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Income Tax Appellate Tribunal, “SMC” “A’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by assessee is directed against order of NFAC for the assessment year 2017-18 dated 4.9.2023 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”). The assessee has raised following grounds of appeal: 1. “On the facts and circumstances of the case, the learned First Appellate Authority (FAA) & AO were not justified in treating Rs.21,41,000/- as unexplained investments and assessing the same as income from other sources.
2. Both the authorities below, have failed to appreciate one important fact in this case is that, the appellant has been carrying on the business of purchase of timber and firewood and had submitted VAT returns in support of her claim.
3. That the appellant craves leave to add, alter, amend and to modify, substitute, delete and to rescind all or any of the ground of appeal on or before the hearing, if necessary, so arises.”
Fouzia Chand Shahi, Chikmagalur Page 2 of 4 2. Facts of the case are that the assessee has made an amount of Rs.21.41 lakhs to assessee’s bank account with Federal Bank bearing Nos.1365600002064, 13560100079902 & 13560100085990. Before ld. AO, assessee has filed no details of source of deposit. Hence, the assessment order was passed u/s 144 of the Act dated 24.9.2019. Against this assessee went in appeal before NFAC who has confirmed the same. Once again, assessee has filed an appeal before me.
I heard the rival submissions and perused the materials available on record. Before me, ld. A.R. has submitted that assessee has been in timber and firewood business and it has been assessed to VAT and this amount has been deposited out of business receipts, which is disclosed as sales in books of accounts and the VAT department has accepted the same. Hence, the addition cannot be made. 3.1 Contrary to this, ld. D.R. submitted that before ld. AO, there was no participation by assessee. However, before NFAC, assessee has not filed source of deposit. Hence, the issue may be remitted to the file of ld. AO to decide the same in the light of CBDT Circular No.3/2017 dated 20.1.2017. In my opinion, the plea of the ld. D.R. is justified, in view of the order of the Tribunal in the case of M/s. Afrozkhan in dated 5.12.2023, wherein the Tribunal has remitted the issue to the file of ld. AO with the following observations:- “3. We have heard the rival submissions and perused the materials available on record. Similar issue came for consideration before this Tribunal in the case of Bhoopalam Marketing Services Pvt. Ltd. in ITA No.375/Bang/2022 dated 15.9.2022 wherein held as under:
“7. We have carefully considered the rival contention and perused the orders of the lower authorities.
Admittedly the assessee has deposited Rs.298,08,080/- during the post- demonetization between 09/11/2016 and 30/12/2016.
Fouzia Chand Shahi, Chikmagalur Page 3 of 4 Therefore, Ld.AO made addition of INR 5,82,76,300/- as income of the assessee u/s. 68 of the income tax act, by passing assessment order u/s. 144 of the Act. The Ld.AO made such addition as the assessee could not file requisite details as the notice was issued to the email address that was not functional. In the interest of justice, we deem it proper to remand the issues back to the Ld.AO for a de novo verification.
7.1 We have carefully gone through the various standard operating procedures laid down by the central board of direct taxes issued from time to time in case of operation clean. The 1st of such instruction was issued on 21/02/2017 by instruction number 03/2017. The 2nd instruction was issued on 03/03/2017 instruction number 4/2017. The 3rd instruction was in the form of a circular dated 15/11/2017 in F.No. 225/363/2017-ITA.II and the last one dated 09/08/2019 in F.no.225/145/2019-ITA.II. These instructions gives a hint regarding what kind of investigation, enquiry, evidences that the assessing officer is required to take into consideration for the purpose of assessing such cases.
In one of such instructions dated 09/08/2019 speaks about the comparative analysis of cash deposits, cash sales, month wise cash sales and cash deposits. It also provides that whether in such cases the books of accounts have been rejected or not where substantial evidences of vide variation be found between these statistical analyses. Therefore, it is very important to note that whether the case of the assessee falls into statistical analysis, which suggests that there is a booking of sales, which is non-existent and thereby unaccounted money of the assessee in old currency notes (SBN) have been pumped into as unaccounted money. 8.1 The instruction dated 21/02/2017 that the assessing officer basic relevant information e.g. monthly sales summary, relevant stock register entries and bank statement to identify cases with preliminary suspicion of back dating of cash and is or fictitious sales. The instruction is also suggested some indicators for suspicion of back dating of cash else or fictitious sales where there is an abnormal jump in the cases during the period November to December 2016 as compared to earlier year. It also suggests that, abnormal jump in percentage of cash trails to on identifiable persons as compared to earlier histories will also give some indication for suspicion. Non- availability of stock or attempts to inflate stock by introducing fictitious purchases is also some indication for suspicion of fictitious sales. Transfer of deposit of cash to another account or entity, which is not in line with the earlier history. Therefore, it is important to examine whether the case of the assessee falls into any of the above parameters are not.”
Fouzia Chand Shahi, Chikmagalur Page 4 of 4 3.1 In view of the above order of the Tribunal, we inclined to remit the issue in dispute to the file of ld. AO for fresh consideration to examine in the light of above order of the Tribunal.”
3.2 Accordingly, considering the facts of present case, in the light of above order of the Tribunal, I remit the issue in dispute to the file of ld. AO for fresh consideration on similar directions. 4. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 26th Dec, 2023