Case Law Details
Sardar Jabasingh Vs ITO (ITAT Chennai)
The Income Tax Appellate Tribunal (ITAT) in Chennai heard the case of Sardar Jabasingh vs. Income Tax Officer (ITO) concerning unexplained cash deposits totaling Rs. 1,03,23,100 in his bank accounts for the 2016-17 assessment year. The case was initiated due to a discrepancy in reported income and significant cash deposits in Jabasingh’s accounts. He initially claimed the funds were business-related under Section 44AD, reporting limited income; however, he later asserted that the funds were collected from parish members for supposed housing projects through the Tamil Nadu Housing Board, facilitated by an individual named Ravi Kumar. He alleged he was misled by Kumar, who promised housing for parish members affected by floods. Following complaints by parish members, Jabasingh claimed he returned the funds. Despite providing partial evidence, such as police complaints, the Commissioner of Income Tax (Appeals) dismissed the appeal. ITAT, however, noted the inconsistencies in explanations and remanded the case back to the Assessing Officer (AO) for fresh assessment, allowing Jabasingh another opportunity to provide documentation on the source of funds. The AO has been instructed to conduct a de novo assessment, giving Jabasingh a fair chance to present evidence, without ITAT’s observations affecting the AO’s independent evaluation.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter in short “the Ld.CIT(A)”), Delhi, dated 30.10.2023 for the Assessment Year (hereinafter in short “AY”) 2016-17.
2. At the outset, we note that there is a delay of ‘24’ days in filing of the However, after perusal of the Affidavit filed by the assessee for condonation of delay and taking note of the contents of the same, we are inclined to condone the delay and proceed to adjudicate the grounds of appeal raised by the assessee.
3. The main grievance of the assessee is against the action of the CIT(A) confirming the addition made by the AO u/s.68 of the Income Tax Act, 1961 (hereinafter in short “the Act”) to the tune of Rs.1,03,23,100/-.
4. At the outset, the AR of the assessee submitted that the assessee is a Pastor and filed his return of income for AY 2016-17 declaring total income of Rs.12,00,920/- on 29.09.2016 which was selected for limited scrutiny under CASS i.e, to examine large cash deposits in his Savings Bank A/c. The AO during the course of assessment proceedings noted from the bank statements of SBI & IOB found that the assessee had made cash deposits of Rs.50 lakhs in SBI and Rs.53,23,100/- in IOB, totaling Rs.1,03,23,100/- and that assessee has only withdrawn Rs.2,612/- from his bank account. The AO noted that though, the assessee stated that he is into civil construction/renovation/repairs of building and in the income computation statement, he has shown gross receipts of Rs.63,53,188/- and income estimated u/s.44AD of the Act @8% i.e. Rs.5,08,255/-, the AO noted that the assessee has not withdrawn any amount from the bank account other than the meager amount of Rs.2,612/-. Therefore, the AO disbelieved the assessee’s submissions and added the entire amount deposited in cash in both accounts u/s.68 of the Act.
5. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) and brought to his notice that he collected the amount deposited in the bank account for allotment of house under the Tamil Nadu Housing Board, and that he was duped by some person as if from Tamil Nadu Housing Board; and believing those persons, the assessee collected deposits from his parish members on the promise of allotment of houses of Tamil Nadu Housing Board; and finding that no houses were being allotted, the depositors had filed compliant against him and therefore, he has returned the amount collected from them (supra). However, the Ld.CIT(A) was not convinced and he dismissed the appeal filed by the assessee.
6. Aggrieved, the assessee is in appeal before this Tribunal.
7. We have heard both the parties and perused the material available on We note that an amount totaling Rs.1,03,23,100/- was deposited in the savings bank account of the assessee and when confronted by the AO to prove the nature & source of the deposit, assessee failed to prove the same and therefore, the AO made an addition u/s.68 of the Act of the entire cash deposits. During the first appellate proceedings, the assessee filed some evidence like police complainants/FIR filed by one complainant, Shri Uday Baskara S/o. Shri Rajaram that assessee had collected money from him and others on the promise that houses of the Tamil Nadu Housing Board would be allotted to them and since, assessee failed to provide them with the promised houses, they have filed police complaints against him. According to the Ld.AR, the assessee had been duped by one Mr.Ravi Kumar who approached him during a prayer meeting in his Church at Guindy and convinced him that he was an official of the Tamil Nadu Housing Board and would be able to provide/allocate houses for the people affected by flood. Believing Mr.Ravi Kumar, he being a Pastor of a Church collected money from several Parish Members which was deposited in assessee’s bank account, and the AO taking note of the money deposited in his two saving bank accounts, have made addition in his hands which couldn’t be explained during the course of assessment proceedings because of failure/non-cooperation from the authorized representative before the AO. The Ld AR’s limited plea is that assessee shouldn’t be penalized for the omission on the part of earlier authorized representative who conducted the case before AO. And therefore, he prays for one more opportunity be granted before the AO so that he can place all the relevant materials truthfully before the AO, and relies on the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC). Be that as it may, it is noted that during assessment proceedings the assessee gave explanation to the AO regarding the nature & source of cash deposits i.e. he was a contractor, but before the Ld.CIT(A) he changed his version and came out with collection of money from members of the Parish for allotment of house by Housing Board and that he has returned the sum taken from them after complaints were lodged against him and has filed certain evidence in this behalf which we note the AO had no occasion to examine. Therefore, for the ends of justice and fair play, we are inclined to set aside the impugned order of the Ld.CIT(A) and restore the assessment back to the file of the AO for de novo assessment. The Ld.AR of the assessee undertakes to file the relevant documents to prove the nature & source of the deposits. The AO is directed to grant proper opportunity to the assessee and thereafter, frame de novo assessment in accordance to law without being influenced by any observations made by us (supra).
8. In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on the 30th day of August, 2024, in Chennai.
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