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Case Law Details

Case Name : Dhirajlal Bhagwanbhai Talaviya Vs ITO (ITAT Surat)
Appeal Number : ITA No. 726/SRT/2023
Date of Judgement/Order : 03/10/2024
Related Assessment Year : 2017-18
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Dhirajlal Bhagwanbhai Talaviya Vs ITO (ITAT Surat)

ITAT Surat Held that Central Board of Direct Tax (CBDT) in its Circular No.3 of 2017, on the issue of cash deposit during demonetization directed to accept the cash deposit up to Rs.2,50,000/-. Thus, addition u/s. 69A reduced by Rs. 2,50,000/- and added the balanced amount.

Facts- The case of the assessee was selected for scrutiny for the reasons of cash deposit during the demonetization. During assessment, AO noted that assessee have made cash deposit of Rs.10,50,000/- in his bank account. AO treated the entire cash deposit as unexplained money and u/s 69A of the Act and taxed the same u/s. 115BBE, in the assessment order dated 08.12.2019 passed u/s 143(3) of the Act.

CIT(A) held that since the assessee failed to substantiate the source of cash deposit, thus, it was a fit case for making addition of Rs.10,50,000/-. CIT(A) further held that on perusal of computation of income, the assessed income is of Rs.15,94,360/. However, the calculation of tax contains certain errors. Thus, AO was directed to make fresh calculation of tax. However, no specific finding in taxing the addition at enhanced rate was given. Further aggrieved, the assessee has filed present appeal before Tribunal.

Conclusion- Held that Central Board of Direct Tax (CBDT) in its Circular No.3 of 2017, on the issue of cash deposit during demonetization directed to accept the cash deposit up to Rs.2,50,000/-. Thus, keeping in view the CBDT Instruction, out of total addition of Rs.10,50,000/-, Rs.2,50,000/-is allowed. Further, keeping in view that assessee is regularly filing return of income and shown gross total income of more than Rs.6,00,000/- in proceeding assessment years and the income from other sources on account of brokerage income is accepted. Therefore, the assessee is also given benefit of availability of Rs.1,50,00/-, thus, out of total addition of Rs. 10.50 lacs, Rs.4.00 lacs is deleted and remaining Rs.6,50,000/- is sustained.

FULL TEXT OF THE ORDER OF ITAT SURAT

1. This appeal by assessee is directed against the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (in short ‘the NFAC’), Delhi, dated 31.08.2023 for Assessment Year (AY) 2017­18. The assessee has raised following grounds of appeal:

“1. On the facts and circumstances of the case as well as on the subject, the learned CIT(A), NFAC has erred in confirming the action of assessing officer in making addition of Rs.10,50,000/- as unexplained money u/s 69A of the I.T. Act, 1961.

2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of assessing officer in invoking provisions of section 115BBE of the Act and in thereby taxing the addition at 60 percentage and levying surcharge at 25 percentage which is not applicable on above amount.

3. It is therefore prayed that above addition made by assessing officer and confirmed by Commissioner of Income-tax (Appeals) may please be deleted.

4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of appeal.”

2. Brief facts of the case are that assessee is an individual, filed his return of income for AY.2017-18 on 14.03.2018, declaring total income of Rs.5,40,630/-. The case was selected for scrutiny for the reasons of cash deposit during the demonetization. During assessment, the Assessing Officer noted that assessee have made cash deposit of Rs.10,50,000/- in his bank account with Yes Bank and Corporation Bank. The Assessing Officer issued show cause notice to substantiate the source of such cash deposit. In response to such show cause notice, the assessee furnished cash book for AY.2016-17 and 2017-18. On receipt of such cash book, the assessee was asked to explain each and every entry reflected in the cash book, otherwise it would be treated as bogus and cash deposit would be treated as unexplained. The Assessing Officer recorded that in response to such show cause notice, the assessee submitted that he has having opening cash balance of Rs.24,67,296/-. The Assessing Officer noted that despite having huge cash balance in hand, the assessee has withdrawn from his bank account and narrated instance on 24.06.2016 wherein the assessee has withdrawn Rs. 20,000/-. The Assessing Officer treated the entire cash deposit as unexplained money and u/s 69A of the Act and taxed the same under section 115BBE, in the assessment order dated 08.12.2019 passed u/s 143(3) of the Act.

3. Aggrieved by the addition of Assessing Officer, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed detailed written submission. Submissions of assessee are recorded in para 6 of order of ld. CIT(A). The assessee in his submission stated that during demonetization, the assessee made deposit of Rs.10,5000/- in his savings bank account. The cash deposit was out of past cash savings and income earned during the year under consideration. Reasonable quantum of cash available out of past saving is to be accepted. The assesse submitted that he has earned a rental income from shed @ Rs. 41,000/- per month and also earned brokerage income, bifurcations of which were furnished by assessee. The assessee has shown to have earned Rs.7,31,330/-. The assessee contended that he has disclosed all such income in his return of income, which is accepted by Assessing Officer. The assessee also furnished computation of his total income. The assessee submitted that even if opening cash deposit is not taken into consideration, set off to the extent of income / cash withdrawn of Rs.7,31,330/- cannot be denied. As there is no evidence that such receipt was utilized elsewhere and not available for deposit in bank. The assessee also stated that even in case of individual of not having an income, total cash deposit up to Rs.2,50,000/- to be accepted without any allegation. The assessee submitted that Assessing Officer made addition arbitrarily. To support of his submission, the assessee also relied on certain case laws. For taxing the addition u/s 115BBE of the Act, the assessee objected that provision of section 115BBE of the Act is not applicable for the year under consideration.

4. The ld. CIT(A) on considering the submission of assessee held that assessee is individual and claimed income from business and letting out and income from other sources. The assessee made cash deposit of Rs.10,50,000/- in his two bank accounts. The Assessing Officer on considering the cash book and various small withdrawal on certain occasions, not accepted the explanation of assessee. The ld. CIT(A) held that there is no evidence on record to show that assessee is maintaining books of account, so the assessee was asked to show the source of amount claimed in his cash book. The explanation furnished by assessee is not plausible to explain the cash deposit of Rs.10,50,000/-. No evidence was furnished by assessee about income from brokerage of rental income from shed. Since the assessee failed to substantiate the source of cash deposit, thus, it was a fit case for making addition of Rs.10,50,000/-. The ld. CIT(A) further held that on perusal of computation of income, the assessed income is of Rs.15,94,360/. However, the calculation of tax contains certain errors. Thus, the Assessing Officer was directed to make fresh calculation of tax. However, no specific finding in taxing the addition at enhanced rate was given. Further aggrieved, the assessee has filed present appeal before Tribunal.

5. I have heard the submission of ld. AR of the assessee and learned Senior Departmental Representative (ld. Sr. DR) of the Revenue. The ld. AR of the assessee submits that during the relevant financial year, the assessee has earned rental income as well as brokerage income. The assessee has earned total income of Rs.7,31,330/-. While filing return of income, the assessee has shown gross total income at Rs.6,21,392/- and after seeking deduction under Chapter VI-4A of Rs.80,759/-, the assessee has shown net income of Rs.7,50,650/-. The assessee has also shown other exempt income of Rs. 78,896/-. In the computation of income, the assessee has shown rental income from shed of Rs.4,92,000/- and after claiming standard deduction, the assessee offered net income from house property of Rs.3,44,400/-. The assessee also earned income from brokerage, bank interest, dividend income and income from other sources, aggregating of Rs.2,76,992/-. Hence, the income of assessee is accepted and making addition of entire cash deposit amounts to double addition. The ld. AR submits that though the assessee was having sufficient cash balance in his hand for deposit and duly substantiated the cash deposit. The ld. AR submits that assessee is regularly filing income showing gross total income of more than Rs.6,00,000/- from several previous assessment years and thus, the assessee was having sufficient cash balance in his hand.

6. On the other hand, ld. Sr. DR for the Revenue supported the order of lower authorities. The ld. Sr. DR of revenue submits that this is not a case of double addition. The assessee is not maintaining any books of account. The theory of cash available in hand is not supporting by any evidence. There is no proof that assessee was having any shed for earning rental income. Such rental income, if being received regularly, is not shown in the bank statement. The assessee is claimed huge cash balance in his hand, then why the assessee has withdrawn petty cash amount of Rs. 20,000/- and Rs.30,000/- on various occasions as reflected in his bank statement. The plea raised by the assessee is not plausible and reasonable explanation. The explanation of assessee is beyond the ‘human probability’. The ld. Sr DR for the revenue submits that all contentions raised by assessee were considered by the lower authorities.

7. I have considered the rival submission of both the parties and gone through the orders of lower authorities carefully. I have also gone through the various evidences placed on record by ld. AR of the assessee. I find that during relevant financial year particularly during demonetization period, the assessee has made cash deposit of Rs.10,50,000/- in his two bank accounts. On show cause notice to substantiate such cash deposit, the assessee explained that he was having sufficient cash balance in his hand. No evidence of such cash balance was furnished by assessee. The assessee took plea that during the relevant financial year under consideration, the assessee has made withdrawal of Rs.7,31,330/- which has not been offered for taxation and making addition of entire cash deposit would amount to double addition. I find that despite raising objection by lower authorities that assessee has not furnished any evidence about ownership of shed which was let out against which rental income of Rs.41,000/- per month, still the assessee has not filed any evidence on record, no the address of such shed is brought on record. I find that such rental income is not reflected in the bank statement. If, it is, was really periodical. Though, I am conscious of the facts that such rental income offered by the assessee is accepted by Assessing Officer and no variation income was made in the head of such income. The Assessing Officer doubted the source of cash deposit. On considering all the facts, I find that the assessee miserably failed to substantiate the entire cash deposit during the demonetization period. I find that Central Board of Direct Tax (CBDT) in its Circular No.3 of 2017, on the issue of cash deposit during demonetization directed to accept the cash deposit up to Rs.2,50,000/-. Thus, keeping in view the CBDT Instruction, out of total addition of Rs.10,50,000/-, Rs.2,50,000/-is allowed. Further, keeping in view that assessee is regularly filing return of income and shown gross total income of more than Rs.6,00,000/- in proceeding assessment years and the income from other sources on account of brokerage income is accepted. Therefore, the assessee is also given benefit of availability of Rs.1,50,00/-, thus, out of total addition of Rs. 10.50 lacs, Rs.4.00 lacs is deleted and remaining Rs.6,50,000/- is sustained. In the result, ground no. 1 of appeal is partly allowed.

8. So far as the taxing of addition u/s 115BBE of the Act is concerned, I find that Division Bench of this Tribunal in a series of decisions including in case of Samir Shantilal Mehta vs. ACIT, ITA No.42/SRT/2022 has already held that provision of section 115BBE of the Act is not applicable for AY.2017-18. Therefore, such addition cannot be taxed u/s 115BBE of the Act. In the result, Ground No. 2 of the appeal raised by the assessee is allowed.

9. In the result, grounds of appeal raised by the assessee are partly allowed.

Order pronounced on 03/10/2024 in the open court.

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