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Income Tax Appellate Tribunal, VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE
PER DUVVURU RL REDDY, Judicial Member :
This appeal is filed by the assessee is against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)-NFAC”] in DIN & Order No. ITBA/NFAC/S/250/2023-24/1060304354(1), dated 31/01/2024 arising out of the order passed U/s. 144 of the Income Tax Act, 1961 [“the Act”] for the AY 2017-18.
2 2. Briefly stated the facts of the case are that the assessee, a firm, made certain cash deposits in its bank account(s) in the FY 2016-17 during the demonetization period. Therefore, notice U/s. 142(1) of the Act was issued on 09/03/2018 and the assessee was asked to file the return of income as the assessee was required to file the return on or before 31/03/2018. However, the assessee has failed to furnish the return of income for AY 2017- 18 U/s. 139 of the Act and also failed to furnish the return in response to notice U/s. 142(1) of the Act. Thereafter, the Ld. AO based on the AIR information available in ITBA, notice U/s. 133(6) of the Act was issued to State Bank of India, Bobbili Branch where the cash was deposited by the assessee during the demonetization period. On verification information obtained from the SBI, Bobbili Branch, the Ld. AO observed that the assessee made cash deposits to the extent of Rs. 12,52,718/-. Therefore, the Ld. AO invoked the provisions of section 144(1)(b) of the Act for the failure on the part of the assessee to furnish the return in response to notice U/s. 142(1) of the Act dated 25/09/2018, the Ld. AO proceeded to complete the assessment as “best judgment assessment” through e-proceedings. During the assessment proceedings, the Ld. AO after considering the submissions made by the assessee and on perusal of the material available on 3 record observed that the assessee has failed to give any explanation about the nature and source of cash deposits of Rs. 10,52,718/- and hence the cash deposits made during the demonetization period is treated as unexplained money U/s. 69A of the Act and added the same to the total income of the assessee. The Ld. AO also invoked the provisions of section 115BBE of the act. Thus, the Ld. AO completed the assessment and determined the total income of the assessee at Rs. 10,52,718/- and passed the assessment order U/s. 144 of the Act, dated 24/12/2019. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A)-NFAC.
On appeal, the Ld. CIT(A)-NFAC after considering the submissions made by the assessee observed that the assessee has not been able to file any concrete reasons or explanation as to why the AO’s action was unwarranted. As well as, the appellant could not explain the nature and source of cash deposited total amount of Rs. 10,52,718/- in his bank account during the demonetization period, and therefore the same is hereby added in return of income of the assessee and charged the same as unexplained money U/s. 69A r.w.s 115BBE of the Act…..”. Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in 4 appeal before the Tribunal by raising the following grounds of appeal:
“1. The order of the Ld. CIT(A) is contrary to the facts and also the law applicable to the facts of the case.
The Ld. CIT(A) ought to have held that the AO is not justified in completing the assessment U/s. 144 of the Act.
3. The Ld.CIT(A) ought to have quashed the assessment completed without issue of notice U/s. 143(2) of the Act.
4. Without prejudice to the above, the Ld. CIT(A) is not justified in sustaining the addition of Rs. 10,52,718/- made by the AO U/s. 69A of the Act towards unexplained cash deposits. Any other grounds may be urged at the time of hearing.” 5.
At the outset, the Learned Authorized Representative [“Ld. AR”] submitted that the assessee is in the business of running cinema hall and all the collections made out of the selling of the movie tickets were deposited in the bank account of the assessee. This fact was explained along with documentary evidence before the Ld. AO as well as the Ld. CIT(A)-NFAC. However, the Ld. AO disallowed the cash deposits made during the demonetization period by holding that the assessee has failed to give any explanation about the nature and source of the cash deposits. The Ld. AR therefore pleaded that since the nature and source of cash deposits was proved with documentary evidence, the 5 addition made by the Ld. AO and confirmed by the Ld. CIT(A)- NFAC may be deleted.
On the other hand, the Learned Departmental Representative [“Ld. DR”] heavily relied on the orders of the Ld. Revenue Authorities and argued in support of the same. The Ld. DR further submitted that the onus is on the assessee to substantiate its claim along with documentary evidence before the Ld. Revenue Authorities. Therefore, the Ld. DR pleaded that the assessee has failed to discharge its onus, the decision taken by the Ld. AO and Ld. CIT(A)-NFAC need not be disturbed.
I have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. It is an undisputed fact that the assessee is running a cinema hall. On perusal of the bank statements and the relevant material placed before me, I find that the cash collected out of selling of the movie tickets, the assessee deposited the cash in its bank account. It is also apparent that there were cash deposits throughout the year, which were made out of the selling of movie tickets, and this fact was also not disputed by the Ld. AO. But the Ld. AO brought to tax only the cash deposited during the demonetization period. In this situation, considering the facts
6 and circumstances of the case as well as the material placed before me, I am of the view that the cash deposits made by the assessee are properly explained as they are nothing but the day- to-day collections made out of the selling of the movie tickets. Hence, I hereby direct the Ld. AO to delete the addition. It is ordered accordingly.
Since the issue involved in the Ground No.4 is adjudicated on merits, the adjudication of Grounds No. 2 & 3 becomes merely an academic exercise. Grounds No. 1 & 5 are general in nature and therefore they need no separate adjudication.
In the result, appeal filed by the assessee is allowed.
Pronounced in the open Court on 27th August, 2024.