Cash deposits during demonetization cannot be treated as unexplained if other deposits are considered business income, emphasizing consistency in income assessment.

ORDER

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. ’CIT(A)’] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2017-18 dated 19.06.2024, which has been passed against the assessment order u/s 144 of the Act, dated 22.11.2019.

2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:

“1. For that the order passed under section 250 dated 19/06/2023 is wholly illegal and bad in law.

2. For that the Ld. CIT (A) has erred in law as well as on fact in upholding addition of Rs.711000 as unexplained money under section 69A, though out of the cash deposit of Rs. 11591500, sum of the cash deposit of Rs. 1,08,80,500 has been considered as business income and tax @ 8% by the AO but cash deposit during demonetization period has been not considered explained.

3. For that the Ld. CIT(A) has erred in passing a vague and cryptic order as Ld. Cit has uphold the addition of Rs. 711000 as unexplained cash credit though the present case is the addition as unexplained money u/s 69A.

4. For that the Ld. CIT(A) has erred in passing the order without giving the opportunity of being heard which is against the principle of natural justice.

5. For that whole order is bad in fact and the law of the case and is fit to be quashed.

6. For that order grounds, if any, shall be urged at the time of hearing of the appeal.”

3. Brief facts of the case are that notice u/s 142(1) of the Act was issued on 17.03.2018 requiring the assessee to prepare a return of income but the assessee failed to furnish the same for the impugned assessment year. On the basis of data analytics and information available, the Ld. AO noted that the assessee had deposited a sum of Rs. 1,15,91,500/- in the bank account in Uttar Bihar Gramin Bank, Hajipur, A/c No. 1009151130000322 and during the demonetization period from 09.11.2016 to 31.12.2016 a sum of Rs. 16,54,000/- was deposited. Since no compliance was made to the notice u/s 142(1) of the Act therefore, the assessment was made u/s 144 of the Act. The assessee was found to be engaged in the business activity and had deposited total Rs. 1,15,91,500/- during the FY 2016-17 out of which Rs. 7,11,000/- was deposited during the demonetization period in the old currency which was treated as unexplained money and the remaining cash deposit of Rs. 1,08,80,500/- in the bank account was treated as the assessee’s turnover of the business for which the assessee had not filed the return of income nor offered any tax and 8% of Rs. 1,08,80,500/-, which worked out to Rs. 8,70,440/- was considered as the business income of the assessee and assessed accordingly.

4. None appeared in the course of the hearing before us and the appeal was heard with the assistance of the Ld. Sr. DR. It is noted that the assessee has taken the ground that the cash deposit during the demonetization period has not been considered. We also note that the order of Ld. CIT(A) in upholding the addition is a cryptic one, the operative part of which is as under:

“Having considered the appellant's submissions and the facts of the case. I hold the following views: It is found from the submission of the appellant, due to his lack of knowledge about income tax he could not file his return of income A.Y. in question. During the course of the assessment proceedings the A.O. has assessed the appellant’s income on the basis of available bank transactions. AO has also identified Rs. 870440/- as business income and the balance amount of Rs. 7,11,000/-as unexplained cash credit but the appellant in his submission stated that the total transaction found in bank a/c was his business transaction. The appellant also stated that his business is bes