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2024 Supreme(Online)(ITAT) 1507
INCOME TAX APPELLATE TRIBUNAL (CHENNAI BENCH)
MANU KUMAR GIRI, J, S. R. RAGHUNATHA, ACJ
Manikandan Subash Chandra – Appellant
Versus
Income Tax Officer, Non Corporate Ward 2(4), Bose, Madurai – Respondent
Income Tax Appeal/ITA No.: 1452/Chny/2023
For the Appellant: Shri. B. Pratap, CA
For the Respondent: Shri. D. Hema Bhupal, JCIT
A taxpayer cannot be penalized under Section 69A when cash deposits are accounted for in maintained books and the assessing officer fails to reject those accounts before adding amounts as unexplained income.
Headnote:(A) Income Tax Act, 1961 - Section 69A - Cash deposits during demonetization - The assessing officer added Rs.55,77,500/- as unexplained cash under section 69A due to large cash deposits during the demonetization period despite the appellant being able to demonstrate that these funds were recorded in his books of accounts. The CIT(A) upheld this addition, citing abnormalities in profit trends and cash handling during the specified period. The Tribunal found that the appellant maintained regular books of accounts, thus there was no basis for the addition under section 69A. (Paras 2-11)
(B) Burden of proof - The appellant had the burden to prove the source of cash deposits, showing sales realized in cash which were properly accounted. The Tribunal noted relevant case laws where similar findings led to the deletion of impugned additions. The final decision allowed the appeal and deleted the addition. (Paras 10-12)
| Table of Content |
|---|
| 1. appeal process overview with details on representation. (Para 1) |
| 2. introduction of case facts including income declaration and assessment basis. (Para 2 , 3 , 4 , 5 , 6) |
| 3. submissions from the appellant regarding operational status and cash handling. (Para 9) |
| 4. court's decision based on previous cases and acceptance of maintained books. (Para 10 , 11 , 12) |
आदेश/ORDER
PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2017-18, vide order dated 10.11.2023.
2. The assessee has raised the following grounds of appeal:
“1. The impugned order is illegal, opposed to the facts, contrary to law, against the principles of natural justice and without jurisdiction, and therefore, liable to be quashed.
2. The learned assessing officer erred in adding Rs.55,77,500/- under section 69A when the assessee maintained regular books of accounts and the cash deposits do get reflected in the books of accounts.
3. The learned assessing officer failed to note that section 69A is applicable only when the money is not recorded in the books of accounts whereas in the case of the assessee the money is recorded in the books of accounts and therefore section 69A is not applicable.
4. The learned assessing officer ought to have seen that the cash balance available as on 08-11-2016 as per the books of accounts could be deposited after the announcement of the Demonetization Scheme.
5. The learned assessing officer failed to note that the Income Tax Act is a self contained code independent of demonetization scheme.
6. The learned assessing officer ought to have seen that there is no provision in the Income Tax Act to tax the sale proceeds received in demonetized currencies of SBN deposited in the bank account as unexplained money under section 69A.
7. The learned assessing did not point out any defects in the books of accounts and rejected the books of accounts as incomplete or incorrect before adding the cash deposits under section 69A.
8. The appellant prays for leave to add, alter, amend or modify any or all the grounds at any time before or at the time of hearing.”
3. The brief facts of the case are that, the assessee is an individual and carrying on the business of trading in pulses and grains, filed his return of income for the AY 2017-18 admitting gross total income of Rs.8,26,303/-. The case was selected for scrutiny assessment under CASS with the reason as "Large cash deposits during demonetization period and Business return filed for the first time". The AO noticed from ITS details that the assessee had deposited Rs.55,77,500/- in cash during demonetization period in Tamilnadu Mercantile Bank Account No.153700060750001. The AO completed the assessment by making addition of Rs.55,77,500/- as unexplained money u/s.69A of the Act and taxed as per provisions of Section 115BBE of the Act by passing an order U/s.143(3) dated 28/12/2019. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the ld.CIT(A).
4. The ld.CIT(A) on perusal of the submissions of the assessee and the order of the Assessing Officer has confirmed the addition by holding as under:
“6.2 The addition of Rs.55,77,500/- made by the Assessing Officer relating to cash deposits as unexplained money u/s.69A of the Act and the submissions of the appellant has been perused. It can be seen from the assessment order that the appellant for the first time reported business income as a proprietary business for the AY 2017-18 declaring total income at Rs.8,26,303/-. Prior to this the appellant was a partner in firms and declared less than Rs.2.00 lakhs income. It clearly shows that there is an abnormal increase in income which is not in trend with the immediately previous assessment year incomes. Further, as per profit and loss account as declared by the appellant in return of income ITR-3 for the AY 201
