TaxTMI 
TaxTMI 
2024 (4) TMI 1297
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....s including Tribunals having been placed on record of the Id. CIT(A), the ld. CIT(A) had erred in law and facts in maintaining the addition of Rs. 51,76,000/- in the returned income of the appellant holding amongst other that the ld. A.O was correct in treating the deposits of SBN during Demonetisation Period as not a legal tender and it was unexplained money under Sec. 69A of the Act attracting tax liability u/s 115BBE of the Act. 3. The disputed action of the Id. A.O and maintaining the same by the Id. CIT(A) was not correct in law and facts and, therefore, the Hon'ble ITAT may very kindly allow the appeal of the appellant reversing the decisions of the authorities below whereby they had held and maintained respectively that the addition u/s 69A r.w.s. 115BBE of the Act of Rs. 51,76,000/- was correctly made. The same may very kindly be deleted by allowing the appeal of the appellant. 4. The appellant craves leave to add, alter, substitute withdraw, modify or amend any of the ground of appeal here in above taken on or before the hearing. 5. The appellant prays that his appeal may kindly be allowed by cancelling the disputed addition and allow the app....
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....k account is the proceeds of the sales. The ld. AO noted that the assessee was not authorised to receive the SBN after the demonetisation announced. The ld. AO also relied upon the RBI circular for accepting the notes and the related compliance to be made. The ld. AO noted that since the assessee did not produced the copy of authorisation, valid identity proof and Annexure -5 as prescribed by RBI he noted that the assessee violated the rules laid down vide notification dated 08.11.2016 of the RBI. Based on this observation the ld. AO added a sum of Rs. 51,76,000/- being the deposit of cash in the form of SBN as unexplained money of the assessee u/s. 69A of the Act and the same was added to the income of the assessee. 4. Feeling dissatisfied the assessee preferred an appeal before the ld. CIT(A), the ld. CIT(A) has dismissed the appeal of the assessee. Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: "5.0 Decision: 5.1 Ground No. 1:- Vide this ground of appeal, Appellant has challenged the findings of the AO in his assessment order and has stated that AO has erred in making of Rs. 51,76,000/- u/s 69A of IT Act,....
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....ountered that it has filed all the relevant reply with regard to source of cash deposited in bank accounts. From the perusal of reply filed during appellate proceedings, it is seen that appellant has tried to explain the source of cash deposits in his bank accounts was only out of the realization of earlier sale proceeds from the debtors to whom goods were sold. Further, it was also explained that outside places the business of the appellant is carried on through dalals who are who are working at various places and collect the funds from the debtors as usual and as per trade practice and deposit the same in Appellant's bank accounts. Further, it has also been explained that many a times Appellant's touring agents collect sale proceeds and hand over the same to the dalals, who in turn deposit the money in the Appellant's bank account. The dalals were working for the assessee. Further, Appellant has stated that all the facts were fully brought on the record during assessment proceedings as to how cash was received, collected and deposited in the bank account during demonetization period. Further, appellant has stated that it has provided all the sale bill numbers along wi....
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.... by the account holder in favour of the person actually rendering SBN in the bank account (2) valid identity proof (3) duly filled proforma in Annexure 5 as prescribed by the RBI. The AO has noted that on issue of notice to the bank u/s 133(6) bank have not provided the copies of authorization issued by account holder (2) valid of identity proof (3) duly filled proforma in annexure 5. AO has given his finding that neither appellant nor the bank has furnished the aforesaid three documents and has concluded that in absence of these documents the claim of the appellant that the cash in SBN has been deposited by the buyer/ third party is not acceptable and has held that explanation regarding of source of cash deposit in SBN is not satisfactory. In view of the above findings AO has treated the cash of Rs. 51,76,000/- in SBN credited into appellant's bank account as unexplained money u/s 69A of the I.T. Act. Considering the totality of facts as emerging from the finding of the AO and reply of the appellant I am inclined to accept the finding of the AO in his assessment order with regard to treatment of cash deposit in SBN amounting to Rs. 51,76,000/- as unexplained money u/s 69A of t....
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....he appellant assessee in this case is engaged in the business of purchasing, manufacturing and selling of textile, dyed and printing clothes under his proprietary firm M/s Baba Prints, Balotra. The sales of the appellant is spread over throughout the country in various States. During the tenure of demonetisation period, in appellant's bank account, (in three banks), cash in SBN was deposited by the appellant's Dalals or by appellant's sale representatives through Dalals or at many occasions by the debtors themselves (i.e. purchasers of goods). The appellant had not at all instructed or informed to his banks to accept such cash during demonetisation period. In Para No. 4 at Pg. No. 2, of the asst. order, two types of deposits were mentioned by the ld. A.O. these are reproduced as under:- S. No. Name of the Bank Account Account No. Amount deposited during demonetization period Amount deposited in SBN 1. HDFC Bank Ltd., 50200006111512 Rs. 27,79,285/- Rs. 18,75,500/- 2. PNB 0551002100042345 Rs. 53,19,914/- Rs. 31,46,500/- 3. Axis Bank 912030067848428 Rs. 3,37,830/- Rs. 1,54,000/- Total Rs. 84,3....
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.... # If the receipt is against the sale proceed, please furnish the ledger account (from 01.04.2015 to 31.03.2018) of the party/firm/individual (actually rendering the SBN) who has deposited the cash directly to your account. The ledger account should be confirmed by these parties/firms/individuals. # Copy of sale bill, bilty, transportation slips and other receipts which may establish the genuineness of sales made to these parties/persons (actually tendering the SBN). # Please furnish cash/bank book for the period from 1.04.2015 to 31.03.2017 showing the receipt of cash against sale proceed. 7. In this case, the assessee submitted that the source of cash deposited in bank in SBN during demonetization period is debtor realization only. Here Reference is invited to the Notification S.O.3408(E) dated 08.11.2016 of the Ministry of Economic Affairs vide which the Central Government declared that the bank notes of existing series of denomination of the value of five hundred rupees and one thousand rupees (SBN/Specified Bank Notes), shall cease to be legal tender on and from the9th November,2016. The assessee has claimed that he/she rec....
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....y disclosed position had been fully accepted so far as the trading activity (purchases and sales etc. and the collection of sale proceeds) is concerned. 7. Thereafter vide letter dt. 07-12-2019, the appellant had filed further details in the Performa provided by the A.O relating to the cash deposited in appellant's bank a/c from 09- 11-2016 to 31-12-2016. Nothing inconsistent was found in these deposits except of the fact as to why and who had deposited the cash at outside places of Balotra, whereas the assessee's banks branches whereat Balotra. For this the assessee had also made the facts clear and placed the facts on record which we shall also be dealing with. In letter of 07-12-2019, the appellant had also explained the fact of availability of cash and its direct deposits at those various places and also informed that no transactions of sales in cash was made by him. It was only the realisation of the earlier sale proceeds from the debtors to whom the goods were sold. It was also informed that at these outside places, the business of the appellant is carried on through the Dalals, who are working at these various places, who also collect the funds from the debtors as usual a....
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.... (Sundry Debtors) to directly deposit SBN Notes in our A/c. Other cash deposits in various Banks was made by outside parties (Debtors), was accepted by Bank without following the norms prescribed by RBI in this regard. We have given authorization ta our Dalals only. Who have already received the amount prior to demonization period. It is to facilitate them as they have already received the amount before demonization period and that is also far 6 to 7 Lacs. We have already send copies of A/cs to parties (Sundry Debtors) for confirmation and we submitts the same to your honour as early as possible. The amount deposited by parties (Debtors) in our Bank A/c without our authorization is amount due to them for goods sold to them. Copies or Bills are enclosed herewith for your ready reference. The assessee is doing business of Trading and manufacturing of printed cotton cloth since long. The assessee is regularly assessed for income tax since last 10- 15 veal'. He is regularly maintaining day to day hook of the assessee's turnover during the year under consideration is 12.46 Crore. Whereas turn over for preceding previous wear was 11.27 Crore. A....
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....ition in this regard is also made clear here under. Legal Position:- 11. This action of the ld. A.O is wholly erroneous, unjust, arbitrary and absolutely contrary to the provisions of the Income Tax Act, 1961, because of the fact that the appellant had maintained the regular books of accounts correctly showing correct position of stock, purchases and sales and closing stock etc. along with receipts of cash and other outgoing of the cash. Such maintained books of accounts were fully correct and all the money transactions were duly recorded and reflected in the books of accounts. There bring no adverse remark or finding of the ld. A.O in this regard. The turnover during this year was higher than earlier year. The books of accounts were not rejected, nor Sec. 145 was invoked. Besides this, appellant's books of accounts are duly audited u//s 44AB and disclosed sales turnover were duly accepted by the concerned Sales Tax (GST & VAT) Department). Thus the ld. AO was, on the facts and law as applicable and also as per settled legal position bound to accept the books of accounts and make the assessment without any addition because entire cash deposited by the appellant during demonet....
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....addition is totally erroneous, bad in law, without jurisdiction, bad in facts which deserves to be quashed and cancelled. We place reliance on the under mentioned decision. i. (2023) 198 ITD 406 (Hyd.-Trib.) = (2022) 145 taxmann.com 232 (Hyd.-Trib.) - NECX (P.) Ltd. vs. ITO. "Where assessee produced number of sales invoices to show source from where cash was received which was deposited in bank account of assessee and, further, turnover of assessee was also not disputed by Assessing Officer, CIT(A) was not justified in sustaining additions under section 68 made on account of said cash deposited in bank account of assessee and same was to be deleted." ii. Sh. Balwinder Kumar vs. ITO, W-3(1), ITAT, Amritsar Bench- ITA No. 256/Asr/2022 for A.Y. 2017-18 Further in Para No. 12 the Hon'ble ITAT, Amritsar Bench has given the decision by concluding remarks as under:- "12. Considering the factual matrix of the case, we hold that the cash deposits in bank represent the sales which the assessee has rightly offered for taxation. We have gone through the trading account and find that there was sufficient stock to affect the sales and we do not find any def....
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....see submitted that the Ld. CIT(A), NFAC erred in confirming additions made towards cash deposits of Rs. 7,67,500/- by treating it as unexplained money u/s. 69 of the Act, without appreciating the fact that the assessee can transact in Specified Bank Notes up to appointed date as per the Specified Bank Notes (Cessation of Liabilities) Act, 2017, and as per said Act, appointed date for this purpose is 31.12.2016. In this regard, he relied upon the decision of ITAT Visakhapatnam Bench in the case of ITO v. Sri Tatiparti Satyanarayana in ITA No.76/Viz/2021 order dated 16.03.2022. 5. The Ld. DR, on the other hand, supporting the order of the Ld. CIT(A), field a detailed Written Submissions dated 21.09.2022 and argued that as per the Specified Bank Notes (Cessation of Liabilities) Act, 2017, which came into effect from 31.12.2016, the assessee is prohibited from dealing with Specified Bank Notes w.e.f.09.11.2016 for all purposes except for the purpose of exchange of such Specified Bank Notes held on or before 08.11.2016. Further, assuming for a moment, the assessee can transact in Specified Bank Notes up to 31.12.2016, but the assessee could not prove the receipt of sale conside....
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....account, if any, 4maintained by him for any source of income, and 5the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, 6or the explanation offered by him is not, 7in the opinion of the 61[Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income64 of the assessee for such financial year.". [Emphasis supplied by us] 18. We now deal, and by analysing the facts of the appellant's case with relevant law. In this regard, we would try to show as to how Sec. 69A was wrongly invoked by the ld. A.O in the factual matrix of the case and consequently the addition of income u/s 69A and levy of tax u/s 115BBE was wrongly done. Both these i.e. addition and levy of tax deserve to be quashed and cancelled. Sr. No. Conditions of Section 69A Facts of the case of assessee 1. The assessee is found to be owner of money, bullion etc. and the same is not recorded in books. The assessee is maintaining regular books of accounts and such amount of cash collection or receipt cash including SBN. On account of sales made....
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....essee offers no proper, reasonable or acceptable explanation as regards the sums found credited in the books maintained by the assessee. It is true the opinion of the A.O for not accepting the explanation offered by the assessee's as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the A.O is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion." 5. Such income may be deemed to the Income of the assessee. When the basic facts that the sales have been made earlier and were recorded in the audited books of accounts, the nature of source SBN availability stands identified as per past practice and asper correct facts of the case, the whole basis of making the addition is unjustified. The Assessing Officer has disregarded the evidence and explanation and compulsion based on documentary and day to day practice and hard correct facts of the happenings. The ld. A.O, if was not at all satisfied for any reason, even after the reply vide letter dt. 07- 12-2016 and 16-12-2016, he could have ....
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...., maintained by the assessee, for any source of income, and secondly, the assessee should have not offered any explanation, about the nature and sources of investments, or the explanation offered should not be satisfactory, in the opinion of the AO. 11. In the present case, the relevant financial year is 1999-2000, and in the books of accounts of that year, this stock has been duly accounted for, and after so accounting for the same, the figure of sales, as noticed above, has been accepted by the Department, and enhanced GP rate has been applied thereto." Thus the above ruling / ratio of the jurisdictional High Court i.e. High Court of Rajasthan in this case of the assessee is fully supporting the factual matrix of the case. The language of Sec. 69 & 69A is pary materia. The ld. A.O, therefore, exceeded his powers in making arbitrary addition. This action of the ld. A.O, therefore, was wrong on facts and without authority of law deserves to be cancelled allowing the ground of appeal of the appellant. ii. (2022) 98 ITR (Trib.) 419 (ITAT[Chand]) - DCIT vs. Roop Fashion. In this decision of the ITAT Chand. Bench, the ratio descendancy is that : "where the....
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....anted to invoke deeming provision fiction. Ground No. 2 :- 21. The Ground No. 2 relates to the erroneously charging of interest u/s 234B IT Act, 1961. This levy of interest is reflected in the computation of tax sheet. This is erroneously charged for the reason that the appellant had correctly disclosed the income. The impugned addition made by the ld. A.O was a lawful and arbitrary exactly jurisdiction by the ld. A.O consequential levy, therefore, the levy of interest is also arbitrary as the disputed addition is and it has to go along with the disputed addition made for which detailed written submission already been made above. In view of this, it is prayed that the levy of interest may very kindly be deleted and cancelled. Ground No. 3 :- 22. Regarding Ground No. 3, it is urged that initiation of penalty proceeding is wrong. In this connection it is urged that Sec. 271AAC, 271F & 272A(1)(d) of the Act, is not applicable in the facts and circumstances of the case. Since the addition u/s 69A as well as the computation of tax 115BBE of the Act and this consequential initiation of penalty proceedings are all based on irrelevant fiction and on wrong approach which is arbi....
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....y. 40-42 iv. Sarla Cloth Store Bill Nos. 1246, 1247, 1248, 1249, 1250 & 1370 & its a/c copy. 43-51 v. Prabhat Textiles Bill No. 1438 and its a/c copy. 52-53 b. Clarificatory Statement of PNB and HDFC Banks a/c relating to period of 09-11-2016 to 31-12-2016 where collected money from debtors or was directly deposited by debtors themselves in Bank A/c. 54-56 c. PNB A/c statement for A/c No 0551002100042345 upto the period of 01-10-2016 to 31-12-2016 57-74 d. Axis bank A/c statement for A/c No. 91230067848428 for the period (from 01-12-2015 to 01-02-2016). 75-76A e. HDFC bank A/c statement for A/c No 50200006111512 upto the period from 01-10-2016 to 31-12-2016. 77-88 7. Letter of HDFC Bank dt. 04-12-2019 informing to the Income Tax Department that earlier statement submitted by them was relating to the cash deposits and total credits in the account which was not as per their requirement, hence clarificatory letter with revised statement was filed by HDFC Bank to the I.T. Department. 103-105 6. Copy of the ITAT decisions of :- 1. The ITAT decision of Visakhapatnam Bench reported in the case of ITO vs. Sri ....
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....isputed is that the assessee is after filling the return of income by the assessee the case of the assessee was selected under CASS for scrutiny. Notices were issued and served upon the assessee. The assessee is engaged in the business of purchasing, manufacturing, and selling of textile dyed and printed clothes under his proprietorship firm M/s. Baba Prints, Balotra. The ld. AO noted that the assessee has deposited huge cash into the bank accounts as detailed herein below: S. No. Name of the Bank Account Account No. Amount deposited during demonetization period Amount deposited in SBN 1. HDFC Bank Ltd., 50200006111512 Rs. 27,79,285/- Rs. 18,75,500/- 2. PNB 0551002100042345 Rs. 53,19,914/- Rs. 31,46,500/- 3. Axis Bank 912030067848428 Rs. 3,37,830/- Rs. 1,54,000/- Total Rs. 84,37,029/- Rs. 51,76,000/- The bench noted that the ld. AR of the assessee submitted that the out of the total cash deposit of Rs. 84,37,029/- Rs. 32,61,029/- was considered as receipt from the customer even though the same was received in cash. The ld. AR of the assessee also demonstrated before us that even in the last ....