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Income Tax Appellate Tribunal, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE
अपीलधथी की ओर से/ Appellant by : Shri I.Kama Sastry, AR प्रत्यधथी की ओर से / Respondent by : Ms.Aparna Villuri, DR सुनवधई की तधरीख / Date of Hearing : 03.01.2024 घोर्णध की तधरीख/Date of Pronouncement : 11.01.2024 आदेश /O R D E R
Per Shri Duvvuru RL Reddy, Judicial Member :
This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi vide DIN & Order No.ITBA/ NFAC/S/250/2023-24/1055637104(1) dated 31.08.2023, arising out of order passed u/s 143(3) of the Income Tax Act, 1961 (in short ‘Act’) dated 15.12.2019 for the Assessment Year (A.Y.) 2017-18.
Brief facts of the case are that the assessee, an individual, deriving income from saree designing, filed her return of income for the A.Y.2017- 18, admitting total income at Rs.3,54,500/- for the A.Y.2017-18. The case was selected for limited scrutiny under CASS to examine the cash deposit during demonetisaton period. Subsequently, statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee along with questionnaire, calling for information through ITBA on 29.04.2019 to explain the sources for the cash deposits made during demonetisation period along with documentary evidence. The assessee did not furnish the information as called for vide notice u/s 142(1) of the At, but subsequently uploaded the bank account statement held with Oriental Bank of Commerce, Rajahmundry vide a/c No.06982011006278. From the said bank account statement, the Assessing Officer(AO) observed that the assessee had deposited an amount of Rs.10,80,000/- on various dates from 05.11.2016 to 17.12.2016. During the course of assessment proceedings, the assessee was asked to explain the sources for the cash deposits with necessary documentary evidence, but the assessee could not furnish any documentary evidence in respect of the cash deposits made during the course of demonetisation period and also on 05.11.2016 and 08.11.2016 as well. The AO presumed that the assessee is not interested in adducing any evidence to explain her case with documentary evidences, explaining the sources for making the cash deposits in the bank account. Hence, the AO was left with no option, but to rely on the evidentiary material available in the form of bank account for the purpose of completing the assessment. The AO held that the assessee was given sufficient opportunity, but the assessee could not avail the same and could not discharge her primary onus by explaining the sources for cash deposits so made. Therefore, held that the entire cash deposits of Rs.10,80,000/- stands unexplained by the assessee and accordingly treated as undisclosed income for the F.Y.20167-17 relevant to the A.Y.2017-18 and brought to tax u/s 69A of the Act under the head “other sources”.
Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) granted partial relief of Rs.2,50,000/- out of Rs.10,80,000/- by relying on the SOP issued by CBDT regarding verification of cash transaction relating to demonetization period in Instruction No.03/2017 dated 21.02.2019 and confirmed the remaining addition of Rs.8,30,000/-.
Aggrieved by the order of the Ld.CIT(A) the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal :
1. The order of the CIT(A) is erroneous both on facts and the law.
2. The CIT(A) has not verified the fact of submission of the gift deed to Assessing Officer before making the assessment order. 3. The CIT(A) erred in passing the order without considering the income declared by the appellant during the last three years i.e. Assessment Years 2015-16, 2016-17 and 2017-18 Sl.No. Assessment Year Income declared in income tax return 1. 2017-18 3,54,500 2. 2016-17 4,25,561 3. 2015-16 2,36,654 4. Any other ground that may be urged at the time of hearing. 5. Ground No.1 and 4 are general in nature which does not require specific adjudication.
6. Ground No.2 and 3 are related to confirming the addition of Rs.8,30,000/- without considering the gift deed and the income declared during the A.Y.2015-16, 2016-17 and 2017-18. The assessee filed copy of gift deed of Rs.5,00,000/- received from her mother, Smt.K.Devi Bhavani on 10.05.2016, statement of bank account held with Oriental Bank of Commerce for the period 01.04.2016 to 31.03.2017 in the paper book. The Ld.AR submitted that the assessee withdrew the amount of Rs.5,00,000/- given by her mother and deposited the same again on 04.11.2016 and 08.112016. Referring to the notice u/s 143(2) of the Act dated 21.09.2018 issued and served on the assessee, the Ld.AR submitted that the assessee’s case was selected for limited scrutiny under CASS to examine cash deposit during demonetisaton period. But the deposit of Rs.5,00,000/- made on 04.11.2016 and 08.112016 before demonetisation period was also considered for addition, beyond the scope of the limited scrutiny for which the case was selected and not valid in the eyes of law. He, therefore, pleaded to set aside the order passed by the Ld.CIT(A), delete the entire addition made and allow the appeal of the assessee.
7. Per contra, the Ld.DR relied on the order of the Ld.CIT(A) and submitted that the Ld.CIT(A) is justified in granting part relief to the assessee as per CBDT Instruction No.03/2017 dated 21.02.2019 and confirming the balance addition as the assessee failed to establish the identify, genuineness and credit worthiness of the transactions. He, therefore, pleaded to uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee.
8. I have heard both the parties and perused the material placed on record. It is undisputed fact that the assessee made cash deposits of Rs.10,80,000/- during the period from 05.11.2016 to 17.12.2016 on various dates. The contention of the assessee is that as per the notice issued u/s 143(2) dated 21.09.2018, assessee’s case was selected for limited scrutiny under CASS to examine the deposits made during demonetisaton period, whereas, the deposits which were made before demonetisation period were also taken into consideration for addition, which was beyond the scope of the limited scrutiny and therefore, the entire addition made is not justified and liable to be deleted. It was the further contention of the assessee that the cash deposits made in her bank account during the demonetisation period are out of gifts received from her parents on the occasion of her birthday, marriage day etc and since the old currency was required to be deposited during the demonetisation period, the assessee deposited the same out of her earlier withdrawals. It is evident from the bank statement filed that the assessee made cash deposits of Rs.1,00,000/- and Rs.4,00,000/- on 05.11.2016 and 08.11.2016 respectively before demonetisation period and cash deposit of more than Rs.40,000/- from 25.11.2016 to 17.12.2016 during demonetisaton period. The Ld.CIT(A) has already granted partial relief of Rs.2,50,000/-, relying on the CBDT Instruction No.03/2017 dated 21.02.2019, the relevant portion of the same is reproduced hereunder :
“in case of an individual (other than minor) not having any business income, no further verification required to be made if total cash deposit is upto 2.5 lakhs. In case of taxpayers above 70 years of age, the limit is Rs.5.0 lakh per person. The source of such amount can be either household savings / savings from past or amounts claimed to have been received from any of the source mentioned in Paras 2 to 6” In view of the foregoing facts and circumstances of the cases, I am inclined to give further relief of Rs.5,00,000/- for the cash deposits of Rs.1,00,000/- and Rs.4,00,000/- made on 05.11.2016 and 08.11.2016 before demonetisation period, since it was beyond the scope of the notice issued u/s 143(2) dated 21.09.2018 for which the assessee’s case was selected for limited scrutiny under CASS to examine the deposits made during demonetisaton period and uphold the remaining addition of Rs.3,30,000/- (8,30,000 – 5,00,000) as the assessee failed to establish the identity, genuineness and creditworthiness of the transactions during demonetisaton period, by filing proper evidences before me. Accordingly, the grounds raised by the assessee are partly allowed.
In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on 11th January, 2024.
Sd/- (दुव्वूरु आर.एल रेड्डी) (DUVVURU RL REDDY) न्याधयक सदस्य/JUDICIAL MEMBER Dated : 11 .01.2024 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Smt.Vudatha Vani Rao, 6-1-8/6, T.Nagar, Rangachari Street, Rajahmundry 2. रधजस्व/The Revenue – The Income Tax Officer, Ward-1(1), Aayakar Bhawan, Veerabhadrapuram, Rajahmundry 3. The Principal Commissioner of Income Tax, Rajahmundry 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 5..गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam