2020 (1) TMI 785 - HC - Income Tax

Reopening of assessment u/s 147 - unexplained cash credit u/s 68 - HELD THAT - Assessee has failed to produce any material to authenticate his contentions that the cash deposits in his account were on account of the sales being made by him from the Kirana business. In absence of any purchase bill to justify that the deposits in the bank account were sale receipts the tax authorities cannot be faulted for making the addition of the unexplained cash entries in the bank account. Firstly the appellant chose to abstain from joining the assessment proceedings despite several notices. Then he did not render any cogent explanation or documentary evidence to support his contentions before the CIT (A) or ITAT. Pertinently the assessee had not filed his income tax return for AY 2010-11 and justified his action by contending that he was not liable to file the same as he had adopted presumptive taxation scheme under Section 44AD of the Act and had availed the benefit thereof wherein there was no obligation to explain individual entry of cash deposit in his bank account unless such entry had no nexus with the gross receipts. However when confronted with the cash entries he could not give any convincing justification. Tax authorities upheld that the cash has been deposited merely to generate funds in the bank account whenever payments were required to be made by cheque. Therefore indeed there is no nexus with the gross receipts. The appellant has not produced any material in support to explain the entries of cash such as books of accounts or purchase bills etc and we find no merit in the Appellant s contentions. There are consistent and concurrent findings of the fact by the lower tax authorities no question of law arises for our consideration. - Decided against assessee.

Summary

Issues:
1. Appeal against ITAT order sustaining additions made by CIT (A) for AY 2010-11 under Section 260A of the Income Tax Act, 1961.
2. Unexplained cash deposits in bank account leading to assessment under Section 144 of the Act.
3. Failure to attend assessment proceedings and lack of evidence to substantiate business transactions.
4. Dispute regarding nature and source of cash deposits in bank account.
5. Rejection of appellant's contentions by ITAT and request for remand.

Analysis:
1. The appellant filed an appeal under Section 260A of the Income Tax Act against the ITAT order sustaining additions made by CIT (A) for AY 2010-11. The case originated from non-filing of ITR for the relevant year, leading to assessment under Section 144 of the Act based on unexplained cash deposits of ?15,86,000 in the bank account. The appellant failed to attend assessment proceedings despite multiple notices, resulting in additions to the assessed income.
2. The CIT (A) confirmed the additions made by the AO, highlighting the lack of substantiated evidence regarding the cash deposits being related to business transactions. The appellant's contentions of filing returns and declarations were not accepted, as no proof of Kirana business or books of account were presented. Consequently, the additions were upheld under Section 68 of the Act.
3. The ITAT dismissed the appeal, emphasizing the appellant's failure to explain the nature and source of cash deposits. The appellant's argument of cash deposits being from Kirana business sales was rejected due to the absence of supporting evidence or purchase bills. The ITAT found no justification for remanding the matter back to the AO, given the lack of substantiated claims by the appellant.
4. The lower tax authorities concurred that the cash deposits were not linked to business receipts but merely to facilitate cheque payments. Despite adopting presumptive taxation under Section 44AD, the appellant could not provide satisfactory explanations or documentary evidence. The consistent findings of the tax authorities led to the dismissal of the appeal, with no legal questions arising for consideration.
5. The appeal was ultimately dismissed, and the pending application was disposed of without costs. The judgment highlighted the importance of providing credible evidence to support claims during assessment proceedings and the consequences of failing to do so in tax disputes.