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Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI RAVISH SOOD
आदेश / ORDER PER RAVISH SOOD, JM
The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 29.04.2022, which in turn arises from the order passed by the A.O under Sec. 144 of the Income-tax Act, 1961 (in short ‘the Act’) dated 30.12.2019 for the assessment year 2017-18. The assessee has assailed the impugned order on the following grounds of appeal before us:
“1) That order of CIT(A) is bad-in-law, illegal and void-ab-initio. 2) On the facts and in the circumstances of the case CIT(A) erred in dismissing appeal by alleging that "assessee has not paid taxes due on the returned income for the A.Y. 2017/18" in spite of the fact that in "Miscellaneous Attachment" enclosed alongwith Form No. 35 filed on 04.02.2020, which consist of statement of facts, grounds of appeal and appeal fee challan of Rs.1,000/- and from where CIT(A) has copied and paste grounds of appeal on Page no. 3 of his order, following crucial and relevant facts were mentioned for the reason best known to him:- "That appellant had been allotted two PANs (1) AEYPK1736P and (2) BVXPK0771K by the department. That during the year under consideration appellant derived income mainly from trading of Patanjali Products and Gold Ornaments.
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The return of income for the year under consideration was e- filed in PAN-BVXPK0771K on 27.01.2018 declaring total income of Rs.5,20,880/- vide ack. no. 376506610270118 and paid self assessment tax of Rs. 35,150/-. That said return was accepted by the department while processing u/s 143(1). That later on, notice u/s 142(1) of the Act was issued to the appellant on 22.07.2018 in PAN-AEYPK1736P by ITO, Dhamtari with a request to file return of income for the A.Y 2017/18 by 31.03.2018 on the basis or information available with the department that appellant has made cash deposit to the extent of Rs.17,29,800/- (Out of said amount, Rs.16,17,500/- in the denomination of Specified Bank Notes) in bank accounts with "State Bank of India, Pakhanjur" during demonetization period but has not filed return of income for the year under consideration. That appellant had not filed return in response to notice u/s 142(1) dt. 22.07.2018 for the A.Y. 2017/18 under bona fide impression that as income of Rs.5,20,880/- has already been offered and assessed in PAN-BVXPK0771K, offering same income in PAN- AEYPK1736P would result in double taxation of same income". 3) On the facts and in the circumstances of the case CIT(A) erred in confirming addition of Rs.8,984/- made by the Assessing Officer by applying net profit @ 8% on cash deposited in legal tender during demonetization period in bank accounts with "State Bank of India, Pakhanjur" to the extent of Rs. 1,12,300/- (Rs. Total cash deposited in bank accounts during demonetization period of Rs. 17,29,800/- less Rs. 16,17,500/- deposited in SBN during demonetization period) by accepting it as business receipts without giving any basis or reason for such estimation and also without considering the facts and circumstances of the case properly and judicially. The assessee prays that the addition of Rs.8,984/- be deleted. 4) On the facts and in the circumstances of the case CIT(A) erred in confirming addition of Rs.16,17,500/- made by the Assessing Officer by treating cash deposited during demonetization period in Specified Bank Notes to the extent of Rs.16,17,500/- in bank accounts with "State Bank of India,
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Pakhanjur" as unexplained money u/s 69A and levying tax thereon as per provisions of section 115BBE(1) of the Act @ 60% by treating it as non-business receipts without giving any basis or relying on any evidences for such estimation and also without considering the facts and circumstances of the case properly and judicially. The assessee prays that the addition of Rs.16,17,500/- made u/s 69A be deleted. 5) Without prejudice to ground nos. 3 & 4, on the facts and in the circumstances of the case CIT(A) erred in confirming action of the Assessing Officer in levying tax u/s 115BBE(1) @ 60% instead of 30% on alleged unexplained money of Rs. 16,17,500/- assessed u/s 69A since assessee had made said transactions mainly prior to 15.12.2016, i.e. the date on which "The Taxation Law (Second Amendment) Bill, 2016" received ascent of the Hon'ble President of India, and amendment made by "The Taxation Law (Second Amendment) Bill, 2016" in section 115BBE(1), to charge tax @ 60% on deemed income instead of earlier rate of 30%, was substantive in nature, hence, either it would apply prospectively to the transactions made on or after 15.12.2016 and not retrospectively to the transactions made during the period from 01.04.2016 to 14.12.2016 or apply from A.Y. 2018/19 onwards. The assessee prays that the income-tax be charged on such transactions @ 30%. 6) The appellant reserves the right to add, amend, or alter any ground or grounds of appeal at the time of hearing.”
Succinctly stated, on the basis of data analytics and information gathered during the phase of online verification under “Operation Clean Money”, it was gathered by the A.O that the assessee had in old currency notes of Rs.500/- & Rs.1000/- deposited a substantial amount of cash in her bank account during the demonetization period, i.e, from 09.11.2016 to 30.12.2016, as under:
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Name of bank Bank a/c. No. Total deposited from Cash deposited in 09/11/16 to demonetized 30/12/16 currency ( SBN/Old Notes) State Bank of India, 30994867489 15,29,800/- 14,17,500/- Pakhanjore State Bank of India, 11364382879 2,00,000/- 2,00,000/- Pakhanjore Total 17,29,800/- 16,17,500/-
On the basis of the aforesaid details, it was observed by the A.O that the assessee had made cash deposits of Rs.17,29,800/- over the period i.e from 09th November, 2016 to 30th December, 2016, out of which an amount of Rs.16,17,500/- was deposited in old currency during the year under consideration. As the assessee failed to file her return of income, therefore, the A.O proceeded with Section 144(1)(b) of the Act and called upon the assessee to explain as to why best judgment assessment may not be framed in her case, but as the assessee failed to comply with the said notice, thus, the A.O was constrained to proceed with and frame assessment u/s 144 of the Act.
During the course of the assessment proceedings, the A.O acting on the basis of AIR information issued notice(s) u/s. 133(6) of the Act to the aforementioned banks and called for the bank account statements and details of cash deposit made by the assessee during
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the demonetization period, i.e, 09.11.2016 to 30.12.2016. As per the bank statement(s) made available by the banks, it was observed by the A.O that the assessee had made cash deposits during the year, as under:
Sl. No Bank Name Deposited Date Deposited Amount 1 State Bank of India Pakhanjore 11/11/2016 Rs.4,50,000/- 2 State Bank of India Pakhanjore 19/11/2016 Rs.2,06,500/- 3 State Bank of India Pakhanjore 22/11/2016 Rs.25,000/- 4 State Bank of India Pakhanjore 24/11/2016 Rs.35,000/- 5 State Bank of India Pakhanjore 25/11/2016 Rs.39,000/- 6 State Bank of India Pakhanjore 28/11/2016 Rs.2,01,000/- 7 State Bank of India Pakhanjore 08/12/2016 Rs.3,00,000/- 8 State Bank of India Pakhanjore 22/12/2016 Rs.2,60,000/- 9 State Bank of India Pakhanjore 11/11/2016 Rs.2,00,000
As per the details made available, it was observed by the A.O that the assessee had during the year made cash deposit in old currency notes of Rs.16,17,500/-, as under:
Name of bank Bank a/c. No. Total deposited from Cash deposited in 09/11/16 to demonetized 30/12/16 currency ( SBN/Old Notes) State Bank of India, 30994867489 15,29,800/- 14,17,500/-
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Pakhanjore State Bank of India, 11364382879 2,00,000/- 2,00,000/- Pakhanjore Total 17,29,800/- 16,17,500/-
In the absence of any details forthcoming from the assessee in respect of his income for the year under consideration, the A.O held the deposit of Rs.1,12,300/- [Rs.17,29,800/- (-) Rs.16,17,500/- (SBN)] as the net turnover of his business of running a poultry farm, and accordingly determined his deemed income u/s. 44AD i.e. @8% at Rs. 8,984/-. As the assessee had made cash deposits of Rs.16,17,500/- in SBN in his bank account during the year under consideration, therefore, the A.O in absence of any explanation of the assessee held the said amount as the assessee’s unexplained money u/s.69A of the Act. Accordingly, the A.O vide his order passed u/s.144 of the Act, dated 30.12.2019 determined the income of the assessee at Rs.16,26,484/-.
Aggrieved the assessee carried the matter in appeal before the CIT(Appeals). As the assessee had failed to pay the tax on the returned income, therefore, the CIT(Appeals) held the appeal as not maintainable under sub-section (4) of Section 249 of the Act. At the same time, the CIT(Appeals) allowed liberty to the assessee to file the aforesaid appeal after paying the tax on the returned income a/w. a
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request for condonation of the delay as would be involved at the relevant point of time.
The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before me.
I have heard the ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record.
At the very outset of the hearing of appeal, it was submitted by the Ld. Authorized Representative (for short ‘AR’) for the assessee that the appeal filed by the assessee had wrongly been dismissed by the CIT(Appeals) by referring to sub section (4) of Section 249 of the Act. Elaborating on her aforesaid contention, it was submitted by the Ld. AR that incidentally the assessee at the relevant point of time was holding two Permanent Account Number(s), viz. (i). Old PAN : AEYPK1736P which was available with the bank; and (ii) New PAN : BVXPK0771K that was being used by the assessee for filing of his return of income. It was averred by the Ld. AR that as the assessee had misplaced his old PAN, therefore, on his application a new PAN was allotted to him. Explaining the aforesaid anomaly that had resulted to the addition in the hands of the assessee, it was submitted by the Ld. AR that the cash deposit(s) in question which
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has been held by the A.O as the unexplained money of the assessee u/s.69A of the Act, was in fact duly accounted for by him in his regular books of account and was reflected in his return of income that was filed by using the new PAN. On being specifically queried by the Bench as to why the aforesaid fact was not brought to the notice of the lower authorities, it was submitted by the Ld. AR that as the assessee was a small time businessmen putting up in a village, therefore, he had remained unaware of the e-mails that were dropped by the department in his account intimating about the fixation of his case on various occasions. The Ld. A.R in order to substantiate his claim that the cash deposits in question were made by the assessee from his duly disclosed sources, had placed on record the return of income of the assessee for the year under consideration i.e. A.Y.2017- 18 that was filed by using the new PAN : BVXPK0771K. My attention was drawn by the Ld. AR to the aforesaid return of income wherein at Page 9 of the APB, there was a clear disclosure by the assessee of having made a cash deposit of Rs.16,17,500/- over the period 09.11.2016 to 30.11.2016 in his bank account No.11364382879 with SBI. Also, it was claim of the Ld. AR that the assessee had duly disclosed his turnover in his financial statement that formed part of his return of income for the year under consideration. The ld. A.R in order to fortify his aforesaid claim had drawn my attention towards
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the financial statement of the assessee for the year under consideration, Page 10 of APB.
As the aforesaid return of income filed by the assessee for the year under consideration using his new PAN a/w the financial statement for the year under consideration was in the nature of an additional evidence, which through was filed by him alongwith his return of income with the Income-Tax Department but under a different PAN, therefore, the assessee had requested that the same may be admitted as additional evidence as per Rule 29 of the Income- Tax Appellate Tribunal Rules, 1963.
After having given a thoughtful consideration, I am of the considered view that as the aforesaid document(s), viz. (i). return of income that was filed by the assesssee using PAN BVXPK0771K; and (ii). financial statement for the year under consideration, had been filed by the assessee with the Income-Tax Department and will have a strong bearing for disposing off the issue involved in the present appeal, therefore, the same merits admission.
Controversy involved in the present appeal lies in a narrow compass, i.e, maintainability of the appeal filed by the assessee under sub-section (4) of Sec. 249 of the Act. Apropos the merits of te case, the same hinges around two fold additions, viz. (i). addition of
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cash deposits in SBN of Rs. 16,17,500/- held by the A.O as the unexplained money of the assessee u/s.69A of the Act; and (ii) addition of Rs. 8984/- made by the A.O u/s. 44AD by applying the net profit @8% on the assessee’s deemed turnover of Rs.1,12,300/-.
Before proceeding any further, I may herein observe that I am unable to comprehend as to on what basis, much the less justification, the assessee was holding two PAN(s), viz. (i). PAN : AEYPK1736P which was made available by the assessee to his bank; and (ii) PAN : BVXPK0771K that was being used by the assessee for filing of his return of income for the year under consideration. At the first blush, it though appeared to me that the assessee had tried to mislead the department by providing to the bank in which demonetized currency was deposited by him, a PAN different from that which was being used by him for filing his returns of income, but the said conviction was dispelled by the fact that the assessee had in his return of income that was filed by using a different PAN i.e BVXPK0771K duly disclosed the cash deposits of Rs.16,17,500/- that were made over the year during the demonetization period in his SB account No.11364382879 with SBI. Be that as it may, it is the claim of the assessee, which prima facie appears to be correct, that the cash deposit of Rs.16,17,500/- (supra) in SBN during the demonetization period, i.e., 09.11.2016 to 30.12.2016 had duly been
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disclosed by him in his return of income that was filed using PAN : BVXPK0771K for the year under consideration.
At this stage, I may herein observe that there is substance in the claim of the Ld. AR that as the assessee is a small time businessman putting up in a village, therefore, he had remained oblivion about the notices which were dropped in his e-mail account by both the lower authorities. On the basis of the aforesaid facts, I am of the considered view that now when the assessee had at the time of filing of the appeal before the CIT(Appeals) paid the tax on the income returned by her, therefore, he could not be held to have failed to comply with the statutory condition contemplated in Clause (a) of sub section (4) of Section 249 of the Act, which reads as under:
“(4) No appeal under this Chapter shall be admitted unless at the time of filing of the appeal, - (a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or”
Considering the aforesaid facts, I am of the view that as the assessee had duly complied with the mandate of Section 249(4)(a) of the Act, therefore, the dismissal of his appeal in limine by the CIT(Appeals), on the said count, cannot be sustained. At the same time, we cannot remain oblivion of the fact that as the return of income of the assessee for the year under consideration i.e. A.Y.2017-18 that was
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filed by using PAN: BVXPK0771K was not there before the lower authorities, therefore, there was no occasion for them to consider the same. Thus, I am of the considered view that the matter in all fairness requires to be restored to the file of the A.O, with a direction to consider the return of income filed by the assessee for the year under consideration i.e. A.Y.2017-18 by using PAN BVXPK0771K, and decide the matter afresh. Needless to say, the A.O shall afford a reasonable opportunity of being heard to the assessee during the course of the set-aside proceedings.
As it is the claim of the Ld. AR that the assessee had duly disclosed her turnover from poultry farm business in his financial statement that formed part of his return of income that was filed by using PAN BVXPK0771K, therefore, the adoption of an amount of Rs.1,12,300/- as the deemed turnover of the assessee by the A.O, and the estimation of the income derived therefrom @8% at Rs.8,984/- also would require to be revisited by the A.O on the same terms as recorded by us hereinabove. The A.O is accordingly directed to also re-adjudicate the said issue after considering the claim of the assessee. Accordingly, the order passed by the CIT(Appeals) is set- aside and the matter is restored to the file of A.O for re-adjudication in terms of my aforesaid observations.
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In the result, appeal of the assessee is allowed for statistical purposes in terms of the aforesaid observations.
Order pronounced in open court on day of 23rd November, 2022.
Sd/- (रवीश सूद/RAVISH SOOD) �या�यक सद�य/JUDICIAL MEMBER Raipur; �दनांक / Dated : 23rd November, 2022 ***SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals), Raipur (C.G.) 4. The Pr. CIT, Raipur (C.G.) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, रायपुर / DR, ITAT, “SMC” Bench, Raipur. गाड� फ़ाइल / Guard File. 6.
आदेशानुसार / BY ORDER, // True Copy // �नजी स�चव /Private Secretary आयकर अपील�य अ�धकरण, रायपुर/ ITAT, Raipur