The ACIT, Gandhinagar Circle, Gandhinagar V. Shri Jayeshkumar Laxman Kharsan, Palanpur

ITA 584/AHD/2022

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9652 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-10-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 28-12-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 143(3); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member The ACIT, Gandhinagar Circle, Gandhinagar (Appellant) Vs Shri Jayeshkumar Laxman Kharsan, Chadotar, Palanpur-Deesa Highway, Nr. Hotel Chaudhary Dhaba, Palanpur PAN: AZVPK5136F (Respondent) Revenue Represented: Shri B.P. Makwana, Sr.D.R. Assessee Represented: Shri S.N. Divatia, A.R. & Shri Samir Vora, A.R. Date of hearing : 09-10-2023 Date of pronouncement : 06-12-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Revenue as against the appellate order dated 01.11.2022 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2017-18. ITA No. 584/Ahd/2022 Assessment Year 2017-18 I.T.A No. 584/Ahd/2022 A.Y. 2017-18 Page No ACIT Vs. Shri Jayeshkumar Laxman Kharsan 2 2. The brief facts of the case is that the assessee is a proprietor of M/s. L.K Petroleum runs two petrol pumps having dealership with Bharat Petroleum Corporation Ltd. one at Chadotar Region and the other at Deodar. The Chadotar petrol pump was worked for the entire financial year 2016-17 relevant to the Assessment Year 2017-18, whereas Deodar petrol pump was worked only from April 2016 to July 2016. For the Assessment Year 2017-18, the assessee filed its Return of Income on 18.01.2018 declaring a total income of Rs. 28,60,170/-. The return was taken up for scrutiny assessment on the ground that huge cash deposits were made in the bank accounts during demonetization period. 3. After detailed discussions, the Assessing Officer held that excess cash deposit of Rs. 67,50,000/- made by the assessee is treated as unexplained income u/s. 69A of the Act and assessed the same u/s. 115BBE @ 60% and also initiated penalty proceedings against the assessee. 4. Aggrieved against the assessment order, the assessee filed an appeal before Commissioner of Income Tax (Appeals.). The Ld. CIT(A) after considering the various details and comparison of the cash sales made in the earlier assessment year, held that there were no excess cash deposits by the assessee during the demonetization period by observing as follows: “...7. From the above, it is observed that the pattern of cash sales was similar in the year 2015 as it is in the year 2016. The appellant has its petrol pumps in the remote regions of the state and primary mode of sales is cash. Based on the monthly sales data as mentioned in the submissions, it is also observed that whether there was demonetization or not, the appellant has routinely made cash sales every month which has been deposited in bank accounts and the money has been used to buy its I.T.A No. 584/Ahd/2022 A.Y. 2017-18 Page No ACIT Vs. Shri Jayeshkumar Laxman Kharsan 3 inventory. Comparatively seen month-wise, in November, there has been an increase in sales value by 20 percent and in December there is rise of 5 percent as compared to the preceding year which is due to more inclination of the consumers to use cash including SBNs and also due to rise in price of the commodity. The brief comparison of total sales is as under: Name of Petrol Pump F.Y. 2015-16 (in Rs.) F.Y. 216-17 (in Rs.) Chadotar 17,53,51,365.00 19,23,03,187 Deodar 2,72,71,288.00 1,04,42,272 (Apr-July) Based on the above data, the overall sales during the year of Chadotar petrol pump has risen by 11 per cent (approx.). It is also to be considered that the higher collection in sales also includes the rise in price of the commodity. The appellant had furnished documentary details including the cash book, monthly sales, bank book, bank statement, audit reports, etc. before the AO. It is apparently observable that the money received from sale of petrol, diesel etc has been deposited in the banks and the amount is used for the purpose of making payments to BPCL. Thus, the cash deposited in banks is part of trading receipts which are already shown in sales. Thus, in the pertaining facts and circumstances of the case, it appears that the AO has misjudged and miscalculated the entire case of the appellant and the factual matrix does suggest that the addition made by the AO of alleged excess cash of Rs.67,50,000/- indeed represents the proceeds of the cash sales of the appellant. Thus, there could not be any scope to doubt its nature and source.” 4.1. The Ld. CIT(A) also deleted the addition made u/s. 69A by observing as follows: “9. ...it is evident that nothing is forthcoming therefrom to even say that the expenses are manipulated to create any cash on hand. Clearly, the AO has made a mistake in considering only the Deodar petrol pump in making comparison for the expenses to come to such a conclusion. Thus, the conclusion drawn by the AO cannot be sustained, being bereft of any evidence and merits. In the circumstances, it has to be held that the alleged excess cash of Rs.67,50,000/- is nothing but proceeds of cash sales effected by the appellant during the year in respect of both the petrol pumps (though the Deodarpump was in operation only for 4 months in that year) and the same has already suffered tax as business income of the appellant for the year under consideration. It's nature and source, as elucidated in sufficient details herein-before, is well explained and hence, it cannot be brought within the ambit of section 69A of the Act as none of the ingredients to attract section 69A are satisfied here. For what has been outlined above, the AO is directed to delete the addition of Rs.67,50,000/-. With this, the taxation of Rs.67,50,000/- u/s 115BBE cannot also survive. Consequently, the Ground Nos. 1 and 2 are allowed.” I.T.A No. 584/Ahd/2022 A.Y. 2017-18 Page No ACIT Vs. Shri Jayeshkumar Laxman Kharsan 4 5. Aggrieved against the appellate order, the Revenue is in appeal before us raising the following Grounds of Appeal: (a) The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 67,50,000/- on account of addition of unexplained excess cash deposited in to bank account u/s. 69A of the IT Act. (b) The Ld. CIT(A) has erred in law and on facts in not considering the taxation as per the mandate of section 115BBE of the IT Act in respect of addition of Rs. 67,50,000/-. (c) The appellant craves leave to add, alter and /or to amend all or any of the ground before the final hearing of the appeal. 6. Ld. Sr. D.R. Shri B.P. Makwana appearing for the Revenue pleaded that the assessee during the demonetization period shown excess cash credit, which is not the same comparing to the earlier assessment year and thus supported the order passed by the Assessing Officer. The Ld. Sr. D.R. thus pleaded to uphold the addition made by the Assessing Officer and Ld. CIT(A) is not correct in deleting the above additions. 6. Per contra, the Ld. A.R. Shri S.N. Divatia appearing for the assessee supported the order passed by the Ld. CIT(A) and also filed a Paper Book running to 74 pages. The Ld. Counsel brought to our notice, the Notification S.O. No. 3408(E) dated 8 th November, 2016 issued by Ministry of Finance, Department of Economic Affairs, Government of India exempting various categories of persons to accept the old Rs. 500 and Rs. 1000 demonetized currencies between 25.11.2016 to 15.12.2016, wherein clause (11) authorized as follows: (11) for purchase of petrol, diesel and gas at the stations operating under the authorization of Public Sector Oil and Gas Marketing Companies. I.T.A No. 584/Ahd/2022 A.Y. 2017-18 Page No ACIT Vs. Shri Jayeshkumar Laxman Kharsan 5 7. Thus Ld. Counsel pleaded during the demonetization period there were huge cash sales of petrol and diesel in the petrol pumps operated by the assessee. The Ld. CIT(A) after considering the pattern of cash sales with that of the earlier years and also noting the assessee’s petrol pump is located in a very remote region of the state and the primary mode of sales is by way of cash. Ld. CIT(A) compared with the monthly sales data and also considered the purchase of petroleum products and payments made by the assessee to BPCL and found that no discrepancy in the transaction. Thus the addition made by the Assessing Officer was found to be baseless and deleted the additions. Therefore the Ld. Counsel submitted that the order passed by the Ld. CIT(A) being a speaking order does not require any interference and Revenue appeal is liable to be dismissed. 8. We have given our thoughtful consideration and perused the materials available on record. At the outset, the Revenue could not place on record any material to substantiate the findings arrived by Ld. CIT(A) by clearly comparing the cash sales made in the previous assessment years. The Ld. CIT(A) after comparison found that the sales has risen to approximately 11 per cent of the earlier year which is also one of the reason for the rise in price of the petrol and diesel commodities. The Ld. CIT(A) also held that the A.O. has made a mistake in considering only the Deodar petrol pump sales in making comparison for the expenses to make the addition. Thus the Ld. CIT(A) deleted the addition made by the Assessing Officer on cash deposits during the demonetization period. It is also to be I.T.A No. 584/Ahd/2022 A.Y. 2017-18 Page No ACIT Vs. Shri Jayeshkumar Laxman Kharsan 6 taken on record, the Notification S.O. No. 3408(E) issued by Ministry of Finance authorizing Public Sector petrol pump dealers to accept the demonetized currencies between 25.11.2016 to 15.12.2016. Therefore there is an increase in the sales of petrol, diesel during the demonetization period. The Assessing Officer further failed to verify the purchase of petroleum products from BPCL by the assessee. Thus the addition made by the Assessing Officer u/s. 69A has no basis and the Ld. CIT(A) correctly deleted the above addition. Thus the grounds raised by the Revenue is devoid of merits and the same is liable to be dismissed. 9. In the result, the appeal filed by the Revenue is hereby dismissed. Order pronounced in the open court on 06-12-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 06/12/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद