Shri Ramesh, Balotra V. ITO, , Balotra

ITA 401/JODH/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2845 (ITAT-JODHPUR)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-03-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 29-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 68; 69; 145; 143(3); 142(1); 234B; 133(6); 143(2); 69A; 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 Sh. Ramesh 2 nd Phase, Industrial Area Balotra, Rajasthan [PAN: AAUPK 1393 A] (Appellant) Vs. The Income Tax Officer, Income Tax Department, Balotra (Respondent) Appellant by Sh. N. R. Mertia, CA Respondent by Sh. A. S. Nehra, Sr. DR Date of Hearing 20.03.2024 Date of Pronouncement 24.04.2024 ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by assessee is arising out of the order of the National Faceless Appeal Centre, Delhi dated 25/09/2023 [here in after ‘NFAC’ ] for assessment year 2017-18 which in turn arise from the order dated 19.12.2019 passed under section 143(3) of the Income Tax Act, by ITO, Balotra. 2. In this appeal, the assessee has raised following grounds: - I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 2 “1. That the appellate order of the Id. CIT(A) dt.25-09-2023 in Appeal No. CIT(A) Jodhpur-2/10509/2019-20 is erroneous and is bad in law and bad in facts. 2. That in the fact and in the circumstances of the case and in view of the detailed written submissions along with the supporting decisions of various courts including Tribunals having been placed on record of the Id. CIT(A), the ld. CIT(A) had erred in law and facts in maintaining the addition of Rs.51,76,000/- in the returned income of the appellant holding amongst other that the ld. A.O was correct in treating the deposits of SBN during Demonetisation Period as not a legal tender and it was unexplained money under Sec. 69A of the Act attracting tax liability u/s 115BBE of the Act. 3. The disputed action of the Id. A.O and maintaining the same by the Id. CIT(A) was not correct in law and facts and, therefore, the Hon'ble ITAT may very kindly allow the appeal of the appellant reversing the decisions of the authorities below whereby they had held and maintained respectively that the addition u/s 69A r.w.s. 115BBE of the Act of Rs. 51,76,000/- was correctly made. The same may very kindly be deleted by allowing the appeal of the appellant. 4. The appellant craves leave to add, alter, substitute withdraw, modify or amend any of the ground of appeal here in above taken on or before the hearing. 5. The appellant prays that his appeal may kindly be allowed by cancelling the disputed addition and allow the appeal of the appellant.” 3. Succinctly, the fact as culled out from the records is that return of income for the AY 2017-18 was filed electronically by the assessee on 31.03.2018 declaring total income of Rs.7,20,690/-. Thereafter, the case was selected for scrutiny through CASS and notice u/s 143(2) of the Income-tax Act, 1961 has been issued on 10.08.2018 which was duly served upon the assessee. Thereafter Notice u/s 142(1) of the Act I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 3 containing the detailed questionnaire, relevant to issues identified, has been issued on 25.07.2019 electronically requiring him to furnish relevant Information/details by 09.08.2019. But it is seen that no detail/information was received on the said date. Thus, the assessee failed to comply the notice. 3.1 Thereafter Notices u/s 142(1) of the Income Tax Act, 1961 were issued on 26.09.2019, and 10.10.2019 and hearing was fixed on 08.10.2019, and 18.10.2019 respectively. But the assessee as usual did not furnished complete submission. Following the rule of natural justice, the ld. AO afforded one more opportunity by way of issue of notices under Section 142(1) of the Income Tax Act, 1961 along-with a Show Cause Notices dated 24.10.2019, the hearing has been fixed on 11.11.2019. In response to the show cause, the assessee did not filed any submission. The assessee vide 142(1) dated 29.11.2019 was requested to furnish further information in respect of source of cash deposited during demonetization period. The assessee though filed part information on 03.12.2019 and 07.12.2017 but not in the manner laid down in notice u/s 142(1) dated 29.11.2019. The assessee is basically engaged in Business of Purchasing, Manufacturing, and Selling of Textile Dyed & Printed Cloths under his proprietorship Firm M/s Baba I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 4 Prints, Balotra. On perusal of the information available with the ld. AO, it is seen that huge cash has been deposited in the bank accounts of the assessee aggregating a sum of Rs. 84,37,029/- out of that a sum of Rs. 51,76,000/- was specified bank notes [SBN]. 3.2 The ld. AO noted that the assessee is in Balotra, but these cash have been deposited from various other cities such as Vijaywada, Jatani, Jamsedpur, Raurkela etc., On being asked the assessee submitted that the sum is the proceeds of the sales of textile cloth from the various debtors of the assessee. The assessee claimed that the money so deposited into the bank account is the proceeds of the sales. The ld. AO noted that the assessee was not authorised to receive the SBN after the demonetisation announced. The ld. AO also relied upon the RBI circular for accepting the notes and the related compliance to be made. The ld. AO noted that since the assessee did not produced the copy of authorisation, valid identity proof and Annexure -5 as prescribed by RBI he noted that the assessee violated the rules laid down vide notification dated 08.11.2016 of the RBI. Based on this observation the ld. AO added a sum of Rs. 51,76,000/- being the deposit of cash in the form of SBN as unexplained money of the assessee u/s. 69A of the Act and the same was added to the income of the assessee. I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 5 4. Feeling dissatisfied the assessee preferred an appeal before the ld. CIT(A), the ld. CIT(A) has dismissed the appeal of the assessee. Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: “5.0 Decision: 5.1 Ground No. 1:- Vide this ground of appeal, Appellant has challenged the findings of the AO in his assessment order and has stated that AO has erred in making of Rs. 51,76,000/- u/s 69A of IT Act, 1961 r.w.s. 115BBE of the IT Act, 1961 as unexplained money. 5.2 I have duly considered the facts of the case, findings of the AO in his assessment orders and reply/explanation filed by appellant during the appellant proceedings along with case laws and judicial pronouncements cited by the Appellant in his reply. From the perusal of the assessmet order it is seen that appellant is a engaged in the business of purchasing, manufacturing and selling of dyed and printed cloths under his proprietorship firm M/s Baba Prints at Balotra. The AO has noted that Appellant had deposited cash amounting the Rs.51,76,000/- in SBN (specific bank notes) during the period of demonetization i.e. from 09.11.2016 to 30.12.2016 in his 3 different bank accounts amounting to Rs.18,75,500/-, Rs.31,46,500/- and Rs. 1,54,400/-. The AO has noted that the total amount of Rs.51,76,000/- has been deposited in the bank accounts of the appellant outside Baltora i.e. (Vijayawada, Jatani, Jamshedpur, Rourkela etc.). the AO sought detailed information with regard to source of these cash deposits in the bank accounts during assessment proceedings in the format provided to the appellant. The AO has noted that Appellant has provided partial information and that too not in the format as asked. Being not satisfied with the explanation with regard to deposit of SBN (specific bank notes) in Appellant's bank accounts during the period of demonetization, gave a clear cut findings that such deposits is treated as unexplained money u/s 69A r.w.s. 115BBE of the IT Act, 1961. 5.3 The Appellant has vehemently opposed/challenged the findings of the AO during assessment proceedings and also during appellate proceedings. Appellant has stated that AO has not probably appreciated the explanation and evidence filed during assessment proceedings with regard to the deposits of SBN in his bank accounts. From the reply of the Appellant, it is seen that Appellant has stated that such deposits are out of old debtors who have deposited such amount in his bank accounts without being authorized to do so. The banks have accepted such deposits in his bank accounts. Appellant has stated that during the assessment proceedings several letters dated 03.12.2019, 07.12.2019 were filed giving explanation about the source of cash deposit in SBN currency during the period of demonetization. Appellant I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 6 has countered that it has filed all the relevant reply with regard to source of cash deposited in bank accounts. From the perusal of reply filed during appellate proceedings, it is seen that appellant has tried to explain the source of cash deposits in his bank accounts was only out of the realization of earlier sale proceeds from the debtors to whom goods were sold. Further, it was also explained that outside places the business of the appellant is carried on through dalals who are who are working at various places and collect the funds from the debtors as usual and as per trade practice and deposit the same in Appellant's bank accounts. Further, it has also been explained that many a times Appellant's touring agents collect sale proceeds and hand over the same to the dalals, who in turn deposit the money in the Appellant's bank account. The dalals were working for the assessee. Further, Appellant has stated that all the facts were fully brought on the record during assessment proceedings as to how cash was received, collected and deposited in the bank account during demonetization period. Further, appellant has stated that it has provided all the sale bill numbers along with amount collected from such debtors through dalals who had collected the sale proceeds and had kept that cash with them. This cash was later on time to time as per the convenience and also keeping in view of the rush in the bank the dalals deposited this collected money in the Appellants bank account. Further, it has also been explained that the debtors themselves had made the deposits in bank in SBN cash for which no instructions or requests of any nature was made by the appellant to these bank branches. From the detailed reply of the appellant filed during the demonetization period it is seen that appellant is relying on the sale proceeds, old debtors and dalals who have in fact deposited SBN amounting to Rs.51,76,000/- during the period of demonetization. The appellant had also relied upon various case laws and judicial pronouncements as cited in the paragraph 4 above. On the strength of above discussion, appellant has sought relief from this office. 5.4 I have carefully examined and considered the reply of the appellant as discussed above. It is pertinent to note that SBN (specified bank notes) was not the legal tender during the period of demonetization through which business transaction would be conducted. In this regard, it is relevant to underscore the findings of the AO contained in paragraph 7, 8 and 9 of is assessment order wherein he has mentioned the detailed Governments/RBI guidelines and instructions issued from time to time to regulate the transactions in the banks. From the same it is seen that Government notification SO 3408(E) dated 08.11.2016 declared that bank notes of existing series of denomination of Rs.500 and Rs.1000 (SBN i.e. specified bank notes) shall cease to be a legal tender on and from 09.11.2016 to 30.12.2016. Hence, during the period appellant was not authorized to receive during the period of demonetization in any form of business transaction. Further, the AO has also rebutted the plea of the appellant that the cash deposited in SBN in his bank accounts is out of third party deposits and realization out of collection from the old debtors. In this connection it is important to invite the instruction no. RBI/2016-17/112 dated 08.11.2016 issued by RBI wherein it is categorically mentioned if third party deposited cash in SBN during I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 7 demonetization period, he should have to furnish (1) Copy of authorization issued by the account holder in favour of the person actually rendering SBN in the bank account (2) valid identity proof (3) duly filled proforma in Annexure 5 as prescribed by the RBI. The AO has noted that on issue of notice to the bank u/s 133(6) bank have not provided the copies of authorization issued by account holder (2) valid of identity proof (3) duly filled proforma in annexure 5. AO has given his finding that neither appellant nor the bank has furnished the aforesaid three documents and has concluded that in absence of these documents the claim of the appellant that the cash in SBN has been deposited by the buyer/ third party is not acceptable and has held that explanation regarding of source of cash deposit in SBN is not satisfactory. In view of the above findings AO has treated the cash of Rs. 51,76,000/- in SBN credited into appellant's bank account as unexplained money u/s 69A of the I.T. Act. Considering the totality of facts as emerging from the finding of the AO and reply of the appellant I am inclined to accept the finding of the AO in his assessment order with regard to treatment of cash deposit in SBN amounting to Rs.51,76,000/- as unexplained money u/s 69A of the Act. Therefore, appeal of the appellant is Dismissed. 5.5 Ground No. 2: vide this ground of appeal appellant has challenged the levy of interest u/s 234B amounting to Rs. 12,69,213/-. In view of the finding given in paragraph 5.4 above, this ground of appeal is dismissed. 5.6 Ground No. 3: vide this ground of appeal appellant has challenged the imposition of penalty proceeding. It is noted that penalty proceeding is a separate proceeding and it is premature at this stage. Therefore there is no need for adjudication on this ground of appeal. 6.0 In the result, the appeal of the appellant is Dismissed.” 5. Since the ld. CIT(A) has dismissed, the appeal of the assessee, the assessee has preferred the present appeal on the ground as stated hereinabove. In support of the grounds so raised the ld. AR of the assessee has relied upon the submission made before the ld. CIT(A) and the same is reproduced herein below:- 1. “ The above appeal of assessee is against the assessment order dt. 19-12-2019 made u/s 143(3) of the Income Tax Act, 1961 (hereinafter the Act), under DIN No. ITBA/AST/S/143(3)/2019-20/1022708348(1), assessing the income at Rs. 58,96,690/- as against the returned income of Rs. 7,20,690/- , thereby making an impugned / disputed I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 8 addition of Rs. 51,76,000/-, invoking Sec. 69A r.w.s. 115BBE of the Act, 1961. This impugned order of making addition of Rs. 51,76,000/- is bad in law, bad in facts and without jurisdiction of the ld. A.O is as much as he had made the addition along with direction of charging interest u/s 234A, 234B, 234C & 234D of the Act and simultaneously initiating penalty proceedings by issuing penalty notices u/s 271AAC, 271F and 272A(1)(d) of the Act r.w.s. 274. Thus, the impugned addition was made in relation to Bank Deposits in cash of SBN, during demonetisation. 2. The appellant had taken three grounds of appeal and first ground is in relation to the impugned addition of Rs. 51,76,000/- u/s 69A of the Act r.w.s. 115BBE of the Act. The second ground is regarding levy of interests and third is regarding initiation of the penalty proceedings. Prior to deal with the grounds of appeal, certain facts contained in the asst. order as well as the correct facts there against from the side of appellant are necessarily required to brought on appellate records. Grounds No. 1 :- 3. The appellant assessee in this case is engaged in the business of purchasing, manufacturing and selling of textile, dyed and printing clothes under his proprietary firm M/s Baba Prints, Balotra. The sales of the appellant is spread over throughout the country in various States. During the tenure of demonetisation period, in appellant’s bank account, (in three banks), cash in SBN was deposited by the appellant’s Dalals or by appellant’s sale representatives through Dalals or at many occasions by the debtors themselves (i.e. purchasers of goods). The appellant had not at all instructed or informed to his banks to accept such cash during demonetisation period. In Para No. 4 at Pg. No. 2, of the asst. order, two types of deposits were mentioned by the ld. A.O. these are reproduced as under:- S. No. Name of the Bank Account Account No. Amount deposited during demonetization period Amount deposited in SBN 1. HDFC Bank Ltd., 50200006111512 Rs. 27,79,285/- Rs. 18,75,500/- 2. PNB 0551002100042345 Rs. 53,19,914/- Rs. 31,46,500/- 3. Axis Bank 912030067848428 Rs. 3,37,830/- Rs. 1,54,000/- Total Rs. 84,37,029/- Rs. 51,76,000/- The above stated deposits in cash in SBN was fully added by the ld. A.O in the retuned income which is in dispute. I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 9 4. The ld. A.O had issued notice u/s 143(2) of the Act on 10-08-2018 as this case was selected for Scrutiny Assessment, and thereafter during the course of asst. proceedings further notices u/s 142(1) were also issued. 5. The ld. A.O mentioned in the asst. order that the appellant had not responded fully to the notices. This is an absolutely wrong narration of the ld. A.O, the appellant vehemently deny because the assessment records itself speaks otherwise. The assessee had time to time placed all relevant, explanations, material, information and documentary evidences, which in the facts and circumstances of the case, he could have made or done, nothing was found incorrect factually. The ld. A.O had further stated in the asst. order, his reasons for the making impugned asst. order in this regard. It is, therefore, appropriate to draw your kind attention towards Para No. 5 & 7, of the impugned asst. order, which are being reproduced here under:- “5. It is further seen that the branch of the aforesaid banks is in Balotra but these cash has been deposited outside Balotra i.e (Vijaywada, Jatani, Jamsedpur, Raurkela etc.,). On being asked about the source of cash deposit, the assessee submitted that “he/she deals in selling of the textile cloth on credit terms in the various part of India and these cash deposit is nothing but debtor realization from the parties outside balotra”. In order to verify the submission, the assessee vide various notice issued u/s 142(1) dated 29.11.2019 has been asked to furnish various information/detail including source of the cash deposited in these bank accounts but the assessee failed to furnish the detail. Detail of such information is as under: Appellant’s comments is that the later both the lines of above para are wrong so far facts of the case is concerned. # Details of the persons (actually tendering the SBN during demonetization period) to whom cash has been received in following format. S. N. Name Address PAN/Aadhar/GST No. etc. Amount received Nature of Receipt along with bill no. Email or Phone No. Cash received in SBN Cash received in Non SBN Some typing error in the asst. order mont I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 10 # If the receipt is against the sale proceed, please furnish the ledger account (from 01.04.2015 to 31.03.2018) of the party/firm/individual (actually rendering the SBN) who has deposited the cash directly to your account. The ledger account should be confirmed by these parties/firms/individuals. # Copy of sale bill, bilty, transportation slips and other receipts which may establish the genuineness of sales made to these parties/persons (actually tendering the SBN). # Please furnish cash/bank book for the period from 1.04.2015 to 31.03.2017 showing the receipt of cash against sale proceed. 7. In this case, the assessee submitted that the source of cash deposited in bank in SBN during demonetization period is debtor realization only. Here Reference is invited to the Notification S.O.3408(E) dated 08.11.2016 of the Ministry of Economic Affairs vide which the Central Government declared that the bank notes of existing series of denomination of the value of five hundred rupees and one thousand rupees (SBN/Specified Bank Notes), shall cease to be legal tender on and from the9th November,2016. The assessee has claimed that he/she received SBN from third parties during demonetization period. In view of the aforesaid notification, the assessee was not authorized to receive SBN during demonetization period. However, in order to verify the claim of the assessee, the assessee was requested to furnish (i) identity i.e. complete address, PAN, Contact No. of the depositors (ii) Confirmation account from buyers/depositors so that it may be confirmed that the cash in SBN was deposited by these parties but the assessee did not furnish any of the documents/detail.” The appellant had fully gave all explanation by filing responses in the forum of various charts to the ld. A.O during the course of asst. proceedings in response to notices sent / issued by the ld. A.O. the appellant had also explained to the ld. A.O as to why and how the cash was deposited at various places of other states out of Rajasthan, like Orrisa, Jharkhand, Gujarat etc. etc. in cash during the demonetisation period. For this purpose, the appellant had explained his reasons for the same vide his letters dt. 03-12-2019, 07-12-2019 &16-12-2019 (Copies are enclosed here with). As a matter of fact the assessee had filed three letters with all necessary Annexures as were demanded by the ld. A.O which are duly reflected in the departmental portal. These assessee’s letters also gave references to the various Annexures which were filed along with these letters to the Assessing Officer. Thus, the wrong enumeration of the existing facts was made by the ld. AO to the effect that the assessee had not fully explained the facts of the case. This is totally incorrect and false, which is highly deprecated and objected to, because these letters themselves speaks so. I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 11 6. The assessee vide his letter dt. 03-12-2019 all preliminary informations which the ld. A.O required from the assessee were placed on record and is very well established from the perusal of said letter. (copy of which is also enclosed here with this submission as Annexure - 1). In this letter the appellant along with other informations also placed on record. He also gave and mentioned the comparative trading history of his business of the current year as well as of the preceeding two asst. years. The ld. A.O accepted the said history and accepted the books of accounts and disclosed trading results. He had not applied the provision of Sec. 145 of the Act. Meaning thereby to say disclosed position had been fully accepted so far as the trading activity (purchases and sales etc. and the collection of sale proceeds) is concerned. 7. Thereafter vide letter dt. 07-12-2019, the appellant had filed further details in the Performa provided by the A.O relating to the cash deposited in appellant’s bank a/c from 09- 11-2016 to 31-12-2016. Nothing inconsistent was found in these deposits except of the fact as to why and who had deposited the cash at outside places of Balotra, whereas the assessee’s banks branches whereat Balotra. For this the assessee had also made the facts clear and placed the facts on record which we shall also be dealing with. In letter of 07-12-2019, the appellant had also explained the fact of availability of cash and its direct deposits at those various places and also informed that no transactions of sales in cash was made by him. It was only the realisation of the earlier sale proceeds from the debtors to whom the goods were sold. It was also informed that at these outside places, the business of the appellant is carried on through the Dalals, who are working at these various places, who also collect the funds from the debtors as usual and as per trade practice and deposit the same in appellant’s bank accounts. Many a times appellant’s touring agents also collect the sale proceeds and handover the same to the Dalals, who deposit the money in appellant’s bank a/cs. These Dalals were working for the assessee. Nothing sort of the defect was found by the ld. A.O in this trade practice and in these factual submission. Copy of this letter of 07-12-2019 is also enclosed here with as Annexure -2 . Relevant gist we also reproduce here under for continuity of understanding:- Para No. 5 at Pg. No. 2 of letter dt. 07-12-2019:- “5. Point No. 15.3 Sir, cash deposit during demonetisation period in 500, 1000 notes in bank A/c, as well as Non SBN deposited in Bank is sales proceed only. The assessee sales goods on credit basis through Agent (Dalal) mainly or by our representatives on tour. The Receipt from debtors is also made through mainly Dalals or by Sundry Debtors depositing directly the amount in our bank a/c or by person on tour who ultimately give money to Dalals and deals with other mandis also. We have given authorization to our Dalal M/s Deepak Textile Agency, Jatni for three deposits only which he had collected the amount before 08-11-2016. The rest of the deposits in our Bank A/cs are made by our customers directly without our Authorization. On which we have no control.” I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 12 8. The last letter of the appellant during the course of asst. proceeding is dt. 16-12-2019 to the ld. A.O. Through this letter the appellant had in all clear terms brought the facts again on record before the ld. AO. These are mentioned in Para No. 7 at Pg. No. 2, of the said letter, wherein he had explained the facts which are as under. This is also reproduced here because of continuity in the understanding the facts of the case. Para No. 7 at Pg. No. 2 of letter dt. 16-12-2019:- "7. As regards party wise details payment received during the Demonization period from Sundry Debtors, we are enclosing herewith the table as desired by your honour, Apart above we are also enclosing the relevant copies of Bills, Ledger A/c of parties with PAN No. as for as available with us. It is further submitted Sir, during demonization period a major portion is deposited in NON SBN Currency Notes Also it is further worthwhile to mention here that we have not given authorization to any party (Sundry Debtors) to directly deposit SBN Notes in our A/c. Other cash deposits in various Banks was made by outside parties (Debtors), was accepted by Bank without following the norms prescribed by RBI in this regard. We have given authorization ta our Dalals only. Who have already received the amount prior to demonization period. It is to facilitate them as they have already received the amount before demonization period and that is also far 6 to 7 Lacs. We have already send copies of A/cs to parties (Sundry Debtors) for confirmation and we submitts the same to your honour as early as possible. The amount deposited by parties (Debtors) in our Bank A/c without our authorization is amount due to them for goods sold to them. Copies or Bills are enclosed herewith for your ready reference. The assessee is doing business of Trading and manufacturing of printed cotton cloth since long. The assessee is regularly assessed for income tax since last 10- 15 veal'. He is regularly maintaining day to day hook of the assessee's turnover during the year under consideration is 12.46 Crore. Whereas turn over for preceding previous wear was 11.27 Crore. As his sales is more then 1 Crore his accounts are under preview of audit and Seen regularly audited, The Accounts for the period 01 10 31 (13.2017 is regularly maintained and duly audited.” (Copy of this letter is also filed as Annexure -3 to this Written Submission) 9. Through this letter the appellant had fully brought the facts on record, along with the reason as to why and how the cash was received, collected and/ or deposited in bank a/c I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 13 during the demonetisation period also. Not only this, the assessee had placed on record copy of complete details of sales made to these customers, with reference to their respective Sales Bills Numbers etc. in PNB cash deposits along with the amount collected from such debtors through the Dalals, who had already collected the sale proceeds in many cases even prior to demonetisation was pronounced. This cash was later on time to time as per the convenience and also keeping in view the RUSH in banks the Dalals deposited the collected money. Thus the Dalals had deposited the money during demonetisation. That apart, it was also explained that the debtors themselves had made the deposits in bank in SBN cash for which no instruction or request of any nature was made by the appellant to these bank branches. None of the factual position i.e. as regard of making the sales to such debtors from whom the cash was collected or cash was directly deposited by them in many cases, or the appellant’s touring agent made collection and handed over the same to Dalals for onward sending the same to assessee. These facts explained were not found incorrect in any manner . The sales was accepted by the ld. A.O also. Yet the ld. A.O made the impugned addition. Copy of these Clarificatory Statement in this regard is also as Annexure - 4. The perusal of the said statement reveals which is also showing the details of sales made and money received and time to time deposited by such debtors against the goods purchase by them. The copy of Bills and all Accounts are the sample copies which is being attached to make known the facts and trade practice of the appellant was not new but in vogue for in all the past years. 10. Further observation of the ld. A.O that to accept the SBN by the assessee and depositing the same in his bank accounts was also wrong and illegal but it is not so. It is an erroneous approach of the ld. A.O. The legal position in this regard is also made clear here under. Legal Position :- 11. This action of the ld. A.O is wholly erroneous, unjust, arbitrary and absolutely contrary to the provisions of the Income Tax Act, 1961, because of the fact that the appellant had maintained the regular books of accounts correctly showing correct position of stock, purchases and sales and closing stock etc. along with receipts of cash and other outgoing of the cash. Such maintained books of accounts were fully correct and all the money transactions were duly recorded and reflected in the books of accounts. There bring no adverse remark or finding of the ld. A.O in this regard. The turnover during this year was higher than earlier year. The books of accounts were not rejected, nor Sec. 145 was invoked. Besides this, appellant’s books of accounts are duly audited u//s 44AB and disclosed sales turnover were duly accepted by the concerned Sales Tax (GST & VAT) Department). Thus the ld. AO was, on the facts and law as applicable and also as per settled legal position bound to accept the books of accounts and make the assessment without any addition because entire cash deposited by the appellant during demonetisation period was generated from his earlier sales made and were fully and correctly recorded in the books of account and was its business transaction. Such collection of sale proceeds from the debtors was / is a regular practice and I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 14 phenomena in his trade. This fact is also verifiable from the various and regular cash collections in the past years and during this year prior to demonetisation also. 12. Your kind attention is also drawn to the fact and as stated that such practice had been and is being be continued practice of the trade as such in this line of business. That the sales transactions are largely affected through the Dalals or by deputing agents. They at remote areas, while touring, collected the sale proceeds and also handed over the same to the Dalals to be remitted to the assessee i.e. to the sellers. Thus no irregularity could be said to have happened in this collection. Had the appellant not collected his debtors even during the demonetisation, he might have lost the sale proceeded in the way he had if not proceeded that ought to have resulted in bad debts. Further in many of the cases, the sale proceeds have already been collected much prior to demonetisation date either lying with agents or with Dalals for to be handing over debtor remitted to the seller. Thus such sums was remitted not in a single lot but as per convenient at various places by various Dalals keeping in view the rush or safely prevailed in their areas. Thus there was nothing irregularity in this regard. 13. We may, also submit and draw your kind attention towards the fact that to accept cash in SBN by banks and cash deposits by its customers and credit the same in the bank accounts, was only the matter between the assessee’s Dalals and bankers . The appellant had, it is specifically submitted, never instructed or directed to any banker to accept the cash for and on his behalf from the debtors. It is as per the banks and concerned areas dealers or Dalals convenience matters. The assessee as a seller was only interested to have the sale proceeds in his business. A.O. So far as the Income Tax Law is concerned, the settled position in this regard is that the income had to be computed as per books of account for each source of income. The sale transactions were already considered and treated as such by the ld. A.O and he had accordingly taxed the same. Thus this impugned addition is totally erroneous, bad in law, without jurisdiction, bad in facts which deserves to be quashed and cancelled. We place reliance on the under mentioned decision. i. (2023) 198 ITD 406 (Hyd.-Trib.) = (2022) 145 taxmann.com 232 (Hyd.-Trib.) – NECX (P.) Ltd. vs. ITO. “Where assessee produced number of sales invoices to show source from where cash was received which was deposited in bank account of assessee and, further, turnover of assessee was also not disputed by Assessing Officer, CIT(A) was not justified in sustaining additions under section 68 made on account of said cash deposited in bank account of assessee and same was to be deleted.” ii. Sh. Balwinder Kumar vs. ITO, W-3(1), ITAT, Amritsar Bench– ITA No. 256/Asr/2022 for A.Y. 2017-18 I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 15 Further in Para No. 12 the Hon’ble ITAT, Amritsar Bench has given the decision by concluding remarks as under:- “12. Considering the factual matrix of the case, we hold that the cash deposits in bank 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 affect 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 69A or tax the same u/s 115BBE again. Accordingly, the addition of Rs.1,35,43,034/- is deleted.” 14. Thus the appellant assessee was well within its right to accept and transact in SBN upto the appointed date as per the Specified Bank Notes (Cessation of liabilities) Act, 2017. According to the Said Act the appointed day for which purpose was 31-12-2016. The appellant was well within his rights if same SBN cash was deposited in bank because the same was not ceased to be a legal tenure. All such SBN were against the earlier sale made collection, which the Dalal had to accept as it was a legal tender. In support of this, the reliance is placed on the ITAT decision of Visakhapatnam Bench reported in the case of ITO vs. Sri Tatiparti Satyanarayana D. No. 25-8-9 and 10, ITA No. 76/viz./2021 for A.Y. 2017- 18, Date of order 16-03-2022. In which it was held as under:- “9. We have heard both the parties and perused all the documents on record. We find that there was sufficient cash balance with the assessee as detailed in page No.30 of the paper book. The Specified Bank Notes (Cessation of Liabilities) Act, 2017, defines “appointed day” vide Section 2(1)(a). As per Section 2(1)(a), “appointed day” means the 31st Day of December 2016. Section 5 of the Specified Bank Notes (Cessation of Liabilities) Act, 2017 also deals with prohibition on holding, transferring or receiving specified bank notes. Section 5 states that “On and from the appointed day, no person shall knowingly or voluntarily, hold, transfer or receive any specified bank note”. We therefore, find that the specified bank notes can be measured in monetary terms since the guarantee of the Central Government and the liability of Reserve Bank of India does not cease to exist till 31.12.2016. In view of the above, the contention of the Ld.DR, treating the receipt of SBNs from cash sales as illegal and thereby invoking the provisions of section 69A is not valid in law. Therefore, we dismiss this ground of the Revenue.” 15. The above decision of the Visakhapatnam Bench was followed by the ITAT Chennai Bench in the decision of Mrs. Umamaheswari, vs. ITO, ITA No. 527/Chnny/2022. The Chennai bench as held that :- I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 16 4. The Ld.AR for the assessee submitted that the Ld. CIT(A), NFAC erred in confirming additions made towards cash deposits of Rs.7,67,500/- by treating it as unexplained money u/s.69 of the Act, without appreciating the fact that the assessee can transact in Specified Bank Notes up to appointed date as per the Specified Bank Notes (Cessation of Liabilities) Act, 2017, and as per said Act, appointed date for this purpose is 31.12.2016. In this regard, he relied upon the decision of ITAT Visakhapatnam Bench in the case of ITO v. Sri Tatiparti Satyanarayana in ITA No.76/Viz/2021 order dated 16.03.2022. 5. The Ld. DR, on the other hand, supporting the order of the Ld. CIT(A), field a detailed Written Submissions dated 21.09.2022 and argued that as per the Specified Bank Notes (Cessation of Liabilities) Act, 2017, which came into effect from 31.12.2016, the assessee is prohibited from dealing with Specified Bank Notes w.e.f.09.11.2016 for all purposes except for the purpose of exchange of such Specified Bank Notes held on or before 08.11.2016. Further, assuming for a moment, the assessee can transact in Specified Bank Notes up to 31.12.2016, but the assessee could not prove the receipt of sale consideration of Rs.13 lakhs in Specified Bank Notes and thus, the benefit of source cannot be given to the assessee. The appellant assessee’s comment on this regard is that, that he had fully established that these SBN were the collection form the debtor agent sale proceed. Para No. 6 of Pg. No. 5 of the order as held: 6. From the above what is clear is that up to the appointed date i.e.31.12.2016, there is no prohibition for dealing with Specified Bank Notes. Therefore, in my considered view, the objection of the AO on this regard in light of said Act is devoid of merits. Further, a similar issue had been considered by the Tribunal, Visakhapatnam Bench, in the case of Sri Tatiparti Satyanarayana in ITA No.76/Viz/2021, where the Tribunal after considering relevant provision of Specified Bank Notes (Cessation of Liabilities) Act, 2017, held that there is no prohibition under the Act to deal with Specified Bank Notes up to 31.12.2016. Therefore, in my considered view, the observation of the AO on this regard totally incorrect and liable to be rejected. 16. In view of the above Authorities of the ITAT Visakhapatnam and Chennai Benches, it is thus established from that the observation / inference of the ld. A.O holding the receipt of legal tender money i.e. SBN during the demonetisation against his earlier made sales of textile as well as the recovery made from those debtors. Thus, there was nothing wrong as was held by the ld. A.O. After dealing with this aspects of the matter, it is requested to delete the addition made by the ld. A.O, allowing the ground of appeal. I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 17 17. We now turn towards Sec. 69A and analyse the said section whereby also it is fully established that the said section was not at all attracted in the facts and circumstances of the case, yet, the ld. A.O erroneously, arbitrary in excess of the powers vested or confirmed on him, the impugned addition was made invoking Sec. 69A, was not at all available to the ld. A.O to make addition nor any other section of the Act empowered him to so. Thus this action was also without jurisdiction. Now we reproduce Sec. 69A here under:- “ Unexplained money, etc. 69A. Where in any financial year the assessee is 1 found to be the owner of any money, bullion, jewellery or other valuable article and 2 such money, bullion, jewellery or valuable article 3 is not recorded in the books of account, if any, 4 maintained by him for any source of income, and 5 the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, 6 or the explanation offered by him is not, 7 in the opinion of the 61 [Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income 64 of the assessee for such financial year.". [Emphasis supplied by us] 18. We now deal, and by analysing the facts of the appellant’s case with relevant law. In this regard, we would try to show as to how Sec. 69A was wrongly invoked by the ld. A.O in the factual matrix of the case and consequently the addition of income u/s 69A and levy of tax u/s 115BBE was wrongly done. Both these i.e. addition and levy of tax deserve to be quashed and cancelled. Sr. No. Conditions of Section 69A Facts of the case of assessee 1. The assessee is found to be owner of money, bullion etc. and the same is not recorded in books. The assessee is maintaining regular books of accounts and such amount of cash collection or receipt cash including SBN. On account of sales made prior to demonetization as well as collections made by Dalals and lying with this, were fully recorded in the books of accounts. The position of cash book of the year was placed on record of the ld. A.O by the appellant. There was no case of availability of any money i.e. SBN, was outside the books of accounts and unrecorded. Hence section 69A was not applicable. It was I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 18 wrongly invoked. 2. The books of accounts being maintained for any source of income Source of income is only the transactions of business and its earlier made sale and collection of cash even prior to demonetization as stated above, for which the books of accounts were regularly and fully maintained. These were also duly audited u/s 44AB of the Act in respect of. The trading results was also much better compared to preceeding years such type of cash recovery of sale proceed was a past practice. No doubt about the correctness of any entry was raised by the Assessing Officer nor was any wrong entry found. 3. The assessee offers no explanation about the nature and source of money etc. with him. The assessee had offered explanation, supported by evidences of audited books of accounts, sales vouchers, past history of the case and its comparison which were submitted to the ld. A.O. Full year’ cash books was also placed on record of the ld. A.O along with the previous year’s trend of supply of petrol and diesel etc. 4. Or the explanation offered by him is not in the opinion of the Assessing Officer satisfactory. The Ld. Assessing Officer has accepted the facts of sales made and cash realisation from the debtors to the tune and extent disclosed and explained in the letter and in the Tables of letter dt. 07-12-2019 & 16-12-2019 as well as some facts in letter dt. 03-12-2019. No fault was found in any Datas filed by the assessee. Thus there was no reason before the ld. A.O’s non satisfaction from the assessee’s explanation. A.O’s inference of invalidity of accepting cash in SBN against recovery of sale proceeds from debtors was fully in accordance with law and statutory provisions. “Assessee offers no Explanation” means where the assessee offer no proper explanation as per the Supreme Court I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 19 decision, reported in (2007) 291 ITR 278 (SC) – CIT vs. P. Mohanakala dealing with the case of Sec. 68 has clarified that. The relevant ruling of S.C. reads as under: “Where the assessee offers no proper, reasonable or acceptable explanation as regards the sums found credited in the books maintained by the assessee. It is true the opinion of the A.O for not accepting the explanation offered by the assessees as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the A.O is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion.” 5. Such income may be deemed to the Income of the assessee. When the basic facts that the sales have been made earlier and were recorded in the audited books of accounts, the nature of source SBN availability stands identified as per past practice and asper correct facts of the case, the whole basis of making the addition is unjustified. The Assessing Officer has disregarded the evidence and explanation and compulsion based on documentary and day to day practice and hard correct facts of the happenings. The ld. A.O, if was not at all satisfied for any reason, even after the reply vide letter dt. 07- 12-2016 and 16-12-2016, he could have made further enquiry at his own and could have further examined the facts of the case by deputing the inspector etc. or by sending Commission or by direct enquiry from appellant in this regard but on the contrary the ld. A.O erred in law and facts in not accepting the those facts without any counter or contrary to facts any whisper to the assessee’s explanation and make arbitrary addition. As I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 20 said, if any inconsistency or irregularity or illegality took place in depositing the SBN in bank during demonetisation period such was even not unauthorised by bank standards or RBI standards or if it was so, then there could have only a matter resting between the appellant and his debtors or banks or RBI, but least the income tax department in this regard. The appellant’s sales were duly accepted by the other department and, therefore, in no event the receipt of cash or collection of cash from debtors. Clarificatory Note to give for Annexure “each and every sale transaction and recovery / collection of sale proceeds during verifiable from the copy of sale Invoice / copy of Debtor Account and bank statement as well as the practice is also as corroborated with Past Practice. - The addition made deserves to be deleted. 18.1. It would be further relevant here to draw your kind attention towards the under mentioned decisions:- i. (2008) 219 CTR (Raj. H..C. / Jurisdictional H.C.) 58 – CIT vs. Mehta Gwar Gum & Company has held at Pg. 61 that: “9. Then, even according to the AO, the addition was made, treating the amount, to be the undisclosed investment under s. 69 of the IT Act. We may here gainfully quote the provisions of s. 69, which reads as under : "Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the AO, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year." 10. A reading of above section makes it clear, that the basic condition, for attracting the provisions of s. 69 is, that the investments made in the financial year concerned, should not be recorded in the books of account, I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 21 maintained by the assessee, for any source of income, and secondly, the assessee should have not offered any explanation, about the nature and sources of investments, or the explanation offered should not be satisfactory, in the opinion of the AO. 11. In the present case, the relevant financial year is 1999-2000, and in the books of accounts of that year, this stock has been duly accounted for, and after so accounting for the same, the figure of sales, as noticed above, has been accepted by the Department, and enhanced GP rate has been applied thereto.” Thus the above ruling / ratio of the jurisdictional High Court i.e. High Court of Rajasthan in this case of the assessee is fully supporting the factual matrix of the case. The language of Sec. 69 & 69A is pary materia. The ld. A.O, therefore, exceeded his powers in making arbitrary addition. This action of the ld. A.O, therefore, was wrong on facts and without authority of law deserves to be cancelled allowing the ground of appeal of the appellant. ii. (2022) 98 ITR (Trib.) 419 (ITAT[Chand]) – DCIT vs. Roop Fashion. In this decision of the ITAT Chand. Bench, the ratio descendancy is that : “where the addition u/s 69A was made on account of unexplained money i.e. cash deposited in bank a/c by assessee during demonetisation period out of cash sales and realization from trade debtors, duly shown in books of account – no adverse comments made by investigation wing on assessee’s submission and no defect was pointed in the books of account maintained by the assessee neither any inflated purchases or suppressed sales were found, therefore, the Hon’ble ITAT Chand. Bench held that the Assessing Officer action in estimating sales was without any basis as well as addition based on surmises and conjectures not tenable accordingly of Sec. 69A was cancelled.” 19. In addition to what we have stated above, it is also legally a settled position in this regard that when the ld. AO had accepted the entire sales turnover of the assessee and had accordingly accepted the net profit earned and taken the same as returned income disclosed by the assessee, then to re-add such sale by way of disallow the cash generation thereof for which he was not at all competent and was not having jurisdiction to ignore the net profit derived from the books of account by accepting the sales and to separately re-add / disallow the said generation of cash of business turnover resulted in double additions in the facts and circumstances of the case. This, the Income Tax Act does not permit. I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 22 20. The ld. A.O had accepted the books of account but had at the same time taxed the business receipts invoking Sec. 69A r.w.s. 115BBE without rejecting the books of account. Such receipt was generated out of the sales turnover as said above which is not at all disputed in any manner by the ld. A.O. Therefore, without rejecting the books of account, the ld. A.O cannot tax the same and proceed to make addition invoking Sec. 69A of the Act as an unexplained money / cash. As submitted, the entire generation of cash was duly explained as was recorded in the books of account maintained for the source of income. As per assessee’s nature of business, quantity vise and value vise purchase and sales of the commodities are also maintained and reflected and available in the records. Therefore, there was not at all any money with assessee which could be taxed u/s 69A but the ld. A.O had done that in this case. In such factual matrix of the case no deeming do can even be invoked nor the factual matrix of the case warranted to invoke deeming provision fiction. Ground No. 2 :- 21. The Ground No. 2 relates to the erroneously charging of interest u/s 234B IT Act, 1961. This levy of interest is reflected in the computation of tax sheet. This is erroneously charged for the reason that the appellant had correctly disclosed the income. The impugned addition made by the ld. A.O was a lawful and arbitrary exactly jurisdiction by the ld. A.O consequential levy, therefore, the levy of interest is also arbitrary as the disputed addition is and it has to go along with the disputed addition made for which detailed written submission already been made above. In view of this, it is prayed that the levy of interest may very kindly be deleted and cancelled. Ground No. 3 :- 22. Regarding Ground No. 3, it is urged that initiation of penalty proceeding is wrong. In this connection it is urged that Sec. 271AAC, 271F & 272A(1)(d) of the Act, is not applicable in the facts and circumstances of the case. Since the addition u/s 69A as well as the computation of tax 115BBE of the Act and this consequential initiation of penalty proceedings are all based on irrelevant fiction and on wrong approach which is arbitrary without authority of law and the result of wrong and improper interpretation of statutory provision in the existing facts of the case, therefore, the penalty proceedings in the facts and circumstance was not to be initiated and the ld. A.O erred in initiation. These existed no case of Sec. 69A and of Sec. 115BBE. Thus the penalty proceedings may kindly be cancelled also. 23. Lastly, it is prayed that the above appeal of the appellant may kindly be allowed, deleting the addition and interest and cancelling the penalty initiation. Enc.:- I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 23 i. Annexure – 1 Copy of letter dt. 03-12-2019 1-3 ii. Annexure – 2 Copy of letter dt. 07-12-2019 1-3 iii. Annexure – 3 Copy of letter dt. 16-12-2019 1-2 iv. Annexure – 4 Copy of Bills and all accounts:- 1-76 a. Copy of sample of Bills and its account details. (Pg. 1-43) b. Clarificatory Statement of HDFC and PNB Banks (Pg. 44-46) c. PNB bank a/c statement (Pg. 47-62) d. Axis bank a/s statement. (Pg. 63-64) e. HDFC bank a/c statement. (Pg. 65-76) v. Annexure – 5 Power of Attorney with non- judicial stamp of Rs. 100 1-2 Thanking you, we remain.” 6. The ld. AR of the assessee also filed a detailed paper books containing following evidences / relied upon material: S. No. Particular Papers Page No. 1. Copy of Written submission filed on 04-09-2023 in support of Ground of Appeal with Annexures, filed before CIT(A), NFAC, Delhi. 1-22 2. Annexure – 1 – Copy of reply letter dt. 03-12-2019 to the notice u/s 143(2). 23-25 3. Annexure – 2 – Copy of reply letter dt. 07-12-2019 to the notice u/s 142(1) under DIN No. ITBA/AST/F/142(1)/2019-20/1018345362(1). 26-28 4. Annexure – 3 – Copy of reply letter dt. 16-12-2019 to the notice u/s 142(1) under DIN No. ITBA/AST/F/142(1)/ 2019-20/1021318626(1). 29-30 5. Annexure – 4 – Copy of Bills and relevant debtors Accounts of BABA PRINTS, (Proprietory concerned of appellant Sh. Ramesh) :- 31-88 I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 24 a. Copy of sample of Bills Invoice and relevant debtors account copy from 01-04-2016 to 31-03-2017. i. Sri Sidheshwar Pursti Bill No. 664 and its a/c copy 31-33 ii. Raj Kamal Textiles Bill Nos. 966, 1038, 1079, 1196 & 1334 and its a/c copy. 34-39 iii. Shyam Sunder Agarwal Bill Nos. 716 & 718 and its a/c copy. 40-42 iv. Sarla Cloth Store Bill Nos. 1246, 1247, 1248, 1249, 1250 & 1370 & its a/c copy. 43-51 v. Prabhat Textiles Bill No. 1438 and its a/c copy. 52-53 b. Clarificatory Statement of PNB and HDFC Banks a/c relating to period of 09-11-2016 to 31-12-2016 where collected money from debtors or was directly deposited by debtors themselves in Bank A/c. 54-56 c. PNB A/c statement for A/c No 0551002100042345 upto the period of 01-10-2016 to 31-12-2016 57-74 d. Axis bank A/c statement for A/c No. 91230067848428 for the period (from 01-12-2015 to 01-02-2016). 75-76A e. HDFC bank A/c statement for A/c No 50200006111512 upto the period from 01-10-2016 to 31-12-2016. 77-88 7. Letter of HDFC Bank dt. 04-12-2019 informing to the Income Tax Department that earlier statement submitted by them was relating to the cash deposits and total credits in the account which was not as per their requirement, hence clarificatory letter with revised statement was filed by HDFC Bank to the I.T. Department. 103-105 6. Copy of the ITAT decisions of :- 89-102 1. The ITAT decision of Visakhapatnam Bench reported in the case of ITO vs. Sri Tatiparti Satyanarayana D. No. 25-8-9 and 10, ITA No. 76/viz./2021 for A.Y. 2017-18, Date of order 16-03-2022. Relevant Para 9 at Pg. 5 of this decision. (Pg. 89-96) 2. The decision of the Visakhapatnam Bench was followed by the ITAT Chennai Bench in the decision of Mrs. Umamaheswari, vs. ITO, ITA No. 527/Chnny/2022 for A.Y. 2017-18, Date of order 14-10-2022. Relevant Para 6 at Pg. 5 of this decision. (Pg. 97-102) Both the above ITAT decisions are already referred in the written submission at Pg. No. 10-11. 7. The ld. AR of the assessee in support of the cash deposited into the bank account submitted that out of the total cash deposited for a sum of Rs. 84,37,029/- the ld. AO as well as CIT(A) has accepted the I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 25 explanation of the assessee for an amount of Rs. 32,61,029/-. The same way cash of Rs. 51,76,000/- was deposited. The assessee has also in the previous year received the cash from the same customers. The assessee filed a chart showing the name of the party, address, PAN No. Amount outstanding, Bill no. corresponding to the bill and the date of which the amount deposited into the bank account of the assessee. The ld. AR of the assessee on random tallied the figure with that of the amount deposited into the bank account with that of the invoice and the ledger account submitted by the assessee in the paper books. Thus, the ld. AR of the assessee submitted that once the sale is accepted the realisation of the same from the customer cannot again be added as unexplained money u/s. 69A of the Act. The ld. AO has not rejected the book result declared by the assessee and therefore, the amount supported by the sale again cannot be added once the same is realised and reflected in the books as cash realisation when out of total realisation in that period accepted for an amount of Rs. 32,61,029/-. 8. The ld DR is heard who has relied on the findings of the lower authorities. The ld. DR vehemently argued that the assessee has accepted the money in the SBN even though the same was not legal tendered money. The assessee has even violated the RBI circular and I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 26 guidelines of the circulate dated 8.11.2016. Therefore, the addition made by the ld. AO should be sustained and in support the ld.DR also supported the order of the ld. CIT(A). 9. We have heard the rival contentions and perused the material placed on record. The fact related to the disputed is that the assessee is after filling the return of income by the assessee the case of the assessee was selected under CASS for scrutiny. Notices were issued and served upon the assessee. The assessee is engaged in the business of purchasing, manufacturing, and selling of textile dyed and printed clothes under his proprietorship firm M/s. Baba Prints, Balotra. The ld. AO noted that the assessee has deposited huge cash into the bank accounts as detailed herein below: S. No. Name of the Bank Account Account No. Amount deposited during demonetization period Amount deposited in SBN 1. HDFC Bank Ltd., 50200006111512 Rs. 27,79,285/- Rs. 18,75,500/- 2. PNB 0551002100042345 Rs. 53,19,914/- Rs. 31,46,500/- 3. Axis Bank 912030067848428 Rs. 3,37,830/- Rs. 1,54,000/- Total Rs. 84,37,029/- Rs. 51,76,000/- The bench noted that the ld. AR of the assessee submitted that the out of the total cash deposit of Rs. 84,37,029/-, Rs. 32,61,029/- was considered as receipt from the customer even though the same was I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 27 received in cash. The ld. AR of the assessee also demonstrated before us that even in the last year the assessee is in receipt of the cash from the customer and when the amount which is in legal currency is not disputed for an amount of Rs. 32,61,029/- the amount of Rs. 51,76,000/- deposited directly by the customer in the bank account as its regular practice the same cannot be considered as unexplained money. The assessee has submitted all the details in support of the claim that the assessee has received the money as his receipt of money against the sale made by the assessee. The revenue has not disputed the arguments of the ld. AR of the assessee that it is the receipt of the money against the sales made by the assessee. The lower authorities and even the ld. DR has simply disputed that the assessee has violated the provision of circular of the RBI dated 8.11.2016. 9.1 Thus, the bench noted that it is not under dispute that the assessee has accounted the receipt as money received and deposited into the bank account directly by the party to whom the goods has been sold. This method of depositing the cash has regularly been followed by the assessee even in the past years and for an amount of Rs. 32,61,029/- is not disputed by the revenue. The only dispute is of the SBN deposited in to the bank account directly by the party for which I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 28 even the assessee is not aware that how much legal tender deposited and how much SBN. Thus, the now the issue to be examined as to whether the assessee is under any obligation in such a situation as per the RBI circular or not, as the revenue while making the addition heavily relied upon the guidelines of the RBI and the relevant provisions thereof. The Specified Bank Notes ( Cessation of Liabilities) Act, 2017, defines “appointed day” vide section 2(1)(a). As per section 2(1)(a) “appointed day” means the 31 st Day of December 2016. Section 5 of the Specified Bank Notes ( Cessation of Liabilities) Act 2017 also deals with prohibition on holding transferring or receiving specified bank notes. Section 5 states that “on and from the appointed day, no person shall knowingly or voluntarily, hold, transfer or receive any specified bank note”. Therefore, the SBN can be measured in monetary terms since the guarantee of the Central Government and the liability of Reserve Bank of India does not cease to exist till 31.12.2016. Thus, the assessee as per his regular practice has received directly into the bank account and the said money though not accepted directly by the assessee but the same has been deposited by the parties to whom the assessee has sold the goods. The RBI has placed the restriction and taking the declaration as per the Annexure-5 from the person whose deposit the money and undisputedly this money has not been deposited by the assessee and I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 29 therefore, furnishing at Annexure-5 by the assessee is out of question. It was the ld. AO who might have issued the 133(6) to the respective party or to the bank and called for the details to justify the averments made by the assessee and thus, when the sales is not disputed and in fact the part of the cash in the demonetised period is not disputed the action of the lower authority in sustaining the addition u/s. 69A is incorrect and thus hereby directed to be deleted. In nutshell when the sales are not in dispute and found genuine and even for that part of the cash is considered as explained in the same demonetisation period which are not SBN out of the same sales merely the part of the other amount directly deposited into the bank account by the seller though SBN cannot be considered as unexplained money in the hands of the assessee as the same has not been received by the assessee directly and the same was received by the bank which was permitted till 31 st December to be received by the bank. Based on this observation ground no 2 & 3 raised by the assessee are allowed. Ground no. 1, 4 & 5 being general in nature does not require any adjudication. In the result, the appeal of the assessee is allowed. I.T.A. No. 401/Jodh/2023 Assessment Year: 2017-18 30 Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board. Sd/- Sd/- (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) Judicial Member Accountant Member Ganesh Kumar, PS Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order Date Initial 1. Draft dictated on Sr.PS/PS 2. Draft placed before author Sr.PS/PS 3. Draft proposed & placed before the Second Member JM/AM 4. Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr. P.S./P.S. Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8. Date on which file goes to the Head Clerk 9. Date on which file goes to the AR 10. Date of dispatch of Order