Bhatia Service Station, Vadodara V. The Income Tax Officer, Ward-3(1)(4), Vadodara

ITA 82/AHD/2023

AI Insights

The case revolves around the appeal by Bhatia Service Station against the order of the CIT(A), which upheld the Assessing Officer's decision to treat a portion of cash deposits during the demonetisation period as unexplained income. The Assessing Officer had noted that the cash deposits exceeded the reported sales, leading to an addition of Rs.9,00,000 under Section 69A. The Tribunal examined the records, including the cash books and bank statements, and found that the assessee had sufficient cash sales to justify the deposits, thus allowing the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129469 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-08-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 07-02-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NEETA LODHA
• Section: 143(2); 69A

Judgement Text

ITA No.82/Ahd/2023 Assessment Year: 2017-18 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.82/Ahd/2023 Assessment Year: 2017-18 Bhatia Service Station, Opp. Swaminarayan Temple, Harni Road, Vadodara – 390 006 [PAN – AABFB 6961 C] Vs. Income Tax Officer, Ward – 3(1)(4), Vadodara. (Appellant) (Respondent) Assessee by Smt. Neeta Lodha, AR Revenue by Ms. N.J. Vyas, Sr. DR Da te o f He a r in g 03.08.2023 Da te o f P ro n o u n ce m e n t 06.09.2023 O R D E R This appeal is filed by the Assessee against order dated 23.12.2022 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18. 2. The Assessee has raised the following ground of appeal :- “1. The Learned CIT (Appeals) has erred both in law and on facts of the case in upholding the action of the Assessing Officer of considering the cash deposit as unexplained cash.” 3. The assessee filed its return of income on 24.10.2017 declaring income of Rs.10,43,660/-. Notice under Section 143(2) of the Income Tax Act, 1961 was issued on 29.08.2018 and duly served. Subsequently, notice under Section 142(1) was issued on 25.10.2019 and 03.12.2019. In response to the said notice, the assessee uploaded computation of income, bank account statement, audit report, sales register and purchase register, stock summary and his reply. After verification of the details, the Assessing Officer observed that the assessee is a retail dealer of Bharat Petroleum and the assessee had deposited cash of Rs.29,57,480/- on 08.11.2016 and 10.11.2016 in front of last purchase of Rs.13,00,000/- on 07.11.2016 which was excess of its sales. The assessee was requested to show cause that why in absence of any justification or reply the cash ITA No.82/Ahd/2023 Assessment Year: 2017-18 Page 2 of 3 deposit of excess of Rs.9,00,000/- amount should not be treated as unexplained income of the assessee for Assessment Year 2017-18. The assessee filed its reply and after taking cognisance of the said reply, the Assessing Officer held that as per Government Notification only sales amount in SBN notes depositing during demonetisation can be allowed and, therefore, made addition of Rs.9,00,000/- under Section 69A of the Act. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that the assessee is a retail dealer of Bharat Petroleum and is engaged in the business of reselling of petroleum products and other allied products. The sale of the firm is on cash basis and, therefore, during the year under consideration demonetisation took place on 08.11.2016, however, the supply of petrol and diesel continued to be in the exempted category for the purpose of payment through old bank notes up till 2 nd December, 2016. The assessee deposited cash in its bank account during the demonetisation period against cash sales made and payments received from debtors and for which the assessee has filed the cash book alongwith other details. The Ld. AR submitted that all the relevant details related to the cash deposits was filed and its genuineness. The assessee was having cash in hand on daily basis prior to demonetisation period and during the demonetisation period. The Ld. AR submitted that once the assessee is regularly filing the return of income and the same is reflect in the books of accounts, the source of cash deposit in Bank account cannot be rejected by the Assessing Officer without rejecting the books of account of the assessee. The Ld. AR, therefore, submitted that the addition made by the Assessing Officer under Section 69A is not justified. 6. The Ld. DR submitted that the cash received was not mentioned in the books for 15the November and 16 th November. The observation of the CIT(A) that there was negative cash balance on 15 th & 16 th November has rightly confirmed the stand of the Revenue and, therefore, the addition made by the Assessing Officer to the extent of Rs.9,00,000/- is justifiable. The Ld. DR relied upon the Assessment Order and the order of the CIT(A) ITA No.82/Ahd/2023 Assessment Year: 2017-18 Page 3 of 3 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that no books were rejected in assessee’s case and in fact the cash books as well as cash deposited during the demonetisation period was on the basis of heavy cash sales during those days. The contention of the Ld. AR that due to heavy cash sales on those days, it was not practicable for the Accountant to enter the cash entries immediately in the books of accounts. The cash received from the debtors were deposited in the bank account on the same date, but the entries for the same were made on combined basis. This has led to negative cash balance in the books of accounts for 2-3 days but the assessee had sufficient cash balance to deposit cash of Rs.6,56,000/- on 16.11.2019 as cash sales on that day itself was of Rs.7,16,325/- and, therefore, the difference was explained to the Assessing Officer as well as the CIT(A) which was totally ignored by both the Authorities. Thus, the addition made by the Assessing Officer to the extent of Rs.9,00,000/- under Section 69A of the Act does not survive. Hence, appeal of the assessee is allowed. 8. In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on this 6 th September, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 6 th September, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad