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Facts
The assessee, an astrologer, deposited ₹30 lakhs in cash during the demonetization period. The Assessing Officer (AO) estimated the cash available as on 08.11.2016 at ₹12 lakhs, treating the remaining ₹18 lakhs as unexplained money under Section 69A of the Income Tax Act.
Held
The Tribunal noted that the assessee had given loans totaling ₹19,50,000 to ten parties, as per his balance sheet. Nine of these parties provided confirmation of the loans, with one party being deceased. The Tribunal directed deletion of ₹14.5 lakhs received from nine creditors, and confirmed the balance addition of ₹3.5 lakhs.
Key Issues
Whether the addition of ₹18 lakhs as unexplained cash deposits made during the demonetization period is justified, considering the loans given by the assessee to third parties.
Sections Cited
69A
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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI AMITABH SHUKLA
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter in short "the Ld.CIT(A)”), Delhi, dated 25.01.2024 for the Assessment Year (hereinafter in short "AY”) 2017-18.
The main grievance of the assessee is against the action of the Ld.CIT(A) confirming the addition of ₹18 lakhs being cash deposits made during demonetization period as unexplained money u/s.69A of the Income Tax Act, 1961 (hereinafter in short ‘the Act’).
The brief facts are that the assessee is an individual, who filed his return of income (RoI) for AY 2017-18 on 29.01.2018 admitting total income of ₹8,04,390/-. Later, the case of the assessee was selected for scrutiny and the AO noted that the assessee had deposited cash to the tune of ₹30 lakhs in the bank a/c maintained with Bank of Baroda, Coimbatore during demonetization period on three (3) occasions (14th, 16th & 18th November, 2016). The AO asked the assessee to furnish nature and source of the cash deposits with supporting evidence.
Pursuant thereto, the assessee submitted his income & expenditure account for the year ended 31.03.2016 & 31.03.2017 and also balance sheet as on 31.03.2016 & 31.03.2017. According to the AO, the assessee didn’t furnish the details of the cash available with him as on 08.11.2016 (i.e. a day prior to demonetization). Therefore, from the details furnished before him, he worked out the cash balance as on the date of demonetization (i.e. 08.11.2016) as under:-
Particulars Amount Rs. Cash at Bank and on hand as on 5,26,800 31.03.2016 (Rs. 1,000 + 5,25,800) as per Balance Sheet furnished by the assessee as on 31.03.2016 Add: The assessee has shown total 6,32,187 receipts of Rs. 10,83,749/- for the F.Y. 2016-17. Therefore, the proportionate receipts upto 31.10.2016 (7 months) works out to Rs. 6,32,187 (10,83,749/12 x 7) Estimated cash available with the assessee 11,58,987 as on 01.11.2016 Add: Extra credit given to the assessee 41,013 from 01.11.2016 to 08.11.2016 Estimated cash available with the assessee 12,00,000 as on 08.11.2016
And since, the assessee had deposited cash of ₹30 lakhs during demonetization period, whereas, the cash balance according to the AO as on 08.11.2016 was ₹12 lakhs, the balance amount of ₹18 lakhs (Rs.30 lakhs minus Rs.12 lakhs) was treated as unexplained money u/s.69A of the Act.
Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who confirmed the action of the AO.
Aggrieved, the assessee is in appeal before this Tribunal.
We have heard both the parties and perused the material available on record. We note that the assessee is an astrologer by profession and has returned an income of ₹8,04,390/- for AY 2017-18. And since, he had deposited ₹30 lakhs during demonetization period, the AO asked him to explain the nature & source of the same; and the assessee filed the details like income & expenditure account as on 31.03.2016 & 31.03.2017 and also the balance sheet as on 31.03.2016 & 31.03.2017. Since, the assessee couldn’t furnish the details of the cash available with him as on 08.11.2016, the AO estimated the cash available with assessee as on 08.11.2016 at ₹12 lakhs and directed the assessee to prove the nature & source of balance amount of ₹18 lakhs, which according to the AO, the assessee couldn’t explain. So he added it u/s.69A of the Act. On appeal, the assessee submitted that ten (10) parties borrowed money from him had returned the same (loan-amount) during the year under consideration, which has been deposited during the demonetization period along with the cash in hand as on 08.11.2016 from the profession of Astrology. The name of the lenders/PAN as on 31.03.2016 (AY 2016-17) is as under:- ASHOK KUMAR MAHADEV DETAILS OF LOANS & ADVANCES AS ON 31-03-2016
Sl. NAME AND ADDRESS OF THE PARTY PAN AMOUNT No. RS 1 DURAISAMY R. AVMPD67988 200000 1/2 MYLANKATTUR, SATHIYANAICKAN PALAYAM KUMARAMANGALAM, THIRUCHENGODU 2 ARUNKUMAR D, BTSPA5937L 160000 1/2 MYLANKATTUR, SATHIYANAICKAN PALAYAM, KUMARAMANGALAM, THIRUCHENGODU 3 VADIVEL S. AWNPV2150K 160000 D113, NAPIRAMPATTI, UTHANGARAI, KRISHNAGIRI 4 VIPUL NM BFTPV9635M 120000 VARYA THAZHAM, PAYAMBRA, KURIJVATOOR KOZHIKODE 5 SETTU V HJQPS0615R 200000 D113. NAPIRAMPATTI UTHANGARAI KRISHNAGIRI 6 MEKALA R. AJGPM9391R 150000 127 C. NGR STREET, KALAPPATI, COIMBATORE 7 NAGARAJ K AUFFN90450 150000 200 8TH STREET, BHAKTAVATSALAM NAGAR, KAILASAMPALAYAM, THIRUCHENGODU 8 SUBRAMANIAN C GGIPS9197G 100000 0113, NAPIRAMPATTI, UTHANGARAI KRISHNAGIRI 9 NAGARAJAN U. AFCPN6900M 200000 17, BOOPATHIRAJA NAGAR, POOCHIYUR DEENAMPALAYAM COIMBATORE 10 ASHOK KUMAR M. NO PAN 500000 5/478 POSTAL COLONY, PERUR CHETTIPALAYAM, COIMBATORE (FATHER) TOTAL 1950000
The Ld.CIT(A) taking note that no enquiry regarding the aforesaid fact was made during the course of assessment proceedings, he called for Remand Report from the AO, who issued notices to the assessee and acknowledges that they all received the notices, but failed to give confirmation to him (AO) about the loan taken from assessee and gave such a report to Ld CIT(A).
However, the assessee controverted the aforesaid remand-report, and instead, brought to our notice that nine (9) parties among ten (10) had given their confirmation via online on 29.07.2022 (one person died) and forwarded a copy of the same to the Ld.CIT(A), which fact the Ld.CIT(A) acknowledges at Page No.9 of his order. After going through the replies given through online of nine (9) persons (except Mr.Ashok Kumar .M who has taken loan of ₹5 lakhs, with no PAN details), the Ld.CIT(A) acknowledged that out of nine (9) creditors, five (5) didn’t file any return of income; and the replies was similar, he wasn’t convinced; and in addition, he noted from the return of income of the assessee for AY 2016-17 that there were no debtors shown in the return of income for AY 2016-17 i.e. amount of total sundry creditors were ‘zero’ at column No.2.7. Therefore, he wasn’t convinced with the aforesaid explanation and confirmed the action of the AO making addition of ₹18 lakhs u/s.69A of the Act. Before us, the Ld.AR filed the income & expenditure account for the year ended 31.03.2016 as well as the balance-sheet as on 31.03.2016 (preceding year) which is reproduced as under:-
BALANCE SHEET AS ON 31ST MARCH 2016 Liabilities Amount Assets Amount God's Account 101.00 ADVANCES AND DEPOSITS PROPRIETOR CAPITAL ACCOUNT Loan Given to 1,950,000.00 Various Parties A. Mahadev 1,451,689.00 2.476,699.00 CASH AND BANK BALANCES Add:Net Profit for the year 1,025,010.00 --------------- Bank accounts 1,000.00
Cash 525,800.00
----------------- ----------------- TOTAL ₹2.476.800.00 TOTAL ₹2,476,800.00 ----------------- -----------------
From the perusal of the balance-sheet, it would reveal that assessee has shown advance and deposits (loan given to various parties as ₹19,50,000/-) and cash on hand as on 31.03.2016 as ₹5,25,800/- which the AO has taken note for making estimation of cash as on 08.11.2016.
We also note that the assessee had filed the ITR copies for AY 2015-16 which shows the assessee has shown total income of ₹7,67,030/- and return of income for AY 2016-17 at ₹9,96,410/- and for AY 2017-18 at Rs.8,04,390/-. Having noted that the AO has taken note of the cash-on- hand as on 31.03.2016 at ₹5,25,800/-, he ought not have ignored the loans and advances shown to have been given by the assessee to the tune of ₹19,50,000/-. The assessee has filed the details of ten (10) parties to whom the assessee had given loan as noted supra. A perusal of the same would reveal that out of ten (10) creditors, nine (9) have given their PAN details and only one person (i.e. Mr.Ashok Kumar) doesn’t have PAN. We note that the AO had issued notices through post which have been served upon them. It is noted that except one borrower (Mr.Ashok Kumar) who has taken a loan of ₹5 lakhs, all others have given their replies through online which has been reproduced by the Ld.CIT(A).
Only five (5) out of nine (9) parties, didn’t file the return of income can’t be the ground for disbelieving their identity, when all of them have furnished their PAN details and notices have been served on them through post. The amounts given to these creditors are noted to be small amounts ranging from ₹1.60 lakhs to ₹2 lakhs. Therefore, we direct deletion of ₹14.5 lakhs received from nine creditors, and confirm the balance addition of ₹3.5 lakhs.
In the result, appeal filed by the assessee is partly allowed.
Order pronounced on the 09th day of October, 2024, in Chennai.