Loading judgment…
Facts
The assessee, engaged in the business of trading live birds, deposited Rs. 2,07,04,000/- in three bank accounts during the demonetization period in Assessment Year 2017-18. The Assessing Officer made an addition under Section 69A read with Section 115BBE for unexplained cash deposits, which was subsequently confirmed by the CIT(A). The assessee contended that these deposits were from regular cash sales, supported by audited books and historical business practice.
Held
The Tribunal, after reviewing the records, found that the assessee maintained sufficient cash balance as per the accepted books of accounts. It was observed that the cash deposits were not at variance with the previous years' trends and were consistent with the business practice of cash sales, hence could not be treated as undisclosed income.
Key Issues
Whether the cash deposits made by the assessee during the demonetization period, claimed to be from cash sales and supported by audited books and past business trends, could be treated as unexplained income under Section 69A/115BBE of the Income Tax Act.
Sections Cited
Section 143(3), Section 69A, Section 115BBE, Section 143(1), Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: Dr. B. R. R. Kumar, Sh. Sudhir Kumar
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of ld. PCIT, Delhi-7 dated 31.03.2021.
Following grounds have been raised by the assessee:
“1. That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in sustaining an assessment framed under section 143(3) of the Act, making an addition of a sum of Rs. 2,07,04,000/- under section 694 of the Act, on account of alleged unexplained cash deposits during demonetization period.
2. That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in sustaining an addition of a sum of Rs. 2,07,04,000/- under section 694 r.w.s. 115BBE of the Act on account of alleged unexplained cash deposited in the three bank accounts of assessee - appellant, which sustenance is purely based on mere conjecture, suspicion and surmises and that too without rebutting the documentary evidences and explanation so furnished by the assessee appellant. 2.1 That the learned commissioner of Income Tax (Appeals) has failed to appreciate the fact that the books of accounts of Mohd. Umeed assessee - appellant have duly been audited (and also accepted by department) and cash deposit on similar lines have been accepted through out in past and cash sale and deposit thereof is inherent nature of assessee's poultry business. That even in the impugned assessment year, cash sales and deposit in bank thereof from April to 8s November have not been disputed by lower authorities and as such, the addition so made under section 69A is without any basis and needs to be deleted. 2.2 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate the fact that it was due to government's demonetization policy that the assessee had to deposit the entire cash lying with it in denomination of Rs. 500 and Rs. 1000 currency notes and it is also a matter of public knowledge that subsequent to demonetization cash sales dropped substantially due to lack of currency availability in market. That all the aforesaid facts were arbitrarily brushed aside by the learned AO and CIT (A) wherein, the addition so made and sustained is contrary to material available on record. 2.3 That the adverse findings recorded by the learned CIT (A) while sustaining the impugned addition have been recorded with preconceived notions and by arbitrarily brushing aside the detailed submissions/evidences/material placed on record and also relying on irrelevant case laws, which were furnished in order to support the fact that the cash has been deposited in bank account out of the cash available in the books of accounts of assessee.
3. That the erred in learned Commissioner of Income Tax (Appeals) has grossly assessee, a fair and proper and meaningful thereby violating the principles of natural order of assessment is vitiated both on fact of being heard, justice and thus such an in law.”
The assesses filed return of income on 29.10.2017 declaring income of Rs. 13,77,850/- which was processed u/s 143(1) of the Income Tax Act, 1961. Subsequently, the case was selected under CASS for complete scrutiny on the ground of large cash deposited. During the year under consideration, the assessee has been in the business of trading of live birds. The assessee has declared income from Business and Profession.
Mohd. Umeed 4. The Assessing Officer observed that the assessee deposited aggregating amounting to Rs. 2,07,04,000/- in his bank account bearing No. (I) 0464020100000014 maintained with Jammu & Kashmir Bank, account number (ii) 0040231000302 maintained with Janta Co-operative Bank and account number (iii) 09227630000384 maintained with HDFC Bank. Further, during assessment proceedings, it was observed that the assessee has not declared the bank accounts maintained with HDFC Bank and Janta Bank in his return of income. The gist of cash deposits made by the assessee is as under:
Sl. No. Name of the Bank Account No Cash deposit from 09.11.2016 to 30.12.2019 1 HDFC Bank 0040231000302 24,00,000/- 2 Janta Co-operative 09227630000 384 1,31,24,000/- Bank 3 Jammu And 0464020100000014 51,80,000/- Kashmir Bank Total 2,07,04,000/-
The assessee submitted that the cash deposited during the F.Y. 2016-17 is less 87.92% of the cash sales as compared to earlier years, (approx. 91.2%). It means that during demonetization period, the assease has not deposited excess cash.
The AO held that the assessee has not provided any details of the persons from whom the said cash has been received. The AO held that the bills of sales furnished on sample basis by the assessee mentions cash in the place where the name of
The AO placing reliance on the judgment of Hon’ble Apex Court in the case of Roshan Di Hatti vs. CIT (SC) 107 ITR 938 and KaleKhan Mohammad Hanif vs. CIT (SC) 50 ITR 1 wherein it was held that the onus of providing the source of money found to have been received by an assessee is on him and when the nature and source of a receipt cannot be satisfactorily explained by the assessee, it is open to the revenue to hold that it is income of the assessee and no further burden lies on the revenue to show that the income is from any particular source. The AO also relied on the judgment of Hon’ble Apex Court in the case of CIT vs. K Chinnathamban (SC) 292 ITR 682 wherein it was held that cash deposits in the bank should be explained by the assessee otherwise it is unexplained income/money.
Aggrieved, the assessee filed appeal before the ld. CIT(A) who confirmed the addition of Rs. 2,07,4.000/-made by the Assessing Officer.
Aggrieved, the assessee filed appeal before the Tribunal.
Heard the arguments of both the parties and perused the material available on record.
The cash deposits of the assessee during the three years period is as under: Cash deposits Financial Year Month 2014-15 2015-16 2016-17 April 6,35,000 34,60,000 1,18,65,000 May 69,94,240 67,64,400 1,28,30,000 June 25,00,000 1,14,54,000 96,21,150 July 87,26,730 73,05,000 11,15,000 August 85,20,000 95,05,500 27,84,316 September 1,00,30,000 46,16,000 7,20,520 October 76,35,000 42,60,500 27.07.000 November 44,88,600 42,04,000 2,16,59,500 December 78,28,500 1,40,28,850 1,54,000 — January 41,75,000 1,09,22,900 February 5,00,000 1,40,71,000 22,50,000 March 41,05,000 1,25,65,000 5,00,000 Total 6,61,38,570 10,31,57,150 6,62,06,486 13. For the FY 2014-15, F.Y. 2015-16 and F.Y. 2016-17, the comparative, position was as under:
Particulars FY 2014-15 FY 2015-16 FY 2016-17 (Rs.) (Rs.) (Rs.) Total cash deposit 6,61,38,570/- 10,31,57,150/- 6,62,06,486/- Average cash deposit 55,11,547/- 85,96,429/- 55,17,207/- Lowest deposit in a month 5,00,000/- 34,60,000/- 1,54,000/- during the year in Feb, 2015 in April, 2015 in Dec, 2016 Highest 1,00,30,000/- 1,40,71,000/- 2,16,59,500/- deposit in a month in Sept, 2014 in Sept, 2015 in Nov, 2016 Deposit in November 44,88,600/- 42,04,000/- 2,16,59,500/- Deposit in December 78,28,500/- 1,40,28,850/- 1,54,000/-
