VED PRAKASH,REWARI V. ITO, WARD 3, REWARI

ITA 2508/DEL/2024

AI Insights

The case involves Ved Prakash, who appealed against the order of the CIT(A) confirming the addition of Rs. 8,18,000 to his income for the assessment year 2017-18. This addition was initially made by the AO, who treated the amount as unexplained money under Section 69A due to insufficient explanation of the source of cash deposits made during the demonetization period. The Tribunal, after reviewing the evidence and submissions, found that the assessee had adequately explained the source of the deposits and that the books of account maintained were not rejected or doubted by the AO. Consequently, the Tribunal deleted the addition and also addressed the applicability of Section 115BBE, clarifying that it did not apply to the transactions in question.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31674 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: SMILE Microfinance Ltd. vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR
• Assessee Lawyers: NAVEEN GUPTA; FILING BANK
• Keywords: Corroborative evidences; Income from undisclosed sources; Onus to prove
• Section: 142(1); 69A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, ITA NO. 2508/Del/2024 A.YR. : 2017-18 VED PRAKASH, S/O SHRI AMAR SINGH, H.NO. 19, VILL. DHAMLAWAS, P.O. PITHRAWAS, DISTT REWARI, REWARI, HARYANA-123401 (PAN: AYWPP8027A) VS. ITO, WARD 3, REWARI HARYANA (APPELLANT) (RESPONDENT) Appellant by : Sh. Naveen Gupta, Adv. Respondent by : Sh. Sanjay Kumar, Sr. DR. Date of hearing : 11.03.2025 Date of pronouncement : 11.03.2025 ORDER The Assessee has filed the instant Appeal against the Order of the Ld. CIT(Appeal)/NFAC, Delhi dated 31.01.2024, relating to assessment year 2017-18 on the following grounds:- 1. That the Order of the Ld. CIT(A) is against law and facts. 2. That the Ld. CIT(A) erred in dismissing the appeal of the appellant and thereby confirming the addition of Rs. 8,18,000/- made by the AO to the total income of the appellant by not accepting the source of cash deposit in the bank account during demonetization period. 3. That the Ld. CIT(A) erred in confirming the action of the AO in invoking Sec. 69A while making an addition of Rs 8,18,000/-, although the same doesn’t fall within the purview of Sec. 69A. 4. That the Ld. CIT(A) erred in confirming the action of the AO in confirming the action of the AO in invoking section 115BBE of the Act while making addition to the total income of the appellant, although the 2 | P a g e addition made does not fall within the purview of section 115BBE. 2. The brief facts of the case are that as per the information available with the department, the assessee had deposited cash of Rs. 18,85,500/- in his bank accounts with Oriental Bank of Commerce during the demonetization period. AO found that no return of income was filed by the assessee for the assessment year 2017-18 and thereafter issued notice under section 142(1) of the Income Tax Act on 25/01/2018 requiring the assessee to file his return of income. In the absence of any response to the above and further notices issued, the AO issued a show cause notice on 19/09/2019 proposing to make an addition of Rs.41,22,000/- being the cumulative cash deposit in the bank accounts. In response to the show cause notice, the assesse filed his reply stating he was engaged in the business of retail trade of agricultural seeds and fertilizers in the name of M/s. Amar Khad Beej Bhandar at village Mokalwas, Gurgaon and the appellant explained the cash deposits as made out of the cash in hand, bank withdrawals and sales made. The assessee had deposited total cash of Rs. 18,85,000/- post demonetization (from 09.11.2016 to 31.12.2016) out of which Rs. 4,67,500/- were deposited in new currency notes. Further benefit of Rs. 1,00,000/- was given to the assessee on account of sale proceeds available with him as cash in hand. Moreover, the assessee had withdrawn the amount of Rs. 5,00,000/- on 26.10.2016 from account number 10575944905 maintained with State Bank of India. Corroborative evidences were produced which were verified and placed on record. After verification, further benefit of Rs. 5,00,000/- on account of cash withdrawn was given to the assessee. In view of the same, AO noted that no satisfactory explanation in respect of the cash deposits of Rs. 8,18,000/- was given by the assessee. Therefore, he treated the cash deposit of Rs. 8,18,000/- (Rs. 14,18,000 - 3 | P a g e Rs. 1,00,000 - Rs. 5,00,000) as unexplained money u/s 69A of the Income Tax Act, 1961 for the previous year 2016-17 relevant to A. Y. 2017-18 which will be charged to tax as per the provisions of section 115BBE of the Income Tax Act, 1961. Against the aforesaid action of the AO, assessee appealed before the Ld. CIT(A) who vide his impugned order dated 31.01.2024 affirmed the action of the AO and dismissed all the grounds raised by the assessee. 