NANDIGOWDANAHALLI MANJAPPA PUSHPA,BANGALORE vs. INCOME-TAX OFFICER, WARD-6(2)(1), BENGALURU

PER CHANDRA POOJARI, ACCOUNTANT MEMBER:

1.1 “The learned C missioner of Income-tax (Appeals)-NFAC, DELHI has erred in passing the impugned order in the manner passed. The impugned order having been passed is bad in law and void ab-initio and is liable to be quashed. 1.2 In any case, the learned CIT(A) has erred in dismissing the appeal filed subject to verification by the Assessing officer. Such a direction being beyond the scope of power of CIT(A) makes the entire appellate order void ab initio and such order is liable to be quashed.

2. In any case, the learned CIT(A) has erred in confirming the additions made by the Assessing officer amounting to Rs. 43,17,498/- u/s 69A of the Act. On proper appreciation of facts and the law applicable, there is no unexplained money at all. The addition as made and confirmed Nandigowdanahalli Manjappa Pushpa, Bangalore Page 2 of 38 being wholly erroneous on facts. and law applicable are to be deleted in entirety.

3. The learned CIT(A) has erred in confirming the addition made by the Assessing officer amounting to Rs. 28,97,498/- by assessing the agricultural income as unexplained money u/s 69A of the Act holding that the Assessing officer had not verified the agricultural receipts with immediate preceding year. The findings/observation of the CIT(A) being wholly erroneous as the appellant having explained the agricultural income with documentary evidences, the addition as made/sustained is to be deleted.

4. The learned CIT(A) has erred in confirming the addition made by the Assessing officer amounting to Rs. 14,20,000/- being cash deposits made as unexplained Money u/s 69A of the Act. The cash deposits were duly sourced and explained, therefore there is no unexplained money at all. The addition as made and confirmed being erroneous and same is to be deleted.

5. In any case, the addition of cash deposits as made and sustained are erroneous and excessive.

6. In any case and without further prejudice, the authorities below having assessed/confirmed the agricultural income as unexplained money u/s 69A of the Act, should have considered the same as source for the cash deposits made. The Action of authorities below being contrary to their own findings/conclusions and in any case amounts to double addition are to be negated and the addition as made/confirmed is to be deleted.

7.1 The assessing officer had also erred in calculating the tax u/s. 115BBE of the Act and the learned CIT(A) has erred in not adjudicating this ground. On facts of the case and law applicable, the provisions of the section 115BBE are not applicable and such tax calculation being erroneous is to be deleted.

7.2 In any case and without further prejudice, the computation of tax as done is erroneous and excessive.

8. The appellant denies the liability to pay interest u/s 234A, 234B and 234C of the Act. The interest having been levied erroneously is to be deleted.

9. In view of the above and other grounds to be adduced at the time of hearing it is requested that impugned assessment order be quashed or at least the additions made/confirmed as unexplained money be deleted, agricultural income as declared by the appellant be accepted, further it be also held that the appellant is liable to tax at regular rates of tax and that the provisions of special rate of tax are not attracted to the case of the appellant and interest levied be also deleted.”

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 3 of 38 2. At the time of hearing, ground Nos.1.1 & 1.2 were not argued and hence, these grounds are dismissed.

S.No. Sources of Agriculture income AO 's comment

Sale of COFFEE Raw of In connection with 1 Rs.49,71,540/- on 21.05.2016 to agriculture income, Mudremane Coffee curers assessee’s claim accepted.

2 Sale of Arabica Parchment of Rs. On online verification of TIN 10,00,000/- on 25.01.2017 to Shri no. 29380698785 of Shri Balaji coffee traders on 25.01.2017 Balaji coffee traders, it is came to known that Shri. Balaji coffee traders is not authorized dealer. Hence, assessee’s claim is not accepted.

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 4 of 38

3 Assessee's claim accepted. Sale of Black Pepper of Rs. 12,50,000/- to Kiran Commodities on 05.11.2016

4 Certificate from village authority of Certificate is not signed with Rs. 12 to 13 lakhs aprox per year from seal, hence it is defective and agriculture produce sold same was not accepted.

In view of the above, assessee furnished proofs extent to Rs. 62,21,540/- in respect to agriculture in me. Hence, assessee was not furnished and documentary evidence to substantiate h! claim in respect to remaining agricultural income shown of Rs. 28,97,498/- and same was added u/s 69A of IT Act-1961 as unexplained money. (Addition of Rs. 28,97,498/- u/s 69A of1TAct) "

4.1 The Assessing officer in para 4.1 of the Assessment order stated that the total cash deposits made by the assessee during demonetization period is Rs. 26,70,000/-. However, the assessee has made cash deposits of Rs. 21,20,000/- only. This fact was also intimated to the Assessing officer during the course of assessment proceedings. However, the Assessing Officer has considered the cash deposits at Rs. 26,70,000/- only and stated as under:

Sl.N0. Assessee 's explanation AO 's comment

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 5 of 38 3 Certificate from village authority of Certificate is not signed with Rs. 12 to 13 lakhs aprox per year from seal, hence it is defective and agriculture produce sold same was not accepted.

4.3 In view of the above, Assessee is furnished proof extent to Rs. 12,50,()00/- only in respect to cash deposit in demonetization period and sources for remaining cash deposits made of Rs. 14, 20,000/ is not found to be satisfactorily explained. Hence, assessee is not furnished any documentary evidence to substantiate his claim in respect to remaining cash deposit of Rs. 14,20,000/- and same is added to the returned income u/s 69A of the IT Act, 1961. (Addition of Rs. 14,20,000/- u/s 69A of IT Act). "

4.2 According to assessee, the Assessing Officer having assessed the agricultural income as unexplained money u/s 69A of the Act should have accepted the same as source for cash deposits made. The action of assessing officer in assessing the cash deposits into bank accounts as unexplained money over and above the addition made by treating the agricultural income of unexplained money amounts to double addition. The total of Rs. 43,17,498/- made u/s 69A of the Act (Rs. 28,97,498 + Rs.14,20,000) is taxed @ 60% u/s 115BBE of the Act and surcharge of Rs.6,47,625/has been levied @ 25%. The net demand raised as per the Assessment Order is Rs. 47,37,312/- which is inclusive-of following Interest:

Interest u/s 234A - Rs.2,80,000/- Interest u/s 234B - Rs.11,55,000/- Interest u/s 234C - Rs.8,323/- 4.3 Further penalty proceedings u/s. 271 AAC(I) and 270A(2) of the Act for under reporting of income have been initiated. Against this assessee carried appeal before NFAC, against the addition made by the ld. AO, which was confirmed by the NFAC. Against this assessee is once again before us.

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 6 of 38 5. The ld. A.R. submitted that with respect to Agricultural income of Rs. 91,19,038/-, the assessee’s explanation and the learned Assessing officer’s comments are mentioned at para 3 of the assessment order which is reproduced in the table mentioned in para 4.1 of this order 5.1 The ld. A.R. further submitted that with respect to cash deposit during demonetisation period of Rs. 26,70,000/- the assessee’s explanation and the learned Assessing officer’s comment are mentioned at para 4.1, 4.2 and 4.3 of the assessment order. The learned Assessing Officer in para 4.1 of the assessment order stated that the total cash deposits made by the assessee during demonetization period is Rs. 26,70,000/-. However, the assessee had actually made cash deposits of Rs. 21,20,000/- only during the demonetization period. This fact was also intimated to the learned Assessing officer during the course of assessment proceedings. However, the Assessing Officer has considered the cash deposits at Rs. 26,70,000/- only and stated in para 4.1 of this order 5.2 Thereafter, the learned Assessing Officer having assessed the agricultural income as unexplained money u/s.69A of the Act should have accepted the same as source for cash deposits made. Instead, the learned Assessing Officer made addition of the cash deposits (Rs.14,20,000) and agricultural income (Rs. 28,97,498) totally amounting to Rs.43,17,498/- as unexplained money u/s.69A of the Act to the income returned vide order passed u/s. 143(3) of IT Act dated 03.12.2019 resulting in the assessed income of Rs. 51,09,978/-. Addition made out of agricultural income 5.3 The ld. A.R. submitted that the Agricultural Income declared in the Return of Income for the Assessment year 2017-18 is Rs.91,19,038/-. For the year, the assessee owned around 89 acres of agricultural lands at Arehalli hobli, Gugrihalli, Balaguli Village,

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 7 of 38 Nandigodanahalli, Belur Taluk, Hassan District, Chickmangalur District. These lands are cultivable land with abundant source of waters mainly in the form of borewell, well and rain fall etc. Copies of RTC are already submitted in the course of assessment proceedings. The estimated value of the crop per acre has also been indicated in the said certificate. 5.4 She submitted that as stated above, with respect to Agricultural income of Rs. 91,19,038/-, the assessee’s explanation and the learned Assessing officer’s comments are mentioned at para 3 of the assessment order have already been above paras of this order. 5.5 In this regard, she submitted on learned Assessing Officer’s comments as follows: i) It is stated at column no 2 of the above table that on online verification of TIN no. 29380698785 of Shri Balaji coffee traders, it was found that Shri. Balaji coffee traders is not an authorized dealer. Hence, the assessee’s claim was not accepted. In this regard, the assessee submitted that Sri. Balaji Coffee Traders is very much registered with commercial taxes department. As stated above, the TIN number of Shri Balaji coffee traders is 29380698785. The screenshot of TIN number of Shri Balaji coffee traders as downloaded from the website of commercial taxes department is enclosed as Annexure -7. Further, the assessee had nothing to do with the registration or non-registration of Shri Balaji Coffee Traders being the customer of the assessee. The assessee had sold Arabica Parchments to Shri Balaji Coffee Traders during the year under appeal and had included the same in agricultural income declared in the return of income. The sale proceeds were received through banking channel. Merely because the customer of the assessee is registered or unregistered under commercial taxes will not / would not /

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 8 of 38 cannot change the nature of income which would be always in the nature of agricultural income only. Further it is submitted that the payment from Sri Balaji Traders was received in cheques only. ii) In column 4 of the above chart it is mentioned that a certificate was obtained by the Village accountant showing agricultural income of Rs. 12-13 lacs and same has not been signed with seal, hence it is defective and same was not accepted. In this regard the assessee submitted that the village accountant certificate merely certifies the agricultural land holdings of the assessee and mentions the details of estimate quantity of crop grown like pepper and coffee per acre and also gives the current market price per ton of pepper and coffee. It is nowhere stated in the certificate that Rs. 12 to 13 lakhs is derived approximately from the produce sold. Further the village account certificate is duly signed with seal and also dated. The land holdings as per this certificate can also be verified from the RTC’s Certificates submitted in the course of assessment proceedings and now attached with the written submissions as Annexure–4. Copy of certificate issued by Village accountant with English translation thereof is also enclosed as Annexure 6. iii) Thus, the conclusion of learned Assessing Officer in holding that the purchaser who bought agricultural produce from the assessee is not an authorized dealer and the certificate obtained from the village authority is defective are contrary to facts and circumstances of the case and the law applicable and hence is to be rejected. iv) The assessee grows commercial crops like coffee and areca and the commercial crops are sold to dealers in the crops. Apart from the items mentioned by the assessing officer in the Nandigowdanahalli Manjappa Pushpa, Bangalore Page 9 of 38 chart, the assessee also encloses herewith a copy of assessee’s account in the books of Coffee Day Global Ltd Hassan as Annexure - 8 which shows that the assessee had sold coffee of Rs. 26,35,363/- to the above listed company and the payment thereof was received through banking channel only. This fact was made available to the Assessing officer during assessment proceedings. However, same has not been considered by the assessing officer in the course of assessment order. This figure by itself would go on to reduce the figure of addition to NIL. It is also to be submitted that the assessee had not received any agricultural income in cash. All the receipts from agricultural proceeds were through banking channel only. v) The assessing officer has erroneously concluded that the assessee had not substantiated with documentary evidence for explaining the balance portion of agricultural income. The very substantial holding of land by the assessee and the nature of crops grown and further that all the payments were through banking channels only substantiates the claim of the agricultural income made by the assessee. The agricultural income shown by the assessee is most reasonable and same is to be accepted. The assessing officer has not shown any comparable cases nor has he given any reasons except stating that there is no documentary substantiation. The assessee had made out her case and agricultural income to be accepted.

6. The ld. D.R. relied on the order of the lower authorities and submitted that the agricultural income declared by the assessee is very excessive as compared to the earlier years.

