NIDHI JAIN,C/O DESHLAHRA INDUSTRIES, NANDINI ROAD BHILAI vs. INCOME TAX OFFICER WARD 1 (1), BHILAI

Succinctly stated, the assessee had e-filed her return of income for A.Y.2017-18 on 15.03.2018, declaring an income of Rs.2,89,400/-. Subsequently, the case of the assessee was selected for scrutiny assessment through CASS to verify the “cash deposits during demonetization period”.

During the course of the assessment proceedings, the A.O observed that the assessee had made cash deposits of Rs.5,50,000/- and Rs.7,00,000/- in her bank account No.32654876179 and account No.30265716144 held with State Bank of India. On being queried about the source of the aforesaid cash deposits, it was submitted by the assessee that the bank account No. 30265716144 was a joint account held by her alongwith her husband, viz. Shri Vinod Jain and the cash deposits of Rs.7 lacs made in the said bank account pertained to him. The assessee in order to support her aforesaid claim had placed on record copy of the return of income a/w. consent letter of her husband, viz. Shri Vinod Jain. Apropos the cash deposits of Rs.5.50 lacs that was made in her bank account No. 32654876179 with State Bank of India, it was submitted by the assessee that the same was sourced out of the cash in hand that she had retained for her personal expenses. The assessee to support her aforesaid claim had filed before the A.O s copy of her balance sheet and capital a/c. as was called for by him. Accordingly, it was the assessee’s claim that she was having sufficient cash in hand (SBNs) as on 01.11.2016 during the pre-demonetization period which had sourced the subject cash deposits made in her bank account during the demonetization period. The A.O called for the bank statements of the assessee from State Bank of India for the period 01.04.2016 to 31.03.2017, and observed that the same revealed that the assessee had during the demonetization period made cash deposits of Rs.5,50,000/- in three tranches, viz. (i) 21.11.2016 : Rs.1,50,000/-; (ii) 19.12.2016 : Rs.1,00,000/-; and (iii) 19.12.2016 : Rs.3,00,000/-.

Also, a perusal of the bank account of the assessee, reveals that the cash deposits made by her, were thereafter, withdrawn in cash. As the assessee had failed to substantiate the source of the aforesaid cash deposits made during the demonetization period to the satisfaction of the A.O, therefore, the latter held the same as her unexplained money u/s. 69A of the Act. Accordingly, the A.O based on his aforesaid deliberations, had vide his order passed u/s. 143(3) of the Act, dated 12.12.2019 after making an addition of Rs.5,50,000/- determined the income of the assessee at Rs.8,39,400/-.

Aggrieved the assessee carried the matter in appeal before the CIT(Appeals). As the assessee despite having been afforded three opportunities i.e. on 31.01.2021, 11.09.2024 and 08.10.2024 had failed to participate in the proceedings before the first appellate authority, therefore, the latter was constrained to proceed with and dispose of the appeal vide an ex-parte order. After deliberating at length, on the facts involved in the case before him, though the CIT(Appeals) principally concurred with the A.O that the assessee had failed to come forth with any explanation as regards the cash deposits of Rs.5,50,000/- made in her bank account, but at the same time was of the view that she at the relevant point of time would have been in possession of cash in hand of Rs. 1 lac for personal purposes. Accordingly, the CIT(Appeals) scaled down the addition made by the A.O u/s. 69A of the Act to Rs.4,50,000/- and allowed a relief of Rs.1 lac.

The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the Tribunal. As the assessee appellant despite having been intimated about the fixation of hearing of the appeal has neither put up an appearance nor filed any adjournment application, therefore, I am constrained to proceed with as per Rule 24 of the Appellate Tribunal Rules, 1963 and dispose of the appeal after hearing the revenue respondent and perusing the material available on record.

Admittedly, it is a matter of fact borne from record that the assessee in the course of assessment proceedings had failed to come forth with any explanation as regards the source of the cash deposits of Rs.5.50 lacs that was made in her bank account No. 32654876179 with the State Bank of India. Though the A.O had held the entire amount of Rs.5,50,000/- as the assessee’s unexplained money u/s. 69A of the Act, but the CIT(Appeals) had scaled down the addition to Rs.4,50,000/-.

I have given thoughtful consideration to the facts involved in the present case. At the threshold, I may hereinabove observe that the CBDT Instruction No.03/2017 dated 21.02.2017, which is binding on the revenue, had, inter alia, stated that in case of an individual (either than minors) not having any business income, no further verification is required to be made if total cash deposit is up to Rs.2.5 lakh. Also, it is stated in Instruction No. 03/2017 (supra) that the basis for verification can be the income earned during past years and its source, filing of return of income and income therein shown, cash withdrawals from accounts, etc. For the sake of clarity, the CBDT Instruction No.03/2017 dated 21.02.2017 is culled out as under (relevant extract):

In the result, appeal filed by the assessee is partly allowed in terms of the aforesaid observations.