Smt. Kherunishaben Abdulbhai Mistri, Bhuj-Kutch V. The ITO, Ward-3, Gandhidham

ITA 6/RJT/2020

AI Insights

This case involves an appeal by Smt. Kherunishaben Abdulbhai Mistri against the order of the Commissioner of Income-tax (Appeals)-3, Rajkot, which confirmed the addition of \\u20b9 16,49,312 as unexplained cash balance under section 68 of the Income Tax Act for the assessment year 2015-16. The assessee, a homeopathic doctor, declared this cash balance in her return filed post-demonetization period. The ITO treated a significant portion of this balance as unexplained due to the absence of satisfactory explanations or evidence supporting the source of the cash. The CIT(A) upheld this decision, leading to the present appeal before the Income Tax Appellate Tribunal, Rajkot.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 138305 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 26-02-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 08-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 68; 2; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted through E-Court at Ahmedabad) BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .A . N o .0 6 / R j t/2 0 2 0 ( A s se ss m e nt Y e a r : 20 15- 16 ) S mt. K he r un is ha be n A b du l bh a i M is tr i, Ma h e n di C ol on y, B hu j , Gu j ar at - 3 70 0 0 1 V s . The I n c o m e Ta x O f f ic e r War d- 3 , Ga nd h id ha m [ P AN N o. C N ZP M 8 9 4 3G ] (Appellant) .. (Respondent) Appellant by : Shri Mehul Ranpura, A.R. Respondent by: Shri Shramdeep Sinha, CIT DR D a t e of H ea r i ng 06.06.2023 D a t e of P r o no u n ce me nt 14.06.2023 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: 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. 2. The assessee has taken the following grounds of appeals:- “1. The grounds of appeal mentioned hereunder are without prejudice to one another. 2. The ld. Commissioner of Income-tax (Appeal)-13, Rajkot [hereinafter referred as to the “CIT(A)”] erred on facts as also in law in retaining addition of Rs. 16,49,312/- made by the AO u/s 68 on ITA No.06/Rjt/2020 Smt. Kherunishaben Abdulbhai Mistri vs. ITO Asst.Year –2015-16 - 2 - account of unexplained cash on hand as at the end of the year. The addition confirmed is totally unjustified and deserves to be deleted, may kindly be deleted. 3. Your Honour’s appellant craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal.” 3. 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 (9 th of November to 30 th 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. 4. 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: ITA No.06/Rjt/2020 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 ITA No.06/Rjt/2020 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. 8. In result, the appeal of the appellant is dismissed.” 5. 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 1 st 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. ITA No.06/Rjt/2020 Smt. Kherunishaben Abdulbhai Mistri vs. ITO Asst.Year –2015-16 - 5 - 6. 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. 7. In the result, the appeal of the assessee is partly allowed. This Order pronounced in Open Court on 14/06/2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 14/06/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, राजोकट / DR, ITAT, Rajkot 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार Dy./Asstt.Registrar) आयकर अपील य अ धकरण, राजोकट / ITAT, Rajkot