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Facts
The assessee filed a return declaring income of Rs. 7,50,560. The Assessing Officer (AO) observed cash deposits of Rs. 4,85,000 during demonetization, claimed by the assessee as agricultural income and past savings. Despite notices, the assessee failed to provide supporting documents. The AO restricted the claimed agricultural income and added Rs. 2,83,191 as unexplained income.
Held
The Tribunal held that the assessee failed to provide any explanation or evidence for the deposits, thereby failing to discharge the onus placed upon him. Citing judicial precedents, the Tribunal found no infirmity in the order of the Ld. CIT(Appeals) which confirmed the addition.
Key Issues
Whether the assessee discharged the onus to explain the source of cash deposits during demonetization, and whether the addition of unexplained income by the AO was justified.
Sections Cited
234B, 234C, 147, 144, 69A, 50C
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
(Assessment Year: 2017-18) Smit Chhaganbhai Ardeshna, Vs. Assessing Officer, 6, Alka Society BPC Road, Ward-1(2)(4), Akota, Vadodara-390007 Vadodara [PAN No.BIZPA3572R] (Appellant) .. (Respondent) Appellant by : None Respondent by: Ms. Ketaki Desai, Sr. DR 07.01.2025 Date of Hearing Date of Pronouncement 11.02.2025 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)”), ADDL/JCIT(A)-10, Delhi vide order dated 24.06.2024 passed for A.Y. 2017- 18.
The assessee has taken the following grounds of appeal:-
“1. The Learned Income Tax Officer, Ward 1(1)(1), Baroda (“the AO”) erred in fact and in law in making addition of Rs. 2,83,191 as special income.
2. The learned AO erred in fact and in law in making the addition of Rs. 2,83,191/- simply on the basis of cash deposits during the demonetization period.
The learned AO erred in fact and in law in making the addition based on assumptions, surmise and conjectures.
Without prejudice to the above, the learned AO erred in fact and in law making the addition of the gross deposits and not net deposits.
Smit Chhaganbhai Ardeshna vs. AO Asst.Year –2017-18 - 2– Other Grounds 5. The learned AO erred in fact and in Law in initiating penalty proceedings. 271AAC1. 6. The learned AO erred in fact and in Law in charging interest u/s 234B of the Act. 7. The leaned AO erred in fact and in Law in charging interest u/s 234C of the Act. 8. Your Appellant craves the right to add, to alter, to substitute, delete or modify all or any of the above grounds of Appeal
.”
3. The brief facts of the case are that assessee is an individual and for the impugned year under consideration, he filed a return of income declaring total income of ₹7,50,560/-. During the course of assessment, the assessing officer observed that the assessee had deposited cash to the tune of ₹4,85,000/- during the demonetisation period, in different banks. The source of such cash deposits was claimed as coming out of agricultural income, past savings etc. In view of the above, the assessing officer asked the assessee to file details of agricultural income, copy of ledger of agricultural income and expenditure on agricultural produce, proof of receipt of agricultural income etc. However, despite issuance of several notices, the assessee did not file any reply before the assessing officer. On going through the return filed by the assessee, the assessing officer observed that the assessee had shown agricultural income to the tune of ₹3,25,000/-, however, the same was not supported by any supporting documents. The assessing officer perused the returns filed by the assessee for earlier assessment years and observed that for assessment year 2016-17 and 2015-16, the assessee had filed agricultural income to the tune of ₹2,60,000/- and ₹2,01,809/- respectively. In view of the above, the assessing officer held that in absence of any details filed by the assessee, the Smit Chhaganbhai Ardeshna vs. AO Asst.Year –2017-18 - 3– agricultural income of the assessee should be restricted to ₹2,01,809/- as shown in the return of income for assessment year 2015-16. Further, the assessing officer observed that since there is no cash in hand in the return of income filed for assessment year 2016-17, therefore, the claim of the assessee that he was having past savings with him cannot be accepted. Accordingly, the agricultural income of the assessee was restricted to ₹2,01,809/- and deposits of the above amount were accepted as coming out of agricultural income and the balance amount of ₹2,83,191/- was added to the income of the assessee, as unexplained income of the assessee.
4. In appeal, Ld. CIT(Appeals) confirmed the additions with the following observations:
3. It is noted from record that the appellant opted for the Vivad Se Vishwas Scheme (VsVs) vide applying Form -1 dated 30-01-2021 and Form-3 dated 05-02- 2021. The appellant was provided adequate opportunities vide notice dated 01-02- 2021, 08-04-2021 and 14-06-2024 to substantiate the grounds of appeal raised. But no reply or details have been filed by the appellant till date. Further, the appellant has also failed to file Form-4 and Form-5 under VSVS that he had opted for vide filing Form-1 as mentioned above.
