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Facts
The assessee filed an appeal against the order of the CIT(A) confirming an addition of Rs. 10,00,000/-. The addition was made on account of unexplained cash credit/deposits in the bank account during the demonetization period. The assessee claimed the cash was withdrawn from the bank and also from agricultural income and JCB job work income.
Held
The Tribunal held that the reasons given by the assessee for the delay in filing the appeal were not sufficient and condoned the delay subject to payment of costs. Regarding the addition, the Tribunal noted that the cash withdrawals were paid to Shri Vijay J. Ramani and not considered as cash available with the assessee. The Tribunal also held that Section 115BBE could not be applied retrospectively.
Key Issues
1. Whether the addition made by the AO on account of cash deposit during demonetization period was justified. 2. Whether Section 115BBE was applicable for the assessment year.
Sections Cited
250, 143(2), 271AAC(1), 253(3), 68, 44AD, 115BBE
AI-generated summary — verify with the full judgment below
Before: SHRI BIJAYANANDA PRUSETH & SHRI DINESH MOHAN SINHA
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 21.12.2023 by the Commissioner of Income-tax (Appeals)/ National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the Assessment Year (AY) 2017-18.
Grounds of appeal
raised by the assessee are as under: “1. On the facts and circumstances of the case as well as law on the subject, the learned Assessing Officer has erred in making addition on issue other than the issue mentioned in the notice u/s 143(2) where the case of the assessee has been selected for limited scrutiny.
2. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of Assessing Officer in making the addition of Rs.10,00,000/- on account of alleged unexplained cash credit being cash deposits in bank account.
/AY.2017-18 Jashubhai M Patel 3. On the facts and circumstances of the case as well as law on the subject, the learned Assessing Officer has erred in taxing the addition by taking the rate @77.25% by attracting S.115BBE instead of taxing as per normal tax slab.
Even otherwise on the facts and circumstances of the case as well as law on the subject, the Assessing Officer has erred in taxing the income u/s 115BBE @ 77.25% in a retroactive manner by applying the duly substituted S.115BBE inserted retrospectively instead of taxing it at 33.54% as per the old provisions of S.115BBE.
5. It is therefore prayed that the above additions made by the Assessing Officer and confirmed by the CIT(A) may please be deleted.
6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
The appeal filed by assessee is barred by 171 days in terms of provisions of section 253(3) of the Act. The assessee has filed an affidavit giving reasons for delay in filing of appeal before the Tribunal. In the affidavit, it has been stated that the CIT(A) passed the order on 21.12.2023 and against the said order, appeal should have been filed before Tribunal on 22.02.2024. The appeal was filed in Form 35 on 25.02.2020, which was late by 171 days. The e- mail id of tax consultant given in Form No.35 was jashubhai@btpatel.in. Accordingly, notices and subsequent order were sent to the tax consultant’s e-mail, which was not in knowledge of assessee. It came to his knowledge during reminder to the show cause notice issued during penalty proceedings u/s 271AAC(1) of the Act. Thereafter, he consulted a new authorised representative (AR), who advised to file appeal before Tribunal. However, owing to personal difficulties, assessee could not send relevant papers to the new consultant and hence, the delay has occurred. The learned Authorized Representative (ld. AR) of the assessee submitted that delay was not
4. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue submitted that the reasons given by the appellant is not a ‘sufficient cause’ to condone the delay. He submitted that if the Bench decides to condone the delay, appropriate cost may be imposed on the assessee.
We have considered submission of both parties on this preliminary issue delay in filing the appeal. In our considered view, the reasons given by the assessee that “Tax Consultant failed to open the said order received on their e-mail address jasubhai@btpatel.in leading to lack of knowledge of the fact of dismissal of appeal by the CIT(A)(NFAC)” is general in nature without any supporting papers and would not constitute ‘sufficient cause’ in terms of provisions of sub-section (5) of section 253 of the Act. The ld. AR requested that the delay may be condoned and the appeal may be decided on merit in the interest of justice. He submitted that the delay is not inordinate and it was not deliberate and intentional. Considering the facts of the case and the submissions of the appellant, we condone the delay subject to payment of cost of Rs.5,000/- (Rupees five thousand only) by the assessee to the credit of ‘Income Tax Appellate Tribunal Bar Association, Surat’ within two weeks from the receipt of this order.
Facts of the case in brief are that assessee filed his return of income on 27.03.2018 for AY.2017-18, declaring total income of Rs.3,25,840/-. The case /AY.2017-18 Jashubhai M Patel was selected for limited scrutiny. Accordingly, notices u/s 143(2) and u/s 142(1) were issued and served upon the assessee. In response, the assessee submitted copy of 7/12, copy of agriculture income certificate, ledger copy of agriculture income and expenses and copy of bank statement. The Assessing Officer (in short, ‘AO’) also found that during the demonetization period there was cash deposit of Rs.10,00,000/- in his bank account. The AO noticed various discrepancies which is mentioned in the show cause notice as well as discussion at para 5.4 of assessment order. The AO observed that assessee has claimed to have made withdrawal of Rs.19,50,000/- on 22.04.2016, Rs.2,00,000/- on 25.05.2016, Rs.5,00,000/- on 26.05.2016 and Rs.17,90,000/- on 28.09.2016 from the DCB Bank and shown the same as the source of cash, which was utilized for making deposit of Rs.10,00,000/- during demonetization period. However, the said amounts were paid/debited to one Mr. Vijay J. Ramani. Hence, explanation of the assessee that these amounts were part of cash on hand was not accepted and he added Rs.10,00,000/- u/s 68 of the Act.
7. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). The CIT(A) issued five notices fixing the hearings on 18.01.2021, 07.11.2023, 14.11.2023, 20.11.2023 and 06.12.2023. The assessee filed reply on 08.12.2023 wherein he contended that sources of cash deposit were cash withdrawals, opening balance of cash, agricultural income and income from JCB job work. The CIT(A) considered submission of the assessee and the /AY.2017-18 Jashubhai M Patel assessment order and observed that the cash withdrawal was actually paid to Mr. Vijay J. Ramani and hence cannot be considered as part of the cash available with the assessee for making the impugned cash deposit. He accepted the findings of the AO and dismissed appeal of the assessee.
Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. Ground No.1 of the appeal is regarding addition on issue other than the issue mentioned in notice u/s 143(2) for which the case of the assessee was selected for limited scrutiny. The ld. AR submitted that the case was selected to verify ‘Large agricultural income’ but in the assessment order addition of Rs.10,00,000/- was made on account of cash deposit. This action of the AO is in contravention of CBDT Instruction No.5/2016 and as the AO has exceeded his jurisdiction, the addition is liable to be deleted. 7.1 On the other hand, learned Senior Departmental Representative (ld. Sr. DR for the revenue supported the order of AO and submitted that the issue of cash deposit was also one of the reasons for selection of the case for scrutiny. He submitted that both large agricultural income and cash deposit during demonetization period were the issues for which case of the appellant was selected for scrutiny. 7.2 We have heard both the parties and perused the materials available on record. During the hearing, the Bench had requested the ld. Sr. DR to submit the copy of the reasons for selection of the case for scrutiny under CASS. The ld. Sr. DR has submitted a copy of “CASS Selection Reason and Issue” from /AY.2017-18 Jashubhai M Patel which it is seen that the case was selected for scrutiny with Reason Code EI02.02 and DM01.15A on issue of “Agricultural income” and “Cash deposit during demonetization period”. It is clear from the above that the AO has passed the order as per the mandate given to him by the CBDT for limited scrutiny under CASS. He has not exceeded the jurisdiction as contended by the ld. AR. Accordingly, the ground No.1 is dismissed.
Ground No.2 is regarding addition of Rs.10,00,000/- u/s 68 of the Act on account of cash deposit in the bank account maintained with DCB Bank. The ld. AR submitted that the appellant was having cash balance of Rs.24,17,978/- as on 07.11.2016. The assessee deposited Rs.10,00,000/- on 22.11.2016. The assessee was having Rs.22,79,843/- as cash on hand before the above deposit in the bank account. However, assessee had deposited only Rs.10,00,000/-. It was also submitted that there was cash on hand of Rs.9,61,570/- as on 31.03.2016. Even in the return of income for AY.2017-18, assessee has shown cash on hand of Rs.8,26,157/- after deposit of the impugned cash during demonetization period. The ld. AR further submitted that assessee had explained that there was withdrawal of Rs.17,90,000/- from the bank and the cash available before demonetization was out of opening cash balance, cash withdrawal from bank and income of the current year. The reason for making the addition was that the cash withdrawals by the assessee were debited in the name of Shri Vijay J. Ramani and hence cannot be taken as cash available with the assessee. In this regard, the ld. AR submitted that /AY.2017-18 Jashubhai M Patel assessee issued bearer cheques in the name of Shri Vijay J. Ramani, who is the son of the assessee. The cash collected by his son was available with the assessee, which was used for making deposit during demonetization period. The ld. AR also submitted that the AO has accepted the agricultural income as well as JCB job work income u/s 44AD offered by the assessee. Having accepted the credits shown in the return, no addition u/s 68 can be made. The CIT(A) has upheld the order of AO on the ground that cash withdrawals of Rs.7,00,000/- and Rs.17,90,000/- in May, 2016 and September, 2016 respectively cannot be considered as part of cash available with assessee but in fact the same were payment made to Shri Vijay J. Ramani. The ld. AR submitted that these sums were withdrawn by the son of the assessee. Hence, these two amounts were duly explained by the appellant. 8.1 The ld. Sr. DR has supported the order of lower authorities. He submitted that the AO has pointed out various discrepancies in the cash book maintained by the assessee. He further submitted that the amount paid to Shri Vijay J. Ramani has been wrongly claimed as cash withdrawal by the appellant, forming part of the cash on hand before demonetization. He submitted that both AO and CIT(A) have rightly rejected such explanation by the assessee which is not supported by any evidence. He requested that the order of CIT(A) may be upheld.
We have heard both parties and perused the materials available on record. We have also deliberated on the decisions relied upon by ld. AR. The /AY.2017-18 Jashubhai M Patel reason why addition was made by the AO was that the assessee has not satisfactorily explained the source of cash deposit of Rs.10,00,000/- made during the demonetization period. The assessee had submitted that the sources of cash deposit were out of opening cash balance, earlier cash withdrawal from the banks, cash receipt on account of agricultural and JCB job work income. The explanation of the assessee was rejected by the AO and the CIT(A). The claim of cash withdrawal of Rs.2,00,000/-, Rs.5,00,000/- and Rs.17,90,000/- on 25.05.2016, 26.05.2016 and 28.09.2016 respectively from DCB Bank, was not accepted on the ground that as per the bank statement the said amounts were paid to Shri Vijay J. Ramani. The ld. AR submitted that Shri Vijay J. Ramani is son of the assessee and bearer cheques in his name were issued to collect cash from the bank. The said cash withdrawal was available with the appellant and was part of the cash on hand before demonetization period. The appellant has not supported the above claim with supporting evidences. The amounts of withdrawal are substantial. The appellant has not filed confirmation or affidavit from Shri Vijay J. Ramani that he withdrew the impugned amounts in cash and gave it to the appellant. He has not confirmed that the amount was not utilized by him for personal purposes or investment. Copy of the bank account of Shri Vijay J. Ramani has not been submitted to prove that the above withdrawals were not credited to his account. The copies of PAN, Aadhar and Passport of Shri Vijay J. Ramani mentioned the name of his father as Jashubhai Manjibhai Ramani and not Jashubhai Manjibhai Patel, /AY.2017-18 Jashubhai M Patel the appellant herein. The name of the assessee in the PAN is Jashubhai Manjibhai Patel, and not Jashubhai Manjibhai Ramani. In view of these facts and since no supporting and corroborative evidence has been filed by the appellant to support the claim that the cash withdrawal by Shri Vijay J. Ramani, was part of cash available with the appellant, we do not find any infirmity in the order of AO. The order of AO has been rightly upheld by the CIT(A). Accordingly, the ground No.2 is dismissed.
Ground Nos. 3 and 4 pertains to invoking section 115BBE of the Act to tax the addition of Rs.10,00,000/- made u/s 68 of the Act. The ld. AR submitted that the impugned receipts were explained out of ostensible sources. Hence, provisions of section 115BBE cannot be applied. It was also submitted that provisions of section cannot be applied retrospectively as held by Hon’ble Madras High Court in case of S.M.I.L.E Microfinance Ltd. vs. ACIT, WP(MD) No. 2078 of 2020 (Madras) and Samir Shantilal Mehta vs. ACIT, in of 2022 (Surat – Tribunal), dated 08.05.2023. 10.1 On the other hand, ld. Sr. DR supported the order of lower authorities. 10.2 We have considered the submission of both parties and deliberated upon the decisions relied upon by both sides. The provisions of section 115BBE of the Act was enacted on 15.12.2016 and hence cannot be applied for the year under consideration. The ld. AR has relied on various decisions which are placed in the paper book. We find that the Division Bench of this Tribunal in cases of Samir Shantilal Mehta vs. ACIT, in Arjunsinh /AY.2017-18 Jashubhai M Patel Harisinih Thakor vs. ITO, in Jitendra Nemichand Gupta vs. ITO, in ITA No.211/SRT/2021 and Sanjaybhai Mansukhbhai Patel vs. DCIT, in ITA No.869/SRT/2023; the Indore Bench in DCIT vs. Punjab Retail Pvt. Ltd., in ITA No.677/Ind/2019 and the Jabalpur Bench in ACIT vs. Sandesh Kumar Jain, in ITA No.41/Jab/2020 held that applicability of amended provision of Section 115BBE of the Act is not retrospective. There is no reason not to follow above decisions. Thus, the AO is directed to tax the addition at normal rate of tax and applicable surcharges and cess, if any. The assessee is, accordingly, allowed relief against taxing the addition at higher rate u/s 115BE of the Act. Hence, we allow the ground Nos.3 and 4 of the assessee.
Ground Nos.5 and 6 are general in nature and do not require adjudication.
In the result, the appeal of the assessee is partly allowed. Order is pronounced on 23/04/2025 in the open court.