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Facts
The assessee, Sri Shankar Souhardha Pattina, a cooperative society, failed to file its Income Tax Return for AY 2015-16. The Revenue initiated proceedings under section 148A and later completed assessment under section 144, treating a cash deposit of Rs. 2,86,89,300 in IDBI Bank as unexplained income under section 69A. The assessee's appeal before the CIT(A) was dismissed for not filing additional evidence.
Held
The Tribunal held that the additional evidence filed by the assessee, including financial statements, cash book, bank statements, and registration certificate, were essential for adjudicating the case. The Tribunal admitted this additional evidence.
Key Issues
Whether the CIT(A) was justified in not accepting the additional evidence filed by the assessee for adjudicating the appeal, and whether the cash deposit could be treated as unexplained income under Section 69A.
Sections Cited
69A, 148A, 144, 139(1), 142(1), 147, 144B, 156, 271(1)(c), 115BBE, 2(24), 80P, 46A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SMT. BEENA PILLAI & SHRI LAXMI PRASAD SAHU
Per Laxmi Prasad Sahu, Accountant Member
1. This appeal is filed by the assessee against the DIN & Order No. ITBA/NFAC/S/250/2023-24/1058451342(1) dated 04.12.2023 of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the AY 2015-16.
2. The facts in brief are that as per the specific information under the head “NMS Case”, the assessee had carried out following cash transactions in its bank account during the F.Y. 2014-15 relevant to the A.Y. 2015-16.
Financial Name of the Bank Account No. Amount In Rs. Transaction description Deposited cash of Rs. 0876104000023427 2,86,89,300 IDBI BANK 10,00,000 or more in a LIMITED saving bank account
The assessee had not filed Return of Income for A.Y. 2015-16 and for that reasons the sources of cash deposits in bank account remained unexplained. Proceedings u/s 148 were initiated and various opportunities were given to the assessee to explain the income chargeable to tax which has escaped assessment for the Assessment Year 2015-16. Since the assessee had not filed any reply, it was logically concluded that he had no proper explanation with respect to the above cash transactions. Accordingly, order u/s 148A(d) of “the Act” was passed on 30.03.2022. Sufficient opportunity was granted as detailed in para no. 2 of the assessment order. Subsequently, the assessee has filed return of income on 4.11.2022 as per provisions of section 148 of "the Act" declaring total income at Rs. Nil. Since the assessee has not complied the notice under section 142(1) and show cause notice was given and last opportunity was afforded before completing the assessment under section 144 of “the Act”. Since assessee has completely failed to respond to the various notices, therefore, the assessment order was passed under section 144 of the Act r.w.s. 147 and 144B of the Act. Accordingly, the total income as
per return filed on 04.11.2022 i.e., Rs. 2,86,89,300/- was treated as unexplained money under section 69A for the A.Y. 2015-16. Accordingly, notice of demand under section 156 of "the Act" was issued and penalty proceedings under section 271(1)(c) has been initiated separately.
Against this order dated 04.03.2023 of the Ld. AO, Assessment Unit, an appeal was filed before the Ld. CIT(A) challenging the addition of Rs. 2,86,89,300/- as income of the appellant society by the Ld. AO. Before the Ld. CIT(A) the appellant wanted to file additional evidence, however, as per Ld. CIT(A), the appellant has failed to make out a case for additional evidence under Rule 46A and hence not allowed to file additional evidence. The Ld. CIT(A) has dismissed the appeal, the said order of the Ld. CIT(A) is challenged in the present appeal on the following grounds: -
a. The ld. AO erred in holding that, an amount deposited with bank Rs. 2,86,89,300 as the income of the appellant society by invoking the provisions of sec. 69A, because the cash deposit is not covered as income u/s. 2(24) of the Act. b. The ld. AO erred in holding that, a sum of Rs. 2,86,89,300 as its income, when it is obviously available on the record that, the cash was deposited with IDBI Bank. Therefore, your appellant prays that, the addition made to the returned income may please be deleted. c. The ld. AO erred in invoking the provisions of sec. 115BBE, tax on special income, when it is not an income at all of the appellant.
The ld. AR submitted that the lower authorities did not accept the additional evidence filed by the assessee which were essential for adjudicating the case. The additional evidence filed were only KYC. Only there was a drawback, there is a delay in filing additional evidence. The assessee was of the opinion that it was not required to file return of income being a Souhardha Cooperative Society and income earned by the society is allowable for 100% deduction u/s. 80P of the Act. The ld. CIT(A) did not grant proper opportunity to represent the case. He further submitted that KYC contained the name of depositor, ID no. of the member, Aadhar, PAN and amount deposited, but the CIT(Appeals) did not accept additional evidence. Due to lack of knowledge of assessment proceedings, the assessee could not comply notices issued by the AO, therefore the case was completed u/s. 144 of the Act and requested that if a chance is given to the assessee, he undertook to comply to the notices and substantiate the case and requested that the matter may be sent back to the CIT(Appeals) for fresh consideration.
On the other hand, the ld. DR relied on the order of lower authorities and submitted that assessee was required to file return of income in spite of which he did not file return u/s. 139(1). Therefore notice was issued u/s 148 and the assessee filed return belatedly and he did not participate in the assessment proceedings, therefore the AO was bound to completed assessment u/s. 144 of the Act. The ld. CIT(Appeals) rightly rejected the additional evidence filed by the assessee. The AO granted sufficient opportunity to the assessee for complying notices u/s. 142(1).
Considering the rival submissions, we note that the assessee has deposited cash in IDBI Bank Ltd. in A/c No. 0876104000023427 of Rs.2,86,89,300. Accordingly notice u/s. 148 was issued, but the assessee after giving various opportunities for substantiating the cash deposits by the AO did not reply. Therefore the case was completed u/s. 144 and the CIT(Appeals) did not accept additional evidences filed i.e. KYC. However the assessee has filed before us the same which is placed at page 2 to 9 of PB which were furnished before the CIT(Appeals) also. We also note from the appeal set that the assessee has filed petition under Rule 46A dated 29.10.2023 which contains the following:-
Audited financial statements and copy of audit report.
Statement showing opening cash, receipts and payments including cash deposited into bank on daily basis, with a view to prove, there was sufficient cash balance in hand, out of which the cash was deposited into IDBI bank. (365 days). 3. Statement showing opening cash, receipts and cash deposited into IDBI Bank Ltd., on the date on which deposit was made showing precisely the amount of cash balance available in the hand. 4. A scanned copy of cashbook, General Ledger. 5. Bank Statement issued by IDBI Bank Ltd., for the Fin. Yr.: 2014-15 for the cross verification of transactions. 6. A certificate of registration of the society under The Karnataka Co-opt. Societies Act, 1959. 8. Considering the above documents and in the present facts of the case, we think it appropriate to admit the additional evidence filed and these are very much relevant to decide the case of the assessee and we remit the issue to the CIT(Appeals) for fresh consideration and decision as per law. The assessee is directed to update its email id, communication address and other details and file necessary documents that would be essential and required for substantiating his case and for proper adjudication by the revenue authorities. Needless to say that reasonable opportunity of being heard be given to the assessee. The assessee is directed to cooperate with the proceedings and in case of further default, the assessee shall not be entitled to any leniency.
In the result, the appeal of the assessee is allowed for statistical purposes.
Pronounced in the open court on this 31st day of July, 2024.