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Facts
The assessee, engaged in employment and civil construction work, filed his return for AY 2016-17 declaring income of Rs. 4,25,340. The AO observed cash deposits of Rs. 57,86,525 in the assessee's bank account and treated Rs. 56,99,685 as unexplained income under Section 69A of the Income Tax Act.
Held
The CIT(A) dismissed the assessee's appeal ex-parte due to non-compliance with notices. The ITAT noted that cash withdrawals exceeded cash deposits and that the assessee had provided explanations. The Tribunal found that the matter could be decided on merits.
Key Issues
Whether the cash deposits in the bank account were adequately explained by the assessee, and whether the CIT(A) erred in dismissing the appeal ex-parte without providing a reasonable opportunity of hearing.
Sections Cited
147, 144B, 69A, 115BEE, 44AD, 139(1)
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 905/JPR/2024
fu/kZkj.k o"kZ@Assessment Years : 2016-17 Sh. Bhupendra Meena cuke The ITO, 86 Lav Kush Nagar-1st, Tonk Vs. Ward-1(1), Phatak, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AWDPM9422B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal (C.A.) jktLo dh vksj ls@ Revenue by : Shri Anoop Singh (Addl.CIT) a lquokbZ dh rkjh[k@ Date of Hearing : 07/08/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 04/10/2024 vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M.
This appeal is filed by the assessee aggrieved from the order of the Ld. CIT(A), National Faceless Appeal Centre, Delhi dated 04.06.2024 [Here in after referred as “CIT(A)/NFAC”] for the assessment year 2016- 17, which in turn arise from the order dated 08.03.2023 passed under section 147 read with section 144B of the Income Tax Act, [Here in after referred as “Act” ] by the AO. 2. The assessee has raised following grounds:-
Sh. Bhupendra Meena vs. ITO “1. The ld. CIT(A), NFAC has erred on facts and in law in deciding the appeal without providing reasonable opportunity of hearing in as much as it issued 4 notices within a period of 1 month at his e-mail id which did not come to his notice.
2. The ld. CIT(A), NFAC has erred on facts and in law in confirming the addition of Rs. 56,99,685/- u/s 69A of IT Act by treating the cash deposit to this extent in the bank account as unexplained income of assessee by not appreciating that source of such cash deposit is out of the cash withdrawn earlier from the same bank account and other bank account of assessee.
3. The appellant craves to alter, amend and modify any ground of appeal
4. Necessary cost be awarded to the assessee.”
The brief facts of the case are that the assessee was employed with Aravali Micro Finance and was also engaged in executing small civil construction work. The assessee has e-filed his return of income 139(1) of the Act for the A.Y. 2016-17 on 07.11.2017 admitting income under the head as follows:-
Income from business : Rs. 2,02,130/- Income from salary : Rs. 2,58,000/- Income from house property : Rs. 50,400/- The assessee declared total taxable income of Rs. 4,25,340/-. The assessee has opted presumptive business income u/s 44AD of the Act, where the assessee has shown his gross turnover/receipts to the extent of Rs. 13,40,000/- and offered the income of Rs. 2,02,130/-. The ld. AO noted that the assessee has made cash deposit amounting to Sh. Bhupendra Meena vs. ITO Rs.57,86,525/- during the F.Y.2015-16 relevant to A.Y.2016-17. Further, it is seen from the record, that the assessee has e-filed his return of income u/s 139(1) for the A.Y.2016-17 on 07/11/2017 declared total income of Rs.4,25,340/- by opting presumptive business income u/s 44AD of the Income Tax Act. Hence, an opportunity was given to the assessee u/s 148A(b) requesting for explanation of the same. In response to the notice assessee filed his submission on 13/06/2022. The same was perused. The assessee failed to furnish any proper explanation in support of the cash deposit. Thus, an order u/s 148A(d) was passed on 25/07/2022. Subsequently, the case was reopened with the prior approval of PCIT and notice u/s 148 was issued to the assessee on 25.07.2022. In response to notice u/s 148 assessee e-filed his return of income for the year under consideration on 25.01.2023 and declared total income of Rs. 4,25,340/- by opting presumptive business income u/s 44AD of the Act.
3.1 The Ld. AO noted that the assessee has not submitted the source and nature of cash deposits and any proper explanation/documentary evidence. During the course of video conference held on 21/02/2023, the assessee along with his representative attended and the explanation produced by the assessee's representative was not satisfactory. The assessee's representative repeatedly said that this is our final submission. The assessee has confirmed in the video conference to submit the power Sh. Bhupendra Meena vs. ITO of attorney, has not submitted the same. In view of the above discussion, and in the absence of any proper explanation/documentary evidence on the nature and source of cash deposits in bank account which is maintained in Bank of Baroda to the extent of Rs.56,99,685/- was treated as unexplained money as per section 69A of the Income Tax Act, 1961. Since the assessee has not explained the nature and source for the cash to the extent of Rs.56,99,685/- the same was treated as unexplained money referred to under section 69A. Accordingly, the cash deposit to the extent of Rs.56,99,685/- was added back under the head 'Income from Other Sources' and brought to tax at special rate as per the provisions of section 115BEE of the Income tax Act.
Being aggrieved by the order of the AO, the assessee filed an appeal before the ld. CIT(A). The Ld. CIT(A) observed that various notices were issued to the assessee requiring the assessee to file the details in support of grounds taken by the assessee. Since the assessee has not complied with the notices issued the ld. CIT(A) dismissed the appeal of the assessee ex-parte. The extract of the finding of the ld. CIT(A) is reproduced as under:-
Sh. Bhupendra Meena vs. ITO “6.Decision: Since the appellant has not made any written submission during the course of these proceedings, the appeal is decided on the basis of the details as provided in the Form no. 35 filed by the appellant, the assessment order and other material available on record. 6.1 Ground no. 1 and 2: -During the course of assessment proceedings, it was noted by the AO that the assessee had made cash deposit amounting to Rs.57,86,525/- during the year. On enquiry the assessee submitted that the cash deposits were out of previous withdrawals. However, the same was not accepted by the AO since the assessee satisfactorily failed to explain the same. Also, looking at the pattern of cash deposits and since the assessee had failed to explain the source and nature of these deposits, an addition of Rs.56,99,685/- was made as unexplained cash deposits u/s 69A of the Act. 6.2 During the current proceedings, the appellant has made no written submission in response to several notices issued. Since the appellant has not produced even an iota of evidence to explain the source and nature of the cash deposits, I see no reason to interfere with the order of the Assessing officer. The onus squarely lies on the appellant to explain the source and nature of cash deposits satisfactorily, once the provisions of section 69A of the Act have been triggered. In light of the above discussion, I hereby confirm the addition of Rs.56,99,685/- and these groundsare accordingly dismissed. 6.3 Ground no. 3: -Since no such option has been exercised by the appellant the during appellate proceedings, it is clear that this ground of appeal is academic in nature and does not merit separate adjudication In the result, the appeal is dismissed.”
Aggrieved from the order of the ld. CIT(A) the assessee has preferred this appeal before this tribunal on the grounds as reiterated in para 2 above. In support of the grounds of appeal the ld. AR of the assessee has relied upon the following written submission:-
Sh. Bhupendra Meena vs. ITO “1. During the year under consideration assessee was employed with Aravali Micro Finance and was also engaged in executing small civil construction work. He filed the return on 21.07.2016 (PB 1-3) declaring total income of Rs.4,25,340/- comprising of income from salary, income from house property and income from business & profession u/s 44AD of IT Act.
2. The AO observed that assessee has deposited cash of Rs.56,99,685/- in his bank account maintained with Bank of Baroda. The assessee explained that source of such cash deposit is the cash received from construction work & sale of building material, amount received from salary & rent and cash withdrawal made from the same bank account & other bank account (PB 37-40) for which statement of cash withdrawn and cash deposit was also filed (PB 9- 20). The AO, however, held that assessee has not submitted the source and nature of cash deposit and has no given proper explanation/ documentary evidences. Accordingly he made addition of Rs.56,99,685/- u/s 69A of IT Act.
3. The Ld. CIT(A), NFAC issued 4 notices between 01.04.2024 to 01.05.2024, Le within a period of 1 month. Since assessee has not furnished submission in response to these notices, the Ld. CIT(A), NFAC after reproducing the assessment order at Pg 3 to 17 of the order, held at Pg No. 18, Para 6.2 that assessee has not produced any evidence to explain the source and nature of cash deposit and therefore, the addition made by AO is confirmed.
Submission:-
At the outset it is submitted that the Id. CTT(A), NFAC within a period of 1 month issued 4 notices providing time of 5 to 7 days to comply with the notice. These notices were issued at email id of the assessee but it did not come to the notice of assessee as he has not checked the e-mail. However, the intimation about issue of notice u/s 250 was also received on the mobile of assessee on 04.04.2024, 25.04.2024 & 05.05.2024. Out of it assessee forwarded the notice which was received by him on the mobile on 04.04.2024 to his CA Sh. Shailash Bansal on 05.04.2024. Due to bank audit period the notice could not he responded by the CA and the notices which were received by the assessee on his mobile on 25.04.2024 & 05.05.2024 could not be forwarded by the assessee to his counsel due to oversight. In any case, since reasonable opportunity of hearing was not provided but all the papers which were required to explain the contention of assessee was filed before the AO, therefore, in the interest of justice it is prayed that instead of remanding the matter back to the AO/CIT(A), the appeal of assessee be decided on merit. For this purpose reliance is placed on the following cases:
Zuari Leasing & Finance Ltd. Vs. ITO (2008) 112 ITD) 205 (Del.) (Trib.) (TM)
The Honb'le ITAT at Para 10 of the order held as under:-
10. h is clear from above that primary power, rather obligation of the Tribunal, is to dispose of the appeal on merits. The incidental power to remand, is only an exception and should be sparingly used when it is not possible to dispose of the appeal for want of relevant evidence, lack of finding or investigation warranted by the circumstances of the case. Remand in a casual manner and for the sake of remand only or as a short cut, is totally prohibited. It has to be borne in mind that litigants in our country have to wait for long to have fruit of legal action and expect the Tribunal to decide on merit It is, therefore, all the more necessary that matter should be decided on merit without allowing one of the parties before the Tribunal to have another inning, particularly when such party had full opportunity to establish its case. Unnecessary remands, when relevant evidence is on record, belies litigant's legitimate expectations and is to be deprecated. Having regard to aforesaid principle, it is necessary to look into records to see whether there is sufficient material on record to dispose of the issue on merit and there is no need to remand the issue to provide a fresh inning to the Revenue:
Srimanta Shankar Academy Vs. ITO (2007) 107 ITD 99 (Gauhati) (Trib.) (TM) The Honb'le ITAT at Para 10 of the order held as under:-
It is true that remand of a matter is discretionary. But such discretion is required to be shown to be exercised in a judicial manner. In the case of Saurashtra Packaging (P) Ltd, vs. CIT (1996) 131 CTR (Guj) 40: (1993) 204 ITR 443 (Guj), their Lordships of Gujarat High Court have observed that where matter can be disposed of by the Tribunal on the basis of material already on record, a remand should not be resorted to. It is always necessary to avoid multiplicity of proceeding and to save time. There are large mumber of decisions of High Courts and Supreme Court ywhere instead of directing the Tribunal to make a reference of question under s. 256(2), the Courts while disposing of reference application answered the question sought to be referred and directed the Tribunal to proceed in a particular manner. All this is done to save time and multiplicity of proceeding I am convinced that such a course to save time should have been adopted in this case and remand of the matter is totally unnecessary. I say so for the reasons and after noting following facts available on record.
So far as merit of the case is concerned, the cash deposited and withdrawal in the bank account is tabulated as under:- Name of bank Cash withdrawn from the Cash deposited in the bank bank Bank of Baroda Rs. 56,18,100/- Rs. 57,86,525/- State Bank of India Rs. 5,45,000/- - Total Rs. 61,63,100/- Rs. 57,86,525/- Sh. Bhupendra Meena vs. ITO The date wise details of amount withdrawn and deposit is at PB 11-13. Explanation about the individual cash deposit is at PB 14-20, bank statement of Bank of Baroda is at PB 21-28 and bank statement of State Bank of India is at PB 29-36. Thus it can be noted that cash withdrawal from the bank account is much more than the cash deposit in the bank account. The AO has considered the cash deposit amount as unexplained ignoring that the source of such cash deposit is out of the cash withdrawal from the bank. This was explained before the AO (PB 38). Thus when the cash withdrawal is more than the cash deposit in the bank account, addition confirmed by the Ld. CTT(A), NFAC is unjustified.
3. Without prejudice to above, it is submitted that the peak deposit in the Bank of Baroda account is Rs.3,29,310/- on 28.09.2015 (PB 25). In the bank account salary, rent and sale proceeds of contract business are also deposited. The assessee has declared income u/s 44AD from contract business at Rs.2,02,130/- on the turnover of Rs.13,40,000/- (PB 2-3). The gross total income declared is Rs.5,10,530/-. This is more than the peak deposit in the bank account. Therefore, no addition is otherwise justified. Even if this explanation of assessee is not accepted, what can be added to income is only the peak deposit as held by various courts as under:-
Sind Medical Stores Vs. CIT 117 DTR 0497 (Raj.) (HC)
Para 12 of this judgement is reproduced as under:
12. This court in the case of Commissioner of Income Tax Vs. Tyaryamat Balchand (supra), after relying on several judgments, also upheld the finding about peak credit theory This Court in CIT Vs. Ishwardas Mutha (2004) 270 ITR 597 (Raj.) also accepted the contention to take into account, the peak credit. When any amount is paid, later withdrawn from the books, would be available for recycling and rotation, unless otherwise established as invested elsewhere by the Revenue. We hold the assessee was entitled to the benefit of peak credit which ought to have been allowed instead of making separate addition of entire amount. However, we may observe that the Assessing Officer has to come to a definite finding that the amount withdrawn was used by the assessee in any other expenditure or investment. If the Assessing Officer comes to a finding that withdrawn amount wax used or spent by the assessee for any other investment or expenditure than the benefit of peak of such credit, in such circumstances, may not be available CIT Vs. Ishwardas Mutha 270 ITR 597 (Raj.) (ИС)
In this case the Tribunal worked out the peak of the credits and sustained the addition for peak credit only. Against this department preferred a reference application to the High Court for challenging the addition confirmed on peak basis instead of entire Sh. Bhupendra Meena vs. ITO credit. The High Court rejected the reference application and held that no referable question arose from the order of the Tribunal. In view of above, addition confirmed by ld. CIT(A), NFAC be directed to be deleted.”
To support the various grounds so raised by the Ld. AR of the assessee and has relied upon the following evidences in support of the contentions so raised:-
S. No. Particulars Page No. 1. Copy of acknowledgement of return along with 1-2 computation of total income 2. Copy of reply along with invoices raised on the 3-8 party 3. Copy of reply along with statement of cash 9-20 withdrawn & cash deposited from Bank of Baroda account & state Bank of India account 4. Copy of bank statement of Bank of Baroda account 21-28 Copy of bank statement of state Bank of India 5. 29-36 account 6. Copy of reply along with confirmation of the parties 37-46
During the course of hearing, the ld. AR for the assessee prayed that the Ld. CIT(A) has passed the ex-parte order and the assessee was not provided adequate opportunity of being heard. Thus, the assessee may be provided one more opportunity to advance his arguments/submissions before the ld. CIT(A) in the interest of equity and justice.
Sh. Bhupendra Meena vs. ITO 8. Per contra, the ld. DR relied on the order of the ld. CIT(A) and submitted that the assessee is not serious about pursuing his case and therefore, the order should be sustained.
After hearing both the parties and perusing the materials available on record, it is noted that the assessee has not filed any submissions and evidences relating to the deposit of cash before the Ld. CIT(A) and thus the ld.CIT(A) has no other alternative except to confirm the action of the AO. It is also noted that the Ld. AR of the assessee prayed for one more chance to contest the case before the Ld.AO while as the Ld. DR relied on the order of the ld. CIT(A). We found force in the arguments of the Ld. AR of the assessee that against cash deposit of Rs. 57,86,525/-, the assessee made withdrawal of Rs. 61,63,100/- which was available and thus the cash deposits remained out of withdrawal only. The Bench feels that looking to the facts of the case one more chance be given to the Assessee to contest the case before the Ld.AO and the appeal is restored to the file of the Ld. AO for afresh adjudication after considering the contention of the assessee and the assessee will submit the necessary documents / evidences concerning the above mentioned issue. However, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings before ld. AO. Thus the appeal of the assessee is allowed for statistical purposes.
Sh. Bhupendra Meena vs. ITO 10. Before parting, we may make it clear that our decision to restore the matter back to the file of the Ld. AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by Ld. AO independently in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open Court on 04/10/2024.