Case Law Details
Kamlesh Vasant Nerkar Vs CIT (ITAT Mumbai)
Introduction: In a significant ruling, the Income Tax Appellate Tribunal (ITAT) Mumbai pronounced a judgment in the case of Kamlesh Vasant Nerkar Vs CIT, providing relief to the taxpayer. The core issue revolves around the additions made by the Assessing Officer (AO) even when the income had been sufficiently elucidated by the assessee.
Background of the Case: The assessee, Kamlesh Vasant Nerkar, was under scrutiny for not filing his Return of Income for AY 2013-14 and not disclosing a transaction involving the purchase of immovable property. The AO added an amount of Rs 1,85,000 as unexplained money/cash deposited in the bank account.
Main Grounds of Appeal:
1. The failure to disclose the purchase of immovable property.
2. Non-response to multiple notices and letters leading to an ex-parte assessment.
3. An additional Rs 1,85,000 by AO termed as unexplained money/cash deposit.
4. Lack of explanation and justification provided at the time of filing an appeal.
Analysis of the Tribunal:
1. Neglect of the Merits: The CIT(A) had dismissed the appeal of the assessee based on non-prosecution, without delving deep into the actual merits of the case.
2. Evidence Presented by Assessee: The assessee provided numerous documents as evidence, including Form No.16, showcasing his earnings from his job as a teacher. Furthermore, various bank statements and other financial documents corroborated that the disputed amount could have come from legitimate savings.
3. Savings & Sources of Income: From the records, it was evident that the assessee had sufficient savings from his salary, along with additional funds from his mother and wife, which adequately explained the cash deposit.
4. Lack of Adequate Opportunity: The CIT(A) was noted to have made the decision hastily, not providing the assessee with a fair chance to present his case.
Conclusion: The ITAT Mumbai, after a detailed examination of the case, set aside the order passed by the CIT(A) and instructed the AO to consider the amount of Rs.1,85,000 as explained/income of the assessee, thereby directing its deletion. This judgment accentuates the importance of due diligence and the necessity to give taxpayers a fair opportunity to explain their stance before drawing conclusions.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The assessee by filing the present appeal, sought to set aside the impugned order dated 28.02.2023 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2013-14 on the grounds inter-alia that :-
“1. The Appellant failed to file his Return of Income for AY 2013-14 and failed to disclose the transaction of purchase of immovable property.
2. The Appellant had entered into a transaction of purchase of immovable property worth Rs 19,03,395/-in FY 2012-13.
3. The Appellant neither responded to any notices/letters which were issued from time to time and accordingly the assessment was completed u/s 144 Le ex-parte.
4. Ld AO erred in adding Rs 1,85,000 which is treated as unexplained money/cash deposit made into bank account.
5. The Appellant failed to provide any explanation & justification in support of the ground of appeal mentioned above at the time of filling an Appeal with the Commission of Income Tax (Appeals)
The Appellant craves leave to add, amend, supplement, alter and /or delete any of the above Grounds of Appeal.”
2. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : assessee is working as a teacher having income below taxable income and was not required to file his return of income. During the year under consideration the Assessing Officer (AO) noticed in the reopening proceedings that the assessee has purchased immovable property for a consideration of Rs.19,03,395/-, out of which he has paid cash amount of Rs.1,85,000/-. On failure of the assessee to explain the same the AO proceeded to make the additions of Rs.1,85,000/- to the unexplained money/cash deposit in the bank account and thereby framed the assessment under section 147 read with section 144 of the Income Tax Act, 1961 (for short ‘the Act’).
3. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition by dismissing the appeal due to non prosecution. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeal.
4. I have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
5. Bare perusal of the impugned order passed by the Ld. CIT(A) goes to prove that he has dismissed the appeal filed by the assessee due to non prosecution without going into the merits of the case. However, the Ld. A.R. for the assessee challenging the impugned order contended that the amount of Rs.1,85,000/- added by the AO as unexplained income/cash was his saving from the salary as the assessee is working as a teacher and brought on record form No.16.
6. The assessee has also brought on record his bank statement qua the account maintained with Thane District Central Bank available at page 8 to 10, bank statement of Canara Bank of his wife available at page 11 to 12, bank statement of co-operative bank of his file available at page 13 to 15, bill for selling gold by his wife available at page 16 to 27, bank statement of his mother maintained with Canara Bank available at page 29 to 35 which shows that the assessee, his wife and his mother were having ample saving to cover the amount of Rs.1,85,000/- deposited in cash.
7. Moreover from perusal of form No.16 it is proved that the assessee is a permanent employee with Zilla Parishad School, Thane and his annual salary is Rs.4,48,143/- out of which one can easily expect the saving of 40% as he was not income tax payer. Moreover, the assessee has brought on record the fact that he has taken Rs.75,000/- from his mother who was a pensioner and her bank statement available at page 29 to 35 is showing the sufficient balance to lend Rs.75,000/- to the assessee. Furthermore, saving bank account of the assessee was also maintaining balance of Rs.2.18 lakhs.
8. All these facts go to prove that the assessee was having funds out of his own savings, savings of his wife and mother out of which cash amount was withdrawn and deposited the same which stood duly explained. The Ld. CIT(A) has decided the issue in a hurried manner without giving adequate opportunity of being heard to the assessee. In case the issue is remitted back to the Ld. CIT(A) it would further push the assessee, who is a teacher, into protracted litigation, more particularly when amount of addition of Rs.1,85,000/- stood duly explained.
9. In view of what has been discussed above the impugned order passed by the Ld. CIT(A) is set aside and the AO is directed to treat the amount of Rs.1,85,000/- as explained/income of the assessee and addition made is ordered to be deleted.
10. Resultantly, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 28.07.2023.
