RAJUL,BANGALORE vs. INCOME-TAX OFFICER, WARD-2(2)(5), BENGALURU

The instant appeal filed by the assessee is directed against the order dated 25.07.2023 passed by the National Faceless Appeal Centre (NFAC), Delhi arising out of the order dated 13.12.2019 passed by the ITO, Ward 2(2)(5), Bangalore u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for A.Y. 2017-18 whereby and whereunder the addition u/s. 69 of the Act in respect of the cash deposited to the tune of Rs.14,40,000/- in the bank account of the assessee’s society during the demonetisation period made by the Ld.AO has been confirmed.

There is a delay of 25 days in filing the instant appeal before us by the assessee which has been duly explained by the application filed by the assessee for condonation of the same. The crux of the case made out by the assessee is this that upon getting the intimation for the year 2023-24, the assessee approached the auditor who in turn upon verification of the same from the portal got the information of passing of the appellate order on 28.07.2023 for A.Y. 2017- 18. Immediately thereafter the senior Chartered Accountant was consulted and upon his advice the instant appeal filed before us. Such explanation rendered by the assessee seems to be genuine. Relevant to mention that such contention made by the Ld.AR has not been controverted by the Ld.DR with all his fairness. Hence the delay is condoned.

It appears that the assessee deposited cash totaling to Rs.14,40,000/- in the bank account lying with Union Bank of India during demonetization period. The source of the above cash deposit was also duly explained by the assessee upon submitting confirmation of various persons claimed to have repaid loans prior to demonetization period. The list of such persons is also recorded in the order passed by the Ld.AO at page 33. However, as the details of PAN numbers of deductors, copy of lenders agreement etc was not furnished before the authorities below, the issue was not duly verified.

At the time of hearing of the instant appeal, the Ld.Counsel appearing for the assessee submitted before us that as the transaction has not been verified in its proper perspective by the authorities below, the matter may be remanded to the Ld.AO to verify the same in accordance with the CBDT circulars issued in respect of SBNs deposited during the demonetization period. The Ld.AR further submitted that the authorities below that the genuineness of such transaction was also not duly verified and the claim of the assessee was rejected considering the said deposit to be unexplained u/s. 69 of the Act. Such submissions, however, has not been controverted by the Ld.DR.

We have heard the rival submissions made by the respective parties and perused the relevant materials available on record.

We find that the cash deposit made by the assessee remained unverified by the authorities below in its proper perspective as we have already discussed above.

We have further 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 1 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.

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

The assessee is directed to establish all relevant details to substantiate its claim in line with the above applicable instructions. We are aware of the fact that not every deposit during the demonetisation period would fall under category of unaccounted cash. However the burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash.

The Ld.AO shall verify all the details / evidences filed by the assessee based on the above direction and to consider the claim in accordance with law.

It is made clear that while deciding the issue, the Ld.AO should give an opportunity of being heard to the assessee and to consider any further evidence which the assessee may