee redeposited this loan of Rs.10 lakhs in his loan account and it was the withdrawal made in cash of the loan granted which was redeposited in the account. He pointed out that the loan account reflected further loan of Rs.10 lakhs granted to the assessee on 30.03.2017. He, therefore, contended that the facts on records sufficiently demonstrated the source of cash deposited of Rs.10 lakhs in the bank account of the assessee, and there was no occasion to treat the same as unexplained.

The ld. DR, though stated that no such explanation was offered by the assessee to either of the revenue authorities, however, was unable to deny the fact that all the above information were available on record before the Assessing Officer and could be verified from the same by the Assessing Officer and the ld. CIT(A).

In view of the above, we agree with the ld. Counsel for the assessee that there was no occasion for the Assessing Officer to treat the amount of cash found deposited in the bank account of the assessee as unexplained since the copies of the bank account of the assessee clearly demonstrated the cash deposited to be in the loan account of the assessee which had earlier been withdrawn and thereafter redeposited. And even if assessee failed to offer explanation to this effect to the AO the same could and ought to have been verified by the AO by exercising his powers of investigation, seeking information from the bank u/s 131 of the Act In view of the same, the addition made of Rs.10 lakhs to the income of the assessee, I hold, is not sustainable and directed to be deleted.

In effect, the appeal of the assessee is allowed.