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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC-1” MUMBAI
Before: SHRI KULDIP SINGH & SHRI OM PRAKASH KANT
PER OM PRAKASH KANT, AM
This appeal has been preferred by the assessee against the order dated 07.11.2021 passed by the National Faceless Appeal Centre (NFAC) (hereinafter referred as ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds:
Jay Nanda Mataji Co Jay Nanda Mataji Co-operative Credit 2 Society Limited ITA NO. 257/M/2022
1. The Assessing Officer erred in making an addition of The Assessing Officer erred in making an addition of The Assessing Officer erred in making an addition of ₹33,33,677/ 33,33,677/- on account of cash deposits made during the year on account of cash deposits made during the year by invoking the provisions of section 69A of the Income Tax Act, by invoking the provisions of section 69A of the Income Tax Act, by invoking the provisions of section 69A of the Income Tax Act, 1961. It was submitted that the deposits made in to the bank out 1961. It was submitted that the deposits made in to the bank out 1961. It was submitted that the deposits made in to the bank out of collections from various members of Co of collections from various members of Co-operative Credit operative Credit Society. The same was upheld by the CIT(A). ety. The same was upheld by the CIT(A).
At the outset, the Ld. counsel of the assessee submitted that At the outset, the Ld. counsel of the assessee submitted that At the outset, the Ld. counsel of the assessee submitted that there was a delay in filing the appeal by 33 days. The Ld. counsel there was a delay in filing the appeal by 33 days. The Ld. counsel there was a delay in filing the appeal by 33 days. The Ld. counsel referred to the affidavit filed by the Secretary of the assessee society referred to the affidavit filed by the Secretary of the assessee society referred to the affidavit filed by the Secretary of the assessee society wherein he has submitted that due to pandemic environment in he has submitted that due to pandemic environment in he has submitted that due to pandemic environment in Mumbai, filing of appeal was delayed. He has further stated that filing of appeal was delayed. He has further stated that filing of appeal was delayed. He has further stated that there is no malafide intention in delaying the filing of appeal. In this there is no malafide intention in delaying the filing of appeal. In this there is no malafide intention in delaying the filing of appeal. In this case, the order of the Ld. CIT(A) has been passed on 07.11.2021 case, the order of the Ld. CIT(A) has been passed on 07.11.2021 case, the order of the Ld. CIT(A) has been passed on 07.11.2021, which, the assessee has claimed to be received on 09.11.2021 and the assessee has claimed to be received on 09.11.2021 and the assessee has claimed to be received on 09.11.2021 and therefore, the due date of filing the appeal before the ITAT was on therefore, the due date of filing the appeal before the ITAT was on therefore, the due date of filing the appeal before the ITAT was on 08.01.2022 whereas the assessee has filed appeal on 10. whereas the assessee has filed appeal on 10.02.2022. whereas the assessee has filed appeal on 10.
The Ld. DR did not controvert the fact that the period of delay The Ld. DR did not controvert the fact that the period o The Ld. DR did not controvert the fact that the period o falls in the Covid-19 Pandemic period. 19 Pandemic period. As the assessee has As the assessee has Jay Nanda Mataji Co Jay Nanda Mataji Co-operative Credit 3 Society Limited ITA NO. 257/M/2022 reasonably explained reasons for the delay in filing the appeal, we reasonably explained reasons for the delay in filing the appeal, we reasonably explained reasons for the delay in filing the appeal, we condoned the said delay and admit condoned the said delay and admitted the appeal for adjudication. ted the appeal for adjudication.
Briefly stated, the facts of the case are that the assessee is a Briefly stated, the facts of the case are that the a Briefly stated, the facts of the case are that the a Credit Co-operative Society. The Assessing Officer observed from operative Society. The Assessing Officer observed from operative Society. The Assessing Officer observed from the data analysis carried the data analysis carried by the Income-Tax Department under Tax Department under exercise of “operation clean money operation clean money” that assessee has deposited that assessee has deposited cash of more than ₹33,33,677/ 33,33,677/- in his bank account in his bank account during the ‘de- monetization period (9 monetization period (9th November to 30 December, 2016) November to 30 December, 2016)’ but had not filed Income-Tax Return for the assessment year under Tax Return for the assessment year under Tax Return for the assessment year under consideration and therefore, the Assessing Officer issued notice u/s consideration and therefore, the Assessing Officer issued notice u/s consideration and therefore, the Assessing Officer issued notice u/s 142(1) directing the assessee to file the return of 142(1) directing the assessee to file the return of 142(1) directing the assessee to file the return of income. As no return of income was filed the Assessing Officer completed the return of income was filed the Assessing Officer completed the return of income was filed the Assessing Officer completed the assessment as best judgment assessment assessment as best judgment assessment on 20.12.2019 on 20.12.2019 in terms of section 144 of the Income Tax Act, 1961 (in short ‘the Act’) section 144 of the Income Tax Act, 1961 (in short ‘the Act’) section 144 of the Income Tax Act, 1961 (in short ‘the Act’) and Jay Nanda Mataji Co Jay Nanda Mataji Co-operative Credit 4 Society Limited ITA NO. 257/M/2022 made addition for said cash deposits of made addition for said cash deposits of ₹33,33,677/ 77/- and interest credited by bank thereon thereon of ₹5,51,357/-, totaling to ₹ ₹38,85,034/-.
Aggrieved, the assessee filed an appeal before the Ld. CIT(A). Aggrieved, the assessee filed an appeal before the Ld. CIT(A). Aggrieved, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) issued notices for hearing but in view of no The Ld. CIT(A) issued notices for hearing but in view of no The Ld. CIT(A) issued notices for hearing but in view of no compliance, the Ld. CIT(A) upheld the additio compliance, the Ld. CIT(A) upheld the additions, observing as under: observing as under:
“6.1 Grounds no. 1 and 2: These grounds or appeal ave related and 6.1 Grounds no. 1 and 2: These grounds or appeal ave related and 6.1 Grounds no. 1 and 2: These grounds or appeal ave related and hence are being taken up together. The appellant has earned interest hence are being taken up together. The appellant has earned interest hence are being taken up together. The appellant has earned interest The assessee admits income from fixed deposits worth Rs. 5,51,357/ income from fixed deposits worth Rs. 5,51,357/- The assessee admits that there was no return of i that there was no return of income filed during the relevant ncome filed during the relevant assessment year due to internal problems in the cooperative society. assessment year due to internal problems in the cooperative society. assessment year due to internal problems in the cooperative society. In view of the same, the assessing officer is correct in adding back this In view of the same, the assessing officer is correct in adding back this In view of the same, the assessing officer is correct in adding back this interest as income of the assessee for the year in question. Further, as interest as income of the assessee for the year in question. Further, as interest as income of the assessee for the year in question. Further, as no return of income had been filed, there is no question of allowing n of income had been filed, there is no question of allowing n of income had been filed, there is no question of allowing deduction under section 80P of the Income tax Act. In view of the deduction under section 80P of the Income tax Act. In view of the deduction under section 80P of the Income tax Act. In view of the above, these grounds of appeal are dismissed. above, these grounds of appeal are dismissed. 6.2 Ground No. 3: During assessment proceedings the appellant Ground No. 3: During assessment proceedings the appellant Ground No. 3: During assessment proceedings the appellant was asked about the credit entries in the bank account which were was asked about the credit entries in the bank account which were was asked about the credit entries in the bank account which were explained as deposits received in cash from the members of the co explained as deposits received in cash from the members of the co explained as deposits received in cash from the members of the co- operative. It is incumbent upon the taxpayer to prove the operative. It is incumbent upon the taxpayer to prove the operative. It is incumbent upon the taxpayer to prove the genuineness of the transaction, the identity of the and the ess of the transaction, the identity of the and the ess of the transaction, the identity of the and the creditworthiness or financial strength of the creditor/subscriber/ creditworthiness or financial strength of the creditor/subscriber/ creditworthiness or financial strength of the creditor/subscriber/ lender, as held in CIT vs. Precision Finance Pvt. Ltd.: 208 ITR 465 lender, as held in CIT vs. Precision Finance Pvt. Ltd.: 208 ITR 465 lender, as held in CIT vs. Precision Finance Pvt. Ltd.: 208 ITR 465
Jay Nanda Mataji Co Jay Nanda Mataji Co-operative Credit 5 Society Limited ITA NO. 257/M/2022
(Cal), Divine Leasing and Finance Ltd. & Ors: 299 ITR 268 and (Cal), Divine Leasing and Finance Ltd. & Ors: 299 ITR 268 and (Cal), Divine Leasing and Finance Ltd. & Ors: 299 ITR 268 and affirmed in CIT v. Lovely Export (P) Ltd.: 319 ITR (st.) 5 (SC). This has d in CIT v. Lovely Export (P) Ltd.: 319 ITR (st.) 5 (SC). This has d in CIT v. Lovely Export (P) Ltd.: 319 ITR (st.) 5 (SC). This has also been reiterated by the Hon'ble Supreme Court in its order in the also been reiterated by the Hon'ble Supreme Court in its order in the also been reiterated by the Hon'ble Supreme Court in its order in the case of NRA Iron & Steel Pvt. Ltd (Arising out of SLP (Civil) No. 29855 case of NRA Iron & Steel Pvt. Ltd (Arising out of SLP (Civil) No. 29855 case of NRA Iron & Steel Pvt. Ltd (Arising out of SLP (Civil) No. 29855 of 2018) pronounced on March 5, 2019. This coul of 2018) pronounced on March 5, 2019. This could have easily been d have easily been proved to producing the details of the contributors and proving their proved to producing the details of the contributors and proving their proved to producing the details of the contributors and proving their capacity to pay, however, this was not done. This onus on the tax capacity to pay, however, this was not done. This onus on the tax capacity to pay, however, this was not done. This onus on the tax payer has neither been discharged at the assessment stage nor at the payer has neither been discharged at the assessment stage nor at the payer has neither been discharged at the assessment stage nor at the appellate stage. appellate stage.
6.2.2 As mentio As mentioned earlier, large cash deposits were made in the ned earlier, large cash deposits were made in the account of the assessee during the demonetization period and these account of the assessee during the demonetization period and these account of the assessee during the demonetization period and these have not been explained. In the case of Commissioner Of Income Tax, have not been explained. In the case of Commissioner Of Income Tax, have not been explained. In the case of Commissioner Of Income Tax, Salem vs K. Chinnathamban on 24 July, 2007, [2007] 162 Taxman Salem vs K. Chinnathamban on 24 July, 2007, [2007] 162 Taxman Salem vs K. Chinnathamban on 24 July, 2007, [2007] 162 Taxman 459 (SC)(20071 292 ITR 682 (SC)/(2007] 211 CTR 86 (SC), the 20071 292 ITR 682 (SC)/(2007] 211 CTR 86 (SC), the 20071 292 ITR 682 (SC)/(2007] 211 CTR 86 (SC), the hon'ble SC has stated in para 5 of its order, "In order to find out hon'ble SC has stated in para 5 of its order, "In order to find out hon'ble SC has stated in para 5 of its order, "In order to find out whether the assessee is the owner of any money in terms of Section whether the assessee is the owner of any money in terms of Section whether the assessee is the owner of any money in terms of Section 69A of the said Act, the principle of Common Law Jurisprudence in 69A of the said Act, the principle of Common Law Jurisprudence in 69A of the said Act, the principle of Common Law Jurisprudence in Section 110 of the Evidence Act, 1872 can be applied. In the case of ion 110 of the Evidence Act, 1872 can be applied. In the case of ion 110 of the Evidence Act, 1872 can be applied. In the case of Chuharmal v. C.I.T. reported in (1988) 3 SCC 588 it has been held by Chuharmal v. C.I.T. reported in (1988) 3 SCC 588 it has been held by Chuharmal v. C.I.T. reported in (1988) 3 SCC 588 it has been held by this Court that the word 'income' in Section 69A of the Income Tax this Court that the word 'income' in Section 69A of the Income Tax this Court that the word 'income' in Section 69A of the Income Tax Act has wide meaning which meant anything which came in Act has wide meaning which meant anything which came in Act has wide meaning which meant anything which came in as gain. In the present case, the assessee did not adduce any evidence to show In the present case, the assessee did not adduce any evidence to show In the present case, the assessee did not adduce any evidence to show that the aforestated amount did not belong to him. In the facts of this that the aforestated amount did not belong to him. In the facts of this that the aforestated amount did not belong to him. In the facts of this case, therefore, the Department was right in drawing inference that case, therefore, the Department was right in drawing inference that case, therefore, the Department was right in drawing inference that the assessee had the aforestated amo the assessee had the aforestated amount as his income which was unt as his income which was subject to tax under Section 69A." The same was upheld in Leela Devi subject to tax under Section 69A." The same was upheld in Leela Devi subject to tax under Section 69A." The same was upheld in Leela Devi vs. ITO ITAT(DELHI). Appeal Number: vs. ITO ITAT(DELHI). Appeal Number: ITA. No. 1423/Del/1420, vs. ITO ITAT(DELHI). Appeal Number: ITA. No. 1423/Del/1420,
Jay Nanda Mataji Co Jay Nanda Mataji Co-operative Credit 6 Society Limited ITA NO. 257/M/2022 pronounced on 11.02.2021 and by Hon'ble Patna HC in Sapta pronounced on 11.02.2021 and by Hon'ble Patna HC in Sapta pronounced on 11.02.2021 and by Hon'ble Patna HC in Sapta Panchait Kirshk Seva Swablambi Sahkari Sa Panchait Kirshk Seva Swablambi Sahkari Samiti Ltd.v. Union of India miti Ltd.v. Union of India (CIVIL WRIT JURISDICTION CASE NO. 3665 OF 2020. OCTOBER 16. (CIVIL WRIT JURISDICTION CASE NO. 3665 OF 2020. OCTOBER 16. (CIVIL WRIT JURISDICTION CASE NO. 3665 OF 2020. OCTOBER 16. 2020). 6.2.3 It is settled law that where the assessee fails to discharge the 6.2.3 It is settled law that where the assessee fails to discharge the 6.2.3 It is settled law that where the assessee fails to discharge the onus by producing cogent evidence and explanation, the AO would be onus by producing cogent evidence and explanation, the AO would be onus by producing cogent evidence and explanation, the AO would be justified in making the justified in making the additions back into the income of the assessee additions back into the income of the assessee as held in Kale Khan Mohammad Hanif v CIT|19631 50 ITR 1 (SC) as held in Kale Khan Mohammad Hanif v CIT|19631 50 ITR 1 (SC) as held in Kale Khan Mohammad Hanif v CIT|19631 50 ITR 1 (SC) and Roshan Di Hatti v. CIT [19771 107 ITR 938 (SC). This onus on the and Roshan Di Hatti v. CIT [19771 107 ITR 938 (SC). This onus on the and Roshan Di Hatti v. CIT [19771 107 ITR 938 (SC). This onus on the tax payer has neither been discharged at the assessment tax payer has neither been discharged at the assessment stage nor at stage nor at the appellate stage. Thus this ground of appeal is dismissed. late stage. Thus this ground of appeal is dismissed. late stage. Thus this ground of appeal is dismissed.”
6. Before us, the Ld. counsel of the assessee submitted that Before us, the Ld. counsel of the assessee submitted that Before us, the Ld. counsel of the assessee submitted that notices were not served upon the assessee and therefore, assessee notices were not served upon the assessee and therefore, assessee notices were not served upon the assessee and therefore, assessee could not represent before the Ld. CIT(A). He submitted that the could not represent before the Ld. CIT(A). He submitted that the could not represent before the Ld. CIT(A). He submitted that the assessee is willing to s willing to pursue its appeal and explain pursue its appeal and explain the source of cash deposits, therefore therefore, one more opportunity should be provided one more opportunity should be provided to the assessee for appearing bef the assessee for appearing before the Ld. CIT(A) and explain ore the Ld. CIT(A) and explain its stand.
Jay Nanda Mataji Co Jay Nanda Mataji Co-operative Credit 7 Society Limited ITA NO. 257/M/2022
We have heard the rival submissions of the parties on the We have heard the rival submissions of the parties on We have heard the rival submissions of the parties on issue-in-dispute and perused the relevant material on record. We dispute and perused the relevant material on record. We dispute and perused the relevant material on record. We find that before both the Assessing Officer as well as before both the Assessing Officer as well as before both the Assessing Officer as well as before the Ld. CIT(A), the explanation of the assessee in respect of cash deposits is CIT(A), the explanation of the assessee in respect of cash deposits is CIT(A), the explanation of the assessee in respect of cash deposits is not on record due to non not on record due to non-compliance on the part of the assessee. t of the assessee. Before us, the Ld. counsel of the assessee has Before us, the Ld. counsel of the assessee has given an undertaking that assessee is willing to submit necessary evidence in support of that assessee is willing to submit necessary evidence in support of that assessee is willing to submit necessary evidence in support of source of cash deposits and co source of cash deposits and co-operate in appellate proceedings operate in appellate proceedings before the Ld. CIT(A). before the Ld. CIT(A).
7.1 In view of the above and f the above and in the interest of substantial justice, in the interest of substantial justice, we restore this matter back to the file of the Ld. CIT(A) for deciding we restore this matter back to the file of the Ld. CIT(A) for deciding we restore this matter back to the file of the Ld. CIT(A) for deciding afresh in accordance with law after providing adequate opportunity afresh in accordance with law after providing adequate opportunity afresh in accordance with law after providing adequate opportunity of being heard to both the assessee as well as the Assessing O of being heard to both the assessee as well as the Assessing O of being heard to both the assessee as well as the Assessing Officer. The grounds raised by the assessee are accordingly The grounds raised by the assessee are accordingly The grounds raised by the assessee are accordingly, allowed for statistical purposes.
Jay Nanda Mataji Co Jay Nanda Mataji Co-operative Credit 8 Society Limited ITA NO. 257/M/2022
In the result, the appeal filed by the assessee is allowed for In the result, the appeal filed by the assessee is allowed for In the result, the appeal filed by the assessee is allowed for statistical purposes.