TMI Blog2022 (9) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer, opening balance could not be regarded to be undisclosed income. In the case of ITO Vs Rahul kantilal Shah [ 2022 (9) TMI 375 - ITAT MUMBAI] ITAT held that addition on the basis of the opening balance of unsecured loan treating the same as current year transaction by invoking section 68 of the Income Tax Act is unsustainable - CIT(Appeals) has not erred in facts and in law in allowing part relief to the assessee which is the opening cash balance as on 1st April 2001, on the ground that the same could not be considered as income for the impugned year under consideration. Decided in favour of assessee. Addition u/s 40A(3) disallowing 20% for advances given for purchase of land - assessee contended that since no expenditure has been claimed by the assessee, the provisions of 40A(3) of the Act cannot be invoked - HELD THAT:- CIT(Appeals) has correctly applied the law that for the purpose of invoking provisions of section 40A(3) of the Act, it is a prerequisite that expenditure should have been claimed by the assessee. In the instant facts, admittedly, no expenditure was claimed by the assessee in respect of the amount for advances given for purchase of land. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts in admitting the additional evidences ignoring the fact that the assessee has not at all co-operated at the assessment stage. (ii) Whether the CIT(A) was right in law and on facts in admitting the additional evidences, even though the AO in his remand report has categorically objected for admission of additional evidences under Rule 46A of the I.T. Rules, 1962. 3. The brief facts of the case are that the original assessment order was passed under section 143(3) r.w.s. 144 of the Act for assessment year 2002- 03 dated 26-09-2005 determining total income of the assessee at ₹ 6,23,74,520/- as against the returned loss of ₹ 68,979/-. The assessee filed appeal against the additions before CIT(Appeals)-IV who vide order dated 24-08-2011 dismissed the assessee s appeal for the reason that the appeal was not filed in time. The assessee filed appeal before ITAT, Ahmedabad, which set aside the aforesaid order of the CIT(Appeals)-IV vide order dated 13-09-2013 to the file of CIT for deciding the case in merits in the interests of justice after affording reasonable opportunity of hearing to the assessee. 4. In the remand proceedings pursuant to the order of ITAT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al evidence, if it is necessary for determining the correct taxable income in the interest of justice. Further, we note that the Ld. CIT(Appeals) followed due process of law and admitted the additional evidence after calling for the comments of the AO in the remand report. The Gujarat High Court in the case of CIT v. Kamlaben Sureshchandra Bhatti [2014] 44 taxmann.com 459 (Gujarat) held that where Commissioner (Appeals) allowed assessee to produce additional evidence after calling remand report and permitting Assessing Officer to comment on such additional evidence, said order of Commissioner (Appeals) did not require any interference. Again in the case of CIT v Dharamdev Finance (P.) Ltd [2014] 43 taxmann.com 395 (Gujarat) , the Gujarat High Court held that where Commissioner (Appeals) before admitting fresh evidence, had called for remand report from Assessing Officer and full opportunity was provided to both parties, no interference with Commissioner (Appeals)'s order was called for. In view of the above, we are of the considered view, that in the instant set of facts, Ld. CIT(Appeals) has not erred in facts and in law in permitting the assessee to file additional evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-deposits were made out of withdrawals from the same bank account which were furnished during the course of appellate proceedings and they are forming part of paper book (pages 48 to 57), which evidences that the deposits were made from the withdrawals. The counsel for the assessee relied upon the observations made in the CIT(A) order. 11. We have heard the rival contentions and perused the material on record. It has been held in a number of ITAT decisions that unless the Assessing Officer brings any material on record to show that the cash withdrawn was utilized / used for some other purpose, it could not be said that such cash withdrawals might not have been redeposited in the bank account. This proposition was upheld in the case of ITO v. M/s.Murlidhar Ice-cream Sweet Parlour I.T.A. No.531/Ahd/2012 wherein it was held that the disallowance of interest should be proportionately reduced taking into account the amount not utilized for business. Again, in the case of ITO v. Shri Vishan Lal ITA No.634/LKW/2014 , the Lucknow ITAT held that where the cash deposit and withdrawal in the bank account was made regularly by the assessee during the year, it is very reasonable to say ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered view, that the Ld. CIT(Appeals) has not erred in facts and in law in coming to the conclusion that there is a reasonable presumption that once there are substantial withdrawals from the bank account, then in the absence of the Department being able to establish that such withdrawals were utilised by the assessee elsewhere, it can be reasonably presumed that the same were re-deposited in the bank account. Therefore, in our considered view, Ld. CIT(Appeals) has not erred in facts and in law in deleting the aforesaid addition of ₹ 27,59,700/- on account of unexplained cash deposits. 12. In the result, ground number 1 of the Department s appeal is dismissed. Ground number 2: CIT erred in law and on facts in deleting the addition of ₹ 3, 55,73,880/- out of ₹ 4,28,00,000/- made on account of unexplained expenditure under section 69C of the Act: 13. The brief facts in relation to this ground of appeal are during the year under consideration, assessee paid a sum of ₹ 4,28,00,000/- for land advances out of cash balance available in hand of ₹ 4,29,05,918/-. The AO made addition of ₹ 4,28,00,000/- treating the same as unexplained exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed by Assessing Officer, opening balance could not be regarded to be undisclosed income . In the case of ITO Vs Rahul kantilal Shah (ITAT Mumbai) in ITA No. 6805 /Mum/2018 , ITAT held that addition on the basis of the opening balance of unsecured loan treating the same as current year transaction by invoking section 68 of the Income Tax Act is unsustainable. In view of the above, we are of the considered view that the Ld. CIT(Appeals) has not erred in facts and in law in allowing part relief to the assessee to the extent ₹ 3,55,73,880/-, which is the opening cash balance as on 1st April 2001, on the ground that the same could not be considered as income for the impugned year under consideration. 16. In the result, ground number 2 of the Department s appeal is dismissed. Ground number 3: Ld. CIT(Appeals) has erred in law and on facts in deleting the addition of ₹ 85,60,000/- made in the section 40A(3) of the Act: 17. The brief facts in relation to this ground of appeal are that during the course of assessment, the AO made under section 40A(3) of the Act by disallowing 20% of ₹ 4,28,00,000/- (₹ 85,60,000/-) for advances given for purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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