Sri. Bhagavanta Ramarao Deshpande, Vijapur V. Income Tax Officer, Ward-2, , Bijapur

ITA 435/BANG/2023

AI Insights

The case revolves around the addition of Rs.3,74,500 to the income of Sri Bhagavanta Ramarao Deshpande, which was identified as cash deposits made during the demonetisation period in India. The Income Tax Officer (ITO) treated these deposits as unexplained income under section 69A of the Income Tax Act, applying section 115BBE, after the assessee failed to provide satisfactory explanations for the source of these deposits. The CIT(Appeals) upheld the ITO's decision, leading to the filing of an appeal by the assessee before the Income Tax Appellate Tribunal. The Tribunal, after considering the submissions and the facts, decided in favor of the assessee, highlighting the issue of double taxation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124216 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 01-06-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HITHA M.
• Section: 44AD; 133(6); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC “A” BENCH : BANGALORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA No.435/Bang/2023 Assessment year : 2017-18 Sri Bhagavanta Ramarao Deshpande, Behind Kamat Hotel, Sri Deshpande Colony, Vijapur – 586 104. PAN: AQRPD 0019R Vs. The Income Tax Officer, Ward 2, Bijapur. APPELLANT RESPONDENT Appellant by : Ms. Hitha M., Advocate Respondent by : Shri Ganesh R. Ghale, Standing Counsel. Date of hearing : 24.07.2023 Date of Pronouncement : 27.07.2023 O R D E R This appeal is filed by the assessee against the DIN & Order No.ITBA/NFAC/S/250/2022-23/1051745933(1) dated 31.3.2023 of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the AY 2017-18. 2. There is a delay of 3 days in filing this appeal before the Tribunal. The assessee has filed application for condonation of delay along with affidavit stating that the assessee is residing out of Bangalore and due to personal reasons he was unable to sign the appeal papers earlier with his counsel which caused the delay. The ld. AR prayed for condonation of delay due to the above reasonable cause. After hearing both the parties, I observe that there was sufficient ITA No.435/Bang/2023 Page 2 of 5 reasons for the delay and condone the delay of 3 days in filing the appeal before the Tribunal. 3. The sole and substantive issue in this case is the addition of Rs.3,74,500 on account of cash deposits made by the assessee in his bank accounts during the demonetisation period which has been accepted as turnover by the AO. 4. The brief facts of the case are that the assessee filed his return of income electronically on 12.6.2017 declaring salary of Rs.62.000 and business of plying of Rs.1,78,235 aggregating to total income at Rs.2,40,240. The case was selected for scrutiny and statutory notices were issued to the assessee. The AO issued notice u/s. 133(6) to the Bank and received bank statement of the assessee. It was noticed that the assessee has maintained two bank accounts and during the year 2016-17 there were cash deposits on various dates of Rs.53,45,773 in Union Bank of India and Rs.23,43,061 in Karnataka Bank Ltd., Bijapur. The assessee failed to reply to various notices, but filed distributor agreement with Hatsun Agro Product Ltd., Chennai and customer account statement for FY 2016-17. The AO noted from the bank account statements there were cash deposits in old currency notes of Rs.500 and Rs.1,000 denomination and also new currency notes of Rs.500 & Rs.2,000 for the period from 9.11.2016 to 31.12.2016. During the demonetisation period the assessee deposited cash in Union Bank of India and Karnataka Bank Ltd., Bijapur Branch of Rs.8,57,885 and Rs.3,74,500 respectively in old currency notes. ITA No.435/Bang/2023 Page 3 of 5 Accordingly, considering the entire cash deposits into two bank accounts of Rs.76,88,834 in the absence of books of accounts and required documents, the net profit was considered @ 8% and resultantly the AO made an addition of Rs.6,15,106 u/s. 44AD of the Act. 5. Further since the assessee had not disclosed the cash deposits of Rs.3,74,500 (as per AO Rs.3,76,500) in old currency notes in Karnataka Bank Ltd. in the return of income, the AO treated the same as unexplained income u/s. 69A applying the provisions of section 115BBE and made addition of Rs.3,76,500. The CIT(Appeals) confirmed the order of the AO. Aggrieved, the assessee has filed appeal before the Tribunal. 6. The ld. AR reiterated the submissions made before the lower authorities and she submitted that the AO has accepted the entire cash deposits into the two bank accounts and determined the turnover which is accepted by the assessee and the same amount cannot be taxed twice under other provisions of the Act. Therefore the addition of Rs.3,76,500 cannot be sustained. 7. The ld. DR relied on the orders of lower authorities and he submitted that the assessee has not disclosed the amount of Rs.3,74,500 which were cash deposits during the demonetisation period in the old currency in the denomination of Rs.500 and Rs.1,000 notes which was not legal tender, therefore the lower authorities were justified in making addition u/s. 69A of the Act applying section ITA No.435/Bang/2023 Page 4 of 5 115BBE and therefore the orders of the lower authorities should be upheld. 8. After hearing both the sides, perusing the entire material on record and the orders of the lower authorities, I note the assessee has made cash deposits during the demonetisation period into both the bank accounts. The AO has accepted the entire cash deposits made in the bank accounts as turnover of the assessee, but has made addition of only Rs.3,76,500 (Rs.3,74,500 actual) towards the cash deposits of Rs.500 and Rs.1,000 in Karnataka Bank, Bijapur Branch during the demonetisation period. Once the AO has accepted the entire cash deposits as turnover and computed income u/s. 44AD of the Act and the assessee has not disputed the same, the amount of Rs.3,76,500 (actual Rs.3,74,500) which forms part of the same cannot be taxed again under other provisions of the Act as it would result in double taxation. I therefore find substance in the submissions of the ld. AR. Accordingly, the addition of Rs.3,76,500 (actual Rs.3,74,500) is deleted. 9. In the result, the appeal by the assessee is allowed. Pronounced in the open court on this 27 th day of July, 2023. Sd/- (LAXMI PRASAD SAHU ) ACCOUNTANT MEMBER Bangalore, Dated, the 27 th July, 2023. /Desai S Murthy / ITA No.435/Bang/2023 Page 5 of 5 Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore.