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Facts
The assessee, an individual, did not file a return of income. The Assessing Officer observed cash deposits of Rs. 11,89,500 during demonetization and subsequently assessed total income at Rs. 1,04,79,807, treating all bank deposits as unexplained money under Section 69A.
Held
The CIT(A) modified the addition, directing the computation of income at 0.7% of the amount transferred to Vodafone West Ltd. and treating the balance as unexplained money under Section 69A. The Tribunal upheld the CIT(A)'s decision, finding that the cash received was transferred to Vodafone West Ltd. with a margin of 0.7%.
Key Issues
Whether the CIT(A) was justified in deleting the addition made by the AO on account of unexplained cash deposits and whether the assessee provided sufficient explanation for the nature and source of cash deposits.
Sections Cited
250, 139, 142(1), 143(3), 144, 69A, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-SHRI T.R. SENTHIL KUMAR
O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
This appeal has been filed by the Revenue against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (in short ‘the CIT(A)’) dated 27.08.2024 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for Assessment Year (AY) 2017-18. 2. The solitary grievance raised by the Revenue reads as under:-
Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs.1,04,06,448/- u/s 69A of the Act without appreciating the fact that the assessee failed to give any explanation about the nature and source of cash deposits.
The brief facts of the case are that the assessee is an individual. The assessee had not filed his return of income for the year under consideration. ITO Vs. Mahipalsinh Manharsinh Gohil Asst. Year : 2017-18 - 2– The Assessing Officer observed that the assessee had deposited cash of Rs.11,89,500/- during the period of demonetization. Therefore, the assessee was required to furnish the true and correct return of income and asked to file the same under the provisions of the Act. However, the assessee failed to furnish the return of income either u/s 139 of the Act or in response to notice issued by the Assessing Officer u/s 142(1) of the Act. Since the source of cash deposit made during the period of demonetization remained unexplained, the Assessing Officer completed the scrutiny assessment u/s. 143(3) rw.s. 144 of the Act, assessing total income of the assessee at Rs.1,04,79,807/-. In the assessment order, the Assessing Officer made an addition of Rs.1,04,79,807/- considering all the deposits made in the bank accounts in form of cash as well as credit as unexplained money u/s 69A of the Act.
Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A), who, after considering the submissions of the assessee, modified the addition with the following observations:-
8.2 As regards to the addition of Rs. 1,04,79,807/- made by the AO on account of Cash deposits and Credit entries, appearing in the Bank of Baroda and Corporation Bank account treating them as unexplained money u/s 69A of the Act, it is noticed that in response to the submission of the JAO, the appellant vide letter dated 03.06.2024 submitted as under:-
With regards to the above, the appellants would like to most respectfully submit that a letter issued by Vodafone company has already been produced before your office wherein it is clearly stated that the profit margin on E-top up sales shall be 0.7% for the period of 2013 to 2017. Further, a plain analysis of ITO Vs. Mahipalsinh Manharsinh Gohil Asst. Year : 2017-18 - 3– the bank statements clearly portray that the entire amount deposited has been transferred to Vodafone west Ltd., which makes it evident that the entire sales proceeds has been transferred to Vodafone West Ltd. and the appellant does not have any other source of income.
In view of the above submissions, the claim of the appellant that the deposit in the bank was made from agricultural income is not acceptable. It is also seen that the Appellant had transferred the amount received by him in his account to Vodafone. The appellant had furnished a certificate in the letter head of Vodafone claiming to get 0.7 % commission on E top sales. In remand proceedings the AO rejected the claim of the appellant as Super Distributor of Vodafone on the ground that the appellant had filed a casual letter stating to be a distributor which was issued by ASM having employee ID — 251507. If the AO was doubting the authenticity of the letter he was free to conduct enquiry from Vodafone.
Considering the overall circumstances the JAO is directed to compute the income of the appellant @ 0.7% of the total amount transferred to Vodafone out of total deposit in the all banks of the appellant and treat the balance deposit in all banks of the appellant as unexplained money u/s 69A of the Act to be taxed u/s 115BBE @ 60%. Therefore, the addition made by the AO vide order u/s 144 of the Act for AY 2017-18 is partly confirmed. Accordingly, the grounds raised in this appeal are partly allowed.”
In nutshell, the Ld. CIT(A) treated 0.7% of Rs.1,04,79,807/- as the income of the assessee.
Aggrieved, the Revenue is now in appeal before the Tribunal.
Before us, the Ld. DR submitted that since the assessee failed to give any explanation with supporting evidences about the nature and source of ITO Vs. Mahipalsinh Manharsinh Gohil Asst. Year : 2017-18 - 4– cash deposits, the Assessing Officer is right in adding the value of cash deposits and credits appearing in assessee’s bank accounts as unexplained money u/s 69A of the Act.
The Ld. AR, appearing for the assessee, on the other hand, relied on the order of the Ld. CIT(A).
We have heard the rival contentions and perused the material available on record. We find that the assessee has been depositing cash right from April 2016 to March 2017, not only during the demonetization period. The record proves that the cash received by the assessee are being transferred to the Vodafone West Ltd. and had a margin of 0.7% on the E- Top up sales. Since the decision of the Ld. CIT(A) was based on the remand report of the Assessing Officer after duly examining the nature of deposits, in the absence of any other facts brought to our knowledge, we decline to interfere with the order of the Ld. CIT(A).
In the result, appeal of the Revenue is dismissed.