SHAHID AKHATAR,GORAKHPUR V. INCOME TAX OFFICER, WARD - 2(2), GORAKHPUR

ITA 5/VNS/2024

AI Insights

The case involves Shahid Akhatar, who appealed against the order of the National Faceless Assessment Centre (NFAC), which had added Rs. 55,39,400 to his income for the Assessment Year 2017-18, citing that these were deposits of old denomination notes (SBN) during the demonetization period. The Income Tax Officer (ITO) and the Commissioner of Income Tax (Appeals) (CIT(A)) had confirmed this addition, stating that the assessee did not fall into the category of businesses allowed to deposit such notes. However, the Tribunal found that the assessee had a legitimate source for these deposits, being the cash sales from his wholesale fruit business, which were regularly recorded and deposited in the bank.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26039 (ITAT-VARANASI)
• Duration Of Justice: 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 12-01-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA MEENA
• Assessee Lawyers: SUBHASH CHA ND
• Keywords: Condonation of delay
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, CIRCUIT BENCH, VARANASI BEFORE: SHRI B. R. BASKARAN, ACCOUNTANT MEMBER & SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA No. 5/VNS/2024 (Assessment Year :2017-18) Shahid Akhatar Goraknath, Rasoolpur, Gorakhpur – 273001 Uttar Pradesh Vs. Income Tax Officer Ward 2-(2), Gorakhpur Aayakar Bhavan, Civil Lines, Gorakhpur – 273001. PAN/GIR No. AAVPA8139R (Appellant) .. (Respondent) Assessee by Shri. Subhash Chand, Adv. Revenue by Smt. Kavita Meena, Sr. DR Date of Hearing 13/09/2024 Date of Pronouncement 02/12/2024 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 02/11/2023 passed by NFAC Delhi for the quantum of the assessment passed u/s 143(3) for the Assessment Year 2017-18. 2. At the outset, the appeal of the assessee is slightly delayed for which petition for condonation of delay has been given stating that due date of submitting the appeal was 01/01/2024 and since assessee was suffering from medical emergency and was ITA No.5/VNS/2024 Shahid Akhtar 2 advised to take bed rest for which medical certificate has been given and appeal was filed on 12/01/2024. Since there is a marginal delay of 11 days, the same is condoned. 3. In the grounds of appeal assessee has challenged the cash deposits of Rs.55,39,400/- in the bank account in old denomination i.e. SBN notes. The ld. AO noted that assessee deposited cash of Rs.1,14,77,450/- in his bank account maintained with PNB during demonetization period out of which amount of Rs.55,39,000/- was in SBN notes. Accordingly, same has been added. The ld. CIT (A) too has confirmed the said order despite noting the fact that assessee had shown sale proceeds and which was the business of the assessee for the last several years however, he referred to the RBI guidelines issued after demonetization that only few institutions and notified categories were allowed to take demonetize notes and assessee does not fall in the notified category by the RBI. 4. After hearing both the parties and on perusal of the relevant documents given in the impugned order, it is seen that the reasons given by the ld. CIT (A) to confirm the addition is completely baseless and without any logic. What was required to be seen is whether assessee had any source of income or cash which can explain the source of deposits in the bank account. It has been stated that assessee was carrying out whole sale business of sale of fruits and has been regularly filing audited accounts and income tax return and the turnover as on 31/03/2017 was Rs.4,41,71,190/-. The entire sales have been in ITA No.5/VNS/2024 Shahid Akhtar 3 cash for which assessee has been maintaining regular cash books which has been placed in the paper book before us also. The ld. Counsel has also filed audited balance sheet and trading and profit and loss account for A.Y.2016-17, 2017-18 and 2018- 19 to show that assessee has been showing sales in cash and also maintaining detailed cash book wherein the cash sales have been regularly deposited in the bank account. Before the ld. AO, it was stated that as on 08/11/2016 there was a cash in hand in the book of Rs.32,09,588/- and assessee had deposited Rs.31,75,000 on 08/11/2016 which was the date on which demonetization was announced by the Government. The only reason cited by the ld. AO that, in so far as old currencies which were legal notes same are explained but SBN notes are to be confirmed. What was required to be seen was, whether assessee has the availability of cash in the books and also whether assessee’s sales are matching with the deposits in the bank account. During the period of 09/11/2016 to 31/12/2016, assessee had filed details of sales and it is seen that there was a total sales of Rs.41,72,724/- between 09/11/2016 to 31/12/2016. This also matches with the cash book which has been filed before us. Accordingly, the source of cash deposits is from the sales only. The reasons given by the ld. AO that, since the cash was deposited in SBN, therefore, the same should be added and ld. CIT (A) has given the reason that assessee’s business does not come into category notified by the RBI to accept demonetize notes therefore, benefit cannot be given cannot be accepted. What was required to be seen whether ITA No.5/VNS/2024 Shahid Akhtar 4 assessee had source for cash deposit or not? Because Government of India has given a time limit for depositing SBN notes till 31/12/2016 and once the source of cash are from the business duly recorded in the books and deposited during this period, the cash deposited cannot be treated as unexplained. Accordingly, addition made by the ld. AO is deleted. 5. In the result, appeal of the assessee is allowed. Order pronounced on 02/12/2024. Sd/- (B.R. BASKARAN) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Varanasi; Dated 02/12/2024 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Asstt.Registrar) ITAT, Varanasi 1. The Appellant 2. The Respondent. 3. The CIT(A), Varanasi. 4. CIT 5. DR, ITAT, Varanasi 6. Guard file. //True Copy// ITA No.5/VNS/2024 Shahid Akhtar 5 "