LALTANPUIA CHAWGHLUT,AIZAWL vs. INCOME TAX OFFICER WARD-1, SILCHAR, SILCHAR

Briefly stated the facts of the case are that as per the insight portal of the income tax department, it was noticed that the assessee deposited huge cash in his bank account for both the years and did not file his return of income u/s 139 of the Act. Accordingly, after following the due procedure for making reassessment as per the provision of section 147 to 151 of the Act, the notice was issued u/s 148 of the Act on 30.03.2021 and time was granted to file return of income for 30 days but assessee did not file return of income. Subsequently, other statutory notices u/s 142(1) of the Act was issued to the assessee but the assessee did not file any documents. Accordingly, show cause notice u/s 148 of the Act was issued to the assessee on 21.03.2022, the assessee did not make any submissions in response to the show cause notice later on the assessee filed following submissions:

The AO after examining the above submissions he did not accept the submissions of the assessee for the following reasons:

After analysing the provision of section 69A of the Act, he noted that the assessee has deposited cash in his bank account but such deposits are not recorded in the books of accounts of the assessee. Further, nature and source of such deposits made in the bank account were not at all explained. Further for making invoking the deeming section 69A of the Act. there should be clearly identifiable assets or unexplained money. It is amply proved beyond doubt that the assessee has deposited cash in bank accounts stand unexplained and the sum of Rs. 1,13,53,33,000/- & Rs. 32,66,28,000/- are identifiable unexplained assets.

Aggrieved from the above order the assessee filed appeal before the ld. CIT(A), after going through the materials available before him he dismissed the appeal of the assessee.

The ld. Counsel for the assessee reiterated the submissions made before the lower authorities. He further submitted that the assessee produced the Scheduled Tribes certificate, residential certificate and tax exemption certificate are placed at paper book pages 49 to 51. He further submitted that the assessee is registered under GST and filing return placed at paper book page no. 55 to 66. He further referred to the bank statement, agreement with suppliers and supplier confirmation at pages 67 to 134 of the paper book and supported that the assessee is eligible for exemption u/s 10(26) of the Act and the assessee has fulfilled by submitting the necessary certificates issued by the office of DCIT, Aizwal District, dated 27.06.2011 of DCIT, Aizwal District, Mizoram for residential certificate dated 08.05.2024 and ST/Caste Certificate issued by the office of DCIT, Aizwal District dated 30.04.2011 and the assessee is engaged in the business of FMCG. He also referred to the bank statement and submitted that the assessee has withdrawn money towards the purchase of the goods for trading activities and requested that the assessee may be allowed exemption u/s 10(26) of the Act on the income earned. The assessee has filed paper book containing page No. 1 to 142.

On the other hand, the Ld. DR strongly supported the order of the lower authorities and submitted that in spite of having huge bank transaction, the assessee did not file his return of income in spite of given various chance to the assessee, the assessee did not file return of income in response to the notice u/s 148 of the Act too. He merely replies only when the show cause notice was issued to the assessee and he was very well aware. Therefore, the AO was bound to complete the assessment u/s 147 r.w.s. 144 r.w.s. 144B of the Act and during the remand proceeding,

Considering the rival submissions and perusing the entire materials available on record and the orders of authorities below. We noted that the assessee has deposited huge amount in his bank account for both the years and during the assessment proceedings the assessee submitted vague reply noted (supra) and in the remand proceedings, the assessee furnished evidences and the Ld. CIT(A) called remand report against the remand report, assessee filed rejoinder. On going through the remand report and rejoinder filed by the assessee. The GST return filed by the assessee does not prove the legitimate source of bank deposits without supporting documents. We noted that even in remand report proceedings could not prove the source of cash deposits in his bank account with legitimate evidences and as per the observation of the AO, the Assessee has not produced books of accounts, bills and vouchers in Laltanpuia Chawghlut support of his claim even if he did not file the return income and financial statements which prove that the assessee had no evidences and not maintained books of accounts. We also noted that the assessee has not computed his income from business as stated that the assessee is running a FMCG. Firstly, the assessee has to compute his income from business of profession carried on by him as per the provision of the Act and thereafter he may make claim for exemption as per section 10(26) of the Act if he is satisfied the conditions as per the IT Act, but the entire receipts/deposits in bank account is not qualify for exemption u/s 10(26) of the Act, the exemption is only on the income computed as per the provision of the Act even before us the assessee could not furnish any single documents about the trading activity carried on by him only bank statement and agreement with suppliers have furnished but the assessee did not furnish the source of deposits in his bank account. It is also interesting to note that there is huge variation in the bank deposits between the two years and the reason has also not explained. Considering the totality of facts and circumstances of the case the claim of exemption u/s 10(26) of the Act cannot be granted merely on the basis of tribal status and residence and it is the duty of the assessee to conclusively prove that the income was derived from legitimate source within the specified area and is not in the nature of income taxable under the specified head. Apparently the assessee has has not discharged his liability, the case laws relied by the Ld. CIT(A) noted (supra) and relied by the AO in the case of Chuharmal Vs. CIT (1988) 172 ItR 250 (SC) supports the order of the Ld. CIT(A) and the AO. Considering the totality of the facts and observation noted above (supra) we are dismissing the appeals.