5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals) confirming the additions made by the assessing officer. Despite several dates of hearing, the assessee has not caused appearance before us and accordingly, we are of the considered view that the assessee is not interested in pursuing the matter in appellate proceedings before us. We observe that during the appellate proceedings, the assessee has remained absent and has provided no explanation regarding the source of the deposits in his bank account. The assessee has again failed to participate in the proceedings and failed to provide any explanation or supporting evidence to Smit Chhaganbhai Ardeshna vs. AO Asst.Year –2017-18 - 4– challenge the AO's findings. Accordingly, in our view that the assessee failed to discharge the onus placed upon him by the Statute to explain the source of the deposits, and no material facts were brought forward to rebut the findings of the AO/ Ld. CIT(Appeals). In the case of Chuharmal vs. Commissioner of Income-tax (1988) 38 Taxman 190 (SC), where the Supreme Court held that section 69A covers unexplained money, bullion, jewelry, or other valuable articles, and such items are deemed to be income if the assessee fails to provide a satisfactory explanation regarding their source. The Supreme Court in this case held that in cases where the source of income cannot be explained, the income from those sources is deemed to be taxable under section 69A. Additionally, the case of Smt. Srilekha Banerjee and Others vs. CIT, Bihar and Orissa (1964) AIR 697, the Supreme Court held that the burden of proof lies with the assessee to explain the source of money, and if the explanation is unsatisfactory, the Department is justified in treating it as income from undisclosed sources. Further, in the case of CIT, West Bengal- II vs. Durga Prasad More (82 ITR 540) the Court observed that the Taxing Authorities are entitled to examine the surrounding circumstances and apply the test of human probabilities to determine the veracity of an explanation.
Before us, none appeared on behalf of the assessee to represent the case, despite several opportunities of hearing give to the assessee. In the case of Adim Jati Seva Sahkari Samiti Maryadit v. ITO 159 taxmann.com 8 (Raipur - Trib.), the ITAT made the following observations:
Apropos, the claim of the Ld. A.R. that the matter in all fairness be restored to the file of the A.O. for fresh adjudication, the same does not favor us. As observed by us herein above, the grounds based on which the order of the CIT (Appeals) has been assailed before us are devoid and bereft of any merit; therefore, the appeal is liable to be dismissed on the said count itself. Apart from that, we are of a firm conviction that the right vested with an appellant to approach the tribunal by preferring an appeal before it is for a limited purpose, i.e. a grievance that the assessment framed by the AO, or for that matter, order of the CIT(Appeal) were not according to law. In no case can the Tribunal be taken as a forum for an appellant who, as per his volition, had either adopted an evasive or lackadaisical approach before the lower authorities and not participated in the assessment or appellate proceedings to come up with its case for the first time before the Tribunal and, as a matter of right seek restoring of the impugned order to the file of the lower authorities for fresh adjudication.
Considering the facts mentioned above, finding no infirmity in the view taken by the lower authorities who had rightly made/sustained the addition of 2,47,65,369/-, we uphold the same.
In the result, the assessee's appeal is dismissed in terms of our observations above.
Again, in the case of Chiranji Lal Bairwa v. ITO in the ITAT made the following observations, while dealing with a similar issue:
Succinctly, the fact as culled out from the records is that notice u/s 148 was issued on 30.03.2017 after obtaining prior approval of Pr.CIT-3, Jaipur since there was an information with the Department that assessee had sold land vide Khasra No. 1091/954 during FY 2009-10 for Rs.5,00,000/- within the municipal limits of Jaipur city. The value of this land under section 50C of the IT Act, 1961 is Rs.8,36,375/-. Notice u/s 142(1) was issued on 11.08.2017 and served for compliance on 24.08.2017. There was no compliance by assessee to this notice u/s 142(1) and subsequent notices u/s 142(1) and final opportunity/show cause notice u/s 142(1) dated 11.09.2017 for compliance on 25.09.2017. Assessment u/s 147/144 was completed ex-parte on 21.12.2017 at total income of Rs.8,31,375/-. Against this order, appeal was filed before Ld. CIT(Appeals)-3, Jaipur on 27.01.2018 who decided the appeal ex-parte on 19.12.2018 due to total non-compliance by assessee. Against this order assessee moved ITAT, Jaipur Bench, wherein the bench vide order in dated 06.03.2020 set aside the issue to the file of ld. CIT(Appeals) for fresh adjudication.
6. Thus, the bench noted that the assessee was given the chance to represent the case before ld. CIT(A) and even though there were three notices given after set aside of the proceedings by the Bench to the assessee. Three instances of the notices are given in span of 10 months and the assessee did file any submission in support of the grounds raised in the appeal before the ld. CIT(A). Therefore, the ld. CIT(A) has passed a detailed order, mentioning the details of 3 notices issued to the assessee as reproduced here in below: …… Therefore, in support of the fact that the assessee remained noncompliant in the earlier round of litigation. One more chance was given by the Bench vide order dated 06.03.2020 on which the assessee in support of given three occasions did not appear and file the requisite submission before ld. CIT(A). Therefore, it appears that the assessee is not interested in pursuing his case on merits. Before us also while filing the appeal, the assessee did not file any document in support of the claim that why the addition of Rs. 8,31,375/- is not sustainable and it is sale of property and is capital assets and receipt thereof is not chargeable to tax in full. Based on these observations, the appeal of the assessee stands dismissed. In the result, the appeal of the assessee is dismissed.
Accordingly, in view of the above judicial precedents and the fact that the assessee has all throughout remained evasive and non-compliant, we are of the considered view that Ld. CIT(Appeals) has correctly upheld the order of the Assessing Officer. Accordingly, we find no infirmity in the order of Ld. CIT(Appeals) so as to call for interference.
In the result, the appeal of the assessee is dismissed. This Order is pronounced in the Open Court on 11/02/2025