2023 (8) TMI 1281 - AT - Income Tax

Deposit of cash during the period of demonetization - HELD THAT - As assessee could not bring any evidences to substantiate his claim for justifying depositing the cash in his banks accounts during demonetization period. Furthermore, even no details of the customers from whom the cash collections in SBNs have been made during the demonetization were also filed before the Tribunal. Therefore, we do not find any infirmity with the order of the NFAC, the same is hereby upheld. Addition u/s 40A(3) - payments in cash towards purchases - HELD THAT - Before the NFAC, no documentary evidences were filed for verification of the claim of the assessee that they have not violated the provisions of sec. 40A(3) of the Act. The assessee had simply filed the written submissions reiterating his earlier submissions made before the AO. At the time of hearing before us also, ld.AR claimed that the payments were covered under the exception of Rule 6DD of the Income Tax Rules, 1962, however, no documentary evidences/ materials were furnished before the Tribunal substantiating and corroborating the claim of the assessee that they are covered under the exception of Rule 6DD of the Income Tax Rules. In view thereof, there is no need of interference with the findings of the NFAC which is upheld. Assessee appeal dismissed.

Summary

Issues:
1. Stay Application dismissal due to lack of interest in prosecuting the matter.
2. Addition of unexplained money under sec. 69A r.w.s. 115BBE and violation of sec. 40A(3) provisions.

Stay Application Dismissal:
The Stay Application was dismissed as the assessee did not put forth any arguments at the time of hearing, indicating a lack of interest in prosecuting the matter. Consequently, the Stay Application was deemed devoid of merits and dismissed.

Addition of Unexplained Money:
The assessee, engaged in poultry farming, had deposited significant amounts in cash during demonetization. The AO added the deposited amount to the total income as unexplained money under sec. 69A r.w.s. 115BBE. The assessee's explanation that the deposits were from sale proceeds was not accepted. The AO also found that cash payments towards purchases violated sec. 40A(3), adding a substantial amount to the total income. The NFAC upheld the AO's decision as the assessee failed to provide evidence of cash collections in Specified Bank Notes (SBNs) or details of customers during demonetization. The Tribunal found no infirmity with the NFAC's order and upheld it.

Violation of Sec. 40A(3) Provisions:
Regarding the addition made under sec. 40A(3), the AO had conducted verification and found that cash payments for purchases contravened the provisions. The NFAC noted the lack of documentary evidence from the assessee to support the claim of not violating sec. 40A(3). The assessee's reliance on the exception of Rule 6DD of the Income Tax Rules was not substantiated with any materials before the Tribunal. Consequently, the Tribunal upheld the NFAC's findings, leading to the dismissal of the grounds of appeal.

In conclusion, both the Stay Application and the appeal filed by the assessee were dismissed by the Appellate Tribunal ITAT PANAJI, with the order pronounced openly on 25th August, 2023.