2024 (8) TMI 735 - AT - Income Tax

Addition as unexplained money - assessee is purely an agriculturist and has deposited the said sum from out of past drawings and past savings - scope of standard operating procedures laid down by the central board of direct taxes issued from time to time in case of operation clean - HELD THAT - It is very important to note that whether the case of the assessee falls into statistical analysis, which suggests that there is a booking of sales, which is non-existent and thereby unaccounted money of the assessee in old currency notes (SBN) have been pumped into as unaccounted money. Instruction 21/02/2017 issued by the CBDT suggests some indicators towards verifying the suspicion of backdating of cash. It also suggests indicators to identify abnormal jump in cash trials on identifiable persons as compared to earlier history in the previous year. Therefore in our opinion it is important to examine whether assessee falls into any of these categories and transfer of deposit of cash is not in line with history of transactions in the preceding assessment years. Assessee is directed to establish all relevant details to substantiate its claim in line with the above applicable instructions based on the facts in present case. We are aware of the fact that not every deposit during the demonetisation period would fall under category of unaccounted cash. However the burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash. Assessee is directed to furnish PAN and address details of the depositors from whom loan repayment has been accepted in cash. AO shall verify all the details / evidences filed by the assessee based on the above direction and to consider the claim in accordance with law. Assessee appeal stands partly allowed for statistical purposes.

Summary

Issues:
1. Addition of unexplained money to the income of the assessee.
2. Failure to give credit to agricultural income.
3. Application of higher rate of tax under section 115BBE.
4. Verification of cash book and confirmations by the assessee.
5. Compliance with standard operating procedures issued by the CBDT.
6. Burden of proof on the assessee to establish genuineness of deposits during demonetization.
7. Requirement to furnish PAN and address details of depositors for loan repayment in cash.
8. Verification of details and evidences by the AO with proper opportunity for the assessee.

Detailed Analysis:
The appeal before the Appellate Tribunal arose from an order passed by NFAC, Delhi for the assessment year 2017-18. The primary issues raised in the appeal included the addition of Rs. 17,73,000 as unexplained money to the assessee's income, failure to credit agricultural income, and the application of a higher tax rate under section 115BBE. The assessee, an agriculturist, deposited the amount during the demonetization period, claiming it was from past drawings and savings for agricultural purposes. However, both the Assessing Officer (AO) and the CIT(A) rejected this explanation, leading to the appeal before the Tribunal.

The Tribunal considered the submissions and emphasized the need for the assessee to file the cash book and confirmations from depositors for verification by the AO. It referred to various standard operating procedures issued by the CBDT related to assessing such cases, highlighting the importance of complying with these instructions. The burden of proof was placed on the assessee to establish the genuineness of the deposits, especially during the demonetization period.

Specific instructions from the CBDT were cited, emphasizing the need for comparative analysis of cash deposits and sales, indicators of backdating of cash, and abnormal jumps in cash transactions. The Tribunal directed the assessee to provide PAN and address details of depositors for cash repayments and instructed the AO to verify all details and evidences in accordance with the law, granting the assessee a proper opportunity to be heard.

Ultimately, the Tribunal partly allowed the grounds raised by the assessee for statistical purposes, indicating a favorable outcome for the assessee in certain aspects. The order was pronounced in open court on 31st January 2024, concluding the proceedings before the Appellate Tribunal.