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Facts
The Assessing Officer found that the assessee deposited ₹.15,64,630/- in cash during demonetization. The assessee, a non-filer, did not explain the source of cash, leading the AO to treat it as unexplained money under Section 69A and taxed under Section 115BGBE of the Income Tax Act. The CIT(A) confirmed the order.
Held
The Tribunal held that charging the entire amount to tax without considering the profit element is incorrect. The assessee is a mobile sim recharger, and the deposited cash represents collection for clients. The Tribunal found merit in the assessee's contention and decided to remand the matter for fresh consideration.
Key Issues
Whether the entire cash deposit made during demonetization can be taxed as unexplained income without considering the profit element? Whether the assessee should be given an opportunity to present evidence and explanations before the Assessing Officer?
Sections Cited
69A, 115BGBE, 144
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Before: Shri S.S. Viswanethra Ravi & Shri Manoj Kumar Aggarwal
O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal by the assessee is directed against the order dated 20.12.2023 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2017-18.
At the outset, we note that the Assessing Officer found the assessee deposited cash of ₹.15,64,630/- during demonetization period. According to the Assessing Officer, the assessee’s bank statements reflected total credits of ₹.45,39,422/- in the impugned year, since the assessee was a non-filer of income tax return and did not explain the source of cash with supporting evidence, the Assessing Officer treated the credits as unexplained money under section 69A and taxed under section 115BGBE of the Income Tax Act, 1961 [“Act” in short]. We find that the ld. CIT(A) confirmed the order of the ld. CIT(A).
The ld. AR Shri V. Gunasekaran, ITP challenged the exparte order passed by the Assessing Officer as well as the ld. CIT(A). He submits that the assessee is a mobile sim recharger as such the accommodated collection for client was deposited into bank account and then credited to the company. He further submits that for argument sake, the Assessing Officer cannot charge entire amount to tax without considering profit element. The ld. AR prayed to afford an opportunity to the assessee as the assessee is ready to prosecute his case before the Assessing Officer without fail.
The ld. DR Shri R. Raghupathy, Addl. CIT opposed the same and drew our attention to para 5 of the impugned order and argues that the ld. CIT(A) has provided adequate opportunities to make submissions in support of the appeal.
Heard both the parties and perused the material on record. We note that the assessment was completed under section 144 of the Act dated 09.10.2019 and brought to tax entire cash deposits under section 69A of the Act, undoubtedly, there was no assistance from the assessee. We find force in the contention of the ld. AR that charging entire amount to tax without considering profit element is not correct, in our opinion, cannot be ignored. Taking into consideration of the submissions of the ld. AR and the ld. DR and in the interest of justice, we deem it proper to remand the matter to the file of the Assessing Officer for fresh consideration. The assessee is at liberty to file evidences, if any, to substantiate his case before the Assessing Officer. Thus, grounds raised by the assessee are allowed for statistical purposes.