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Facts
The assessee individual deposited a large sum of cash in his bank account without filing a return of income. The Assessing Officer initiated proceedings u/s 147 and, after the assessee failed to provide explanations, made an addition of Rs.1,94,49,680/- u/s 69A r.w.s. 115BBE.
Held
The Tribunal held that the assessee failed to provide proper explanation and supporting documents for the cash deposits. While the appeal was allowed for statistical purposes, the issue was restored to the Assessing Officer for a final opportunity for the assessee to substantiate his case.
Key Issues
Whether the cash deposits in the bank account can be treated as unexplained expenses under Section 69A and 115BBE of the Income Tax Act, 1961, when the assessee fails to provide satisfactory explanation and documentation.
Sections Cited
147, 148, 144, 69A, 115BBE, 69A
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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
This appeal filed by the assessee is directed against the order dated 29.03.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2015-16.
None appeared on behalf of the assessee. However, written submissions have been filed by the assessee with a request to consider the same and decide the appeal. Accordingly the appeal is heard on the basis of written submissions filed by the assessee and the arguments of the Ld. DR.
Facts of the case, in brief, are that the assessee is an individual and has not filed his return of income. Information was available with the department that the assessee has deposited cash of Rs.1,94,49,680/- in the bank account maintained with M/s. Renuka Mata Multistate Credit Co-operative Society Ltd. during the financial year 2014-15 relevant to assessment year 2015-16 and the transactions remained un-verified. The Assessing Officer therefore, initiated proceedings u/s 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by obtaining the approval from the competent authority and accordingly a notice u/s 148 of the Act was issued. The assessee in response to the same filed his return of income on 12.12.2022 declaring total income of Rs.1,70,990/-.
During the course of assessment proceedings the Assessing Officer asked the assessee to explain the source of such cash deposits in the bank account. However, despite number of opportunities granted by the Assessing Officer, there was no response from the side of the assessee. The Assessing Officer, therefore, completed the assessment u/s 144 of the Act and determined the total income of the assessee at Rs.1,94,49,680/- u/s 69A r.w.s. 115BBE of the Act.
In appeal the Ld. CIT(A) / NFAC dismissed the appeal filed by the assessee by holding as under: “DECISION OF THE APPELLATE AUTHORITY W.R.T GROUND NO.-1 TO 5: The contentions of both the Assessing officer and this Appellant assessee have been carefully considered and this Appellate authority has noted the following points: i. As per the Assessment order dated 22.03.2023, the appellant assessee has been non-responsive to the notices issued to the appellant assessee, the details of the notices issued are provided in the table mentioned above (previous part of this order).
ii. Further, the AO in its order has also placed reliance on the information available on record that, the assessee has deposited cash Rs.1,94,49,680/- in the Account maintained with M/s Shri Renuka Mata Multistate Credit Co-op Society Ltd during the financial year 2014-15 relevant to A.Y. 2015-16. iii. Now, keeping in mind the judgment in case of CIT vs. Durga Prasad More (1971), of the Hon. Supreme Court, the assessing officer has not relied on mere suspicion conjecture or surmise to make this assessment, but has substantial material on record to support his assessment. The AO has taken into account the circumstances and probabilities of the case, along with the concrete evidence, before making an assessment and whereas the taxpayer has evidently not provide a satisfactory explanation for such discrepancies in its books of accounts and other documents and has hence been assessed adversely. It is also noted that, in the case of Sumati Dayal vs. CIT on Taxation (1995) 214 ITR 801 (SC)- the finding of the Hon. Supreme Court of India in this case of Sumati Dayal is a clear example of the application of the principle that the apparent must be considered real until it is shown that there are reasons to believe that it is not the real, and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality........ iv. The Appellant Assessee has now filed its submission with certain documentary evidences to this appellate authority which have been considered. Appellant Assessee in its submissions has stated that, "The nature of business is to purchase various agricultural vegetables, fruits (Banana) from dealers agriculturists and to sell at various Mandi locations like Gangakhed, Jalna, Pandharpur, Vaijapur to various dealers." The nature of the business of the appellant assessee is that, the appellant assessee purchases fruits and vegetable and sell them to the wholesalers. v. It is pertinent to mention here that, the AD has concluded in the assessment order that, the assessee does not maintain any books of accounts. Whereas, the appellant assessee has provided his own TAX AUDIT REPORT for the year under consideration, and on page no.-1 & point-7 in the column others it's written "Assessee is engaged in trading of scrap items". vi. This Appellate authority is in the view that the appellant assessee is trying to provide inaccurate particulars to this appellate authority and to mislead. The tax audit report it is clearly written that, the appellant assessee is in trading of 'scrap metals and in its submissions the appellant is saying that, he is in the business of purchasing various agricultural vegetables, fruits (Banana) from dealers agriculturists and to sell at various Mandi locations like Gangakhed, Jalna. Pandharpur, Vaijapur to various dealers which is not tenable in the eyes of this appellate authority. Further, it is thus believed that, it has become fashionable for some persons to use illiteracy as an excuse to gain sympathy. Also ignorance of law cannot be used as an excuse to break laws and rules. vii. Even appellant assessee has not provided any proof which may show that he is carrying out any other business of fruits. Thus, no submissions in support of this claim have been filed. viii. The Appellant assessee has provided his Bank Statement of account with RENUKAMATA MULTI-STATE URBAN CREDIT CO. SOCIETY", assessee has not provided any particulars that for what purposes the money was transferred and also from the bank statement it is seen that appellant assessee has withdrawn cash from the bank on regular basis. ix. The appellant assessee has also provided cash book with its submissions and the first page of the cash book is also reproduced hereunder x. The cash book provided by the appellant assessee does not have any particulars that, from whom the payment was received or for what purposes the payment was made even also the name of the parties from whom the payment received by the appellant assessee has been mentioned in the cash book. The cash book provided by the appellant assessee is also not certified by the appellant assessee / AR or any auditor. This cash book provided by the appellant assessee is not acceptable in the eyes of the appellate authority. In the view of above discussions facts and discussions from point no.-(i) to (vii), as no infirmity is found in the AO's order, this appellate authority uphold's the addition made by the Assessing officer amounting to Rs.1,94,49,680/- on account of unexplained expenses u/s 69A r.w.s. 115BBE of the Act. In the result, the appeal is NOT ALLOWED.”
Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds:
On the facts and in the circumstances of the case and in law, the Id. CIT(A), NFAC, has:
1. Erred in upholding the addition made by the AO at Rs.1,94,49,680/- being cash deposits in bank, as unexplained expenses u/s. 69A r.w.s. 115BBE of the Act, and thereby not allowed the appeal.
2. Erred in not appreciating that cash deposits in the bank account represents the sale proceeds (turnover) of vegetable, fruits, banana and withdrawals represents payments to the agriculturist from whom such items were purchased. Such deposits and withdrawals were made regularly by the appellant. The deposits can only be treated as business turnover and not unexplained expenses u/s. 69A of the Act.
3. Erred in law in confirming the addition of Rs.1,94,49,680/- u/s. 69A as unexplained expenses. Section 69A relates to unrecorded money, bullion, jewellery, etc and not the expenses. Indeed, none of the ingredients necessary for the applicability of section 69A is present in the case of the appellant. Such amount has been duly recorded as turnover in the regular books of account.
4. Erred in stating that appellant has provided inaccurate particulars to the appellate authority. It is Counsel's mistake in not complying with statutory notices of the AO so also in wrong reporting the business as "scrap" in Audit Report. The appellant is illiterate, engaged the Counsel to advise the appellant and also to deal with legal matters. Due to above lapses, resulted into huge demand of Rs. 1,87,75,002/-, the appellant changed the Counsel. Obtaining letter from the Counsel for such lapses is not possible due to strained relationship.
5. Erred in confirming AO's findings that books of account has not been maintained by the appellant. The appellant had uploaded the Audit Report on 12.12.2022 and return of income was also filed on the basis of such Audit Report on 12.12.2022. Thereafter only, assessment order was passed on 22.03.2023. Thus, Audit Report, return of income was available with the AO before passing the assessment order. The appellant prays for justice and appeal deserves to be allowed. The appellant craves liberty to raise additional grounds, evidences and to modify/amend/delete the grounds of appeal at the time of hearing.
We have heard the Ld. DR, perused the written submissions filed by the assessee and the orders of the Assessing Officer and Ld. CIT(A) / NFAC. It is an admitted fact that during the course of assessment proceedings despite number of opportunities granted by the Assessing Officer, the assessee did not make any submission for which the Assessing Officer was constrained to pass the ex-parte order. We find the Ld. CIT(A) / NFAC upheld the addition made by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the assessee in the written synopsis that the Assessing Officer in the subsequent assessment year has accepted the nature of business of the assessee as trading of fruits and vegetables and has completed the assessment without making any addition. However, a perusal of the order of the Ld. CIT(A) / NFAC shows that the cash book produced by the assessee before him does not give the name of the persons from whom the payments were received or for what purposes the payments were made. Since the assessee did not make any submission before the Assessing Officer and since the Ld. CIT(A) / NFAC has given a finding that the cash book so produced by the assessee does not give the names of the persons from whom the payments have been received or the names of the persons to whom the payments have been made, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to make his submissions, if any, before the Assessing Officer on the appointed date without seeking any adjournment under any pretext, failing which the Assessing Officer is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 16th April, 2025.