Seema Bohra, Bengaluru V. Income-Tax Officer Ward-2(2)(3), Bangalore

ITA 794/BANG/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 5314 (ITAT-BANGALORE)
• Duration Of Justice: 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 14-11-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 17-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief
• Section: 68; 143(3); 142(1); 234B; 250; 143(2); 69A; 246A

Judgement Text

ITA No.794/Bang/2023 Seema Bohra, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” “C’’ BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA No.794/Bang/2023 Assessment Year: 2017-18 Seema Bohra No.19, 1 st & 2 nd Floor Hospital Road Bengaluru 560 053 PAN NO : ACLPJ1062G Vs. ITO Ward-2(2)(3) Bangalore APPELLANT RESPONDENT Appellant by : Shri Sudheendra B.R., A.R. Respondent by : Shri Ganesh R. Ghale, A.R., Standing Counsel for Revenue Date of Hearing : 15.11.2023 Date of Pronouncement : 15.11.2023 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal filed by assessee is directed against the order of NFAC for the assessment year 2017-18 passed u/s 250 of the Income-tax Act,1961 ['the Act' for short] dated 8.9.2023. The assessee has raised following grounds of appeal: 1. The orders passed bv the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi under section 250 of the Act and the Income Tax Officer, Ward 2(2)(8) Bangalore under section 143(3) are bad in law and liable to be quashed. Rejection of condonation for delay in filing appeal before CIT(A) 2. The learned CIT(A), NFAC has erred in rejecting the Appellant’s application for condonation of delav in filing the appeal under section 246A. ITA No.794/Bang/2023 Seema Bohra, Bangalore Page 2 of 8 3. The learned CIT(A), NFAC has erred in considering the delay as inordinate and erred in stating that the appellant failed to prove sufficient cause for the said delay. 4. The learned CIT(A), NFAC has erred not appreciating the genuine hardships faced by the Appellant in view of the Covid 19 pandemic in considering the Appellant’s request for condonation. 5. The learned CIT(A),. NEAC has erred in relying on judicial precedents wherein condonation was rejected for negligence and inaction on part of the Appellant which is not in line with the facts of the Appellant’s case. 6. The learned CIT(A), NFAC thus erred in dismissing the appeal under section 246A without hearing the grounds of the appellant on merit. Addition of unexplained cash deposits under section 69A 7. The learned Income Tax Officer, Ward 2(2)(7) (hereinafter referred to as ‘Assessing Officer’ for brevity) erred in making an addition of Rs.12,49,000 under section 69A of the Income Tax Ac, 1961. 8. The learned Assessing Officer has erred in law and fact by passing the order under section 143(3) without considering the submissions made by the Appellant during the assessment proceedings. 9. The learned Assessing officer has erred in fact in stating that the Appellant has not submitted any documentary evidence to substantiate cash deposits under question. 10. The Assessing Officer has failed to appreciate the fact that the cash deposits was of the amount withdrawn by the Appellant from the bank account at an earlier date and redeposited due to the policy of demonetization. 11. The Assessing Officer has failed to appreciate the facts that cash balances of the Appellant as per the Balance sheet as on 31.3.2015, 31.03.2016 and 31.03.2017 corroborate with the explanation offered by the Appellant with regard to the cash deposits. 12. The learned Assessing Officer has failed to appreciate that the money deposited has been recorded in the books of the Appellant and the source of such deposit was duly explained and accordingly, has erred in invoking section 69A of the Act. 13. On facts and circumstances of the case and law applicable, the entire basis of making addition under section 69A is bad in law and is liable to be quashed in entirety. ITA No.794/Bang/2023 Seema Bohra, Bangalore Page 3 of 8 Interest u/s 234B and 234D 14. On facts and circumstances of the case and law applicable, levy of interest under sections 234B and 234D is incorrect. The learned AO has erred in levying interest under sections 234B and 234D of the Act amounting to Rs.3,10,728 and Rs.3,364 respectively and the appellant denies its liability to pay such interest. Prayer 15. In view of the above and other grounds to be adduced at the time of hearing, the appellant prays that the orders passed under section 250 of the Act by the learned CIT(A), NFAC and under section 143(3) of the Act by the learned Assessing Officer, be quashed or in the alternative the addition of Rs.12,49,000/- made under section 69A and consequential interest be deleted. 2. Facts of the case are that Smt Seema Bohra (hereinafter referred to as "the assessee") electronically filed her return of income for AY 2017-18 on 30 July 2017 declaring total income of Rs.2,28,630/-. The said total income contained the following components. Sl.No. Particulars Amount Income (before deductions) 1. Interest received from Punamdevi Bothra Rs.1,67,540 2. Interest on Fixed deposit Rs.64,940 3. Interest on PPF account Rs.58,212 4. Savings Bank account interest Rs.8,546 2.1 The return was selected for limited scrutiny to verify the cash deposited during demonetization period in FY 2016-17. Notice under Section 143(2) of the Act was issued to the assessee on 11 August 2018, for commencing assessment proceedings. Subsequent Notice under Section 142(1) was issued to the assessee on 31 January 2019 against which details such as source of cash deposited, financial statements for Financial Year ("FY') 2014-15, 2015-16, 2016-17 and bank statements were submitted on 19 December 2019. During FY 2013-14, the assessee had given a loan to Smt Vijayalakshmi Kothari (PAN AARPK8150E) of Rs.20,00,000/- ITA No.794/Bang/2023 Seema Bohra, Bangalore Page 4 of 8 on 3 August 2013 vide cheque No.182518 drawn on her Union Bank of India account, During FY 2014-15, the assessee requested Smt Vijayalakshmi Kothari to repay the loan given to her, Smt. Vijaylakshmi Kothari returned the said amount on the following days: Sl.No. Date Name of Bank Amount 1. 24-06-14 Union Bank of India 5,00,000 2. 25-06-14 Union Bank of India 5,00,000 3. 01-10-14 Union Bank of India 5,00,000 4. 07-10-14 Union Bank of India 5,00,000 Total 20,00,000 2.2 The assessee withdrew the said amount for the renovation of her house on the following dates: Sl.No. Date Name of Bank Amount 1. 25-06-14 Union Bank of India 5,00,000 2. 26-06-14 Union Bank of India 5,00,000 3. 01-10-14 Union Bank of India 5,00,000 4. 07-10-14 Union Bank of India 5,00,000 Total 20,00,000 2.3 Thereafter, Rs.8,00,000 were redeposited in my bank account on 17 June 2015. However, the Appellant was unable to use the money completely. Thereafter due to the demonetization, she had deposited Rs.12,49,000/- on various days into her Union Bank of India account. Accordingly, the Appellant had provided all details to corroborate the source of cash deposits made amounting to Rs.12,49,000/-. 2.4 Further, the Learned Assessing Officer during the course of the proceedings did not make any proposal for intended additions and therefore, the Appellant was -under a bonafide belief that the all the queries of the Learned Assessing Officer have been clarified and that the return of income filed by the appellant wilt be accepted, Especially given that trail of Rs.20,00,000 withdrawn from her bank account was expressly provided. ITA No.794/Bang/2023 Seema Bohra, Bangalore Page 5 of 8 2.5 The Learned Assessing Officer has issued an order under Section 143(3) of the Act, dated 25 December 2019 wherein an amount of Rs.12,49,000/- deposited in Union Bank of India account has been treated as unexplained money. In the said order the total income of the Appellant has been assessed at Rs.14,77,630 and tax, interest liability thereon has been determined at Rs.12,79,527/-. Consequently, the Learned Assessing Officer has issued a notice under Section 156. raising a demand of Rs.12,79,527/- (including interest of Rs.3,10,728/- and Rs.3,364/- under Section 234B and Section 234D of the Act, respectively) on the assessee. 2.6 The Learned Assessing Officer in his order, under the last paragraph of Page 2 of the order, has categorically stated that the Appellant has not submitted any documentary evidence and has failed to substantiate the source of cash deposits. Accordingly, the Learned Assessing Officer invoked Section 69A of the Act for making an addition of Rs.12,49,000/-, which is erroneous based on the facts and circumstances of the Case. A brief note on the adjustments made by the learned Assessing Officer is as below: A. Treating cash deposited as Unexplained money 2.7 During the course of assessment proceedings, the Learned Assessing Officer has disregarded the submission made by the assessee, where in the source of the cash deposited was explained. As a result, the Learned Assessing Officer has assessed the total income of the assessee and made an addition of Rs.12,49,000/-, which represents cash deposited in her bank account during demonetization, as unexplained income under the head Income from Other Sources. The Learned Assessing Officer has concluded the assessment without considering the fact that the assessee withdrawn the money from her bank account earlier and deposited the same in her bank due to demonetization. ITA No.794/Bang/2023 Seema Bohra, Bangalore Page 6 of 8 Interest under section 234B & 234D 2.8 Pursuant to the above adjustment, consequential interest of Rs 3,10,728/- and Rs.3,364/- has been levied under Section 234B & Section 234D respectively. 3. Against this assessee went in appeal before ld. NFAC. However, there was a delay of 213 days in filing the appeal before NFAC. In this case, the assessment order was passed on 25.12.2019. The assessee ought to have filed the appeal on or before 24.1.2020. However, the appeal has been filed before NFAC on 12.8.2020. Now the contention of the ld. A.R. is that the assessee need not explain the delay from 15.3.2020 to 28.2.2022 as this delay was already condoned by the Hon’ble Supreme Court in Miscellaneous Application No.21 of 2022 in Miscellaneous Application No.665 of 2021 in Suo Moto WP No.(C) No.3 of 2020 in Re: Cognizance of Limitation dated 10.1.2022 and the assessee has to explain the delay from 24.1.2020 to 15.3.2020 only, which has been explained by the assessee that due to glitches in I.T. portal and also the assessee is not an expert in information technology, he prayed that the above short delay to be condoned. 4. I heard the rival submissions and perused the materials available on record. In my opinion, there is a good and sufficient reason in filing the appeal belatedly before the NFAC. During the Covid period in view of the judgement of Hon’ble Supreme Court in in Miscellaneous Application No.21 of 2022 in Miscellaneous Application No.665 of 2021 in Suo Moto WP No.(C) No.3 of 2020 in Re: Cognizance of Limitation dated 10.1.2022, the delay from 15.3.2020 to 28.2.2022 was already condoned by the Hon’ble Supreme Court and the balance period of delay is very short and hence, the same is condoned and the appeal is admitted. ITA No.794/Bang/2023 Seema Bohra, Bangalore Page 7 of 8 4.1 After admitting the appeal, in my opinion, since the NFAC has not decided the issue on merit, it is appropriate to remit the entire issue on dispute to the file of ld. AO for fresh consideration since the assessee did not furnish any documentary evidence before ld. AO also and failed to prove that cash deposited in her bank account during the period of demonetization are out of her normal business. It is appropriate to remit the entire issue to the file of ld. AO for reconsideration in the light or order of the Tribunal in the case of Bhoopalam Marketing Services Pvt. Ltd. in ITA No.375/Bang/2022 dated 15.9.2022, wherein held as under: “7. We have carefully considered the rival contention and perused the orders of the lower authorities. Admittedly the assessee has deposited Rs.298,08,080/- during the post- demonetization between 09/11/2016 and 30/12/2016. Therefore, Ld.AO made addition of INR 5,82,76,300/- as income of the assessee u/s. 68 of the income tax act, by passing assessment order u/s. 144 of the Act. The Ld.AO made such addition as the assessee could not file requisite details as the notice was issued to the email address that was not functional. In the interest of justice, we deem it proper to remand the issues back to the Ld.AO for a de novo verification. 7.1 We have carefully gone through the various standard operating procedures laid down by the central board of direct taxes issued from time to time in case of operation clean. The 1st of such instruction was issued on 21/02/2017 by instruction number 03/2017. The 2nd instruction was issued on 03/03/2017 instruction number 4/2017. The 3rd instruction was in the form of a circular dated 15/11/2017 in F.No. 225/363/2017-ITA.II and the last one dated 09/08/2019 in F.no.225/145/2019-ITA.II. These instructions gives a hint regarding what kind of investigation, enquiry, evidences that the assessing officer is required to take into consideration for the purpose of assessing such cases. 8. In one of such instructions dated 09/08/2019 speaks about the comparative analysis of cash deposits, cash sales, month wise cash sales and cash deposits. It also provides that whether in such cases the books of accounts have been rejected or not where substantial evidences of vide variation be found between these statisti cal analyses. Therefore, it is very important to note that whether the case of the assessee falls into statistical analysis, which suggests that there is a booking of sales, which is non-existent and thereby unaccounted money ITA No.794/Bang/2023 Seema Bohra, Bangalore Page 8 of 8 of the assessee in old currency notes (SBN) have been pumped into as unaccounted money. 8.1 The instruction dated 21/02/2017 that the assessing officer basic relevant information e.g. monthly sales summary, relevant stock register entries and bank statement to identify cases with preliminary suspicion of back dating of cash and is or fictitious sales. The instruction is also suggested some indicators for suspicion of back dating of cash else or fictitious sales where there is an abnormal jump in the cases during the period November to December 2016 as compared to earlier year. It also suggests that, abnormal jump in percentage of cash trails to on identifiable persons as compared to earlier histories will also give some indication for suspicion. Non- availability of stock or attempts to inflate stock by introducing fictitious purchases is also some indication for suspicion of fictitious sales. Transfer of deposit of cash to another account or entity, which is not in line with the earlier history. Therefore, it is important to examine whether the case of the assessee falls into any of the above parameters are not.” 4.2 Accordingly, the issue in dispute is remitted to the file of ld. AO for fresh consideration after giving an opportunity of hearing to the assessee. 4. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 15 th Nov, 2023 Sd/- (Chandra Poojari) Accountant Member Bangalore, Dated 15 th Nov, 2023. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore.