SOURABH KUMAR SONI,ASHOKNAGAR (M.P) vs. ITO - ASHOKNAGAR, ASHOKNAGAR

This appeal in ITA No. 71/Agr/2024 for the assessment year 2017-

18 has arisen from the appellate order dated28.12.2023 [DIN & Order

No.ITBA/APL/S/250/2023-24/1059147191(1)], passed by learned

ADDL/JCIT(A)-7, Kolkata, which, appeal in turn has arisen from the

assessment order dated 21.12.2019 passed by Assessing Officer u/s.

144 of the Income-tax Act, 1961.

filed with ITAT, Agra Bench, Agra, reads as under :

ITA No.71/Agr/2024

5That the Ld. CIT(A) erred in passing the order stating that the jurisdiction get automated during the APN allocation, with correction in address of the appellant his ITR/reorganization of assessment unit, jurisdiction charges. This contention given by the CIT(A) is clearly wrong as the address of the assessee was never changed by him. And the Ld AO was bound to pass a statutory order u/s 127 r.w.s 129 before transferring the jurisdiction of the assessee, which he didn't pass, making the proceedings void and bad in law.

6.That the Ld. AO and then after the CIT(A)erred in treating the entire income taxable under section 115BBE and wrongly charged tax @ 60 on the entire income even though the assessee has explained that he earned around 120000 during the year from the Kiosks and other computer work. And he has deposited the extra money of Rs. 51518 (1037500- 985982) out of the same earning of Rs. 120000/-only. But the Ld. AO and later the CIT(A) refused to accept the same and added

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the same income twice in calculating the taxable income of the assessee which Is clearly wrong and lead to double taxation of income earned by the assessee. 7. That the Ld CIT(A) erred in understanding that the case of the assessee was originally reopened because of the cash deposited during the demonetisation period and the Ld. AO had mistakenly calculated the amount deposited during the demonetisation as Rs. 1251500/- which in originality was Rs. 1037500 only. The Ld AO in his order accepted that Rs. 9,85,982 was deposit out of money from M.P Online Kiosk only. So the assessee has deposited only Rs. 51518 (1037500-985982) extra, which is from the Rs. 120000 earned by the assessee from the typing and other computer work. The whole assessment and addition framed by the Ld. AO was on the basis that Rs. 1251500 was deposited during the demonetisation period and the Ld AO has deducted Rs,985982 from the same owing to the linkage to MP Online kiosk and treating the rest Rs. 265518 (1251500-985982) as unexplained income but actuality the figure of 1251500 was 1037500 and only Rs. 51518 extra was deposited, that too was explained as the part of saving and income earned during the year of Rs. 120000. 8. The assessee further craves to add, alter or amend the aforesaid grounds as when necessary.” 2.2 The assessee has also raised following additional grounds of

appeal before Income-tax Appellate Tribunal :

“9. That the decision given by NFAC in the appellate order as "dismissed" is not correct being against the addition at Rs.3,85,518/- made, invoking the provisions of Section 68 read with Section 115BBE of the Income Tax Act, the NFAC has sustained Rs.2,65,518/-, relief Rs.1,20,000/-. The decision given as "dismissed" is not correct, same is to be "partly allowed." 10. That the provisions of Section 68 of the Income Tax Act could only be invoked on the amount "exceeded the taxable limit", the income assessed upto the taxable limit even unexplained cannot be charged to tax. Provisions of Section 115BBE of the Income Tax Act could only be invoked over and above the income taxable limit, the income assessed below taxable limit cannot be charged to tax even under Section 115BBE of the Income Tax Act, same is liable to be charged on the income above taxable limit. 11. That the provisions of Section 68 of the Income Tax Act are not attracted in the case of assessee, the deposit made with the bank

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accounts cannot be charged to tax invoking the provisions of Section 68 of the Income Tax Act." It is requested that the above grounds now being taken as additional legal grounds No. 9,10 and 11 may kindly be admitted and obliged.”

Assessing Officer on AIMS Module of ITBA, it was observed by the

Assessing Officer that during the course of demonetization period from

09.11.2016 to 30.12.2016, the assessee has made cash deposits as

under :

Cash deposit : Rs.6,49,150/- (A/c 30765776795) Cash deposit : Rs.6,02,350/- (A/c 34996900073) Bank Name : State Bank of India, Ashoknagar.

3.2 Notice u/s. 142(1) of the Act was issued by the AO to the assessee

on 13.03.2018. The assessee did not file any return of income within time

allowed u/s. 142(1) of the Act. Further, show cause notice(SCN)dated

28.06.2019 was issued by the AO u/s. 142(1) of the Act to the assessee,

asking the assessee to explain the source of cash deposits in the bank

accounts. The assessee submitted that during demonetization period, the

assessee has deposited total of Rs.12,51,500/- in the saving bank

account and current account, out of which Rs.9,85,982/- were deposited

through M.P. Online for the payment of fees and remaining amount of

Rs.1,80,000/- was the savings of assessee’s parents which was

deposited in assessee’s bank account during demonetization period 4 | P a g e

ITA No.71/Agr/2024

while Rs.85,518/- was his savings which was also deposited in his bank

account. Assessee explained that the assessee is engaged in the

business of M.P. Online Form Center and Photostat business,and earned

approximately Rs.1,20,000/-, which is below taxable limit. The Assessing

Officer observed that the assessee has deposited Rs.16,03,053/- in his

account No. 30765776795 maintained with State Bank of India, Mandi

Road, Ashoknagar and Rs.22,54,789/- in his bank account No.

34996900073 maintained with State Bank of India, Mandi Road,

Ashoknagar. The Assessing Officer accepted the contention of the

assessee with respect to the claim that the assessee is engaged in the

business of M.P. online Form Centre Kiosk, and cash amount of

Rs.9,85,982/- out of Rs.12,51,500/- deposited in his bank account during

demonetization period are verifiable, but so far as the claim of the

assessee of Rs.1,80,000/- and Rs.85,518/- being deposited in his bank

account during demonetization period out of saving of his parents and

his own savings respectively, were not accepted by the Assessing Officer

and the same were brought to tax by the AO, as in view of the Assessing

Officer, the documents submitted and the answer supplied were not

satisfactory. Thus, the aggregate amount of Rs. 2,65,518/- was brought

to tax by the AO in the hands of the assessee being unexplained money

u/s 69A of the 1961 Act. Since the assessee did not file any return of 5 | P a g e

ITA No.71/Agr/2024

income, the income shown by the assessee in his reply of Rs.1,20,000/-

as well aforesaid addition of Rs. 2,65,518/- were brought to tax by the

AO, and the income assessed was to the tune of Rs. 3,85,518/- in the

hands of the assessee.

CIT(Appeals), but without success as the assessee merely submitted

bank statement and did not submitted any evidence with regard to

aforesaid deposits. Thus, the appeal of the assessee stood dismissed by

the ld. CIT(A) and the assessment order was upheld by learned CIT(A).

In its appeal before ld. CIT(A) in statement of fact submitted that the

assessee deposited Rs. 10,12,500/- in cash in his bank account and not

Rs. 12,51,000/- as stated by the AO during demonetization period. It was

submitted that Rs. 2,13,500/- was deposited in cash in assessee’s bank

account on 08.11.2016 which was not deposited during demonetization

period. The above amount was deposited out of money collected of Rs.

1,80,000/- by his father from various students for deposits of fee to Jiwaji

University before 08.11.2016 and balance amount was his past savings

and current collection. The ld. CIT(A) proceeded on the assumption that

Rs. 1,80,000/- was the savings of his parents while Rs. 85,518/- was

sought to be explained by the assessee to be his past savings. The ld.

CIT(A) dismissed the appeal of the assessee. 6 | P a g e

ITA No.71/Agr/2024

and the ld. Counsel for the assessee at the outset submitted that the

assessee has taken additional grounds of appeal bearing Nos. 9, 10 &

11, which should be admitted. Ld. Counsel for the assessee submitted

that the assessee did not file return of income as the income was below

taxable limit . The assessee’s income was Rs.1,20,000/- from the

business of M P Online Center(Kiosk) and photostat. The assessee has

not filed return of income, and this income of Rs. 1,20,000/- was declared

during the course of assessment proceedings before the AO. There were

two additions made by the Assessing Officer. It was also submitted that

the assessee was having old savings of Rs.85,518/- and also an amount

of Rs.1,80,000/- was given by the parents out of their past savings, which

was deposited in cash in the bank account of the assessee during the

period of demonetization . The assessee is running a Photostat Centre

and also M.P. Online form Centre (Kiosk). The Assessing Officer has

accepted the income of the assessee from MP Online Form Centre and

Photostat Centre, and no addition were made. It was submitted that the

provisions of section 68 was invoked by the AO, and the total income

was brought to tax to the tune of Rs.3,85,518/- as cash credits u/s 68 and

the same were brought to tax by applying Section 115BBE. It was

submitted that these additions were not warranted and the assessee has 7 | P a g e

ITA No.71/Agr/2024

given proper submissions before the authorities below, which were

arbitrarily rejected by the authorities below. The ld. Counsel for the

assessee also relied upon Instructions No. 3/2017(F.No.225/100/2017/

ITA-II) dated 21.12.2017 issued by the Revenue and it was submitted

that the additions be deleted.

5.2 Learned Sr. DR, on the other hand, relied upon the orders of the

authorities below. Ld. Sr. DR submitted that the Assessing Officer has

rightly made additions to the tune of Rs.2,65,518/-, which were later

affirmed by ld. CIT(Appeals).

record. I have observed that the assessee is engaged in running MP

online Form Center(Kiosk) and Photostat business. Assessee has not

filed return of income u/s 139. As per information available with the AO

on AIMS Module of ITBA, it was observed by the AO that the assessee

deposited cash in his bank accounts during demonetization period from

09.11.2016 to 30.12.2016, detailed as under :

Cash deposit : Rs.6,49,150/- (A/c 30765776795) Cash deposit : Rs.6,02,350/- (A/c 34996900073) Bank Name : State Bank of India, Ashoknagar.

6.2 The AO issued notice u/s 142(1) dated 13.03.2018 to the assessee

to file his return of income. The assessee did not file return of income in

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pursuance to notice issued by the AO u/s 142(1) also. SCN u/s 142(1)

was also issued by the AO to the assessee for explaining sources of

cash deposits. Case of the assessee was selected by Revenue for

framing scrutiny assessment on account of cash deposits in the bank

account. Assessee participated in the assessment proceedings. The

assessee gave explanation with respect to the cash deposits made by

the assessee to the tune of Rs. 9,85,982/- out of Rs. 12,51,500/- , being

out of income from M P Online Center(Kiosk) and Photostat, which

explanation was accepted by the Assessing Officer after considering the

explanation given by the assessee after making due verifications. This is

now disputed by the assessee as it is claimed by assessee that Rs.

10,12,500/- was deposited in cash during demonetization period and not

Rs. 12,51,500/- as stated by authorities below. The assessee had

claimed during assessment proceedings that the assessee has earned

income of Rs.1,20,000/- from Photostat as well as MP online Form Kiosk,

which was brought to tax by the Assessing Officer. The assessee had not

filed return of income. There is no grievance of the assessee so far as

this income of Rs.1,20,000/- which was brought to tax by the AO except

that the same was brought to tax u/s 115BBE as the addition was made

by the AO u/s 68. The AO has accepted the income from M P Online

Center and Photostat , and thus there is no justification in bringing to tax 9 | P a g e

ITA No.71/Agr/2024

this income of Rs. 1,20,000/- u/s 68 at the rates prescribed u/s 115BBE.

Although , no return of income was filed by the assessee but AO has

accepted the claim of the assessee to be engaged in M P Online

Center(Kiosks) and Photostat which business as per AO were verifiable,

and the income offered to taxation of Rs. 1,20,000/- by the assessee

from these business which stood accepted by the AO, cannot be brought

to tax u/s 68 and hence Section 115BBE cannot be applied. I order

accordingly.

6.3 Proceeding further, the Assessing Officer has made two additions to

the income of the assessee in the assessment framed u/s 144, firstly

Rs.1,80,000/- on account of cash deposits in the bank accounts during

the demonetization period, for which the assessee has given explanation

that firstly this amount was not deposited during demonetization period

and secondly these were the amounts collected by his father from

various students for deposit of fees to Jiwaji University before 08.11.2016

but both the authorities below treated this amount of out of past savings

of his parents, which were given to the assessee in the form of cash, and

which stood deposited by the assessee in his bank account during

demonetization period. Initially, the assessee gave explanation that these

amounts were deposited out of past savings of his parents, but later

changed the stance in Form No. 35 and also in Form No. 36 filed with 10 | P a g e

ITA No.71/Agr/2024

ITAT. Thus, there are disputed facts. Thus, both the authorities below

have passed orders based on mistaken facts and hence orders are

erroneous, if contentions of the assessee is to be accepted. This requires

fresh investigation of facts . Under these facts and circumstances and in

the interest of justice, the orders of authorities below are set aside and

matter is restored to file of the AO for denovo assessment, after giving

proper opportunity of being heard to the assessee. The assessee is

directed to duly comply with the directions of the AO during denovo

assessment .. I clarify that I have not commented on the merits of the

issue. I order accordingly.

6.5. Proceeding further, it is also observed that both the authorities

passed the order against the assessee by disbelieving the alleged

contentions of the assessee that Rs.85,517/- was the cash deposits

during demonetization out of his past savings, but however, the assessee

has averred that the differential amount of cash deposits during

demonetization was Rs. 51,518/- and not Rs. 85,517/- and the same

was sought to be explained being out of income of Rs. 1,20,000/-

declared by the assessee before the AO during assessment proceedings

from M P Online Center(Kiosk) and Photocopy business. Initially , the

assessee stated before the AO that this amount was deposited out of

past savings , but later changed stance in Form No. 35 and Form No. 11 | P a g e

ITA No.71/Agr/2024

36.Thus, there are disputed facts. Thus, both the authorities below have

passed orders based on mistaken facts and hence orders are erroneous,

if contentions of the assessee is to be accepted. This requires fresh

investigation of facts . Under these facts and circumstances and in the

interest of justice, the orders of authorities below are set aside and

matter is restored to file of the AO for denovo assessment, after giving

proper opportunity of being heard to the assessee. The assessee is

directed to duly comply with the directions of the AO during denovo

assessment .I clarify that I have not commented on the merits of the

issue. I order accordingly.

statistical purposes .

Order pronounced in the open court on 27/01/2025.

Sd/- (RAMIT KOCHAR) ACCOUNTANT MEMBER Dated: 27/01/2025 *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra

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