USHA PATODIA,KOLKATA V. ITO, WARD - 30(1), KOLKATA

ITA 1969/KOL/2024

AI Insights

The case involves Usha Patodia, who appealed against the order of the National Faceless Appeal Centre, Delhi, which confirmed the addition of Rs. 42,00,000 to her income for the Assessment Year 2017-18. This amount represented cash deposits made during the demonetization period, which the Assessing Officer initially added as unexplained money under Section 69A of the Income Tax Act, and later taxed under Section 115BBE. The Tribunal noted that the assessee had already declared this income in her tax return and paid the applicable taxes, thus rejecting the double taxation of the same income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25208 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: Shri Dinesh Kumar Singal Vs. ITO, ITO Vs. Aakriti Jain
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEN
• Assessee Lawyers: S.M. SURANA
• Keywords: Set aside
• Section: 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.1969/KOL/2024 (Assessment Year: 2017-18) Usha Patodia 3, Tollygunge circular Road, Kolkata-700053, West Bengal Vs. ITO, Ward 30(1) Aaykar Bhavan Dakshin, 2, Gariahat Road (South) Kolkata-700031, West Bengal (Appellant) (Respondent) PAN No. AEVPP4105L Assessee by : Shri S.M. Surana, AR Revenue by : Shri Sallong Yaden, DR Date of hearing: 19.12.2024 Date of pronouncement : 08.12.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 11.09.2024 for the AY 2017-18. 02. The ground no.1 is not pressed at the time of hearing and therefore, the same is dismissed as not pressed. 03. The issue raised in ground no.2 to 4 is against the confirmation of addition by the ld. CIT(A) as made by the ld. Assessing Officer towards cash deposited during the demonetization period and also against the taxing the same u/s 115BBE of the IT Act. Page | 2 ITA No.1969/KOL/2024 Usha Patodia; A.Y. 2017-18 04. The facts in brief are that the assessee filed his return of income on 20.04.2017, declaring total income at Rs.12,80,028. The case of the assessee was selected for limited scrutiny for examination of cash deposited during demonetization period. The statutory and other notices were issued along with questionnaire which were duly served upon the assessee. The assessee replied the said notices by filing the necessary evidences besides furnishing computation of total income which showed evidenced the additional income on account of cash deposited under the head Other Sources miscellaneous. The assessee also filed cash statement with the AO. The assessee also filed before the ld. Assessing Officer copy of bank statement of corporation bank wherein Rs. 42 lacs were deposited two occasions i.e. 15.11.2015 of Rs.2 lacs and on 21.11.2016 of Rs.40 lacs. Finally, a show cause notice was issued to the assessee on 16.11.2019, giving show cause as to why Rs.42 lacs should not be treated as unexplained money and added to the income of the assessee and finally, the said cash was added to the income of the Assessee in the assessment framed by the AO. 05. In the appellate proceedings, the ld. CIT(A) dismissed the appeal of the assessee by observing and holding as under:- “4.The findings of the AO are reproduced as under:- \"In the instant case at hand, the assessee being an individual, maintaining of books ofaccounts is not mandatory and the assessee has never given a satisfactory explanation about the nature and source of acquisition of the money that has been deposited in her bank account. Hence, the reply to the show cause is not accepted Further, the assessee has not made any voluntary disclosure of the accumulated money in her hand through the PMGKY scheme or the IDS 2016. Moreover, the assessee has not denied the ownership of the cash deposited in her bank account number 005200101009327 of Corporation Bank on 15.11.2016 and 21.11.2016. In the light of the above, the total cash deposit of Rs 42,00,000/- narrated above is unexplained and hereby treated as income of the assessee for the FY 2016-17 and added back to her total income Page | 3 ITA No.1969/KOL/2024 Usha Patodia; A.Y. 2017-18 u/s 69A of the 1. Tax Act 1961 read with section 115BBE of the l. Tax Act 1961.\" 5. The ground of appeal No. 1 is general in nature and it does not require any specific adjudication. Accordingly, it is treated as dismissed. 6. The grounds of appeal No. 2 and 5 are inter-related and are in respect of addition of Rs. 42,00,000/- as income u/s 69A of the Act during the FY 2016- 17, treating them as unexplained.” 06. After hearing the rival contentions and perusing the available records we note that cash of Rs. 42 lacs were deposited in the bank account of the assessee on two dates during demonitisation. The ld. AR vehemently submitted before us that the cash deposited in the bank account of Rs.42 lacs during the demonetization period was disclosed in the return of income as miscellaneous income under the head other sources and due taxes were paid thereon. It was argued that the ld. Assessing Officer has accepted the return of income, wherein the assessee has added Rs.42 lacs towards cash deposited into bank account during demonitisation. However, the ld. Assessing Officer again added Rs.42 lacs towards the said cash deposited u/s 69A of the Act which resulted in double taxation of the same income which is not permissible under the Act and therefore, the same has to be deleted. The ld. AR in defense of his argument relied on the decisions of the co-ordinate bench in case of Shri Dinesh Kumar Singal Vs. ITO vide order dated 22.05.2023 in ITA No. 683/Chd/2022, & in case of ITO Vs. Aakriti Jain ITA No. 481/Chd/2023 vide order dated 14.06.2024 for A.Y. 2018-19, wherein it has been held that where the income has been offered in respect of cash deposited in the bank then the same cannot be added second time as it amounts to double taxation which is not permissible under the Act. Page | 4 ITA No.1969/KOL/2024 Usha Patodia; A.Y. 2017-18 07. Another contention of the assessee was that the provisions of Section 69A of the Act are not appliable to the assessee. It is only applicable when the books of accounts are maintained by the assessee in which the said money, bullion, jewelleryor other valuable article are recorded then the same is deemed to be income of the assessee during the financial year if assessee fail to offer any explanation and any satisfactory explanation, which is not in this case. Therefore, the order passed by the ld. CIT(A) may kindly be set aside and the ld. Assessing Officer is directed to delete the addition. 08. Further, the ld. DR contended d that the assessee paid the taxes on the said cash deposits but the assessee has not paid the taxes as per the provisions of Section 115BBE of the Act which provides for charging such income by way of cash deposited at a higher rate. 09. After hearing the rival contentions and perusing the materials available on record. We find that the assessee has deposited cash of Rs. 42 lacs in the bank account during the demonetization period and the same was added while filing the return of income under the head other sources and taxes were paid as applicable but not in accordance with Section 115BBE of the Act. We note that the ld. Assessing Officer has not disputed the return filed by the assessee, wherein the assessee has suomoto shown the cash deposit of Rs.42 lacs as income. However, made another addition over and above the income declared by the assessee towards cash deposited resulting into double addition of the same amount of income and also levied taxes at the rate as provided u/s 115BBE of the Act. In our opinion, the order passed by the ld. Assessing Officer and confirmed by the CIT(A) is totally wrong as the same income cannot be taxed twice. On the one hand the ld. Assessing Officer accepted the income declared by the Page | 5 ITA No.1969/KOL/2024 Usha Patodia; A.Y. 2017-18 assessee in the return of income, which included the amount of ₹42 lacs deposited as cash into the bank account of the assessee and secondly, the addition was made by way of unexplained money u/s 69A of the Act. In our opinion, the said addition is wrong and against the provisions of the Act. The case of the assessee find support of the co-ordinate bench in case of Shri Dinesh Kumar singal Vs ITO (supra) & in case of ITO Vs Aakriti Jain (supra). The operative part of the decision in ITO Vs Aakriti Jain (supra) extracted as under:- “8. We have considered the findings of the ld. CIT(A) and the arguments put forward by the ld. DR. We have also considered the different case laws brought on record by the Counsel of the Assessee 481-Chd-2023- Aakriti Jain, Ludhiana and the written submissions filed during the proceedings before us. We are of the view that the finding of the ld. CIT(A) is logical and therefore, correct to the extent that once the purchase and stock of the Assessee has been accepted, there is no reasons to deny sale out of such stock and purchase. We also find that the A.O. has not rejected the books of account of the Assessee, so, once cash purchases / sales based on vouchers had been accepted, there is no point in making addition on the deposit of such cash in the bank account, particularity on cash sales. 9. We have also heard the rival submissions of the parties and perused the material available on record. The ld. Counsel for the Assessee has explained the source of such cash deposits and it has also explained that such cash sales are subject to VAT where VAT has been collected and deposited with the Government treasury. In support of her explanation, the Assessee has furnished the documents of the relevant period of VAT returns, copy of trading and profit and loss accounts and balance sheets, which are duly audited. We find that the Assessing Officer has accepted the cash sales and the Assessing Officer has also accepted the VAT collected and deposited in the Government account. Even the Assessing Officer has accepted the VAT returns filed by the Assessee and accepted by the 481-Chd-2023- Aakriti Jain, Ludhiana Indirect Taxes Department. Therefore, it clearly shows that the Assessing Officer has not doubted the availability of cash in the hands of the Assessee. Once availability of cash in the hands of the Assessee is accepted, then deposit of such cash in bank account cannot be rejected. 10. Lastly, we find that accepting the cash sale by the Assessee offered to tax, and then addition of same cash deposited in the bank, will amount of double taxation and the same is clearly unsustainable in the law and cannot be justified. Therefore, we find that the explanation offered by the Assessee is genuine, reasonable and duly supported by the documentation, books of account and audited accounts of the Assessee. Therefore, we find no reason to disturb the findings of the ld. CIT(A). Accordingly, Departmental appeal on this issue is dismissed.” Page | 6 ITA No.1969/KOL/2024 Usha Patodia; A.Y. 2017-18 010. Since the facts before us, are very much same, we ,therefore, respectfully following the decisions of the coordinate benches , set aside the order of ld. CIT(A) and direct the ld. Assessing Officer to delete the addition. 011. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 08.01.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 08.01.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "