Shri Dinesh Singh Chouhan, H v. The Income Tax Officer, Ward Jagdalpur

(Tax Case No.179/2024) Digitally signedby SISTASISTASOMAYAJULUSOMAYAJULUDate:2024.09.2010:36:00 +0530 2024:CGHC:35770-DB AFR HIGH COURT OF CHHATTISGARH AT BILASPUR TAXC No. 179 of 2024 Shri Dinesh Singh Chouhan, H.No.43, Housing Board Colony, Bacheli,District Dantewada – 494 553, PAN: ... Appellant Versus The Income Tax Officer, Ward Jagdalpur ... Respondent For Appellant:Mr. Siddharth Dubey, Advocate.For Respondent:Mr. Amit Chaudhari, Advocate, on advance copy. -Division Bench: Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Amitendra Kishore Prasad, JJ. Order on Board(12/09/2024) Sanjay K. Agrawal, J. 1. Heard on admission and formulation of substantial question of law inthis appeal preferred under Section 260A of the Income Tax Act, 1961(for short, ‘the IT Act’).this appeal preferred under Section 260A of the Income Tax Act, 1961(for short, ‘the IT Act’). 2. The appellant herein / assessee was served with a notice underSection 148 of the IT Act by registered post and thereafter, his casewas selected for scrutiny and notice under Section 142(1) of the ITSection 148 of the IT Act by registered post and thereafter, his casewas selected for scrutiny and notice under Section 142(1) of the IT (Tax Case No.179/2024) Act was also served to him fixing the date of hearing as 12-6-2015which he did not respond leading to extending of last opportunityby again issuing notice under Section 142(1) of the IT Act byRegistered Post with Acknowledgment Due and finally, on 16-6-2016, since the appellant did not comply with the above statednotices, a memo was issued to him to show cause why assessmentbe not completed ex parte under Section 144 of the IT Act as per theinformation and documents available on record which was served tohim, but it also remained unanswered and again it was notresponded by the appellant / assessee. Finding no way, theAssessing Officer called information under Section 133(6) of the ITAct from the Manager, State Bank of India, Branch: Bacheli inresponse to which the Bank had submitted copy of the statement ofthe bank account of the assessee on 20-6-2016 and on verificationof the said bank account, it was revealed that the assessee had madecash deposits of ₹ 11,44,070/- in his Savings Bank AccountNo.30524245488 maintained by him in the said branch and in thatcase, onus was lying with the assessee to substantiate his case withevidence regarding source of income for making cash deposits inthe said bank account. Since the assessee failed to participate in theassessment proceedings and furnished no explanation and alsofailed to explain the source of above cash deposit, the assessmentwas completed ex parte under Section 144 of the IT Act and ₹ (Tax Case No.179/2024) 11,44,070/- was treated as the assessee’s undisclosed andunexplained income and it was added to the total income of theassessee under Section 68 read with Section 69A of the IT Act by itsorder dated 21-9-2016. 3. Feeling aggrieved against the order of the Assessing Officer dated (Tax Case No.179/2024) 11,44,070/- was treated as the assessee’s undisclosed andunexplained income and it was added to the total income of theassessee under Section 68 read with Section 69A of the IT Act by itsorder dated 21-9-2016. 3. Feeling aggrieved against the order of the Assessing Officer dated 21-9-2016, the appellant / assessee preferred an appeal underSection 246A of the IT Act before the Commissioner of Income Tax(Appeals), National Faceless Appeal Centre (NFAC), Delhiwhereupon the appellant herein / assessee was issued notice on hisregistered e-mail address to submit written submission, but theappellant despite of four notices issued under Section 250 of the ITAct on 30-12-2020, 7-5-2021, 10-8-2022 & 14-10-2023 chose notto file written submission and ultimately, the appellate authority i.e.the CIT (Appeals), NFAC, by order dated 23-10-2023 dismissed theappeal upholding the order of the Assessing Officer holding that theappellant herein / assessee has failed to substantiate his claim anddid not furnish documentary evidence / written submissionexplaining the nature and source of the cash deposits of 11.44 lacs₹in his bank account, and further held that the documents filed byhim to support his explanation do not inspire confidence. 4. Questioning legality, validity and correctness of the order dated 23-10-2023, the appellant herein preferred appeal before the Income10-2023, the appellant herein preferred appeal before the Income (Tax Case No.179/2024) Tax Appellate Tribunal and during the pendency of appeal, theappellant / assessee preferred two applications for admission ofadditional evidence under Rule 29 read with Rule 18(4) of theIncome Tax (Appellate Tribunal) Rules, 1963 which were allowedby the ITAT and documents were admitted on record and consideredby the Appellate Tribunal i.e. ITAT. The ITAT by its impugnedorder, dismissed the appeal holding that the assessee has failed tosubstantiate its plea based on documentary evidence the nature andsource of the cash deposits made by him in his bank account and thedocuments filed by him to support his explanation in shape ofadditional documents do not inspire any confidence andaccordingly, affirmed the order passed by the CIT (Appeals), NFACaffirming the order of the Assessing Officer leading to filing of thisappeal under Section 260A of the IT Act. 5. Mr. Siddharth Dubey, learned counsel appearing for the appellant /assessee, would submit that the findings of the Assessing Officer,CIT (Appeals) and ITAT are perverse and all the authorities haveerred in upholding addition under Section 68 read with Section 69Aof the IT Act in absence of books of account being maintained bythe appellant herein / assessee specifically when there was nostatutory obligation on the appellant / assessee to maintain books ofaccount as per Section 44AA of the IT Act and further erred inupholding addition under Section 68 read with Section 69A to the (Tax Case No.179/2024) appellant’s/assessee’s income for the Assessment Year 2012-13 asthe parameters to make addition under the aforesaid provisions aredifferent / as the condition(s) to attract addition under the aforesaidprovisions are different. As such, substantial question of law arisesfor consideration in this appeal. 6. We have heard learned counsel for the appellant on the question ofadmission of this tax case and considered his submissions madeherein-above carefully and minutely as well.admission of this tax case and considered his submissions madeherein-above carefully and minutely as well. (Tax Case No.179/2024) appellant’s/assessee’s income for the Assessment Year 2012-13 asthe parameters to make addition under the aforesaid provisions aredifferent / as the condition(s) to attract addition under the aforesaidprovisions are different. As such, substantial question of law arisesfor consideration in this appeal. 6. We have heard learned counsel for the appellant on the question ofadmission of this tax case and considered his submissions madeherein-above carefully and minutely as well.admission of this tax case and considered his submissions madeherein-above carefully and minutely as well. 7. A careful perusal of the record would show that an amount of ₹11,44,070/- in the savings bank account maintained by the appellantherein / assessee was found deposited by the appellant to which theAssessing Officer issued number of notices seeking his explanationas regards the nature and source of the cash deposits, but before theAssessing Officer, the appellant did not chose to appear andremained ex parte upon which ex parte order dated 21-9-2016 underSection 144 of the IT Act was passed and 11,44,070/- was treated₹as the assessee’s undisclosed/unexplained income and added to thetotal income of the assessee under Section 68 read with Section 69Aof the IT Act. On appeal preferred by the appellant before the CIT(Appeals), NFAC under Section 246A of the IT Act, the appellantagain did not support his plea to support his points raised in theappeal and 4-6 notices were issued to him on his registered e-mail (Tax Case No.179/2024) address to file written submission on the E-Filing Portal, but theappellant did not file any reply. The appellate authority i.e. theNFAC held that the appellant did not furnish any documentaryevidences and written submission in spite of various notices issuedto him during the appellate proceeding and has failed to explain thenature and source of 11,44,070/- which was deposited in his₹account. The ITAT after admitting the additional documents, yet,did not find any force in the submission of the appellant anddismissed the appeal. However, at this stage, Section 68 of the ITAct deserves to be noticed. It states as under: - “68. Cash credits.—Where any sum is found credited inthe books of an assessee maintained for any previous year,and the assessee offers no explanation about the nature andsource thereof or the explanation offered by him is not, inthe opinion of the Assessing Officer, satisfactory, the sumso credited may be charged to income-tax as the income ofthe assessee of that previous year: Provided that where the sum so credited consists ofloan or borrowing or any such amount, by whatever namecalled, any explanation offered by such assessee shall bedeemed to be not satisfactory, unless— (a) the person in whose name such credit is recordedin the books of such assessee also offers anexplanation about the nature and source of such sumso credited; and (b) such explanation in the opinion of the AssessingOfficer aforesaid has been found to be satisfactory: *********” Page 7 of 13 (Tax Case No.179/2024) 8. A careful perusal of the aforesaid provision would show that where any sum is found credited in the books of an assessee maintainedfor any previous year, same may be charged to income-tax as theincome of the assessee of that previous year, and if the explanationoffered by the assessee about the nature and source of sums foundcredited in the books is not satisfactory, in such cases, there is,prima facie, evidence against the assessee, viz., the receipt ofmoney, and then the burden is on the assessee to rebut the same, andif he fails to rebut, it can be held against the assessee that it was areceipt of an income nature. 9. In the matter of Commissioner of Income Tax v. P. Mohanakala1,their Lordships of the Supreme Court considered the nature andscope of Section 68 of the IT Act and laid down when and in whatcircumstances Section 68 of the IT Act would come into play byobserving as under: - 9. In the matter of Commissioner of Income Tax v. P. Mohanakala1,their Lordships of the Supreme Court considered the nature andscope of Section 68 of the IT Act and laid down when and in whatcircumstances Section 68 of the IT Act would come into play byobserving as under: - “15.The question is what is the true nature and scope ofSection 68 of the Act? When and in what circumstancesSection 68 of the Act would come into play? That a barereading of Section 68 suggests that there has to be credit ofamounts in the books maintained by an assessees; suchcredit has to be of a sum during the previous year; and theassessees offer no explanation about the nature and sourceof such credit found in the books; or the explanation offeredby the assessees in the opinion of the Assessing Officer isnot satisfactory, it is only then the sum so credited may becharged to income-tax as the income of the assessees of thatprevious year. The expression “the assessee offers no (Tax Case No.179/2024) explanation” means where the assessees offer no proper,reasonable and acceptable explanation as regards the sumsfound credited in the books maintained by the assessees. Itis true the opinion of the Assessing Officer for not acceptingthe explanation offered by the assessees as not satisfactoryis required to be based on proper appreciation of materialand other attending circumstances available on record. Theopinion of the Assessing Officer is required to be formedobjectively with reference to the material available onrecord. Application of mind is the sine qua non for formingthe opinion.” 10.Similarly, Section 69A of the IT Act provides for unexplained money, etc. and it states as under: - “69A. Unexplained money, etc.—Where in any financialyear the assessee is found to be the owner of any money,bullion, jewellery or other valuable article and such money,bullion, jewellery or valuable article is not recorded in thebooks of account, if any, maintained by him for any sourceof income, and the assessee offers no explanation about thenature and source of acquisition of the money, bullion,jewellery or other valuable article, or the explanationoffered by him is not, in the opinion of the AssessingOfficer, satisfactory, the money and the value of the bullion,jewellery or other valuable article may be deemed to be theincome of the assessee for such financial year.” 11.The Supreme Court in the matter of Chuharmal S/o Takarmal Mohnani v. Commissioner of Income Tax, M.P., Bhopal2 dealing with Section 69A of the IT Act has held that in order to find outwhether the assessee is the owner of any money or valuable articlefor the purposes of Section 69-A of the Income Tax Act, 1961, theprinciple of common law jurisprudence embodied in Section 110 ofthe Evidence Act can be applied. It follows from well-settled 2(1988) 3 SCC 588 (Tax Case No.179/2024) principle of law that normally, unless contrary is established, titlealways follows possession. The expression ‘income’ as used inSection 69-A of the Income Tax Act, has wide meaning whichmeant anything which came in or resulted in gain. 12.Further, the principle of law laid down in Chuharmal(supra) wasfollowed by the Supreme Court with approval in the matter ofCommissioner of Income Tax, Salem v. K. Chinnathamban3 andit has been held that where a deposit