RAJESH KUMAR GUPTA,SHIVPURI V. INCOME TAX OFFICER SHIVPURI, SHIVPURI

ITA 143/AGR/2025

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The case involves Rajesh Kumar Gupta, an individual engaged in the business of selling prepaid recharge vouchers, who was assessed for income tax for the year 2017-18. The Income Tax Officer (ITO) scrutinized Gupta's finances after noting deposits of Specified Bank Notes (SBN) amounting to Rs. 4,98,500 during the demonetization period in India. Gupta did not file a return as his income was below the taxable limit, but the ITO added the deposited amount as unexplained income under section 69A of the Income Tax Act, 1961. Gupta's appeal to the CIT(A) was dismissed, leading to the current appeal before the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669085 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: CIT v. Kailash Jewellery House
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA.
• Assessee Lawyers: RAJENDRA SHARMA
• Keywords: Set aside
• Section: 144

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH ‘SMC’: AGRA BEFORE SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.143/AGR/2025 (ASSESSMENT YEAR: 2017-18) Rajesh Kumar Gupta, Raj Communication, New Colony, Bairad, Shivpuri-473793. Madhaya Pradesh PAN-AIEPG5553E Vs. Income Tax Officer, Shivpuri. (Appellant) (Respondent) Assessee by Shri Rajendra Sharma, Adv. and Shir Manuj Sharma Department by Shri Shailendra Srivastava. Sr. DR Date of Hearing 22/05/2025 Date of Pronouncement 24/06/2025 O R D E R [ PER MANISH AGARWAL, AM: This appeal is filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (‘the Act’, in short) by the ld. Addl./ Joint Commissioner of Income Tax (Appeals)-1, Mumbai (‘Ld. CITA’ in short) dated 11.02.2025 in Appeal No. CIT(A), Gwalior/10531/2019-20 for Assessment Year 2017-18. 2. Brief facts of the case are that the assessee is an individual and engaged in the business of prepaid recharge vouchers of Bharti Airtel 2 ITA No.143 /Agr/2025 Rajesh Kumar Gupta vs. PCIT Ltd. as distributors. The income of the assessee was of Rs. 2,12,718/- which was below the maximum amount not chargeable to tax therefore, no return of income was filed by the assessee for the impugned assessment year. The AO had information that assessee had deposited Specified Bank Notes (SBN) intro bank during the period of demonetization of Rs. 4,98,500/- and no return of income was filed therefore, the case of the assessee was taken for scrutiny. After considering the submissions, assessment was completed vide order passed u/s 144 of the Act dt. 22.12.2019 at a total income of Rs.7,10,718/- by making addition of Rs. 4,98,500/- u/s 69A towards the SBN deposited during the demonetization holding the same as unexplained. 3. Against the said order assessee preferred appeal before the ld. CIT(A) who vide impugned order dt. 11.02.2025 dismissed the appeal of the assessee. 4. Aggrieved by the said order of ld. CIT(A), assessee filed present appeal before the Tribunal on the strength of following grounds of appeal: “1. That the appellate order passed u/s 250 dt. 11.02.2025 is not in accordance with the provisions of section 250(6) of Income Tax Act. The appellate order passed u/s 258 is liable to be set aside. 2. That while passing the appellate order, the NFAC has completely ignored that provisions of section 69A are not attracted in the case of assessee. The AO has wrongly invoked the provisions of section 69A of Income tax Act, the addition made on this score is liable to be deleted. 3. That while sustaining the addition as made by the AO, the NFAC has completely ignored that the deposits with bank are not the income, so as to attract the provisions of section 69A of Income tax 3 ITA No.143 /Agr/2025 Rajesh Kumar Gupta vs. PCIT Act, addition made, invoking the provisions of section 69A are highly unjustified, no addition is liable to be made, addition made by the AO, sustained by CIT Appeal is liable to be deleted. 4. That while sustaining the addition, as made by the AO, the NFAC has completely ignored that the deposits with bank are fully explained with reference to the explanations furnished by the assessee before the AO, taking into consideration, the explanations furnished, no addition is liable to be made, addition made by the AO, sustained by CIT Appeal is liable to be deleted. 5. That the appellate order dt. 11.02.2025 is bad in law, liable to be set aside.” 5. All the grounds of appeal are related to the addition of Rs. 4,98,500/- made u/s 69A by treating the cash deposited during demonetization period in SBN as unexplained u/s 69A of the Act thus the same are taken together for adjudication. 6. Before us, the Ld. AR of the assessee submitted that during the year under appeal, assessee was trading in recharge vouchers of Bharti Airtel and since the total income was below the maximum amount not chargeable to tax, no return of income filed. Regarding the source of cash deposited in SBN during the demonetization period, it is explained that the same is out of past savings and receipts from the customers against the sale of recharge vouchers. He further submitted that while dismissing the appeal of the assessee, ld. CIT(A) has observed that income of the assessee was low which might be used for household expenses and thus it is not possible to have such cash for making deposit in bank. In this context Ld. AR submitted that though the assessee has not maintained any regular books of accounts however, had prepared and filed the statement of affairs for the year ended on 31.3.2014, 3.3.2015 and 4 ITA No.143 /Agr/2025 Rajesh Kumar Gupta vs. PCIT 31.3.2016 according to which, as against the total capital of Rs. 8,51,234/-, assessee was having cash in hand of Rs. 5,31,385/- as at 31.3.2013 which was accumulated over the period and was available with the assessee when the demonetization was announced on 08.11.2016. It was submitted that the ld. CIT(A) without pointing out any defect in the same has rejected the plea of the assessee in absence of any corroborative evidence. It is further submitted by ld.AR that provisions of section 69A are also not applicable to the present case as bank deposit cannot be treated as money, bullion or jewellery or any valuable article or thing for the invocation of section 69A of the Act. In view of the above submission, it is prayed by ld. AR that the addition made on account of cash deposit in SBN deserves to be deleted. 