SARDAR JABASINGH,CHENNAI vs. ITO, NON CORPORATE WARD-14(1), CHENNAI
Facts
The assessee, a Pastor, filed his return of income for AY 2016-17. During assessment, the AO noticed significant cash deposits in the assessee's bank accounts, which the assessee claimed were collected from parish members for house allotments. The AO added the entire deposit amount to the assessee's income under Section 68.
Held
The Tribunal noted that the assessee's explanation for the cash deposits changed during appellate proceedings. While initially stating he was a contractor, he later claimed the money was collected from parishioners for housing and returned after complaints. The Tribunal found that the AO had not examined the evidence presented at the CIT(A) stage.
Key Issues
Whether the addition of cash deposits under Section 68 of the Income Tax Act was justified, considering the assessee's explanation and the need for a de novo assessment.
Sections Cited
68, 44AD
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI AMITABH SHUKLA
आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the
Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter in
short "theLd.CIT(A)”), Delhi, dated 30.10.2023 for the Assessment Year
(hereinafter in short "AY”) 2016-17.
At the outset, we note that there is a delay of ‘24’ days in filing of
the appeal. However, after perusal of the Affidavit filed by the assessee
ITA No.169/Chny/2024 (AY 2016-17) Shri Sardar Jabasingh :: 2 ::
for condonation of delay and taking note of the contents of the same, we
are inclined to condone the delay and proceed to adjudicate the grounds
of appeal raised by the assessee.
The main grievance of the assessee is against the action of the
Ld.CIT(A) confirming the addition made by the AO u/s.68 of the Income
Tax Act, 1961 (hereinafter in short "the Act”) to the tune of
Rs.1,03,23,100/-.
At the outset, the Ld.AR of the assessee submitted that the
assessee is a Pastor and filed his return of income for AY 2016-17
declaring total income of Rs.12,00,920/- on 29.09.2016 which was
selected for limited scrutiny under CASS i.e, to examine large cash
deposits in his Savings Bank A/c. The AO during the course of
assessment proceedings noted from the bank statements of SBI & IOB
found that the assessee had made cash deposits of Rs.50 lakhs in SBI and
Rs.53,23,100/- in IOB, totaling Rs.1,03,23,100/- and that assessee has
only withdrawn Rs.2,612/- from his bank account. The AO noted that
though, the assessee stated that he is into civil
construction/renovation/repairs of building and in the income computation
statement, he has shown gross receipts of Rs.63,53,188/- and income
estimated u/s.44AD of the Act @8% i.e. Rs.5,08,255/-, the AO noted
that the assessee has not withdrawn any amount from the bank account
ITA No.169/Chny/2024 (AY 2016-17) Shri Sardar Jabasingh :: 3 ::
other than the meager amount of Rs.2,612/-. Therefore, the AO
disbelieved the assessee’s submissions and added the entire amount
deposited in cash in both accounts u/s.68 of the Act.
Aggrieved, the assessee preferred an appeal before the Ld.CIT(A)
and brought to his notice that he collected the amount deposited in the
bank account for allotment of house under the Tamil Nadu Housing Board,
and that he was duped by some person as if from Tamil Nadu Housing
Board; and believing those persons, the assessee collected deposits from
his parish members on the promise of allotment of houses of Tamil Nadu
Housing Board; and finding that no houses were being allotted, the
depositors had filed compliant against him and therefore, he has returned
the amount collected from them (supra). However, the Ld.CIT(A) was not
convinced and he dismissed the appeal filed by the assessee.
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 an amount totaling Rs.1,03,23,100/- was
deposited in the savings bank account of the assessee and when
confronted by the AO to prove the nature & source of the deposit,
assessee failed to prove the same and therefore, the AO made an addition
u/s.68 of the Act of the entire cash deposits. During the first appellate
proceedings, the assessee filed some evidence like police
ITA No.169/Chny/2024 (AY 2016-17) Shri Sardar Jabasingh :: 4 ::
complainants/FIR filed by one complainant, Shri Uday Baskara S/o. Shri
Rajaram that assessee had collected money from him and others on the
promise that houses of the Tamil Nadu Housing Board would be allotted
to them and since, assessee failed to provide them with the promised
houses, they have filed police complaints against him. According to the
Ld.AR, the assessee had been duped by one Mr.Ravi Kumar who
approached him during a prayer meeting in his Church at Guindy and
convinced him that he was an official of the Tamil Nadu Housing Board
and would be able to provide/allocate houses for the people affected by
flood. Believing Mr.Ravi Kumar, he being a Pastor of a Church collected
money from several Parish Members which was deposited in assessee’s
bank account, and the AO taking note of the money deposited in his two
saving bank accounts, have made addition in his hands which couldn’t be
explained during the course of assessment proceedings because of
failure/non-cooperation from the authorized representative before the AO.
The Ld AR’s limited plea is that assessee shouldn’t be penalized for the
omission on the part of earlier authorized representative who conducted
the case before AO. And therefore, he prays for one more opportunity be
granted before the AO so that he can place all the relevant materials
truthfully before the AO, and relies on the decision of the Hon’ble
Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249
ITR 216 (SC). Be that as it may, it is noted that during assessment
ITA No.169/Chny/2024 (AY 2016-17) Shri Sardar Jabasingh :: 5 ::
proceedings the assessee gave explanation to the AO regarding the
nature & source of cash deposits i.e. he was a contractor, but before the
Ld.CIT(A) he changed his version and came out with collection of money
from members of the Parish for allotment of house by Housing Board and
that he has returned the sum taken from them after complaints were
lodged against him and has filed certain evidence in this behalf which we
note the AO had no occasion to examine. Therefore, for the ends of
justice and fair play, we are inclined to set aside the impugned order of
the Ld.CIT(A) and restore the assessment back to the file of the AO for de
novo assessment. The Ld.AR of the assessee undertakes to file the
relevant documents to prove the nature & source of the deposits. The AO
is directed to grant proper opportunity to the assessee and thereafter,
frame de novo assessment in accordance to law without being influenced
by any observations made by us (supra).
In the result, appeal filed by the assessee is allowed for statistical
purposes.
Order pronounced on the 30th day of August, 2024, in Chennai.
Sd/- Sd/- (अिमताभ शु�ा) (एबी टी. वक�) (AMITABH SHUKLA) (ABY T. VARKEY) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER
ITA No.169/Chny/2024 (AY 2016-17) Shri Sardar Jabasingh :: 6 :: चे�ई/Chennai, �दनांक/Dated: 30th August, 2024. TLN, Sr.PS आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF
