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Facts
The assessee made substantial cash deposits (Rs. 6,09,43,120 for AY 2012-13 and Rs. 1,93,89,000 for AY 2013-14) in bank accounts but did not file returns of income for the relevant assessment years. The Assessing Officer reopened the cases under Section 148 and, due to the assessee's non-compliance and failure to explain the source of deposits, treated these amounts as unexplained income under Section 69A, which was subsequently confirmed by the CIT(A).
Held
The Tribunal noted that the CIT(A) did not consider substantial withdrawals made by the assessee from the bank accounts. Considering the large additions made and in the interest of justice, the Tribunal restored the matter for both assessment years to the Assessing Officer for de-novo consideration, allowing the assessee to provide evidence. This restoration is conditional on the assessee paying a cost of Rs. 10,000/- for each assessment year to the Prime Minister Relief Fund due to past non-cooperation.
Key Issues
Whether cash deposits in bank accounts, where the assessee failed to explain the source or provide supporting evidence, constitute unexplained money under Section 69A of the Income Tax Act, and whether the CIT(A) erred by not considering substantial withdrawals made by the assessee.
Sections Cited
148, 69A, Rule 46A
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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA
O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
Both appeals have been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide orders dated 12.12.2023 & 14.12.2023 passed for A.Ys. 2012-13 & 2013-14.
The assessee has taken the following Grounds of Appeal:
(A.Y. 2012-13) “1. In law, on the facts and in the circumstances of the case, the hon’ble CIT(A) has erred in the confirming the addition of Rs.6,09,43,120 made by the assessing officer u/s 69A as unexplained money. 2. On the facts and circumstances of the case the Hon’ble CIT(A) has erred in confirming the addition made by assessing officer without properly appreciating the additional evidence furnished before Hon’ble CIT(A) under Rule 46A of the Income tax Rules.
&243/Ahd/2024 Dhruvalkumar Sadhubhai Patel vs. ACIT Asst. Years –2012-13 & 2013-14 - 2– 3. In law, on the facts and circumstances of the case, the hon’ble CIT(A) failed to decide the grounds of appeal relating to invocation of provision of Sec 69A of the act by the assessing officer on the basis of bank statement which does not fall within the meaning of “books of account” so as to attract the provision of sec 69A of the act.
4. The hon’ble CIT(A), both in law and on facts of the case erred in the making addition of RS.6,09,43,120 (entire credit side of bank statement) which was trading receipt(sales shown in credit side) of Poultry business without allowing deduction for purchase & other expenses (Debit side of bank statement) and hence, Hon’ble CIT(A) failed to estimate the income by applying “Real Income theory”.
5. The appellant craves to leave to add, alter, delete, amend or withdraw any grounds of appeal on or before hearing of appeal.” First we take up the assesseee’s appeal for A.Y. 2012-13
The brief facts of the case are that the assessee is an individual and during the impugned assessment year, the Assessing Officer was in receipt of information that there was cash deposit to the tune of Rs. 6,09,43,120/- in the bank account of the assessee held with HDFC Bank. The Assessing Officer noted that the assessee had not filed return of income for the relevant assessment year. Accordingly, the case of the assessee was reopened under Section 148 of the Act. During the course of hearing, the Assessing Officer issued several notices of hearing, however, there was no compliance made by the assessee in response to the same. Accordingly, the Assessing Officer treated the cash deposited to the tune of Rs. 6,09,43,120/- in the bank account held with the assesseee, as unexplained income under Section 69A of the Act.
In appeal, Ld. CIT(A) called for remand report and after taking into consideration the contents of the remand report and also the submissions of the assessee, Ld. CIT(A) confirmed the addition with the following observations:
&243/Ahd/2024 Dhruvalkumar Sadhubhai Patel vs. ACIT Asst. Years –2012-13 & 2013-14 - 3–
“11.3 I have considered the facts of the case, perused the remand report of AO/submissions made by the appellant and I concur with the findings of the AO. The issues called to attention in the remand report of the AO are outlined below for better understanding of the case of the appellant:- The appellant has not filed his return of income despite the fact he is liable to file return and to disclose his true income for taxation. During assessment proceedings appellant never co-operated. Though appellant has taken plea for his ill health due to dengue from August -Dec 2019 but it is pertinent to mention that notice u/s 148 was issued on 29/3/2019-and assessment was completed on 24/12/2019.Thus appellant was well aware of the assessment proceedings and had plenty of time to comply with the notices. The appellant also claimed that the notices issued were not received by the appellant but on the other hand, pleaded that due to hospitalization as the appellant was suffering from dengue couldn't attend to the notices. Thus appellant is contradicting his own versions. With respect to the issue of addition u/s 69A of the Act, the appellant failed to furnish complete details of the parties to whom the payments were made during both the assessment and appellate proceedings; and only furnished the ledger account, balance sheet and P&L account of the year under review. The appellant could not provide a single invoice for payment made by the appellant rather only submitted its bank statements; the status of which account is closed. The facts remains that the P&L account and balance sheet submitted by the appellant is not audited which is also admitted by the appellant itself and appears to be an afterthought created to dissuade the appellate with indeterminate submissions. Hence, in the absence of audited books of accounts, P&L account/balance sheet, the authenticity of the documents submitted by the appellant could not be ascertained. It is important to add here that the appellant has not commented anything on merits of the case in response to the remand report furnished by the assessing officer but has tried to draw the attention of this appellate towards what the AO ought to have done in order to verify the information available with the AO whereas the burden of establishing the genuineness of the deposit in order to fall outside the scope of unexplained cash deposit; primarily lies on the appellant. 11.4 Therefore, the appellant failed to submit any data/reply to contravene the information available with the AO neither during the assessment proceedings nor during the appellate proceedings and could not prove that the cash deposits made were genuine by furnishing documentary evidence in order to establish the nature and source of such deposits made. … 11.8 Therefore, the appellant’s claims stands unverifiable and non-substantiated in the absence of specific details necessary to prove the genuineness and creditworthiness of the transactions made. Hence, I find no infirmity in the action of AO and the audition &243/Ahd/2024 Dhruvalkumar Sadhubhai Patel vs. ACIT Asst. Years –2012-13 & 2013-14 - 4– made by the appellant is hereby upheld. Consequently, the appellant’s appeal and grounds of appeal
2 and 3 are dismissed as not maintainable on merits.”
5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A).
Before us, the Counsel for the assessee submitted that if given an opportunity of being heard, the assessee would be in a position to substantiate the source of cash deposit in the bank account. Further, the Counsel for the assessee submitted that the assessment order was passed on ex-parte basis and in the assessee did not get an opportunity to prove the source of cash deposits made in his bank account. Accordingly, it was submitted that in the interest of justice, the matter may be restored to the file of Assessing Officer for de-novo consideration.
In response Ld. D.R. placed reliance on the observations made by the Ld. CIT(A) in the appellate order.
On going through the facts of the instant case, we observe that while confirming additions, Ld. CIT(A) has not given credit of the withdrawals made by the assessee from his bank account during the impugned year under consideration. We observe that on perusal of the bank statement submitted by the assessee, there are substantial withdrawals which have also been made by the assessee from the aforesaid bank account held with HDFC Bank. Accordingly, looking into the fact that substantial amount of addition amounting to Rs. 6,09,43,120/- has been made in the hands of the assessee, in the interest of justice, the matter is hereby restored to the file of Ld. Assessing Officer for deciding the matter afresh, after taking into &243/Ahd/2024 Dhruvalkumar Sadhubhai Patel vs. ACIT Asst. Years –2012-13 & 2013-14 - 5– consideration any evidence which the assessee may choose to file in support it’s case. However, we observe that the assessee has largely remained unresponsive and non-cooperative during the course of assessment proceedings and accordingly, a cost of Rs. 10,000/- is directed to be paid by the assessee for the purpose of getting the matter set-aside to the file of Assessing Officer, to be deposited in the Prime Minister Relief Fund. We also make it clear that in case the assessee still continuous to remain non- coperative and non-compliant, then the Assessing Officer would be at liberty to pass appropriate orders on the basis of material available on record, in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes, subject to payment of Rs. 10,000/-, to be deposited in the Prime Minister Relief Fund.
Now we shall come to assessee’s appeal for A.Y. 2013-14
The assessee has taken the following grounds of appeal:
(A.Y. 2013-14) “1. In law, on the facts and in the circumstances of the case, the hon’ble CIT(A) has erred in the confirming the addition of Rs.1,93,89,000 made by the assessing officer u/s 69A as unexplained money.
2. On the facts and in the circumstances of the case the Hon’ble CIT(A) has erred in confirming the impugned addition without providing adequate opportunity of being heard and thus violated the principles of natural justice.
3. In law, on the facts and in the circumstances of the case, the hon’ble CIT(A) failed to decide the grounds of appeal relating to invocation of provision of Sec 69A of the act by the assessing officer on the basis of bank statement which does not fall within the meaning of “books of account” so as to attract the provision of sec 69A of the act.
&243/Ahd/2024 Dhruvalkumar Sadhubhai Patel vs. ACIT Asst. Years –2012-13 & 2013-14 - 6– 4. The hon’ble CIT(A), both in law and on facts of the case erred in the making addition of Rs.1,93,89,000 (entire credit side of bank statement) which was trading receipt (sales shown in credit side) of Poultry business without allowing deduction for purchase & other expenses (Debit side of bank statement) and hence, Hon’ble CIT(A) failed to estimate the income by applying “Real Income theory”.
The appellant craves to leave to add, alter, delete, amend or withdraw any grounds of appeal
on or before hearing of appeal.”
11. We observe that the facts are similar to those for A.Y. 2012-13, wherein the Assessing Officer noted that the assessee had deposited cash amounting to Rs. 1,93,89,000/- in his bank account and the nature and source of such deposits made in the bank account were not explained by the assessee, since the assessee remained non-compliant both during the assessment proceedings as well as appellate proceedings. Before Ld. CIT(A), the assessee gave a bald statement that the said deposits were out of cash sales against selling of chick, but failed to substantiate the same with books of accounts / evidence / documents. Since the assessee could not file any corroborative evidence in support of it’s case to explain the source of cash deposit, Ld. CIT(A) was constrained to confirmed the additions made by the Assessing Officer.
12. However, in the interest of justice and looking into the quantum of additions made by the Ld. Assessing Officer, the matter is hereby restored to the file of Assessing Officer for de-novo consideration, subject to payment of cost of Rs. 10,000/- for A.Y. 2013-14 as well, to be deposited in Prime Minister Relief Fund.
In the result, the appeal of the assessee is allowed for statistical purposes for A.Y. 2013-14.
&243/Ahd/2024 Dhruvalkumar Sadhubhai Patel vs. ACIT Asst. Years –2012-13 & 2013-14 - 7–
In the combined result, the appeals of the assessee are allowed for statistical purposes for both the impugned assessment years before us, subject to payment of cost of Rs. 10,000/- for each of the assessment years. This Order is pronounced in the Open Court on 23/04/2025
Sd/- Sd/- (NARENDRA P. SINHA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 23/04/2025 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. संबंिधत आयकर आयु� / Concerned CIT 3. 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,