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2024 Supreme(Guj) 1760
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BHARGAV D. KARIA, NIRAL R. MEHTA, JJ.
The Principal Commissioner Of Income Tax 1 – Appellant
Versus
M/S Sidhanath Enterprise - Opponent
R/TAX APPEAL NO. 73 of 2024
Decided On : 25-06-2024
Advocate Appeared:
For the Appellant : Karan G Sanghani, Mrs Kalpana K Raval
IMPORTANT POINT
The court affirmed that the onus of proving the source of cash deposits lies with the assessee, but found that the evidence supported the legitimacy of the deposits as part of the business operations.
Headnote:
Income Tax - Appeal - Income Tax Act, 1961 - Sections 143(3), 147 - The court discussed the provisions regarding assessment and reopening of assessments, emphasizing the onus on the assessee to prove the source of cash deposits, ultimately finding no merit in the revenue's appeal.
Fact of the Case:
The appellant-revenue challenged the Tribunal's decision which upheld the CIT(A)'s order deleting an addition of Rs.224.53 crore made by the Assessing Officer based on cash deposits in the assessee's bank accounts, arguing that the assessee failed to prove the source of these deposits.
Finding of the Court:
The court found that both the CIT(A) and the Tribunal had correctly determined that the cash deposits were related to the assessee's business of shroff and that the Assessing Officer had previously dropped re-assessment proceedings, indicating no undisclosed income.
Issues: Whether the Tribunal was justified in upholding the deletion of the addition made by the Assessing Officer regarding cash deposits, and whether the onus was on the assessee to prove the source of these deposits.
Ratio Decidendi: The court held that the findings of fact by the CIT(A) and Tribunal were sound, and the revenue's claims lacked merit as the cash deposits were part of the regular business transactions of the assessee.
Result: The appeal is dismissed.
ORDER :
BHARGAV D. KARIA, J.
1. This Appeal is filed under Section 260A of the Income Tax Act, 1961 (for short ‘the Act’) by the appellant-revenue by raising following substantial questions of law, arising from the order dated 29th June, 2022 passed by Income Tax Appellate Tribunal, Rajkot (for short ‘the Tribunal’) in ITA No.374/RJT/2017 for A.Y. 2012- 13.
(i) Whether the Hon'ble Tribunal was justified in relying on the decision of Hon'ble Gujarat High Court in assessee's own case for A.Y. 2008-09, overlooking the fact that the said decision was granted on the issue of re- opening proceedings u/s. 147 of the Income Tax Act, 1961 and not on the merit of the case?
(ii) Whether the Hon'ble Tribunal was justified in confirming the order of Ld. CIT(A), overlooking the fact that during the assessment proceedings u/s. 143(3) of the Income Tax Act, 1961, the assesse has failed to discharge its primary onus cast upon the assesse by not submitting detail of his clients?
(iii) Whether the Hon'ble Tribunal was justified in upholding the order of the Ld. CIT(A) in respect of deletion of addition of Rs.224,53,23,993/- ignoring the fact that the assessee failed to discharge his onus of proving of cash deposits in bank account?
(iv) Whether the Hon'ble Tribunal has erred in not appreciating the fact that the onus was on the assessee to prove the source of cash in his accounts as laid down by Hon'ble Gujarat High Court in the cases of Bhagwandas D. Vachhani (56 taxmann.com 284) and Sarwan Kumar Sharma (49 taxmann.com 101) which onus the assesse has failed to discharge?
2. The assessee who is doing business of shroff and derives income from commission, filed return of income declaring income of Rs.28,790/-.
2.1 The Assessing Officer, on the basis of the information that there was cash deposit of Rs.224,53,23,993/- in sixteen bank accounts of the assessee during the year under consideration, issued notice to the assessee to explain the same.
2.2 In response to the notice, the assessee submitted that he being in the business of shroff, money collected from the customers or on behalf of the customers and that the cash deposited did not belong to him.
2.3 The Assessing Officer, however, did not find the explanation satisfactory and made addition of the aforesaid amount under Section 143(3) of the Act.
2.4 Feeling aggrieved, the assessee preferred appeal before CIT (A) contending that identical addition sought to be made in the A.Y. 2008-09 by reopening the case under Section 147 of the Act which was quashed by this Court and that reopening for the year under consideration subsequently done by the Assessing Officer with respect to the cash deposit in other bank accounts of the asessee was dropped by following the decision of this Court. The CIT (A), considering such submissions, deleted the addition observing as under.
“8. While making assessment u/s.143(3), the A.O. made additions of Rs.224.53 crore for the deposits made by the appellant in 16 bank accounts as mentioned in para 3 of the assessment order. Later on the A.O. reopened the assessment for A.Y. 2008-09, as deposits in the same bank accounts were found pertaining to the period relevant to A.Y.2008-09 also. The appellant filed writ petition before the Hon'ble High Court of Gujarat, Ahmedabad against the reopening of the proceedings for A.Y. 2008-09. The Hon'ble High Court of Gujarat, Ahmedabad quashed the notice issued u/s. 148 of the Act against the appellant. The operative paras of the aforesaid order is reproduced below.
9. Against the above order of the Hon'ble High Court of Gujarat, Ahmedabad, SLP has not been approved by the CBDT, New Delhi as informed by the A.O, vide letter dated 03.01.2017. Thus, the order of the Hon'ble High Court becomes final in this case.
9.1 Although the order of the Hon'ble High Court of Gujarat as reproduced above is regarding re-opening of the proceedings in appellant's case for A.Y.2008-09, but the facts of the case & issue involved in all the assessment years is same
