SMT. KHERUNISHABEN ABDULBHAI MISTRI,BHUJ-KUTCH vs. THE ITO, WARD-3, GANDHIDHAM

This appeal has been filed by the assessee against the order passed by the Ld. CIT(Appeals)-3, (in short “CIT(A)”), Rajkot in Appeal No. CIT(A)- 3/10494/2017-18 vide order dated 24.10.2019 passed for Assessment Year 2015-16.

The assessee has taken the following grounds of appeals:-

The brief facts of the case are that the assessee filed return of income for assessment year 2015-16 declaring total income of ₹ 3,05,160/-. The case of the assessee was selected for limited scrutiny for the reasons “cash deposit for demonetisation period (9th of November to 30th December) as reported in SFT reporting”. During the course of assessment, the Assessing Officer observed from the ITR filed by the assessee after the demonetisation period on 19-11- 2016, that the assessee has shown a cash balance of ₹ 16,49,312/- available with the assessee. During the course of assessment, none appeared on behalf of the assessee. Accordingly, the AO treated the cash balance of ₹ 13,44,155/- reflected in the ITR of ₹ 16,49,312/- as un-explained cash credits (after giving credit of ₹ 3,05,160/- declared by the assessee in her ITR) and held that the aforesaid income constituted unexplained income of the assessee.

In appeal, Ld. CIT(Appeals) dismissed the appeal of the assessee on the ground that the assessee has not been able to explain the source of cash balance declared in the ITR filed for the impugned assessment year. Accordingly, while dismissing the appeal of the assessee, Ld. CIT(Appeals) made the following observations: Smt. Kherunishaben Abdulbhai Mistri vs. ITO Asst.Year –2015-16 - 3 - “7.3 I have carefully considered the rival contentions. At the outset it is evident that the assessee has not appeared before AO during assessment proceedings even when notices were duly served on appellant and her AR. Even during remand proceedings no satisfactory details were filed. I find force in the AO’s contentions that the assessee has not filed any return of income in earlier years and as such huge amount of cash balance claimed in accounts by the assessee to explain deposits made during the demonetization period is not supported by any evidences. I have duly noted that even for the income declared during the current year no details were filed before the AO during remand proceedings. I is also admitted by the AR that the income in earlier years was not more than maximum amount chargeable to tax. I am of the considered view, after considering the extent of income declared during the relevant assessment year and non filing of returns in any of the earlier years that the assessee was having only limited income, if any, in the earlier years. I also find force in the AO’s argument that even it is accepted that the assessee was having income from Homeopathy profession, still she would have incurred professional and household expenses from such income. As such considering limited income offered in the current assessment year, the huge cash balance claimed cannot be acceptable in the facts of the case of the assessee. Even if it is estimated, considering the income declared in the current year and the professional qualifications of appellant, that assessee was having, say Rs. 10,000 or Rs. 15,000/- or so saving per year in the last 10 years or so, when income was even lower, and also giving due consideration to the AR's argument regarding non maintenance of bank account in earlier years in view of appellant’s religious beliefs, it can Smt. Kherunishaben Abdulbhai Mistri vs. ITO Asst.Year –2015-16 - 4 - fairly be estimated that saving at maximum could be around Rs. 1,50,000/- in the facts and circumstances of the case. It may be an argument that in some years there may be more savings but at the same time in certain years due to familial and social obligations the expenses must also be more. It is also noted that the AO has already allowed a credit for Rs. 3,05,157/- while computing the disallowance which was the profit offered by the appellant in the return filed. It is also noted that the AO did not adjust household and any other personal expenses out of the profit declared and as such the estimated savings as above will get subsumed in the credit already allowed by the AO. In view of the above discussion, the appellant’s claim that whole cash balance was out of earlier year’s savings is without basis and is rejected. In the result, the grounds of appeal of the appellant are dismissed.

The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals). Before us, the counsel for the assessee submitted that the assessee is a senior citizen and is a homeopathic doctor, who is practicing from home. He submitted that the assessee deposited a sum of ₹ 16.49 lakhs, which is the cash on hand for the assessee as on 1st April for the impugned assessment year. The assessee has been practicing homeopathy for the past 30 years and copy of the Certificate of Registration with State Homeopathic Council, MP was also produced before us. Accordingly, the counsel requested that given the facts of the instant case, appropriate/reasonable relief may be afforded to the assessee. In response, Ld. DR placed reliance on the observations made by the Ld. CIT(Appeals) and AO in their respective orders. Smt. Kherunishaben Abdulbhai Mistri vs. ITO Asst.Year –2015-16 - 5 -

We have heard the rival contentions and perused the material on record. We observe that the assessee is a senior citizen of 66 years of age. She has been 5practicing homeopathy for the past 30 years or so. Certificate of Registration as Homeopathic Doctor issued by State Homeopathic Council, MP has been produced before us for our records. Further, it has also been brought to our notice that the assessee has also filed return for assessment year 2016-17 and assessment year 2017-18. The case of the assessee was also opened for scrutiny for assessment year 2017-18 and the return of income filed by the assessee has been accepted. Considering the aforesaid facts, in the interest of justice, further relief of the 7 lakhs is granted to the assessee, and the AO is directed to reduce the income by the aforesaid amount.