stands in the name of a thirdperson and where that person is related to the assessee then in sucha case the proper course would be to call upon the person in whosebooks the deposit appears or the person in whose name the depositstands should be called upon to explain such deposit and furtherheld that the onus of proving the source of deposit primarily restedon the persons in whose names the deposit appeared in variousbanks, and observed as under: - 12.Further, the principle of law laid down in Chuharmal(supra) wasfollowed by the Supreme Court with approval in the matter ofCommissioner of Income Tax, Salem v. K. Chinnathamban3 andit has been held that where a deposit stands in the name of a thirdperson and where that person is related to the assessee then in sucha case the proper course would be to call upon the person in whosebooks the deposit appears or the person in whose name the depositstands should be called upon to explain such deposit and furtherheld that the onus of proving the source of deposit primarily restedon the persons in whose names the deposit appeared in variousbanks, and observed as under: - “7.Where a deposit stands in the name of a thirdperson and where that person is related to the assesseethen in such a case the proper course would be to callupon the person in whose books the deposit appears orthe person in whose name the deposit stands should becalled upon to explain such deposit. In the present case,there is no evidence recording registration of the firm.In the present case, books of accounts are not properlymaintained. In the present case, there is no explanationregarding the source of investment. In the present case,the evidence of K. Palanisamy, indicates that even thepartners of the firm were fictitious. In the above (Tax Case No.179/2024) circumstances, the Tribunal had erred in directinglinking up of the deposits with the accounts of M/s V.V.Enterprises. In fact, the directions given by theTribunal to the AO for such linking up was not evencapable of compliance. The onus of proving the sourceof deposit primarily rested on the persons in whosenames the deposit appeared in various banks. In thecircumstances, the Department was right in makingindividual assessments in the hands of the respondentassessee K. Chinnathamban. Similarly, the Departmentwas right in making the individual assessments in thenames of other respondent assessees, who are parties toconnected civil appeals herein.” 13.Finally, in the matter of Vijay Kumar Talwar v. Commissioner of Income Tax, Delhi4, the Supreme Court held that a finding of factmay give rise to a substantial question of law, inter alia, in the eventthe findings are based on no evidence and/or while arriving at thesaid finding, relevant admissible evidence has not been taken intoconsideration or inadmissible evidence has been taken intoconsideration, and observed in paragraph 21 as under: - “21.A finding of fact may give rise to a substantialquestion of law, inter alia, in the event the findings arebased on no evidence and/or while arriving at the saidfinding, relevant admissible evidence has not been takeninto consideration or inadmissible evidence has been takeninto consideration or legal principles have not been appliedin appreciating the evidence, or when the evidence has beenmisread. (See: Madan Lal v. Mst. Gopi & Anr.[5]; NarendraGopal Vidyarthi v. Rajat Vidyarthi[6]; Commissioner ofCustoms (Preventive) v. Vijay Dasharath Patel[7]; Metroark 42011 AIR SCW 21585(1980) 4 SCC 255 : (AIR 1980 SC 1754)6(2009) 3 SCC 287 : (2009 AIR SCW 1756)7(2007) 4 SCC 118 : (2007 AIR SCW 1694)5(1980) 4 SCC 255 : (AIR 1980 SC 1754)6(2009) 3 SCC 287 : (2009 AIR SCW 1756)7(2007) 4 SCC 118 : (2007 AIR SCW 1694) (Tax Case No.179/2024) Ltd. v. Commissioner of Central Excise, Calcutta[8]; WestBengal Electricity Regulatory Commission v. CESC Ltd.[9])” Further, in Vijay Kumar Talwar (supra), where the lowerauthorities as also the High Court have concurrently found that theassessee did not produce any evidence to rebut the presumptiondrawn against him under Section 68 of the IT Act, in the absence ofany cogent evidence and finding the explanation furnished by theassessee not satisfactory, their Lordships of the Supreme Court heldthat the concurrent finding of the lower authorities would not giverise to a substantial question of law, and observed as under: - (Tax Case No.179/2024) Ltd. v. Commissioner of Central Excise, Calcutta[8]; WestBengal Electricity Regulatory Commission v. CESC Ltd.[9])” Further, in Vijay Kumar Talwar (supra), where the lowerauthorities as also the High Court have concurrently found that theassessee did not produce any evidence to rebut the presumptiondrawn against him under Section 68 of the IT Act, in the absence ofany cogent evidence and finding the explanation furnished by theassessee not satisfactory, their Lordships of the Supreme Court heldthat the concurrent finding of the lower authorities would not giverise to a substantial question of law, and observed as under: - “22.Examined on the touch-stone of the afore-noted legalprinciples, we are of the opinion that in the instant case theHigh Court has correctly concluded that no substantialquestion of law arises from the order of the Tribunal. Allthe authorities below, in particular the Tribunal, haveobserved in unison that the assessee did not produce anyevidence to rebut the presumption drawn against him underSection 68 of the Act, by producing the parties in whosename the amounts in question had been credited by theassessee in his books of account. In the absence of anycogent evidence, a bald explanation furnished by theassessee about the source of the credits in question viz.,realisation from the debtors of the erstwhile firm, in theopinion of the assessing officer, was not satisfactory. It iswell settled that in view of Section 68 of the Act, where anysum is found credited in the books of the assessee for anyprevious year, the same may be charged to income-tax asthe income of the assessee of that previous year, if theexplanation offered by the assessee about the nature andsource thereof is, in the opinion of the assessing officer, notsatisfactory. (See: Sumati Dayal v. Commissioner of 8(2004) 12 SCC 505 : (AIR 2004 SC 3142 : 2004 AIR SCW 2304)9(2002) 8 SCC 715 : (AIR 2002 SC 3588 : 2002 AIR SCW 4212)9(2002) 8 SCC 715 : (AIR 2002 SC 3588 : 2002 AIR SCW 4212) (Tax Case No.179/2024) Income Tax, Bangalore[10] and Commissioner of Income Taxv. P. Mohanakala[1]). We are of the opinion that on aconspectus of the factual scenario, noted above, theconclusion of the Tribunal to the effect that the assessee hasfailed to prove the source of the cash credits cannot be saidto be perverse, giving rise to a substantial question of law.The Tribunal being a final fact-finding authority, in theabsence of demonstrated perversity in its finding,interference therewith by this Court is not warranted.” 14. Reverting to the facts of the present case in the light of the aforesaid principles of law laid down by their Lordships of the SupremeCourt in the aforementioned decisions, it is quite vivid that in theinstant case, despite number of notices having been issued by theAssessing Officer to explain and to furnish the nature and source ofthe cash deposits of ₹ 11,44,070/- in the bank account of theappellant herein / assessee, the appellant chose not to appear anddid not furnish any explanation either before the Assessing Officeror before the appellate authority i.e. the CIT (Appeals), NFAC,however, the appellant has furnished some explanation in shape ofadditional documents holding that it is the amount of M/s. ShriramTransport Finance Company Limited stating that the amount of ₹11,44,070/- was collected by him (appellant/assessee) as a recoveryagent from its borrowers who were located in naxal affected areasand deposited in his account. However, this explanation, for thereasons mentioned in the shape of affidavit, has not been found tobe the reasonable explanation and the ITAT has rightly come to the10 1995 Supp (2) SCC 453 : (AIR 1995 SC 2109 : 1995 AIR SCW 3231) Soma (Tax Case No.179/2024) conclusion that the assessee has failed to substantiate the nature andsource of the cash deposits in his bank account. Soma (Tax Case No.179/2024) conclusion that the assessee has failed to substantiate the nature andsource of the cash deposits in his bank account. 15. In that view of the matter, in our considered opinion, the AssessingOfficer; the CIT (Appeals), NFAC; and the ITAT, all, haveconcurrently and correctly concluded that the assessee did notproduce any evidence to rebut the presumption drawn under Section68 read with Section 69A of the IT Act and in light of the decisionof the Supreme Court in Vijay Kumar Talwar (supra), we are ofthe considered opinion that the finding of the ITAT is the correctfinding of fact based on record and the appellant has failed todemonstrate any substantial question of law in this appeal and assuch, no substantial question of law arises from the order of theITAT requiring formulation for consideration. 16. Accordingly, this appeal stands dismissed at the admission stage itself without notice to the other side. Sd/- Sd/- (Sanjay K. Agrawal) (Amitendra Kishore Prasad) JUDGE JUDGE