NURUNNESHA SARDAR,HOWRAH V. .ITO, 47(2), KOLKATA

ITA 98/KOL/2024

AI Insights

The case involves Nurunnesha Sardar, an elderly lady and trader of motorcycles, who appealed against the order of the CIT(A) which upheld the addition of Rs. 12,57,000 as unexplained cash deposits during the demonetization period in India. The Income Tax Officer (ITO) had initially made this addition under Section 144 of the Income Tax Act, 1961, due to non-compliance with notices and lack of satisfactory explanation regarding the source of the deposits. The CIT(A) dismissed her appeal, leading to the current appeal before the ITAT. The ITAT noted that the assessee had not provided necessary documents at earlier stages but allowed the appeal for statistical purposes, remanding the case back to the CIT(A) for a fresh examination with the new documents submitted.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469557 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: Chuharmal vs. CIT (1988) 172 ITR 250, ITO, Ward 1(1)(3), Ahmedabad Versus M/s Ashapura Petrochem Marketing Pvt. Ltd. [ITA No 51 l/Ahd/2020], Kishore Jeram Bhai Khaniya Vs Income Tax Officer, Ward -25(1) New Delhi [ITA No. 1220/Del/2011], Income Tax Officer Vs Kishore Jeram Bhai Khaniya, Ward -25(1) New Delhi [ITA No. 980/Del/2011], Assistant Commissioner of Income Tax 1(1), Ujjain Vs. Dewas Soya Limited [ITA No. 336/Ind/2012]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Business income; Opportunity of being heard; Reasonable cause
• Section: 144; 142(1); 250; 68; 44AD; 69A; 72

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'एसएमसी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA श्री संजय शमाा, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SONJOY SARMA, JUDICIAL MEMBER & SRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 98/KOL/2024 Assessment Year: 2017-18 Nurunnesha Sardar Vs. ITO, Ward-47(2), Kolkata (Appellant) (Respondent) PAN: BLTPS8269Q Appearances: Assessee represented by : None. Department represented by : Susanta Saha, Sr. DR. Date of concluding the hearing : September 25th, 2024 Date of pronouncing the order : December 20th, 2024 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: The present appeal filed by the assessee pertaining to the AY 2017-18 is against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (in short, the 'Act') dated 07.11.2023, which is arising out of the assessment order framed u/s 144 of the Act dated 11.11.2019. Page | 2 I.T.A. No.: 98/KOL/2024 Assessment Year: 2017-18 Nurunnesha Sardar. Page 2 of 9 1.1. The Registry has informed that the appeal filed by the assessee is barred by limitation of time by 11 days. A condonation petition has been filed by the assessee for condoning the delay stating as follows: “The Appellant humbly prays before the Hon’ble Income Tax Appellate Tribunal, Kolkata to condone the delay of 12 days in filing this Appeal Petition before the Hon’ble Tribunal. The Appellant would like to draw your kind attention to the fact that the delay in filing Appeal Petition has taken place due to the following reasons: 1. The period of dispute is Assessment Year 2017-18, relating to Previous Year 2016-17. As the matter relates to much older period, huge time has been consumed in finding and consolidating the records. 2. The Appellant is an old lady of 72 years of age and due to such old age is suffering from various chronic diseases. In the aforesaid circumstances, the Appellant humbly prays before the Hon’ble Tribunal to allow the Appellant to submit this Appeal Petition for the interest of justice.” 1.2. Considering the condonation application and the reasons stated therein that the assessee being an old lady of 72 years and was suffering from various diseases, we are satisfied that the assessee was prevented by sufficient and reasonable cause from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication on merits. 2. The assessee is in appeal before this Tribunal raising the following grounds of appeal: “1. The Assessee was engaged in trading of motor cycles and accessories under the trade name Sankrail Automobiles since a long period. As the commodities are motor cycles therefore there had always been a reasonable demand prevailing in the market. Hence the Turnover of the business in reasonable quantum is not unusual. 2. The Assessee being an old aged senior citizen lady had developed a habit of retaining a sizable amount of cash in hand. This cash was not only held for the purpose of savings but also for emergency purpose to be served as working capital of the business. Page | 3 I.T.A. No.: 98/KOL/2024 Assessment Year: 2017-18 Nurunnesha Sardar. Page 3 of 9 3. During the period of demonetization, there was no presumption in the economy that old currency notes of Rs. 500/- and Rs. 1,000/- would be obsolete overnight. After announcement of demonetization in the year 2016, the cash holding of the Assessee had to be submitted in the bank accounts of the Assessee. 4. That the contention of the Ld. Assessing Officer (hereinafter referred to as ‘AO’ of determining Rs. 12,57,000/-, being the cash deposits as undisclosed income is not tenable as the cash deposited has been generated during the ordinary course of business of the Assessee for all the past years of activities. 5. It is also to be noted that contention of the Ld. AO of holding Rs. 12,57,000/-being the cash deposits as undisclosed income is based on presumption and no conclusive evidence was referred to by the Ld. AO during passing of the Assessment Order, based on which it could be proved that the cash deposited to the bank accounts was undisclosed income of the Assessee. 6. The Assessee being an old aged senior citizen lady, could not track the directions provided by the Ld. Adjudicating Authority from time to time and hence non-submission of documents at the end of the Assessee was not intentional or not for any malafide purposes. 7. That the Assessee has duly disclosed the income as earned during the Assessment Year 2017-18 during filing of Income Tax Return. The computation of income as aforesaid is attached herewith and marked as ‘Annexure A’ for your kind perusal.” 2.1. The brief facts of the case as per the statement of facts are as follows: a) This Appeal is preferred before the Hon’ble Income Tax Appellate Tribunal, Kolkata (hereinafter referred to as ‘ITAT’) in the prescribed Form No. 36 along with relevant attachments against the order passed by the Commissioner of Income Tax (Appeals) vide order dated 07th November, 2023 relating to the Assessment Year 2017-18 in the matter of Nurunnesha Sardar, i.e. the Assessee. b) The Assessee preferred to appeal against the order passed by the Ld. Income Tax Officer, Ward 47 (6), Kolkata, before the Ld. Commissioner of Income Tax (Appeals). The aforesaid Order was passed by Ld. Income Tax Officer under Section 144 of the Income Tax Act, 1961 dated 11th November, 2019. c) In the said order passed by the Ld. Income Tax Officer, it was held that Rs. 12, 57,000/-, being the cash deposits made by the Assessee during Page | 4 I.T.A. No.: 98/KOL/2024 Assessment Year: 2017-18 Nurunnesha Sardar. Page 4 of 9 the Previous Year 2016-17, as undisclosed income under Section 68 of the Income Tax Act, 1961 and thereafter imposed prescribed tax, interest and penalties on the said amount by passing Order under Section 144 of the Income Tax Act, 1961. d) Thereafter the Assessee preferred an Appeal before the Ld. Commissioner of Income Tax (Appeals) by filing the prescribed Form 35 as provided in the Statute. e) The Commissioner of Income Tax (Appeals) rejected the Appeal Petition and the plea of the Assessee by order dated 07th November, 2023. f) In such aforesaid circumstances, the Assessee prefers to move this Appeal Petition before this Hon’ble Tribunal for against the order passed by Ld. Commissioner of Income Tax (Appeals). 2.2. None appeared on behalf of the assessee and the appeal is heard with the assistance of the ld. Sr. DR. Brief facts of the case are that the assessee had filed the return of income on 24.03.2018 showing total income of Rs. 4,64,900/- which was selected for scrutiny on the issue of cash deposited during the demonetization period. Since the notice u/s 142(1) of the Act issued during the course of the assessment proceeding was not complied with, the Ld. Assessing Officer (hereinafter referred to as ld. 'AO') relying upon the decision of Hon’ble Supreme Court in the case of Chuharmal vs. CIT (1988) 172 ITR 250 and in the absence of any explanation for the source of the deposits and after issuing a show cause notice on 04.11.2018, added a sum of Rs. 12,57,000/- u/s 69A of the Act as unexplained money. Aggrieved with the addition, the assessee filed an appeal before the Ld. CIT(A) and also filed a written submission on 22.03.2022 before him which is as under: “1) That the petitioner is old aged lady of 71 years and reseller and trader of motor cycle under the trade name of “SANKRAIL AUTOMOBILE” The copy of PAN and Trade license enclosed 2) That during the subject assessment year the petitioner had made the business of Rs1,97,21,540.00 and income earned of Rs. 4,64,900.00 as per Income tax Return submitted. The Copy of ITR.V Enclosed. Page | 5 I.T.A. No.: 98/KOL/2024 Assessment Year: 2017-18 Nurunnesha Sardar. Page 5 of 9 3) That according to assessment order made by the learned A.O taxable income derived Rs 17,21,900 U/s 144 of IT Act 1961 when tax derived considering taxable income is 29,78,903.00 is bad in law and motivated order made by the A.O of ward 47(6), Kolkata. Taxable Income as per Tax Demand U/s 156 on the basis of Sec. 144 (best judgement) Taxable Income derived by A.O Return Income 4,64,900.00 Taxable Income as per Unexplained money 12,57,000.00 assessment order 17,21,900.00 Again Unexplained money U/s 67A added 1,25,7000.00 As per Assessment Order 17,21,900.00 29,78,900.00 Now the tax and interest demand of Rs 14,22,084/- (Inclusive of interest of Rs104,384/-) is highly irregular and motivated demand must be vacated. The assessment order U/s 144 and demand notice U/s 156 are contradictory enclosed here with. That during the subject assessment year your petitioner deposited Rs 12,57,000.00 in two bank accounts out of the cash collection against sale of motor cycle made to the customers and also out of the cash withdraw during the months of September 2016 and October 2016 from two current bank account……” 2.3. After going through the assessment order and the submission of the assessee, the Ld. CIT(A) noted from the submission that the appellant had stated that she is an aged lady of 71 years and reseller and trader of motor cycle under the trade name of “SANKRAIL AUTOMOBILE” and had also stated that the cash deposits were made out of cash collection against sale of motorcycle. The appellant had not furnished any documentary evidences to substantiate the claim for the year under consideration despite multiple opportunities provided to her. Therefore, the contention of the appellant was not found to be acceptable and the addition of Rs. 12,57,000/- made by the Ld. AO was upheld and the appeal was dismissed. 2.4. During the course of the appeal before us, the ld. Sr. DR submitted that there was no response before the Ld. AO and even before the Ld. CIT(A) the required source of cash deposits was not furnished. It was also submitted that in the AY 2014-15 there was no business carried out by the assessee and, therefore, the order of the Ld. CIT(A) may be Page | 6 I.T.A. No.: 98/KOL/2024 Assessment Year: 2017-18 Nurunnesha Sardar. Page 6 of 9 confirmed. Further, the ld. Sr. DR also filed written submissions which are reproduced as under: “1. In this case, the cash deposit during the demonetisation period of Rs. 12,57,000/- was added u/s 69A as the assessee did not furnish any explanation or source of such cash deposit. As per Page 2 of the Assessment Order the assessee did not furnish any reply even penalty u/s 272A(l)(d) of the Act was initiated. 2. During the appeal proceedings also, the assessee has not furnishing reply or any document with supporting sources of such huge cash deposit during demonetisation period. 3. Before the Hon’ble ITAT, the Assessee has furnished some new documents, which was not furnished before the Ld AO or the Ld CIT(A). Hence, the Sr DR may kindly be allowed to furnish his submission on the new documents filed before the Hon’ble ITAT. 4. Before the Hon’ble ITAT, the assessee has furnished copy of the Trading and Profit & Loss Account where the income from business was shown as Rs. 2,90,000/- and commission income Rs. 1,74,903/-Total Rs. 4,64,903/- is computed as Income from Business & Profession. The assessee claimed that the total of sales and service charges during the FY 2016-17 was Rs. 1,45,22,814/-. The assessee did not furnish any copy of the TAX AUDIT REPORT though the total sale was more than Rs. 1 crore as per the submissions before the Hon’ble ITAT. 4.1 The assessee claimed that the cash deposited was out of her business of SALES OF MOTORCYCLE. So, she was not eligible to receive cash in demonetised notes after 08.11.2016. The assessee has referred two decisions regarding the cash deposit during the Demonetization Period - one of which relating to a PETROL PUMP where the case related to a medicine shop has been mentioned - when both of them were eligible to receive cash in demonetised notes till 30.12.2016. Hence, the decisions are not applicable in this case. So, the cash deposited in demonetized currency after 08/11/2016, must have been the cash in hand as on 08/11/2016. Now whether 4.2 It is required to see whether such huge cash in hand was common in other years or not. The assessee has filed the ITR for AY 2014-15 on 25.09.2015 disclosing turnover of Rs. 7,60,210/- and computed total income of Rs. 2,45,787/- u/s 44AD - presumptive way - no account case. Cash in hand as on 31.03.2014 was NIL. In the ITR, the cash balance, sundry debtors, sundry creditors, stock were written as NIL. 4.3 The assessee has filed the ITR for AY 2015-16 on 15.12.2015 disclosing turnover of Rs. 28,43,520/- and computed total income of Rs. 483400/- u/s 44AD - presumptive way- no account case. The cash balance, sundry debtors, sundry creditors, stock were written as NIL. 4.4 The assessee has filed the ITR for AY 2016-17 on 20.09.2016 disclosing turnover of Rs. 29,31,058/- and computed total income of Rs. 3,51,727/- u/s Page | 7 I.T.A. No.: 98/KOL/2024 Assessment Year: 2017-18 Nurunnesha Sardar. Page 7 of 9 44AD - presumptive way- no account case. The cash balance, sundry debtors, sundry creditors, stock were written as NIL. 4.4 For AY 2017-18, the year under Appeal, the assessee has filed the Return in ITR-2 on 24.03.2018. The ITR-2 is meant for individuals and HUFs NOT CARRYING OUT ANY BUSINESS/PROFESSION. The assessee has disclosed only income from other sources of Rs. 4,64,903/-. The assessee has not disclosed the details of cash deposits during demonetisation period which was required to be disclosed in Para 4-5 of the ITR. The copy of the ITR (first 6 pages) is attached herewith as Annexure A. Here the Assessee has disclosed only income from Other Sources of Rs 4,64,903/-. On perusal of the same the Hon'ble ITAT would appreciate that the assessee has filed some false evidences before the Hon'ble ITAT regarding the business income, commission income, Profit & Loss Account, Balance Sheet etc. as mentioned above in para - 4. The assessee has not furnished any copy of the Tax Audit Report though it is claimed now that the turnover was more than Rs. 1 crore. The accounts are later prepared to match the Income from Other Sources of Rs 4,64,903/- as disclosed in the ITR as Other Sources Income. 4.5 The assessee has filed the Return for AY 2018-19 in ITR-3 on 11.10.2018, where the cash in hand was Rs. 18,215/- and cash at bank was Rs. 12,023/- , Total Rs. 30,238/-as on 31/03/2018. 4.6 The assessee has filed the Return for AY 2019-20 in ITR-3 on 15.10.2019 where the cash in hand was Rs. 38,500/- and cash at bank was Rs. 1,661/- , Total Rs. 40,161/- as on 31/03/2019. 5. From the above, it is apparent that it can't be that the assessee was having cash in hand of Rs. 12,57,000/- as on 08.11.2016 in demonetised notes. Considering the total of cash in hand and cash at bank for other years - from AY 2014-15 to 2016-17 as NIL and for AY 2018-19 and 2019-20 very small amounts as above and also considering that there was cash in hand as on 08.11.2016 in other demonetised notes up to denomination of Rs. 100/-, it is earnestly prayed before the Hon'ble ITAT to consider this submission and kindly reject the documents such as Profit & Loss Account, Balance Sheet etc. filed before the Hon'ble ITAT. The above information is true and collected from the ITRs filed by the Assessee as mentioned.” 3. We have considered the submissions made by the ld. Sr. DR and also gone through the prayer and the judicial pronouncements relied upon by the assessee which have been appended to the appeal memo on Form-36. The assessee has relied upon the following judicial pronouncements in support of the relief claimed: Page | 8 I.T.A. No.: 98/KOL/2024 Assessment Year: 2017-18 Nurunnesha Sardar. Page 8 of 9 i) ITO, Ward 1(1)(3), Ahmedabad Versus M/s Ashapura Petrochem Marketing Pvt. Ltd. [ITA No 51 l/Ahd/2020] ii) Kishore Jeram Bhai Khaniya Vs Income Tax Officer, Ward -25(1) New Delhi [ITA No. 1220/Del/2011) & iii) Income Tax Officer Vs Kishore Jeram Bhai Khaniya, Ward -25(1) New Delhi [ITA No. 980/Del/2011] iv) Assistant Commissioner of Income Tax 1(1), Ujjain Vs. Dewas Soya Limited [ITA No. 336/Ind/2012] 3.1. On the other hand, the ld. Sr. DR contends that the various columns of the return show that neither there was any business during the year under consideration nor the same had been shown and as the assessee contends that the turnover was more than Rs. 1,00,00,000/-, therefore, the accounts were required to be audited, which has not been done. A perusal of the balance sheet filed with Form No. 36 shows that the assessee had shown sales of Rs. 1,44,42,322/- besides service charges received at Rs. 80,492/- and the net profit has been shown at Rs. 2,90,000/-. The balance sheet tallies at Rs. 16,84,054.74/-. In the computation of income, the net taxable income is being shown at Rs. 4,64,903/-. These documents were not filed before the Ld. AO nor even before the Ld. CIT(A). It is a settled principle that even in the best judgment assessment, the income has to be assessed to the best of judgment. Since these documents have been filed for the first time before the Tribunal, therefore, in the interest of justice and fair play, it is deemed appropriate that the order of the Ld. CIT(A) is set aside and the matter is remanded to the file of the Ld. CIT(A) to pass the order de novo after considering the submissions of the assessee and also after giving an opportunity of being heard to the Ld. AO as per rule 46A of the Income Tax Rules, 1962. The assessee shall not seek any Page | 9 I.T.A. No.: 98/KOL/2024 Assessment Year: 2017-18 Nurunnesha Sardar. Page 9 of 9 unnecessary adjournment and shall make all submissions before the Ld. CIT(A). 4. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 20th December, 2024. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 20.12.2024 Bidhan (P.S.) Copy of the order forwarded to: 1. Nurunnesha Sardar, Raghudebbati, Sankrail Raghuydebbati, Howrah, West Bengal, 711310. 2. ITO, Ward-47(2), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "