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Facts
The assessee, an individual, failed to file income tax returns for the assessment year 2017-18. Information from the ITBA system revealed cash deposits of Rs. 5,509,900 during the demonetization period. Subsequently, a total credit of Rs. 20,840,162 was found in the assessee's bank account, including a cash deposit of Rs. 58,42,500, without any explanation from the assessee.
Held
The Assessing Officer invoked Section 69A of the Income Tax Act, 1961, treating the unexplained credit transactions as income. The CIT(A) partly allowed the appeal, directing the Assessing Officer to consider debit entries and pre-credit as unexplained money, and also to give credit for cash withdrawals. The Tribunal noted that the Assessing Officer's grievance was about confirming the peak credit, which aligns with the provisions of Section 69A.
Key Issues
Whether the CIT(A) erred in directing to consider peak credit as unexplained money under section 69A despite the assessee not filing returns and there being no ostensible business connection.
Sections Cited
144, 142 (1), 133 (6), 69A
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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI RAJ KUMAR CHAUHAN, JM
ITA number 3155/M/2023 is filed by The Income Tax Officer – 19 (1) (5), Mumbai (the learned AO) for assessment year 2017 – 18 in case of Mr. Chamna Ram (the assessee) against the appellate order passed by the National Faceless Appeal Centre (NFAC), Delhi (the learned CIT – A) on 11/7/2023 wherein the appeal filed by the assessee against the assessment order dated 23/12/2019 passed under section 144 of The Income Tax Act 1961 (the ACT) by The ld. AO was partly allowed.
“1. On the facts and in the circumstances of the case, the Ld. CIT has erred in holding that the assessing officer was not right in invoking Sections 69A of the Income Tax Act, 1961, in the hands of the whereas credit transactions aggregating to Rs.2,08,40,162/- including cash deposits of Rs. 58,42,500/- were found in assessee's bank account, at both the stage of assessment as well as appellate proceedings and the assessee failed to explain the nature and source of acquisition of the money?"
2 "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing to consider the peak credit as unexplained money u/s. 69A of the I.T Act, 1961 in spite of the fact that the assesse has not filed his return of income for the year under consideration as well as for any of the assessment years and no ostensible business connection has been observed by the Assessing Officer
3. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing to consider the peak credit as unexplained money u/s, 69A of the IT Act, 1961, in spite of the fact that, the Assessing Officer observed that there was no regular trend of cash deposits in the assesse's case for A.Y 2015-16 and AY 2016-17 and abnormal cash deposits of Rs 58,42,500/- observed in the relevant A.Y 2017- 18."
Brief facts of the case show that the assessee is an individual, did not file any return of income for assessment
The learned assessing officer noted that as the assessee has not filed any return of income for any of the assessment years, bank statement for financial year 2015 – 16 and 2017 – 18 in case of the assessee was scrutinized and it was seen that there is nil deposit of cash in financial year 2015 – 16 and financial year 2017 – 18. Therefore, he concluded that there is no regular trend available of cash receipts/deposits in the bank account of the assessee. However, during the year, the substantial amount of the sum of Rs. 5,842,500/– is deposited as cash during demonetization period as well as during the entire year for which no explanation has been received from the assessee. Therefore, he held that deposit of cash in previous year 2016 – 17 shows abnormal pattern and unaccounted and unexplained money of the assessee having no connection with any business activity of the
Assessee preferred an appeal before the learned CIT – A. As before the assessing officer assessee did not comply with any of the notices, the assessee also did not comply before the learned CIT – A. Therefore, the learned CIT – A proceeded to decide the issue on the merits of the case. In the appellate proceedings, the burden of proof lies on the assessee to prove that the facts and findings of the learned assessing officer are incorrect. Therefore, he reached a conclusion that the assessee had no evidence or explanation against the finding of the AO. Accordingly on the merits the learned CIT – A held , based on the statement of facts filed, that the appellant came to Mumbai when he was 19 years old and after two years left for his hometown and is doing odd jobs works for survival. The assessee could not understand various notices and ex parte orders were passed. He says that the bank account
Now the learned assessing officer has preferred this appeal. The learned departmental representative reiterated the grounds of appeal and supported the order of the learned assessing officer. He submits that the assessing officer has made the total addition in the bank account including all the credits and therefore the learned CIT – A is not correct in directing the learned assessing officer to consider the debit and only the peak credit is required to be added under section 69A of the act. He submits that unless the assessee proves that he is entitled to the peak credit, showing similar transaction, same cannot be allowed.
Despite notice, none appeared on behalf of the assessee. Therefore because of the non-appearance of the assessee despite service of notice, the issue is decided on the merits of the case as per information available on record.
We have carefully considered the contentions of the learned departmental representative. The facts as stated clearly show that the assessee is an individual who did not file his return of income and in the bank account of the assessee with Kotak Mahindra Bank , sum of Rs.
Accordingly, appeal filed by the learned assessing officer is dismissed.
Order pronounced in the open court on 23.04 .2024.