SHRI JIGAR JAGDISH DOSHI,BHUJ-KUTCH vs. THE INCOME TAX OFFICER WARD-1, BHUJ-KUTCH, BHUJ-KUTCH

This assessee’s appeal for A.Y. 2013-14, arises from order of National Faceless Appeal Centre (NFAC), Delhi dated 15-09-2021, in proceedings under section 250 of the Income Tax Act, 1961; in short “the Act”.

The assessee has taken the following grounds of appeal:

The brief facts of the case are that the assessee is an individual and partner in the firm, namely M/s Mayur Jewellers. During the year under consideration, the assessee earned income from job work, income from the partnership firm and capital gains. The return of income was filed on 13-03- 2014 declaring total income of � 2,05,850/-for the year under consideration. During the course of assessment proceedings, the AO observed that the assessee had made cash deposits amounting to � 19,22,000/-in the savings bank account. On being requisitioned, the assessee submitted before the AO that the source of the aforesaid cash deposits were from the withdrawals made from M/s Doshi Investments, wherein the assessee was a partner. Since the arguments of the assessee were not found to be convincing to the AO, and the entire amount of cash deposits of � 19, 22,000/-was added to the total income of the assessee.

The assessee filed appeal before Ld. CIT(Appeals), who dismissed the appeal of the assessee on the ground that from the facts it is apparent that assessee has routed his unexplained cash through the books of the firm M/s Doshi investments since firstly, cash introduction was done and then there were cash withdraws from the firm and subsequently cash deposits in the savings banks account of the assessee. Ld. CIT(Appeals) further held that Page No 3 Shri Jigar Jagdish Doshi vs. ITO partnership firm was not genuine and same was formed by the assessee to introduce unaccounted cash in the firm and then the same was routed towards his savings bank account. While dismissing the assessee’s appeal, the Ld. CIT(Appeals) made the following observations:

The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals) confirming the additions made by the AO. The counsel for the assessee drew our attention to pages 13-14 of the paper book, to the working of the peak cash negative balance. The counsel for the assessee submitted that the AO erred in law in adding the entire cash Page No 4 Shri Jigar Jagdish Doshi vs. ITO credit/deposit of � 19.22 lakhs in the hands of assessee and he further submitted that only the peak credit of � 4.24 may be sustained and balance may be deleted. Further, the counsel for the assessee submitted that the Ld. CIT(Appeals) has failed to analyse the working of the cash balance for the impugned assessment year, which was submitted before him during the course of appellate proceedings and has proceeded to add the entire credits in the bank account, which is not permissible in law. The counsel for the assessee drew our attention to page 2-3 of the paper book (written submissions filed before the ld. CIT(A)) and submitted that the Ld. CIT(Appeals) did not appreciate the fact that the entire cash deposits had been duly explained by the assessee and the Ld. CIT(Appeals) simply upheld the order of AO by treating the entire cash deposits as unexplained income of the assessee. The assessee submitted before us that the Ld. CIT(Appeals) failed to appreciate that the entire amount had come from M/s Doshi investments, in which the assessee is a partner. Accordingly, only the peak rate of � 4.24 lakhs may be added and balance amount is not liable to be sustained in the hands of the assessee. In response, the DR placed reliance on the observations made by the AO and Ld. CIT(Appeals) in their respective orders.

We have heard the rival contentions and perused the material on record. On going through the records the case, we observe that Ld. CIT(Appeals) has not given any finding on the working of the peak cash balance submitted before him during the course of appellate proceedings. Accordingly, in the interest of justice, we are restoring the matter to the file of Ld. CIT(Appeals) to analyse the working of the cash balance submitted Page No 5 Shri Jigar Jagdish Doshi vs. ITO before him during the course of appellate proceedings, and then decided the matter in accordance with law, after giving due opportunity of hearing to the assessee. The DR has also not objected to the matter being restored to the file of Ld. CIT(Appeals) in interest of justice.

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