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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI
Feeling aggrieved by order of first appeal dated 31.10.2023 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 20.09.2019 passed by learned ITO, Betul [“AO”] u/s 144 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on the grounds mentioned in Form No. 36 (Appeal Memo).
The background facts culled out from assessment-order are such that the AO received an information from SFT (Statement of Financial
Page 1 of 9 10,00,000/- in A/c No. 30847054223 with State Bank of India, Moti Chowk, Khagaul, Patna (Bihar) branch during demonetization period. Initially, the AO issued a query-letter dated 14.03.2017 to assessee asking to furnish response regarding source of deposit to which the assessee replied that “Cash withdrawal self account dated 11.08.2016, then re-deposited on 16.11.2016”. Thereafter, the AO issued a notice u/s 142(1) on 12.03.2018 calling the assessee to file return of income of AY 2017-18 relevant to the previous year 2016-17 in which the impugned deposit was made but this notice remained uncompiled. The AO issued some more notices to assessee u/s 142(1) by post but the same were also returned unserved. Then, the AO made service of notice by affixture through departmental inspector. The departmental inspector furnished a report mentioning that the assessee was not residing at that address. Ultimately, the AO collected assessee’s A/c Statement directly from Bank by exercising power u/s 133(6) from which he observed that the assessee made a single deposit of Rs. 10,00,000/- on 16.11.2016 during demonetization period. The AO also issued a notice dated 09.09.2019 and served the same on assessee’s daughter Miss Sahnaj on 10.09.2019 by hand. However, finding no response from assessee, the AO made best judgement assessment u/s 144 treating the impugned deposit of Rs. 10,00,000/- as unexplained income u/s 69A read with section 115BBE.
Further, the AO made one more addition of Rs. 26,159/- on account of ‘interest income’ taking into account the interest credited by bank in A/c
Page 2 of 9 10,26,159/- [Rs. 10,00,000 + Rs. 26,159]. The assessee is aggrieved by addition of Rs. 10,00,000/- u/s 69A and carried matter in first-appeal.
During first-appeal, the assessee made submissions which the CIT(A) considered. Ultimately, the CIT(A) upheld addition by passing following order:
“6.1 Ground No 2 is directed against the Assessing Officer (hereinafter referred to as 'the AO') making addition of cash deposit of Rs 10,00,000. I have carefully perused the facts of the case and the submission of the appellant. The AO found that the appellant has deposited cash amounting to Rs 10,00,000 in the bank account no 30847054223 maintained with State bank of India during the demonetization period i.e. 09.11.2016 to 31.12.2016. I find that in the grounds of appeal the appeal and in her submission dated 11.10.2023, the appellant had submitted that the amount belong to her and she had withdrawn
10. Lakh on 11/08/2016 for her personal purpose to purchase the plot but as the same did not happened, hence the amount was deposited again to her account. But in her submission made on 17.01.2022, the appellant submitted that ".... the cash deposited by me treated as income while the amount was accumulated by me as housewife by past savings also approaches to assessing officer but the same was not taken on record and treated the income. I am housewife and no way of income only the past savings so deposited please consider the fact." Again on 13.02.2022, the appellant submitted as "Sir the case is that the cash deposited by third party against sale of vegetable and I have file the ITR but AO not considered." 6.2 I find that the appellant has given contradictory claims with regard to the cash deposit. The appellant had submitted 3 different explanations:-
1. That the amount belong to her and she had withdrawn 10 Lakh on 11/08/2016 for her personal purpose to purchase the plot but as the same did not happened hence the amount was deposited again to her account.
2. That the cash deposited was accumulated as housewife by past savings.
3. That the cash deposited by third party against sale of vegetable. 6.3 Therefore, it clearly establishes that the explanations given by the appellant is an afterthought and from the different reasons given show that it is not genuine and it is also not backed by any evidences. Even if for the sake of argument, it is accepted that withdrawn 10 Lakh on 11/08/2016 for her personal purpose to purchase the plot but as the same did not happen, hence the amount was deposited again to her account, that fact remains that the source of Rs. 10,00,000 is not explained as she has claimed that she is a Page 3 of 9 AY 2017-18 housewife and has no source of income and therefore the claim of past savings is not tenable and believable. The explanations offered by the appellant are not satisfactory, is contradictory and is not backed by any supporting evidences. Further, various notices were issued to the appellant and even served on her daughter. Therefore, the appellant cannot claim ignorance of the notices. The appellant has not submitted any evidences of her having intimated the AO regarding change in her address. The notices were duly sent to the address available in the department database. In view of the above facts and discussion, the addition made by the AO of Rs. 10,00,000 is sustained and the appeal on this ground is treated as dismissed.”
4. The assessee is aggrieved by order of CIT(A) and has filed this appeal before us.
5. The sole issue involved in present appeal is the addition of Rs.
10,00,000/- made by AO u/s 69A on account of unexplained cash deposit in bank a/c.
Ld. AR for assessee firstly submitted that it is clearly borne out from assessment-order itself that the notices sent by AO were returned unserved upon assessee. Thereafter, when the AO effected service by affixture, the departmental inspector also informed that the assessee was not residing at the address. Further, the last notice was served by AO upon assessee’s daughter and not upon assessee. Thus, it is a fact that none of the notices sent/served by AO reached to assessee. Therefore, the assessee was unable to make compliance of the notices issued by AO.
Then, Ld. AR deliberated upon the order of CIT(A). For this, he filed a copy of assessee’s bank statement of SBI and demonstrated that there was a credit balance of Rs. 9,10,906.78 held by assessee in Bank A/c on Page 4 of 9 balances were accumulated by assessee out of past savings and activities.
From the balance so accumulated/held in bank a/c, the assessee made a cash withdrawal of Rs. 10,00,000/- on 11.08.2016 which is appearing as debit entry in Bank Statement with the caption “Cash Withdrawal Self”. Ld. AR submitted that this withdrawal was made by assessee for personal purpose to purchase a plot but since the same could not happen, the amount was re-deposited in bank a/c on 16.11.2016. Ld. AR submitted that the assessee filed this very explanation to the AO in response to query-letter dated 14.03.2017 initially issued by AO, which was much prior to the issuance of first notice dated 12.03.2018 u/s 142(1). He submitted that the assessee could not make any submission before AO during assessment- proceeding because the AO’s notices did not reach to him but during first- appeal, the assessee submitted the very same explanation to CIT(A) also. Ld. AR submitted that the assessee’s another explanation (which the CIT(A) has treated as contradictory) that the cash was stated to have been deposited from sale of vegetable, was not a direct source for impugned deposit of Rs. 10,00,000/-; that was only a generalized explanation made by the person handling asessee’s case at that level. Ld. AR submitted that the assessee is a lady residing in a smaller place and does not have a proper person to handle her case which is apparently discernible from the weak drafting language employed by the person who handled her case. Ld. AR strongly emphasized that it is a fact that the assessee withdrew cash from bank a/c for personal
Page 5 of 9 demonetization was declared by Govt. of India. He submitted that there is a withdrawal and re-deposit of exactly same amount of Rs. 10,00,000/- and the time gap between withdrawal and re-deposit is also small i.e. withdrawal was made on 11.08.2016 and re-deposit was made on 16.11.2016. Ld. AR submitted that the deposit made by assessee must be treated as fully explained from assessee’s own source of cash withdrawal from same bank a/c and the addition must be deleted. Alternatively, in the interest of justice, the case of assessee may be remanded to the file of AO for adjudication afresh after considering assessee’s explanation.
Per contra, Ld. DR for revenue firstly submitted that the assessee has made non-compliances of the notices issued by AO, therefore the AO had no option except to make best judgement assessment u/s 144. Then, he submitted that the CIT(A) has also observed three contradictory explanations of assessee as to the source of deposit, namely (i) the deposit was made by utilizing cash withdrawal made from bank, (ii) the deposit was made out of past savings, and (iii) the deposit was made out of sale of vegetables. He submitted that even if first two explanations are merged in the sense the past savings were accumulated/held in the form of credit balance in bank a/c from which the cash withdrawal was made; the third explanation given by assessee is certainly contradictory to first two.
Therefore, according to Ld. DR, the CIT(A) has rightly rejected assessee’s
Page 6 of 9 alternatively take an appropriate decision as per wisdom of Bench.
We have considered rival contentions of both sides and perused the orders of lower-authorities as well as the material held on record to which our attention has been drawn. The controversy in present appeal relates to the addition made by AO on account of unexplained cash deposit of Rs. 10,00,000/- made on 16.11.2016. From the assessment-order passed by AO, two facts are clearly discernible. The first fact is such that none of the notices issued by AO could reach to assessee and the departmental inspector also reported that the assessee was not residing at that address.
The last notice was also served upon assessee’s daughter and not upon assessee. The second fact is such that the AO, prior to undertaking exercise of assessment, issue a query letter dated 14.03.2017 to assessee (which was perhaps the online drive undertaken by department to elicit response from depositors of cash during demonetization) and in response to same, the assessee made a clear submission that cash was withdrawn on 11.08.2016 and re-deposited on 16.11.2016. During first-appeal also, the assessee filed very same explanation to CIT(A) in Ground of Appeal and submissions.
However, as noted by CIT(A), one more explanation was filed by assessee stating that the cash was deposited against sale of vegetables. But this explanation, as submitted by Ld. AR, is not qua the direct source of deposit in bank a/c but it was a generalized explanation qua assessee’s activity
Page 7 of 9 fact, however, remains that the assessee stucks to her explanation that the cash of Rs. 10,00,000/- withdrawn from bank a/c was re-deposited. Since this explanation of assessee remained untested by AO during assessment- proceedings as the notices sent by AO did not reach to assessee, we think it appropriate to give one more opportunity to assessee to represent her case before AO. Accordingly, we remand this issue to the file of AO for adjudication afresh. Needless to mention that the AO shall give necessary opportunities to the assessee and the assessee shall also stay diligent in complying with the notices as may be issued by AO. The AO shall pass a judicious order without being influenced by his earlier order.
Resultantly, this appeal is allowed for statistical purpose.
Order pronounced in open court on 21/03/2025