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Facts
The assessee, employed by Tripura Chits Pvt. Ltd., had cash deposits in his bank account during demonetization. Despite opportunities and notices, he did not file his income tax return. The Assessing Officer treated the entire cash deposit and amounts in Form 26AS as income.
Held
The Tribunal held that the addition of Rs. 28 lakhs, reflected as salary in Form 16, should be taxed at the normal rate of tax. However, the issue of cash deposits was remitted back to the jurisdictional AO for fresh adjudication.
Key Issues
Whether the entire cash deposits in the assessee's bank account can be treated as income without proper verification, and if salary income reflected in Form 16 should be assessed as business income or salary income.
Sections Cited
133(6), 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K
Per Laxmi Prasad Sahu, Accountant Member :
This is an appeal filed by the assessee against the Order passed by the CIT(A) vide DIN &Order No: ITBA/NFAC/S/250/2024-25/1065599748(1) dated 12.06.2024.
Briefly stated, the facts of the case are that assessee is employed in M/s. Tripura Chits Pvt. Ltd., and as per the information it was noticed that during demonetization period, there was cash deposit in the bank account of the assessee and on perusal of the portal it was noticed that assessee had not filed return of income and assessee was given opportunities. A show cause notice was also issued to the assessee but the assessee did not file his return of income despite being provided with several opportunities. Notices were sent on the registered email ID available in the web portal of the assessee and notices through speed post / registered post were also sent to the assessee. A notice was issued to the bank under section 133(6) of the Act and bank furnished the information. On perusal of the bank statement, it was noticed that during the demonetization period a sum of Rs.15,80,000/- was deposited and further on verification of the entire bank statement, it was noticed that there was total cash deposit of Rs.36,35,500/-. For natural justice, show cause notice was issued on 06.12.2019 and assessee was asked to justify the source of cash deposits of Rs.36,.35,500/- but the assessee did not respond to any of the notices issued. Therefore, the entire cash deposit was treated as income under section 69A of the Act. Further, on perusal of Form 26AS, it was seen that the assessee has been paid Rs.28 lakhs as salary and TDS of Rs.6,71,601/- made on the salary but the assessee did not file any return of income. Since the assessee did not file return of income, the entire amount appearing in Form 26AS was treated as income. Accordingly, the total income was assessed at Rs.64,34,500/-.
Aggrieved from the above Order, assessee filed appeal before the learned CIT(A). During the appellate proceedings, written submissions were uploaded in the ITBA portal. The learned CIT(A) after considering the entire written submissions confirmed the Order of the AO.
Aggrieved from the above Order, assessee filed appeal before the Tribunal with a delay of 262 days. The learned Counsel reiterated the submissions with regard to delay in filing appeal before the Tribunal, furnished copy of the Order of the Co-ordinate Bench in in which the sequence of events have been narrated and the assessee has been given opportunity to file appeal before the CIT(A). The learned Counsel submitted that the employer company is closed and assessee was working as manager and many depositors were coming to the office and asking for return their deposits. The Director of the company is sent behind the bars. Therefore, assessee shifted to Andhra Pradesh, appeal could not be filed within the due date. On going through the Order of the Co-ordinate Bench and explanation submitted by the learned Counsel by relying on the judgment of the Hon’ble Supreme Court in the case of Collector of Land Acquisition Vs. MST Katiji and Others, (1987) 2 SCC 107 : 1987 (2) SC, the delay in filing the appeal is condoned. The learned Counsel reiterated the submissions made before the learned CIT(A) and submitted that the company has deposited its money in the assessee’s bank account (current account). The cash deposited in the assessee’s bank account does not belong to the assessee. It is the money of the company and he produced Form 16 generated through Traces and enclosed Form 16 whereas income from salary is shown as Rs.27,78,400/-. The gross salary is Rs.28,00,000/-. The gross salary shown in Form 16 enclsoed is matching with Form 16 Part A obtained through traces whereas TDS has been made of Rs.6,71,601/- and TDS deposited is fully matched. Therefore, the addition of Rs.28 lakhs made by the AO is out of salary income received from his employer. Therefore, this addition made is to be taxed at normal rate of tax. Further, in respect of cash deposits in assessee’s bank account, this matter is remitted back to jurisdictional AO since the cash before the AO as well as learned CIT(A) was not presented properly. During the course of hearing the learned Counsel undertook that the assessee will substantiate cash deposits in his bank account does not belong to the assessee, it belongs to the employer company and company has utilised. Therefore, this issue is remitted back to the jurisdictional AO and decide as per law after giving reasonable opportunity of being heard to the assessee and assessee is directed to produce necessary documents to substantiate his claim with cogent documents / evidences and not seek unnecessary adjournments in the case. In case of failure, no second leniency shall be granted to the assessee.
In the result, appeal filed by the assessee ispartly allowed for statistical purposes.