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 11 of 38

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 12 of 38 English Version of Village Accountant Certificate:

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 13 of 38 7.1 However, the ld. AO doubted the agricultural income without disputing the holding of agricultural property by assessee to the extent of 86 acres 8 guntas. The assessee has been growing coffee, pepper and arcanite. The village accountant certificate furnished by the assessee also supports the claim of the assessee that assessee has derived income from the sale of agricultural products. The only allegation of the ld. AO is that assessee has declared excessive agricultural income at Rs.91,19,038/- out of this, he accepted the following agricultural income:

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 14 of 38 a) Sale of raw coffee - Rs.49,71,540/- b) Sale of Black pepper - Rs.12,50,000/- Total - Rs.62,21,540/- 7.2 The balance amount of Rs.28,97,498/- was not accepted by ld. AO on the following reasons: a) Rs.10 lakhs Arabic Parchment - Balaji Coffee Traders on verification found that he is not the authorized dealer. b) Another Rs.12 to 13 lakhs not accepted on the reason that certificate is signed with the seal of village accountant. 7.3 Before us, ld. A.R. furnished the legible copy of certificate from Village Accountant as extracted on earlier part of this order. Hence, the certificate cannot be rejected. Further, the reason advanced by ld. AO to reject the sale of Arcanite, Pepper (Coffee) Rs.10 lakhs on 25.1.2017 is also not correct. Because the ld. AO is doubting that Balaji Coffee Traders is not authorized dealer. The assessee when selling the product has looked at only to get good price for the product and not looking at whether the Balaji Coffee Traders is authorized dealer or not. The assessee does not know whether Balaji Coffee Traders has obtained code for authorization to purchase coffee from any authority. He is not concerned about it. This ground is not a reason to reject the claim of the agricultural income declared by the assessee. Thus, both reasons given by the ld. AO to reject the claim of the assessee’s agricultural income is not justified. Accordingly, we direct the ld. AO to accept the income declared by assessee at Rs.91,19,038/- as agricultural income only. Ordered accordingly.

8. With regard to the second ground, the ld. A.R. submitted that the learned Assessing Officer has considered the cash deposits made during demonetization period at Rs. 26,70,000/-.

8.1 At the outset, she submitted that the total cash deposits during demonetization period before 09.11.2016 to 31.12.2016 were only

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 15 of 38 Rs. 21,20,000/- and not Rs. 26,70,000/- as held by the Assessing officer. This fact was also intimated to the learned Assessing officer during the course of assessment proceedings. The details of cash deposits made are as under; Name of the Bank Account number Amount (in Rs.) Axis Bank 468010100012661 5,10,000.00 Karnataka bank 0077000800823101 9,60,000.00 Karnataka bank 0077000800823201 4,50,000.00 Karnataka bank 0072500100549501 1,00,000.00 Karnataka bank 0072500100490901 1,00,000.00 Total 21,20,000.00 8.2 Further, she also submitted that the assessing officer had made an erroneous compilation to arrive at the addition u/s. 69A of the Act in respect of cash deposits. The assessing officer compares deposits in bank of agricultural income through cheques to arrive at the source of cash deposits.

8.3 In fact, during the course of assessment proceedings, amongst other details, the assessee submitted that the sources of cash deposit were out of income earned for the current and earlier year as reflected in Return of income of the assessee filed from past many years and the explanation given in the online response to cash deposit 2016. The screenshot of response submitted on e-filing portal under compliance tab in Cash transaction 2016 is as under:

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 16 of 38 a) Karnataka bank Ltd - A/c No. - 0077000800823101

Balance Rs. 30,000/- out of earlier savings. b) Karnataka bank Ltd Rs. 1,00,000/- out of earlier savings/cash balance. c) Axis bank A/c. No. 468010100012661 Rs. 5,10,000/- out of earlier savings/cash balance.

8.4 Apart from above, upto 08.11.2016, the assessee had further more cash withdrawals from various banks. The details of which is as under:

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 17 of 38 KARNATAKA ACCOUNT NUBER : BANK LIMITED 0072500100490901 SL NO. DATE AMOUNT WITHDRAWN 1 17.06.2016 2,00,000.00 2 21.06.2016 1,00,000.00 3 27.06.2016 25,000.00 4 27.06.2016 90,000.00 5 29.06.2016 50,000.00 6 16.07.2016 1,50,000.00 7 19.07.2016 1,25,000.00 8 25.07.2016 60,000.00 9 26.07.2016 10,000.00 10 01.08.2016 1,00,000.00 11 11.08.2016 40,000.00 12 16.08.2016 50,000.00 13 12.09.2016 75,000.00 14 21.09.2016 25,000.00 15 26.09.2016 60,000.00 16 28.09.2016 20,000.00 17 14.10.2016 25,000.00 18 18.10.2016 50,000.00 19 24.10.2016 65,000.00 20 24.10.2016 60,000.00 21 12.11.2016 10,000.00 22 19.11.2016 24,000.00 23 03.12.2016 24,000.00 24 12.12.2016 24,000.00 25 21.12.2016 24,000.00 26 02.01.2017 24,000.00 27 05.01.2017 5,000.00 28 16.01.2017 24,000.00 29 23.01.2017 24,000.00 30 31.01.2017 24,000.00 31 20.02.2017 24,000.00 32 20.02.2017 24,000.00 33 03.03.2017 10,000.00 34 10.03.2017 25,000.00 35 13.03.2017 1,00,000.00 36 28.03.2017 25,000.00 TOTAL 17,95,000.00

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 18 of 38

ACCOUNT NUBER : AXIS BANK LTD 468010100012661 SL NO. DATE AMOUNT WITHDRAWN 1 20.04.2016 75,000.00 2 10.11.2016 10,000.00 3 08.12.2016 24,000.00 4 03.01.2017 24,000.00 5 16.01.2017 24,000.00 6 18.02.2017 24,000.00 7 28.02.2017 50,000.00 8 03.03.2017 25,000.00 9 06.03.2017 25,000.00 TOTAL 2,81,000.00 KARNATAKA ACCOUNT NUBER : BANK LIMITED 0072500100549501

SL NO. DATE AMOUNT WITHDRAWN 1 11.04.2016 2,00,000.00 2 06.06.2016 30,000.00 3 27.06.2016 50,000.00 TOTAL 2,80,000.00

KARNATAKA ACCOUNT NUBER : BANK LIMITED 0077000800823101

SL NO. DATE AMOUNT WITHDRAWN 1 25.04.2016 1,00,000.00 2 27.04.2016 6,00,000.00 3 16.08.2016 1,00,000.00 4 04.11.2016 30,000.00 5 19.11.2016 24,000.00 6 02.01.2017 24,000.00 7 06.01.2017 50,000.00 8 04.02.2017 50,000.00 9 09.02.2017 1,00,000.00 10 22.02.2017 1,00,000.00 11 04.03.2017 1,00,000.00 TOTAL 12,78,000.00

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 19 of 38 KARNATAKA ACCOUNT NUBER : BANK LIMITED 0077000800823201 SL NO. DATE AMOUNT WITHDRAWN 1 08.11.2016 5,00,000.00 2 12.11.2016 10,000.00 3 03.12.2016 24,000.00 4 06.01.2017 50,000.00 5 04.02.2017 25,000.00 6 04.02.2017 25,000.00 7 08.03.2017 50,000.00 TOTAL 6,84,000.00 8.5 As stated above, the assessee had deposited a sum of Rs. 21,20,000/- on various dates out of earlier income and savings and out of amount withdrawn as above which was unutilised and which were subsequently deposited into bank account during demonetization period. Breakup of Cash Deposit during demonetization period i.e., 08.11.2016 to 30.12.2016 is as follows:

DATE Bank name and Amount Source account number 10/11/16 Axis Bank 10,000.00 Cash out of earlier income or 468010100012661 savings 11/11/16 Karnataka Bank- 8,10,000.00 Cash withdrawn out of Bank 0077000800823101 account on various dates ( As per Cash transaction reply submitted) 11/11/16 Karnataka Bank- 4,50,000.00 Cash out of earlier income or saving 0077000800823201 and cash withdrawals. (Shruthi E L) 13/11/16 Karnataka Bank – 1,00,000.00 Cash out of earlier income or saving 0072500100490901

13/11/16 Karnataka Bank – 1,00,000.00 Cash out of earlier income or saving 0072500100549501 Rs. 1,20,000.00 cash withdrawn out of Bank account on various dates (As per cash Transaction Reply Submitted) & Balance Rs. 30,000.00 Karnataka Bank – cash out of earlier income or 13/11/16 007000800823101 1.50.000.00 savings) Axis Bank Cash out of earlier income or 19/11/16 468010100012661 1,00,000.00 savings Axis Bank Cash out of earlier income or saving 25/11/16 468010100012661 4,00,000.00 Total 21,20,000.00

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 20 of 38 8.6 The source for cash deposited of Rs. 21,20,000/- during demonetization period is out of cash on hand as on 08.11.2016 generated out of earlier saving and income plus cash withdrawals made out of bank accounts namely Axis bank and Karnataka Bank Ltd. 8.7 Further, the ld. A.R. submitted that the cash balance as on 31.03.2016 was Rs. 77,22,996/- and the cash balance as on 31.03.2015 was Rs. 32,08,946/-. 8.8 She submitted that the action of assessing officer in assessing the cash deposits into bank accounts as unexplained money over and above the addition made by treating the agricultural income of unexplained money amounts to double addition. The agricultural proceeds were received through banking channels. The assessee had sufficient cash balance as well as cash withdrawals from banks to prove the cash deposits made in the demonization period and same needs to be accepted. She further relied on following case laws: 8.8.1 In any case, on similar facts and circumstances of the case, the Income Tax Appellate Tribunal “SMC – C” Bench, Bangalore held in the case of Sri.Dhruva Mungamuri vs The Income Tax Officer, Ward 5(3)(5), Bengaluru in : Asst.Year 2013-2014 held as follows :

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 21 of 38

5.1 The CIT(A) accepted only a sum of Rs.10.70 lakh as available to the assessee to redeposit into the bank account and for the balance amount of Rs.10.10 lakh, he confirmed the addition. It was the plea of the assessee that the assessee has withdrawn the money for the admission of his son in a medical college, for which the assessee has also produced evidence like copies of admission letter, demand draft etc. before the CIT(A). Thus, it was explained by the assessee that the amount was withdrawn for the admission of his son in a medical college. Since the admission was not materialized, the assessee has redeposited the amount to the bank. These facts were not disputed by the department. However, according to the CIT(A), the withdrawals were made in June 2012 and the assessee has deposited the same into the bank account in November 2012. There was a longtime gap ranging from June to November, the CIT(A) has given relief only to the extent of Rs.10.70 lakh. However, the department has no material to show that the earlier withdrawals made by the assessee has been spent for any specific purposes and not the said amount available with the assessee to redeposit into the bank account. There is also no evidence that the assessee has made withdrawals on various dates for any other purposes than the admission of assessee’s son in a medical college. In such circumstances, it cannot be said that the withdrawals have not been utilized to redeposit with the bank account. Therefore, it has to be presumed that the assessee has withdrawn the cash and the same remained to be unutilized for one reason or the other, and the cash remained with the assessee. In such circumstances, due credit has to be given for such withdrawal of cash by the assessee. In my opinion, In my opinion, similar view was taken by the Cochin Bench of the Tribunal in the case of Sri.Mathew Philip v. ITO [ITA No.443/Coch/2019 – order dated 29.11.2019] wherein it was held as under:- “10. We have heard the rival submissions and perused the material on record. In the present case, theoo dispute is with regard to cash deposit of Rs.32.5 lakhs into the various bank accounts of the assessee. The main plea of the assessee is that the assessee had withdrawn cash of Rs.50 lakhs on 26/09/2014. The assessee had withdrawn cash on various dates at Rs.68 lakhs as narrated in para 5 of this order. 10.1 These amounts were redeposited into Bank accounts on various dates as follows: 02/04/2014 Rs. 3,00,000/- 27/08/2014 Rs. 1,50,000/- 26/09/2014 Rs.50,00,000/- 11. The Assessing Officer has given credit of Rs.23.50 lakhs towards cash in hand for depositing it into Bank account of the assessee. The Assessing Officer treated Rs.28.5 lakhs as unexplained sources. Thus, he treated the following amounts as unexplained cash deposits of the assessee: Rs. 3 lakhs Rs. 1 lakh Rs.28.5 lakhs Total: Rs.32.5 lakhs 11.1 The assessee explained that during the assessment year 2012-13, the assessee had an ailment of cancer and he could not attend to business and financial matters and kept the cash withdrawn from Bank on 31/12/2013 for medical treatment and other expenses and deposited the amount in Bank only on 26/09/2014. In support of his claim, the assessee has produced discharge summary dated 06/11/2013 from Lourde Hospital, Ernakulam before AO. He has also produced CT Scan report dated 11/07/2013 which is not disputed by the Nandigowdanahalli Manjappa Pushpa, Bangalore Page 22 of 38 lower authorities. The Assessing Officer has not accepted the contention of the assessee that he has kept the cash idly in his hands on the reason that he has not filed the wealth tax return showing the cash in hand. The Assessing Officer has not doubted the withdrawal of cash. However, the fact is that the assessee has withdrawn cash of Rs.50 lakhs on 31/12/2013. There is no evidence brought on record to show that these withdrawals have been used by the assessee or deposited by the assessee in any other Bank. It cannot be said that these withdrawals made from the Bank account were used for household expenses or any other investment. In such circumstances, it cannot be disputed that the withdrawals have been used for redeposit into the Bank account of the assessee. In other words, the Assessing Officer has not disputed the existence of Bank accounts and withdrawal from the same. The earlier withdrawal of Rs.50 lakhs from the Bank account on 31/12/2013 or withdrawal from various Bank accounts on different dates is not disputed. The assessee might have kept the cash withdrawals with him and redeposited into various Bank accounts on a later date. It is quite possible that the assessee might have withdrawn the cash for some purpose but the same remains to be utilized for one reason or the other and the cash continues to be remained with him. Sometimes it may also happen that the cash withdrawals from Bank accounts continues to remain as cash balance with the assessee even for many months and sometimes cash withdrawn is utilized on the same day. All these probable aspects of the matter cannot simply be ignored or brushed aside but the fact remains that the cash has been withdrawn from the Bank and that is not at all disputed. In view of this, the explanation of the assessee deserves to be accepted, unless contrary is brought on record which has not been done in this case. Considering the totality of the facts and circumstances of the case and in view of the discussions above, the cash deposits made by the assessee on various dates should be reasonably presumed that it is from earlier withdrawals made by the assessee on various dates. Accordingly, we delete the entire addition of Rs.32.5 lakhs made by the Assessing Officer.”

5.2 In view of the above, I am inclined to delete the impugned addition.

8.8.2 She submitted that the following judicial pronouncements affirm the view that if there is a delay / time lag in depositing withdrawn cash to the assessee's bank account and the assessee has offered sufficient evidence, the same cannot be added as unexplained investment under Section 69 / cash credits u/s. 68 of the Income Tax Act,; and further that if the cash deposited is supported by sufficient cash balance in books of account, then the deposit of amount in bank account cannot be treated as unexplained.

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 23 of 38 8.8.3 No Addition if Delay in Depositing Cash withdrawn was explained by way of Oral Evidence - Cash withdrawn from Bank was re-deposited after seven months, addition cannot be made as cash credits. For this proposition, she relied on the judgement in the case of Jaya Aggarwal v. ITO (2018) 302 CTR 241 : 254 Taxman 398 : 165 DTR 97 (Del), wherein held as under: “Allowing the appeal of the assessee the Court held that; Cash withdrawn from Bank was re-deposited after seven months, addition cannot be made as cash credits. Explanation given by assessee that deposit was made out of sum withdrawn earlier was not fanciful and sham story and it was perfectly plausible.

The Delhi High Court annulling the decisions of Income Tax Appellate Tribunal (ITAT) and Commissioner of Income Tax (Appeals) held that if there is a delay in depositing withdrawn cash to the assessee's bank account and the assessee has offered sufficient oral evidence to justify the delay, the same cannot be added as unexplained income under Section 68 of the Income Tax Act. The issue in the matter in hand was that whether the ITAT was right in confirming the addition under Section 68 of the Income Tax Act for deposit of cash by the assessee out of cash withdrawn by her from the same bank account for the purchase of immovable property. This addition of cash in the assessee's bank account who declared a loss for the same assessment year was questioned by the Assessing Officer. It was contended on behalf of the assessee that she withdrew cash from her bank account as on May 2nd, 1997 to buy property for which earnest money in cash was to be paid. Further, this withdrawn amount was re-deposited in the bank on January 13th, 1998 since the deal could not be concluded. The Assessing Officer rejected this explanation on the only ground of unjustifiable duration between the date of withdrawal and deposit which was more than 7 months. He hence treated the amount as unexplained cash credit adding the same under Section 68. On appeal, the ITAT upheld the decision of CIT (A) reasoned that no prudent man would keep such a huge amount at the residence to negotiate a property deal. While allowing the appeal filed by the assessee, the High Court relying upon the 'Prudent Man's Behavior Test 'and 'Principle of Preponderance of Probability held that an oral evidence cannot be disregarded being the only evidence relied upon by a party. The Court while referring to Murray's English Dictionary went on further to explain the meaning of 'Probability' as, "likelihood of anything to be true. Probability refers to the appearance of truth or likelihood of being realized which any statement or event bears in light of the present evidence." The Court ruling in favor of the assessee directed that the addition made under Section 68 should be deleted. (Related Assessment year 1998 – 99)

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 24 of 38 8.8.4 Addition under section 68 - Unexplained deposits - Since Assessing Officer had not brought on record that cash-in-hand available with assessee was not utilized for making impugned deposit particularly when The Assessing Officer himself accepted deposits in various bank accounts out of said cash in hand available with the assessee, so there was no occasion to doubt impugned deposits and no addition could be made under section 68. For this proposition she relied on the judgement in the case of Rajinder Singh v. ACIT (2018) Tax Pub(DT) 1368 : 63 ITR (Trib) 550 (ITAT Delhi), wherein held as under: “Assessing Officer required assessee to explain source of bank deposit. Assessee explained the same to be cash-in hand available with him from earlier years which was claimed to be generated from time to time by withdrawals from bank accounts and sale of the properties from which short-term capital gain was earned by the assessee. However, Assessing Officer made additions on the ground that assessee had not filed Wealth Tax Returns. Held: Assessing Officer had not brought on record that cash-in-hand available with assessee was not utilized for making impugned deposit particularly when the Assessing Officer himself accepted deposits in various bank accounts out of said cash in hand available with the assessee, so there was no occasion to doubt impugned deposits and no addition could be made.”

8.8.5 Unexplained money- Cash deposit in the bank account of the assessee - Source of such cash deposit was cash withdrawal from the account of one contractor - Held, entire cash deposit cannot be taxed - Such cash deposit is part of business receipts- Held, to meet the interest of justice 8% taxable. For this proposition she relied on the judgement in the case of Hemant Kumar Pradhan v. ITO (2018) 62 ITR 57 (ITAT Cuttack), wherein held as under: “The assessee was associated with a contractor K. Such contractor was awarded construction work of road under a Government scheme. There was cash deposits in the bank of the assessee which was explained to be from the cash withdrawal from the bank of K. Owing to failure of K to reply to summons, entire cash deposited added to total income. The Tribunal held that, source of cash withdrawal in K’s account was the business receipts on account of road construction. Thus, cash deposits in the assessee's account were his business receipts and such business receipts can be taxed only to Nandigowdanahalli Manjappa Pushpa, Bangalore Page 25 of 38 the extent of profits earned. In the interest of justice, the Tribunal held that 8% of such receipts were taxable. (Related Assessment year 2009-10).”

8.8.6 No addition on mere frequent withdrawal and deposit of own money Addition made by Assessing Officer merely on the ground that assessee made frequent withdrawal and deposit of his own money was not justified as the same was not prohibited under any law. For this proposition she relied on the judgement in the case of DCIT v. Smt. Veena Awasthi Appeal Number : IT A No.215/LKW/2016 - Date of Judgement Order : 30.11.2018 ( ITAT Lucknow), wherein held as under:

“Held: Assessing Officer had noted the behavioural pattern of assessee in frequently withdrawing cash and then depositing cash again in the bank account irrespective of having sufficient cash with her. He, therefore, added cash deposit made by assessee under the head income from undisclosed sources. It was noted that Assessing Officer nowhere in his order had brought out any material on record to show that assessee was not having an additional source of income other than that disclosed in the return nor Assessing Officer could spell out in his order that cash deposits made by assessee were from some undisclosed source. There is no law in the country which prevents citizens to frequently withdraw and deposit his own money. Documentary evidence furnished clearly clarified that on each occasion at the time of deposit in her bank account, assessee had sufficient availability of cash. Entire transaction of withdrawals and deposits were duly reflected in the bank account of assesses and were verifiable from relevant records. Thus, addition was not justified (Related Assessment Year: 2011-12).” 8.8.7 Inordinate delay in deposit of cash from withdrawals i.e. 5-6 months from withdrawals from bank: In various cases, it may have been argued by the assessee that cash deposited during demo period sourced from withdrawals from the banks i.e.1-6 months prior to deposit. In most of cases, Department has not considered the said arguments and made addition on the ground that what was the use of money in intervening period and where it was kept etc. 8.8.8 In a recent decision the Ld Delhi Tribunal in the case of Gordhan, Delhi v/s DCIT dated 19/10/2019 (Delhi Trib.) held that “no addition can be made u/s 68 on the sole reason that there is a time gap of 5 months between the date of withdrawals from bank account and redeposit the same in the bank account, Unless the AO

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 26 of 38 demonstrate that the amount in question has been used by the assessee for any other purpose. In my view addition is made on inferences and presumptions which is bad in law.” 8.8.9 Likewise, the case of ACIT vs Baldev Raj Chawla 121 TTJ 366 (Delhi) also held that merely because there was a time gap between withdrawal of cash and cash deposits explanation of the assessee could not be rejected and addition on account of cash deposit could not be made particularly when there was no finding recorded by the assessing officer or the Commissioner that apart from depositing this cash into bank as explained by the assessee, there was any other purposes it is used by the assessee of these amounts. In view of above facts, the ground number 1 of the appeal of the assessee is allowed and orders of lower authorities are reversed. 8.8.10 She placed reliance on the decision of Ld. Delhi High Court in the case of CIT vs Kulwant rai in 291 ITR 36 wherein the Hon’ble Delhi High Court has held as under:- “This cash flow statement furnished by the assessee was rejected by the AO which is on the basis of suspicion that the assessee must have spent the amount for some other purposes. The orders of AO as well as CIT(A) are completely silent as to for what purpose the earlier withdrawals would have been spent. As per the cash book maintained by the assessee, a sum of Rs. 10,000 was being spent for household expenses every month and the assessee has withdrawn from bank a sum of Rs. 2 lacs on 4th December 2000 and there was no material with the Department that this money was not available with the assessee. It has been held by the Tribunal that in the instant case the withdrawals shown by the assessee are far in excess of the cash found during the course of search proceedings. No material has been relied upon by the AO or CIT(A) to support their view that the entire cash withdrawals must have been spent by the assessee and accordingly, the Tribunal rightly held that the assessment of Rs. 2.5 lacs is legally not sustainable under s. 158BC of the Act and the same was rightly ordered to be deleted.”

8.8.11 On the basis of this judgement the Ld. Delhi tribunal recently deleted the addition made for inordinate delay in cash deposit in the case of NEETA BREJA v/s ITO (ITA No 524/D/17/25- 11-2019), in which the ITAT Delhi Bench "E": New Delhi held as follows:

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 27 of 38 “12. In the present case also the learned assessing officer or the learned CIT A did not show that above cash was not available in the hands of the assessee or have been spent on any other purposes. Further the coordinate bench in ACIT vs Baldev Raj Charla 121 TTJ 366 (Delhi) also held that merely because there was a time gap between withdrawal of cash and cash deposits explanation of the assessee could not be rejected and addition on account of cash deposit could not be made particularly when there was no finding recorded by the assessing officer or the Commissioner that apart from depositing this cash into bank as explained by the assessee, there was any other purposes it is used by the assessee of these amounts. In view of above facts, the ground number 1 of the appeal of the assessee is allowed and orders of lower authorities are reversed.

8.8.12 No addition when cash deposit in bank is supported by cash balance in books of account. 1.1. In the case of CIT v. Associated Transport (P) Ltd (1996) 84 Taxman146 /(1995)212ITR 417(Cal.) the Tribunal found that the assessee had sufficient cash in hand and in the books of account of the assessee, therefore, held that there was no reason to treat that amount as income from undisclosed sources and it was not a fit case for treating the amount as concealed income of the assessee. The revenue moved to the Calcutta High Court against the order of the tribunal and the Hon’ble High Court confirmed the order of the Tribunal.

1.2. In the case of Lalchand Bhagat Ambica Ram v. CIT (1959) 37ITR 288(SC) the Hon’ble Court decided the matter in favour of assesee on the ground that it was clear on the record that the appellant maintained its books of account according to the mercantile system and were maintained in its cash books showing the cash balances. The books of account of the appellant were not challenged by the Assessing Officer. If the entries in the books of account were genuine and the balance in cash was matching with the books, it could be said that the assessee had explained the nature and source of such deposit. 1.3. In the case of Lakshmi Rice Mills v. CIT (1974) 97ITR258(Pat.) the Hon’ble High Court held that it was a fundamental principle governing the taxation of any undisclosed income or secreted profits that the income or the profits as such must find sufficient explanation at the hands of the assessee. If the balance at hand on the relevant date is sufficient to cover the value of the high denomination notes subsequently demonetised and even more, in the absence of any finding that the books of account of the assessee were not genuine, the source of income is well disclosed and it cannot amount to any secreted profits within the meaning of the law. What has to be disclosed and established is the source of the income or the receipt of money, not the source of the receipt of the high denomination notes which were legal tenders at the relevant time. Thus, the so-called finding of fact by the Tribunal were based upon placing a Nandigowdanahalli Manjappa Pushpa, Bangalore Page 28 of 38 wrong onus of proof and applying not the correct principles of law governing such cases. On the facts, no tangible material had been brought on the record to take the shape of any legal evidence for the purpose of recording a finding that the assessee’s explanation was not worthy of acceptance. This by itself was a question of law arising from the Tribunal’s decision.

8.8.13In view of the above she submitted that all the deposits of cash in bank account are duly supported by available cash balance as per books of account and there is no unexplained cash deposit at all. Hence the additions as made is to be deleted.

8.9 She submitted that in any case and without prejudice the assessee submitted that the deposits in bank account are not covered by Section 69A of Income-tax Act, 1961. Section 69A applies only if there are unexplained entries in cash book of the assessee. Bank account cannot and are not the books of account, as held in the following cases : i) CIT v. Bhaichand Gandhi [2013] 141 ITR 67/30 taxmann.com 220 ii) Smt. Manasi Mahendra Pitkar v.ITO 73 taxmann.com 68 (Mumbai - Trib.) iii) Smt. Ramilaben B. Patel v ITO 100 taxmann.com 325 iv) Mehul V. Vyas v. ITO 80 taxmann.com 311 (Mumbai - Trib.) v) ITO V Kamal Kumar Mishra* 33 taxmann.com 610 (Lucknow - Trib.) vi) L.N. Poddar v Income-tax Appellate Tribunal [2010] 322 ITR 513 (PAT.)

8.10 Therefore, the additions are made U/s. 69A of the Act being wholly erroneous as against law is to be deleted. 8.11 She submitted that on analysing the provision of section 69A it can be seen that the conditions for its applicability are as follows:

• Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery, or other valuable article and Nandigowdanahalli Manjappa Pushpa, Bangalore Page 29 of 38 • Such money, bullion, jewellery or other valuable article is not recorded in the books of accounts ‘if any’ maintained by him for any source of the income, and • Assessee could not explain about the nature and source of the acquisition of the money, bullion, jewellery or other valuable article or • The explanations given by the assessee is not satisfactory in the opinion of the Assessing Officer • Then the value of money, bullion, jewellery, or other valuable article may be deemed to be the income of the assessee of for such financial year.

8.12 She submitted that on a plain reading of section 69A, it is clear that the onus is upon the Assessing Officer to find the assessee to be the owner of any money, bullion, jewellery or valuable article and such money, bullion, jewellery or valuable article was not recorded in the books of account, if any, maintained by the assessee for any source of income. Further the third condition states that the assessee could not explain about the nature and source of the acquisition. It can be seen that all the first three conditions are cumulative as the word used is and between every first condition. In other words only when together all the first three conditions are satisfied, the provisions of section 69A can be applied and the income be deemed as unexplained money in the hands of the assessee. In these circumstances, the AO can resort to making an addition under section 69Aof the Act only in respect of such monies / assets / articles or things which are owned by him, which are not recorded in the assessee's books of account and which are not explained.

8.13 According to the section 69A, it can be applied only when the assessee has not recorded the monies etc in the books of accounts, it has been held so in the following cases:

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 30 of 38 • ITAT-Mumbai Bench in Karthik Construction Co, in ITA No.2292/Mum/2016. “A reading of section 69A of the Act makes it clear, addition can only be made when the assessee is found to be in possession of money bullion jewellery, etc., not recorded in his books of account. It is not the case of the Department that the loan repayment made during the year was either not recorded in the books of account or the source of fund utilised in repaying the loan is doubtful. That being the case, the addition under section 69A of the Act cannot be made. Therefore, the decision of the learned Commissioner (Appeals) has to be sustained” • Recent Bangalore ITAT - Judgement of Smt. Teena Bethala, Bengaluru vs Income Tax Officer - 28 August, 2019. In support of the assessee's contentions, the learned AR placed reliance on the decision of the ITAT-Mumbai Bench in the case of DCIT Vs. Karthik Construction Co. in dated 23.02.2018, wherein the Bench at para 6 thereof has held that addition under section 69A of the Act cannot be made in respect of those assets / monies / entries which are recorded in the assessee's books of account. In ITA Nos.1383 and 1384/Bang/2019 my considered view, the aforesaid decision of the ITAT- Mumbai Bench (supra) is squarely applicable to the facts of the case on hand, where the entries are recorded in the assessee's books of account. In this view of the matter, I am of the opinion that the addition of Rs.6,30,000/- made under section 69A of the Act is bad in law in the facts and circumstances of the case on hand and therefore delete the addition of Rs.6,30,000/- made thereunder. The AO is accordingly directed.

8.14 Upon applying the provisions to the facts of the case, she submitted that all the three conditions required to be met for applying section 69A are not met in the case of the assessee. Though the assessee could be held to be the owner of the money but such monies have been accounted for in his books of accounts and duly explained by the assessee. The assessee has maintained regular books of accounts as stated above and has duly reflected all the cash receipts as repayment of loans by borrowers against the sum advanced earlier. The assessee has also filed the copy of balance sheet, profit and loss, cash book etc before the Assessing officer to establish the same. The books of account, cash book, financials, and all such documents as stated earlier confirm and establish the source of receipts and maintenance of regular books of accounts.

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 31 of 38 8.15 Irrespective of the above the fifth condition states that nature of such money should be an income to tax the same. In other words, there should be a gain, a benefit or an element of profit to tax the same. 8.16 The assessee has receipts of two kinds one in the form of repayment of loan by borrowers and second is interest income. Capital transactions such as receipt of money upon repayment of loans by borrowers cannot in any circumstance be treated as income of the assessee. And the interest income receipts have already been duly offered to tax by the assessee in its return of income and such income has also been accepted as such by the Assessing Officer.

8.17 Further, without prejudice to the above, she submitted that even if the entire cash receipts are considered as income, the investment of the same is not proved by the assessing officer to support and justify such cash receipts as income. The assessing officer has deemed the entire receipts as income without any supporting evidences/ documentation in his hand or any criteria/basis to establish the same. Mere assumption or suspicion or doubt by the Assessing officer cannot be made the base for deeming any receipt as income and treating the same as unexplained.

8.18 It has been held in the case of - CIT Vs Shri Jawahar Lal Oswal& others (Punjab & Haryana High Court)-Deeming provision cannot be initiated on the basis of suspicion and doubt. - Smt. Kanika Rathi, New Delhi vs Ito, New Delhi on 22 August, 2017 - by indulging into mere surmises and conjectures an addition cannot be made u/s 69A by completely disregarding the submissions and explanations of the assessee, and by further alleging that the documentary evidences submitted by the assessee are sham and have been created just to prove the source of cash deposit.

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 32 of 38 8.19 In view of the above she submitted that the cash deposits in bank accounts having been fully proved and sourced, the addition as made is to be deleted. 8.20 Further, she submitted that the learned Assessing officer has erred in taxing the entire deposits as income of the assessee U/s. 69A of I.T. Act, 1961. On proper appreciation of facts of the case, there is no unexplained money etc., and hence, the provisions of Section 69A of IT Act, 1961 are not applicable to assessee. 8.21 She submitted that the action of assessing officer in assessing the cash deposits into bank accounts as unexplained money over and above the addition made by treating the agricultural income of unexplained money amounts to double addition. 8.22 Without prejudice to the above, as regards applicability of Section 115BBE of the Act [as substituted by the Taxation Laws (Second Amendment) Act, 2016]:

• Section 115BBE was originally inserted by the Finance Act, 2012 w.e.f. 01.04.2013. • The said Section was substituted by the Taxation Laws (Second Amendment) Act, 2016, w.e.f. 01.04.2017. • It is submitted that the Taxation Laws (Second Amendment) Bill, 2016 was introduced in Lok Sabha on 28.11.2016 and received the Presidential assent on 15.12.2016. • In the instant case, the relevant year under consideration in FY16-17 i.e. before the amendment of Section 115BBE by Taxation Laws (Second Amendment) Act, 2016.

8.23 In other words, the ld. A.R. submitted that as on the date of 01.04.2016 (the beginning of the financial year), the aforesaid amendment did not exist. Therefore, the law applicable with respect to income, should be the law as it stood on the first day of April of financial year 2016-17 i.e. 01.04.2016.

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 33 of 38 8.24 It is settled law that, the law as it stood on the first day of April of any financial year must apply to the assessments of that year. Therefore, though the aforesaid Section is amended w.e.f. 01.04.2017, the same do not apply for the impugned AY 2017-18, as the said amendment did not exist as on 01.04.2016. 8.25 In this regard, the ld. A.R. relied on the following decisions:

 In Karimtharuvi Tea Estate Ltd. v. State of Kerala [1966] 60 ITR 262 (SC), the Court held as under:

“10. Now, it is well-settled that the Income-tax Act, as it stands amended on the first day of April of any financial year must apply to the assessments of that year. Any amendments in the Act which come into, force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force.”  In Krishna Mohan Agrawal v. CIT [2007] 295 ITR 190 (Allahabad), the Court held as under:

“The following question has been referred:

"Whether the Income-tax Appellate Tribunal was legally correct in holding that the amendment to section 64(1) of the Income-tax Act, 1961, brought about with effect from April 1, 1976, by the Taxation Laws (Amendment) Act, 1975, was applicable to the assessment year 1976-77?"

The amending Act known as the Taxation Laws (Amendment) Act, 1975, (Central Act No. 41 of 1975) received the assent of the President of India on August 7, 1975. By that Act one of the changes brought about was in section 64 of the Income-tax Act by virtue of section 13 of that Amendment Act. As stated above, in this case the amendment relating to section 64 was enforced, by a notification with effect from April 1, 1976. Therefore, relying upon the decisions in Wallace Brothers and Co. Ltd. v. CIT [1948] 16 ITR 240 (PC), Kalwa Devadattam v. Union of India [1963] 49 ITR 165 (SC), Kesoram Industries and Cotton Mills Ltd. v. CWT [1966] 59 ITR 767 ; AIR 1966 SC 1370 and Chief CIT v. Rama Shanker [2005] 277 ITR 69 (All), we hold that the Tribunal was legally not correct in holding that the amendment in question enforced with effect from April 1, 1976, was applicable to the assessment year 1976-77 which would be relatable to the previous year 1975-76 inasmuch as that previous year was already over on the date of enforcement of the amendment.”

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 34 of 38  In PIU Ghosh v. Dy. CIT [2016] 386 ITR 322 (Calcutta), the Court held as under: “1.1 The question formulated on 12th August, 2009 when the appeal was admitted reads as follows :—

"Whether the Tribunal below substantially erred in law in applying provision of Section 40(a)(ia) of the Income Tax Act, 1961 in the present case pertaining to Assessment Year 2005-06 when the provisions were substituted by the Finance Act, 2004 with effect from April 1,2005 ?"

“The facts admitted and/or not disputed are as follows: There is an Act called the Super Profits Tax Act, 1963, which received the assent of the President on the 4th May, 1963.

The admitted position in this case is that if this amount cannot be treated as a reserve then this has got to be excluded for the purpose of computation of basic capital for the purpose of ascertaining the standard deduction. There is no dispute regarding this. Therefore, the only question is whether it is to be treated as a reserve. What is known as reserve has been discussed in the various decisions of this court and also the Supreme Court. In the present case, we are not in a position to accept that on the relevant date April 3, 1963, there was any known liability, whether contingent or otherwise. There was no Act at that point of time. Merely there was a Bill. A Bill might or might not be changed into an Act. We are unable to accept the contention of the revenue that the Bill mast be treated as a contingent liability. A Bill introduced in Parliament cannot create any liability, contingent or otherwise. In the present case, when this amount was earmarked on April- 3, 1963, or a little earlier as found by the Tribunal there was no such Act”’

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 35 of 38  In Loknath Goenka v. CIT [2019] 417 ITR 521 (Patna) (FB), it was held as under: 2. The point for consideration in the reference is whether the Appellate Tribunal was correct in law in holding that the share income of minor sons of the assessees, including the share in interest on capital credited to the minor sons out of the partnership firm was to be computed in the hands of their father under Section 64(1)(iii) in the Assessment year 1976-77. The said provision was introduced in the Income Tax Act by the Taxation Law (Amendment) Act 1975 with effect from 1.4.1976, whereas the accounting year of the assessee(s) in the instant case(s) came to an end on 10.8.1975 and on 31.12.1975 in Taxation Case No. 126 of 1983 and Taxation Case No. 28 of 1986 respectively.

Nandigowdanahalli Manjappa Pushpa, Bangalore Page 36 of 38 20. In view of the foregoing discussions and conclusions arrived at by us, I am of the considered opinion that the judgment rendered in the case of Badri Prasad (supra) does not lay down the correct law.

6. We are of the opinion that though the subject to the charge is the income of the previous year, the law to be applied is the law that is in force in the assessment year, unless the law is changed. In fact, what has to be looked into is the law of income-tax. The provision of the Act as it stands on the 1st April of a financial year must apply for that year. Further, since the law that has to be applied is the law as it stands on the 1st April of a financial year, any amendments in the Act, which come into force after 1st April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force. This position has been made clear by the Supreme Court in CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589 and in Karimtharuvi Tea Estate Ltd. v. State of Kerala [1966] 60 ITR 262.  In Andhra Cements Co. Ltd. v. CIT [1998] 232 ITR 364 (Andhra Pradesh), it was held as under:

7. The Tribunal proceeded on the basis that 1-4-1983 being Sunday, the rules were brought into force on 2-4-1983 as the first working day of the assessment year. To verify the correctness of the order of the Tribunal, we have called for the file from the Finance Ministry. On a perusal of the file we find that that is not the correct position. There is no reference to 1-4- 1983 being a holiday and, therefore, bringing into force the amended rules with effect from 2-4-1983 as the first working day of the assessment year. The real reason is that the current pattern of the Finance Act is to notify the rates applicable one year in advance so that advance tax is calculated on the rates applicable for the next year. That was the reason why even in the budget speech the Finance Minister has calculated the loss arising out of this additional grant of depreciation for the financial year 1983-84 which is relevant to the assessment year 1983-84.

8. Therefore, the Tribunal is not right in holding that the assessee is entitled for the higher rates of depreciation for the assessment year 1983- 84 as the amended rules came into force on 2-4-1983.

8.26 From the above, the ld. A.R. for the assessee submitted that the provision of Section 115BBE as substituted by the Taxation Laws (Second Amendment) Act, 2016, do not apply to the instant case.

9. The ld. D.R. submitted that the assessee has not explained sources of deposit of Rs.14.20 lakhs out of sum of Rs.26.70 lakhs deposited by assessee during the demonetization period and the same to be considered as unexplained money u/s 69A r.w.s. 115BBE of the Act.