POOJARI RAJENDRA BABURAO,BANGALORE vs. INCOME TAX OFFICER, WARD-1(2)(1), BANGALORE

The brief facts of the case are that the assessee is an individual and having business income being goldsmith, rental income and agricultural income. The assessee originally filed his return of income and later on, his case was selected for scrutiny through CASS to examine the issue of cash deposits during the demonetization period. Notice u/s. 143(2) was issued and the assessee also responded to the said notice and filed the bank statements, details of cash deposits and the copies of documents relating to agricultural land holding. Thereafter, further notice u/s. 142(1) was issued for which also the assessee responded and filed the details. The AO based on the details furnished by the assessee had found that the assessee had deposited cash in SBNs during the demonetization period in the Kotak Mahindra Bank. Since the assessee is not authorized to accept the SBNs, the AO initially issued a show cause notice and proposed to tax the said deposits as unexplained money u/s. 69A of the Act. The assessee had furnished the cash book, P&L Account with regard to the agricultural receipts and submitted that the cash deposits are from the above sources. Based on the details furnished by the assessee, the AO had accepted a sum of Rs. 5,83,000/- was available with the assessee and therefore, accepted the said SBN as properly explained. Thereafter, the AO had proposed to treat the balance cash deposits out of the total cash deposits as unexplained money u/s. 69A of the Act. The assessee had submitted a reply, out of the said Rs. 7,16,367/-, a sum of Rs. 4,80,000/- was given to him by his father for depositing the said amount in his bank account. The assessee also filed a confirmation letter from his father. The assessee also submitted that the balance of Rs. 2,36,637/- was out of his savings and agricultural activities. The AO, without having any other material evidences, had doubted the said explanation offered by the assessee only for the reason that the assessee’s father instead of depositing the SBN into his bank account, had deposited the said cash into his son’s account without any reason. The AO also stated that the assessee instead of depositing the cash in one go, had deposited the same on different dates. Therefore, the AO had concluded that the explanation offered by the assessee is not accepted and confirmed the addition u/s. 69A of the Act.

As against the said order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) also sought for a remand report from the AO but the AO was unable to send a report since the assessee had not responded to the notice issued by him. The Ld.CIT(A) had also observed that the assessee had never mentioned in his earlier submissions that his father gave the cash for depositing it into his bank accounts and also the Ld.CIT(A) had observed that the father of the assessee had not produced any documents for his journey from his native Kharsundi to Bangalore and the reason for depositing the cash on different dates were not properly explained and confirmed the addition of Rs. 4,80,000/-. The balance Rs. 2,36,637/- was also not accepted by the Ld.CIT(A).

As against the said order, the assessee is in appeal before this Tribunal with a delay of 77 days.

The assessee also filed an application to condone the said delay and submitted that he is a computer illiterate and studied upto 10th class from a village in Maharashtra state and earning his livelihood through the goldsmith business. The assessee further submitted that he is not having any email ID and therefore, the email ID of his cousin was given for and on the information received from his cousin, he participated in the assessment proceedings and assessments have been completed. The assessee also submitted that he has not been served the appeal order and only when the assessee received the penalty notice, he has contacted the consultant and thereafter the appeal order was downloaded from the portal. The assessee also submitted that in the meanwhile, he was having some health issues and therefore, temporarily resides in his native village in Maharashtra and therefore, some miscommunication happened and finally the appeal was made ready through the AR at Bangalore which caused a delay of 77 days and prayed to condone the said delay.

We have considered the said submissions made by the assessee and considering the facts involved in the present case, we are inclined to condone the delay of 77 days in filing the appeal and condoned the said delay.

At the time of hearing, the Ld.AR submitted that the assessee is a goldsmith and also owns some agricultural lands in his native village and out of the said earnings, he has deposited cash into his bank account and therefore, the said deposits could not be termed as unexplained money u/s. 69A of the Act. The Ld.AR further submitted that his father is an aged person and out of the earnings, he had some cash into his hand and therefore, he has requested his son to deposit the said cash into his bank account and therefore, explanation given by the assessee is a valid explanation. The Ld.AR further submitted that when the Department has no other evidence to disprove the case of the assessee and simply the assessee’s father resides in a far away place, the explanation could not be rejected in toto. The Ld.AR further submitted that the assessee’s father does not have any bank account in his name and therefore, he has to necessarily depend on the assessee and the cash deposit also not a big amount to treat the same as unexplained money u/s. 69A of the Act. The Ld.AR further submitted that during the demonetization period, there were restrictions for cash deposits and also because of the KYC issue, the assessee could not deposit the entire amount in one lumpsum. The Ld.AR also submitted that the assessee had furnished the confirmation letter given by his father but the AO without verifying its veracity, had treated the cash deposits as unexplained money u/s. 69A of the Act which is not in accordance with the provisions and prayed to allow the appeal.

The Ld.DR submitted that the AO after going through the cash flow statement and also the other records, had made the addition for the unexplained money and therefore, the order of the AO is to be confirmed.

We have heard the arguments of both sides and perused the materials available on record.

We have gone through the entire records. From the records, we found that the assessee is not a businessman but only a goldsmith earning a meager amount and his total cash deposits during the entire year was Rs. 13,89,000/-. The assessee had also explained the reasons for the cash deposits made during the demonetization period and also tried to demonstrate that the cash of Rs. 4,80,000/- was given by his father to deposit the same into his bank account. The authorities had not accepted the said explanations and they require more documentary evidences for travelling from their native to Bangalore for giving the money to his son for depositing it into his bank account instead of depositing the said amount in the father’s native village. The assessee had explained that the father is an old person and he is not having any account for depositing the SBN and in such circumstances only, the money was given to the assessee for depositing the same into his bank account. Further, the assessee had also furnished a confirmation letter from his father for handing over the cash. It is also a fact that during the demonetization period, there are several restrictions imposed by the banks for depositing the cash and in such circumstances, we cannot find fault with the assessee about the deposits made on 3 different dates. The assessee had also explained that because of the KYC issue, the entire cash received from his father could not be deposited in one lumpsum. We found that the reason is also a valid reason. Even though the assessee had explained the reasons for the cash deposits and also participated and produced all the details required by the AO at the time of assessment, the AO however, not being satisfied, had confirmed the addition. The AO have not brought any material to disprove the claim of the assessee. Considering the peculiarity of the facts, we are in agreement with the Ld.AR and therefore we direct the AO to delete the addition of Rs. 7,16,367/- made u/s. 69A of the Act.

In the result, the appeal filed by the assessee is allowed.