TaxTMI 
TaxTMI 
2026 (5) TMI 1194
X X X X Extracts X X X X
X X X X Extracts X X X X
....lected for Complete Scrutiny through CASS. Notice u/s 143(2) of the I.T. Act, 1961 dated 13.08.2018 was issued to the assessee through ITBA. The assessee, in response, filed the necessary details/information/ documents etc. (on ITBA Portal) as required. The AO noted that the books of accounts and vouchers were provided on the ITBA portal, during the course of assessment proceedings which were examined on test check basis. 2.1 During the course of assessment proceedings, it was noticed by the AO that the assessee had deposited cash of Rs. 72,00,000/- in his bank account during the demonetization period. In this regard, the assessee was asked by the AO vide notice dated 10.10.2019 to explain such cash deposit. In response the assessee submitted that source of the cash deposit was out of his professional receipts. Thereafter, the assessee vide notice dated 08.11.2019 was asked to provide the names of the from whom he received cash receipts. In response, the assessee provided the names of parties and dates of cash receipts as under: Date Course of cash Party name Cash amount 15,04,2016 Professional Fee Kalikho Pul Ex Chief Minister (Arunachal Pradesh) 60,00,0....
X X X X Extracts X X X X
X X X X Extracts X X X X
....given matter. (b) As far as the cash receipt from BJP Uttrakhand is concerned, the Assessee submitted that he had received cash from BJP Uttrakhand for representing Special Appeal No. 795 of 2016 Sh. Harish Chandra Rawat Vs Union of India in the Hon'ble High Court of Uttrakhand. On careful perusal of the facts of the above case from the website sources maintained by the Jurisdictional High Court, it was found that the assessee was not even representing the case. Hence, it is very clear that the cash of Rs. 12,00,000/-was not received by the assessee from BJP Uttrakhand for representing the Special Appeal No. 795 of 2016. Therefore, the assessee was unable to provide confirmation from BJP Uttrakhand. Accordingly, it is concluded that the Cash of Rs. 12,00,000/- was unexplained income of the assessee earned during F.Y. 2016-17. Relevant portion of the Writ petition is reproduced here as under (c). Also, it would not be wrong to say that this deposit of Rs. 72 lakhs was on account of unexplained receipts by the Assessee. The Assessee submitted that he received this Rs. 72,00,000/- in the months of April, 2016 and May. 2016. When we scrutinize this deposit of Rs. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....13th petitioner in writ petition whereas the other 13 petitioners are (1) Pema Khandu, (2) Kumar Waii. (3) Kameng Dolo, (4) Markio Tado, (5) Jarkar Gamlin, (6) P.D. Sona, (7) Mutchu Mithi, (8) Kamlung Mossang. (9) Phosum Khimhun, (10) Wanglin Lowangdong, (11) T. Wangham, (12) Lombo Tayeng and (14) T.N. Thongdak. It could not be the case that the entire advocate fee of Rs. 60,00,000/- was borne by Late Shri Kalikho Pul because the matter pertains to all the 14 persons and therefore, the other 13 persons could have also borne their share of advocate fees. In such case confirmations from the other 13 parties could have been easily obtained by the assessee. But he did not do so, which only means that the cash deposit of Rs. 60,00,000/- was not the advocate fee charged from the 14 persons. Moreover, the cash of Rs. 60,00,000/- claimed to have been received on 15.04.2016 should have been deposited immediately into the bank account of the assessee wherein his regular professional receipts were received. But the assessee did not do so and rather claimed that he kept the cash of Rs. 60,00,000/- with him for nearly seven months. In the absence of necessary confirmations from the parties and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee is trying to create a concocted story with an after - thought to explain the sources of Rs. 12,00,000/-. 6.2 The appellant-assessee made another claim before the FAA that addition of Rs. 72,00,000/- u/s. 69A leads to double taxation. His logic was that he already included this sum of Rs. 72,00,000/- as his turnover. However, as explained in paragraphs 6.1.1 and 6.1.2 the link between cash deposit of Rs. 72,00,000/- during demonetization period and receiving of the so called professional receipts of Rs. 72,00,000/- in Apr/May 2016 could not be established by the assessee. Without prejudice to this, the assessee also did not submit the chronological break up of the professional receipts of FY 2016-17 so as to see how and when this 72,00,000/- was incorporated into turnover. In view of this the claim of the assessee of double taxation is not correct and hence rejected. 7. As a result, appeal filed by the appellant against the order passed u/s. 143(3) of the I.T. Act for A.Y. 2017-18 is treated as DISMISSED." (emphasis supplied by us) 4. Aggrieved with the order of the Ld. CIT(A), the assessee filed an appeal before us on the following grounds of appeal: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ies. (enclosed in page no.222 of the paper book). Thus, from the very beginning transparency was maintained and the appellant declared the details of cash received from the parties and didn't resort to the amount being collected from Sundry parties. Though, being an Advocate he could have claimed giving services to sundry parties. As a matter of fact, the total receipts during the year was Rs. 18,17,84,889/--The appellant is covered under Tax Audit and his books are duly audited. Clause no. 11 of the form 3CD (Tax Audit Report) clearly mentions that the bank book has been maintained by the appellant and the same has been examined by the Tax Auditor. The amount which is deposited in the bank account becomes part of the books of accounts and has to be properly documented by the assessee and at the same time has to be properly verified by the Tax Auditor. The Tax Audit Report, balance Sheet and Profit and loss account has been duly signed by the Tax Auditor. As a matter of fact in dual system of accounting any amount which is shown as a receipt in the books of account has to be credited to an account. The amount received in books of account can't go ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....corded such money in the books of accounts and offers no explanation or unsatisfactory explanation. Both the condition given in point no 2 and 3 are cumulative and satisfaction of either of condition does not automatically triggers rigours of section 69A. The Hon'ble Apex Court in the case of D.N. Singh v. Commissioner of Income-tax, Central [2023] 150 taxmann.com 301 (SC) while explaining sec. 69A broke down the section as follows:- "Turning more to section 69A, it may be broken down into the following essential parts: a. The assessee must be found to be the owner; b. He must be the owner of any money, bullion, jewellery or other valuable articles; c. The said articles must not be recorded in the Books of Account, if any maintained; d. The assessee is unable to offer an explanation regarding the nature and the source of acquiring the articles in question, or The explanation, which is offered, is found to be, in the opinion of the Officer, not satisfactory; e. If the aforesaid conditions are satisfied, then, the value of the bullion, jewellery or other valuable article may be deemed as the income of the financial ye....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ave been duly accepted and examined on test check basis. Thus, when the impugned receipts are part of the income and are duly entered in the books of accounts, and the facts stands established. applying sec. 69A would be against the law. In this context we rely upon the decision of the Hon'ble ITAT Delhi Bench 'B' in the case of Income Tax Officer v. J.K. Wood India (P) Ltd. [2024] 158 taxmann.com 208 Wherein the applicability of section 69A was struck down due to the fact that sales were recorded in the books of accounts. It was further held that "We have given thoughtful consideration to the factual matrix discussed hereinabove. The undisputed fact is that there is not even a whisper of any defect, error or infirmity in the books of account maintained by the assessee which were audited both under the Companies Act and under the Income tax Act. The books of account have been maintained in the regular course of business and cash deposits in the books of account are duly reflected in the books of account". We further rely on the decision of the Hon'ble ITAT Delhi Bench 'G' in the case of S. Balaji Mech-Tech (P.) Ltd. v. Inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... held that addition under section 69A of the Act cannot be made in respect of those assets I monies/'entries which are recorded in the assessee's books of account". In view of the above submissions it is prayed that the addition of Rs. 72,00,000/- may please be deleted." (emphasis supplied by us) 6. On the other hand, the ld. Sr. DR filed a written submission, which is reproduced as under: "Brief Facts: As mentioned in the order of the AO and that of the Ld. CIT(A) Grounds taken by the appellant are strongly opposed in view of the detailed discussions in the order of AO/Ld CIT(A). In spite of sufficient opportunities the assessee miserably failed to furnish satisfactory explanation, with corroborative evidences, in respect the source cash deposit claimed to have been received as professional fee in cash from Late Mr. Kalikho Pul Ex CM Arunachal Pradesh and BJP Uttrakhand for Rs. 60 tacs and Rs. 12 lacs respectively as elaborated in details by AO in Para 4.3 of the Assessment Order. Further reliance is placed on the following judicial pronouncements:. Cash Deposit and ITR Filed): The Hon'ble Supreme Court has dismissed an SLP as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e authorities under the Act shall be invalid by reason of any mistake, defect or omission if such notice or proceedings or assessment is otherwise valid under the Act. This provision embodies the principle that mere non-mentioning or mentioning of a wrong provision of law in a proceedings or order can not be a ground to invalidate it if that is otherwise permissible and valid under law. In a number of judgments various courts have confirmed this principle like in the following: a. In the case of Jayeshkumar Chhakaddas Shah v/s Gordhanji Mafaji Thakor, Civil Appeal No. 10521 of 2013 (SC), it was observed by the Hon'ble Apex Court that mere non-mention of a correct provision is not fatal to the application if the power to pass such an order is available with the court. b. In the case of J. Kumaradasan Nair Vs. IRIC Sohan 2009 AIR SCW 1921 (SC) it was observed by the Hon'ble Apex Court that when the provisions are meant to apply and in fact found to be applicable to the facts and circumstances of a case, then there is no reason as to why the court will refuse to apply the same only because a wrong provision or no provision has been mentioned. c. In t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of account and the deposits were found only in the assessee's bank statement which cannot be considered as the books of account of the assessee and, therefore, section 68 was not applicable. Our attention was drawn to the confirmation letters placed at pages 159 and 160 of the paper book. We are however unable to accept the argument. Though section. 68 of the Act may not be strictly applicable since the assessee was not maintaining any books of account and the bank statement cannot be considered as the assessee's books of account, on the basis of the judgment of the Supreme Court in the case of A. Govindarajulu Mudaliar v. CIT (1958) 34 ITR 807, it is the onus of the assessee to explain the cash received by him and if there is no explanation or acceptable evidence to prove the nature and source of the receipt, the amount may be added as the assessee's income on general principles and it is not necessary to invoke section 68, nor is it necessary for the income-tax authorities to point out the source of the monies received. Even if section 68 is not applicable, the cash deposit in the bank can be asked to be explained by the assessee under section 69 or section 69B of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... immediately deposited into the bank account of the assessee as the marriage of his son was planned in October 2016 but which could not materialise due to some reasons were going on, and therefore it was kept with the assessee and due to demonetization period being declared the said cash was deposited in the bank account of the assessee. On the above plea of the Ld. AR, the AO observed that the assessee could have easily spent the said amount on his son's marriage because it was received in cash and cash has not trace but due to sudden announcement of demonetization the assessee had to deposit the same in the bank account and accounted the same under his professional receipts to avoid declaring the same in the PMGKY/IDS and avoiding penalty thereon. The above findings of the AO were also endorsed by the Ld. CIT(A). 7.2 The appellant-assessee made another claim before the First Appellate Authority that addition of Rs. 72,00,000/- u/s. 69A leads to double taxation as the said sum was already included as his turnover. The Ld. CIT(A) did not accept the above claim of the assessee for the reasons given by the AO in paragraphs 6.1.1 and 6.1.2 the link between cash deposit of Rs. 72,00....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch were not recorded in the books of account and were rightly added u/s 69A of the Act. However, the above claim of the assessee and its rebuttal by the AO is not emerging out of any factual verification either by the AO or the Ld. CIT(A) by examining the books of account in respect of the claim made by the assessee. Therefore, the said claim of the assessee requires factual verification. Further, as noted by the Ld. CIT(A) that the assessee also did not submit the chronological breakup of the professional receipts of FY 2016-17 so as to show how and when this 72,00,000/- was incorporated into turnover. The same has also not been submitted before us. These aspects require factual verification. 7.5 Therefore, in view of the above facts, we set aside the orders of the AO and the Ld. CIT(A) and restore the matter to the file of the AO to decide the issue afresh in the light of the above observations and in accordance with law. 7.6 The assessee will be at liberty to submit its evidence / details in support of his claims before the AO. 8. Ground no. 4 is against the levy of tax u/s 115BBE of the Act, in respect of the amount of cash deposit of Rs. 72,00,000/- added u/s 69A of t....