KUNHABDULLA,KOZHIKODE vs. ITO WARD 2(2), KOZHIKODE

Brief facts of the case are that the appellant is an individual. No regular return of income was filed by the appellant under the provisions of section 139(1) of the Income Tax Act, 1961 (the Act). Based on the information that the appellant made cash deposit in the bank account during previous year relevant to AY 2012-13, the Income Tax Officer, Ward 2(2), Kozhikode (hereinafter called "the Kunhabdulla AO") formed an opinion that income escaped assessment to tax. Accordingly, a notice u/s. 148 of the Act was issued on 28.03.2019. In response to the notice u/s. 148, the appellant filed return of income on 08.05.2019 disclosing total income of Rs. 3,00,260/-. Against the said return of income, the assessment was completed by the by the AO vide order dated 10.12.2019 passed u/s. 143(3) r.w.s. 147 of the Act at a total income of Rs. 33,25,260/-. While doing so, the AO made addition of Rs. 30,25,000/- being the cash deposits made in the bank account as unexplained money of the assessee.

Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order dismissed the appeal rejecting the explanation of the assessee that the cash deposits are made out of business of granite stones and country made bricks by holding that the explanation is an afterthought and the appellant had failed to substantiate its claim with supporting documentary evidences in the form of sales and purchase invoices, placing reliance on the judgement of the Hon'ble Delhi High Court in the case of Ravinder Kumar v. ITO [2022] 273 Taxman 369.

Being aggrieved, the appellant is in appeal before us in the present appeal.

When the appeal was called on nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, we proceeded to dispose of the appeal after hearing the learned Sr. DR. Kunhabdulla 6. On a perusal of the assessment order it would be clear that the appellant made cash deposit in his NRO & NRE bank accounts. The total cash deposit made during the previous year relevant to the assessment year under consideration aggregates to Rs.34,00,000/-. The AO had made an analysis of the cash deposits as well as withdrawals. After giving the benefit of the withdrawals for subsequent deposits, the AO had arrived at cash deficiency of Rs, 30,25,000/-. During the course assessment proceedings the appellant only submitted a cash flow statement and not offered any explanation in support of the source for the cash deposits made. It is only during the course of the proceedings before the CIT(A) the appellant had offered an explanation that the cash deposits were made out of the sale proceeds of the business of granite stones and country made bricks and the income was offered u/s. 44 AD of the Act on a turnover of Rs. 34,00,000/- and declared income of 2,40,000/-. However, the said explanation was rejected by the CIT(A) as the appellant had failed to substantiate the contentions that the sale proceeds were made out of the business of granite stones, etc. without supporting evidence in the form of sale and purchase invoices, etc. We are of the considered opinion that since the appellant had failed to discharge its onus of proving the contention that the cash deposits were made out of the sale proceeds of granite stones, etc., the CIT(A) had rightly dismissed the claim placing reliance on the decision in the case of Ravinder Kumar (supra). We do not find any merit in the appeal filed by the assessee.