Nazir Ahmad, Budgam, Jammu and Kashmir V. ITO Ward 2, Srinagar

ITA 163/ASR/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1371 (ITAT-AMRITSAR)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-05-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 31-03-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Keywords: Unexplained cash credit; Unexplained investment
• Section: 68; 144; 250; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DASGUPTA, JUDICIAL MEMBER I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 Nazir Ahmad, C/o Syed Ali Filling Station, Fultipora, Near Danger MO. Dal Wan Chari Sharif, Budgam Jammu and Kashmir. [PAN:-ANDPA0969N] (Appellant) Vs. ITO,Ward-2, Srinagar. (Respondent) Appellant by Sh. Rohit Kapoor, CA and Sh. V.S. Aggarwal, ITP Respondent by Smt. Priyanka Patel, Sr. DR Date of Hearing 07.05.2024 Date of Pronouncement 28.06.2024 ORDER Per: Udayan Dasgupta, JM: This appeal is filed by the assessee against the order of the Ld. CIT (A) NFAC, passed u/s 250 of the Act 61, dated 14/11/2023, which in turn has arisen out of the assessment order dated 30/12/2019, passed by the AO, Ward – 2, Srinagar. I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 2 2. The filing of this appeal is belated by 79 days, and the assessee has filed an application for condonation of delay, the relevant portion of which is reproduced below: “1. This is in regard to delay in filing of appeal before the Hon'ble ITAT. It is very humbly submitted that in the above said appeal is being filed against the order passed by NFAC, Delhi on 14.11.2023. The said appeal was required to be filed within 60 days i.e. by 13.01.2024. 2. The present appeal is being filed before the Hon'ble ITAT Amritsar Bench after a delay of 79 days in filing of the appeal. It is pertinent to mention here that the delay in filing the appeal was primarily due to the fact that the father of the assessee Sh. Assadullah Bhat had been grappling with Cancer and was admitted in hospital for the treatment of his disease. The assessee was significantly impacted due to ill health of his father and could not pay attention towards day to day legal matter. In these circumstances, the assessee could not hand over the documents for filing of appeal to the Authorized representatives Mr. Virsain Aggarwal and CA Rohit Kapoor. Therefore, the timeline as embedded for filing of appeal could not be adhered to due to the circumstances as stated above.” Taking note of the situation that the assessee’s father was under treatment in hospital , for cancer during the period of time, which is evidenced by medical I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 3 documents issued by “ Sher-i-Kashmir Institute of Medical Sciences ” and vouched by a sworn affidavit of the assessee himself, we are of the opinion that there has been no intentional or willful neglect on the part of the assessee in this case , and the assessee being resident of J & K , it was not possible for him to contact and consult his lawyers stationed in Amritsar, and the delay in filing this appeal was not out of negligence . 3. The Ld. DR, has not objected to the said delay, and considering the cause put forth by the assessee in court, the delay in filing the appeal by 79 days is condoned and the appeal is admitted for hearing on merits. 4. The grounds of appeal are as follows: “1. On the facts and circumstances of the case, the Ld. CIT(A) vide order u/s 250(6) dated 14.11.2023 has erred in confirming the addition made by the Ld. AO vide order u/s 144 on account of deposit of Rs. 996180/- during demonetization period in J&K Bank Budgam account no 201020100000521. 2. That the Ld. CIT(A) has erred in confirming the addition of Rs. 996180/- made by the AO on account of deposits without any application of mind and without considering the submissions of the assessee. 3. That the Ld. CIT(A) has erred in confirming the addition of Rs. 996180/- in J&K Bank account without appreciating that the assessee was in the business of petrol pump at Pakherpora. That the CIT(A) failed to appreciate that the cash amounting to I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 4 Rs. 996180/- deposited after 15 December 2016 was deposited out of cash in hand available as per books of accounts. 4. That without prejudice to the aforesaid, the Ld. CIT(A) has erred in confirming the addition on account of deposits in J&K bank account without appreciating that the cash in hand as on 16.12.2016 represents cash sales, bank withdrawals and opening cash in hand. 5. That without prejudice to the aforesaid, the Ld. CIT(A) has erred in confirming the addition on account of deposits in J&K bank account without appreciating that the books of accounts have duly been accepted and as such, the benefit of cash in hand available as on 16.12.2016 cannot be denied. 6. That the Ld. CIT(A) has erred in confirming the addition of Rs. 996180/- in J&K Bank account u/s 69A without appreciating that the provisions of section 69A can only be applied if the amount alleged to be unexplained is not recorded in books of accounts. 7. That the Ld. CIT(A) has erred in confirming the addition of Rs. 996180/- in J&K Bank account on surmises and conjectures and without giving the telescoping benefit of income earned during the year under consideration. 8. That the appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed off.” I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 5 5. All the grounds of appeal relate to only one addition of Rs. 9,96,180/- made by the AO u/s 69A of the Act 61, on account of deposit of SBN notes in bank account during demonetization period. 6. The brief facts of the case are that the appellant is an individual and owner of a petrol pump (retail outlet of MS and HSD), operating under trade name of “Syed Aali Filling Station”, under Indian Oil Corporation, located at Pakherpora, Distt. Budgam, Jammu and Kashmir. 6.1 During the demo period, the Government has permitted the petrol pumps business of retail outlets, to accept demonetized currency from customers, till 15 th December, 2016, against sale of goods (MS and HSD). Thereafter, w.e.f. 16 th December 2016, the acceptance of SBN notes by petrol pump retail outlets were stopped. 6.2 In the instant case, the AO has alleged that the assessee has deposited an amount of Rs.9,96,180/- vide SBN notes in his bank account at Jammu and Kashmir Bank, Budgam , in A/c No : 201020100000521, after the cutoff date of 15 th December, 2016, and as such the said deposits, being unexplained u/s 69A of the Act 61, has been added back to the total income and charged to tax at rates prescribed u/s 115BBE of the Act 61. 6.3 The assessment was completed by the AO, on a total income of Rs. 24,48,667/- (which includes the addition of Rs.9,96,180/- u/s 69A of the Act 61). I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 6 7. The matter was carried in first appeal, by the assessee, and the Ld. CIT (A), has sustained the addition u/s 69A of the Act 61, due to reasons contained in the appellate order by observing as follows: “5.1 I have gone through the assessment order of the AO, grounds of appeal, facts of the case and found that the appellant had made cash deposited in his bank account A/c no. 201020100000521 with J&K Bank Budgam and has made a cash deposits of Rs 31,58,345 in SBNs in his bank account during the demonetization period. During the assessment proceedings, it was observed by AO that out of this total cash deposit, Rs 21,62,165 were deposited till 15.12.2016 and the remaining amount was treated as out of undisclosed source. The AO has rightly mentioned in the assessment order that cash deposit after 15.12.2016 Since, in form of old specified notes in the account was not made out of the business of the petrol pump as the fuel pumps were not authorized to accept the old specified notes after 15.12.2016. Thus, the treatment of the cash deposits of Rs 9,96,180 as unexplained money is justified and the addition made by the AO is upheld.” 8. Now the assessee is in appeal before the Tribunal against the addition of Rs. 9,96,180/-. I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 7 8.1 In course of hearing before the Tribunal, the assessee has filed a short paper book containing the copies of the tax audit report dated 15/09/2018 , for the year under appeal , which is reportedly uploaded in the portal and considered by the AO for the purpose of assessment and a print out of the daily cash summary for the month of December 2016 , the bank statement of Jammu and Kashmir Bank Limited A/c No : xxxxxxxxxxx00521 , for the month of December 2016 and the print out of the J & K Bank ledger account in the books of the assessee ( petrol pump) for the period 1 st December, 2016 to 31 st December, 2016 . The assessee has also filed a short synopsis which is kept on record. 9. The Ld. AR pointed out from the bank statement that the total amount of cash deposited after 15 th December, 2016 till 30 th December 2016, was Rs. 6,54,645/- only (and not Rs. 9,96,180/- as stated by the AO in the order), and he further points out that the cash balance as per cash book as on 15 th December, 2016, was Rs. 10,03,350/- (after close of business hours, on the 15 th December, night). The daily cash summary from 1 st December, 2016 to 31 st December, 2016, of the assessee books are made a part of this order for ready reference). The date wise summary of cash deposits from 16 th of December to 30 th December alongwith the daily cash summary are shown as follows: I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 8 I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 9 Cash Deposited Dated Amount 17-12-2016 185,500.00 20-12-2016 42,600.00 22-12-2016 92,095.00 22-12-2016 58,000.00 23-12-2016 1,000.00 27-12-2016 106,990.00 29-12-2016 91,600.00 30-12-2016 28,860.00 30-12-2016 48,000.00 Total 654,645.00 10. It is further argued by the Ld. AR, that all books of accounts were produced and examined by the AO in course of scrutiny assessment and no adverse inference has been drawn and the observation of the AO as recorded in page 2 (para -4 of the assessment order) are as follows: “4. The reply filed other details & evidences called for and filed by the assessee has been considered. In view of the Audit Report on Form 3CB dated 15.09.2018 and uploaded the same in Income Tax E- filing alongwith ITR filed on 20.10.2019 and Audited Accounts statements and detailed ledger accounts and the expenses evidences filed by the assesse for the A.Y. 2017-18, it is seen that the assessee has reported a gross sale of Rs. 3,00,45,926/- and a Gross profit of Rs. 8,61,337/- @2.87% and net profit of Rs. 2,65,700/- @ 00.88% been reported. The I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 10 sale/purchase evidences were also filed. The fact that he was running a Trading business of Petrol Pump is established. Thus on the facts and circumstances of the case and keeping in view the directive / Notification of the Government that the Sale of Petrol in SBN were permitted up to 15.12.2016, it is hereby inferred that this deposits of Cash at Rs.21,62,165/- (Cash deposits made in SBNs upto 15/12.2016) pertains to Sale of trading activity constituting the business turnover of the assessee during the year and as assessed as such and the balance Cash Deposits made in SBNs at Rs.9,96,180/- after the permitted period i.e. 16.12.2016 to 31.12.2016 is treated as out of undisclosed source as discussed separately in succeeding paras.” 10.1 The Ld. AR further pointed out that from the above observation of the AO, it is well established that all purchase and sales are duly recorded in the regular books and the cash balance as on the 15 th of December, 2016, as appearing in the cash book has been accepted, and the entire sale proceeds of Rs. 3,00,45,926/- has been disclosed for the entire financial year and duly certified in the tax audit report, which also proves without saying that the entire turnover disclosed by the assessee is out of sales of petrol and diesel in the business of petrol pump. 10.2 He further argues that, both the AO and the Ld. CIT (A) has committed a technical error, in as much, that they have acted under the impression that all deposits of SBN notes in bank after 15 th December, 2016, by a petrol pump I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 11 retailer, is prohibited by the Government, and as such the said deposits has been treated to have been made out of undisclosed sources. 10.3 Actually, it is not so, the Government guidelines was that petrol pump retailers cannot accept SBN from any customer after 15 th December, 2016 (midnight) against sale of goods, but there was no bar in deposit of the cash, already collected against sales of goods till 15 th December, 2016 (midnight), in the bank account after the cutoff date of 15 th December,2016. 10.4 For legal support, the Ld. AR has relied upon some judicial decisions, which are referred to as follows: “a) 2024] 162 taxmann.com 100 (Chennai -Trib.) IN THE ITAT CHENNAI BENCH 'A' Joint Commissioner of Income-tax (OSD) v. G.K. Dairy INCOME TAX : Unless Assessing Officer points out any defects in books of account maintained by assessee or abnormal deviation in total sales, cash sales and cash deposits , no additions can be made towards cash deposits u/s. 69A b) [2024] 162 taxmann.com 95 (Ahmedabad - Trib. Bhailalbhai Mafatlal Pujara v. ITO Section 69A of the Income-tax Act, 1961 - Unexplained moneys (Demonetization period) - Assessment year 2017-18 - Assessing Officer during assessment proceedings found that there were cash deposits in bank account of assessee during I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 12 demonetization period, source of which was not explained - Therefore, Assessing Officer made addition on account of cash deposits treating same as unexplained money under section 69A - Such cash deposits were primarily used for making payment to a State Government organization which was dealing in agricultural produce and ,thus, prima facie it appeared that cash deposits during demonetization period was representing business transactions -Whether, therefore, cash deposits made by assessee during demonetization period represented business transactions which could not be made subject to tax under section 69A - Held, yes [Para 8.1] [In favour of assessee] 2023 (10) TMI 1028 - ITAT AHMEDABADTHE I.T.O., WARD- 1 (1) (3) , AHMEDABAD VERSUS M/S. ASHAPURA PETROCHEM MARKETING PVT. LTD. Unexplained cash credit u/s. 68 - assessee was not authorized to accept Specified Bank Notes during demonetization period as observed in the assessment order - HELD THAT: - It is an admitted fact that the cash deposit is on account of sale of petrol, diesel and other petroleum products. These sales have been duly recorded in the books of accounts and appropriate VAT taxes also collected by the assessee. The Manager of the assessee company also filed a Notarized Affidavit accepting the above facts during the course of assessment proceedings. I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 13 2021 (12) TMI 599 - ITAT BANGALOREANANTPUR KALPANA VERSUS ITO, WARD - 1, KOPPAL Unexplained cash deposits in two bank accounts - Legal tender money in demonetization of currency - AO culled out, the deposits that was made of bank notes that were declared as not legal tender owing to demonetization of currency - HELD THAT:- Both AO and CIT(A) accepted the fact that the cash receipts are nothing but sale proceeds in the business of the assessee. Addition has been made only on the basis that after demonetization, the demonetized notes could not have been accepted as valid tender. Since the sale proceeds for which cash was received from the customers was already admitted as income and if the cash deposits are added under section 68 of the Act that will amount to double taxation once as sales and again as unexplained cash credit which is against the principles of taxation. Assessee was having only one source of income from trading in beedi, tea power and pan masala and therefore provisions of section 115BBE of the Act will have no application so as to treat the income of the assessee as income from other sources. 2021 (5) TMI 447 - ITAT VISAKHAPATNAMOther Citation: [2022] 96 ITR (Trib) 24 (ITAT [Viskha])ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1 I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 14 VISAKHAPATNAM VERSUS M/S HIRAPANNA JEWELLERS AND (VICE-VERSA) Addition u/s 68 r.w.s 115BBE - assessee had deposited the sum in high denominations of specified bank notes (SBNs) post demonetization - CIT-A deleted the addition - HELD THAT:- The assessee produced the newspaper clippings of The Hindu, The Tribune and demonstrated that there was huge rush of buying the jewellery in the cities consequent to declaration of demonetization of 1000 and 500 notes on 08.11.2016. As cash receipts 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 effect the sales and we do not find any defect in the stock as well as the sales. Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. This view is also supported by the decision of Hon'ble Delhi High Court in the case of Kailash Jewellery House [2010 (4) TMI 1070 - DELHI HIGH COURT] and Vishal Exports Overseas Ltd. [2012 (7) TMI 1110 - AHMEDABAD HIGH COURT]” 11. On the other hand, the Ld. DR, relied upon the order of the Ld. CIT(A), and prayed for sustaining the addition, but he has not been able to controvert the arguments of the assessee. I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 15 12. We have considered the arguments of both the parties and have considered the materials and the paper book and synopsis filed on record and we find that in the instant case , the SALES and collection of cash SBN , against such sales , has already taken place before close of business hours on the 15 th December, 2016, and the cash balance as per cash book , at close of business hours on the 15 th December, 2016 , ( midnight ) was Rs.10,03,350/- , which was mixed currency of SBN and normal notes, and in any case the SBN notes actually deposited has to be less than Rs.6,54,645/- , which is the total of cash deposits made in bank during the period 16 th December 2016 to 30 th December 2016 , ( because the said amount as per bank statement is a fraction figure and it could not have been entire SBN notes). 12.1 The availability of cash balance in regular books of accounts as on 15 th December, 2016, is already reflected in cash book, at Rs. 10,03,350/-, which is accepted by the department, after examination of books of accounts, and no adverse inference is drawn, and out of the said balance an amount of Rs. 6,54,645/- has been deposited in bank, during the period 16 th December to 30 th December, 2016 (the last date of SBN deposit), as evidenced by bank statement, in instalments spreading over nine days’ time. 12.2 The reason for deposits in instalment has been explained by the Ld. AR, being the location of the assessee outlet situated about 20 (twenty km) approx. I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 16 from the bank and for security reasons, hard cash was transported in instalments spread over number of days. 12.3 We are of the opinion that the assessee has not violated any provisions of law and has not violated any Government guidelines as such, and the deposit of mixed currency (SBN and normal), of Rs. 6.54 lakhs, has been made out of the cash balance already available as per cash book balance on the 15 th December, which is not disputed by any party. 12.4 As such considering the entire factual matrix of the case and considering the availability of the funds in the regular cash book (which is not disputed by the AO), the addition made by the AO and sustained by the Ld. CIT(A) amounting to Rs. 9,96,180/- on account of unexplained investment has got no basis and the same is deleted. 13. In the result, the appeal of the assessee bearing ITA No. 163/Asr/2024 is allowed. Order pronounced in the open court on 28.06.2024 Sd/- Sd/- (Dr. M. L. Meena) (UDAYAN DASGUPTA) Accountant Member Judicial Member AKV Copy of the order forwarded to: I.T.A. No.163/Asr/2024 Assessment Year: 2017-18 17 (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order