3. Against the aforesaid order, Assessee is in appeal before us. 4. I have heard the rival contentions and perused the records. At the time of hearing, Ld. Counsel for the assessee submitted that assessee is running a shop of trading in Fertilizer, Seeds and Pesticides under the Name and Style of M/s Amar Khad Bhandar at village Mokhalwas, Distt. Gurgaon. During the year, assessee had deposited Rs. 18,85,500/- in cash in his bank accounts during demonetization period. Out of it, AO accepted the source of Rs. 10,67,500/- and added the remaining amount of Rs. 8,18,000/- to the total income of the assessee by treating this amount as unexplained income u/s 69A of the Act. He further submitted that most of sales of the assessee are in cash and assessee maintains regular books of account including cash book, ledger, purchase bills, sales bills, stock register etc. and complete books of account were duly submitted before the AO, who noted that the books of account and other documentary evidences submitted by the assessee were perused and verified which was never rejected and / or doubted by the AO, hence, addition on this account needs to be deleted, due to availability of sale of stock in the books of account of the assessee. It was the further contention that assessee by filing bank statements, final accounts, sale bill and books of accounts etc. before the AO, 4 | P a g e discharged his initial burden to prove, but the department has failed to prove that the cash deposits was not genuine and the same were out of unaccounted income of the assessee. It was further submitted by the Ld. AR that Section 69A could only be invoked where the alleged transaction is found not recorded in the books of account, whereas in the instant case the transaction was duly recorded in books of account and the same were filed before the AO, hence, section 69A is not applicable in the present case, therefore, the addition confirmed on this account deserve to be deleted. Further, it was submitted that AO made the addition in dispute as unexplained money u/s. 69A and also held that the tax will be charged on the assessed income as per provisions of Section 115BBE, which does not fall within the purview of Section 115BBE. 5. Per contra, Ld. DR relied upon the orders of the authorities below. 6. Upon careful consideration, I find that assessee had deposited Rs. 18,85,500/- in cash in his bank accounts during demonetization period. Out of it, AO accepted the source of Rs. 10,67,500/- and added the remaining amount of Rs. 8,18,000/- to the total income of the assessee by treating this amount as unexplained income u/s 69A of the Act. It is further observed that that most of sales of the assessee are in cash and assessee maintains regular books of account including cash book, ledger, purchase bills, sales bills, stock register etc. and complete books of account were duly submitted before the AO who has observed that the books of account and other documentary evidences submitted by the assessee were perused and verified, which were never doubted nor rejected by the AO. In view of the aforesaid peculiar facts and circumstances of the case, I am of the considered view that addition in dispute confirmed by the Ld. CIT(A) deserve to be deleted. I hold and direct 5 | P a g e accordingly. So far as assessee’s assessment u/s. 115 BBE of the Act is concerned, Hon’ble Madras High Court in SMILE Microfinance Ltd. vs. ACIT in WP(MD) no. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.) has already settled the issue against the department that the law applies to the transaction on or after 01.04.2017 only. Ordered accordingly. 7. In the result, the Assessee’s appeal is allowed in the aforesaid manner. Order pronounced in the Open Court on 11/03/2025. Sd/- (SHAMIM YAHYA) ACCOUNTANT MEMBER SRBHATNAGAR Copy forwarded to:- 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar "