KALIMUDDIN MOHAMAD RAFIQUE,MUMBAI V. DCIT, CIR-4(3)(2), MUMBAI

ITA 594/MUM/2024

AI Insights

The case involves Kalimuddin Mohamad Rafique, who appealed against the order of the National Faceless Appeal Centre (NFAC) confirming the addition of Rs. 12,02,500 to his income for the Assessment Year 2011-12. This addition was initially made by the Deputy Commissioner of Income Tax under section 144 read with section 147 of the Income-tax Act, 1961, due to unexplained cash deposits in the assessee's bank account. The assessee argued that part of the deposits were business receipts and personal savings, and contested the application of section 68, which led to double taxation. However, both the CIT(A) and the Tribunal found the explanations and evidence provided by the assessee insufficient to substantiate his claims, leading to the dismissal of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396548 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Additional evidence; Reassessment proceedings; Unexplained cash credit
• Section: 147; 144; 142(1); 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 594/MUM/2024 Assessment Year: 2011-12 Kalimuddin Mohamad Rafique E/801, Dhreeja Jamuna CHS, Chincholi Bunder Road, Malad(West),Mumbai-400064. PAN: AQAPK7595C Vs. Deputy Commissioner of Income Tax Circle 4(3)(2), Room No. 649, 6th Floor, Aayakar Bhavan, M. K. Road, Churchgate, Mumbai-400020. (Appellant) (Respondent) Present for: Assessee : Ms. Priyanshi Desai, Advocate Revenue : Shri. Rajesh Meshram, Sr. DR Date of Hearing : 25.03.2025 Date of Pronouncement : 28.05.2025 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of National Faceless Appeal Centre (NFAC), vide order no. ITBA/NFAC/S/250/ 2023-24/1058799667(1) dated 15.12.2023 passed against the assessment order by Dy. Commissioner of Income Tax, Circle4(3)(2), Mumbai, u/s.144 r.w.s 147 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 12.12.2018 for Assessment Year 2011- 12. 2. Grounds taken by the Assessee are reproduced as under: “1. The Ld. CIT (Appeals) has erred both in law and on the facts in confirming the action of the Ld. Assessing Officer of making addition of Rs. 12,02,500/- under section 68 r.w.s. 115BBE of the Income-tax Act, 1961 on account of unexplained cash deposit made in the bank account without considering the submissions made by the Appellant and rejecting the explanation and requisite documents submitted during the course of appellate proceedings before Ld. CIT (Appeals). 2 ITA No. 594/Mum/2025 Kalimuddin Mohamad Rafiquie, A.Y. 2011-12 2. Without prejudice to the above, the Ld. CIT (Appeals) has erred both in law and on the facts in confirming the addition under section 68 r.w.s. 115BBE of the Income-tax Act, 1961 on account of unexplained cash deposit without considering the submissions made by the Appellant during the course of assessment proceedings and appellate proceedings that the cash deposit to the extent of Rs.6,49,430/- was made out of receipts from carrying out business which was duly disclosed in Profit and Loss Account for the year under consideration. 3. The Ld. CIT(Appeals) has erred both in law and on the facts in confirming the action of the Ld. Assessing Officer of wrong invocation of section 68 of the Income-tax Act, 1961 as the impugned addition to the extent of Rs.6,49,430/- to the total income of the Appellant amounts to double taxation firstly as business income and secondly as unexplained cash deposit under section 68 4. The Ld. CIT (Appeals) has erred both in law and on the facts in confirming the action of the Ld. Assessing Officer of making addition to the extent of Rs.6,49,430/- on account of unexplained cash deposit under section 68 without considering the fact that the said addition was made by the Ld. Assessing Officer without rejecting the profit and loss account enshrined in return of income filed in ITR Form No.4 for the year under consideration which was duly furnished during the course of reassessment proceedings. 5. The Ld. CIT (Appeals) has erred both in law and on the facts in agreeing with the Ld. A.O. that the Appellant's case does not qualify for admission of additional evidence under Rule 46A of Income Tax Rules, 1962 without considering the fact that the Appellant was not in receipt of the notice dated 20.11.2018 issued under section 143(2) and 142(1) wherein the Appellant was required to explain the source of cash deposit of Rs. 12,02,500/- made in the bank account thereby preventing the Appellant from producing the evidence to explain the source of cash deposit which he was called upon to produce by the Ld. Assessing Officer vide the aforesaid notice. 6. The Ld. CIT (Appeals) has erred both in law and on the facts in approving the action of the Ld. A.O. of completing the reassessment for the year under consideration to the best of his judgment under section 144 of the Income-tax Act, 1961 without considering the fact that the Appellant was not in receipt of notice dated 20.11.2018 issued under section 143(2) and 142(1) wherein the Appellant was required to explain the source of cash deposit of Rs.12,02,500/- made in the bank account thereby affirming the best judgment assessment order passed by the Ld. A.O. without giving sufficient opportunity to the Appellant to adduce evidence relevant to the impugned addition so made. 7. The Ld. CIT (Appeals), has erred in confirming the fact in its impugned order that the Appellant has not surrendered the PAN \"AIVPM1766C\" which was erroneously furnished to bank without considering the fact that the said PAN is deactivated and not in use and the Appellant is regularly filing income tax return under the valid PAN \"AQAPK7595C\" which is linked with the Aadhar Card.” 3. Brief facts of the case as culled out from records are that, assessee is in retail trading and filed his return of income with PAN: 3 ITA No. 594/Mum/2025 Kalimuddin Mohamad Rafiquie, A.Y. 2011-12 “AQAPK7595C” on 31.08.2012 showing loss from house property of Rs. 1,50,000/- and income from business/profession at Rs.2,71,135/-. Thus, the assessee reported gross total income at Rs.2,71,485/- against which claimed a deduction u/ch XIA at Rs. 63,147/-. According to the Ld.AO, AIR (ITS) data showed that there is a deposit of cash of Rs.12,02,500/- in the bank account of the assessee held in Standard Chartered Bank, Lokhandwala Branch, Mumbai. Since assessee did not file his return of income, the sources of said cash deposit could not be verified which led to issue of notice u/s.148 of the Act, dated 27.03.2018. 3.1. Assessee was required to furnish his explanation along with documentary evidences to substantiate the source of deposit of cash in his bank account. Assessee claimed that he had been regularly filing his return of income against the stated PAN “AQAPK7595C”. However, there was another PAN allotted to the assessee i.e. “AIVPM1776C” which was mistakenly given to the Standard Chartered Bank for the account where deposit of cash had taken place. Assessee was asked to establish that this deposit of cash in Standard Chartered Bank account has been duly considered in the return filed by him with the other PAN. Since assessee neither furnished any explanation nor any documentary evidences, Ld.AO completed the assessment by making addition towards deposit of cash as unexplained cash credit u/s. 68 of the Act. 4. Aggrieved, assessee went in appeal before the Ld.CIT(A). Assessee reiterated the facts about having two PAN with him. It was submitted that, he never used the second PAN which was submitted to Standard Chartered Bank for any purpose. It was claimed by the assessee that Rs.6,49,340/- was deposited as business receipt which comprised of data processing fees of Rs. 2,70,480/- and Rs. 3,78,950/- as gross sales of leather items. For the balance amount of Rs.5,53,070/-, it was submitted that the deposit was made out of personal as well as savings of his spouse. 4 ITA No. 594/Mum/2025 Kalimuddin Mohamad Rafiquie, A.Y. 2011-12 4.1. Upon submissions of additional evidences, Ld. CIT(A) called for a remand report from the Ld. AO. Observations made by Ld. AO in the remand proceedings are reproduced below which brings out absence of genuineness of the transaction and lack of credibility. “1. Out of total cash deposits made, the assessee claimed to receive a sum of Rs 2,82,367/- from his wife, however he has not provided any cogent material on record about how his wife sourced this cash. Therefore, this cannot be verified. 2. Rs 3,60,100/- is shown as withdrawal from the bank, though the withdrawal entries appear in the bank statement of the assessee however it is beyond logic why the assessee will do any unfruitful exercise of withdrawing from the ATM and made deposits in cash. This seems an afterthought to match the entries. The cash deposits of Rs.3,60,100/- therefore remained unverified. 3. The total cash sales during the year to the tune of Rs 3,78,950/- is shown, however, no documentary evidence for these sale proceeds is brought on record. Therefore, the same cannot be verified. 4. Data processing fees of Rs 2,70,480/- is entire receipt in cash. However, the assessee has not submitted any bills/ invoices/voices/work completion certificate etc which substantiates claim of receipts. 4.2. Assessee furnished his rejoinder to the remand report but could not evidently and corroboratively counter the observations of Ld. AO. Ld. CIT(A) considered the issue which hovers around existence of two PAN with the assessee for which he claims that PAN with “AQAPK7597C” is used for filing his returns and other one “AIVPM1776C” was submitted for bank purposes. After taking into account the submission made by the assessee, Ld. CIT(A) concluded that there are no corroborative evidence to explain sources of deposit of cash in the bank account of the assessee. He also noted that assessee has not surrendered his other PAN which according to him was submitted to the bank. Thus, after considering all the facts and submissions, the addition made was sustained and appeal was dismissed. Aggrieved, assessee is in appeal before the Tribunal. 5. Before us, Ld. Counsel of the assessee reiterated the above stated facts and submissions made before the authorities below. He further pointed to a letter submitted before the bank which is dated 02.01.2019 5 ITA No. 594/Mum/2025 Kalimuddin Mohamad Rafiquie, A.Y. 2011-12 requesting to update his PAN which he had been using regularly. This letter was submitted after the passing of impugned assessment order wherein the addition was made. Ld. counsel in the alternate claimed relief to the extent of business receipts reported in the income and expenditure account amounting to Rs.6,49,430/- for the deposit of cash in the bank account. He also submitted that the reasonable net profit on the said cash deposit may be added. 5.1. Per contra, Ld. SR DR asserted that finding of Ld. CIT(A) after calling remand report has factually dealt with the case of the assessee, where nothing corroborative is brought on record for the claim made, justifying and explaining the source of deposit of cash. Accordingly, the additions so made ought to be sustained. 6. We have considered the submissions made by both the parties and perused the material on record. There is no dispute on existence of two PAN with the assessee. There is nothing brought on record to demonstrate that one of the PAN has been surrendered by the assessee after coming to his knowledge of there being two PAN in his name. The only document furnished is of requesting the bank to update the regular PAN which is made by the assessee after passing of the impugned assessment order with the bank. Even if the submissions made by the assessee have to be considered that part of the deposit of cash relates to business receipts on account of data processing fees and sale of leather items, there is no documentary evidence to establish such a fact. In respect of claim that the balance amount other than the business receipts is out of saving of the assessee and his spouse, there is nothing to substantiate the claim, justifying the savings available with the assessee and his spouse. 6.1. Perusal of the bank statement available in the paper book also does not bring any clarity as to frequency and nature of transactions reflected in the said bank statement. The submissions made by the assessee are not adequate and evasive in nature. We also take note of 6 ITA No. 594/Mum/2025 Kalimuddin Mohamad Rafiquie, A.Y. 2011-12 provisions u/s. 139A of the Act whereby subsection (7) provides that no person who has already been allotted a PAN under the new series shall apply, obtain or possess another PAN. In the present case, assessee holds two PAN and has not brought on record any documentary evidence of surrendering one of the two PAN possessed by him which is claimed to have been inadvertently allotted to him. 6.2. In the given set of facts and circumstances and detailed exercise under taken by Ld.CIT(A) including calling of remand report from the Ld.AO, we do not find any reason to interfere with the findings arrived at by Ld.CIT(A). Considering the overall factual matrix, the additions made towards deposit of cash in Standard Chartered Bank having another PAN as stated by the assessee, remains unexplained and therefore, is sustained. Accordingly, grounds raised by the assessee are dismissed. 7. In the result, appeal of the assessee is dismissed. Order is pronounced in the open court on 28th May, 2025 Sd/- Sd/- (Pawan Singh) (Girish Agrawal) Judicial Member Accountant Member Dated: 28th May, 2025 Divya R. Nandgaonkar Stenographer Copy to : 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 5 Guard File CIT BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "