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Income Tax Appellate Tribunal, DELHIBENCH ‘A’, NEW DELHI
Before: Sh. Saktijit DeyDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of the ld CIT(A), National Faceless Appeal Centre, (NFAC), Delhi dated 30.09.2021 for AY 2017-18.
The assessee has raised the following grounds of appeal:- “1. That the Learned CIT (A) has erred in Law and on facts in upholding the action of the Ld. AO in making an addition of Rs. 5,61,825/- u/s 69A of the Income Tax Act, 1961 on account of unexplained cash deposits without considering the facts and circumstances of the transactions by simply rejecting the documents submitted and explanations by the assessee and ignoring that the evidences of the assessee are even capable of explaining the transactions.
2. The Ld. CIT(A) has erred in not admitting the evidences submitted by the assessee on the basis of surmises & conjecture without applying mind and ignoring the submissions and prayer of the assessee and just relying on baseless objection of the Ld. Assessing Officer.”
For the sake of brevity, the relevant portion of order of the Assessing Officer is reproduced as under:- “During the course of assessment proceedings, it has been observed that the assessee had deposited cash during the year under consideration, the reason for the selection of case through CASS. The assessee was asked vide notice dated 19.06.2019 to explain the cash deposits made and also to submit the details of the bank accounts maintained by assessee and the statements thereof. However, no details regarding the cash deposit and bank accounts was submitted by assessee in response to the said notice dated 19.06.2019 issued u/s 142(1) of IT Act. Considering the nan-submission of required details from the end of assessee, last opportunity vide notice dated 10.10.2019 was given to assessee to submit the required details by 14.10.2019. However, no submission was made by assessee in response to final opportunity given.
5. Considering the aforesaid facts of the case, penalty notice dated 15.10.2019 under section 272A(1)(d) of the Income Tax Act, 1961 for non-compliance of notices issued under section 142(1)/143(2) was issued to assessee.
Further, records in the form of Income Tax Return, 26AS as retrieved from system and bank statements given by assessee on 20.11.2019 have been perused. On further examination of the facts, a sharp increase in sales/receipts on account of professional services is noted in this case for the year under consideration. The increase in cash receipts in lieu of professional services for the current assessment year i.e. 2017-18 stands approximately to 26.96% as compared to increase of 15.67 percentage points during the preceding previous year Le. A.Y. 2016-17. On further perusal of data for A.Y. 2018-19, the increase in sales is around 17.24% in comparison to A.Y. 2017-18. This clearly establishes the regular trend of increase in sales in the range of 15-17 percentage points in various years except A.Y. 2017-18.
Brief analysis of the professional receipts over the various years is as under:-
A.Y. 2015- A.Y. 2016-17 A.Y. 2017-18 A.Y. 2018-19 16 Professional Receipts 4414020 5108616 6487820 7605589 Receipts corresponding to 26 4620 12250 13590 AS 8020
Receipts earned in Cash 4409400 5100596 6475570 7591999 % Increase in Cash Receipts 15.67551141 26.95712423 17.24062901 Pictorial representation of increase in sales over the various assessment years is shown as under:-
Considering the aforesaid facts, show Considering the aforesaid facts, show-cause notice dated 22.11.2019 cause notice dated 22.11.2019 was issued to assessee asking why the excess amount of professional was issued to assessee asking why the excess amount of professional was issued to assessee asking why the excess amount of professional receipts mentioned by you in return should not be res receipts mentioned by you in return should not be restricted to the receipts mentioned by you in return should not be res extent as per the regular quantum of business activities over the extent as per the regular quantum of business activities over the extent as per the regular quantum of business activities over the various assessment years. You were further required to explain/show various assessment years. You were further required to explain/show- various assessment years. You were further required to explain/show cause why the excess amount of cash deposited should be added to cause why the excess amount of cash deposited should be added to cause why the excess amount of cash deposited should be added to your total income as undisclosed income. your total income as undisclosed income.
In response to show 7. In response to show-cause notice issued, assessee vide his reply cause notice issued, assessee vide his reply dated 25.11.2019 has submitted that assessee is practicing ENT dated 25.11.2019 has submitted that assessee is practicing ENT dated 25.11.2019 has submitted that assessee is practicing ENT specialist and fee receipts cannot be taken on average percentage specialist and fee receipts cannot be taken on average percentage specialist and fee receipts cannot be taken on average percentage basis and the same be considered as absolute patient receip basis and the same be considered as absolute patient receipt which is basis and the same be considered as absolute patient receip increasing throughout the years.
The reply of the assessee against increasing throughout the years. 8. The reply of the assessee against increasing throughout the years. 8. The reply of the assessee against the show-cause notice issued has been perused. It is submitted that cause notice issued has been perused. It is submitted that cause notice issued has been perused. It is submitted that the assessee vide his reply dated 25.11.2019 has stated that the fee the assessee vide his reply dated 25.11.2019 has stated that the fee the assessee vide his reply dated 25.11.2019 has stated that the fee receipts are absolute patient receipts receipts are absolute patient receipts which is increasing throughout which is increasing throughout the years and the fee receipts of doctor depends on degree of the years and the fee receipts of doctor depends on degree of the years and the fee receipts of doctor depends on degree of specialization and years of experience. The assessee has submitted specialization and years of experience. The assessee has submitted specialization and years of experience. The assessee has submitted that the cash deposit of Rs.54,30,000/ that the cash deposit of Rs.54,30,000/- has been made. has been made.
The aforesaid statement of assessee The aforesaid statement of assessee establishes the finding of establishes the finding of assessing officer that there is no other reason for cash deposits made. assessing officer that there is no other reason for cash deposits made. assessing officer that there is no other reason for cash deposits made. However, vide para 6 above, it has been established that there is However, vide para 6 above, it has been established that there is However, vide para 6 above, it has been established that there is sharp increase in receipts shown by assessee during the A.Y. 2017 sharp increase in receipts shown by assessee during the A.Y. 2017-18 sharp increase in receipts shown by assessee during the A.Y. 2017 which is not in synchr which is not in synchronization with increase in cash receipts during onization with increase in cash receipts during A.Y 2016-17 or A.Y 2018 17 or A.Y 2018-19. The assessee has clearly failed to justify 19. The assessee has clearly failed to justify the sharp increase in cash sales/receipts during the year under the sharp increase in cash sales/receipts during the year under the sharp increase in cash sales/receipts during the year under consideration l.e. A.Y 2017 consideration l.e. A.Y 2017-18. Considering the above, the reply of the 18. Considering the above, the reply of the assessee is not tenable. Therefore, cash deposited and shown as ssessee is not tenable. Therefore, cash deposited and shown as ssessee is not tenable. Therefore, cash deposited and shown as professional receipts is allowed to the tune of regular trend of quantum professional receipts is allowed to the tune of regular trend of quantum professional receipts is allowed to the tune of regular trend of quantum of business activities carried out by assessee which is approximately of business activities carried out by assessee which is approximately of business activities carried out by assessee which is approximately the increase of 16 percentage points over the vari the increase of 16 percentage points over the various assessment ous assessment years and the amount of cash deposited in excess to the same is years and the amount of cash deposited in excess to the same is years and the amount of cash deposited in excess to the same is hereby disallowed. hereby disallowed.
In consequence to the above, following the trend of increase of sales in the case of assessee, professional receipts to the tune of Rs. 59,25,994/- (16 percent increase in previous years' sales: 51,08,616/- "1.16 = 59,25,994/-) is hereby allowed and the difference of receipts (64,87,820/--59,25,994/- 5,61,825/-) is disallowed and added back to the income of assessee u/s 69A of the Income Tax Act, 1961 for Assessee being the owner of unexplained money and where the Assessee has failed to offer a reasonable justification.”
On going through the record, we find that there has been only one cash deposit of Rs. 165,000/- on account of old currency notes (SBN) in saving banks account. The assessee is a practicing doctor, ENT specialist, deriving income from medical practice. The assessee has also deposited cash in his Saving Bank account (Non-SBN) which has been duly accepted by the AO during the same period. We find from the assessment order that there has been no abnormal cash deposit and the assessment order is based on estimation and strange logic and without any legal basis and hence, held to be legally invalid.
In the result, the appeal of the assessee is allowed.
Order Pronounced in the Open Court on 28/04/2023.