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TMI Blog2023 (7) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, we find no infirmity in the order of Ld. CIT(Appeals) when he held that proceedings u/s 147 of the Act were validly initiated, looking into the facts of the instant case. Decided against assessee. Unexplained cash deposits in bank account - As considering the well-established legal proposition that was only the profit element embedded in any receipts which may be taxed in the hands of the assessee, it would be fair to estimate profit @10% of the total cash deposits in the hands of the assessee, which may be subject to tax in the hands of the assessee. In the case of President Industries [ 1999 (4) TMI 8 - GUJARAT HIGH COURT] held that the entire cash deposit should not be added to the income of the assessee had only the element of profit element should be considered as the taxable income of the assessee. The above proposition was also followed in the case of Dineshbhai Mathai Vala [ 2015 (4) TMI 712 - ITAT AHMEDABAD] - Accordingly, in the interest of justice 10% of the total deposits may be taken as a taxable income and thus taxed in the hands of the assessee. - ITA No. 67/Rjt/2019 - - - Dated:- 30-6-2023 - Shri Waseem Ahmed, Accountant Member And Shri Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, the assessee has been non-filer of income tax return. It is a well-settled principle of law that for initiation of proceedings under section 147 of the Act, only a prima facie belief has to be formed by the assessing officer that the income has escaped assessment. In the case of Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC) , the Hon'ble Supreme Court observed that the Court has only to see whether there was prima-facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. On the scope of re-opening u/s 147 of the Act observed as under: We have only to see whether there was prima-facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eading the Assessing Officer to reopen the assessment. The term itself is suggestive of its prima-facie characteristics and not established or conclusive facts or information. Meaning thereby, it is the Assessing Officer's prima-facie belief, of course, derived from the some material/ information, etc. leading him to reopen the assessment. 4.5 In the case of Purviben Snehalbhai Panchhigar [2019] 101 taxmann.com 393 (Gujarat), the Gujarat High Court held that in the instant case the Assessing Officer has heard the material on record which would prima- facie suggest that the assessee had sold number of shares of a company which was found to be indulging in providing bogus claim of long term and short-term capital gain. The company was prima-facie found to be a shell company. The assessee had claimed exemption of long-term capital gain of Rs. 1.33 crores by way of sale of share of such company. 4.6 This was again affirmed by the Gujarat High Court in the case of Sanjay Baulal Surana [2021] 129 taxmann.com 375 (Gujarat). 4.7 In the instant set of facts, Ld. CIT(Appeals) has made the following observations in the appellate order, while upholding initiation of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash deposit the bank account. Accordingly, in absence of any details/explanation put forth by the assessee, the entire deposits amounting to ₹ 32.70 lakhs was treated as unexplained income of the assessee under section 69A of the Act. 8. In appeal, the assessee submitted that the entire deposits cannot be taxed in the hands of the assessee as it s undisclosed income, and that addition of 8% the total deposits may be taxed hands of the assessee on presumptive basis. The Ld. CIT(Appeals) however, observed that there is nothing on record to show that the amount of deposits and cash withdrawals were made in the bank account on account of any business activities, as contended by the assessee. Further, Ld. CIT(Appeals) also observed that there is an apparent discrepancy in the submissions made by the assessee, since on one hand he has contended that the aforesaid income was out of business income, whereas in another submission, the assessee has contended that the aforesaid cash deposits have been made out of agricultural proceeds. However, the Ld. CIT(Appeals) agreed with the contention of the assessee that the entire amount cannot be taxed in the hands the assessee as its undis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re carried out by the appellant and from whom cash amounts were received because of such activities and to whom cash amounts were paid because of such activities. The name and address of the persons from whom cash amounts are claimed to have been received and also the name and address of the persons to whom cash .amounts are claimed to have been paid are not provided by the AR, No any relevant records and books of accounts have been produced to establish that the cash amounts were received and deposited in the bank and cash amounts were withdrawn and paid because of any particular business activities. Surprisingly at another place of this submission dated 06/08/2018, the AR of the appellant has further pleaded that the addition of Rs. 32,70,525/-u/s. 69A was made by the AO whereas the entire source of this money as deposited in the bank was out of sale of agricultural product and pass savings of the appellant and his family member. If the appellant has deposited the above amount of Rs. 32,17,525/- on account of sale of agricultural products, then he cannot be said to be a business man involved in any business activities and rather he can be held to be a mere farmer. Thus there is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tries followed by credit entries, it is not correct to add entire amount of Cash deposit to the income of the appellant. In my opinion the entire amount of credit side of Rs. 32,55,500/- cannot be added to the total income of the appellant by ignoring the debit entries of cash amounts as reflected in the bank account. The only peak amount if remained unexplained could be added as income in the hands of the appellant and not the aggregate of total credit side of the account. In this regard the support is drawn from the decision of hon'ble High Court of Gujarat as given in the case of CIT vs. Shri Indrajeet Zandusing Tomar, 2016 ITI 114. In view of this the AO is directed workout peak credit by considering only cash transactions (i.e. cash deposits and cash withdrawals) and add the same to the total income of the appellant. Thus the grounds of appeal of the appellant are partly allowed. 9. Before us, the counsel for the assessee submitted that the assessee is having substantial landholdings, amounting to approximately 22 bighas. He submitted that the entire cash deposits have been made out of the agricultural produce of the assessee. The counsel for the assessee drew our att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e source of cash deposits during the impugned assessment year. The Ld. CIT(Appeals) made a specific observation that there is discrepancy regarding the statement was made by the assessee, wherein on one hand the assessee has stated that he has earned agricultural income, but on the other hand, the assessee stating that the source of deposits is out of business income earned by the assessee. However, considering the facts of the case, the Ld. CIT(Appeals) held that only the peak credit may be taxed in the hands of the assessee, and the entire cash deposits cannot be subject to tax in the hands of the assessee. Further, as observed by Ld. CIT(Appeals), the assessee has been taking contradictory strands at various stages of the proceedings and it was only during the appellate stage that the assessee took an argument that the cash deposits were out of agricultural income. Further, before Ld. CIT(Appeals) the assessee has also contended that he has earned business income and the aforesaid cash deposits were out of the business income earned by the assessee. Therefore, it is not very clear whether the assessee had earned agricultural income in the prior assessment years and the cash de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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