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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
The above two appeals filed by the assessee are directed against the separate orders dated 24.06.2024 of the CIT(A) / NFAC, Delhi relating to assessment years 2013-14 and 2014-15, respectively. Since identical grounds have been raised by the assessee in both these appeals, therefore, for the sake of convenience, these were heard together and are being disposed of by this common order.
2013-14 as the lead case. Facts of the case in brief, are that the assessee is an individual and filed her return of income on 11.02.2014 declaring total income of Rs.1,98,600/-. In this case, certain information was available with the department that the assessee has made cash deposits in her savings bank account maintained with Shri Renukamata Multi State Urban Co-operative Credit Society Limited during the financial year 2012-13, the total of which comes to Rs.92,44,950/- (similarly for financial year 2013-14, such cash deposit was found to be amounting to Rs.1,08,73,605/-). Since the above cash deposits are not commensurate with the income admitted in the return of income, the Assessing Officer reopened the assessment as per the provisions of section 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) after recording reasons. Thereafter, notice u/s 148 of the Act was issued. However, the assessee did not file the return of income in response to the notice issued u/s 148 of the Act. The Assessing Officer thereafter issued the statutory notice u/s 142(1) of the Act. Again, there was no compliance to the various notices issued. In view of the above and due to continuous non-compliance of the assessee to the statutory notices issued by him from time to time, the Assessing Officer in the order passed u/s 147 r.w.s. 144 r.w.s. 144B of the Act made addition of Rs.92,44,950/- u/s 69A of the Act (similar addition was made for assessment year 2014-15 amounting to Rs.1,08,73,605/-).
The assessee filed an appeal before the CIT(A) / NFAC with a delay of 229 days. However, in absence of any proper explanation for the delay in filing of the appeal, the CIT(A) / NFAC dismissed the appeal in limine in view of the non- compliance of provisions of section 249(3) read with Faceless Scheme, 2020 paragraph 5(1)(ii)(b). He however noted that during the course of appeal proceedings, various notices were issued and the assessee finally filed written submissions on 15.03.2024. Although the CIT(A) / NFAC dismissed the appeal on account of delay in filing of the appeal, however, he proceeded to decide the appeal on merit also on the basis of various details filed by the assessee from time to time in the shape of additional evidence which were not filed before the Assessing Officer.
The CIT(A) / NFAC called for a remand report from the Assessing Officer. During the course of remand proceedings, the Assessing Officer issued notice u/s 133(6) of the Act to Shri Renukamata Multi State Urban Co-operative Credit Society Limited which failed to respond to the said notices. Thereafter, reminder was issued, in response to which Shri Renukamata Multi State Urban Co-operative Credit Society Limited furnished a copy of PIGMY Agreement only and it has not given any confirmation in respect of the nature of transaction carried out in special saving A/c No.00010452430071. The Assessing Officer also disregarded the submissions of the assessee that on maturity of any Pigmy account, the maturity amount used to get credited in the account of the respective agent and then the agent used to distribute the said maturity proceeds to the respective members by withdrawing the cash from the agent’s account i.e. from assessee’s account. Since Shri Renukamata Multi State Urban Co-operative Credit Society Limited had not given any confirmation in response to the notice u/s 133(6) of the Act, the Assessing Officer requested the CIT(A) / NFAC to decide the case as he deems proper.
The CIT(A) / NFAC dismissed the appeal filed by the assessee by observing as under: “9.5 Perusal of the above remand report reveals that various opportunities were granted by the AO during the remand proceedings. During the remand proceedings multiple opportunities were granted to the appellant to furnish documentary evidences to substantiate its stand that she is a mere PIGMY commission agent working for Renuka Mata Multi State Urban Co-operative credit society. However, in response to this the appellant merely furnished the following documents. (i) Copy of form 26AS (ii) Bank statement of Axis Bank statement. (ⅲ) Bank statement of Renuka mata Multi State Urban Co-operative Credit Society (iv) Affidavit (v) Copy of Acknowledgment of Return of Income for A.Y. 2013-14, Balance sheet as on 31/03/2013 (vi) Trading and Profit and loss account for the year ending 31/03/2013 From verification of the documents filed by the appellant it is revealed that no documentary evidence has been filed by the appellant to substantiate that (i) She was authorized to collect money of members in respect of maturity proceeds. (ii) The appellant has not obtained any confirmation from the bank to clarify whether the modus operandi explained by the appellant was approved by the bank. Further, whether she was authorized to collect the maturity amount on behalf of the members and distribute the same to the members in cash (iii) It is not clarified by the appellant regarding nature of services rendered for receipt of commission of Rs. 2.96,552/- Further, no clarification has been obtained from the bank regarding the commission income of Rs. 2,96,552/- (iv) No documentary evidences has been filed in respect of business income claimed to have been carried out and identified the purchase and sale transactions relating to such business activity. 9.6 Various courts have held as under 9.6.1 The Supreme Court in case of CIT V. P. Mohanakala [2007]291 ITR 278/161 Taxman 169 held as under: That the expression "assessee offers no explanation" means where the assessee offers no proper, reasonable and acceptable explanation as regards the sum found credited in the books maintained by the assessee. 9.6.2 The Supreme Court in the case of A. GovindarajuluMudaliar v. CIT [1958] 34 ITR 807 (SC)] has held as under: The burden to prove the genuineness of cash credit lies on the taxpayer. If the assessee fails to prove satisfactorily the source and nature of amounts of cash received and creditworthiness of the creditor, the AO is entitled to draw inference that the receipts are of an assessable nature 9.6.3 The Karnataka High Court in the case of Smt. Rekha KrishnaRaj261 CTR 79 held as under "Addition under section 66 can be made even for an unexplained credit amount on account of supply of goods, and not necessarily only for a cash credit SLP dismissed by Supreme Court on account of delay." 9.7 There is no documentary evidence on record to explain the sources of the credit entries. Further, as per the normal standard operating procedure no bank can credit deposits pertaining to one person can be credited into the bank account of a third party. The AO in remand report has also submitted that the Renuka Mata Multi State Urban Co-operative credit society had not given any confirmation regarding nature of transactions carried out in special saving A/c No. 00010452430071. Therefore, apparently there is no scope for the appellant to accept the maturity deposits in her own bank account. No documentary evidences have been filed to identify the person to whom such proceeds of maturity belongs No documentary evidences have been filed in respect of person to whom the cash payment have been made In view of the above facts and decision rendered by various courts, the credits to the tune of Rs 92,44,950/- in the bank account remain unexplained.
In the result, appeal is treated as dismissed.”
Aggrieved with such order of the CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds: 1. On the facts and in the prevailing circumstances of the case and in law, the Respected CIT(A)-NFAC erred in confirming the addition made by the Ld. Assessing Officer on the basis of invalid reasons without considering the documents submitted by the assessee. Hence, the addition of Rs.92,44,950/- being bad in law may please be deleted.
2. On the facts and in the prevailing circumstances of the case and in law, the Respected CIT(A)-NFAC erred in confirming the addition made by the Ld. Assessing Officer without appreciating the submission made by the assessee along with the documentary evidences. Hence, the addition of Rs.92,44,950/- being bad in law may please be deleted.
3. The Appellate craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of the appeal, if deemed necessary at the time of hearing of the appeal.
The Ld. Counsel for the assessee strongly challenged the order of the CIT(A) / NFAC in sustaining the addition made by the Assessing Officer. Referring to page 5 of the paper book, he drew the attention of the Bench to the confirmation given by Shri Renukamata Multi State Urban Co-operative Credit Society Limited stating the details of amount given to the assessee on account of Pigmy account of some of the depositors. Referring to page 8 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the statement of Shri Renukamata Multi State Urban Co-operative Credit Society Limited wherein the Pigmy collection deposits are made and on maturity of the same, the amount was transferred to the bank account of the assessee. Referring to page 24 of the paper book, the Ld. Counsel drew the attention of the Bench to Form No.26AS issued by Shri Renukamata Multi State Urban Co-operative Credit Society Limited, according to which the assessee was paid commission of Rs.2,96,552/- and on which TDS of Rs.29,655/- was deducted u/s 194H of the Act. Referring to page 23 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the Profit and Loss Account wherein the assessee had declared commission of Rs.3,93,852/-. He submitted that the amounts deposited in the bank account are the maturity amounts of the Pigmy deposit holders that had come through the assessee to be reimbursed to the deposit holders. He submitted that despite giving all those submissions to the CIT(A) / NFAC during the course of appeal proceedings, the Assessing Officer, in the remand report without appreciating the facts correctly, has requested the CIT(A) / NFAC to decide the appeal on the basis of details filed by the Assessing Officer, which is not correct. He accordingly submitted that the addition made by the Assessing Officer and sustained by the CIT(A) / NFAC should be deleted.
The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the CIT(A) / NFAC. He submitted that the assessee did not file any details before the Assessing Officer. Even during the remand proceedings, neither the assessee filed the full details nor Shri Renukamata Multi State Urban Co- operative Credit Society Limited, filed the requisite details before the Assessing Officer. Therefore, the order of the CIT(A) / NFAC be upheld. In his alternate contention, he submitted that the matter may be restored to the file of the Assessing Officer for fresh adjudication of the issue.
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We find the Assessing Officer in the instant case made addition of Rs.92,44,950/- u/s 69A of the Act on the ground that the assessee neither filed the return in response to the notice u/s 148 nor filed any reply to the statutory notices u/s 142(1) of the Act and there is no other evidence to explain the source of such huge deposits of Rs.92,44,950/- in the account maintained with Shri Renukamata Multi State Urban Co-operative Credit Society Limited. We find in appeal, the Ld. CIT(A) / NFAC first dismissed the appeal on account of delay but thereafter proceeded to decide the appeal on merit and sustained the addition made by the Assessing Officer. While doing so, he called for a remand report from the Assessing Officer on the basis of various evidences filed before him and the Assessing Officer in his remand report submitted that the full details were not furnished by Shri Renukamata Multi State Urban Co-operative Credit Society Limited. It is the argument of the Ld. Counsel for the assessee that there are no cash deposits in the bank account, whatever credits are there, they are the closure proceeds of Pigmy account depositors which were credited to the account of the assessee on maturity, that such maturity proceeds were given back to the depositors and the assessee has earned only commission income on account of such Pigmy deposits which is evident from Form No.26AS.
10. It is an admitted fact that the assessee during the course of assessment proceedings did not file any details in response to notice u/s 142(1) and also has not filed the return of income in response to notice u/s 148 of the Act. Although the assessee filed certain details before the Ld. CIT(A) / NFAC as additional evidence, we find when the Ld. CIT(A) / NFAC called for a remand report from the Assessing Officer on the basis of such additional evidences filed before him, the Assessing Officer replied that full details were not forthcoming from Shri Renukamata Multi State Urban Co-operative Credit Society Limited and therefore, the Assessing Officer requested the Ld. CIT(A) / NFAC to decide the appeal on the basis of material available before him. We find the assessee before the lower authorities has not filed any document to substantiate that she was authorized to collect the money from the members in respect of the maturity proceeds nor the assessee has obtained any confirmation from the bank to clarify as to whether such modus operandi was approved by the bank. At the same time, it is also evident that the bank has issued Form No.26AS showing the commission paid to the assessee and TDS has been deducted u/s 194H of the Act. Under these circumstances, we are of the considered opinion that the matter requires fresh adjudication at the level of the Assessing Officer. We, therefore, deem it proper to restore the issue to the file of the Assessing Officer with a direction to give one more opportunity to the assessee to file the requisite details before him to substantiate that all those deposits made in the bank account are the maturity proceeds of the Pigmy depositors which in turn has been given back to them and it is not the money of the assessee and that it has earned only commission income for the services rendered as collection agent of the Pigmy depositors. The assessee may produce any other evidence that may be required by the Assessing Officer to explain the nature and source of such deposits in the bank account. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
Identical grounds have been raised in ITA No.1836/PUN/2024. Since the facts of the instant appeal are identical to the facts in are also restored to the file of the Assessing Officer for fresh adjudication in light of our directions given therein.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open Court on 11th November, 2024.