2023 (12) TMI 1314 - AT - Income Tax

Unexplained money u/s 69 r.w.s. 115BBE - Deposits in bank account by using demonetized currency notes - According to the ld. AO, the assessee has not explained the nature and source of above deposit to assessee s bank account - HELD THAT - Similar issue came for consideration before this Tribunal in the case of Bhoopalam Marketing Services Pvt. Ltd. 2022 (11) TMI 331 - ITAT BANGALORE instruction dated 21/02/2017 that the assessing officer basic relevant information e.g. monthly sales summary, relevant stock register entries and bank statement to identify cases with preliminary suspicion of back dating of cash and is or fictitious sales. The instruction is also suggested some indicators for suspicion of back dating of cash else or fictitious sales where there is an abnormal jump in the cases during the period November to December 2016 as compared to earlier year. It also suggests that, abnormal jump in percentage of cash trails to on identifiable persons as compared to earlier histories will also give some indication for suspicion. Non-availability of stock or attempts to inflate stock by introducing fictitious purchases is also some indication for suspicion of fictitious sales. Transfer of deposit of cash to another account or entity, which is not in line with the earlier history. Therefore, it is important to examine whether the case of the assessee falls into any of the above parameters are not. Thus we inclined to remit the issue in dispute to the file of ld. AO for fresh consideration to examine in the light of above order of the Tribunal. Appeal of the assessee is partly allowed for statistical purposes.

Summary

Issues involved:
The appeal challenges the order of NFAC for the assessment year 2017-18, raising grounds related to natural justice, additions made without proper consideration, failure to call for necessary documents, lack of discussion on submissions, reliance on precedent judgments, and the treatment of cash deposits as unexplained money under relevant sections of the Income-tax Act, 1961.

Grounds Raised by the Assessee:
1. The order of the ld. CIT(A) is opposed to the law, facts, and circumstances of the case.
2. The order is passed hastily, violating the principle of natural justice.
3. The ld. CIT(A) erred in upholding additions without considering the appellant's submissions.
4. The ld. CIT(A) should have passed a speaking order rejecting appellant's submissions.
5. The matter is covered by a judgment of the Hon'ble jurisdictional Bengaluru ITAT.
6. The cash deposits were made from sales receipts and closing cash balance.
7. The appellant has already admitted the sales as revenue receipts.
8. The addition made was without considering the income included in the turnover.
9. The appellant has no other source of income apart from business income.
10. The appellant seeks leave to amend the grounds of appeal.
11. The appellant prays for the appeal to be allowed for a refund.

Facts and Decision on Cash Deposits Issue:
The assessee deposited a sum during demonetization using demonetized currency notes, which the AO treated as unexplained money. The appellant provided detailed statements of cash transactions, which were overlooked by the lower authorities. The Tribunal referred to a similar case and remanded the issue back to the AO for fresh consideration in light of procedural instructions regarding cash deposits and sales analysis provided by the CBDT. The appeal was partly allowed for statistical purposes.

Conclusion:
The Tribunal remitted the issue of cash deposits back to the AO for reevaluation based on procedural guidelines, emphasizing the need to consider relevant evidence and instructions for assessing cases involving unexplained cash deposits during demonetization. The appeal was partly allowed for statistical purposes.