Further, we have also gone through the month-wise cash and credit sales, month-wise purchase and month-wise cash deposits in three years financial years i.e. F.Y. 2014-15, F.Y. 15-16 and F.Y. 2016-17 which are as under:
FY 2014-15 FY 2 01 4- 15 SA LE S TOTA L SA LES C ASH DE POS IT MO NTH W IS E P UR C HASE S C ASH SA LES C RED I T SA LES C ASH/ CR ED IT Apr -1 4 45, 84 ,7 16 .00 1,0 2, 78 ,4 65 .00 1,4 8, 63 ,1 81 .00 6,3 5, 00 0. 00 1,4 4, 54 ,1 29 .00 Ma y -14 52, 14 ,1 300 0 1,1 4, 02 ,7 14 .00 1,6 6, 16 ,8 44 .00 69, 94 ,2 40 .00 1.6 1, 58 ,5 20 .00 Jun - 14 43, 41 ,7 96 .00 1,5 4, 71 ,0 60 .00 1,9 8, 12 ,8 56 .00 25, 00 ,0 00 .00 1,9 2, 47 ,5 83 .00 Ju l- 14 68, 71 ,1 36 .00 1,2 4, 68 ,2 56 .60 1,9 3, 39 ,3 92 .00 87, 26 ,7 30 .00 1,8 8, 07 ,1 89 .00 Aug -1 4 70, 13 ,7 11 .00 1,5 5, 62 ,0 46 .00 2,2 5, 75 ,7 57 .00 85, 20 ,0 00 .00 2,1 9, 14 ,5 46 ,00 Sep -1 4 79, 84 ,1 26 .00 1,6 8, 71 ,2 36 .00 2,4 8, 55 ,3 62 .00 1,0 0, 30 ,0 00 .00 2,4 1, 73 ,6 65 .00 Oct - 14 77, 13 ,2 30 .00 1,5 4, 12 ,0 47 .00 2,3 1, 25 ,2 77 .00 76, 35 ,0 00 .00 2,2 4, 71 ,0 28 .00 N o v- 14 66, 21 ,7 74 .00 1,4 2, 01 ,3 66 ,00 2,0 8, 23 ,1 40 .00 44, 88 ,5 00 .00 2,0 2, 48 ,0 94 .00 D ec -1 4 58, 51 ,6 52 .00 1,2 3, 86 ,2 03 ,00 1,8 2, 37 ,8 55 .00 78, 28 ,5 00 .00 1,7 6, 97 ,6 53 .00 Ja n- 1 5 49, 26 ,6 87 .00 99, 84 ,1 65 .00 1,4 9, 10 ,8 52 .00 41, 75 ,0 00 .00 1,4 4, 78 ,5 96 .00 Fe b- 15 44, 13 ,2 87 .00 1,2 0, 57 ,4 11 .00 1,6 4, 70 ,6 98 .00 5,0 0, 00 0. 00 1,6 0, 17 ,4 08 .00 Mar -1 5 69, 84 ,1 62 .00 1,5 6, 21 ,0 45 ,00 2,2 6, 05 ,2 07 .00 41, 05 ,5 00 .00 2,1 9, 35 ,2 25 .00 TOTA L 7,2 5, 20 ,4 07 .00 16, 17 ,1 6, 014 .0 0 23, 42 ,3 6, 421 .0 0 6,6 1, 38 ,5 70 .00 22, 76 ,0 3, 636 ,0 0 FY 2015-16 FY 2 01 5- 16 SALE S TOTA L SA LES C ASH DE POS IT MO NTH W IS E P UR C HASE S C ASH SA LES C RED I T SA LES C ASH/ CR ED IT Apr -1 5 58, 15 ,7 46 .00 1,8 9, 15 ,6 25 .00 2,4 7, 31 ,3 71 .00 34, 60 ,0 00 .00 2,4 1, 40 ,1 67 .00 Ma y -15 80, 58 ,5 62 .00 2,2 5, 41 ,5 87 .00 3,0 6, 00 ,1 49 .00 67, 64 ,4 00 .00 2,9 8, 77 ,5 56 .00 Jun - 15 98, 72 ,5 85 .00 2,7 9, 78 ,4 16 .00 3,7 8, 51 ,0 01 .00 1,1 4, 51 ,0 00 .00 3,7 0, 13 ,4 15 .00 Ju l-15 94, 15 ,8 70 .00 2,1 4, 78 ,9 56 .00 3,0 8, 94 ,8 26 .00 73, 05 ,0 00 .00 3,0 2, 21 ,5 78 .00 Aug-1 5 1,0 5, 87 ,4 16 .00 3,0 4, 08 ,5 93 .00 4,0 9, 96 ,0 09 .00 95, 05 ,5 00 .00 4,0 1, 69 ,7 85 .00 5ep -1 5 76, 22 ,1 58 .00 2,4 6, 28 ,7 41 .00 3,2 2, 50 ,8 99 .00 46, 16 ,0 00 .00 3,1 2, 38 ,8 40 .00 Oct - 15 71, 26 ,8 56 .00 2,5 7, 89 ,5 46 .00 3,2 9, 16 ,4 02 .00 42, 60 ,5 00 .00 3,2 1, 58 ,3 78 .00 N o v- 15 80, 87 ,4 15 .00 2,9 8, 51 ,5 06 .00 3,7 9, 38 ,9 21 .00 42, 04 ,0 00 .00 3,7 0, 67 ,8 25 .O0 Mohd. Umeed D ec-1 5 94, 52 ,8 21 .00 2,9 8, 75 ,6 14 .00 3,9 3, 28 ,4 35 .00 1,4 0, 28 ,8 50 .00 3,8 4, 25 ,4 37 .00 Jan - 16 1,0 8, 45 ,6 23 .00 2,8 4, 14 ,5 62 .00 3,9 2, 60 ,1 85 .00 1,0 9, 22 ,9 00 .00 3,8 3, 42 ,5 02 .00 Fe b-16 1,8 8, 24 ,4 15 .00 3,2 5, 36 ,4 03 .00 4,6 3, 60 ,8 18 .00 1,4 0, 71 ,0 00 .00 4,5 2, 25 ,2 91 .00 Ma r -1 6 1,1 7, 45 ,2 68 .00 2,7 8, 71 ,5 16 .00 3,9 6, 16 ,7 64 .00 1,2 5, 65 ,0 00 .00 3,8 6, 31 ,8 76 .00 TOTA L 11, 24 ,5 4, 735 .0 0 32, 02 ,9 1, 065 .0 0 43, 27 ,4 5, 800 .0 0 10, 31 ,5 7, 150 .0 0 42, 25 ,1 2, 650 .0 0 FY 2016-17 FY 2 01 6- 17 SALE S C ASH DE POS IT MO NTH W IS E P UR C HASE S C ASH SA LES C RED IT SA LES TOTA L SA LES C ASH/ CR ED IT Apr -1 6 1,3 8, 74 ,5 62 .00 2,4 1, 58 ,7 50 .00 3,8 0, 33 ,3 12 .00 1,1 8, 65 ,0 00 .00 3,6 9, 75 ,3 89 .00 Ma y -16 1,5 8, 54 ,3 84 .00 2,9 8, 74 ,6 56 .00 4,5 7, 29 ,0 40 .00 1,2 8, 30 ,0 00 .00 4,4 4, 60 ,8 17 .00 Jun - 16 1,0 3, 87 ,1 68 .00 3,6 1, 58 ,7 10 .00 4,6 5, 45 ,8 78 .00 96, 21 ,1 50 .00 4,5 2, 55 ,7 16 ,00 Ju l- 16 55, 84 ,1S 8. 00 3,4 4, 51 ,1 68 .00 4,0 0, 35 ,3 26 .00 11, 15 ,0 00 .00 3,8 9, 20 ,0 29 .00 Aug -1 6 78, 71 ,6 28 .00 3,8 1, 71 ,6 86 .00 4,6 0, 43 ,3 14 .00 27, 84 ,3 16 .00 4,4 7, 23 ,5 08 .00 Sep -1 6 69, 15 ,2 86 .00 2,9 7, 87 ,4 85 .00 3,6 7, 02 ,7 71 .00 7,2 0, 52 0. 00 3,5 6, 76 ,9 82 .00 Oct - 16 82, 18 ,2 05 .00 3,4 8, 41 ,0 62 .00 4,3 0, 59 ,2 67 .00 27, 07 ,0 00 .00 4.2 8, 66 ,8 29 .00 N o v- 16 21, 74 ,5 84 .00 1,9 8, 74 ,1 56 .00 2,2 0, 48 ,7 40 .00 2,1 6, 59 ,5 00 .00 2,1 4, 18 ,6 28 .00 Dec -1 6 6,8 7, 46 2. 00 2,4 1, 57 ,4 69 .00 2,4 8, 44 ,9 31 .00 1,5 4, 00 0. 00 2,4 1, 39 ,9 82 .00 Jan - 17 9,7 1, 56 2. 00 3,0 8, 87 ,4 15 .00 3,1 8, 58 ,9 77 .00 - 3,0 9, 66 ,3 41 .00 Fe b- 17 14, 91 ,7 41 .00 3,3 5, 18 ,3 33 .00 3,5 0, 10 ,0 74 .00 22, 50 ,0 00 .00 3,4 0, 36 ,3 81 .00 Ma r -1 7 13, 75 ,1 60 .00 3,5 8, 58 ,4 15 .00 3,7 2, 33 ,5 75 .00 5,0 0, 00 0. 00 3,6 1, 98 ,6 28 .00 TOTA L 7,5 4, 05 ,9 00 .00 37, 17 ,3 9, 305 .0 0 44, 71 ,4 5, 205 ,0 0 6,6 2, 06 ,4 86 .00 43, 46 ,3 9, 230 .0 0
From the above said table it is very clear that cash deposited in various banks during the three financial years is as under:
Year C ash D ep o sit C ash S ate s Tot a l Se les % o f c as h % o f c as h d ep o si t to d epo si t to tot a l sa le s ca s h sa les 201 4 -15 6,6 1, 38 ,5 70 .00 7,2 5, 20 ,4 07 .00 23, 42 ,3 6, 421 .0 0 91. 20 28. 24 201 5 -16 10, 31 ,5 7, 150 .0 0 11, 24 ,5 4, 735 ,0 0 43, 27 ,4 5, 800 .0 0 91. 73 23. 84 201 6 -17 6,6 2, 06 ,4 86 .00 7,5 4, 05 ,9 00 .00 44, 71 ,4 5, 205 .0 0 87. 92 14. 81
