PANKAJ GUPTA V. PRINCIPAL CHIEF COMMNR. OF INCOME TAX, BBSR

ITA/28/2024

AI Insights

The case involves Pankaj Gupta, the appellant, who contested the addition of \\u20b9 28,00,000 as unexplained investment for the assessment year 2017-2018. The addition was made under section 69-A of the Income Tax Act, 1961, following a deposit made post-demonetization notification. The appellant argued that the deposit was not unexplained and sought to exclude the period during which he applied for rectification of the Tribunal's order. The revenue opposed the appeal, asserting that the deposit was indeed unexplained. The High Court of Orissa at Cuttack dismissed the appeal, finding no substantial question of law arising from the Tribunal's order.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 761541 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 04-12-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: S C MOHANTY; A KEDIA
• Assessee Lawyers: SUMIT LAL; Z M WALLACE
• Keywords: Demonetization; Rectification of order; Substantial questions of law; Unexplained investment
• Section: 69 A; 260-A; 143(6)

Judgement Text

" Page 1 of 5 IN THE HIGH COURT OF ORISSA AT CUTTACK ITA No. 28 of 2024 Pankaj Gupta ..... Appellant Represented by Adv.- Mr. Sumit Lal, Advocate Mrs. Z.M. Wallace, Advocate -versus- Principal Chief Commissioner of Income Tax, Odisha Region, Bhubaneswar and others ..... Respondents Represented by Adv.- Mr. S.C. Mohanty, Advocate (Sr. Standing Counsel) Mr. A. Kedia, Advocate (Junior Standing Counsel) CORAM: THE HON'BLE MR. JUSTICE ARINDAM SINHA AND THE HON'BLE MR. JUSTICE M.S. SAHOO ORDER 03.12.2024 Order No. I.A. no.30 of 2024 and ITA no.28 of 2024 01 . 1. Mr. Lal, learned advocate appears on behalf of applicant/appellant-assessee and submits, reported delay of 373 days be condoned and he be allowed to move for admission of the appeal on substantial questions of law arising from impugned order Page 2 of 5 dated 16th May, 2023 of the Tribunal. He submits, time taken between 16th August, 2023 and 26th July, 2024 be excluded as his client had applied for rectification of impugned order. As such, the delay be condoned in exercise of power under sub-section (2) in section 260-A of Income Tax Act, 1961. 2. Mr. Mohanty, learned advocate, Senior Standing Counsel appears on behalf of revenue and opposes the application. 3. We are inclined to and accept cause shown for the delay. It is condoned. The application is disposed of. 4. Mr. Lal submits, substantial questions of law arise from impugned order dated 16th May, 2023 of the Tribunal, which dealt with ITA no.66/CTK/2023 in respect of assessment year 2017- 2018. That impugned order is erroneous would be apparent from the Tribunal having referred to the sum of ₹ 28,00,000/- deposited by his client on 12th November, 2016 as unexplained investment. The Assessing Officer (AO) had made addition of the amount as unexplained money under section 69-A. Furthermore, there stood issued notification dated 8th November, 2016. Clause (iii) under paragraph-2 of the notification said, there was no limit prescribed on the quantity or value of the Specified Bank Notes (SBN) to be Page 3 of 5 credited to the account maintained with the bank by a person, except that if the account holder had not complied with Know Your Customer (KYC) norms, the limit would be ₹50,000/-. 5. He submits, substantial questions of law arisen would be whether a deposit made after said demonetization notification on 8th November, 2016, in terms of it, can be said to be a bad deposit and therefore unexplained money? Furthermore, could the deposit be treated as an investment? He submits, the appeal be admitted on questions to be formulated. 6. Mr. Mohanty opposes admission of the appeal. He submits, there is no error on fact, let alone in law as appearing or questions can be said to arise from impugned order of the Tribunal. It is a clear case where the assesse had only ₹ 252.40 shown as balance in his cash book on 8th November, 2016 but thereafter on 12th November, 2016 deposited by SBN, ₹28,00,000/-. It was unexplained money and correctly added by the AO. A mistaken reference by the Tribunal to the unexplained money as unexplained investment does not make a difference. 7. The assessment order dated 30th December, 2019 stands disclosed in the memo. Item no.7 is addition under section 69-A of Page 4 of 5 the Act on account of possessing unexplained money. The AO found copy of the cash book for financial year 2016-2017 revealed as on date of declaration of demonetization, i.e. 8th November, 2016, there was credit balance of ₹252.40. The assessee deposited a sum of ₹28,00,000/- on 12th November, 2016 in the bank using old currency denominations of ₹ 500/- and ₹ 1,000/- 8. The assessee was required to answer queries made. He furnished his compliance on 21st December, 2019 and relevant portion relating to the issue was reproduced by the AO in the order. It is extracted and reproduced below. “The assessee does not maintain the denomination of notes received or deposited. Hence, the assessee can neither confirm nor deny the denominations deposited. The deposit during demonetization would have contained old demonetized notes. The deposits during that period are made out of cash sales and realization of debtors in the regular course of the assessee's business. The assessee is in the agency-line business of FMCG goods. Despite of the huge turnover, the assessee caters to small vendors, kirana stores, Pan Dukans etc. which account for almost 90% of the assessee's turnover. To boost the business, the assessee provides the goods to the purchasers on credit basis. In regular Page 5 of 5 course, collections are made from these debtors and orders are collected. A disrupt in this flow of business would lead to losing such regular customers and ultimately creation of bad debts and doubtful bad debts” The above argumentative explanation has given by the assessee after information received from UCO Bank, Sohela Branch, under section 143(6) was provided to him. 9. In the facts found by the AO, confirmed by the First Appellate Authority and thereafter the Tribunal, there does not arise any substantial question of law for admission of the appeal. The explanation offered by assessee was no explanation at all. Nature or source of acquisition of the money not explained could only invite opinion of the AO of unexplained money. 10. The appeal does not deserve to be admitted. It is dismissed. (Arindam Sinha) Judge (M.S. Sahoo) Judge mkr/jyostna Digitally Signed Signed by: JYOSTNARANI MAJHEE Reason: Authentication Location: ORISSA HIGH COURT Date: 04-Dec-2024 11:37:33 Signature Not Verified "