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Facts
The assessee deposited a total of Rs. 1,13,28,200/- during the demonetization period and Rs. 92,64,140/- during the post-demonetization period. The Assessing Officer treated these deposits as unexplained money. The CIT(A) granted partial relief, restricting the addition under section 69A to Rs. 52,52,400/- but considering the amount of Rs. 60,75,800/- for computing business income.
Held
The Tribunal found that the CIT(A) had properly examined the issue and passed a well-reasoned order. The assessee did not present any new material or evidence. Therefore, the Tribunal found no infirmity in the conclusions of the CIT(A).
Key Issues
Whether the CIT(A) erred in making additions on account of cash deposits during and post demonetization, and in levying tax under Section 115BBE.
Sections Cited
69A, 44AD, 115BBE, 68
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Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI OM PRAKASH KANT
ORDER PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 21.08.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds:
1. On the facts and in the circumstances of the case the Learned CIT (A) has erred in granting relief of Rs.60,75,800/- of cash deposits against total cash deposits of Rs.1,13,28,200/- during the period of demonetisation on Javed Munir Khan account account of of of cash cash cash deposit deposit deposit in in in regular regular regular notes notes notes without without without appreciating the facts that all the cash deposits were made appreciating the facts that all the cash deposits were made appreciating the facts that all the cash deposits were made of regular notes except for the first cash dep of regular notes except for the first cash deposit which was osit which was made subsequent to the announcement of demonetisation, made subsequent to the announcement of demonetisation, made subsequent to the announcement of demonetisation, eventually the addition restricted to the amount of eventually the addition restricted to the amount of eventually the addition restricted to the amount of Rs.52,52,400/ Rs.52,52,400/- u/s. 68 of the Income Tax Act, 1961 be u/s. 68 of the Income Tax Act, 1961 be deleted deleted 2. The Learned CIT(A) has erred in making addition of Rs. The Learned CIT(A) has erred in making addition of Rs. The Learned CIT(A) has erred in making addition of Rs. 12,27,195/ 12,27,195/-, being 8 percent of the cash deposited in to g 8 percent of the cash deposited in to Bank Account of Rs.92,64,140/ Bank Account of Rs.92,64,140/-during the period other during the period other than demonetisation and Rs.60,75,800/ than demonetisation and Rs.60,75,800/- during the period during the period of demonetisation of regular notes u/s. 69A of the Income of demonetisation of regular notes u/s. 69A of the Income of demonetisation of regular notes u/s. 69A of the Income Tax Act, The Learned CIT (A) erred in treating Tax Act, The Learned CIT (A) erred in treating the total cash the total cash deposits aforesaid as the turnover of the Appellant, deposits aforesaid as the turnover of the Appellant, deposits aforesaid as the turnover of the Appellant, whereas the profit element embedded in the total deposits whereas the profit element embedded in the total deposits whereas the profit element embedded in the total deposits which could be verified as per Form26AS should have been which could be verified as per Form26AS should have been which could be verified as per Form26AS should have been treated as the turnover of the appellant for working out treated as the turnover of the appellant for working out treated as the turnover of the appellant for working out presumptive prof presumptive profits u/s. 44AD, hence The bench may be 44AD, hence The bench may be please to delete the total additions made u/s. 69A. please to delete the total additions made u/s. 69A. please to delete the total additions made u/s. 69A.
3. The Learned CIT(A) has erred in levying tax on above The Learned CIT(A) has erred in levying tax on above The Learned CIT(A) has erred in levying tax on above referred addition u/s. 115BBE of the I. T. referred addition u/s. 115BBE of the I. T. Act, 1961. Act, 1961.
At the outset, we note that despite due service of At the outset, we note that despite due service of At the outset, we note that despite due service of notice of hearing through registered post, none appeared on behalf of the hearing through registered post, none appeared on behalf of the hearing through registered post, none appeared on behalf of the assessee, nor was any request for adjournment made ny request for adjournment made except filing ny request for adjournment made of a written submission on behalf of the assessee. of a written submission on behalf of the assessee. On perusal of the On perusal of the record, we further find that on earlier occasion record, we further find that on earlier occasions also no one had s also no one had appeared for the assessee. In these circumstances, we are satisfied appeared for the assessee. In these circumstances, we are satisfied appeared for the assessee. In these circumstances, we are satisfied that the assessee was not interested in prosecuting the appeal. that the assessee was not interested in prosecuting the appeal. that the assessee was not interested in prosecuting the appeal. Accordingly, the appeal was heard ex parte qua the assessee ex parte qua the assessee, after Accordingly, the appeal was heard hearing the submissions of the Ld. Depa hearing the submissions of the Ld. Departmental Representative. rtmental Representative.
Having perused the records and after considering the Having perused the records and after considering the Having perused the records and after considering the arguments of the Ld. DR, we find that in this case issue in dispute arguments of the Ld. DR, we find that in this case issue in dispute arguments of the Ld. DR, we find that in this case issue in dispute is is is regarding regarding regarding addition addition addition of of of cash cash cash deposits deposits deposits during during during and and and post post post period. demonetization period. The Assessing Officer observe The Assessing Officer observed that during the demonetization period, the assessee had deposited aggregate the demonetization period, the assessee had deposited aggregate the demonetization period, the assessee had deposited aggregate cash amounting to ₹1,13,28,200/ 1,13,28,200/-. In the absence of any response . In the absence of any response to the show cause notice, the said amount was treated as to the show cause notice, the said amount was treated as to the show cause notice, the said amount was treated as unexplained money under section 69A of the Income-tax Act, 1961. unexplained money under section 69A of the Income unexplained money under section 69A of the Income The Assessing Officer further noticed that aggregate cash deposits The Assessing Officer further noticed that aggregate cash deposits The Assessing Officer further noticed that aggregate cash deposits of ₹92,64,140/- were made during the post were made during the post-demonetization period. demonetization period. As the assessee, despite being engaged in business, failed to furnish As the assessee, despite being engaged in business, failed to furnish As the assessee, despite being engaged in business, failed to furnish any details despite several opportunities, th any details despite several opportunities, the Assessing Officer e Assessing Officer estimated 10% of such deposits as income and made an addition of of such deposits as income and made an addition of of such deposits as income and made an addition of ₹9,26,414.
3.1 On appeal, the Ld. CIT(A), after calling for and considering a On appeal, the Ld. CIT(A), after calling for and considering a On appeal, the Ld. CIT(A), after calling for and considering a remand report from the Assessing Officer, granted partial relief. The remand report from the Assessing Officer, granted partial relief. The remand report from the Assessing Officer, granted partial relief. The Ld. CIT(A) noted that Ld. CIT(A) noted that out of the total cash deposits of out of the total cash deposits of ₹1,13,28,200/- during the demonetization period, a sum of during the demonetization period, a sum of during the demonetization period, a sum of ₹60,75,800/- was deposited in the form of regular bank notes. was deposited in the form of regular bank notes. was deposited in the form of regular bank notes. Accordingly, relief was granted to that extent and the addition Accordingly, relief was granted to that extent and the addition Accordingly, relief was granted to that extent and the addition under section 69A was restricted to ₹52,52,400/- -. However, the under section 69A was restricted to amount of ₹60,75,800/ 60,75,800/- was considered for the purpose of was considered for the purpose of computing business income. computing business income.
3.2 The Ld. CIT(A) recorded a finding that the assessee was acting The Ld. CIT(A) recorded a finding that the assessee was acting The Ld. CIT(A) recorded a finding that the assessee was acting as a commission agent for Airtel Payment Bank Ltd. commission agent for Airtel Payment Bank Ltd. commission agent for Airtel Payment Bank Ltd., collecting cash from persons desirous of remitting money to their relatives at cash from persons desirous of remitting money to their relatives at cash from persons desirous of remitting money to their relatives at Javed Munir Khan places, depositing the same in his bank account, and distant places, depositing the same in his bank account, and distant places, depositing the same in his bank account, and thereafter transferring it to the said bank. Taking note of the fact thereafter transferring it to the said bank. Taking note of the fact thereafter transferring it to the said bank. Taking note of the fact that the assessee had offered income in earli that the assessee had offered income in earlier years under section er years under section 44AD of the Act, the Ld. CIT(A) applied the presumptive provisions 44AD of the Act, the Ld. CIT(A) applied the presumptive provisions 44AD of the Act, the Ld. CIT(A) applied the presumptive provisions of section 44AD and computed business income at 8% on the of section 44AD and computed business income at of section 44AD and computed business income at aggregate cash deposits of ₹1,53,39,940/- (₹ ₹92,64,140/- + aggregate cash deposits of ₹60,75,800/-), thereby determining the taxable bus ), thereby determining the taxable business income at ), thereby determining the taxable bus ₹12,27,195/-. The addition was thus sustained to the said . The addition was thus sustained to the said . The addition was thus sustained to the said extent.The relevant finding of the Ld. CIT(A) is reproduced as under: The relevant finding of the Ld. CIT(A) is reproduced as under: The relevant finding of the Ld. CIT(A) is reproduced as under:
7.2 Perusal of the above table reveals that the appellant has not 7.2 Perusal of the above table reveals that the appellant has not 7.2 Perusal of the above table reveals that the appellant has not disclosed entire receipts. From the facts bro disclosed entire receipts. From the facts brought out in the ught out in the assessment order it is clear that the appellant had deposited assessment order it is clear that the appellant had deposited assessment order it is clear that the appellant had deposited cash during the demonetization period to the tune of Rs. cash during the demonetization period to the tune of Rs. cash during the demonetization period to the tune of Rs. 1,13,28,200/ 1,13,28,200/- and Cash to the tune of Rs. 92,64,140/ and Cash to the tune of Rs. 92,64,140/- during the period other than the demonetization period. The AO had the period other than the demonetization period. The AO had the period other than the demonetization period. The AO had made addition of Rs. 9,26,414/ made addition of Rs. 9,26,414/- being 10% of Rs. 92,64,140/ being 10% of Rs. 92,64,140/-. In Para 6.7.1 of this order the addition of Rs. 60,75,800/ Para 6.7.1 of this order the addition of Rs. 60,75,800/ Para 6.7.1 of this order the addition of Rs. 60,75,800/- has been deleted u/s 68 of the Act and it has been held that this amount deleted u/s 68 of the Act and it has been held that this amount deleted u/s 68 of the Act and it has been held that this amount of Rs. 60,75,800/ of Rs. 60,75,800/- will be considered for working out the will be considered for working out the business profits. Therefore, the turnover of the appellant is iness profits. Therefore, the turnover of the appellant is iness profits. Therefore, the turnover of the appellant is reworked reworked at at Rs. Rs. 1,53,39,940/- 1,53,39,940/ [Rs. [Rs. 92,64,140/ 92,64,140/- + Rs. 60,75,800/-]. The AO worked out the business profits at 10% of ]. The AO worked out the business profits at 10% of ]. The AO worked out the business profits at 10% of receipts. However, he has not brought out the reasons for receipts. However, he has not brought out the reasons for receipts. However, he has not brought out the reasons for adopting such rate. The adopting such rate. The appellant has stated that it has offered appellant has stated that it has offered its business income u/s 44AD of the Act. Therefore, the business its business income u/s 44AD of the Act. Therefore, the business its business income u/s 44AD of the Act. Therefore, the business income of the appellant is worked out @ 8% of Rs. 1,53,39,940/ income of the appellant is worked out @ 8% of Rs. 1,53,39,940/ income of the appellant is worked out @ 8% of Rs. 1,53,39,940/- i.e. Rs. 12,27,195/ i.e. Rs. 12,27,195/-. The addition of business profits is reworked . The addition of business profits is reworked and upheld at Rs. and upheld at Rs. 12,27,195/-. The business profits are reduced . The business profits are reduced from 10% to 8%. Ground no.2 of appeal is partly allowed. from 10% to 8%. Ground no.2 of appeal is partly allowed. from 10% to 8%. Ground no.2 of appeal is partly allowed.
In our considered opinion, the Ld. CIT(A) has examined the In our considered opinion, the Ld. CIT(A) has examined the In our considered opinion, the Ld. CIT(A) has examined the issue in detail, duly considered the material on record, and passed issue in detail, duly considered the material on record, and passed issue in detail, duly considered the material on record, and passed a well-reasoned order reasoned order after obtaining a remand report from the after obtaining a remand report from the Assessing Officer. Before us, the assessee has merely reiterated the Assessing Officer. Before us, the assessee has merely reiterated the Assessing Officer. Before us, the assessee has merely reiterated the Javed Munir Khan made before the Ld. CIT(A) and has not placed any submissions made before the Ld. CIT(A) and has not placed any submissions made before the Ld. CIT(A) and has not placed any new material or evidence on record to controvert the findings of the new material or evidence on record to controvert the findings of the new material or evidence on record to controvert the findings of the first appellate authority. authority.
We find no infirmity, either factual or legal, in the conclusions We find no infirmity, either factual or legal, in the conclusions We find no infirmity, either factual or legal, in the conclusions arrived at by the Ld. CIT(A). The approach adopted by the Ld. CIT(A) arrived at by the Ld. CIT(A). The approach adopted by the Ld. CIT(A) arrived at by the Ld. CIT(A). The approach adopted by the Ld. CIT(A) is reasonable and in accordance with law. is reasonable and in accordance with law. Accordingly, the grounds Accordingly, the grounds of appeal raised by the assessee are dismissed. of appeal raised by the assessee are dismissed.
In the result, the appeal of the assessee is dismissed. In the result, the appeal of the assessee is dismissed. In the result, the appeal of the assessee is dismissed.