SMT. REENA MATHUR,INDORE V. DCIT-3(1), INDORE

SA 1/IND/2025

AI Insights

This case involves a stay application filed by Smt. Reena Mathur against the recovery of an outstanding demand resulting from additions made by the Assessing Officer (AO) under sections 69A and 115BBE of the Income-tax Act, 1961. The demand arose from unexplained bank deposits and disallowed interest on a house loan for the assessment year 2017-18. The assessee contended that the case should have been selected for 'Limited Scrutiny' and that the deposits were from a business income and declared undisclosed income under the IDS. However, the Tribunal found that the case was under 'Complete Scrutiny' and that the assessee failed to substantiate the source of the deposits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470318 (ITAT-INDORE)
• Appeal Type: Stay Application
• Pronouncement Date: 28-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: FORREVENUEMADE; FORREVENUESUBMITTEDTHATINPARANO.; FORREVENUEDREWUSTOTHEAFORESAID; FORREVENUE.WEFINDTHATTHECIT A HASMADEA; SHRIASHISHPORWAL
• Assessee Lawyers: SHRI PAVAN VED
• Keywords: Business income; Application of stay
• Section: 143(3); 69A; 20

Judgement Text

"Page 1 of 11 आयकरअपीलीयअिधकरण, इंदौरɊायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER AND SHRI UDAYAN DAS GUPTA, JUDICIAL MEMBER (Virtual hearing) SA No.1/Ind/2025 (Arising out of ITA No. 462/Ind/2023) A.Y: 2017-18 Smt. Reena Mathur 102, Regency Point Shri Nagar Ext. Indore बनाम /Vs. DCIT 3(1) Indore (Appellant / Assessee) (Respondent / Revenue) PAN:ABZPM1734D Assessee by Shri Pavan Ved, AR Revenue by Shri Ashish Porwal, Sr. DR Date of Hearing 24.01.2025 Date of Pronouncement 28.01.2025 O R D E R Per Bench: This stay application has been filed by the assessee seeking stay over recovery of outstanding demand of Rs. 1,99,78,906/- consisting of tax and interest created by assessment-order dated 16.12.2019 passed by DCIT/ACIT-3(1), Indore [“AO”] u/s 143(3) of Income-tax Act, 1961 for Smt. Reena Mathur SA No.1/Ind/2025 – AY 2017-18 Page 2 of 11 Assessment-Year [“AY”] 2017-18, which is impugned in ITA No. 462/Ind/2023 pending before ITAT, Indore. 2. Heard the learned Representatives of both sides and case records perused. 3. Ld. AR for assessee initially carried us to the assessment-order dated 16.12.2019 passed by AO to explain the facts giving rise to outstanding demand. Referring to same, Ld. AR showed that the assessee is engaged in the business of trading of lawn grass, plants, nursery, seaweeds, organic manure, etc. That for the year under consideration, the assessee declared presumption income u/s 44AD from the said business. That the assessee deposited a total sum of Rs. 1,95,05,500/- in bank accounts during the previous year 2016-17 relevant to AY 2017-18 out of which a sum of Rs. 1,51,16,500/- was deposited during demonetization period from 09.11.2016 to 30.12.2016. That the AO treated entire deposit of Rs. 1,95,05,500/- as unexplained and made addition u/s 69A r.w.s. 115BBE and the AO also made a minor addition of Rs. 2,00,000/- by disallowing the interest on house loan claimed by assessee as deduction. These additions have resulted in a demand of Rs. 2,04,78,906/- against which the assessee has already deposited a sum of Rs. 5,00,000/-, the remaining demand of Rs. 1,99,78,906/- is outstanding. The assessee Smt. Reena Mathur SA No.1/Ind/2025 – AY 2017-18 Page 3 of 11 filed first-appeal to CIT(A) but did not get success. Therefore, the assessee has come in next appeal before ITAT which is pending before ITAT. 4. Then, the Ld. AR raised several contentions to show that the assessment made by AO and consequentially the impugned demand created therefrom, are suffering from several fallacies. Therefore, according to Ld. AR, the heavy demand created by AO will get quashed in the appeal filed by assessee which is pending before ITAT. Ld. AR submitted that the department is likely to take coercive action against assessee for recovery of demand and hence stay must be granted so as to save assessee from irreparable damage. Ld. DR for revenue made replies to the contentions raised by Ld. AR. We have considered rival submissions made before us by learned Representatives. We discuss below the contentions of both sides alongwith our conclusions. 5. The first contention raised by Ld. AR is such that the case of assessee must have been selected by AO under “Limited Scrutiny” for examining deposits made during demonetization period (which was Rs. 1,51,16,500/- only) but the AO has made addition of Rs. 1,95,05,500/- for deposits made by assessee during entire previous year 2016-17 as well as disallowance of interest expenditure. Therefore, according to Ld. AR, the assessment made by AO by travelling beyond Smt. Reena Mathur SA No.1/Ind/2025 – AY 2017-18 Page 4 of 11 the scope of “Limited Scrutiny” is bad. He pointed out that the assessee has also requested the AO to provide the documentation to show the nature of scrutiny, whether Limited or Complete, but there is no response from AO. 5.1 Replying to this, Ld. DR for revenue submitted that in Para