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2022 (5) TMI 1141 - ITAT MUMBAIReopening of assessment u/s 147 - addition u/s 68 - HELD THAT:- We first reject arguments of AR that provision of section 68 could not have been applied in case where cash is deposited in the bank accounts. We find that assessee is maintaining books of accounts undoubtedly. Addition is made on account of cash deposited in three bank accounts which could not be explained to the satisfaction of the ld AO. We do not find any infirmity in application section 68 on such sums in view of the decision in case of Arunkumar J Muchalla V CIT [ [2017 (8) TMI 1137 - BOMBAY HIGH COURT] where in the decision of CIT v. Bhaichand H. Gandhi [1982 (2) TMI 28 - BOMBAY HIGH COURT] AO has disallowed the expenditure - In the order itself, the learned AO earlier agreed with the assessee that only 40% of such expenditure is disallowable. Order sheet has been reproduced by the AO of the assessment order. When the assessee agreed for 40% disallowance, the learned Assessing Officer made the volte face and disallowed almost 100% of such expenses. In support of that expenditure, assessee has produced the names of the person to whom the payments have been made and the copy of the bank account from which the payments are made. It is also substantiated by the ledger accounts where narration of such expenditure is provided. Only reason for disallowance is that the names of persons, which mentioned in the bank statements and their identity, could not be verified. Amount of gross income shown by assessee AO has disbelieved gross receipt - The gross receipts have been stated to be higher than the cash deposit of ₹30,63,900/- and ₹ 2 lacs. These two items are also separately added by the learned AO. Naturally, the gross receipts i.e. Income as well as the expenditure both have been added into the hands of the assessee. Even otherwise, the learned Assessing Officer should have verified independently whether the cash deposit is a sum received by the assessee as professional fees or not. Further, when the amount is deposited in bank account is emanating from books of accounts, further addition of cash deposit amounts to double addition. Ld AO did not carry out this examination. Advance received Assessing Officer could have asked the assessee to produce details by producing the nature of work carried out by the assessee and continuation of business of Wave Films. IT also needs to be examined when the assessee has offered this as income, if in this year it is advance. However, LD AO preferred to make Google search. Instead of making Google search, the learned Assessing Officer should have made independent inquiry of the above sum paid by Wave Films as advance to the assessee in cash to correct position of the above transactions. It is more pertinent when the assessee claimed that business of wave films continued. Merely, because some infirmity is noted in stamp paper, it could not have resulted into stating that whole transaction is bogus. The payment of advances even after the death of Gurdeep Singh Chadha by Wave Films clearly shows that business of Wave Films might have continued. For this, the assessee has also submitted the Permanent Account Number of the payee and confirmation. Ld AO could have enquired about the persons who gave confirmation and on what basis. If assessee fails to show that, in those circumstances, addition could have been possibly made. Therefore, on this facts and circumstances, we are not in a position to comment on the genuineness of the above transaction, unless the detailed inquiry is carried out by the learned Assessing Office. The LD AO may direct assessee to produce the relevant information/ persons who paid cash and treatment of this sum in the books of wave films to substantiate the veracity of the above agreement. We set aside the issue back to the file of the Assessing Officer with a direction to the assessee to substantiate the transaction of advance received and also to show that the amount of cash deposited in the bank account in cash are covered by gross receipts of the profession shown by the assessee. The assessee is also directed to show the nature of expenditure incurred with adequate evidences. Thereafter ld AO may decide issues afresh on merits after giving assessee proper opportunity of hearing.
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