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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
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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 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.
1. 3. 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cash deposits of Rs.50 lakhs in SBI and Rs.53,23,100/- in IOB, totaling Rs.1,03,23,100/- and that assessee has only withdrawn Rs.2,612/- from his bank account.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 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 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 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.