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Facts
The assessee's appeal concerns an addition of Rs. 3,44,65,000/- made under section 68 for unexplained cash credits during the demonetization period. The Assessing Officer (AO) framed a best judgment assessment under section 144, alleging manipulation of cash expenses and failure to provide cogent evidence for cash deposits. The CIT(A) upheld the AO's findings.
Held
The Tribunal noted the assessee's failure to produce relevant cash sales register/cash flow and other sources of income despite opportunities. The Tribunal found that the CIT(A)'s discussion highlighted the assessee's lack of evidence. Therefore, to meet the interest of justice, the issue was restored to the CIT(A)/NFAC for fresh adjudication.
Key Issues
Whether the addition for unexplained cash credits under section 68 is justified when the assessee failed to provide cogent evidence and explanations for cash deposits during demonetization.
Sections Cited
143(3), 144, 68, 271AAC
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Mumbai “D” Bench, Mumbai.
Before: Shri Satbeer Singh Godara (JM) & Shri Girish Agrawal (AM)
IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “D” Bench, Mumbai.
Before Shri Satbeer Singh Godara (JM) & Shri Girish Agrawal (AM)
I.T.A. No. 2840/Mum/2023 (A.Y. 2017-18)
Vs. ACIT, Circle 23(3) Ravi Balwantrai Mehta 701, Dev Residency Room No. 104, 1st Navyug Society, Plot Floor, Matru No. 9, Vile Parle Mandir, Tardeo Mumbai-400 056. Mumbai-400 007.
PAN : AACPM7722P (Appellant) (Respondent)
Assessee by Ms. Neha Anchlia Department by Smt. Mahita Nair Date of Hearing 01.07.2024 Date of Pronouncement 10.07.2024
O R D E R Per Satbeer Singh Godara (JM) :-
This assessee’s appeal for A.Y. 2013-14, arises against the National Faceless Appeal Centre “NFAC”, Delhi’s Din and order No. ITBA/NFAC/S/250/2023-24/10544698610(1) dated 28.07.2023 in proceedings under section 143(3) of the Income Tax Act 1961; in short “the Act”. Heard both the parties at length. Case file perused.
The assessee pleads the following substantive grounds in the instant appeal. “1. On the facts and in the circumstances of the case and in law. The appeal order passed by the learned CIT(A) is bad in law as he has not dealt with the grounds of appeal - "the assessment order is bad in law as the assessing officer erred in not giving adequate opportunity to the appellant to present the entire facts of the case during the assessment proceedings and erred in passing the assessment order u/s 144 of Income Tax Act, 1961, thereby violating the provisions of natural justice." 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming Rs. 3,44,65,0007- as cash credits u/s 68 of The
Income Tax Act, 1961 and the reasons assigned by him for doing so are wrong and contrary to the facts and circumstances of the case, provisions of Income Tax Act, 1961 and rules made thereunder. 3. The learned Assessing Officer also erred in initiating penalty proceedings u/s 271AAC of Income tax Act, 1961 in respect of additions made thereon.”
It emerges during the course of hearing that the Assessing Officer had framed his section 144 assessment dated 29.12.2019 in assessee’s case making section 68 unexplained cash credits addition of Rs. 3,44,65,000/- representing the cash deposited during demonetizing period in the month(s) of November and December, 2016. This tax payer attributed source thereof to regular business related transactions. There would be hardly any dispute that he had indeed filed the relevant details of cash sales and cash deposits (month-wise figures for A.Ys. 2016-17 to 2017-18), followed by revision of the corresponding figures during the course of assessment dated 29.12.2019 framed under section 144 of the Act. Learned assessing authority appears to have indicated differences in assessee’s cash deposits made in the corresponding figures to conclude that he had failed to explain source thereof by submitting cogent evidence.
The learned CIT(A)’s lower appellate discussion has upheld the same as under :- “5. Appellate Findings: 5.1 I have carefully considered the facts of the case, order u/s 144 of the Income Tax Act, 1961, the submission of the appellant and the material available on record. On perusal of assessment order, it is noticed that the A.O. had made addition of Rs.3,44,46,500/- u/s 68 of the Income Tax Act, 1961 5.2 On perusal of the assessment order, it is noticed that during assessment proceedings, the appellant submitted month-wise cash sales and cash deposited during F.Y. 2015-16 &F. Y. 2016-17. As the assessing officer noted that the cash expenses shown by the appellant were much more than the amount reflected as total expenditure in the Profits Loss Account. This included many credit payments also. This finding is noted in Para 4.2 of the assessment order. The Para 4.2 of the assessment order is reproduced as hereunder:-
4.2 In above information I v respect of F.Y. 2015-16, ft is noted that Assessee is showing total cash expenses of Rs. 2.72.92.255/- whereas total expenditure of as per P& L account for the F.Y. 2015- 16 Is Rs. 1.90.18.594 which Include both credit as well as cash payment and therefore, It Is proved beyond doubt that Assessee has manipulated cash expense figures of the above table for the F.Y.201S-16 just to show trend of large cash In Hand and Justify the huge Improbable cash deposit during demonetization.
Here, only on being pointed out by the A.O., the appellant revised the month-wise cash sales and cash deposited during F.Y. 2015-16 &F.Y. 2016-17.
5.3 Further, in Para 4.4, the A.O. has noted that the SBN has been deposited by third parties at different and distinct branches, which is enumerated as per order as hereunder:-
1. Another important finding of the A.O. noted in Para 4.8 in the assessment order is that the appellant has not furnished the detailed cash account/book with the narration of entries. 2. Further, the submission of the appellant before the undersigned that the A.O. continued to consider the first submission regarding monthly cash sales as legitimate is incorrect as despite repeated reminders, the appellant failed to furnish the cash book with narration. Even in the appeal proceedings, the appellant has not furnished the date wise cash book alongwith narration of entries. The appellant has not furnished filed any evidences regarding source of cash deposits shown on account of sale or
advance for sale of land or any other capital asset of Rs. 1,77,44,397/. Moreover, the appellant has not furnished any explanation that what was mode of such advance. The appellant has not furnished the date wise cash book along with narration of entries regarding cash in hand of Rs. 1,64,62,786/- . The AO has pointed out many defects in the books of the appellant which the appellant has chosen not to clarify or furnish relevant evidences. Even during the appellate proceedings, the appellant has been provided several opportunities for furnishing evidences with respect to his appeal, but the appellant has not filed any evidences with respect to his appeal. In the absence of furnishing any evidence in support of appeal filed by the appellant, I have no option but to confirm the order of assessing officer. Accordingly, the appeal of the appeal is not allowed.
As a result, the appeal filed by the appellant is not allowed.”
It is thus clear that the learned CIT(A)’s lower appellate discussion has quoted assessee’s failure in placing on record the relevant cash sales register/cash flow along with any other alleged source thereof despite having availed various opportunities. Faced with this situation, we deem it appropriate in the larger interest of justice to restore the instant soled issue back to the learned CIT(A)/NFAC’s afresh appropriate adjudication with a rider that the taxpayer herein shall plead and prove all the relevant facts, in three effective opportunities, at his risk and responsibility only.
This assessee’s appeal is allowed for statistical purposes in above terms.
Order pronounced in the open court on 10th July, 2024.
Sd/- Sd/- (Girish Agrawal) (Satbeer Singh Godara) Accountant Member Judicial Member
Mumbai : 10.07.2024 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai.
Guard File. BY ORDER, //True Copy//
(Assistant Registrar) PS ITAT, Mumbai