SIDHALINGAPPA GUNDAPPA HUVINABHA vs. RAICHUR

Present appeal arises out of order dated 19/07/2023 passed by NFAC, New Delhi for assessment year 2017-18.

The brief facts of the case are that the assessee is an individual having rental income, agricultural income, interest and other income. The return was filed by the assessee for the year under consideration on 14/03/2018 and the case was selected for scrutiny to verify the source of cash deposits during the demonetization period. The Ld.AO noted that the assessee had deposited Rs.37,19,640/- in 2 bank accounts with SBI and Canara Bank. As the assesee could not furnish any details, the same was added u/s 68 of the Act as unexplained money and taxed it u/s 115BBE of the Act.

The Ld.AO also presumed 8% income on the total bank credits in the SBI and Canara Bank and made an addition of Rs.20,13,663/- being business credits in the hands of the assessee.

The Ld.CIT(A) passed ex-parte order by holding that the assesee has not responded to the notice issued on 14/02/2020 and 21/01/2021 and he upheld the action of the Ld.AO by dismissing the appeal in lemini. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal.

At the outset, the Ld.DR pointed out certain factual mistake in the grounds of appeal raised before this Tribunal and accordingly, the same is not considered. However by and large, the grounds that arises out of the impugned order that has been raised in Grounds 2 -4 are on 2 aspects:  one is on the cash deposits made during demonetization period; and,  the other is in respect of presumptive tax at 8% levied by the Ld.AO on the cash deposits treating it to be business income.

The Ld.AR submitted that before this Tribunal that it was a exparte order u/s 144 of the Act. And before the Ld.CIT(A), the assesee could not appear, as the notices were sent by email which could not be verified and looked it at appropriate time. He submitted that in the interest of justice, the issues may be remanded to the Ld.AO for necessary consideration.

The Ld.DR though did not object to the remand of the issues submitted that assessee should be vigilant enough and should appear on receipt of the notice issued by the authorities.

We have perused the submissions advanced by both in the light of the records placed before us. 9.1. The CBDT instructions dated 09/08/2019 speaks about cash deposits or cash sales, and cash deposits. It provides the manner in which necessary verifications of the books of accounts have been to be made where substantial evidences of vide variation are found. Therefore, it is very important to note that whether the case of the assessee, 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 assessee is directed to establish all relevant details to substantiate its claim in line with the above applicable instructions as the case may be. We are aware of the fact that not every deposit during the demonetization 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.

On the next issue regarding presumptive tax levied on the entire cash deposit by the Ld.AO @ 8%, we note that the Ld.AO already invoked the provisions of sec. 68 of the Act. The said issue has already been remitted by us to the file of the Ld.AO for fresh consideration. Hence this issue has been becomes infructuous otherwise it will amount to double addition which cannot be sustained. Accordingly, this issue is decided in favour of assessee. Accordingly, the appeal filed by the assessee is sent back to the file of Ld.AO for denovo consideration on the cash deposits during the demonetisation period as per the directions in para 10.1 herein above. In the result, the appeal of the assessee is partly allowed for statistical purposes.