From the above said table it is apparent that the cash has been deposited in the above said years from 87, 92 to 91.20% of cash sales, it is 15% to 28% of the total sales. Cash is being deposited as per trends & practice of business. Cash deposited during the FY 2016-17 is less 87.92% of the cash sales as
Further, the cash in hand position of the assessee is as under:
FY 2 01 6- SALE S C ASH DE POS IT MO NTH W IS E C ash in 17 P UR C HASE S han d C ASH SA LES C RED IT SA LES TOTA L SA LES C ASH/ CR ED IT (in Rs. ) Apr -1 6 1,3 8, 74 ,5 62 .00 2,4 1, 58 ,7 50 .00 3,8 0, 33 ,3 12 .00 1,1 8, 65 ,0 00 .00 3,6 9, 75 ,3 89 .00 20, 09 ,5 62 Ma y -16 1,5 8, 54 ,3 84 .00 2,9 8, 74 ,6 56 .00 4,5 7, 29 ,0 40 .00 1,2 8, 30 ,0 00 .00 4,4 4, 60 ,8 17 .00 50, 33 ,9 46 Jun - 16 1,0 3, 87 ,1 68 .00 3,6 1, 58 ,7 10 .00 4,6 5, 45 ,8 78 .00 96, 21 ,1 50 .00 4,5 2, 55 ,7 16 ,00 57, 99 ,9 64 Ju l- 16 55, 84 ,1S 8. 00 3,4 4, 51 ,1 68 .00 4,0 0, 35 ,3 26 .00 11, 15 ,0 00 .00 3,8 9, 20 ,0 29 .00 1,0 2, 69 ,1 22 Aug -1 6 78, 71 ,6 28 .00 3,8 1, 71 ,6 86 .00 4,6 0, 43 ,3 14 .00 27, 84 ,3 16 .00 4,4 7, 23 ,5 08 .00 1,5 3, 56 ,4 34 Sep -1 6 69, 15 ,2 86 .00 2,9 7, 87 ,4 85 .00 3,6 7, 02 ,7 71 .00 7,2 0, 52 0. 00 3,5 6, 76 ,9 82 .00 2,1 5, 51 ,2 00 Oct - 16 82, 18 ,2 05 .00 3,4 8, 41 ,0 62 .00 4,3 0, 59 ,2 67 .00 27, 07 ,0 00 .00 4,1 8, 66 ,8 29 .00 2,7 0, 62 ,4 05 N o v- 16 21, 74 ,5 84 .00 1,9 8, 74 ,1 56 .00 2,2 0, 48 ,7 40 .00 2,1 6, 59 ,5 00 .00 2,1 4, 18 ,6 28 .00 75, 77 ,4 89 Dec -1 6 6,8 7, 46 2. 00 2,4 1, 57 ,4 69 .00 2,4 8, 44 ,9 31 .00 1,5 4, 00 0. 00 2,4 1, 39 ,9 82 .00 81, 18 ,9 51 Jan - 17 9,7 1, 56 2. 00 3,0 8, 87 ,4 15 .00 3,1 8, 58 ,9 77 .00 - 3,0 9, 66 ,3 41 .00 90, 82 ,5 13 Fe b- 17 14, 91 ,7 41 .00 3,3 5, 18 ,3 33 .00 3,5 0, 10 ,0 74 .00 22, 50 ,0 00 .00 3,4 0, 36 ,3 81 .00 83, 24 ,2 54 Ma r -1 7 13, 75 ,1 60 .00 3,5 8, 58 ,4 15 .00 3,7 2, 33 ,5 75 .00 5,0 0, 00 0. 00 3,6 1, 98 ,6 28 .00 91, 99 ,4 14 TOTA L 7,5 4, 05 ,9 00 .00 37, 17 ,3 9, 305 .0 0 44, 71 ,4 5, 205 ,0 0 6,6 2, 06 ,4 86 .00 43, 46 ,3 9, 230 .0 0 -
On going through the entire factual information available on record and not disputed by the revenue, it can be held that the assessee had sufficient cash balance as per the accepted books of accounts and hence, the cash deposits cannot be treated as undisclosed income.
In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 14/08/2024.