2023 (2) TMI 1260 - AT - Income Tax

Addition u/s 69A r.w.s. 115BBE - unexplained amounts deposited in his bank account - HELD THAT - Assessee had failed to explain the nature and source of the cash deposits made in his bank account during demonetization period. Observing, that the assessee could not justify the nature and source of the amounts deposited in Specified Bank Notes (SBN) in his bank account during the demonetization period, the A.O had made an addition of the same u/s. 69A. ' Also, it is discernible from the assessment order that though the A.O had issued a Show Cause Notice (SCN) to the assessee to explain the nature and source of the cash deposits but no compliance was made by the assessee. Also, as several opportunities to the assessee to participate in the course of proceedings before him, but he failed to participate in the same. As assessee had failed to come forth with any plausible explanation as regards the nature and source of the cash deposits made by him in his bank account in SBN during the year, therefore, no infirmity arises from his order - Appeal of the assessee is dismissed.

Issues Involved:
1. Confirmation of income at Rs.16,94,650/- against the returned income at Rs.3,41,650/-.
2. Addition of Rs.13,53,000/- as unexplained cash deposits during the demonetization period under Section 69A.
3. Application of Section 115BBE of the Income Tax Act, 1961.
4. Lack of appreciation of documents and explanations provided by the assessee.
5. Procedural and prosecutorial aspects regarding the assessee's non-participation in appellate proceedings.

Detailed Analysis:

1. Confirmation of Income at Rs.16,94,650/- Against Returned Income:
The assessee had e-filed his return of income for the A.Y. 2017-18 declaring a total income of Rs.3,41,650/-. The return was processed under Section 143(1) of the Income Tax Act on 31.10.2017. The case was selected for limited scrutiny, and notice under Section 143(2) was issued. During the assessment, it was observed that the assessee had made substantial cash deposits amounting to Rs.16,38,500/- in his bank account, including Rs.13,53,000/- during the demonetization period. The Assessing Officer (A.O) treated Rs.13,53,000/- as unexplained money under Section 69A, resulting in an assessed income of Rs.16,94,650/-.

2. Addition of Rs.13,53,000/- as Unexplained Cash Deposits Under Section 69A:
The A.O noted that the assessee, who claimed to be an RTO agent and ran a stationary/photocopy shop, failed to provide documentary evidence supporting his claim that the cash deposits were on behalf of his customers. Consequently, Rs.13,53,000/- was added as unexplained money under Section 69A. The CIT(Appeals) upheld this addition, citing the assessee's failure to provide a satisfactory explanation or evidence for the cash deposits. The CIT(Appeals) relied on several judicial precedents, including the Supreme Court's ruling in Chuharmal vs. CIT, which emphasized the taxpayer's burden to explain the nature and source of unexplained money.

3. Application of Section 115BBE of the Income Tax Act, 1961:
The A.O applied Section 115BBE, which deals with the tax treatment of income referred to in Sections 68, 69, 69A, 69B, 69C, or 69D. The assessee contended that this provision was not applicable. However, the CIT(Appeals) and the Tribunal upheld the A.O's decision, noting that the assessee failed to discharge the onus of proving the source of the cash deposits, thereby justifying the application of Section 115BBE.

4. Lack of Appreciation of Documents and Explanations Provided by the Assessee:
The assessee argued that the CIT(Appeals) did not consider the documents and explanations available on the portal. However, both the CIT(Appeals) and the Tribunal noted that the assessee did not participate in the appellate proceedings or provide any supporting evidence. The CIT(Appeals) dismissed the appeal, citing the assessee's non-cooperation and failure to prosecute the appeal effectively.

5. Procedural and Prosecutorial Aspects:
The CIT(Appeals) dismissed the appeal due to the assessee's persistent absence and lack of prosecution. The Tribunal also proceeded under Rule 24 of the Appellate Tribunal Rules, 1963, due to the assessee's non-appearance. The CIT(Appeals) referenced several judicial decisions supporting the dismissal of appeals for non-prosecution, including the Supreme Court's ruling in New India Assurance vs. Srinivasan, which affirmed the inherent power of judicial bodies to dismiss cases for default.

Conclusion:
The Tribunal upheld the CIT(Appeals) decision, confirming the addition of Rs.13,53,000/- as unexplained money under Section 69A and the application of Section 115BBE. The appeal was dismissed due to the assessee's failure to provide a satisfactory explanation or evidence for the cash deposits and non-participation in the appellate proceedings.

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