ITO-4-2-1, MUMBAI, MUMBAI V. SIDDHARTH SURYAKANT DESHMUKH, MUMBAI

ITA 1205/MUM/2024

AI Insights

The case involves two cross appeals by the Revenue and the assessee, Siddharth Suryakant Deshmukh, against the order of the Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC). The appeals pertain to the assessment year 2017-18, focusing on various additions made by the AO under sections 69 and 69A of the Income Tax Act, 1961, which were partly upheld and partly deleted by the CIT(A). The main issues revolved around unexplained investments and cash deposits, and the procedural validity of the assessment order under section 144. The Tribunal noted procedural lapses and the need for a comprehensive examination of the additional evidence provided, leading to the remand of the case to the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473379 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2017-2018
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BHANGEPATIL PUSHKARAJ
• Assessee Lawyers: ASHISH THAKURDESAI
• Keywords: Set aside; Additional evidence; Reasonable cause; Unexplained cash credit; Unexplained investment; Principle of natural justice; FORM 26AS
• Section: 144; 142(1); 143(2); 250; 69; 69A; 234B; 72

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘G’ BENCH MUMBAI BEFORE: SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER & SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No. 1205/MUM/2024 (Assessment Year: 2017–18) ITO-4-2-1 Room No. 644, 6th Floor, Aayakar Bhavan, M.K. Road, Mumbai-400020. Vs. Siddharth Suryakant Deshmukh B 7-8 Shyam Kunj, Manorama Nagarkar Marg, Mahim, 400016. PAN/GIR No. AEOPD1466K (Appellant) .. (Respondent) ITA No. 3019/MUM/2024 (Assessment Year: 2017–18) Siddharth Suryakant Deshmukh B 7-8 Shyam Kunj, Manorama Nagarkar Marg, Mahim, 400016. Vs. ITO 4(2)(1) 647, 6th Floor, Aayakar Bhavan, Maharshi Karve Road, Mumbai-400020. PAN/GIR No. AEOPD1466K (Appellant) .. (Respondent) Assessee by Shri. Ashish Thakurdesai Revenue by Shri. Bhangepatil Pushkaraj Ramesh, Sr. DR Date of Hearing 24/03/2025 Date of Pronouncement 28/03/2025 ITA no. 1205 & 3019/MUM/2024 Siddharth Suryakant Deshmukh 2 आदेश / O R D E R PER VIKRAM SINGH YADAV (A.M): These are two cross appeals filed by the Revenue and the assessee against the order dated 19.01.2024 passed by the Ld. Commissioner of Income–tax(Appeals)/ National Faceless Appeal Centre (NFAC) [hereinafter referred to as the “CIT(A)”] u/s. 250 of the Income-Tax Act, 1961 [hereinafter referred to as \"Act\"] for the Assessment year [A.Y.] 2017-18 wherein the respective grounds of appeal read as under: ITA No. 1205/MUM/2024 “Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A)/NFAC is justified in deleting the addition of Rs. 1,20,31,195/- made by AO under section 69 of the I.T. Act without appreciating the fact that the assessee failed to prove the source of investment which was remained unexplained in absence of documentary evidence.” ITA No. 3019/MUM/2024 “1. The learned CIT (A) has erred in law and on facts in upholding the order passed by the Assessing Officer u/s 144of the Income-tax Act, 1961, which is illegal and bad in law and in violation of the principles of natural justice. 2. The learned CIT (A) has erred in law and on facts in passing the appellate order against the principles of natural justice. 3. The learned CIT(A) has erred in law and on facts in upholding the addition of Rs. 46,19,500/- u/s. 69A of the Act on account of cash deposited in the bank account. 4. The learned CIT(A) has erred in law and on facts in upholding the addition of Rs. 1,02,58,276/- u/s. 69 of the Act on account of unexplained fixed deposits. 5. The learned CIT(A) has erred in law and on facts in upholding the action of the Assessing Officer in invoking the provisions of S. 115BBE of the Act. 6. The learned CIT (A) has erred in law and on facts in sustaining the levy of interest u/s. 234A, 234B and 234C of the Act” 2. The AR also submitted that the assessee wishes to take the following ground of appeal which was taken before the ld CIT(A), ITA no. 1205 & 3019/MUM/2024 Siddharth Suryakant Deshmukh 3 however the same was inadvertently not taken at the time of original filing of the appeal: “7. The learned Commissioner of Income Tax Appeals ought to have held that, the assessment done by learned Assessing Officer without giving mandatory notice u/s 143(2) of the Income Tax Act, 1961, after the appellant had duly filed the return in response to notice u/s 142(1) of the Income Tax Act, 1961 is null and void.” 3. Briefly the facts of the case are that the assessment in this case was completed u/s. 144 vide order dated 28.12.2019 wherein the AO brought to tax a sum of Rs. 1,02,58,276/- as unexplained investment in fixed deposits u/s. 69, Rs. 46,19,500/- as unexplained cash deposits u/s. 69A, Rs. 1,20,31,195/- as unexplained investment in flat u/s. 69 and Rs. 27,54,302/- as unexplained credit as per form 26AS and assessed income was determined at Rs. 3,08,09,339 as against the returned income of Rs. 11,46,060/-. The assessee thereafter carried the matter in appeal before the Ld. CIT(A) who has granted part relief to the assessee. Against the relief provided by the Ld. CIT(A), the Revenue is in appeal before us and in respect of addition sustained by the Ld. CIT(A), the assessee is in appeal before us. 4. At the outset, it is noted that there is a delay in filing the appeal by the assessee by 72 days as pointed out by the Registry. After hearing both the parties and considering the material available on records including the affidavit placed by the assessee the contents of which has not been rebated by the Revenue, we find that there is a reasonable cause for the delay in ITA no. 1205 & 3019/MUM/2024 Siddharth Suryakant Deshmukh 4 filing the present appeal. The delay is hereby condoned and the appeal of the assessee is admitted for adjudication. 5. Regarding addition of Rs. 1,02,58,276/- u/s. 69 in respect of unexplained fixed deposits made by the AO and which has been sustained by the Ld. CIT(A), it was submitted by the Ld. AR that during the course of assessment proceedings, the assessee through his Chartered accountant has submitted the detailed bank statements explaining that these fixed deposits were his own fixed deposits which were placed in earlier years and got matured in current financial year and the maturity proceeds were used for the purchase of the house property. It was submitted that all these bank statements clearly indicated that none of the fixed deposits were made during this financial year and were only redeemed during the financial year relevant to the impugned assessment year. It was submitted that in spite of the same, the AO has gone ahead and made the addition holding that the assessee could not explain the source of investment of the fixed deposit amounting to Rs. 1,02,58,276/- and in this regard, our reference was drawn to the relevant findings of the AO which are contained at para 19.3 to 19.6 of the assessment order and the contents thereof reads as under: “19.3 I carefully gone through the details of FDRs submitted vide letter dated 19.11.2019 and 06.12.2019 wherein it was stated that investment in FDR with various bank are since year 2012. It is further stated that the same has been renewed time to time on accrual basis. The contention of the assessee has been considered wherever investment in FDRs belong to FY 2010-11 & 2011-12(AY 2011-12 & 2012-13) have been taxed as unexplained investment. 19.4 Section 69 of the IT Act ITA no. 1205 & 3019/MUM/2024 Siddharth Suryakant Deshmukh 5 Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income and the assessee offers no explanation about nature and source of investment of explanation offered by him is not, in the opinion of Assessing Officer, satisfactory the value of investment is deemed to be income of the assessee of such financial year. 19.5 On analysis of Para 19.1 the various PDR Investments made in the Financial year 2012,2013,2014,2015,2016 and matured or still continue during the FY 2016-17 works out to be Rs. 1,19,48,813/-out of this amount Rs.16.90,537 is considered and is treated as unexplained investment in flat purchase as marked In Sr. No. 1.3.4.5.6 & 12 FDR with IDBI in para No.19:2) thus balance of Rs 1,02,58,276 is treated as unexplained investment in the In Tate added bagh to the total Income of the assesee as the assessee has not filed any return of Income expect for AY 2017-18. Hence the source FDRs being unexplained-/s 69 are charged on maturity as well as on investment basis. 19.6 In view of detail data of FO/TD, brought on record it is seen that the assessee had made huge investment in the form of TD/ FD etc. in various banks located in Mumbai from 2012 to 2017 many of them got matured in due course, in this regard the assessee could not explain the source of investment of Rs. 1,02,68,276/ 1,02,68,270/- no detail of source with necessary evidence have been filed. This office further issued a show-cause on 04.10.2019 to the assessee to explain the source of all huge investment made in TD/FD along-with other issue as mentioned above and ease was fixed for compliance on 07.10.2019. However, the assessee fled its reply vide letter dated 10.11.2019, 06.12.2019. The assessee company failed to give any explanation about the nature and source of investment, hence the value of Investment as tabulated above-is deemed as unexplained u/s 69 of the Income Tax Act, 1981 and added to the Total Income of the assessee, The Total Income assessed in taxed u/s. 115 BBE of the Act at the rate of 60%.” 6. It was submitted that the assessee has since collected the necessary certificates from the respective banks showing continuous reinvestment of fixed deposits on a yearly basis and the assessee wishes to place on record these additional evidences by way of certificates received from the banks in support of his claim that all these fixed deposits was made in earlier years and only got matured in financial year 2016-17 relevant to impugned A.Y. 2018-19 and the contents of the additional evidence are summarized as under: i. “Fixed Deposit summary from FY 2008-2009 to FY 2016-2017 ii. Corporation Bank - Fixed Deposit Account Statement ITA no. 1205 & 3019/MUM/2024 Siddharth Suryakant Deshmukh 6 iii. Bank of Baroda - Certificate from Bank certifying that fixed deposits were made in FY 2012-2013 iv. Bank of Baroda - Interest Certificates from the Bank for the period 01-01-2011 to 31-03-2017-from each Fixed Deposits with the bank v. Bank of India - Fixed Deposit Balance Certificate from bank for the balance as on 31-03-2014, 31-03-2015 and 31-03-2016 vi. Bank of India - Fixed Deposit Interest Certificate from bank for year FY 2011-2012 to FY 2016-2017 vii. IDBI Bank-Fixed Deposit Account Statement viii. Axis Bank Statement-showing creation of fixed deposit in FY 2012-2013 and redemption of fixed deposit in FY 2016-2017 ix. Kotak Bank-Certificate from Bank for Fixed Deposits over the period 13-08-2011 to 28-05-2021” 7. It was submitted that these are genuine and crucial documents to decide on the merits of the addition so made by the AO and sustained by the ld CIT(A) and therefore in the interest of justice, the same may be allowed to be admitted and the matter may be remitted to the file of the AO for necessary verification. 8. Regarding addition of Rs. 46,19,500/- made by the AO towards unexplained cash deposits invoking provisions of section 69A of the Act, it was submitted that the assessee has submitted an affidavit during the course of assessment proceedings as evident from the order sheet entry dated 19.11.2019 wherein it was submitted that the assessee has sold the gold Jewellery belonging to his mother, wife and sister which were received by them as a shridhan and the sale proceeds were deposited in his bank account and besides that, the maturity proceeds of the FDRs were also got deposited and the same was used for the purchase of the flat. It was submitted that the AO has failed to consider the affidavit so filed by the assessee and the fact that ITA no. 1205 & 3019/MUM/2024 Siddharth Suryakant Deshmukh 7 the gains from sale of jewellery has already been offered to tax in the return of income so filed by the assessee which has also resulted in double addition and even the Ld. CIT(A) has not taken cognizance of the same and on this account, the matter deserve to be set aside to the file of the AO for necessary verification and examination. 9. The Ld. DR in his submission submitted that various notices were given to the assessee during the course of assessment proceedings. However, besides submitting copy of the bank statements as well as certain explanation regarding the maturity proceeds of FDRs, the assessee didn’t submit anything during the course of assessment proceedings and therefore the addition has been rightly made and confirmed by the Ld. CIT(A). At the same, the Ld. DR didn’t specifically objected to the additional evidences which are in the form of the certificates received from the respective banks to demonstrate and corroborate the explanation so submitted by the assessee that these were actually the maturity proceeds of fixed deposits placed in earlier years and not the fresh deposits which were made during the year. It was submitted that where the Bench so decide to admit these additional evidences, the same require necessary verification and the matter therefore need to be set aside to the file of the AO. 10. Regarding the affidavit submitted by the assessee in support of the cash deposits and proceeds from sale of jewellery ITA no. 1205 & 3019/MUM/2024 Siddharth Suryakant Deshmukh 8 already offered to tax in the return of income, the Ld. DR submitted that apparently there is no finding recorded by the AO and the matter therefore needs to be remitted back to the file of the AO. 11. Now coming to the appeal filed by the Revenue where the Revenue has challenged the deletion of addition towards unexplained investment in flat amounting to Rs. 1,10,31,195/-, it was submitted by the ld DR that the Ld. CIT(A) has passed a very cryptic and a non-speaking order and it is not clear as to the basis and the reasoning adopted by the Ld. CIT(A) while passing the impugned order wherein the said addition has been deleted. It was submitted that there is no finding recorded by the ld CIT(A) establishing the linkage between the investment in flat and source of such investment and merely the fact that there are deposits in the bank accounts and there are subsequent withdrawals/transfer towards investment in Flat is not sufficient unless necessary linkage is established especially the quantum and time of deposits and quantum and time of investment. It was submitted that the Revenue is accordingly aggrieved with the said findings of the Ld. CIT(A) and given that in respect of the other two grounds where the Bench so decide to remit the matter back to the fie of the AO, even this ground of appeal may be remitted back. In this regard our reference was ground to the findings of the Ld. CIT(A) which reads as under: “Grounds 5 & 6: On perusal of the assessment order and the submission of the appellant it is noted that the claim of appellant that AO has erred by making double addition is agreed to and is noted that it is already covered.In view of the above, the Grounds are noted as allowed” ITA no. 1205 & 3019/MUM/2024 Siddharth Suryakant Deshmukh 9 12. In his submission, the ld AR submitted that as far as the addition made by the AO towards investment in flat is concerned, the Ld. CIT(A) has rightly deleted the said addition as the same will amount to double addition. It was submitted that the AO has made the addition both in respect of investment in flat as well as the source of such investment which was by way of cash deposit as well as maturity proceeds of fixed deposits and therefore, where the Ld. CIT(A) has deleted the addition holding that it was a case of a double addition, there is no infirmity in the order so passed by the Ld. CIT(A). Regarding the contention of the ld DR in terms of establishing the linkage between the deposits and the investments, it was submitted that the same is evident from the bank statements and there are initial deposits and out of which, there are transfers towards purchase of flat. He accordingly supported the order and the findings of the Ld. CIT(A) as far as the deletion of addition so made by the Ld. CIT(A). 13. We have heard the rival submissions and pursued the material available on record. Firstly, regarding addition of Rs. 1,02,58,276/- u/s. 69 in respect of unexplained fixed deposits made by the AO, the assessee wishes to file additional evidences by way of certificates from the respective banks showing placement of fixed deposits in earlier years and reinvestment thereof from time to time and the fact that the maturity proceeds thereof were credited during the year. We find that these certificates which have been issued by the respective banks ITA no. 1205 & 3019/MUM/2024 Siddharth Suryakant Deshmukh 10 reflect fixed deposits placed by the assessee in earlier years as back as in year 2011 and which as claimed have been renewed and reinvested from time to time and the maturity proceeds have been credited during the year. We therefore find that these certificates so issued by the respective banks will help corroborate the bank statement and the explanation so submitted by the assessee in terms of source of such deposits which have been credited during the year and thus, goes to the root of the matter and are essential and germane to explain the nature and source of deposits in the bank account of the assessee and the same are thus admitted and matter is remitted back to the file of the AO to verify and examine the same and decide the matter afresh as per law after providing reasonable opportunity to the assessee. 14. Regarding addition of Rs. 46,19,500/- made by the AO towards unexplained cash deposits invoking provisions of section 69A of the Act, admittedly, an affidavit has been filed by the assessee during the course of assessment proceedings explaining the source of such deposits out of sale of jewellery belonging to family members of the assessee and as claimed, the gains thereof have also been offered in the return of income so filed by the assessee, however, there is no finding recorded by the AO, hence, we deem it appropriate to remand this matter as well to the file of the AO to examine the same afresh as per law after providing reasonable opportunity to the assessee. ITA no. 1205 & 3019/MUM/2024 Siddharth Suryakant Deshmukh 11 15. Regarding addition towards unexplained investment in flat amounting to Rs. 1,10,31,195/-, we agree with the contention of the ld DR that ld CIT(A) has passed a cryptic and non-speaking order and which doesn’t bring out the reasoning and basis of deleting the addition so made by the AO and therefore, in all fairness, the matter need to be remitted back and we deem it appropriate to remand it to the file of the AO, instead of ld CIT(A), for the reason that deposits in the bank account and investment in the flat are claimed to be linked and given that we have remanded the matter relating to deposits to the file of the AO, this matter is also remanded to the file of the AO and the same will enable the AO to examine the matter holistically and the necessary linkage between the deposits and investment so made by the assessee in purchase of flat and the assessee would also have the necessary opportunity to put forward his submissions and necessary explanations in this regard. In view of the same, we hereby set-aside the matter to the file of AO to examine the same afresh as per law after providing reasonable opportunity to the assessee. 16. In light of aforesaid, the ground of appeal relating to non- issue of notice u/s 143(2) is not adjudicated and left open. 17. Other grounds of appeal are generic and consequential in nature and doesn’t require any separate adjudication. ITA no. 1205 & 3019/MUM/2024 Siddharth Suryakant Deshmukh 12 18. In the result, both the appeals are allowed for statistical purposes. Order pronounced in open court on 28.03.2025. Sd/- (RAHUL CHAUDHARY) Sd/- (VIKRAM SINGH YADAV) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 28/03/2025 Anandi Nambi, Steno Copy of the Order forwarded to: BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// "