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TMI Blog2022 (12) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... same, unless linked with the impugned receipt, would not prove the same, again emphasizing that the matter, as clarified earlier, is primarily factual, and would therefore stand to be determined on the basis of firm factual findings, found absent in the instant case. We, for the reasons afore-stated, find no reason to interfere. We may also add that our findings may not be, apart from bearing a general character clarifying on the legal as well as the factual aspects, regarded as final, foreclosing the assessee s case as the same stands set aside for a de novo consideration to the AO, who shall decide the same per a speaking order having regard to the entirety of the facts and circumstances of the case, and the evidences that may be led or explanations furnished before him. We may before parting with this order also clarify that though the ld. Pr. CIT had called for comments from the incumbent AO, as apparent from his order, his findings are based on his examination of the record and due application of mind, with in fact the comments called for being after eliciting the assessee s replies dated 27/7/2021 25/11/2021, so that no adverse inference arises from the calling of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee has not disclosed any cash deposits during the demonetization period, as per Form-1 assessee has disclosed business income of Rs.1,00,00,000/- and investment in assets of Rs.9,70,201/-. This fact has completely left from the eyes of the erstwhile AO and he allowed assessee's claim of cash deposits . Further, the desired information was received in this office on 25/02/2022 with remarks in view of the AO's report, the case is recommended for remedial action under section 263 for the interest of revenue of the range-head. 9. I have considered the e-submission of the assessee furnished during the course of assessment proceedings as well as revision proceedings and have perused the documents available on records. On examination of records and in continuation to the discussion held in ongoing paras specifically in para 2 above it is seen that the assessee has made cash deposit to the tune of Rs.98,00,000/- in his saving bank account No.364002010752135 kept with Union Bank of India, Branch Ranjhi Khamaria, Jabalpur. Further, in the assessment order the A.O. has mentioned that The assessee has declared income under the Scheme of IDS 2016 amounted to Rs.1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the assessee in his cash book on 26/9/2016. It was this cash which was subsequently deposited in the bank during November December, 2016. On a query by the Bench as regards the payment of the demand of Rs. 49.37 lacs (under IDS), he would place on record three Challans exhibiting the deposit of the same through the assessee s bank account with Union Bank of India, Branch Ranjhi Khamaria, Jabalpur, which also exhibit the dates of encashment of the cheques, being 28/11/2016, 16/3/2016 27/9/2017, further clarifying that the said Scheme, initially up to 31/12/2016, had been extended up to 30/9/2017. 3.2 The Revenue s case, on the other hand, is that there has been without doubt no verification of the assessee s claims by the AO in the assessment proceedings. The AO stating that the assessee had disclosed Rs. 100 lacs in cash under IDS, of which Rs. 98 lacs is deposited during the demonetization period (para 3, pg.2 of the assessment order) is not supported by any evidence on record; Form-1, i.e., the Form of Declaration u/s. 183 of the Finance Act, 2016 in respect of IDS, disclosing Rs. 100 lacs as business income and Rs. 9.70 lacs as invested in assets. The finding by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DS by way of cash. This is as there is no whisper of the same in the said declaration (Form-1) . We may for better comprehension reproduce the statement of undisclosed income forming part of Form-1 (PB pg.71): STATEMENT OF UNDISCLOSED INCOME Description of undisclosed income and income declared in the form of investment in assets I. Total undisclosed income Assessment Year to which the undisclosed income pertains Amount of undisclosed income (in Rs.) Nature of undisclosed income Description 1 2001 439368 Other Investment in asset 2 2009 1000000 Business Income 3 2010 530833 Others Investment in asset 4 2010 1000000 Business Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or otherwise for any other productive purpose, even if personal, he would submit that there is no bar in law for a person to hold cash, even if for years together. Clearly, there is thus no answer to the question posed inasmuch as it does not explain the reason for cash retention for years. The question posed is not one of law, but of fact, which calls for explanation inasmuch as the stated behaviour, apart from being inconsistent with the assessee s reply dated 14/10/2019, i.e., years after the date of cash deposit in bank in Nov/Dec, 2016 , furnished in assessment proceedings, also does not stand the test of preponderance of human probabilities or of reasonableness. Further, on being further asked as to why, then, i.e., assuming the reporting of cash balance on 09/11/2016 as a mistake , the assessee did not deposit the cash in bank upon declaring it on 26/9/2016 (as entered in it s cash-book), or soon thereafter, Shri Jain would state that the same was on account of the same having been deployed in business, though had to be deposited in bank due to demonetization. This, then, answers the question posed earlier, i.e., that the cash, stated as declared under IDS, was in fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence to the material on record and the explanations furnished before him. Why, the mention of an asset of which the assessee cannot but be aware of, the asset (in the form of cash) in Form-1 would have quelled all such queries, as that would have explained the source of the cash deposit subsequently during the demonetization period, which followed soon after the issue of Form 2 on 13/10/2016. The only question that would have in that case survived is the completion of the declaration process, as, surely, the stated explanation would not hold unless the said process is formally closed; the assessee admitting to the source of the impugned cash deposit as being the past undisclosed income of his business, so that the only issue (in that case) that obtains is as to whether the same stands disclosed under IDS, or is to be, in the given facts and circumstances of the case, deemed as his income for the current year u/s. 69A. Why, the AO did not make any effort to enquire about Forms 3 4 (under IDS) which, as explained to us by Shri Jain, are in respect of communication by the assessee of the deposit of the demand as certified by Form- 2 (i.e., Rs. 49.37 lacs in the instant case) wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sic questions that ought to have been, but were not, raised by the AO during the assessment proceedings, inflicting his order with non-application of mind. Now, surely, a mistake, which though cannot be lightly inferred, where indeed so, should not foreclose anybody s case. It is this that led to the hearing in the manner afore stated, with it being apparent, and no case to the contrary made out, that no inquiry was made by the AO in assessment despite non-mention of any asset, much less cash, against the declaration for rs. 100 lacs, with, rather, the assessee reporting a cash balance of rs. 2.09 lacs as on 09/11/2016, despite which the AO records of the assessee having declared cash of rs. 100 lacs under IDS. The matter had, accordingly, to be per force examined from the stand-point of the stated case of a mistake , and qua which it shall also have to be in the set aside proceedings. The other of course is the investment in the sundry assets of the business, which appears to be of job work. Reference in this context is made to the decision by the Hon'ble jurisdictional High Court in CIT v. Associated Food Products (P) Ltd . [2006] 280 ITR 377 (MP), wherein it stands held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC), CIT v. Ganpathi Mudaliar [1964] 53 ITR 623 (SC)). More recently, the Hon ble Apex Court in Dy. CIT v. M.R. Logistics (P.) Ltd . held that merely because there has been a declaration under IDS, 2016, which in that case was of a related party, the same, unless linked with the impugned receipt, would not prove the same, again emphasizing that the matter, as clarified earlier, is primarily factual, and would therefore stand to be determined on the basis of firm factual findings, found absent in the instant case. 5.3 We, for the reasons afore-stated, find no reason to interfere. We may also add that our findings may not be, apart from bearing a general character clarifying on the legal as well as the factual aspects, regarded as final, foreclosing the assessee s case as the same stands set aside for a de novo consideration to the AO, who shall decide the same per a speaking order having regard to the entirety of the facts and circumstances of the case, and the evidences that may be led or explanations furnished before him. We may before parting with this order also clarify that though the ld. Pr. CIT had called for comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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