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Facts
The assessee filed an appeal against the order of the NFAC concerning assessment year 2017-18. The case was selected for limited scrutiny due to cash deposits during the year, including the demonetization period, totaling Rs. 39,85,000/-.
Held
The Tribunal held that the assessee's explanation for the cash deposits, which involved a gift from a brother-in-law and savings from agricultural income, lacked genuineness and appeared to be an afterthought. The provided evidence was insufficient to establish the source of the funds.
Key Issues
Whether the explanation provided by the assessee for the cash deposits made during the demonetization period is substantiated with valid evidence. Whether the additions made by the Assessing Officer and upheld by the CIT(A) are justified.
Sections Cited
143(2), 142(1), 144, 69A
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Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH
Before: SHRI LALIET KUMAR & SHRI KRINWANT SAHAY
Per Krinwant Sahay, AM : Appeal in this case has been filed by the assessee against the order dated 6.9.2024 of ld. Commissioner of Income Tax National Faceless Appeal Centre (NFAC), Delhi for A.Y. 2017- 18.
966-Chd-2024 Surinder Singh Bassi, Mohali 2 2. Grounds of appeal, as per Form 36 filed by the Assessee are as under: -
That the order of National Faceless Appeal Centre (NFAC) Delhi is arbitrary, illegal and against the fact.
That the National Faceless Appeal Centre (NFAC) erred in law in confirming the orders of assessing officer when the appellant has explained the source of deposit which he received as gift from his brother-in-law.
3. That the National Faceless Appeal Centre (NFAC) erred in law in dismissing the appeal on the ground that it is a afterthought story and ignoring the facts & submission of the appellant.
Brief facts of the case as per the order of the Ld. CIT(A), are as under: - 2.1 As seen from the assessment order, the appellant is an individual, filed return of income for AY 2017-18 on 25.11.2017 declaring total income of Rs. 5,36,900/- under income from House Property, Income from Business, Income from Other Sources and Claimed an exemption of Rs. 4,50,000/- towards agricultural income. The case was selected for limited scrutiny assessment through CASS on the following grounds:
1. Cash deposit during the year.
2. Cash deposit during the demonetization period.
966-Chd-2024 Surinder Singh Bassi, Mohali 3 2.2 As per the information available with the department, the assessee had made cash deposits of Rs.39,85,000/- in Canara Bank with account no 35478400000027 during the demonetization period i.e. 09.11.2016 to 31.12.2016. Subsequently a statutory notice u/s 143(2) was issued on 09.08.2018 and duly served on the Assessee. 2.3 Further notices u/s 142(1) on 12.04.2018. 04.07.2019. 26.08.2019. 10.10.2019 and 17.10.2019 were issued and the same were duly served. However, there has been no compliance made by the assessee to the above notices. 2.5 A show-cause notice dated 15.11.2019 was issued to the assessee requiring him to submit the response otherwise the assessment would be completed u/s 144. The assessee did not make any compliance even to the show-cause notice. 2.5 Subsequently, the AO upon in the perusal of the bank statement of Canara Bank, Desu Majra, and Mohali noticed various credit entries including cash deposits made during the FY 2016-17, especially during demonetization period. The assessee had not filed return of income and not offered income and not paid taxes thereon. Moreover, the assessee had not responded and not submitted any explanation with regard to the cash deposits made during the year under consideration. As the assessee failed to establish the source of the cash deposits, AO 966-Chd-2024 Surinder Singh Bassi, Mohali 4 completed the case by making best judgement assessment u/s 144, taking in to account all relevant materials and concluded the assessment order by bringing to tax Rs. 39,85,000/- as unexplained income u/s 69A.
During proceedings before the Ld. CIT(A), the Counsel filed a written submission. On the other hand, the Ld. CIT(A) gave his findings for the rejection of the submissions made by the Assessee as under: - 5.1 Ground No 1 and 3 are general in nature and, hence, do not call for any separate adjudication Ground No. 2, is against the addition of cash deposit of Rs. 39,85,000/-as unexplained income u/s 69A. 5.2. Ground No-2. On careful perusal of assessment order, grounds of appeal
, statement of facts and submission of the appellant it is noticed that the addition u/s 69A for the Rs 39,85,000/- for A.Y. 2017-18 has been made by the AC on account of the fact that the appellant did not respond and furnish any detail during the assessment proceedings with respect to the cash deposits made in the SBNs during the demonetization period in the bank A/c of the assessee kept in Canara Bank. 5.3 During the appellate proceedings, the appellant stated that the source for cash deposit made in the SBNs in to his bank A/c during the demonetisation period was the gift received for Rs. 4000000/- from his brother-in- 966-Chd-2024 Surinder Singh Bassi, Mohali 5 law Shri. Kesar Singh. The appellant also submitted copy of the bank A/c of Shri Kesar Singh along-with copy of affidavit from Shri. Kesar Singh. The Scanned copy of the copy of bank statement and the copy of affidavit are furnished below. 5.4 The appellant has also stated that he received Rs. 40,00,000/- on 15.10.2016 from Shri. Kesar Singh as gift for purchase of house and that is the amount which he deposited into his Canara bank A/c. 5.5 On careful examination of the copy of the bank statement and the affidavit given by Shri Kesar Singh, it is noticed that on 01.03.2016, it shows a cash withdrawal self Rs. 35,00,000/- and in the affidavit it is stated that Kesar Singh has given gift of Rs. 40,00,000/- on 15.10.2016 out of advance money received back from Shri Harjeet Singh Rs. 16,00,000/- & Shri Gurpal Singh Rs. 20,00,000/- paid to them on 2.3.2016 out of the withdrawals from his bank account & Bal Rs. 4,00,000/- was available out of savings from agricultural Land & withdrawal from bank. 5.6 The above claim seems to be a thorough after thought reason stated by the appellant because first of all it is to be noted that Shri Kesar Singh has withdrawn the amount of Rs. 35,00,000/- in cash on 01.03.2016 and it is claimed that the same (in old currency) has been given as gift to the appellant on 15.10.2016 i.e after a gap of Eight months from the date of withdrawal, for which as per the affidavit it is stated that the money was given to one Mr. Harjeet Singh and other Mr Gurpal Singh and that too both of then 966-Chd-2024 Surinder Singh Bassi, Mohali 6 returned money on 11th and 12th October 2016 respectively which was gifted to the appellant on 15.10.2016 which the appellant has deposited into his bank account when the demonetisation is in place and when there is clear instruction/prohibition from the government that no transaction other than certain specified items were allowed to be transacted in the demonetisation currency as given below: "At the outset, it is an admitted fact that consequent to demonetization of SBNs i.e. Rs.500/- and Rs.1000/- notes, i.e. w.e.f. 09.11.2016, it made illegal to transact in SBNs while conducting business operations or for that matter any other activities in exchange of SBNS. In the instant case, as per the finding of facts recorded by the AO, the appellant failed to submit the proper record as envisaged under RBI Notification in S.O. No.3408(E) dated 08.11.2016 (supra), which forced the AO to make the impugned addition of Rs. 10,00,000/-, being the amount of SBNs deposited in the bank accounts maintained by the assessee during the demonetization period." 5.7 Other than the affidavit which is also not a registered Gift deed, the appellant has not furnished any evidence to show the relationship of Mr. Kesar Singh and the appellant, the identity, genuineness of giving advance by Mr.Kesar singh to Mr. Harjeet Singh and other Mr Gurpal Singh. Similarly no proof for having received the advances back from Mr. Harjeet Singh and other Mr Gurpal 966-Chd-2024 Surinder Singh Bassi, Mohali
7. Singh are submitted. It is also more pertinent to note when both Mr.Kesar singh and the appellant have bank accounts why the gift is given in the form of cash. This act itself clearly proves that the narration in the Affidavit is only an effort made trying to match the self withdrawal made from the bank account of Mr.Kesar singh on 1.3.2016 to link to the cash deposit made by the appellant into his own bank account. Therefore, the above explanation is nothing but a well woven story. 5.8 When there is a strict prohibition to accept /give/transact anything in SBNs it is not possible to accept the submission of the appellant that he had received gift from his relation in SBNs just before the demonetisation i.e on 15.10.2016, which he could have very well deposited immediately into his bank account even if at the worst place, he had not received through bank channel, but the appellant had claimed that he deposited the same during the demonetisation period that too from the withdrawals (le. 01.03.2016) made 08 i.e, before the date of gift (ie. 15.10.2016). 5.9 Also, the claim that balance amount Rs. 4,00,000/- was out of savings from agricultural income is also not supported by details of crops raised, sold to whom, amount of receipt etc. mere copy of land holdings held does not come to the aid of the appellant. 5.10 Hence, in view of the above it is held that the submission of the appellant that the source for deposit are the gift from relative & savings from agricultural income are nothing but mere after thought reasons which lacks 966-Chd-2024 Surinder Singh Bassi, Mohali 8 genuineness. Therefore, the grounds of appeal of the appellant are dismissed.
The ld. DR relied on the order of the CIT(A).
We have considered the written submissions filed by the ld. Counsel for the Assessee and his arguments which are more or less on the line of his written submissions only. During the appellate proceedings, ld. Counsel for the Assessee could not rebut the findings given by the CIT(A) in this appellate order. Such findings given by the ld. CIT(A) has not been rebutted either in the written submissions filed by the Counsel of the Assessee or in the form of arguments made during the proceedings before us, therefore, we do not find any reason to interfere in the findings given by the Ld. CIT(A). Accordingly, assessee’s appeal on grounds mentioned above are dismissed.
In the result, assessee’s appeal is dismissed.
Order pronounced on 09.06.2025.