DINESH,ERODE V. ITO WARD 2(1), ERODE

ITA 2970/CHNY/2024

AI Insights

The case revolves around an appeal by Dinesh against the order of the Commissioner of Income Tax (Appeals) which confirmed the addition of Rs.6,78,500 to the assessee's income for the assessment year 2017-18. This addition was initially made by the Income Tax Officer, citing that the deposits were made in violation of government instructions post-demonetization. The assessee argued that these deposits were part of his legitimate business activities as an agent of M/s. Hermis Tickets Pvt Ltd, which commenced in October 2016. The Tribunal referenced a similar case (TASMAC) and concluded that the SBNs received were not illegal and the source of these notes was the same as that of other currency, leading to the decision to allow the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34492 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Other Referred Cases: TASMAC vs. ITA No.431/Chny/2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. RAGHUPATHY
• Assessee Lawyers: S. BHUPENDRAN
• Keywords: Set aside
• Section: 250; 68; 69

Judgement Text

"Page - 1 - of 4 आयकर अपीलीय अधिकरण, ‘‘ए’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI श्री एबी टी. वर्की, न्यायिर्क सदस्य एवं श्री अयिताभ शुक्ला, लेखा सदस्य क े समक्ष BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 2970/Chny/2024 निर्ाारण वर्ा /Assessment Years: 2017-18 Dinesh No.94, Sullikarudu, Getticheviyur, Erode, Tamil Nadu-638 110. [PAN: CEEPD6297J] Income Tax Officer Ward-2(1), Erode (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. S.Bhupendran, Advocate प्रत्यर्थी की ओर से /Revenue by : Mr.R.Raghupathy, Addl. CIT सुिवाई की तारीख/Date of Hearing : 18.02.2025 घोर्णा की तारीख /Date of Pronouncement : 26.03.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M : This appeal is filed by the assessee against the order bearing DIN & Order No.ITBA/APL/S/250/2024-25/1068907916(1) dated 20.09.2024 of the Learned Commissioner of Income Tax [herein after “CIT(A), for the assessment year 2017-18. Through the aforesaid appeal the assessee has challenged order u/s 250 dated 20.09.2024 passed by NFAC, Delhi. 2.0 The only issue raised by the assessee, through its grounds of appeal, is regarding an addition of Rs.6,78,500/- made by the Ld.AO on account of cash deposits in assessee’s bank accounts. The Ld.Counsel for the assessee has submitted that it started the business of money ITA No.2970 /Chny/2024 :- 2 -: Page - 2 - of 4 transfer in FY-2016-17 by becoming an agent of M/s.Hermis Tickets Pvt Ltd and its business actually commenced from 21.10.2016. As per para 4 of his Ld.AO’s order an amount of Rs.6,78,500/- was deposited in assessee’s bank account by way of specified bank notes(SBNs). The Ld. Counsel submitted that the Ld.AO made the addition of Rs.6,78,500/- u/s 69 holding that contemporaneous government instructions precluded assessee from receiving any amount in SBNs. The Ld. First Appellant Authority confirmed the addition of the Ld.AO by concurring with the reasoning given therein. The Ld.Counsel has placed reliance upon the order of this tribunal in the case of TASMAC as at ITA No.431/Chny/2023 dated 07.10.2024. The Ld. DR relied upon the orders of lower authorities. 3.0 We have heard rival submissions in the light of material available on records. There is nothing in the order of Ld.AO to allude that the impugned amounts represented any receipts from activities qua which the demonetization was initiated. The Ld. AO has not brought any evidence on record so as to allude that the impugned receipts are not connected with the assessee’s admitted business activities. On the issue of treatment of SBNs, we have noted a Hon’ble Coordinate Bench of this tribunal in the case of TASMAC as at ITA No.431/Chny/2023 dated 07.10.2024 as observed as under:- ITA No.2970 /Chny/2024 :- 3 -: Page - 3 - of 4 “…..8.3 In view of the above provisions, as in the present case, once the receipt of SBNs by assessee is not illegal or barred by any legal provisions the receipt of SBNs cannot be put on a different footing for the purpose of Section 68 or Section 69 of the Act from other currency as the source of SBNs are same as the source of other currency. The SBNs though are not legal tender, is of no - 34 - ITA No.431/CHNY/2023 consequence for determination of source, because the SBNs can be encashed for the face value with the bank without any question being raised. We further noted from the RBI circulars or CBDT circulars that neither the RBI circulars nor any CBDT circulars including any instructions on demonetization requires any person to disclose the source of SBNs. We noted from the facts of the case placed before us that out of total deposits of Rs.2635.35 Crores were in cash for the month of November 2016, which has been accepted as the value of liquor sold for a sum of Rs.2582.56 Crores, hence it can be easy presumed, unless disproved by Revenue, that the balance sum of Rs.52.79 Crores is out of sale of liquor. There is no basis or evidences or examination of any person for reaching a conclusion that this sum of Rs.52.79 Crores received by assessee has been substituted in demonetized currency. We noted from the evidences placed before us that the observation of the AO that branch wise details of deposits made in SBNs was not available is ITA No.2970 /Chny/2024 :- 4 -: Page - 4 - of 4 not correct for the reason that the complete details of deposits of SBNs account-wise, branch-wise was submitted before the AO as well as before the CIT and also before us…..” 4.0 We are in agreement with the decision of this tribunal supra on the issue of treatment of SBNs. Accordingly, considering the facts of the case as well as in respectful compliance to the decision of Hon’ble Coordinate Bench of this tribunal in the case of TASMAC, the order of lower authorities is set aside and the Ld.AO is directed to delete the impugned addition of Rs.6,78,500/-. In the result, all the grounds of appeal raised by the assessee are allowed. 5.0. In the result, the appeal of the assessee is allowed. Order pronounced on 26th , March-2025 at Chennai. Sd/- ( एबी टी. वकी) (ABY T VARKEY) न्यानयक सदस्य / Judicial Member Sd/- (अयिताभ शुक्ला) (AMITABH SHUKLA) लेखा सदस्य /Accountant Member चेन्नई/Chennai, नदिांक/Dated: 26th , March-2025. KB/- आदेश की प्रनतनलनप अग्रेनर्त/Copy to: 1. अपीलार्थी/Assessee: 2. प्रत्यर्थी/Revenue 3. आयकर आयुक्त/CIT - Coimbatore 4. नवभागीय प्रनतनिनर्/DR 5. गार्ा फाईल/GF "