ITR is a sacred document prescribed in law and reporting-error cannot be pleaded lightly: ITAT

Briefly stated the facts are such that assessee-individual is engaged in property business. He filed return of income declaring total income at Rs. 7,90,290/- and agricultural income of Rs. 5,04,360/-. The case was selected under scrutiny and statutory notices u/s 143(2)/142(1) were issued from time to time, which were complied with by assessee. Finally, Ld. AO completed assessment whereby (i) an addition of Rs. 1,56,25,499/- was made on account of unexplained cash-deposits in Bank A/c; (ii) agricultural income of Rs. 5,04,360/- was not accepted; and (iii) Development expenses of Rs. 31,83,223/- claimed by assessee as business-deduction were disallowed. Being aggrieved, the assessee filed first-appeal to Ld. CIT(A) and got substantial relief. Now, the revenue as well as assessee both are aggrieved by the order of Ld. CIT(A) and have come before us.

In ground of appeal, the revenue has claimed that the Ld. CIT(A) has erred in deleting the addition of Rs. 1,56,25,499/- (Rs. 1,56,245,499/-) is wrongly mentioned in Ground) made by Ld. AO on account of explained cash-deposits in Bank.

During assessment-proceeding, Ld. AO observed that during the AY 2012-13 (previous year 2011-12), the assessee had made a total cash- deposit of Rs. 1,56,25,499/- in different bank accounts. When the Ld. AO confronted the assessee about the source of cash-deposit, the assessee submitted Cash-Book showing opening balance of Rs. 1,76,64,438/- as on 01.04.2011. The assessee claimed that the impugned cash-deposits of Rs. 1,56,25,499/- were made out of the aforesaid opening cash-balance available with him. Ld. AO perused the return of income of the immediately preceding AY 2011-12 held by department on record and observed that the asssessee had declared “Nil” cash balance as on 31.03.2011 in the return. Accordingly, Ld. AO was not satisfied with the opening cash-balance of Rs. 1,76,64,438/- as on 01.04.2011 claimed by assessee. Therefore, the Ld. AO treated the cash-deposited in bank as unexplained and made addition.

ITAT Observations and findings:

ITR Filing is divided in two categories, viz. (i) “Business-ITR” i.e. the returns in which business income is declared; and (ii) “Non-Business ITR” i.e. the returns not containing business-income. In case of “Business-ITR”, again there are two positions, viz. (i) if the assessee is required to maintain books of account u/s 44AA, the assessee has obligation to file Balance-Sheet which necessarily includes “Cash-Balance”, and (ii) If an assessee is not required to maintain books of accounts as per section 44AA, even then section 139(9) mandates reporting “the amount of cash balance at the end of the previous year”. From this, we can conclude that “cash-balance” has to be mandatorily reported for a person engaged in business irrespective of whether he is required to maintain books of accounts or not. Even the prescribed forms of “Business-ITR” have suitable columns to furnish the details of “cash-balance”. This is a statutory requirement and cannot be taken so lightly. Obviously, a person not engaged in business is not required to make reporting of cash-balance and that is the precise reason that “Non-business ITR” do not have any column for reporting of cash-balance.

During hearing, Ld. AR submitted that the reporting of “Nil” cash balance was just a reporting- error, but the assessee was factually having cash-balance as claimed. We note that the ITR is a sacred document prescribed in law and reporting-error cannot be pleaded so lightly.

As a matter of fact, even if we consider that “Nil” reporting of cash-balance was a reporting-error in AY 2011-12, it would be necessary to go back to some more years because the assessee is claiming that he was having cash- balance from a date prior to 01.04.2008. In that event, there would be a need to dig entire case-record of assessee for several years to identify in which year, the assessee has filed “Business-ITR” or “Non-business ITR” and also the amount of cash-balance disclosed by the assessee in the ITR submitted to revenue authorities.

Since the assessee is claiming to be possessing cash-balance from a date prior to AY 2008-09, it is necessary to dig entire case-record of assessee and examine the cash-balance reported by assessee year to year so as to settle the claim of assessee more judiciously. Therefore, we have no option except to refer this issue back to Ld. AO who shall verify the complete case-record of assessee. This would also address the grievance raised by assessee to the effect “Further the assessing officer has neither given any opportunity as to why the cash balances as on 01.04.2011 be not taken at NIL nor there was any question raised in connection with the alleged cash balance at NIL”. Hence we order accordingly and direct the Ld. AO to examine complete case-records of assessee; give a full opportunity to the assessee to submit explanation on “Nil” cash-balance including justification on reporting-error in ITR; and to look into the aspect whether the reporting-error of cash-balance in the ITRs was only in AY 2011-12 or other years as well and whether such error can be excused by revenue authorities.

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