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Facts
The assessee failed to file an Income Tax Return for AY 2017-18 and did not comply with notices to explain substantial cash deposits made during the demonetization period. The Assessing Officer (AO) treated these deposits of Rs. 5,70,98,655/- as unexplained income under Section 69A of the Income Tax Act.
Held
The CIT(A) upheld the addition of Rs. 5,70,98,655/- as unexplained money, dismissing the assessee's appeal. The Tribunal noted that the assessment order was ex-parte and the NFAC upheld the addition for lack of satisfactory explanation regarding the source of the deposits.
Key Issues
Whether the addition of Rs. 5,70,98,655/- as unexplained cash deposits made during the demonetization period is justified, and whether the assessee's failure to provide details of the source of these deposits can lead to the addition being upheld.
Sections Cited
69A, 139(1), 142(1), 133(6), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH : BANGALORE
Before: SHRI CHANDRA POOJARI & SHRI KESHAV DUBEY
ORDER
PER KESHAV DUBEY, JUDICIAL MEMBER
This appeal at the instance of the assessee is directed against the CIT(A)/NFAC order dated 25.02.2024 vide DIN & Order No.
Page 2 of ITBA/NFAC/S/250/2023-24/1061476442(1) passed u/s. 250 of the IT Act, 1961 for A.Y. 2017-18.
The assessee has raised the following grounds . “1. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in dismissing the appeal and that too without appreciating fully and properly the facts and the circumstances of the case.
2. On the facts and in the circumstances of the case and in law, the learned CIT. (A) erred in dismissing the appeal and that too without considering the submission dated 01- 08-2023 and the subsequent letter dated 22-2-2024.
3. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in dismissing the appeal and thereby confirming the action of the learned A.O. in making an addition of an amount of Rs.5,70,98,655/- u/s 69A of the Act.
4. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in confirming the action of the learned A.O. in charging interest u/s 234A of the Act.
5. On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in confirming the action of the learned A.O. in charging interest u/s 234B of the Act. The Appellant craves leave to add, alter, amend or delete any or all of the Grounds of Appeal at any time.”
The brief facts are that based on the information in respect of Cash Deposits during the demonetization period, as per the information uploaded in FIU — NMS, it was learnt that the assessee had made cash deposits during the year as well as during the demonetization period from 09.11.2016 to 30.12.2016 as detailed below: -
AMOUNT OF SL NAME OF THE TYPE OF ACCOUNT NO DEPOSIT in NO BANK & BRANCH A/C Rs 1 Axis Bank, Rajai 914020006149011 Current 1327500 Nagar Branch 2 Axis Bank, Tumkur 913020054079864 Current 627400 3 Axis Bank, Chitra 914020008679435 Current 819530 Durga 4 Axis Bank 8th mile 915020059579774 Current 24,23,025 Tumkur Rd 5 Axis Bank, Tiptur 914020013166720 Current 266000 Total 5463455
As the assessee failed to file the ITR for the Asst. Year 2017- 18 within the due date u/s 139(1) of the I.T. Act, 1961, therefore, in view of the information regarding the substantial cash deposits made during the demonetization period, notice u/s 142(1) dated 23.11.2017 was issued and served upon the assessee requiring the assessee to file return of income by 11.12.2017. However, there was no compliance from the assessee. Further opportunities were provided to the assessee by way of issue of notices/letters to explain the nature and source of the above deposits. Details of hearing notices and response to the taxpayer are as given below —
POSTING THE NOTICE/LETTER/SHOW CASE FOR SL ASSESSEE'S CAUSE NOTICE HEARING /ON- NO COMPLIANCE LINE COMPLIANCE Notice u/s 142(1) dt 1 10/1/2018 Not complied 11/12/2017 Notice u/s 142(1) r.w.s 2 10/7/2019 Not complied 129 dt 5/7/2019 Notice u/s 142(1) dt 3 16/9/2019 Not complied 10/9/2019 Notice u/s 142(1)dt 4 22/10/2019 Not complied 16/10/2019 Show cause dt 5 14/12/2019 Partly complied 12/12/2019
Further as there was no compliance from the assessee information was obtained from the banker as per the information uploaded in F1U-NMS by issue of notice u/s 133(6) of the I.T. Act, 1961. On perusal of the bank statements, it is noticed that the bank statement of ICICI Bank with current a/c no: 015905500642 pertains to M/s. Nawaz and Co., On perusal of the bank statements, it is noticed that the assessee made the following cash deposits during the demonetization period: - CASH DEPOSITED CASH TOTAL SL NAME OF THE DURING DEPOSITED OTHER CREDITS NO BANK 9/11/2016 DURING FY CREDITS DURING FY TO 2016-17 2016-17 30/12/2016 Axis Bank current 1 ac no 623000 846600 749913 3219513 913020054079864 2 Axis Bank ac no 505500 8134500 13511560 22151560 914020006149011
Axis bank current 3 ac no 695800 30298132 3162527 34156459 914020008679435 Axis bank current 4 ac no 2424000 2547025 4863266 9834291 915020059579774 Axis bank current 5 ac no 470000 1245842 1874841 3590683 913020029895031 6 Axis bank current ac 266000 13026556 70000 13362656 914020013166720 TOTAL 4984300 57098655 24232107 86315062
The data received from the bank is treated as the correct data. The summary of total credits in the assessee's Bank account on account of cash deposits and by other modes of transactions are as under: SL NO PARTICULARS AMOUNT (RS) Cash deposits during 1 demonetization period 9/11/2016 4984300 to 31/12/2016 Cash deposits during the year 2 57098655 (other than demonetization period) 3 Other credits 24232107 TOTAL 86315062
The Assessee was issued notice to explain the nature and source of the above deposits. As the Assessee failed to furnish the details as called for with regards to source of cash deposits & also not filed any Return of Income, the Ld. AO treated the cash deposits of Rs.5,70,98,655/- as unexplained money U/s 69A of Page 6 of I Tax Act, 1961. The Ld. CIT(A) upheld the addition of Rs. 5,70,98,655/- by dismissing the Appeal.
Aggrieved by the Order of the Ld. CIT(A), the Assessee has filed the present Appeal before the Tribunal. At the time of hearing, we noticed that the assessment order is ex-parte and accordingly the Ld. AO passed the Assessment Order u/s. 144 of the IT Act, 1961. Further, the NFAC upheld the same for want of information / details by holding that addition of Rs.5,70,98,655/- which represents cash deposit during the entire year is upheld since the source of the Demand Draft could not be satisfactorily explained before the appellate authority. The Ld.CIT(A) also observed that even though the assessee says name, PAN and address of the persons who had brought in money through a Demand Draft is evidenced, the DD has to be only from members. The other sources like loan repayment, FDs only form a small component of the money brought in during the year and taking into account these factors, the addition of Rs.5,70,98,655/- u/s. 69A was upheld. Being so, we are of the opinion that in the interest of justice and fair play, we remit the entire issue in dispute to the file of Ld. AO for fresh consideration and to decide the same in accordance with the law after giving opportunity of being heard to the assessee. The Assessee is directed to co-operate with the Proceedings before the Revenue Authorities and to file the relevant submissions/documents which would be essential and required by the revenue Authorities for proper adjudication of the case. We clarify that in case of Page 7 of further default, the assessee shall not be entitled for any leniency.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 05th June, 2024.