ASHOK KUMAR SETH,VARANASI V. INCOME TAX OFFICER - 1(2), VARANASI

ITA 29/VNS/2024

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The case involves Ashok Kumar Seth, a wholesale trader in Varanasi, who appealed against the order of the Commissioner of Income Tax (Appeals) which confirmed the addition of Rs. 48,19,000 as unexplained cash credit under section 68 of the Income Tax Act, 1961. This amount represented cash deposits made during the demonetization period, which the AO deemed excessive compared to previous months' deposits. The Tribunal noted that the sales reported by the assessee were accepted by the AO, and the books of account were not rejected. Therefore, the source of the deposits, being the cash balance from recorded sales, was considered explained.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 31139 (ITAT-VARANASI)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 28-02-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA MEENA
• Assessee Lawyers: ASHISH BANSAL; SUBHAM SINGH
• Keywords: Set aside; Application of stay
• Section: 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH, VARANASI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA No. 29/VNS/2024 Assessment Year 2017-18 Ashok Kumar Seth, CK-62/25, Gola Dina Nath, Varanasi PAN : ACUPK5581G vs. Income Tax Officer-1(2), Varanasi (Appellant) (Respondent) SA No. 01/VNS/2024 (Arising out of ITA No. 29/VNS/2024) Assessment Year 2017-18 Ashok Kumar Seth, CK-62/25, Gola Dina Nath, Varanasi PAN : ACUPK5581G vs. Income Tax Officer-1(2), Varanasi (Applicant) (Respondent) For Assessee : Shri Ashish Bansal, Adv.& Shri Subham Singh, CA., For Revenue : Smt. Kavita Meena, Sr.DR Date of Hearing : 11-09-2024 Date of Pronouncement : 22-10-2024 O R D E R PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dt. 14-12-2023 passed by the Ld. Commissioner of Income Tax (Appeals)- National Faceless Appeal Centre (NFAC), Delhi [‘Ld.CIT(A)’] and it relates to 2 ITA No. 29/VNS/2024 S.A. No. 01/VNS/2024 Assessment Year (AY.) 2017-18. The assessee has also filed Stay Application, wherein it prayed that the outstanding demand be stayed. 2. The only issue urged in this appeal relates to the addition of Rs.48,19,000/-,being cash deposits made into bank account of the assessee during demonetization period. 3. The facts relating to the issue are stated in brief. The assessee is carrying on the business of wholesale trading in colours, Sindoor, Milk Powder and other items in the name and style of M/s. Seth Sales Corporation. During the course of assessment proceedings, the AO noticed that the assessee has deposited cash in the form of demonetized currency, aggregating to Rs. 56,19,000/- into the Current A/c maintained with Union Bank of India, Kabir Chaura, Varanasi. The assessee explained that the above said deposit was made out of the sale proceeds which were duly recorded in the Books of Account. The AO noticed that the cash deposit made in the months of November and December, 2016 was very much higher than that made in April to October, 2016 and January to March, 2017. Accordingly, he took the view that the assessee can be given credit only to the extent of average cash deposits made during April to October, 2016 and January to March, 2017. Accordingly, the AO gave credit of Rs. 8 lakhs and assessed the balance amount of deposit of Rs.48,19,000/- as un-explained cash credit u/s. 68 of the Income Tax Act, 1961 (‘the Act’). The Ld.CIT(A) also confirmed the same. 4. We heard rival contentions and perused the record. We notice that there is no dispute with regard to the fact that the sales reported by the assessee for the year under consideration has been accepted by the AO. It is the submission of the assessee that the impugned cash deposit of 3 ITA No. 29/VNS/2024 S.A. No. 01/VNS/2024 Rs.56,19,000/- has been made out of cash balance available with it in the Books of Account and the said cash balance has been generated out of the sales made during the year under consideration. In our view, the AO could not have rejected the above said submission of the assessee after having accepted the sales reported by the assessee. We also notice that the AO has also not rejected the Books of Account maintained by the assessee and in that case, the source of deposit would automatically stand explained, since the impugned deposits have been made of cash balance available in the books of accounts. In these circumstances, we are of the view that the AO was not right in law in making the impugned addition. Accordingly, we are of the view that the Ld.CIT(A) was not justified in confirming the addition. 5. Accordingly, we set aside the order passed by the Ld.CIT(A) and direct the AO to delete the impugned addition of Rs. 48,19,000/-. 6. Since we have disposed of the appeal itself, the Stay Application of the assessee becomes infructuous. 7. In the result, the appeal filed by the assessee is allowed and the Stay Application is dismissed. Order pronounced on 22-10-2024 by way of proper mentioning in the Notice Board. Sd/- Sd/- [AMIT SHUKLA] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Varanasi, Dated: 22-10-2024 TNMM 4 ITA No. 29/VNS/2024 S.A. No. 01/VNS/2024 Copy to : 1. The Appellant 2. The Respondent 3. The Pr. CIT, concerned 4. D.R. ITAT, Varanasi 5. Guard File. //By Order// //True Copy // Dy./Asst. Registrar, ITAT, Varanasi "