2023 (2) TMI 388 - AT - Income Tax

Revision u/s 263 - Unexplained cash deposit in bank account - HELD THAT - Case of Joshi Enterprises clearly shows that the issue of cash deposit in the account maintained with SBI Joda Branch has specifically been examined by the AO. AO of Joshi Enterprises has also categorically mentioned in the assessment order that the cash deposits are reflected in the cash book. Joshi Enterprises is running a petrol pump, admittedly they are entitled to accept the specified bank notes. Thus these cash deposit does not belong to the assessee and the assessee has given the explanation for the same and it has been examined by the AO of Joshi Enterprises who had also found that the entries to be correct. This being so, the order of the ld. Pr.CIT in respect of cash deposit maintained with SBI Joda Branch, no more survives for revision u/s.263 of the Act and consequently the same stands quashed. Cash deposits in his bank account maintained with Bank of Baroda, Barbil Branch - In respect of Rs.2,50,000/-, admittedly the cash is belonging to the assessee. A perusal of the assessment order in the case of the assessee shows that there is no mention by the AO in respect of the examination of the same. The assessee has not been able to produce any evidence to show that the AO has examined the issue. This being so, the order u/s.263 of the Act is upheld for the limited purpose of the issue to be examined in respect of Rs.2,50,000/ deposited by the assessee in his bank account maintained with Bank of Baroda, Barbil Branch. Appeal of the assessee stand partly allowed.

Summary

Issues involved:
Condonation of delay in filing appeal, treatment of cash deposits in bank accounts, validity of order passed under section 263 of the Income Tax Act.

Condonation of delay in filing appeal:
The appeal filed by the assessee was initially barred by 17 days, but a condonation application was submitted along with an affidavit explaining the reasons for the delay. The delay was condoned after the Revenue did not object, and the appeal was subsequently heard.

Treatment of cash deposits in bank accounts:
The assessee, an individual and a partner in a firm, had made cash deposits totaling Rs. 38,16,000 in two bank accounts. One deposit of Rs. 35,66,000 was mistakenly made in the assessee's account but belonged to the partnership firm, as confirmed by the AO of the firm. The AO had examined this deposit during the assessment proceedings and accepted the returned income. The order passed under section 263 of the Act in relation to this deposit was quashed as the AO had already considered and accepted the deposit as belonging to the firm. However, another deposit of Rs. 2,50,000 made by the assessee in his personal account was not adequately examined by the AO, leading to the order under section 263 being upheld for further examination.

Validity of order passed under section 263 of the Income Tax Act:
The order passed under section 263 of the Act was upheld in part, with the order regarding the cash deposit of Rs. 35,66,000 being quashed as it was found to belong to the partnership firm and had been appropriately examined by the AO of the firm. However, the order was upheld concerning the cash deposit of Rs. 2,50,000 made by the assessee in his personal bank account, as there was insufficient evidence of examination by the AO in this regard.

In conclusion, the appeal of the assessee was partly allowed, with the order under section 263 being quashed for the cash deposit belonging to the partnership firm but upheld for the deposit made by the assessee in his personal account for further examination.