TaxTMI 
TaxTMI 
2024 (12) TMI 372
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....ore us is, the ld. CIT(A) has erred in confirming the addition of Rs. 88,23,659/- u/s. 69A r.w.s. 115BBE of the Act as unexplained income. 4. The brief facts are that, the assessee is an individual and is in the business of trading in silk sarees and job work of weaving of silk sarees under the name and style of M/s. K.Meiyappan 'A' Fabrics. The assessee filed his return of income for the assessment year 2017-18 on 13.11.2017, admitting an income of Rs. 11,45,870/-. The case was selected for scrutiny under CASS. Accordingly, notices u/s. 143(2) and 142(1) of the Act was issued to the assessee calling for details of cash deposits during demonetization period. In response to notices, the assessee submitted bank statements and explained that cash deposits of Rs. 2,33,03,000/- in SBNs during demonetization period was from the sales made in the month of October and also cash sales from 01.11.2016 to 08.11.2016. However, the Ld. AO was not satisfied with the explanation furnished by the assessee and accepted the cash balance held on 08/11/2016 of Rs. 1,44,79,341/- as explained and the balance amount of Rs. 88,23,659/- was brought to tax u/s. 69A r.w.s. 115BBE of the Act and also Rs. 82,....
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....s. 1,0,72,500/- is also treated as unexplained income of the assessee u/s 69A r.w.s. 115BBE of the lncome-tax Act, 1961 and the same is brought to tax for A. Y.2017-18. A sum of Rs. 88,23.659/- is already brought to tax u/s 69A r.w.s. 115BBE, as discussed above, the balance sum of Rs. 82,48,840/-(1,70,72,500-88,23,659) is brought to tax for A.Y.2017-18 under the head "Income from other sources". Since the determined income includes income in reference to section 69A, penalty proceedings u/s. 271AAC of the Income-tax Act is initiated separately." 4. Aggrieved by the impugned order, the assessee preferred an appeal before the ld.CIT(A). Before the ld.CIT(A), the assessee reiterated that the business of trading in silk sarees, raw silk and job work has been carried out and the deposits made during the assessment year was out of sale proceeds, collection from debtors and the amounts withdrawn from the banks earlier. The assessee maintained regular books of accounts with stock inventory. The assessee furnished purchase bills, sales register, cash book and demonstrated that the cash was deposited in SBN was out of sales proceeds and collection from the debtors. The assessee challenged t....
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....l SBNs deposited during the demonetization period. Further, assessee stated that the cash deposited in the bank in SBNs are out of cash sales, debt realisation etc. This point was not contradicted by the AO and considered all these aspects of cash sales & debt realisations as part of the cash in hand as on 08-43.2016 The assessee cannot claim that he had reaslised the sale proceeds and recovery of debt in SBNs during the demonetisation period which is against the notifications/circulars issued by the RBI. The assessee is prohibited in carrying out the business transactions in the demonetised Currency which is against then public policy. Even if the assessee has done any sale\transactions during the demonetisation period in currency of non-legal tender that will be considered as nota legal transaction. The transactions cannot be recognized in the books of accounts in the currency of non-legal tender. To that extent the books of accounts are Considered to be defective Since the appellant had not taken such plea carrying out the sales in SBNS, the only possibility of cash received in SBNs over and above the closing cash in hand as on 08.11.2016 to be treated as income from the sources....
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....justice of on both the ends. There is no need of discarding the addition of SBNs from the assessed income which is against the facts and the law. Subjected to the above discussion, the ground no.2() raised by the appellant is dismissed. 19.0 The assessee had not deposited the entire amount of SBNs with him at one go in the bank account. He deposited the SBNs on several tranches. The AO has suspected that the assessee was not having sufficient opening balance as claimed by him but brought into the books later and claimed the same as available as on 08.11.2016. Such inference was drawn based on human behaviour and probability of taking such rare course. The AO might have been correct if the facts/documents supporting such inference with him. Once he had accepted the assessee's submission of closing balance of cash in hand, it is the prerogative of the assessee to deposit the SBNs at any time within the time period allowed by the RBI starting from 10.11.2016 to 31.12.2016. As rightly asserted by the appellant in his written submissions, the AO cannot specify the pattern of cash deposits to be done in a particular fashion. There may be several reasons though not specified by the ....
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.... not a legal tender and was prohibited to transact for any of the transactions by general public and hence the order of the Ld.CIT(A) should be upheld. 9. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The fact with regard to the impugned dispute are that the assessee has deposited a sum of Rs. 88,23,659/- in specified bank notes during demonetization period to his bank account beyond the cash balance held on 08/11/2016. It is admitted from the records that the assessee is engaged in trading business of trading in silk yarn, silk sarees and job work of weaving silk sarees. The case was selected for scrutiny to verify the source for cash deposited and called for certain details. The assessee deposited cash of Rs. 2,33,03,000/- after announcement of demonetization by Government of India. Out of which the assessee shown cash balance on 08/11/2016 of Rs. 1,44,79,341/- and hence the difference amount of Rs. 88,23,659/- considered as specified bank notes collected during demonetization period and deposited to his bank account, thereby confirmed the addition by Ld.CIT(A) u/s. 69A of the Act made by the AO. The asses....