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Facts
The assessee filed his return of income for AY 2017-18 declaring a total income of Rs.1,45,680/-. The case was selected for limited scrutiny due to large cash deposits during demonetization. The Assessing Officer (AO) added Rs.16,99,999/- to the total income based on a discrepancy in the cash balance.
Held
The CIT(A) upheld the addition, agreeing with the AO that the assessee's explanation for the cash balance and deposits was an afterthought and not supported by corroborative evidence. An additional ground regarding the applicability of Section 115BBE at an enhanced rate was admitted and allowed.
Key Issues
Whether the AO's addition of Rs.16,99,999/- based on cash balance discrepancy is justified, and whether Section 115BBE applies at an enhanced rate for AY 2017-18.
Sections Cited
250, 143(3), 68, 115BBE
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Before: SHRI PAWAN SINGH & SHRI BIJAYANANDA PRUSETH
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 06.11.2023 by the National Faceless Appeal Centre, Delhi /Commissioner of Income-tax (Appeals) [in short ‘Ld. CIT(A)’] for the Assessment Year (AY) 2017-18, which in turn arises out of assessment order passed by Assessing Officer u/s 143(3) of the Act dated 18.11.2019. Grounds of appeal
raised by the assessee are as under:
1. In view of the facts and circumstances of the case, the Ld. CIT(A), NFAC, New Delhi erred in law and in facts, in not appreciating the facts of the case and the evidence being the cash book and thereby confirming the addition of /AY.17-18 Samir P Panwala Rs.16,99,999 made by the Ld.AO to the income of AY 2017-18 and hence your appellant PRAYS that the same be deleted.” 2. Vide application dated 21.01.2025, assessee has raised following additional ground:
“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 retrospective manner by applying the duly substituted S.115BBE inserted retrospectively instead of taxing it at 35.34% as per the old provisions of S.115BBE.” 2.1 The additional ground raised by the appellant requires the Tribunal to consider a question of law arising from the facts which are on record in the assessment proceedings. Therefore, following the decisions of Hon’ble Supreme Court in case of National Thermal Power Co. Ltd. vs. CIT (1998) 229 ITR 383 (SC), the additional is admitted and the same will be decided in course of the present order.
Facts of the case in brief are that assessee filed his return of income on 05.06.2017 declaring total income of Rs.1,45,680/-. The income of the assessee includes dividend, interest and rental income. Subsequently, the case was selected for limited scrutiny on the large value of cash deposited during demonetization period. The assessee had deposited cash of Rs.19,30,000/- in his savings bank account No.304011748527 maintained with Surat Peoples Co- Op. Bank Ltd. It was found by AO that assessee had deposited amounts ranging from Rs.1,95,000/- to Rs.1,99,000/-, just below Rs.2,00,000/- each on various /AY.17-18 Samir P Panwala dates starting from, 15.11.2016 to 24.11.2016 and Rs.1,50,000/- on 20.12.2016. The assessee had shown cash of Rs.19,03,355/- as on 01.04.2015 in his cash book but cash-in-hand as on 31.03.2015 was Rs.2,03,365/- as per ITR filed for AY 2015-16. The AO issued show cause notice to explain difference of Rs.16,99,999/- (19,03,555 – 2,03,356), but no clarification or reply was given by the assessee. Hence, AO added Rs.16,99,999/- u/s 68 of the Act to the total income of the assessee.
3.1 Aggrieved by the addition made by AO, assessee filed appeal before CIT(A). The assessee submitted cash book for AYs 2015-16, 2016-17 and 2017- 18 and submitted that opening cash balance as on 01.04.2015 and 01.04.2016 were Rs.19,03,355/- and Rs.21,21,515/- respectively. The assessee submitted that he maintains regular books of account and the submission regarding the cash balance as on 01.04.2016 is correct. The CIT(A) observed that appellant has reiterated the stand taken by him before the AO. The CIT(A) observed that basis of appellant’s opening cash balance for FY 2016-17 is cash balance for FY 2015-16. He remarked that appellant has not rebutted finding of AO that opening balance of cash for FY 2015-16 is Rs.2,03,356/- and not Rs.19,03,355/- . Therefore, the AO has rightly given benefit of Rs.2,03,356/- and added the remaining amount. He endorsed the finding of AO that appellant’s explanation about source of cash-in-hand is an afterthought. Accordingly, he dismissed the ground and confirmed the addition of Rs.16,99,999/-.
/AY.17-18 Samir P Panwala 4. Further aggrieved by the order of CIT(A), the assessee has filed present appeal before the Tribunal. The Ld. Authorized Representative (Ld.AR) filed two paper books and submitted that assessee maintains completed books of account, which were produced before AO. The AO has not pointed out any defect or omission in the books of account and they were also not rejected by him. The AO made the addition on the basis of closing cash balance of Rs.2,03,356/- shown in the return of income for AY 2015-16 as against cash balance of Rs.19,03,355/- in the books of account. The AO has made the addition on this discrepancy dated 31.03.2015 for the cash deposited after 20 months in November, 2016. The lower cash in the return was due to mistake of the income tax return preparer, for which the Ld.AR submitted affidavit before the Tribunal. He also submitted that assessee was not required to show cash-in-hand for AY 2016-17 as there was no business income during the year. He further stated that AO erred invoking u/s 115BBE of the Act. For this, he relied on the decision of Hon’ble Madras High Court in case of S.M.I.L.E Microfinance Ltd. vs. ACIT W.P. (MD) No.2078 of 2020 (Mad) and co-ordinate Bench of this Tribunal in case of Samir Shantilal Mehta vs. ACIT in dated 08.05.2023.
On the other hand, Ld. Senior –Departmental Representative (Ld.Sr-DR) for the Revenue supported the orders of lower authorities. He submitted that there was closing cash balance of Rs.2,03,356/- only in the return of income for AY 2015-16. The appellant is claiming the same at Rs.19,03,355/- without /AY.17-18 Samir P Panwala any corroborative evidence. The appellant had no business in AY 2016-17. The cash book shown before the AO and CIT(A) was rightly rejected by them. The affidavit filed is only an afterthought because no such document was filed before AO or CIT(A).
We have heard both the parties and perused the materials on record. We have also deliberated on the decisions relied upon by the Ld. AR. We find that assessee has shown opening cash balance of Rs.9,61,555/- in the return of income for AY 2014-15. However, the closing cash balance as on 31.03.2015 was Rs.2,03,956/- as per the return filed for AY 2015-16. The appellant has submitted that there was mistake by the preparer of Income-tax return of the assessee, who entered the above figure instead of correct balance of Rs.19,03,355/-. The appellant also submitted an affidavit from Shri Bharat Jhaveri, advocate stating that he has inadvertently entered cash balance of Rs.2,03,356/- in the ITR instead of Rs.19,03,355/- as on 31.03.2015. The said cash balance is supported the books of account maintains by assessee. He further stated that the explanation filed by assessee for cash deposit during demonetization is justified. We have carefully perused the details submitted by the Ld. AR and find that the affidavit is not supported by any corroborative evidence. We also find that the assessee has deposited Rs.19,30,000/- in cash on 10 different dates, starting from 15.11.2016 to 20.12.2016. On each occasion, the amount was just below of Rs.2,00,000/- so as to avoid reporting by the authority concerned. If the assessee had closing cash balance of /AY.17-18 Samir P Panwala Rs.20,70,915/- as on 01.11.2016 (page 66 of PB), there was no need to deposit the amount of Rs.19,30,000/- on 10 different dates from 15.11.2016 to 24.11.2016 (9 deposits) and on 20.12.2016 (1 deposit). This is clearly against principles of him on probability. As submitted by appellant, he was not carrying out any business during AY 2016-17 and therefore, generation of cash is also not possible. In view of these facts, the explanation of the assessee is not acceptable. The AO has already allowed benefit of Rs.2,03,356/-. The assessee is allowed further benefit of Rs.2.50 lakh as per the CBDT Instruction No.03/2017 dated 21.02.2017 as per which no further verification is required for an individual not having any business income. The assessee was having no business during the year. The AO is, therefore, directed to delete addition of Rs.2.50 lakh and remaining addition is sustained. This ground of assessee is partly allowed. 6.1 So far as taxing the addition at the enhanced rate of tax u/s 115BBE is concerned, we find that Divisions Bench as well as SMC Bench of this Tribunal in a series of case has held that enhanced rate prescribed u/s 115BBE is not applicable for AY 2017-18. Useful reference may be made to the in cases of Samir Shantilal Mehta Vs ACIT (Surat Trib), Arjunsinh Harisinh Thakor vs ITO in and Jitendra Nemichand Gupta Vs ITO ITA No. 211/Srt/2021, Indore Bench in DCIT vs Punjab Retail Pvt. Ltd 677/Ind/2019 (Indore Trib) and Jabalpur Bench in ACIT vs Sandesh Kumar Jain /AY.17-18 Samir P Panwala in ITA No. 41/Jab/2020. In the result, additional ground No. raised by the assessee is allowed.
In the result, appeal of the assessee is partly allowed. Order pronounced under proviso to Rule 34 of ITAT, Rule, 1963 on 24/03/2025 in the open court.