7. Per contra, ld. Sr. DR vehemently supported the order of lower authorities and stated that assessee has made cash deposit during demonetization in SBN and claimed the said as deposited out of past savings without any evidence to support the claim. He thus prayed for the confirmation of the additions made by the lower authorities. 8. We have heard the rival submissions and perused the materials available on record. In the instant case, though the assessee has not filed the return of income for the year under appeal, however, was engaged in the business of recharge vouchers of Bharti Airtel and having regular source of income from such business. The major amount of the cash deposited in SBN was utilized in making payment to the Bharti Airtel for purchases of recharge vouchers, which fact 5 ITA No.143 /Agr/2025 Rajesh Kumar Gupta vs. PCIT remained uncontroverted. Assessee has deposited SBN during the demonetization out of the cash available as on the closing hours of 08.11.2016 i.e. the date when the demonetization was announced by the Hon’ble prime minister and was the last day upto which the SBN could be accepted as valid currency. The assessee has also filed statements of affairs for the preceding years wherein the cash in hand of more than Rs. 5.00 lacs was shown. Though the assessee was not required to maintain books of accounts as per section 44AA(2) but can prepare a statement of affairs for justifying his closing cash balance at the end of year. In preceding assessment years return of income were also filed and refunds were claimed. It is also a matter of common knowledge that in the business of recharge vouchers most of the sale is in cash and assessee used to deposit cash in bank to make the payment to the company for purchases of recharge vouchers. Under these circumstances, availability of cash amount of 4,98,500/- with the assessee as on the date of announcement of demonetization cannot be ruled out. 9. The Hon’ble Delhi High court in the case of CIT v. Kailash Jewellery House in ITA No. 613/2010 (Delhi High Court) has held as under: “In the facts of above case cash of Rs.24,58,400/- was deposited in bank account. The Assessing Officer made the addition on the ground that nexus of such deposit was not establish with any source of income. The assessee claimed that it was duly recorded in the books on account of cash sales and was considered in the Profit and Loss Account. The Assessing Officer had verified the stock and cash position as per books and had accepted the same. Complete books of account and cash book was submitted to the Assessing Officer and no discrepancy was pointed out. On this basis CIT(A) deleted the addition. Tribunal also observed that it is not in dispute that sum of 6 ITA No.143 /Agr/2025 Rajesh Kumar Gupta vs. PCIT Rs.24,58,400/- was credited in the sale account and had been duly included in the profit disclosed by the assessee in its return. Therefore, cash sales could not be treated as undisclosed income and no addition could be made once again in respect of the same. The Hon’ble High Court dismissed the appeal filed by the Department.” 10. In view of the above discussion and facts of the case and further by respectfully following the ratio laid down Hon’ble high court, we hereby delete the addition of Rs. 4,98,500/- made u/s 69A of the Act towards cash deposited in the bank account during demonetization period. Accordingly, all the grounds taken by the assessee are allowed. 11. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court /06/2025. Sd/- Sd/- (SUNIL KUMAR SINGH) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: .06.2025 PK/Sr. Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR 7 ITA No.143 /Agr/2025 Rajesh Kumar Gupta vs. PCIT Sr. No. Particulars Date 1 Date of dictation of Tribunal Order Direct type 03/06/2025 2 Date on which the typed draft Tribunal Order is placed before the Dictation Member 04/06/2-25 3 Date on which the typed draft Tribunal Order is placed before the other Member 4 Date on which the approved draft Tribunal Order comes to the Sr. P.S. /P.S. 5 Date on which the fair Tribunal Order is placed before the Dictating Member for pronouncement 6 Date on which the signed order comes back to the Sr. P.S. /P.S 7 Date on which the final Tribunal Order is uploaded by the Sr. P.S. /P.S. on official website 8 Date on which the file goes to the Bench Clerk along with Tribunal Order 9 Date of killing off the disposed of files on the judiSIS portal of ITAT by the Bench Clerks 10 Date on which the file goes to the Supervisor (Judicial) 11 Date on which the file goes for Xerox 12 Date on which the file goes for endorsement 13 Date on which the file goes to the superintendent for checking 14 The date on which the file goes to the Assistant Registrar for signature on the tribunal order 15 Date on which the file goes to dispatch section 16 Date of Dispatch of the Order "