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2024 (4) TMI 453 - AT - Income TaxAddition of cash deposited during the demonetisation period in bank account - unexplained income - taxation @ 60% as provided u/s. 115BBE - assessee has withdrawn the cash amount from bank and the unused amount of cash was redeposited in the bank account during the demonetization period - HELD THAT - The unused cash was re-deposited in the bank account during the demonetization period. Assessee has also submitted the other documents and evidences before the assessing officer in response to notice u/s 142(1) of the Act. During the appellate proceedings also the assessee has narrated the same facts and submitted details and documents before the CIT(A) however we note that both the authorities did not appreciate the documents and evidences submitted by the assessee. We note that in holding a particular receipt as income from undisclosed sources the faith of the assessee cannot be decided by the revenue on the basis of surmises suspicious and probabilities of Northern Bengal Jute Co. Ltd. 1967 (1) TMI 80 - CALCUTTA HIGH COURT The overwhelming numbers of documentary evidences were submitted by the assessee before both the lower authorities and these documents cannot be brushed aside on the basis suspicious. We note that AO had not specifically identified any specific defects in the purported evidences and documents submitted by the assessee and also taking note of the fact that the AO has not held that the documents and evidences so submitted by the assessee are bogus. In our opinion the ends of justice would be met if a net profit rate of 10% is adopted on the cash deposit during demonetization period. Therefore we direct the assessing officer to make the addition in the hands of assessee to the tune of Rs. 2, 50, 250/- and should be taxed under normal provisions of the Act and not u/s 115BBE.
Issues Involved:
1. Addition of Rs. 25,02,500/- on account of cash deposited during demonetisation. 2. Non-consideration of the cash book by the Assessing Officer. 3. Validity of cash book due to non-filing of Return of Income (ROI). 4. Explanation of cash deposits from earlier withdrawals. 5. Addition of Rs. 5,39,704/- on account of cash deposits excluding demonetisation period. 6. Application of tax rate u/s 115BBE. 7. Initiation of penalty proceedings u/s 271AAC. Summary: Condonation of Delay: The appeal filed by the assessee for AY 2017-18 was delayed by 13 days. The assessee, a 69-year-old farmer, cited lack of knowledge about Income Tax Proceedings and time limits as reasons for the delay. The Tribunal, considering the Supreme Court's observation in the case of Collector, Land Acquisition vs Mst. Katiji and others, condoned the delay in the interest of substantial justice. Issue 1: Addition of Rs. 25,02,500/- on Account of Cash Deposited During Demonetisation: The Assessing Officer noted substantial cash deposits during the demonetisation period and treated Rs. 25,02,500/- as unexplained income. The assessee contended that the cash was from earlier withdrawals made in February 2015. However, the Assessing Officer rejected this explanation due to lack of documentary evidence. Issue 2: Non-Consideration of Cash Book: The assessee argued that the cash book provided was not considered by the Assessing Officer. The Tribunal noted that the assessee had submitted various documents, including bank statements and cash book ledger, but these were not appreciated by the lower authorities. Issue 3: Validity of Cash Book Due to Non-Filing of ROI: The Assessing Officer held that the cash book had no validity as the assessee had not filed the ROI. The Tribunal found this approach erroneous, especially since the assessee had provided substantial evidence of the cash deposits being from earlier withdrawals. Issue 4: Explanation of Cash Deposits from Earlier Withdrawals: The assessee claimed that the cash deposits were from withdrawals made in the previous year (2014-15) and provided bank statements and ROI for AY 2015-16 to substantiate this. The Tribunal accepted this explanation, noting that the cash was indeed from earlier withdrawals and should not be taxed as unexplained income. Issue 5: Addition of Rs. 5,39,704/- on Account of Cash Deposits Excluding Demonetisation Period: The Assessing Officer also added Rs. 5,39,704/- as unexplained income for cash deposits excluding the demonetisation period. The Tribunal found that the Assessing Officer did not identify specific defects in the evidence provided by the assessee and thus, this addition was not justified. Issue 6: Application of Tax Rate u/s 115BBE: The Assessing Officer applied a tax rate of 60% u/s 115BBE on the alleged unexplained income. The Tribunal directed that only Rs. 2,50,250/- (10% of the cash deposit during demonetisation) should be taxed under normal provisions, not u/s 115BBE. Issue 7: Initiation of Penalty Proceedings u/s 271AAC: The Tribunal did not specifically address the initiation of penalty proceedings u/s 271AAC, focusing instead on the substantive issues of unexplained income and the application of tax rates. Conclusion: The Tribunal partly allowed the appeal, directing the Assessing Officer to make an addition of Rs. 2,50,250/- under normal provisions instead of the entire Rs. 30,42,204/- as unexplained income. The order was pronounced in open court.
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