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Facts
The assessee filed a return of income for AY 2017-18, which was selected for scrutiny due to large cash deposits during demonetization. The assessment order made an addition of Rs.11,62,000/- on account of these deposits. The CIT(A) upheld the AO's order.
Held
The Tribunal noted that the cash deposits were made in an account operated by the assessee and accounted for in the books of his father's poultry business. While the father had provided confirmation of a loan, the Tribunal, to cut short controversy, estimated 25% of the cash deposits as not out of poultry business income.
Key Issues
Whether cash deposits made during demonetization, related to the father's business but deposited in the assessee's account, can be considered as unexplained income of the assessee.
Sections Cited
143(3), 69A, 115BBE
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Income Tax Appellate Tribunal, ‘A’ (SMC
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL & HON’BLE SHRI MANU KUMAR GIRI
(िनधा�रणवष� / Assessment Year: 2017-2018) Karuppannan Mohanraj, Vs. The Income Tax Officer, D.O.Feb-78, Nalligoundan Pudur, Ward 2, Bodupatti (PO) Namakkal. Namakkal 637 007. [PAN: AYOPM 5805H] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri T.S. Lakshmi Venkataraman, FCA ��यथ� क� ओर से /Respondent by : Shri R. Bhoopathi, Addl. CIT. सुनवाई क� तार�ख/Date of Hearing : 04.02.2025 घोषणा क� तार�ख /Date of Pronouncement : 24.02.2025 आदेश / O R D E R PER MANU KUMAR GIRI (Judicial Member)
The captioned appeal filed by the assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals)(NFAC) Delhi [CIT(A)] dated 26.06.2024 for Assessment Year 2017-18.
Brief facts are as under: The assessee being individual filed return of income for the AY 2017-18 on 19.03.2018 admitting total income of Rs.2,61,420/-. Subsequently, the case was Limited Scrutiny under CASS for examination of “Large value cash deposits during demonetization period as compared to returned income. The assessment was completed u/s 143(3) of the Act by order dated 30.12.2019 on a total income of Rs.14,23,420/- as against returned income of Rs.2,61,420/-. The addition of Rs.11,62,000/- has been made by invoking the provisions of section 69A r.w.s 115BBE of the Act. The aforesaid amount represents cash deposits made in SBNs from 10.11.2016 to 30.11.2016. The ld. CIT(A) upheld the order of the AO on merits. Now, assessee is in further appeal before us.
Before us the ld. counsel for the assessee submitted that SBNs of Rs.11,62,000/- were made in the current Account No.2394201050747/- and the said account was operated by the assessee. The cash deposited was accounted for in the books of KSM Poultry, a Poultry Farm Business run by assessee’s father Mr. K Karuppanan. The ld. counsel further argued that the transactions in the Current Account No 2394201050747 pertained to the poultry business of his father and the cash deposits made in the bank account during the period of demonetization also belonged to his father. Ld. AR also claimed that assessee had filed confirmation letters from his father explaining that his father had taken loan of Rs 1.09 crores from Canara Bank in the year 2014. Due to the old age of his father, the assessee claimed that all the transactions were being done by him. The said current account was being exclusively used for the poultry business of his father and the loan repayment of the bank was also done through the said Current Account. The ld. AR further stated that assessee had received salary from his father for the work done Rs 1,80,000/- per annum in AY 2017-18. A copy of the return filed by the appellant was submitted in the appellate proceedings. The appellant also claimed that he has submitted to the Assessing Officer copies of the returns of income of his father for AYs 2015-16, 2016-17 & 2017-18 wherein the said bank account were disclosed. Ld. Authorized Representative further stated that the above Current Account was in the name of KSM Poultry Farm of which assessee’s father was the proprietor. The appellant has also submitted copy of his father's income tax return and bank account in the appellate proceedings. The appellant claims that the deposits made in the said current account were belonging to his father and were disclosed in his books of accounts.
Per contra, the ld.DR for the revenue argued that the assessee at this stage also not justified his explanation with cogent evidence like cash book. Hence, he supported the impugned order of the ld. CIT(A) and pleaded for the dismissal of the appeal filed by the assessee.
We have gone through the orders of lower authorities and submissions addressed by the parties before us. We note that the assessee has filed his detailed submissions as mentioned at para 5 of the ld. CIT(A). We find from the facts recorded in the order of ld.CIT(A) that assessee’s father has disclosed the said bank account in his Income Tax Return for AYs 2015-16, 2016-17 & 2017-18 even prior to the demonetization. It is also not disputed by the AO that the assessee’s father is not doing poultry business in the name of KSM Poultry Farm. It is undisputed fact that the assessee had received salary of Rs.1,80,000/- from his father for the work performed. We also note that even from this Current Account No.2394201050747 Canara bank, the father of the assessee took loan of Rs.1.09 crores. We note that the confirmation furnished from father was not controverted by the revenue. However, out of entire cash deposit, some deposits outside of poultry business cannot be ruled out. Therefore, to cut short the controversy, we treat only 25% of the cash deposits as not out of poultry farm business. Though the assessee contended that the deposits were sourced out of poultry farm business. Under these circumstances, we estimate income of 25% on impugned deposit of Rs.11,62,000/- which comes to Rs.2,90,500/-.
In the result, appeal filed by the assessee is partly allowed.