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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT:
This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Appeal No.CIT(A), Tiruchirapallai- 1/10795/2019-20 dated 19.04.2022. The assessment was framed by the Income Tax Officer, Ward 1, Tiruvarur for the assessment year
2017-18 u/s.144 of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 28.12.2019.
The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the AO in making addition by AO of unexplained cash deposits amounting to Rs.1,60,87,000/- (including Rs.26,87,000/- made during the demonetization period) and passing ex-parte order by the AO u/s.144 of the Act. For this, assessee has raised various grounds running into 10, which are argumentative in nature and repetitive and hence, need not be reproduced.
Brief facts are that the assessee is a Primary Agricultural Cooperative Credit Society Limited. The AO noted that as per information received from FIU unit, the assessee co-operative bank has made huge cash deposit during financial year 2016-17 relevant to assessment year 2017-18. Since, the assessee failed to furnish return of income for the relevant assessment year 2017-18 on or before the due date of filing of return of income u/s.139(1) of the Act, a notice u/s.142(1) of the Act was issued for calling of return of income and other details. The AO recorded the facts that as the assessee failed to comply with the notice u/s.142(1) of the Act,
Rs.1,60,87,000/- and unexplained cash credits to the tune of Rs.4,67,31,203/- by narrating the facts and observing as under:- “The assessee is a Co-operative Credit Society (AOP) and as per the section 139(1), they have to file their Return of income, if the total income before giving exemption U/s 10A/10B/10BA or deductions under chapter VI-A exceeds the maximum amount not chargeable to tax. But the assessee has not filed their return of income for any of the assessment years.
In view of the above, the assessee has failed to file their return of income for the Assessment year 2017-18 on or before the due date for filing the return of income as provided u/s 139(1) of the Income-tax Act, a notice u/s 142(1) was issued to the assessee calling for return of income for the said assessment year. But the assessee failed to comply with the notice u/s 142(1) despite sufficient time allowed to them and also the assessee has failed to comply with the letter and the pre-assessment notice issued on 27.08.2019 calling for assessee's objection if any by 29.08.2019, it is therefore presumed that the assessee has not explanation to offer with regard to the cash deposits made with the above bank during the financial year 2016-17.
Hence, the under signed is constrained to complete the income tax proceeding U/s 144 of the Income-tax Act. 1961 by treating the entire cash deposits in the above said bank account to the extent of Rs 1.60,87,000/- made during the Financial year 2016-17 as unexplained investment u/s 69 of the Income-tax Act, 1961 for the Assessment year 2017-18, which attracts provision u/s115BBE. Further the other than cash deposit to the tune of Rs.4,67,31,203/- is treated as unexplained income of the assessee.”
Aggrieved, assessee preferred appeal before the CIT(A).
The CIT(A) deleted the addition of unexplained cash credits to the tune of Rs.4,67,31,3023/- and the same was not challenged by Revenue, which has become final. The only addition challenged by assessee is cash deposits made during the financial year 2016-17 relevant to assessment year 2017-18 in the bank account at Rs.1,60,87,000/-. The CIT(A) also confirmed the action of AO by observing in para 10.8 as under:- “10.8 It is also noted that where the cash deposits are made in the bank account, the primary onus is on the assessee to explain the nature and source of the same. Hon'ble Apex Court in the case of CIT vs K. Chinnathamban [2007| 162 Taxman 459 (SC)V[2007] 292 ITR 682 (SC)/[2007| 211 CTR 86 (SC) on the issue of Burden of Proof has held that "The onus of proving the source of deposit primarily rests on the person in whose name the deposit appears in various banks". In this case the appellant has made no efforts to make any compliance by producing the books of account of the Society to verify the above transaction or furnishing any confirmations from the persons or furnishing their PAN from whom the amounts are claimed to be received or to substantiate the transactions even during the period other than demonetization period as the cash deposits donot have any trail and it is for the appellant to discharge the primary onus by substantiating the same by bringing forth cogent and reliable evidence. We cannot lose sight of the prevailing phenomenon/practices that cash transactions/deposits, unless evidenced/explained otherwise, are a likely source of Black Money and demonetization was an exercise with the aim of checking the abuse of black money and many mal-practices were reported in the demonetization period leading to such exercise of verification of such cash deposits made in the bank accounts. But in the demonetization period also, it has not substantiated the cash deposits of Rs 26,87,000/ by bringing forth any evidence to discharge its primary onus. It has even acted against the Public Policy by flouting the instructions of the govt. and has allegedly claimed to have accepted specified bank notes (SBN) during the demonetization period, though it is a cooperative society registered under the cooperative society act of the state govt. It has not filed any Income tax return and despite the notice u/s 142(1) to file the return, did not make any compliance and did not file any reply to pre-assessment show-cause notice. The order of the assessment, records total non-cooperation on the part of the appellant during the assessment proceedings. It has not demonstrated to have maintained the Books of Account as required u/s 44AA of the Income-
Act or getting the same audited u/s 44AB of the Act. Despite opportunities given, no additional documentary evidences have been filed by the appellant even in the appellate proceedings to substantiate the above cash deposits. In absence of any such compliances or discharge of primary onus by the appellant to explain the deposits made on various dates in the Bank account of the appellant during the year (including the demonetization period), the AO cannot be find fault with for making the addition and no relief can be granted in the instant appeal. Considering all the above aspects and discussion as above, the action of the AO in making entire addition to the extent of Rs 1,60,87,000/ (including the cash deposit of Rs 26,87,000/ made during the demonetization period) on account of cash deposits in the Bank account during the year is sustained. The grounds of appeal related to the above addition are dismissed.”
Aggrieved, now assessee is in appeal before the Tribunal.
Now, before us the ld.AR for the assessee Shri K. Meenakshisundaram, ITP only made submissions that the assessment order is ex-parte and moreover the CIT(A) has also not allowed reasonable opportunity of being heard and not allowed time to furnish the confirmations from the persons or furnishing PAN numbers from whom the cash was received and deposited in the bank account. Hence, he requested that the order of CIT(A) be set aside and matter be remanded back to him for fresh adjudication.
On the other hand, the ld. Senior DR only supported the orders of AO and that of the CIT(A) and argued that the assessee is unable to submit any detail, the second inning should not have been provided to them.
After hearing both the sides and going through the fact that the assessee is a rural agricultural co-operative credit society, it is also a fact that cash is being deposited by various persons and the bank has a duty to report the cash deposit u/s.285BA of the Act and in fulfilling these duties, they have already reported the details of high cash deposits made by the society to the CIT(A). However, it is noted that the order of AO is ex-parte and it is not clear that whether before passing ex-parte order u/s.144 of the Act, the AO has allowed reasonable opportunity of being heard or not. Moreover, we have gone through the order of CIT(A) and noted that this particular addition was confirmed only for, the assessee has not made any effort to make compliance by producing books of account of the society to verify the above transactions of cash deposits or furnishing of any confirmation from the persons or furnishing their PAN numbers who has deposited the cash in the assessee’s co- operative society. We noted that the assessee should be allowed opportunity to give the details of the persons who have deposited this cash and in case, the assessee is able to provide complete details including name, address and PAN number of these persons,
no addition should be made in the hands of the co-operative society but the assessee has to provide these basic details and also co- operate with the Department in tracing these persons, who has deposited cash in the co-operative societies bank account. In term of the above, we restore this issue back to the file of the AO who will re-adjudicate the issue after getting information from the assessee co-operative society. In term of the above, the orders of the lower authorities on this issue are set aside and matter remanded back to the file of the AO.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 16th February, 2023 at Chennai.