2024 (12) TMI 806 - AT - Income Tax

Unexplained cash deposits in bank account - Addition u/s 68 r/w 115BBE - onus to prove - HELD THAT - We find that the assessee is a doctor and a resident of United Kingdom and regularly comes to India to visit her family. Her father, mother and brother and sister-in-law are also doctors of repute in India and having substantial income which is reflected in their return of income. With respect to the deposit in India in the Federal Bank, the assessee has stated that the fund deposited in the bank account were from her parents, brother and sister-in-law given as gift. Only source of income of assessee in India is income from interest from bank deposits and capital gains. We find that the impugned cash was deposited during the demonetization period 10.11.2016 to 05.12.2016, table of which is reproduced hereinabove. We are inclined to accept the contention of the ld. counsel for the assessee that cash gift could not get deposited at one go as there were difficulties in depositing cash amount during the demonetization period. When the AO made enquiries with the assessee with regard to the deposits in the bank, the assessee gave the reply that these deposits are from the gifts received by family members in India and furnished the gift certificates from the family members, though in plain paper. In such a situation, it was incumbent upon the assessing officer to make further enquiries using its power u/s 133(6)/131(1) with the family members to find out the truth of the matter. Once the assessee has furnished her explanation, the onus shifted to the assessing officer who failed to complete the process of enquiry into the identity and genuineness of transaction as well as creditworthiness of the donors. AO failed to discharge the onus shifted on him for establishing the bogus nature of cash gift and without conducting further enquiries, he made his own deduction from surmises and conjectures. We also find from the status of the family members of the assessee in India, that they are all doctors declaring substantial incomes in their ITRs which justifies the explanation for cash gifts given over a period of time from FY 2014-15 to FY2016-17. We note that all the above cash were received in small tranche from the family members over a period of three years which was deposited in Bank during the demonetization period. The persons from whom the funds were received were not outsiders or unknown entities. In such a factual matrix, the action of the AO, sustained by the CIT(A), without making independent enquiries u/s 133(6)/131(1) does not appear to be justified. See DHEERAJ THAKRAN 2021 (6) TMI 97 - ITAT DELHI Decided in favour of assessee. Addition u/s 115BBE - Assessee has taken a ground that the assessing officer has made the addition u/s 115BBE, without specifying the head of Income or relevant section of the Act i.e., u/s 68, 69A, 69B or 69C rendering the assessment arbitrary and against principle of natural justice. From the facts narrated in the case, we find that the assessee was made aware of the nature of additions to be made in the show cause issued to the assessee. In such a situation, we are of the considered opinion that non mentioning of specific section of the Act would not render the assessment order arbitrary.

Issues Involved:

1. Validity of cash deposit explanation and gift certificates.
2. Application of Section 115BBE of the Income Tax Act.
3. Imposition of interest under Sections 234B and 234D.
4. Initiation of penalty proceedings under Section 270A.
5. Condonation of delay in filing the appeal.

Issue-wise Detailed Analysis:

1. Validity of Cash Deposit Explanation and Gift Certificates:

The primary issue revolved around the explanation provided by the assessee for cash deposits amounting to Rs. 10,98,000/- during the demonetization period. The assessee claimed that these deposits were gifts from family members, substantiated by gift certificates. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] rejected these certificates, arguing they lacked legal sanctity as they were printed on plain paper. The tribunal found that the AO failed to conduct further inquiries under Sections 133(6) and 131(1) to verify the genuineness of the transactions and the creditworthiness of the donors. The tribunal noted that the family members were reputable doctors in India with substantial income, justifying the cash gifts. The tribunal accepted the source of cash deposits, directing the AO to delete the addition of Rs. 10,98,000/-.

2. Application of Section 115BBE of the Income Tax Act:

The assessee contested the application of Section 115BBE, arguing that the AO did not specify the relevant section (e.g., Sections 68, 69A, 69B, or 69C) under which the addition was made, rendering the assessment arbitrary. The tribunal concluded that the assessee was informed about the nature of the additions in the show cause notice, and the non-mentioning of a specific section did not invalidate the assessment order. This view was supported by a jurisdictional Delhi High Court decision, leading to the dismissal of this ground.

3. Imposition of Interest under Sections 234B and 234D:

The tribunal noted that the grounds concerning interest under Sections 234B and 234D were consequential to the main issues and did not require separate adjudication. As such, these grounds were not specifically addressed in the judgment.

4. Initiation of Penalty Proceedings under Section 270A:

Similar to the interest issue, the initiation of penalty proceedings under Section 270A was deemed consequential. The tribunal did not provide a separate adjudication on this matter, indicating it was dependent on the outcome of the primary issues.

5. Condonation of Delay in Filing the Appeal:

The tribunal addressed the delay of 651 days in filing the appeal, attributing it to the non-receipt of the appeal order from the CIT(A) office or the IT portal. The assessee's reliance on certain Supreme Court decisions was considered reasonable, and the delay was condoned.

Conclusion:

The tribunal partially allowed the appeal, accepting the explanation for the cash deposits and directing the deletion of the addition. However, it upheld the application of Section 115BBE, dismissing the related ground. The issues concerning interest and penalty proceedings were deemed consequential and not separately adjudicated. The order was pronounced in the open court on 29.08.2024.

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