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Facts
The assessee deposited cash into their bank account during the demonetization period. The Assessing Officer (AO) treated these deposits as unexplained cash credit and added them to the total income. The assessee claimed the cash was from an opening balance and current year income, but failed to provide supporting evidence.
Held
The Tribunal noted that while cash deposits themselves are not unexplained money, the assessee has the onus to prove the source. The assessee failed to do so, and the CIT(A) confirmed the addition without a scientific approach. The Tribunal, in the interest of justice, decided to give the assessee one more opportunity to present their case before the AO.
Key Issues
Whether the CIT(A) erred in confirming the addition made by the AO for unexplained cash deposits during the demonetization period.
Sections Cited
69A
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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K & SHRI WASEEM AHMED
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi dated 15/07/2024 in DIN No. ITBA/NFAC/S/250/ 2024-25/1066718123(1) for the assessment year 2017-18.
The only issue raised by the assessee is that the ld. CIT(A) erred in confirming the addition made by the AO for Rs. 12,00,000/- representing the deposits of cash u/s 69A of the Act.
In the present case, there was cash deposited by the assessee in the bank account during the demonetization period, the source of which was not explained during the assessment proceedings. Therefore, the AO treated the same as unexplained cash credit and added to the total income of the assessee.
On appeal before the ld. CIT(A), the assessee submitted that the sister of the tax Consultant during relevant time has passed away and, therefore, the Tax Consultant could not make the proper representation during the assessment proceedings.
Besides, the above the assessee also submitted that there was an opening cash balance as on 31/03/2016 amounting to Rs. 9,73,064/- which was utilized for making the cash deposit during the demonetization period along with current year income from the salary as well as other sources.
However, the ld. CIT(A) without making the note of the submission has confirmed the order of the AO by observing as under: “6.2. Further, the assesse submitted the balance-sheet showing the capital account statement and statement of affairs. However, the assesse failed to explain the nature and source of the cash deposits made amounting to Rs.12,00,000/-. During the appellate proceedings, in spite of providing sufficient opportunities, the appellant did not file any submission/explanation in support of the grounds of appeal raised. However, the appellant claimed to have deposited cash out of cash in hand and from cash received out of salary, interest. However the same could not b proved with supporting documentary evidences before the AO as well as during the appellate proceedings. In view of the facts discussed above, the nature & source of deposits made by the appellant remained unexplained. Thus the appellant had failed to discharge his onus under section 69A of the Act. Hence, the addition made by the AO of Rs.12,00,000/- as unexplained money u/s 69A of the Act is confirmed. Accordingly, Ground No. 2 to 6 are dismissed.”
Being aggrieved by the order of ld. CIT(A), the assessee is in appeal before us.
The ld. AR before us submitted that all the notices intimating the date of hearing were issued to the email id which the assessee could not access and accordingly such notices were not complied with. However, the ld. AR requested to set aside the issue to file of the AO for fresh adjudication as per the provisions of law.
On the other hand, the ld. DR submitted that the assessee is not co-operating and, therefore, he should not be afforded any further opportunity. The ld. DR vehemently supported the orders of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the primary onus lies upon the assessee to justify the source of cash deposits based on cogent materials. But the assessee in the given facts and circumstances failed to make such compliances during the assessment and appellate proceedings. It is trite law that the income of the assessee has to be assessed within the four corners of law and on a scientific basis even in a situation where the assessee does not co-operate in furnishing the necessary material. In the given case, the addition has been made for cash deposit in the bank. Admittedly, the cash deposited in the bank per se does not represent the unexplained money u/s 69A of the Act, but the onus lies upon the assessee to provide the source of cash. In this regard, we find that only the source of cash deposits have been treated as income without giving the set off of the cash withdrawals by the . assessee during the year under consideration as well as the opening cash balance available with the assessee as on 31/03/2016. However, from the orders of the authorities below, there is no finding qua the opening cash balance as well as the cash withdrawals from the bank by the assessee, which certainly explains the source of cash deposit to the extent of opening balance and cash withdrawal until and unless something adverse is brought on record.
10.1 Likewise, it is also important to note that the provisions of sec. 249(2) of the Act mandates that the ld. CIT(A) shall dispose of the appeal of the assessee in writing with reasoning and by way of speaking order but in the given case, the CIT(A) has made addition without adopting the scientific approach. Thus, in the interest of justice and fair play, we are inclined to extend one more opportunity to the assessee to represent his case before the AO with the direction that the assessee shall not seek any adjournment and shall extend full cooperation during the proceedings before the AO. Hence, the ground of appeal of the assessee is allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.