SHRI PRADEEP SANJEEV SHETTY, PALGHAR V. NATIONAL FACELESS APPEAL CENTRE, DELHI

ITA 652/MUM/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9359 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 18-09-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 11-04-2022
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 69; 144; 142(1); 143(2); 69A; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM ITA No. 652/MUM/2022 (Assessment Year 2017-18) Shri. P radeep Sanj eev Shetty A-101, Poonam Pal m s Coop. Society, Siddh i Vin ayak Nagar, Nr . Sac red Heart School, Nal lasopar a, Palghar- 401 203 Vs. National Faceless Appeal Centre Delhi (Appellant) (Respondent) PAN No. BQJPS1644E Assessee by : None Revenue by : Shri. Ujjawal Chavan SR AR Date of hearing: 19.09.2022 Date of pronouncement: 31.10.2022 O R D E R PER PRASHANT MAHARISHI, AM: 01. This appeal is filed by the assessee against the order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)] for A.Y. 2017-18, dated 18 th March 2022. By this order, the appeal filed by the assessee was dismissed. 02. Therefore, the assessee is in appeal before us, raising following two grounds: “1. Addition made u/s - 69A on account of Cash Deposit of Rs. 6,48,500/: - Page | 2 ITA No. 652/MUM/2022 Pradeep Sanjeev Shetty; A.Y. 2017-18 a) On the facts and in the circumstances of the case and in law, the AO erred in making addition of Cash Deposited into Bank without considering the Assessee submission made before the Assessing Officer. b) On the facts and in the circumstances of the case and in law, the AO erred in considering the modus operandi of business of Assessee and addition of Cash Deposit during the demonetization period Rs 6,48,500 ( 8,53,500 - 2,05,000). c) On the facts and in the circumstances of the case and in law, the AO erred in considering the fact that Assessee has small scale business of Catering and Desi Bar which mainly in cash and AO failed to understand the fact that the Bank statement cannot be considered as Book of Accounts for the purpose of making addition u/s 69A of the Act. However, the assessee has relied on the various judgements which stated that mere deposit in the Banks cannot be presumed as undisclosed income. 2. Order u/s - 144 of the Act is bad in Law: On the facts and in the circumstances of the case and in law, the AO erred in considering the fact that Assessee had not filed income tax Return u/s 139(1) therefore the Notice of Scrutiny u/s 143(2) where the return is not filed is bad in law. Page | 3 ITA No. 652/MUM/2022 Pradeep Sanjeev Shetty; A.Y. 2017-18 Further, The AO erred in considering the fact that Assessee had not filed income tax Return u/s 139(1) therefore the Notice of Scrutiny u/s 143(2) where the return is not filed is bad in law. AO has ignored the CBDT circular No F No. 225/333/2019/ITA-II.” 03. Briefly stated fact shows that assessee is engaged into a business of catering and running a Desi Bar by the name of ‘Atithi Desi Bar’. No return of income was filed by the assessee. The information was available on AIMS module that assessee has deposited cash of ₹13,66,250/- during F.Y. 2016-17 relevant to A.Y. 2017-18. ITBA portal gave the information that above amount is deposited in the bank account maintained with Punjab Maharashtra Co- operative Bank during demonetization period. The notice under Section 142(1) was issued to the assessee on 13 th March 2018. However, no return was filed. The learned Assessing Officer also noted that initially assessee did not comply with the notice but later 23 rd September 2019, assessee submitted that he is engaged in the business of catering and running Desi Bar. He submitted the computation of income showing total income of ₹605146 /- after claiming deduction under chapter VIA of ₹1,19,636/-. In the computation of income from business assessee computed profit at ₹7,24,782/- being 8% of total turnover of ₹90,37,064/-including cash deposit of ₹13,66,250/-. On perusal of KYC details, it was found that Page | 4 ITA No. 652/MUM/2022 Pradeep Sanjeev Shetty; A.Y. 2017-18 the Assessee is engaged in the business of catering and desi bar. 04. The learned Assessing Officer noted that during F.Y. 2016- 17, assessee has made a total deposit of ₹84,57,460/- including cash deposit of ₹13,66,250/-. Assessee has noted that assessee is frequently depositing cash in his bank account. Assessee post demonetization has deposited RS 853500/- in old currency notes. Ld. AO found that Rs 205000/- was available as cash on hand on 10-11-2016 therefore, balance of ₹6,48,500/- was deemed as unexplained money under Section 69A of the Act. Same was taxed under Section 115BBE of the Act. The assessment order was passed under Section 144 of the Act on 16 th November 2019, assessing the total income of the assessee at ₹12,58,283/- wherein the total income declared by the assessee of ₹6,09,783/- and further addition of ₹6,48,500/- was made u/s 115BBE of The Act. 05. Aggrieved, assessee preferred the appeal before the learned CIT (A). It was stated that when the amount is deposited in the bank account provision of Section 69A of the Act cannot apply as bank statement cannot be considered as books of account for the purpose of making addition under Section 69A of the Act. It was further stated that the learned Assessing Officer did not issue notice under Section 143(2) of the Act. The learned CIT (A) held that there is no infirmity in applying the provision Page | 5 ITA No. 652/MUM/2022 Pradeep Sanjeev Shetty; A.Y. 2017-18 of Section 69A of the Act and further as assessee has failed to furnish the return of income, notice under Section 143(2) of the Act should not have been issued. Appeal of the assessee was dismissed. 06. Despite notice, none appeared on behalf of the assessee, therefore, the appeal is decided on the merits of the case. 07. The learned Departmental Representative supported the orders of the lower authorities. 08. We have carefully considered the rival contentions and perused the orders of the lower authorities. The issue is that assessee is engaged in the business of catering and running of desi bar. Undisputedly, he has shown the turnover of ₹90,37,064/- from that business and in the computation of total income furnished before the learned Assessing Officer, 8% of the same was disclosed as income of the assessee. The learned Assessing Officer because of deposit of old currency note deposited by the assessee amounting to ₹8,53,500/- post demonetization, reducing that to the cash on hand available with assessee as at 10-11-2016, addition was made to the extent of ₹6,48,500/- under Section 115BBE of the Act. 09. Our and above merits , Only issue raised is the cash deposited in bank account cannot be added u/s 689 A of the Act and ld. AO did not issue notice u/s 143 (2) of The Act. First, we deal with that. Page | 6 ITA No. 652/MUM/2022 Pradeep Sanjeev Shetty; A.Y. 2017-18 010. On the first issue that whether the amount of cash deposited in the bank account can be added u/s 69 A of the Act, we do not find any infirmity in the order of the ld. CIT (A) that ld. AO has made addition correctly. Where the money is deposited in the bank account of the assessee, naturally he is owner of the same. There are no books of accounts maintained by assessee, therefore those are found to be not recorded at all. There is no explanation offered by assessee about depositing old currency notes in his bank account after demonetization. Ld. AO has correctly reduced the addition by available old currency notes as on 10-11-2016. Therefore we do not find any infirmity in making addition u/s 69A of The Act. Thus, this ground is dismissed. 011. On the second issue that notice u/s 143(2) of The Act has not been issued. In the present case no ROI was filed by assessee therefore, there is no requirement of issue of Notice u/s 143 (2) of the Act. Ld. CIT (A) has dismissed this ground of appeal correctly. 012. Now coming to the merits of the case, ld. AO found that old currency notes deposited by assessee post demonetization is Rs 853500/- , it was found that as on 10-11-2006 assessee has cash balance of Rs 205000/-. Balance addition is made by ld. AO. Assessee could not explain how he came into possession of these old currency notes post demonetization, assessee could not explain how he came in to possession of Old Currency notes, post Page | 7 ITA No. 652/MUM/2022 Pradeep Sanjeev Shetty; A.Y. 2017-18 demonetization. Therefore we do not find any infirmity in the order of the lower authorities in confirming the addition u/s 69 A of the Act. 013. In the result both the grounds of appeal are dismissed. 014. In the result appeal is dismissed. Order pronounced in the open court on 31.10.2022. Sd/- (PRASHANT MAHARISHI) (ACCOUNTANT MEMBER) Mumbai, Dated:31.10.2022 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai