SHASHI KANT,PAN DARIBA V. ITO-1(3), VARANASI

ITA 51/VNS/2024

AI Insights

The case involves Shashi Kant, a dealer of Pan Masala and Jarda products, who appealed against an order by the National Faceless Assessment Centre (NFAC), Delhi, which added Rs.19,50,000 to his income for the Assessment Year 2017-18 under section 68 of the Income Tax Act. This addition was based on cash deposits made during the demonetization period in India. The Income Tax Officer (ITO) accepted some of the deposits but questioned others, leading to the addition. The Tribunal, after reviewing the submissions and evidence, including the assessee's audited accounts and sales tax returns, concluded that the deposits were from legitimate business sales and thus should not be added as unexplained income.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26035 (ITAT-VARANASI)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Next Hearing Date: 11-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 06-04-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA MEENA
• Assessee Lawyers: SHISHIR BAJPAI
• Section: 144

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, CIRCUIT BENCH, VARANASI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA No.51/VNS/2024 (Assessment Year :2017-18) Shashi Kant PAN DARIBA C-4/255, Nayapan Dariba Uttar Pradesh- 221 001 Vs. ITO-1(3), Varanasi PAN/GIR No. (Appellant) .. (Respondent) Assessee by Shri Shishir Bajpai, CA Revenue by Smt Kavita Meena, Sr. DR Date of Hearing 11/09/2024 Date of Pronouncement 29/11/2024 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 09/02/2024 passed by NFAC Delhi for the quantum of the assessment passed u/s 144 for the Assessment Year 2017-18. 2. In the grounds of appeal assessee is aggrieved by addition of Rs.19,50,000/- made u/s.68 in respect of deposit in bank against sale proceeds and also invoking of provision u/s.115BBE. ITA No.51/VNS/2024 Shashi Kant 2 3. The brief facts are that assessee is a dealer of Pan Masala and Jarda products and has been carrying out this business for the last several years. During the period of demonetization i.e. 09/01/2016 to 30/12/2016, assessee had deposited Rs. 31,50,000/- in SBN in his bank account with banks, Corporation Bank and Indus Ind Bank. The ld. AO out of such cash deposits has made additions of Rs.19,50,000/- which was made in Indus Ind Bank and the cash deposit of Rs.12,00,000/- in the Corporation Bank has been accepted by him. The ld. CIT (A) has confirmed the said addition in his exparte order. 4. After hearing both the parties and on perusal of the records it is seen that from the period 09/01/2016 to 30/01/2016 assessee had deposited Rs. 94,15,000/- out of which Rs.31,50,000/- was SBN / demonetized note and Rs.61,65,000/- were in new currency notes. The assessee had stated that from April 2016 to 31/03/2017 assessee had shown total purchases of Rs. 6,95,34,937/- and had shown gross sales of Rs.5,16,55,041/-. The details of cash sales and purchases were as under:- - The month wise purchase during the year has been as under:- PURCHASES MONTH AMOUNT APRIL 3879933 MAY 3370209 JUNE 3057500 JULY 4637116 ITA No.51/VNS/2024 Shashi Kant 3 AUGUST 2530115 SEPTEMBER 918958 OCTOBER 1759342 NOVEMBER 5540264 DECEMBER 7937987 JANUARY 7733708 FEBRUARY 3637150 MARCH 24532655 TOTAL 69534937 -During the year gross sales and cash sales were as under: MONTH GROSS SALE (a) CASH SALES INCLUDED IN (a) APRIL 0 6500883 MAY 0 4892893 JUNE 0 3442257 JULY 0 2506434 AUGUST 0 1737386 SEPTEMBER 0 2228839 OCTOBER 0 4588230 NOVEMBER 0 2718456 ITA No.51/VNS/2024 Shashi Kant 4 DECEMBER 0 4238160 JANUARY 0 5830712 FEBRUARY 0 4276116 MARCH 0 8694675 TOTAL 51655041 5. It has been submitted that assessee had been maintaining regular books of accounts and also all the accounts were audited and assessee had also filed Sales Tax returns both for the F.Y. 2015-16 and 2017-18 to show that all the sales were in cash all the cash deposits made in the bank account were out of sales only. The assessee has also filed copy of sales registers which was uploaded before the ld. AO vide submission dated 07/12/2022. Once the trading results and sales have been accepted by the AO, then treating the cash sales deposited in the bank account cannot be added u/s.68. 6. From the perusal of the facts and material brought on record, documents submitted in the paper book, it is seen that assessee had been regularly showing cash sales of Pan Masala and Jarda products in Varanasi and adjacent rural areas. As noted above, the cash sales are being regularly deposited in the bank account. Assessee during the demonization period and prior and after demonization period has been depositing cash out of sales which has been accepted. Once assessee has disclosed cash sales and has been maintain regular books of account and ITA No.51/VNS/2024 Shashi Kant 5 cash book, then source of cash deposits are from business of the assessee which has been duly disclosed. Even the Ld. AO has accepted most the cash deposits during demonetisation Therefore, to treat part of the sales as unexplained cash deposits to be added u/s.68 is not justified. Accordingly, I held that the cash deposits are out of cash sales duly disclosed and therefore, same cannot be added u/s.68 and hence, consequently addition made by the ld. AO is deleted. 7. In the result, appeal of the assessee is allowed. Order pronounced on 29/11/2024. Sd/- (AMIT SHUKLA) JUDICIAL MEMBER Varanasi; Dated 29/11/2024 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// "