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Facts
The assessee, an individual with a meagre salary income, deposited a significant amount of cash in his bank accounts, claiming it was received from his deceased father. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) added this amount to the assessee's total income as unexplained investment. The assessee failed to provide sufficient evidence to substantiate the source of funds to the lower authorities.
Held
The Tribunal noted that the assessee failed to substantiate the claim of receiving cash from his father and also failed to explain how the father accumulated such a large sum. However, considering the assessee's small income, the Tribunal decided to give one more opportunity to present evidence.
Key Issues
Whether the addition of Rs. 1,940,600/- as unexplained investment under section 69A is sustainable when the assessee claims the funds originated from his deceased father, but fails to provide adequate substantiation.
Sections Cited
69A, 143(3), 142(1), 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “K(SMC
Before: SHRI PRASHANT MAHARISHI, AM & SHRI SUNIL KUMAR SINGH, JM
PER PRASHANT MAHARISHI, AM:
This appeal is filed by the assessee against the appellate order passed by the National faceless appeal Centre (NFAC), Delhi (the Page | 1 ITA number 2311/M/2024 A.Y. 2017-18 Ajay Babu ram Gupta V Income Tax Officer Ward 34 (1) (1),Mumbai learned CIT – A) for assessment year 2017 – 18 dated 20/11/2023 wherein the appeal filed by the assessee against the reassessment order passed under section 143 (3) of the income tax act dated 9/ 12/2019 passed by the income tax officer Ward 34 (1) (1), Mumbai (the learned AO) S the returned income of the assessee at Rs. 115,574 two Rs. 1,940,600, was dismissed.
Assessee aggrieved with the appellate order has raised several grounds of appeal
, but the main concern and the grievance of the assessee is that the appellate authority has confirmed the addition of Rs. 1,940,600/– on account of unexplained investment under section 69A of the income tax act.
3. Brief facts of the case show that the assessee is an individual who has earned salary income of Rs. 171,220 and has earned income from house property of loss of Rs 2 lakhs as well as income from other sources of Rs. 144,354/- filed his return of income on 30/3/2018 at total income of Rs. nil after claiming deduction of Rs. 115,574. The assessee’s case was selected for limited scrutiny and necessary notice under section 143 (2) was issued on 21/9/2018. Subsequently notice under section 142 (1) was also issued. The assessee filed its reply.
4. Fact shows that the assessee has 14 bank accounts with various banks wherein the assessee has deposited cash of Rs. 19,41,600/–. The assessee explained the source of such cash deposits. Assessee submitted that source of such cash deposit are cash receipts from his father. For this proposition he submitted a notarized document dated 10/11/2017 signed by different person stating that his father expired on 6/11/2017 and cash amounting to Rs. 68.49 Lacs will remain with the assessee. The AO noted that for assessment year 2016 – 17 also assessee gave the same explanation/justification for cash deposit. Assessee was issued a show cause notice on 14/11/2019 in response to which the assessee submitted that whatever assessee wanted to submit has already submitted that the Page | 2 ITA number 2311/M/2024 A.Y. 2017-18 Ajay Babu ram Gupta V Income Tax Officer Ward 34 (1) (1),Mumbai above sum was received from his father who has passed away. The learned assessing officer noted that assessee has also deposited cash of Rs. 71.87 lakhs during financial year 2015 – 16 and had claimed during the course of scrutiny proceedings of that year that source of cash deposit was received from father of Rs. 68.49 Lacs. The learned assessing officer noted that assessee has failed to substantiate that he had actually received an amount of this magnitude from his father and further how his father came to be in possession of such huge sum. Therefore, he rejected the explanation of the assessee and made an addition under section 69A of the act determining the total income of the assessee at Rs. 1,940,600 by the assessment order.
5. Assessee aggrieved with the same preferred an appeal before the learned CIT – A. Assessee was granted six of opportunities but none of them was availed and therefore the learned CIT – A dismissed the appeal of the assessee. Further on the merits also as no submission was made, his appeal was dismissed, and the addition was confirmed.
6. The assessee preferred an appeal before us. The learned advocate Mr.parsham Kumar Doshi appeared before us and submitted that learned Commissioner of income tax appeal erred in passing the assessment order without giving show cause notice of being heard. It was also the contention of the advocate that the assessment is made on the basis of exemption, submission and totally ignored the facts of the case. He therefore submitted that the appellate order passed by the learned CIT – A is not sustainable. His argument was also that the assessment of the cash deposited by the assessee is out of the source of the funds received from father of the assessee who passed away and therefore same cannot be added under section 69A of the act in the hands of the assessee.
The learned departmental representative vehemently submitted that the assessee has stated that he has received a sum of Rs. 69 lakhs Page | 3 ITA number 2311/M/2024 A.Y. 2017-18 Ajay Babu ram Gupta V Income Tax Officer Ward 34 (1) (1),Mumbai from his father who has passed away. assessee has failed to explain how his father came into possession of the above sum, neither the return of income of his father nor the availability of cash on hand with his father was found to be valid. Merely submitting an authorized document did not serve the purpose that the above sum deposited can be considered as genuine. He submits that the assessee categorically stated that he does not want to state anything further before the assessing officer in response to the show cause notice. However, in response to the notice issued by the learned CIT – A on 5 different occasions he did not remain present and therefore now there is no question of any relief on the merit to the assessee. He further submitted that the argument of the learned authorized representative of the assessee is not valid as the learned CIT – A to give any show cause notice, he has already given an opportunity of hearing to the assessee on 6 different occasions which were not availed of by the assessee and therefore all the argument of the learned that authorized representative are devoid of any merit. He further submitted that the learned authorized representative has not submitted anything on merit that how the assessee was in possession of such a huge cash amount. He submitted that the orders of the learned lower authorities be confirmed.
We have carefully considered the rival contentions and perused the orders of the learned lower authorities. Facts clearly show that the assessee is an individual who is drawing a meagre salary of Rs. 171,210, has filed the return of income declaring total income of rupees nil, he has 10 different bank accounts with various banks wherein he has deposited in cash during demonetization period ranging from Rs. 25,000 to Rs 2,15,000/-in his bank account. assessee explained that cash amounting to Rs. 68.49 Lacs was available with the assessee when his father passed away on 6/11/2017. Out of that he has already deposited a sum of Rs. 71.87 Page | 4 ITA number 2311/M/2024 A.Y. 2017-18 Ajay Babu ram Gupta V Income Tax Officer Ward 34 (1) (1),Mumbai lakhs during financial year 2015 – 16 and further Rs. 1,941,600 during this year. The claim of the learned AO is that every year he’s depositing cash in his bank account and saying that the amount of cash deposit is received from his father who has passed away. Therefore, it is not known that what amount of cash his father has left with the assessee at the time of his death and what is the source of income of his father who have accumulated such a hugecash. Be that as it may be, before the learned and CIT – A assessee failed to produce any information but has merely requested for the adjournment on 4 times and on fifth time did not submit any information. Therefore, the assessee is merely running away from the assessment proceedings and before ours has stated that the order of the learned lower authorities are not sustainable. We are not agreeable to the contention of the assessee that the order of the learned lower authorities is not sustainable, however we agree that the assessee should be given one more opportunity because of smallness of the income of the assessee, before the learned CIT – A. The assessee is directed to submit the details of genuineness of the cash deposited in his 10 bank accounts amounting to Rs. 1,941,600/- by producing cogent evidence. The learned CIT – A is directed to examine the claim of the assessee on its on merit and may also examined that on identical facts and circumstances for assessment year 2015 – 16 the assessee has already deposited Rs. 72 lakhs in his bank account. The assessee may be granted an opportunity of hearing, if asked for. After that, the learned CIT – A decide the issue on the merits of the case. If assessee fails to submit any information, the learned CIT – A is free to pass the order on the merits. In the result all the grounds of the appeal, without deciding on merits of the case and on the addition, is restored back to the file of the learned CIT – A with direction to the assessee to make submission immediately as soon as called for without seeking any adjournment. Page | 5 ITA number 2311/M/2024 A.Y. 2017-18 Ajay Babu ram Gupta V Income Tax Officer Ward 34 (1) (1),Mumbai 9. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 29th July 2024 Sd/- Sd/- (SUNIL KUMAR SINGH) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER)