Case Law Details
Shri Palanisamy Chinnasamy Vs ITO (ITAT Chennai)
In this case, The assessment was completed under section 144 r.w.s. 144(1)(b) of the Act by making addition of ₹.5,34,000/- under section 69A of the Act on the ground that the money received from the customers on various dates in old notes cannot be accepted a genuine as the assessee was not supposed to receive currency as per the norms. The contention of the assessee is that he has received and remitted the demonetized currency within the time stipulated by the Act No. 2 of 2017 of the Specified Bank Notes (Cessation of Liabilities) Act, 2017. However, the Assessing Officer was of the opinion that the assessee has been doing furniture business which does not fall under the exemption category as given by the board such as petrol pump, hospital, medical shop, Airtel recharge, etc.
In this case, admittedly, the assessee has neither filed regular return of income under section 139 of the Act for the assessment year 2017-18 nor furnished complete details in response to various notices issued by the Assessing Officer. Moreover, there was no response to the notices issued by the ld. CIT(A) also or furnished any explanation/reply and thus, the ld. CIT(A) confirmed the assessment order. In view of the above, we are of the considered opinion that the assessee shall furnish complete details before the Assessing Officer and the Assessing Officer shall, after verification of details as may be filed by the assessee, decide the issue afresh in accordance with law by affording reasonable opportunity of being heard to the assessee.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) – National Faceless Appeal Centre (NFAC), New Delhi dated 17.11.2021 relevant to the assessment year 2017-18.
2. Brief facts of the case are that the assessee is the proprietor of Chozha Furniture Mart, Dharapuram. As per information available on AIMS Module of ITBA, the Assessing Officer noticed that during the period of demonetization from 09.11.2016 to 30.12.2016, the assessee has made various deposits in various bank accounts. The assessee has not filed his return of income for the assessment year 2017-18. Therefore, the Assessing Officer issued notice under section 142(1) of the Income Tax Act, 1961 [“Act” in short] dated 13.03.2018 requesting the assessee to file return of income for the assessment year 2017-18. However, the assessee has failed to comply with the notice under section 142(1) of the Act and he has not filed regular return of income as per the provision of section 139 of the Act. Subsequently, the assessee has filed a return of income on 29.03.2019 declaring a gross total income of ₹.4,49,148/-, which was a belated one and hence, the Assessing Officer has held that it is an invalid return as the same was not filed within the time limit. Despite various opportunities afforded to the assessee to furnish further details such as source for cash deposited during demonetization period with supportive evidences, cash flow statements, etc. Since the assessee has not responded, the assessee was finally show-caused as to why the amount of cash deposited into the bank account(s) during the year under consideration amounting to ₹.38,98,000/- should not be treated as unaccounted income/explained money and the unexplained cash credits of ₹.4,73,199/- that is the difference between total cash credits ₹.43,71,199/- and total cash deposit of ₹.38,98,000/- should not be assessed to tax, After considering the submissions of the assessee, the Assessing Officer has observed that the deposit of ₹.5,74,900/- received from the customers on various dates in old notes cannot be accepted as genuine as the assessee was not supposed to receive old currency as per the norms. After obtaining bank statements, the Assessing Officer has observed that the assessee has been doing furniture business which does not fall under exemption category as given by the board such as petrol bunk, hospital, medical shop, Airtel recharge, etc. the total cash deposits of ₹.5,34,000/- as per bank account statements (₹.3,03,500.- in ICICI Bank and ₹.2,30,500/- in Canara Bank) of the assessee were treated as unexplained income/money belong to the assessee and added under section 69A of the Act. The total credits in the assessee’s bank account (current accounts alone) was ₹.38,06,199/- including deposit of ₹.5,34,000/- during demonetization period. The difference of total credits in the current accounts of ₹.38,06,199/- and total cash deposit during demonetization period in the current accounts of ₹.5,34,000/- was equal to ₹.32,72,099/-. Accordingly, the business turnover of the assessee was estimated as ₹.32,72,009/- for the assessment year 2017-18 and total income from the business was arrived at ₹.2,61,768/- being 8% of ₹.32,72,099/-. In view of the above, the Assessing Officer has completed the assessment under section 144 r.w.s. 144(1)(b) of the Act dated 24.09.2019 by assessing the total income of the assessee at ₹.7,9,768/-.
On appeal, since there was no response from the assessee, the ld. CIT(A) confirmed the order passed by the Assessing Officer.
3. On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the assessee has received and remitted the demonetized currency within the time stipulated by the Act enacted during demonetization and prayed for deleting the addition.
4. On the other hand, the ld. DR supported the orders of authorities below and submitted that the assessee has not properly responded to the notices issued by the ld. CIT(A) as well as Assessing Officer calling for the details to substantiate his claim.
5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. The assessment was completed under section 144 r.w.s. 144(1)(b) of the Act by making addition of ₹.5,34,000/- under section 69A of the Act on the ground that the money received from the customers on various dates in old notes cannot be accepted a genuine as the assessee was not supposed to receive currency as per the norms. The contention of the assessee is that he has received and remitted the demonetized currency within the time stipulated by the Act No. 2 of 2017 of the Specified Bank Notes (Cessation of Liabilities) Act, 2017. However, the Assessing Officer was of the opinion that the assessee has been doing furniture business which does not fall under the exemption category as given by the board such as petrol pump, hospital, medical shop, Airtel recharge, etc.
6. In this case, admittedly, the assessee has neither filed regular return of income under section 139 of the Act for the assessment year 2017-18 nor furnished complete details in response to various notices issued by the Assessing Officer. Moreover, there was no response to the notices issued by the ld. CIT(A) also or furnished any explanation/reply and thus, the ld. CIT(A) confirmed the assessment order. In view of the above, we are of the considered opinion that the assessee shall furnish complete details before the Assessing Officer and the Assessing Officer shall, after verification of details as may be filed by the assessee, decide the issue afresh in accordance with law by affording reasonable opportunity of being heard to the assessee.
7. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on the 29th July, 2022 in Chennai.
