Loading judgment…
Facts
The assessee, engaged in a grocery business, deposited cash and had other credits totalling Rs. 23,50,989/- in bank accounts during the assessment year 2017-18. The assessee did not file a return of income for this year. The Assessing Officer made an addition of this entire amount as unexplained income. The CIT(A) dismissed the assessee's appeal due to non-appearance.
Held
The Tribunal noted that the assessee's counsel submitted bank statements to support cash sales from the grocery business, and also mentioned cash withdrawals. The Tribunal felt that in the interest of justice, the matter should be restored to the Assessing Officer for de-novo consideration after giving the assessee an opportunity to present all facts regarding the source of deposits.
Key Issues
Whether the entire cash deposits and other credit entries in the bank accounts can be treated as unexplained income without considering the source, such as business sales, and also without giving credit for cash withdrawals?
Sections Cited
69A, 271AAC, 133(6), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has 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 order dated 25.06.2024 passed for A.Y. 2017-18. 2. The assessee has taken the following grounds of appeal:-
“1. Addition on account of unexplained money of Rs. 23,50,989/- u/s 69A of the Income Tax Act, 1961 – On facts and in the circumstances of the case and in law, Ld. CIT(A) by confirming the order passed by the Ld. AO has grossly erred in making addition of Rs. 23,50,989/- to the income of the appellant on account of cash deposits and all other credit entries in the bank accounts.
Initiating penalty proceeding u/s 271AAC of the Act – On facts and in the circumstances of the case and in law, the Ld. AO has grossly erred in initiating the proceedings for levy of penalty u/s. 271AAC of the Act when no such penalty is leviable. The proceedings initiated by the Ld. AO should be dropped as it is wrongly initiated.” Vasudev Udhvani vs. ITO Asst.Year –2017-18 - 2– 3. The brief facts of the case are that the assessee is an individual and engaged in the business of running a grocery shop. As per information available with the Assessing Officer, the assessee deposited cash amounting to Rs. 12,00,000/- during the demonetization period in his bank accounts. The assessee did not file return of income for the impugned year under consideration. The Assessing Officer issued notice under Section 133(6) of the Act to the concerned banks and obtained bank statement maintained by the assessee, with the respective banks. The Assessing Officer observed that there was cash deposit and other credits totaling to Rs. 23,50,989/- in the bank accounts during the impugned assessment year. Accordingly, the Assessing Officer made an addition of Rs. 23,50,989/- to the income of the assessee with the following observations:
5.3 The remarks of the AO while making addition are as under: In the instant case, the assessee has made cash deposits amounting to Rs. 17,53,500/- including Rs.7,25,000/- during demonetization period and also there are other credit entries by way of cheque deposit/ transfer/ clearing amounting to Rs.5,97,489/- in the above bank accounts during the F.Y. 2016-17 relevant to A.Y. 2017-18 but the sources of the same were neither explained nor such money was offered for taxation. The onus is on the assessee to prove that the said cash deposits and other credit entries did not bear the character of income. However, the assessee has failed to do so despite sufficient opportunities afforded vide notices u/s 142(1) of the IT. Act and also in the form of show cause notice during the course of assessment proceedings. Therefore, it is concluded that the cash deposits and other credit entries appearing in the bank accounts of the assessee during the F.Y.2016-17 relevant to A.Y. 2017-18 represented his income from undisclosed sources. As stated above, the assessee has not furnished any details regarding the sources of the cash deposits and other credit entries appearing in the bank accounts and, therefore, the said cash deposits and other credit entries totaling to Rs.23,50,989/- [Rs.17,53,500 + Rs.5,97,489] are treated as unexplained money u/s 69A of the Income Tax Act, 1961 and added to the total income of the assessee for the A.Y.2017-18.
In appeal, the Ld. CIT(A) dismissed the appeal of the assessee on account of non-appearance, with the following observations: Vasudev Udhvani vs. ITO Asst.Year –2017-18 - 3– “6.2 During appellate proceedings the appellant was afforded several opportunities to substantiate the grounds of appeal
. The appellant did not respond to these notices. The appellant has not furnished any evidence or advanced any submission to controvert the findings of the AO. 6.3 Ground 1 is general and is not separately adjudicated. Grounds 2 and 3 are about the merit of the addition made. Since the appellant has not substantiated the claims made in these grounds, these grounds are dismissed. Ground 4 and 5 are consequential. These are not separately adjudicated.
7. In the result, appeal is dismissed.”
5. The assessee is in appeal before us against the aforesaid order passed by the Ld. CIT(A), confirming the additions made by the Assessing Officer.
6. Before us, the Counsel for the assesee submitted that the assessee is an individual running grocery shop under name of “Vasudev Jethabhai Udhvani” and has been regularly filing return of income under presumptive scheme of taxation, since many years. Before us, the Counsel for the assessee submitted that the assessee made cash deposit of Rs. 7,25,000/- during demonetization period since this was in the month of Deepawali and during such time, normally grocery shops made good cash sales. The Counsel for the assessee submitted that it can also be verified from the previous bank statement that the assesse is engaged in the business of running grocery shop and the cash sales from such grocery business is deposited into bank account by the assessee (copy of bank statement was produced before us for our records). Further, the Counsel for the assessee submitted that the assessee is engaged in grocery shop business and since the total income of the assessee did not exceed the basic exemption limit, the assessee did not file return of income for the impugned assessment year, under the belief that he was not required to file return of income. The Counsel for the assessee also submitted that during the year under consideration the assessee had also made csh Vasudev Udhvani vs. ITO Asst.Year –2017-18 - 4– withdrawals amounting to Rs. 2,04,000/- from the aforesaid bank accounts and accordingly, the Ld. CIT(A) erred in facts and in law in confirming the addition of the entire amount of deposits / credits appearing for the bank account, as income of the assessee, without giving credit for corresponding cash withdrawals.
7. In response, Ld. D.R. placed reliance on the observations made by the Assessing Officer and Ld. CIT(A) in their respective orders.
We have heard the rival contentions and perused the material on record.
On going through the facts of the instant case, we are of the considered view that in the interest of justice, the matter may be restored to the file of Assessing Officer for de-novo consideration, after giving due opportunity of hearing to the assessee and giving him opportunity to present all facts in support of the source of cash deposits in the aforesaid bank accounts.