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Income Tax Appellate Tribunal, ‘C’ BENCH : BANGALORE
Before: SMT. BEENA PILLAI & SHRI LAXMI PRASAD SAHU
Per Beena Pillai, Judicial Member
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.
Aggrieved by the addition made by the Ld.AO, the assessee preferred an appeal before the Ld.CIT(A).
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.
9.2. Further CBDT instruction dated 21/02/2017 requires the Ld.AO to verify the basic 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 also suggests certain 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.
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.
10.1 If it is found to be business receipts and is explained by assessee to that extent, the amount to be considered @ 8% as income of the assessee and the balance to be treated as unexplained u/s 68 of the Act. On the other hand if entire amount is found to be unexplained credits which is, not from the business income the sec.68 of the Act to be invoked on the total amount.
10.2 The Ld.AO shall verify all the details/evidences filed by the assessee based on the above direction and applicable instructions to the facts and circumstances of the present assessee and to consider the claim in accordance with law. Accordingly this issue is remanded to the Ld.AO for deonvo verification.
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.
Order pronounced in court on 29th day of November, 2023