Mahesh Parganiha, Durg V. Income Tax Officer, Ward-1(4), Durg

ITA 3/RPR/2022

AI Insights

The case involves an appeal by Mahesh Parganiha against the order of the Commissioner of Income-Tax (Appeals), which confirmed the addition of Rs.20,00,000 to the assessee's income for the assessment year 2017-18. This addition was initially made by the A.O. under Section 143(3) of the Income-tax Act, 1961, citing unexplained cash deposits during the demonetization period. The assessee contended that these deposits were from legitimate sources, including agricultural income and accumulated funds, and were duly recorded in his books of account. However, both the A.O. and the CIT(Appeals) rejected these explanations, leading to the appeal before the Tribunal.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 128057 (ITAT-RAIPUR)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-09-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 05-01-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india; Onus to prove
• Section: 143(3); 69A

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायप ु र मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी रवीश स ू द, ÛयाǓयक सदèय के सम¢ BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 03/RPR/2022 Ǔनधा[रण वष[ / Assessment Year : 2017-18 Mahesh Parganiha EWS-133, Near Water Tank, Dhancha Bhawan, Kurud, Bhilai, Dist. Durg (C.G.)-490 024 PAN: AEPPP0993L .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer, Ward-1(4), Bhilai (C.G.). ......Ĥ×यथȸ / Respondent Assessee by : Shri R.B Doshi, CA Revenue by : Shri G.N Singh, Sr. DR स ु नवाई कȧ तारȣख / Date of Hearing : 19.09.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 16.12.2022 2 Mahesh Parganiha Vs. ITO, Ward-1(4) ITA No.03/RPR/2022 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 10.12.2021, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 25.12.2019 for the assessment year 2017-18. The assessee has assailed the impugned order on the following grounds of appeal: 1). On the facts and in the circumstances of the case CIT(A) erred in confirming addition of Rs.20,00,000/- made by the Assessing Officer by invoking provision of section 69A in respect of cash deposited in bank accounts during demonetization period of Rs.20,00,000/-, duly recorded in the books of account maintained by the assessee and produced before the Assessing Officer for verification, because provisions of this section cannot be invoked in case where concerned money is already recorded in the books of account. The assessee prays that the addition of Rs.20,00,000/- made u/s 69A be deleted. 2). On the facts and in the circumstances of the case CIT(A) erred in confirming addition of Rs.20,00,000/- made by the Assessing Officer only on presumption and surmises by treating cash deposited during demonetization period to the extent of Rs.20,00,000/- (Rs.10,00,000/- each in bank accounts with "Allahabad Bank" and "Central Bank of India"), duly recorded in the books of account maintained by the assessee, as unexplained money u/s.69A and levied tax thereon as per provisions of section 115BBE(1) of the Act @ 60% without considering written submissions, books of account and other documents furnished before him to explain sources of cash deposited during demonetization period and 3 Mahesh Parganiha Vs. ITO, Ward-1(4) ITA No.03/RPR/2022 by ignoring the fact that assessee is assessed to tax since last so many years and sources of cash deposited in bank accounts during demonetization period were duly explainable with reference to complete set of books of account for the F.Y. 2014/15 to F.Y. 2016/17 produced before him for verification, wherein agriculture income belonged to his HUF was not taken as sources of fund. The assessee prays that the addition of Rs.20,00,000/- made u/s 69A be deleted. 3) Without prejudice to ground nos. 1 & 2, 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. 20,00,000/- assessed u/s 69A since assessee had made said transactions 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%. 4) The appellant reserves the right to add, amend, or alter any ground or grounds of appeal at the time of hearing.” 2. Succinctly stated, the assessee had e-filed his return of income for A.Y.2017-18 on 16.03.2018, declaring an income of Rs.12,89,900/-. Subsequently, the case of the assessee was selected for limited scrutiny through CASS for the reason that there were cash deposits in his bank accounts during the demonetization period. 4 Mahesh Parganiha Vs. ITO, Ward-1(4) ITA No.03/RPR/2022 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee during the year under consideration had made cash deposit of Rs.10 lac each in his bank A/c. No.1385225338 with Central Bank of India and bank A/c. No.21287579605 with Allahabad Bank. On being queried about the source of the aforesaid cash deposits, the assessee as observed by the A.O had claimed that the same was sourced out of his agriculture income. Rebutting the aforesaid claim of the assessee, it was observed by the A.O that the assessee had not offered any agriculture income for taxation in his return of income for the year under consideration. Apart from that, it was observed by the A.O that as agricultural land was owned by the assessee’s HUF and the income arising therefrom was assessed in the latter’s hand, therefore, the claim of the assessee as regards availability of cash in hand out of agriculture income which belonged to HUF was merely an afterthought on the basis of which he had tried to explain the source of the cash deposits in his bank accounts. Accordingly, the A.O not finding favour with the aforesaid claim of the assessee held the entire amount of Rs.20 lac as the unexplained money of the assessee u/s.69A of the Act. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals). During the course of the proceedings before the 5 Mahesh Parganiha Vs. ITO, Ward-1(4) ITA No.03/RPR/2022 appellate authority, it was the claim of the assessee that cash deposits in the bank accounts were made out of his books of account. In support of his aforesaid contention the assessee had produced his books of accounts for the year under consideration i.e. A.Y.2017-18, as well as those for the immediately two preceding years a/w. copies of capital account and Balance Sheet for the said years. It was further claim of the assessee that as the entire amount of cash deposits were duly recorded in his books of account, therefore, the A.O had grossly erred in disregarding the said factual position and held the same as his unexplained money u/s.69A of the Act. In sum and substance, it was the claim of the assessee that now when the cash deposits of Rs. 20 lac made during the demonetization period were duly recorded in his books of account, therefore, the provisions of Section 69A of the Act could not have been triggered by the A.O for making the impugned addition in his hands. On appeal, as observed by the CIT(Appeals), it was the claim of the assessee that the cash deposits of Rs.20 lac made in his bank accounts were sourced out of agriculture income of its HUF. Apart from that, it was also the claim of the assessee that the cash deposits in question were funded out of accumulated funds and cash withdrawals made by him over the years from his bank account. However, the CIT(Appeals) did not find favour with the aforesaid claim of the assessee and in absence of any 6 Mahesh Parganiha Vs. ITO, Ward-1(4) ITA No.03/RPR/2022 material which would support the same upheld the addition of Rs.20 lac made by the A.O u/s.69A of the Act. 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before me. 6. At the very outset of the hearing of the appeal, it was submitted by the Ld. Authorized Representative (for short ‘AR’) for the assessee that both the lower authorities had grossly erred in observing that the assessee had claimed that the cash deposits of Rs.20 lac in his bank accounts were sourced out of agriculture income. Our attention was drawn by the Ld. AR to the submissions which were filed before the CIT(Appeals), dated 04.09.2020 wherein the assessee had duly clarified that as the agricultural land was owned by his HUF, therefore, the income earned therefrom belonged to the latter and had duly been accounted for in its returns of income for the year under consideration as well as those for the preceding years. It was further averred by the Ld. AR that the assessee had before the CIT(Appeals) categorically refuted the observation of the A.O that he had in the course of the assessment proceedings claimed that the source of the cash deposits in his bank accounts was out of agriculture income. On the contrary, it was submitted by the Ld. AR that the assesee had brought to the notice of the CIT(Appeals) that cash deposits in 7 Mahesh Parganiha Vs. ITO, Ward-1(4) ITA No.03/RPR/2022 question were made from his books of accounts which were duly produced in the course of the assessment proceedings before the A.O. It was further submitted by him that the A.O had never pointed out any mistake or irregularity in the books of account of the assessee which were produced before him, nor found any instance of inclusion of any agriculture income. On the basis of the aforesaid facts, it was the claim of the Ld. AR that it was not only beyond comprehension as to on what basis the A.O had observed that the assessee had tried to relate the cash deposits under question to agriculture income, but also most surprisingly the CIT(Appeals) despite being informed about the aforesaid serious infirmities in the observation of the A.O, and the fact that cash deposits in question were made from the books of account, had however most whimsically discarded the same. In order to fortify his aforesaid contention the Ld. AR had taken us through an undated letter that was filed by the assessee with the A.O in the course of the assessment proceedings, which substantiated the fact that the assessee had not only produced the books of accounts for the year under consideration i.e. A.Y.2017-18 before the A.O in the course of the assessment proceedings, but also those for the immediately two preceding years a/w. copies of the capital account and Balance Sheet for all the said respective years, Page 10 of APB. The Ld. AR further took us through the cash book of the assessee for 8 Mahesh Parganiha Vs. ITO, Ward-1(4) ITA No.03/RPR/2022 the year under consideration i.e. A.Y.2017-18, Page 38 to 51 of APB. Our attention was drawn by the Ld. AR to the relevant extract of the aforesaid cash book wherein both the transactions of cash deposit of Rs.10 lac each on 29.11.2016 in the aforementioned bank accounts, viz. A/c. No.1385225338 with Central Bank of India and A/c. No.21287579605 with Allahabad Bank stood reflected, Page 49 of APB were reflected. On the basis of the aforesaid facts, it was the claim of the Ld. AR that now when the assessee had duly substantiated the source of the cash deposits in the aforementioned bank accounts in question, therefore, both the lower authorities had grossly erred in law and the facts of the case in making an addition of Rs.20 lac u/s.69A of the Act. 7. Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. 8. I have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record. 9. I have given a thoughtful consideration to the issue in hand, i.e. sustainability of the addition of Rs.20 lac made by the A.O u/s.69A of the Act. Ostensibly, it is the claim of both the lower authorities that the assessee on being called upon to put forth an 9 Mahesh Parganiha Vs. ITO, Ward-1(4) ITA No.03/RPR/2022 explanation as regards the source of the cash deposits aggregating to Rs.20 lac (supra) in his aforementioned bank accounts, had claimed that the same were sourced out of his agriculture income. On the contrary, it is the claim of the Ld. AR that the assessee had never related the cash deposits with the agriculture income, which, in fact, belonged to his HUF and was duly offered to tax in the latter’s hand. To sum up, the observation of both the lower authorities as regards the explanation of the assessee qua the source of the cash deposits clearly militates as against that projected by the Ld. AR before me. 10. Having given a thoughtful consideration to the aforesaid controversy in hand, I find some substance in the claim of the assessee that he had stated before the lower authorities that the cash deposits in question were sourced from his books of accounts which were produced before the A.O in the course of the assessment proceedings. The aforesaid claim of the assessee is fortified on a perusal of the reply that was filed by him in response to a notice issued u/s.142(1) of the Act by the A.O, wherein the assessee has stated to have produced the books of accounts for the year under consideration a/w. those for the immediately preceding two years before the A.O, Page 10 of APB. Apart from that, I find that the assessee vide his written submission dated 04.09.2020 that was filed before the CIT(Appeals), had categorically stated that it was never his 10 Mahesh Parganiha Vs. ITO, Ward-1(4) ITA No.03/RPR/2022 case before the A.O that the cash deposits in the bank accounts under consideration were made by him out of the agriculture income which, in fact, belonged to the HUF and formed part of the latter’s returns of income for the year under consideration as well as those for the preceding years. The aforesaid factual position can safely be gathered from the extract of the aforesaid written submission dated 04.09.2020 (supra), which reads as under: “That so far agriculture income is concerned it was duly explained to the Assessing Officer that agriculture land is his ancestral property and therefore, income therefrom was belonged to his HUF and accordingly, agriculture income was shown regularly in the return of his HUF since last so many ears. It was also explained to the AO that assessee had not included either in his books of account or return of income of the year under consideration or of the preceding years agriculture income belonged to his HUF to explain sources of cash deposited in bank accounts in these years. In spite of that fact and on detailed verification of the books of account produced and other details furnished during the course of assessment proceedings Assessing Officer has not pointed out any mistakes or irregularities therein or found instance of inclusion of agriculture income therein, the Assessing Officer has stated in the assessment order that “ vide submission dated 07.12.2019, the assessee stated that the cash deposited during demonetization period was out of agriculture income” for the reason best known to her even though no such claim was made by the assessee in written submission and documents related to agriculture land and agriculture activities were filed just to show ownership thereof and performance of agriculture activities thereon. Thus, from above it is clearly evidence that the assessee had furnished corroborative and sufficient evidences and explanations in terms of provisions of section 69A to discharge his burden to prove nature and source of cash deposited in bank account during demonetization period and on shifting of burden to A.O, after filing of said evidence and giving proper explanation, to draw satisfaction about explanation offered by 11 Mahesh Parganiha Vs. ITO, Ward-1(4) ITA No.03/RPR/2022 the assessee A.O failed to discharge her burden properly and judicially as she has rejected explanation of the assessee simply by stating that assessee framed afterthought cooked up story to explain source of cash deposit in bank account as out of agriculture income only on guess, surmise and presumption as assessee had not shown in the cash books, capital accounts, balance sheets and income tax returns for A.Y.s 2015/16 to 2017/18 any agriculture land or agriculture incomes, as the case may be, and also established with evidence that agriculture land is belonged to his HUF and income therefrom is shown regularly in his HUF return.” On a perusal of the cash books for the year under consideration, it stands revealed beyond doubt that both the cash deposits of Rs.10 lac each in the aforementioned bank accounts, viz. (i) A/c. No.1385225338 with Central Bank of India; and (ii) A/c. No.21287579605 with Allahabad Bank, on 29.11.2016 were made from his books of accounts. If that be so, then, I find no justification in dubbing of the cash deposits of Rs.20 lac in question as unexplained money of the assessee u/s.69A of the Act by the lower authorities. At the same time, I cannot remain oblivion of the fact that as the aforesaid claim of the Ld. AR not only militates against the observations of the lower authorities, but also there is nothing discernible from the record which would reveal that the authenticity of the cash book of the assessee for the year under consideration had been looked into by the lower authorities, therefore, it would be unfair to summarily accept the same without subjecting the same to necessary verification. I, thus, in terms of the aforesaid observations, 12 Mahesh Parganiha Vs. ITO, Ward-1(4) ITA No.03/RPR/2022 is of the considered view that the matter in all fairness requires to be revisited by the A.O. The A.O is herein directed to re-adjudicate the issue after duly taking cognizance of the explanation of the assessee as regards the source of the cash deposits of Rs.20 lac (supra) in the bank accounts in question. Needless to say, the A.O shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee who shall remain at a liberty to substantiate his claim on the basis of fresh documentary evidence. 11. In the result, appeal of the assessee is allowed for statistical purposes in terms of the aforesaid observations. Order pronounced in open court on 16 th day of December, 2022. Sd/- (रवीश स ू द /RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER रायप ु र / Raipur; Ǒदनांक / Dated : 16 th December, 2022 SB आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals), Raipur (C.G.) 4. The Pr. CIT-1, Raipur (C.G.) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, “एक-सदèय” बɅच, रायप ु र / DR, ITAT, “SMC” Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. 13 Mahesh Parganiha Vs. ITO, Ward-1(4) ITA No.03/RPR/2022 आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव /Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur