NANIKRAM FATEHCHAND CHANGLANI,ULHASNAGAR, THANE vs. ITO, WARD-2(5), KALYAN

The grounds of appeal are as under:-

The Appeal is filed in time.

The Appellant craves leave to add, alter or amend any of the grounds on or before the final date of hearing.

In brief, factual matrix of the case are that the assessee a retired official of Railways, filed his return of income for the A.Y.2017-18 on 18/07/2017 declaring total income of Rs. 14,39,190/-. The breakup of income return is as under:- Sr.No. Heads of Income Amount(Rs.) Amount 1 Pension Income 4,29,581/- 2 Income from House Property 1,50,850/- 3 Income from other Sources

1 The case was selected for scrutiny and notice u/s. 143(2) was issued followed by notice u/s.142(1). The details submitted by the appellant was examined by the AO. It was noticed during the assessment proceedings that the appellant deposited a total of Rs.9,00,000/- in three bank accounts between 09/11/2016 to31/12/2016. The assessee was asked to give the source of such cash deposits. It was replied that the cash deposits were made out of profit from sale of stove parts. He was requested to provide shop license, copy of GST return, Business commencement certificate etc. to provide proof for business conducted. The appellant filed his reply to the notice. The Assessing officer did not accept the explanation for the following reasons:-

2 The AO therefore, concluded that the appellant has nothing substantial to prove the geniuses of source of cash deposit and that the source of the cash deposit remain unexplained. Accordingly the sum of Rs.9,00,000/- was treated as income of the assessee u/s.69A of the I.T.Act. and total income was assessed at Rs.23,39,190/-.

Aggrieved, he filed appeal before CIT(A) and his response before him from time to time. Subsequently, the case was transferred to Addl. CIT, Appeals, Unit-2, Coimbatore under the provisions of sub-section (2) of 246(A), as per E- appeals Scheme 2023.In response to the hearing notice issued earlier he has submitted that he wished to go for Vivad se Viswas Scheme-2020, but it is seen that the appellant has not applied for the VSVS. In various grounds, it was contented by the assessee that the AO erred in computation of total income in Para 8 by including Rs 9,00,000/- twice in the computation. Besides, the treatment given to the impugned sum of Rs 9 lakh was agitated. 4.1 With regard to double addition, the ld.CIT(A) deleted the addition added twice by the AO while in respect of the source of Rs.9,00,000/- offered under “Income from Other Sources”, he observed that the assessee did not bring any substantial evidence in support of his claim other than stating that business was done on a very small scale and that cash deposit was made out of accumulation of total earnings of earlier years. The appellant cannot explain away the source of total deposits as from past savings without furnishing

Before us, the learned Authorised representative of the assessee repeated the same arguments as made before the authorities below.It is noticed that during the assessment proceeding, the assessee submitted the statement of three bank accounts; one a/c no 4350072000018821 of Navjeevan Co-operative bank, 2nd account no 007310100002743 with Bank of India and third a/c no 0264101009371 maintained with Canara Bank. On going through the bank account statements, it is seen that assessee deposited following cash amounts:

1 Thus, a total of Rs 9 lakh was deposited in the above mentioned bank accounts during the demonetization period i.e. in between 09.11.2016 to 31.12.2016.The source of these cash deposits, was stated to be profit from sale of stove parts. Consequently, a notice u/s 142(1) dated 02.07.2019 was issued to assessee requesting to provide the shop license, copy of GST return, business commencement certificate, etc, since; he had claimed source of cash deposit is profit from sale of stove parts. He was further confronted by the AO as to why no such income from sale of stove parts has not been offered in the return of income filed for Assessment year 2018-19.In response, the assessee submitted reply dated 12.07.2019 stating that he along with his family members are in the business of trading of stove and stove parts. The operative part of his submission is reproduced as under: “The ‘A’ is an Individual very senior citizen aged about 86 years. He was working in Railway Accounts Department and retired in the year March 1991. His family members, his father as well as all brothers are in the business of trading of stove and stove parts. Their parent Company i.e, M/s. Sona Traders, M/s. Sona Trading Co. and all his younger brothers who are alive are doing the same stove parts business. After his retirement he has been trading in the same line. His son is settled in US. It is correct that he has deposited Rs 900500/- in Bank Account and declared Income from stove parts not in one year but accumulated cash surplus with him after Retirement from the said business. It is correct that no such income is offered to tax since after depositing money in bank earned out of his business, his wife became bed-ridden and ‘A’ stopped moving out of his house as he is very senior citizen. Savings are offered in Income.” 5.2 Even during appeal proceeding before the ld.CIT(A) or before us, the assessee could not submit any documentary evidence to prove the genuineness of the business carried out during the year under-

As rightly pointed out by the lower authorities, the assessee could not explain the source of cash despots in the bank accounts in any satisfactory manner supported by any concrete evidence. The claim of deposits out of business receipts is devoid of any minimal evidence. However, in spite of doing business as claimed, he has not filed the return of income till AY 2016-17. It is also pertinent to mention here that assessee has P a g e | 8 A.Y. 2017-18 Nanikram Fatehchand Changlani not shown any such income for subsequent assessment year i.e AY 2018-19 as well. Further, the purported claim that the cash deposit is his accumulated earning till 2016-17 and the same is deposited in the bank account, it was rightly pointed out by the Revenue that the assessee deposited old demonetized currency to the tune of Rs 45,000/-in the bank account on every other day starting just after the announcement of demonetization. It is also seen from the table that the assessee is depositing the cash in three different accounts in the tune of Rs 45,000/- every another day which clearly showed that the amount was deposited just below the threshold limit of Rs 50,000/- and if it is accumulated earning, as stated by the assessee, the amount was to be deposited at one time only, which was not done.

1 Section 69A of the Act allows the tax authorities to initiate an inquiry into any substantial unexplained cash deposits and subsequently assess them as unexplained income. The onus is on the taxpayer to substantiate the legitimacy of the deposited cash through proper documentation and evidence. "S. 69A -"Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year."

2 A simple interpretation of Section 69A of the Act reveals that its provisions come into play when there is unaccounted money or assets that are not documented in the taxpayer's books of accounts and are not linked to any reported source of income. If it is found that there was no P a g e | 9 A.Y. 2017-18 Nanikram Fatehchand Changlani corroborative evidence to prove the source of the cash deposit, and the assessee failed to establish a reasonable nexus between the cash deposit during the demonetization period and any evidence of its source, section 69A would come into operation as in this case. 6.3 In view of the above, it is evident that the cash deposited in the bank accounts during demonetization period could neither be treated as business income nor saving of the assessee in absence of any evidence. Assessee miserably failed to bring on record any cogent evidence to support his explanation to prove the genuineness of source of cash deposit made and thus, the source of the above cash deposit of Rs 9 lakh remained unexplained and therefore was rightly added to the total income of the assessee u/s 69A of the Act. The conclusion drawn by the ld.CIT(A) needs no interference and is upheld.

In the result, the appeal is dismissed.