2023 (5) TMI 682 - AT - Income Tax

Unexplained cash deposits - genuineness of the cash deposited not proved for the reason that it is not supported by any PAN details - assessee had huge cash deposits during demonetisation period - 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? - HELD THAT - The instruction dated 21/02/2017 says that the assessing officer basic relevant information e.g. monthly sales summary, relevant stock register entries and bank statement to identify cases with preliminary suspicion of back dating of cash and is or fictitious sales. Instruction is also suggested some indicators for suspicion of back dating of cash else or fictitious sales where there is an abnormal jump in the cases during the period November to December 2016 as compared to earlier year. It also suggests that, abnormal jump in percentage of cash trails to on identifiable persons as compared to earlier histories will also give some indication for suspicion. Non-availability of stock or attempts to inflate stock by introducing fictitious purchases is also some indication for suspicion of fictitious sales. Transfer of deposit of cash to another account or entity, which is not in line with the earlier history. Therefore, it is important to examine whether the case of the assessee falls into any of the above parameters are not. Assessee is directed to establish all relevant details to substantiate its claim in line with the above applicable instructions. We are aware of the fact that not every deposit during the demonetisation period would fall under category of unaccounted cash. Burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted 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. We direct the AO to verify the cash deposited in the light of the above circular by granting proper opportunity of being heard to the assessee. Appeal filed by the assessee stands allowed for statistical purposes.

Issues:
1. Validity of the appellate order passed by the Commissioner of Income-Tax (Appeals).
2. Treatment of sum of Rs. 43,19,100/- as unexplained cash credit under section 68 of the Income Tax Act, 1961.
3. Taxing the sum under the provisions of section 115BBE of the Act.
4. Addition made by the Assessing Officer without basis and evidence.
5. Denial of interest under sections 234B & C of the IT Act, 1961.

Analysis:

Issue 1: Validity of the Appellate Order
The appellant challenged the appellate order passed by the Commissioner of Income-Tax (Appeals) on the grounds of being against natural justice and legal principles. The appellant argued that the conclusions drawn were not in line with the detailed submissions provided during the appeal proceedings. The Tribunal noted the appellant's contentions and directed a thorough verification of the details filed by the appellant to ensure proper assessment.

Issue 2: Treatment of Unexplained Cash Credit
The Assessing Officer had treated a sum of Rs. 43,19,100/- as unexplained cash credit under section 68 of the Income Tax Act, 1961. The appellant contended that the cash deposits were from legitimate cash sales during the demonetization period and were supported by relevant documents. However, the authorities raised doubts due to the lack of PAN details for a portion of the cash sales. The Tribunal observed a violation of natural justice in the assessment process and directed the Assessing Officer to verify the cash deposits thoroughly, granting the appellant an opportunity to justify the claim.

Issue 3: Taxation under Section 115BBE
The appellant disputed the taxation of the sum under section 115BBE of the Act. The Tribunal acknowledged the need for a detailed examination of the cash deposits and directed the Assessing Officer to consider the claim in accordance with the law, emphasizing the importance of providing a proper opportunity for the appellant to present their case.

Issue 4: Addition Without Basis and Evidence
The appellant contested the addition made by the Assessing Officer, claiming it was without basis and relied on assumptions. The Tribunal highlighted the necessity for a comprehensive verification of all details and evidence provided by the appellant to ensure a fair assessment.

Issue 5: Denial of Interest
The appellant denied the payment of interest under sections 234B & C of the IT Act, 1961, arguing that the levy was erroneous. The Tribunal did not provide a specific ruling on this issue in the summarized judgment.

In conclusion, the Tribunal allowed the appeal for statistical purposes and directed the Assessing Officer to conduct a thorough verification of the cash deposits, granting the appellant a fair opportunity to substantiate their claims in accordance with the applicable instructions and legal provisions.

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