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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE
O R D E R This appeal is filed by the assessee against order dated 05.09.2023 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18.
The assessee has raised the following grounds of appeal :-
“1. Learned CIT(A) has erred in law and on the facts of the case in confirming the action of learned AO in making an addition of Rs.22,39,500/- u/s.69A of the Act.
2. Learned CIT(A) has erred in law and on the facts of the case in confirming the action of learned AO in invoking the provisions of S.115BBE of the Act.
3. Learned CIT(A) has erred in law and on the facts in confirming the action of the AO in charging interest u/s.234A/B/C/D.
4. Learned CIT(A) has erred in law and on the facts in confirming the action of AO in initiating penalty u/s.271AAC of the Act which is wholly unsustainable in law and on facts of the case.”
3. As per the verification of the data, the Revenue Authorities found that during the demonetisation period, the assessee deposited Rs.21,45,000/- in his various accounts. The assessee filed return of income for the Assessment Year 2017-18 declaring income taxable income of Rs.6,68,400/-. The return of income was selected for scrutiny and notice under Section 143(2) of the Income Tax Act, 1961 was issued on 24.09.2018. The reason for selecting the case under limited scrutiny is that “cash deposits during the demonetisation period as compared to returned income”. In response to notice under Section 142(1) of the Act, the Assessing Officer issued letters under Section 133(6) of the Act to all the Banks where the assessee has made the cash deposits and from the information it was found that the assessee deposited Rs.21,45,000/- in different Bank account at different dates. The assessee has filed various details such as copy of Bank accounts where the cash was deposited during the demonetisation period, copy of online response given at the time of cash transaction details 2016 alongwith source of cash deposit made from various Banks. On different occasions, the assessee has given the source of cash deposits. After taking cognisance of all these details, the Assessing Officer held that the assessee accepted that there is no paper with him and the cash was distributed within his family itself. But, after verification, the Assessing Officer has seen that the name of the persons was not that of assessee’s family members but neighbours. The assessee has submitted the confirmation and Adhar Card number of the purchaser but no main details of their PAN, copy of bank account from which transaction was made was produced. The assessee issued letter under Section 133(6) of the Act to all the purchasers but none has submitted any details. The Assessing Officer therefore made addition of Rs.22,39,500/- as per Section 59A of the Act as unexplained money as well as assessed the total income of the assessee under Section 115BBE of the Act at the rate of 60%.
4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). the CIT(A) dismissed the appeal of the assessee.
5. The Ld. AR submitted that the source of cash deposit in different Bank account is from Gold and the details of Gold sold to different purchasers alongwith their confirmation was submitted to the Assessing Officer during the assessment proceedings. However, the Assessing Officer, in his Assessment Order noted that the purchaser did not respond to the notice under Section 133(6) of the Act and these purchasers were neighbours and not that of the relatives of the assessee. The Ld. AR submitted that the assessee is saving his pension as well as the assessee was having certain jewellery of his deceased wife and, therefore, Bank deposits were properly verifiable from the details given by the assessee. The Ld. AR submitted that in alternate, the taxability under Section 115BBE of the Act at 60% is not at all justified and this is a prejudicial ground. The Ld. AR further reiterated that the assessee has made all the requisite details. Regarding explanation of cash deposits, the assessee has made the following submissions :-
“1. Explanation of Cash Deposits - Source of Funds: - The taxpayer, an 81-year-old senior citizen, explained that the cash deposits during the demonetization period were proceeds from the sale of gold jewellery, primarily belonging to his deceased wife - Historical sale transactions, conducted with relatives and neighbours were supported by purchaser-wise details, including Aadhaar and PAN information. - The taxpayer maintained cash reserves for medical and personal emergencies due to his age and health concerns 2. Evidence Submitted - Purchaser Details: - Provided purchaser names, transaction amounts, and evidence such as Aadhaar cards, PAN details, and confirmation letters - Bank Statements: - Submitted to substantiate cash deposits made during the specified period. - Responses to Notices: - Comprehensive responses to notices under Sections 142(1) and 143(2), addressing the AO's queries with supporting documents.
Legal Grounds - Onus of Proof:
- The taxpayer discharged the initial burden of proof by furnishing details of transactions, including purchaser identities and evidence of transactions. - The onus shifts to the Assessing Officer to disprove the taxpayer's claims once adequate documentation is provided. - Section 133(6) Notices: - The AO's reliance on non-responses from purchasers under Section 133(6) to reject the transactions' genuineness is misplaced. - The taxpayer cannot be penalized for third-party non- compliance when sufficient evidence has been furnished.
Judicial Precedents - Rohini Builders v. DCIT (2002) 256 ITR 360 (Gujarat High Court): - Held that the mere non-response of creditors to Section 133(6) notices does not justify additions if the assessee has provided adequate evidence. - CIT v. Orissa Corporation Pvt. Ltd. (1986) 159 ITR 78 (Supreme Court): - Ruled that once the assessee establishes the identity and genuineness of transactions, the onus shifts to the department to challenge the evidence. - Sonicwall Technology Systems India Pvt. Ltd. v. DCIT (ITAT Bangalore): - Observed that additions based solely on non-response to Section 133(6) notices are unwarranted when the assessee has discharged their burden of proof.
Rebuttal to AO's Observations - Credibility of Purchasers: - Purchasers provided documents like Aadhaar and PAN. The lack of bank account activity or ITR submissions by the purchasers does not invalidate the transactions. - Cash Transactions: - Cash transactions are permissible under the law. The taxpayer's explanation of cash reserves is reasonable given his age and the circumstances.
6. Relief Sought The taxpayer requests deletion of the addition of ₹22,39,500 - under Section 69A. - The taxpayer further seeks relief from consequential penalties and interest, as the deposits have been sufficiently explained and substantiated.” As relates to alternate and without prejudice ground, the Ld. AR submitted the following :-
The amendment to Section 115BBE of the Income Tax Act prescribing a higher tax rate of 60% was introduced as part of the Taxation Laws (Second Amendment) Bill, 2016, and came into effect from 01.04.2017. The judgment in the case of S.M.I.L.E Microfinance Limited categorically held that the amended rate cannot be applied retrospectively to transactions occurring before this date. Specifically, transactions carried out during the demonetization period (08.11.2016 to 31.12.2016) fall under the earlier provision, where a tax rate of 30% was applicable. The court emphasized that retrospective application of the amendment violates the principle of legal certainty and fairness. As the transactions in the present case pertain to the demonetisation period, only the 30% tax rate applicable prior to 01.04.2017 should be levied. (Annexure-A).
The Ld. DR submitted that the proof of selling of the gold to the neighbours for cash is not a tenable submission and there was no details or confirmation was given by the assessee. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). The Ld. DR submitted that the proof of selling of gold to the neighbours was not given by the assessee.
Heard both the parties and perused all the relevant material available on record. From the perusal of records, it can be seen that the assessee has given the details related to selling of gold after demise of his wife was not in toto declined by the Assessing Officer. In fact, the assessee has given the detail of the relatives and neighbours whom the assessee sold the gold jewellery. The reason given by the assessee about keeping the cash for medical reason was also explained. Thus, the addition made by the Assessing Officer to the extent of Rs.22,39,500/- was very well explained by the assessee and the same was totally ignored by the Assessing Officer and the CIT(A). Thus, appeal of the assessee is allowed.
As regards alternate ground, it does not sustain as the main ground of the assessee is allowed.
In the result, appal of the assessee is allowed.
Order pronounced in the open Court on this 27th December, 2024.