DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(2) GANGTOK, AAYAKAR BHAWAN BHANUPATH, NEAR WHITE MEMORIAL HALL, GANGTOK V. BISHNU PRASAD AGARWAL, RANIPOOL PAKYONG ROAD GANGTOK

ITA 250/KOL/2024

AI Insights

The case involves an appeal by the Department against the decision of the CIT (A), which had allowed the appeal of the assessee, Bishnu Prasad Agarwal, granting him an exemption under section 10(26) AAA of the Income-tax Act, 1961. The primary contention was regarding the source of a substantial cash deposit of ₹2,70,11,870 in the assessee's bank account, which the AO initially treated as unexplained income under section 69A of the Act. The CIT (A) reversed this decision, leading to the Department's appeal. The Tribunal directed the AO to verify if the deposits were part of the assessee's sales turnover, as claimed by the assessee.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469980 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2024
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-10-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 01-02-2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P.P. BARMAN
• Assessee Lawyers: VINAY KUMAR SHRAFF; DEV KUMAR AGARWAL; ARS
• Keywords: Set aside; Source of fund
• Section: 69A

Judgement Text

"p आयकर अपीलीय अधिकरण न्यायपीठ, कोलकाता । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A. No. 250/KOL/2024 Assessment Year: 2013-14 DCIT, Circle 3(2), Gangtok, Aaykar Bhavan, Bhanupath, Near White Memorial Hall, Gangtok-737103 Vs Bishnu Prasad Agarwal, Ranipoor Pakyong Road, Gangtok, Sikkim-737135 [PAN : APFPA1550B] अपीलार्थी/ (Appellant) प्रत्‍ यर्थी/ (Respondent) Assessee by : Shri Vinay kumar Shraff & Shri Dev Kumar Agarwal, ARs Revenue by : Shri P.P. Barman, DR सुनवाई की तारीख/Date of Hearing : 24.10.2024 घोषणा की तारीख /Date of Pronouncement : 20.11.2024 आदेश/O R D E R Per Shri Sanjay Garg, Judicial Member: The present appeal has been preferred by the Department agitating against the action of the ld. CIT (A) in allowing the appeal of the assessee and thereby giving exemption u/s 10(26) AAA of the Income-tax Act, 1961 (the Act). 2. The assessee is a Sikkimese resident and his income is exempt under 10(26)AAA of the Act. There is no dispute raised before us regarding the fact that the assessee is a Sikkimese resident and is entitled to exemption u/s 10(26)AAA of the Act. 3. The only ground raised by the Department is to the effect that the assessee could not prove that the source of bank deposits was out of known-sources earned by the assessee in the State of Sikkim. Page | 2 ITA No.250/KOL/2024 Bishnu Prasad Agarwal; A.Y. 2013-14 4. The brief facts of the case are that the ld. AO found a cash deposit of ₹2,70,11,870/- into the bank account of the assessee and he made the addition u/s 69A of the Act, treating the same as unexplained income of the assessee. The ld. CIT (A), however, deleted the addition which was made by the ld. AO, observing that since the assessee was a Sikkim’s resident, therefore, he was entitled to get exemption in respect of income earned by him from known sources of income in the state of Sikkim. The Revenue however, has stated that has not been established on record that the said amount was earned by the assessee from known sources of income earned in the State of Sikkim. However, the ld. counsel has invited our attention to the opening paras of the assessment order, to submit that it is the own case of the department that assessee has business turnover of ₹5,43,53,194/-. That the said fact was also verified by the Department from the Sales Tax / VAT Tax return of the assessee. The ld. Counsel has submitted that the aforesaid cash deposits in the bank account were out of the receipts/ sales turnover of the assessee. That the department having accepted that the assessee has a sales turnover of 5.43 crores, there was no question for the department to add the said amount under the income tax treating the same as income from undisclosed sources 5. Prima facie, argument advanced by the ld. Counsel for the assessee in this respect seems to have force, however, the fact that the said amount of ₹2,70,11,870/- was a part of the sales turnover of the assessee needs to be verified. We accordingly, set aside the issue to the file of the ld. AO for the limited purpose that the AO will verify as to the aforesaid bank deposits/ cash deposits were part of the sales turnover of the assessee, if it is found so, no addition will be warranted. Page | 3 ITA No.250/KOL/2024 Bishnu Prasad Agarwal; A.Y. 2013-14 6. The ld. Counsel for the assessee at this stage has submitted that since the assessee is in the business of cement and therefore, the sales receipts were received in cash only and that the said cash was deposited in the bank account of the assessee. He in this respect has also relied upon the earlier year order of the CIT (A) dated 11th December, 2023, relating to A.Y. 2012-13 and further the order dated 13th December, 2023, for A.Y. 2014-15 and order dated 13th December, 2023 for A.Y. 2015-16 and another order dated 13.12.2023 for A.Y. 2016-17 and further another order of the same date for A.Y. 2017-18, to submit that under similar circumstances, the cash deposits of the assessee in the bank account have been accepted by the ld. CIT (A) as out of sales turnover. That the Department has not preferred further appeal against the said orders. It is directed that the ld. AO will consider the aforesaid orders / documents relied upon by the counsel for the assessee and thereafter will decide this limited issue to the effect that whether the said cash deposits were out of sales turnover or not, and if the assessee’s claim is found correct, the impugned addition will not be made. 7. In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the Court on 20th November, 2024 at Kolkata. Sd/- Sd/- (SANJAY AWASTHI) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Kolkata, Dated 20.11.2024 *SS, Sr.Ps Page | 4 ITA No.250/KOL/2024 Bishnu Prasad Agarwal; A.Y. 2013-14 आदेश की प्रतततिति अग्रेतषत/Copy of the Order forwarded to : 1. अिीिार्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. संबंतित आयकर आयुक्त / Concerned Pr. CIT 4. आयकर आयुक्त ( अिीि ) / The CIT(A)- 5. तवभागीय प्रतततनति , अतिकरण अिीिीय आयकर , कोिकाता/DR,ITAT, Kolkata, 6. गार्ड फाईि / Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Sr. PS/ Assistant Registrar आयकर अिीिीय अतिकरण ITAT, Kolkata "