2024 (6) TMI 1339 - AT - Income Tax

Addition u/s 69A - addition of cash deposits during demonetization period - HELD THAT - Considering the rival submissions, we note that the assessee is an agriculturist and did not file return of income as he had no taxable income. The explanation of the assessee regarding substantial amount of cash deposits made in the bank accounts during demonetisation period has not been considered by the AO as well as CIT(Appeals). Further since the issue involved in this case relates to the demonetization period the issue has to be examined in the light of the instructions issued by the CBDT in regard to the cash deposited during the demonetization period. As relying on M/S. BHOOPALAM MARKETING SERVICES PVT. LTD. 2022 (11) TMI 331 - ITAT BANGALORE we deem it fit to remit the issue to the file of AO to decide the issue afresh in the same terms. AO will consider the explanation furnished by the assessee in respect of the cash deposited during the demonetization period and in light of the CBDT instructions, if applicable to the assessee being an agriculturist. AO is directed to give reasonable opportunity of being heard to the assessee and decide the issue as per law. The assessee is also directed to produce evidence/documents in substantiating his case. The assessee is directed not to seek unnecessary adjournments for early disposal of the case. Assessee s appeal is allowed for statistical purposes.

Summary

Issues:
1. Addition of cash deposits during demonetization period as income under section 69A of the Income Tax Act.
2. Failure of the Assessing Officer (AO) and Commissioner of Income Tax (Appeals) to consider the explanations and submissions of the assessee.
3. Interpretation of CBDT instructions regarding cash deposits during demonetization period.
4. Assessment of the genuineness of cash deposits made by an agriculturist.

Analysis:

Issue 1:
The appeal concerns the addition of Rs. 10,50,660 towards cash deposits during the demonetization period as income under section 69A of the Income Tax Act. The AO applied section 69A and taxed the entire cash deposit as the assessee's income under section 115BBE.

Issue 2:
The assessee, being an agriculturist, claimed to have no taxable income and explained the cash deposits as gold loan repayments. However, the AO and CIT(A) did not consider the submissions made by the assessee, leading to the dismissal of the appeal based on available material.

Issue 3:
The Tribunal referred to CBDT instructions related to cash deposits during demonetization. The instructions highlighted the need for a comparative analysis of cash deposits and sales, examination of backdating of cash sales, and indicators of fictitious sales. The Tribunal emphasized the burden on the assessee to establish the genuineness of the deposits to avoid classification as unaccounted cash.

Issue 4:
In light of the above, the Tribunal remitted the issue back to the AO for fresh consideration. The AO was directed to evaluate the explanations provided by the assessee regarding cash deposits during demonetization, considering the CBDT instructions applicable to agriculturists. The assessee was instructed to provide evidence and not unnecessarily delay the proceedings.

In conclusion, the Tribunal allowed the assessee's appeal for statistical purposes, emphasizing the importance of a thorough assessment based on the submissions and evidence presented by the assessee. The decision aimed to ensure a fair evaluation of the cash deposits in question and compliance with the CBDT guidelines.