No. 1 of assessment-order, the AO has clearly mentioned that the return was selected for “Complete Scrutiny” under CASS with the reason of “abnormal increase in cash deposits during demonetization period as compared to pre-demonetisation period”. Further, the notice u/s 143(2) dated 09.08.2018 issued by AO filed in assessee’s Paper-Book Pages 8- 11 does not contain any marking of “Limited Scrutiny”. Therefore, the case of assessee was under “Complete Scrutiny” and the AO was required to make a minimum scrutiny of deposits during demonetization period but the AO’s scope was not limited to scrutinize the deposits during demonetization period only. Ld. DR also filed a sample notice of “Limited Scrutiny” issued by department u/s 143(2) in other assessee’s case to show that whenever the case is selected under “Limited Scrutiny”, the AOs are necessarily marking “Limited Scrutiny” in the notice itself as per procedure laid down. Ld. DR submitted that the assessee is merely speculating that his case was Smt. Reena Mathur SA No.1/Ind/2025 – AY 2017-18 Page 5 of 11 under “Limited Scrutiny” but the documents held on record clearly show that the case was under “Complete Scrutiny”. 5.2 After a careful consideration, we find very much strength in the submission of Ld. DR. We observe that in Para No. 1 of assessment- order the AO has clearly stated that the case was taken for “Complete Scrutiny” under CASS. Further, the statutory notice u/s 143(2) available in assessee’s Paper-Book does not contain any marking of “Limited Scrutiny”. Thus, from the documents presently available on record, there is no force in the contention of Ld. AR that the case was under “Limited Scrutiny”. Accordingly, this contention is rejected. 6. The next contention raised by Ld. AR is such that the assessee had declared undisclosed income of Rs. 1,25,00,000/- under Income Declaration Scheme, 2016 [“IDS”], copy of Form No. 4 being Certificate issued by Income-tax Department accepting assessee’s declaration is filed in Paper-Book. Therefore, the assessee was having directly explainable cash to the extent of Rs. 1,25,00,000/- to make deposits during demonetization period and hence the addition to the extent of Rs. 1,25,00,000/- is straightaway liable for deletion. Ld. AR narrated that the assessee submitted this very point to CIT(A) but the CIT(A) rejected assessee’s submission by making an erroneous mention in Para 4.3.1 of his order that Form No. 4 of IDS was not filed whereas Smt. Reena Mathur SA No.1/Ind/2025 – AY 2017-18 Page 6 of 11 the correct fact is such that the Form No. 4 was filed. Ld. AR submitted that since the CIT(A) has committed an apparent error, the assessee has filed rectification-application dated 16.11.2023 u/s 154 to CIT(A), copy filed at Paper-Book Page 20-39, but the same is not yet disposed despite lapse of substantial period. Therefore, the assessee is ready to furnish 20% security of balance amount [i.e. demand of Rs. 1,99,78,906 (-) 1,25,00,000 explainable from IDS] and a complete stay should be given to assessee for entire demand of Rs. 1,99,78,906/-. Alternatively, Ld. AR prayed that an interim stay may be granted till disposal of rectification-application by CIT(A). Ld. AR also filed a copy of order-sheet dated 10.01.2025 of ITAT, Delhi Bench in SA No. 476/Del/2024 wherein interim stay has been granted to assessee since the rectification-application was pending before CIT(A). 6.1 Replying to this, Ld. DR for revenue drew us to the aforesaid rectification-application dated 16.11.2023 claimed to have been filed by assessee to CIT(A). Referring to same, Ld. DR showed (i) that the said application is running over 20 pages and contemplates review of CIT(A)’s order rather than rectification of any apparent error and (ii) more importantly, nowhere in the rectification-application the assessee has sought rectification of CIT(A)’s order on the ground of non- consideration of declaration in IDS/non-consideration of Form No. 4 of Smt. Reena Mathur SA No.1/Ind/2025 – AY 2017-18 Page 7 of 11 IDS. Ld. DR went further to submit that the CIT(A) has categorically mentioned in the Para 4.3.1 of order that the assessee was making contradictory statements about the source of cash deposit either it is sale or it is unaccounted money declared under IDS. Ld. DR also dragged us to Para 4.2 of assessment-order to show that nowhere the assessee has made claim of IDS before AO. He submitted that the assessee’s explanation before AO was that the deposits were made from business of trading of nursery, seaweeds, etc. and even that claim was not substantiated by any document as observed by AO. Ld. DR emphasized that there is no iota of evidence submitted by assessee to AO to substantiate the source of deposits. Having said thus, Ld. AR also carried us to the Form No. 4 of IDS filed in Paper-Book in an attempt to show that said Form No. 4 is silent regarding description of assets in which the undisclosed income declared in IDS was held by assessee and hence it is not discernible as to whether the same was held in the form of “cash”. Further, the declaration of undisclosed income in IDS is for the years 2010, 2011, 2012 which are far beyond from previous year 2016-17 in which the impugned deposits were made. Therefore also, the assessee’s claim is not acceptable. 6.2 After a careful consideration, we find a strong merit in the submissions of Ld. DR for revenue. We find that the CIT(A) has made a Smt. Reena Mathur SA No.1/Ind/2025 – AY 2017-18 Page 8 of 11 clear observation that there is contradiction in assessee’s submission qua the source of deposits i.e. whether it was from sale of business or from IDS. Ld. DR has also shown that before AO, the assessee did not make a claim of IDS and whatever source was explained, was also not substantiated by documents. So far as the rectification-application dated 16.11.2023 filed by assessee to CIT(A) is concerned, the assessee has nowhere raised the issue of non-consideration of IDS / Form No. 4 of IDS as an apparent error in the said application. When we countered Ld. AR qua this point, Ld. AR instantly submitted that the assessee has very recently realized that the said apparent error has not been mentioned in the rectification-application and hence the assessee has already filed a newer application to CIT(A) a few days ago. When the Bench asked the Ld. AR to file evidence of such newer rectification-application, Ld. AR agreed to file copy of same after hearing. Subsequently, Ld. AR has filed an email to ITAT at 12:21 PM after conclusion of hearing regretting for his wrong statement that application was filed to CIT(A). He has further submitted that he sent application on 18/1/25 to CA of assessee but the CA could not upload the same because the portal was not accepting on the ground that earlier application was already pending. Be that as it may, the fact remains that the in the rectification-application pending before CIT(A), Smt. Reena Mathur SA No.1/Ind/2025 – AY 2017-18 Page 9 of 11 there is no rectification sought by assessee qua the non-consideration of IDS/Form No. 4 of IDS. That apart, we also agree with Ld. DR’s submission that the Form No. 4 of IDS does not show that the undisclosed income was in the form of “cash” with assessee and even the declaration was for much earlier years. So far as the interim stay granted by ITAT, Delhi in SA No. 476/DEL/2024 is concerned, on perusal of order-sheet dated 10.01.25 filed before us and also perusal of preceding order-sheet dated 13.12.2024 available at ITAT’s website, we find that there are substantial issues of illegality, jurisdiction and limitations involved therein for which the ITAT directed the department to ascertain certain facts to which the DR sought time to file status report, hence the stay application was adjourned till next date of hearing and interim direction was given to the department for not taking coercive action till next date of hearing of stay application. In present case, there is no such thing. The facts of present case do not warrant us to grant any stay or interim direction. Accordingly, this contention is also rejected. 7. On more point raised by Ld. AR is such that the AO has invoked higher rate of tax u/s 115BBE to the impugned addition whereas the same, in worst case, would be chargeable at normal rate since the deposits in bank a/c were representing assessee’s business income. Smt. Reena Mathur SA No.1/Ind/2025 – AY 2017-18 Page 10 of 11 Therefore also, the demand of assessee would come down substantially. We find that the issue concerns the source of deposit in bank a/c and the AO has considered the same as undisclosed, therefore the AO has made addition u/s 69A. Once addition is made u/s 69A, it automatically attracts higher rate of tax u/s 115BBE. It is also noteworthy that the stand of assessee qua the source of deposit is not clear whether it is sale of business or undisclosed income declared in IDS. This contradiction in assessee’s claim has also been taken into account by CIT(A) for rejection of assessee’s first appeal. Consequently, we are not inclined to accept this claim of assessee also. 8. Thus, from our prima facie observations as noted above, we are not convinced with the submissions of Ld. AR. Consequently, we do not think it is a fit case for grant of stay. Hence, we decline to grant stay as prayed for. The assessee’s application is rejected. 9. Before parting, we make it clear that our prima facie observations noted above, are based on very limited material and arguments possible at the stay of hearing of stay application. Hence the above observations should not be construed as observations on merit. These observations are in the matter of stay application only and shall not prejudice the hearing of appeal of assessee on merit Smt. Reena Mathur SA No.1/Ind/2025 – AY 2017-18 Page 11 of 11 which shall be independently decided on the basis of material and arguments at that time. Order pronounced in open court on 28/01/2025. Sd/- Sd/- (UDAYAN DAS GUPTA) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER िदनांक/Dated : 28.01.2025 Patel/Sr. PS Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file. By Order, Sr. Private Secretary, I.T.A.T., Indore "