Case Law Details
Anaveer Proprietor Vs ITO (ITAT Bangalore)
In Anaveer Proprietor Vs ITO, the Income Tax Appellate Tribunal (ITAT) in Bangalore has restored the matter to reconsider the source of the cash deposits made during the demonetization period, in relation to the sales proceeds from LPG cylinders.
This case presents an intriguing scenario where demonetization and tax laws intersect. The appellant, Anaveer, a gas agency proprietor, had deposited a significant sum in the bank during the demonetization period in India. However, they failed to explain the source of the cash, leading to the assumption that it was an unexplained deposit under Section 69A of the Act.
The main point of contention revolves around the failure to link the sales of LPG cylinders with the cash deposits made during the demonetization period. Despite RBI notifications allowing the acceptance of demonetized notes for such transactions, the appellant has not been able to prove this linkage, leading to the restoration of the matter for reexamination.
Interestingly, an additional argument was raised about the non-inclusion of a Document Identification Number (DIN) in the original assessment order, aligning with CBDT Circular No. 19/2019. This argument, however, was left open as the case has been restored based on its merits.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal at the instance of the assessee is directed against order of CIT(A), dated 31.01.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18. The grounds raised read as follows:
1. The CIT Appeals was not right in passing the order u/s 250 of the Income Tax.
2. The CIT Appeal was not right that the appellant has not proved the transaction in the demonetization
3. The CIT Appeal was not right in not considering the RBI notification, dated : 9/11/2016 (i.e notification No. S.0.3416(E), further RBI extended the SBN dated to 15/12/2016 by passing further notification No. SO 3544(E) dated: 24/11/2016.
4. The CIT Appeals was not right in confirming the order passed u/s 144 R/w 142 (1) of IT Act.
2. Assessee has also raised additional grounds vide his application dated 16.06.2023. The additional grounds raised read as follows:
1. The Ld. CIT(A) as well as the authorities below failed to appreciate that the Assessment Order dt. 24/12/2019 passed under section 144 r.w.s 142(1) of the Act was invalid, since the “Document Identification Number”(DIN) was not mentioned in the said Order, in light of the CBDT Circular No. 19/2019 dated 14th August 2019.
2. It is submitted that, the ld. CIT (A) as well as the authorities below failed to appreciate that, the defect of not mentioning the DIN in the Impugned Assessment order could not be rectified/cured by issuing a separate communication stating the ‘DIN’ of the impugned assessment order.
3. Brief facts of the case are as follows:
Assessee is a proprietor of a gas agency. During the demonetization period, assessee had deposited a sum of Rs.13,85,000/- in Pragati Krishna Gramin Bank, Gulbarga. For the relevant Assessment Year, the assessee had failed to furnish the return of income within the stipulated time as per notice dated 14.03.2018 under section 142(1) of the Act. In the absence of any evidence / explanation for the source of cash deposit, the AO completed the assessment under section 144 r.w.s. 142(1) of the Act, by treating the entire cash deposit of Rs.13,85,000/- as unexplained cash deposit under section 69A of the Act.
4. Aggrieved by the Order of the Assessment, assessee preferred an appeal before the First Appellate Authority. The CIT(A), after taking note of the total sales for the relevant Financial Year, held that the average monthly sales is only Rs.5,06,578/- and cash deposit during the demonetization period amounting to Rs.13,85,000/- was very high. Further, the CIT(A) was of the view that it is not clear whether Rs.500/- denomination notes only have been accepted by the assessee. The CIT(A) concluded that assessee has failed to discharge his onus in explaining the source of cash deposit. However, the CIT(A) gave the benefit of Rs.3.5 lakhs as deduction on estimate basis as source for the above-mentioned cash deposit. Consequently, an amount of Rs.10,35,000/- was confirmed by the CIT(A).
5. Aggrieved by the order of the CIT(A), assessee has filed the present appeal before the Tribunal. The learned AR reiterated the submissions made before the CIT(A). The Standing Counsel submitted that the assessee has not furnished necessary evidence as regards the source of cash deposit. Further, it was submitted that no evidence was produced to link the sales of LPG Cylinders with cash deposits, either before the AO or the CIT(A). Therefore, the learned Standing Counsel submitted that the appeal of the assessee needs to be rejected.
6. I have heard the rival submissions and perused the material on record. The assessee, being a dealer in LPG cylinders, was allowed to accept the demonetized notes of Rs.500/- by virtue of RBI Notification No. S.O. 3416(E) [F.No.10/03/2016-CY.I] dated 09.11.2016. However, the assessee, neither before the AO nor the CIT(A), has been able to explain the source of cash deposited with the sale proceeds of LPG cylinders. In the interest of justice and equity, I am of the view that one more opportunity should be granted to the assessee to prove the source of cash deposits. Hence, the matter is restored to the AO for denovo consideration. The AO shall afford a reasonable opportunity to the assessee to furnish his written submissions and shall take on record the evidences furnished by the assessee before a decision is taken in the matter. The assessee shall cooperate with the AO and shall not seek unnecessary adjournment.
7. As regards the additional grounds raised, we leave open the issue since the matter has been decided on merits.
8. In the result, appeal filed by the assessee is allowed for statistical purposes.
