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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI S.S. VISWANETHRA RAVI, HON’BLE & SHRI S. R. RAGHUNATHA, HON’BLE
PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 30.07.2024 and pertains to assessment year 2017-18.
The only issue raised from the grounds of appeal of the assessee is that the Ld.CIT(A) has erred in confirming the order
:-2-: ITA. No: 2149/Chny/2024 of AO passed u/s.144 of the Act by making an addition u/s.69A of the Act of Rs.49,30,020/-.
Brief facts of the case are that the assessee is an individual, had not filed his return of income for the A.Y. 2011-12. The assessee had made a deposit of cash of Rs.28,92,500/- to his savings bank account maintained with Tamilnad Mercantile bank, Vattur Branch. Based on the above information, the AO initiated proceedings u/s.147 of the Act, and issued notice u/s.148 of the Act, after obtaining proper approval from the higher authorities stating that the cash deposit being unexplained and has escaped assessment.
The assessee did not respond to the various notices issued by the AO, which are given below: “5. The issue of the notices and the response of the assessee are chronologically tabulated below: Sl. Types of Date of Date of Response of the No notices notice service asseseee 1 148 26.03.2018 03.04.2018 Neither appeared nor filed any reply and not complied. 2 142(1) 18.07.2018 24.07.2018 Neither appeared nor filed any reply and not complied. 3 Reposting 13.08.2018 23.08.2018 Neither appeared Letter nor filed any reply and not complied. 4 Proposed 14.09.2018 18.09.2018 Neither appeared assessment nor filed any reply letter and not complied. 5 Reminder to 08.10.2018 13.10.2018 Neither appeared proposed nor filed any reply
:-3-: ITA. No: 2149/Chny/2024 assessment and not complied. letter
The AO, obtained the entire bank statement for the A.Y. 2011-12 and found that the assessee has deposited an amount of Rs.49,30,024/- out of which cash deposit was Rs. 28,92,500/-. Again the AO, for a natural justice, pre-assessment order dated 22.11.2018 along with notice U/s.142(1) was issued to assessee, but the assessee has failed to respond. The AO had no choice but to pass an order U/s.144 of the Act, confirmed the addition of Rs.49,30,024/- as unexplained income and passed the order on 05.02.2018. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A), NFAC.
Before the ld.CIT(A), the assessee filed a written submission by filing the computation of income based on section.44AD offering 8% of the gross deposit made at bank as Rs.42,31,300/- and also filed bank statements. Further, the assessee alternatively pleaded for providing peak credit of the deposits made by the assessee in the bank account. However, the ld.CIT(A) dismissed the appeal of the assessee without considering the submissions of the assessee holding as under: “5.2 The appellant had deposited an amount of Rs.49.30 lakhs during the year under consideration. The Ld. AO sought details regarding the same but the appellant had not filed requisite details. The appellant had also not filed his income tax return.
:-4-: ITA. No: 2149/Chny/2024
Resultant the Ld. AO treated the deposit as unexplained money and added to total income. 5.3 During the appellate proceedings also, the appellant contested that total deposits appellant has not filed any explanation regarding these were Rs.49.30 lakhs but the deposits. 5.4 It is settled position that the onus is upon the appellant to prove genuineness of each and every transactions entered into. In land mark cases like Kale Khan Mohammad Hanif v CIT [1963] 50 ITR 1(SC), Roshan Di Hatti v CIT [1977] 107 ITR (SC) it has been held that the law is well settled that the onus of proving the source of a sum of money found to have been received by an appellant, is on him. Where the nature and source thereof cannot be explained satisfactorily, it is open to the revenue to hold that it is the income of the appellant and no further burden is on the revenue to show that the income is from any particular source. 5.5 In view of the above, I am of the considerate view that in the appellant has not justified the deposits appearing in his bank accounts. In the event of non furnishing of details and documentary evidences thereto, the claim of appellant cannot be verified. Therefore, the addition made by learned AO for sum of Rs.49,30,020/- is upheld.”
Aggrieved by the order of the ld.CIT(A), the assessee preferred an appeal before us.
The ld.AR for the assessee submitted that the assessee is an individual and having a business of trading in pulses and both the lower authorities have not appreciated the fact that any business will have expenditure and the entire credits in the bank account has been brought to tax. Further, ld.AR stated that the assessee is having deposited to the tune of Rs.49,30,024/-, is eligible to declare 8% of the gross collection as income from :-5-: ITA. No: 2149/Chny/2024 business u/s.44AD of the Act and had filed the computation accordingly by showing the business income of Rs.3.38 Lakhs, before the Ld.CIT(A). Therefore, the Ld.AR submitted that the order of the AO was passed exparte u/s.144 of the Act and prayed setting aside the order of ld.CIT(A) and delete the addition made by the AO and consider 8% of the bank deposit as income from business.
Per contra, the ld.DR argued that the assessee was negligent and had not even filed a return of income even after issuing 142(1) notice. Therefore, prayed for confirming order of the ld.CIT(A) by dismissing the appeal of the assessee.
We have heard the rival contentions and gone through the materials available on record and orders of the authorities below. We note that the assessment order passed by the AO u/s. 144 of the Act without considering any of the expenditure by bringing entire credits in the bank account to tax as unexplained income. We note that the assessee has made bank deposits of Rs.49,30,024/-, during the impugned assessment year, which is within the turnover limits prescribed u/s.44AD of the Act. The Ld.AR has filed a computation of income declaring 8% of the amount of bank deposit as business income and prayed for :-6-: ITA. No: 2149/Chny/2024 accepting the same by setting aside the orders of lower authorities. Since, the AO has passed an exparte order by making an entire bank deposit as income without allowing any corresponding expenditure and the same has been confirmed by the Ld.CIT(A), we do not countenance the action of the lower authorities. In the present facts and circumstances of the case and in the interest of justice and fair play we deem it fit to set aside the order of the ld.CIT(A) and estimate the business income of the assessee at 15% of the bank deposit of Rs.49,30,024/-, which works out to Rs.7,39,503/- and direct the AO to recompute the income and tax thereon accordingly.