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Facts
The assessee, a charitable trust, failed to file its income tax return for AY 2017-18. Information gathered under 'Operation Clean Money' revealed cash deposits of Rs. 12,92,914/- in Specified Bank Notes during the demonetization period. The Assessing Officer made an addition of Rs. 14,26,023/- as unexplained cash credit.
Held
The Tribunal noted that the assessee failed to provide satisfactory explanation regarding the nature and source of the cash deposits. Despite opportunities, the assessee did not appear or provide submissions to substantiate its claim. The registration certificate was also found to be backdated, indicating a lack of bona fide.
Key Issues
Whether the cash deposits made during the demonetization period can be treated as unexplained cash credit under Section 69A of the Income Tax Act.
Sections Cited
69A, 144, 115BBE, 250
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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
(Assessment Year: 2017-18) Rajasthani Rawal Brahman Samaj Commissioner of Income Tax Vikas Mandal (Appeals) Income Tax Dept. NFAC 17, Om Shree Sai Darshan, Kailash Income Tax Officer, Circle 3, Vs. Nagar, Koper Cross Road, Opp. Kalyan, Maharashtra – 421306. Sakharam Complex, Dombivali (W), Thane – 421202. PAN/GIR No. AACAR 9376 B (Assessee) : (Respondent) Assessee by : None : Shri. R. R. Makwana Sr. DR. Respondent by Date of Hearing : 15.10.2024 Date of Pronouncement : 27.11.2024 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals), Delhi (‘ld.CIT(A) for short),National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2017-18.
As there was no representation on behalf of the assessee, we hereby dispose of this appeal by hearing the learned Departmental Representative ('ld.DR' for short) and on perusal of the materials available on record.
3. The assessee has raised the following grounds of appeal:
(A.Y. 2017-18) Rajasthani Rawal Brahman Samaj Vikas Mandal 1. “The Learned CIT (A) erred in law and in facts in passing an ex parte order. Your appellant submits that it was prevented by sufficient reasons and proper opportunity of being heard was not granted.
2. The Learned CIT (A) erred in confirming the addition of Rs. 14,26,023/- as unexplained cash within the meaning of section 69A of the Act.
The appellant reserves the right to add, alter or amend any ground or grounds of appeal on or before the hearing.”
4. Brief facts of the case are that the assessee is a charitable trust registered under Bombay Public Trust Act, 1950 engaged in carrying out various social activities. The assessee has not filed its return of income for the year under consideration. The assessee’s case was selected for scrutiny based on the information gathered during the phase of online verification under ‘Operation Clean Money’. The learned Assessing Officer (ld. A.O. for short) observed that the assessee had deposited demonetized Specified Bank Notes (SBN) aggregating to Rs. 12,92,914/- during demonetization period. The assessee did not respond to the notices issued by the ld. AO and hence, the ld. AO proceeded to pass the assessment order u/s. 144 being the best judgment assessment vide order dated 25.11.2019 determining total income at Rs. 17,94,210/- after making an addition of Rs. 14,26,023/- u/s. 69A of the Act as unexplained cash credit being the total cash deposits made in the assessee’s bank account during demonetization period.
5. Aggrieved the assessee was in appeal before the first appellate authority, challenging the assessment order.
6. The ld. CIT(A) vide order dated 25.11.2019 upheld the addition made by the ld.A.O. on the ground that the assessee has been non compliant throughout the appellate proceeding.
(A.Y. 2017-18) Rajasthani Rawal Brahman Samaj Vikas Mandal 7. The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A).
We have heard the learned Departmental Representative (ld. DR for short) and perused the materials available on record. It is observed that the assessee has challenged the additions made by the ld. A.O. before the first appellate authority but has been non compliant throughout the appellate proceeding and even before us the assessee has neither appeared nor made any submission to substantiate its claim inspite of several opportunities. It is also observed that the assessee has given various details before the ld. AO which has been perused and arrived at a conclusion that the assessee has failed to discharge the initial onus casted upon it to prove the identity and creditworthiness of the parties and the genuineness of the transaction. The relevant extract of the assessment order is cited hereinunder for ease of reference. "10.3 In the present case, the assessee has deposited Cash in bank account but such money is not recorded in the books of account of the assessee as the assessee has failed to file its return of income and also failed to offer the said income to tax and pay the due tax on it. Further, the nature and source of such Deposits made in the bank accounts were not at all explained, leave alone satisfactory explanation, Further, for invoking deeming provisions under Section 69A of the act, there should be clearly identifiable asset or unexplained Money. It is amply proved beyond doubt that the assessee has deposited Cash and other Credits appearing in bank accounts stands unexplained, and the sum of Rs 14,26,023/- are identifiable unexplained assets......... 10.5 The assessee is found to be the owner of the Money deposited in his bank account/(s) established through details obtained from the Bank. The assessee was found owner of the Money but has not offered any acceptable and cogent explanation regarding the source of such Money deposited in the bank accounts. The expression "nature and source" used in this section should be understood to mean requirement of identification of source and its genuineness. Thus, in view of the above, all three limbs of Section 69A of the Act stands qualified in the case of the assessee.
Therefore, in cases where assessees deposited huge Cash in bank accounts during Demonetization period (9th November, 2016 to 30th December, 2016), but the sources were neither explained nor such money offered for taxation, the onus is on the assesses' to prove that the Cash deposits made did not bear the character of income. In this case, the assessee had failed to prove this fact that the Cash deposited during demonetization period are normal business receipts and therefore, I hold that the amount of Deposits made in the bank accounts, including Cash deposited during Demonetisation period, (A.Y. 2017-18) Rajasthani Rawal Brahman Samaj Vikas Mandal represented income from undisclosed sources. The assessee has concealed its true income which otherwise is taxable. Further, by relying upon the decision of Hon'ble Supreme Court in the cases cited above that there was ample evidence that Cash was deposited in bank accounts, which is prima facie evidence against the assessee that the deposits are undisclosed income on which the Department can proceed in absence of good explanation.
1. The assessee society has submitted copy by of registration certificate dated 24. 11.2016 issued by the Registrar of Co-operative societies and copies of receipts for subscription issued to various persons. Copy of receipts for subscription Copy of Registration Certificate 14. From perusal of above, it is seen that the Certificate of Registration was issued on 24.11.2016 vide Registration No. Mh/1857/2016/Thane, however, the assessee was using this Registration No. before two months of its allotment as it can be seen from the receipt of Subscription pasted above. It is, thus, that false evidence had been adduced by the assessee to get undue advantage of giving colour of genuineness to cash deposit entries in the bank statement. It shows that the claim of the assessee was not bona fide. Therefore, the details in respect of cash generation and subsequently deposited in to bank account furnished by the assessee is an afterthought which deserves to be negated.
1. The SOP formulated is silent on the issues of credits and cash deposits appearing in the bank account during F.Y. 2016-17 during pre and post demonetization period. The SOP has also instructed to analyze the trend of cash deposits where there should not be any abnormality. Since the bank account was opened during demonetization period itself i.e. on 13.11.2016, the analysis of the bank statement has been made as for F.Y. 2016-17 and 2017- 18.
The total cash deposits made in its bank account during demonetization period is at Rs. 14,26,023/-. In view of the above, as the assessee has failed to comply with the statutory provisions, the total of cash deposits during demonetization i.e. Rs. 14,26,023/- is brought to tax as unexplained cash within the meaning of section 69A of the I.T. Act and that the taxes will be levied as per the provisions of section 115BBE of the I.T. Act."
From the above, it is evident that though the assessee has filed the present appeal challenging the impugned addition, it has failed to establish the genuineness of the transaction neither before the lower authorities nor before us. We therefore are inclined to take an adverse inference that the assessee has no substantial evidence to establish its contentions. Hence, we dismiss the grounds raised by the assessee.