BHURA RAM CHOUDHARAY,COIMBATORE V. ITO, NCW-1(1), COIMBATORE

ITA 2560/CHNY/2024

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The case involves Bhura Ram Choudharay, the appellant, who contested the income tax assessment for the year 2017-18 concerning the treatment of cash deposits made during the demonetization period in India. The Assessing Officer had treated these deposits separately and taxed them under different heads, which the appellant challenged. The Tribunal examined the arguments and evidence presented, including the appellant's affidavit explaining the delay in filing the appeal due to health reasons, and the financial records showing the nature of the deposits. The Tribunal's decision adjusted the tax treatment of the disputed deposits, aligning them with business income rather than treating them as unexplained income under section 69A of the Income Tax Act, 1961.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107582 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R.ANITA
• Assessee Lawyers: S. BHUPENDRAN; VIRTUAL
• Keywords: Business income
• Section: 69A

Judgement Text

"आयकर अपीलीय अिधकरण, ’सी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी जगदीश, लेखा सद˟ क े समƗ । Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri Jagadish, Accountant Member आयकर अपील सं./I.T.A. No.2560/Chny/2024 िनधाŊरण वषŊ/Assessment Year: 2017-18 Bhura Ram Choudharay, 94/1, Rajeshwar Tube Corporation, K.K. Lane No. 1, Avinashi Road, Coimbatore 641 001. [PAN:AINPC1427C] Vs. The Income Tax Officer, Non Corporate Ward 1(1), Coimbatore. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri S. Bhupendran, Advocate (Virtual) ŮȑथŎ की ओर से/Respondent by : Ms. R. Anita, Addl. CIT सुनवाई की तारीख/ Date of hearing : 28.01.2025 घोषणा की तारीख /Date of Pronouncement : 26.02.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 24.07.2024 passed by the Addl/JCIT(A)-3, Bengaluru for the assessment year 2017-18. 2. We find that this appeal is filed with a delay of 12 days. The assessee filed an affidavit along with hospital discharge summary stating the reasons. Upon hearing both the parties and on examination I.T.A. No.2560/Chny/24 2 of the said affidavit, we find the reasons stated by the assessee are bonafide, which really prevented in filing the appeal in time. Thus, the delay is condoned and admitted the appeal for adjudication. 3. The assessee raised 3 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the order of the Assessing Officer. 4. We note that the Assessing Officer found total credit in assessee’s account to an extent of ₹.1,33,25,331/-. Further, the Assessing Officer observed that out of said amount, ₹.11,10,000/- deposited during demonetization period. The Assessing Officer applied net profit rate @ 8% of ₹.1,22,15,331/-[₹.1,33,25,331 – 11,10,000] as business income. Further, regarding the amount of ₹.11,10,000/-, which was deposited during demonetization period charged to tax under income from other sources under section 69A of the Income Tax Act, 1961 [“Act” in short] after giving benefit of ₹.3,61,335/-, thereby, the Assessing Officer determined the income of the assessee at ₹.17,25,891/- [8% of business income of ₹.9,77,226/- and ₹.7,48,665/- under section 69A of the Act]. The ld. CIT(A), on an examination of the profit and loss account & VAT return, held that the turnover of the I.T.A. No.2560/Chny/24 3 assessee was ₹.99,96,887/- and applied 8% on the same. The ld. CIT(A) confirmed the addition made under section 69A of the Act, by assessing income of the assessee at ₹.15,48,416/- instead of ₹.17,25,891/-. 5. Before us, the ld. AR Shri S. Bhupendran, Advocate submits that the Assessing Officer and the ld. CIT(A) are not justified in considering the cash deposits made during demonetization period out of sales receipts. The ld. AR submits that the said cash deposits made during demonetization period also to be considered as business receipt and may be applied net profit rate at 8%. 6. The ld. DR Ms. R. Anita, Addl. CIT vehemently opposed the same. She submits that the assessee is not entitled to accept SBN during demonetization period since the specified bank notes [SBN] are no longer legal tender. She vehemently argued to adopt net profit at 15%. 7. Taking into consideration the submissions of the ld. AR and the ld. DR, we find force in the arguments of the ld. DR and accordingly, we direct the Assessing Officer to consider the amount of ₹.11,10,000/- as business receipt and adopt net profit at 12% on ₹.1,11,06,887/- I.T.A. No.2560/Chny/24 4 [₹.99,96,887/- + ₹.11,10,000/-] as business income. Thus, the grounds raised by the assessee are allowed for statistical purposes. 7. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 26th February, 2025 at Chennai. Sd/- Sd/- (JAGADISH) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 26.02.2025 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. "