Case Law Details
Jagdish Prasad Vs ITO (ITAT Lucknow)
In the matter abovementioned ITAT deleted additions u/s 69A made on account of cash deposit during demonetization after considering the bank certificate which show actual amount of cash deposit.
Assessment was completed at Rs.8,79,916/- by making an addition of Rs. Rs.5,39,500/- u/s 69A on the ground that the aforesaid amount was deposited by the assessee during demonetization period. First appeal was dismissed by Addl/JCIT(A).
Before ITAT it was submitted on behalf of assessee that assessee submitted that amount of Rs.39,500/- was deposited only. which was available as cash in hand out of assessee’s business of sale of electrical and electronics goods. Out of Rs.5,39,500/-, i.e. Rs.5,00,000/- was deposited out of the assessee’s turnover of Rs.42,55,200/- which has been duly shown u/s 44AD in the ITR. Bank certificate was produced which show that cash amounting to Rs. 39,500/- deposit in demonetized currency. On the other hand, revenue relied on order passed by CIT(A) & AO.
After considering the submission of both the parties ITAT observed that assessee has shown turnover of Rs.42,55,200/- u/s 44AD and has shown income of Rs.3,22,850/- in the ITR. Addition made by AO is based only on doubt, surmises and guess work. As the assessee has opted for presumptive taxation u/s 44AD, assessee is not required to maintain regular books of account. The certificate issued by bank to the effect that only Rs.39,500/- was deposited by the assessee which was ignored by CIT (A). The mere fact that part of turnover was deposited in cash should not weigh so heavily in the minds of the authorities that it ignores material evidence placed before the authorities.
Finally, appeal filed by assessee is allowed.
FULL TEXT OF THE ORDER OF ITAT LUCKNOW
(A) This appeal vide I.T.A. No.255/Lkw/2024 has been filed by the assessee for assessment year 2017-18 against impugned appellate order dated 28/02/2024 (DIN & Order No. ITBA/APL/S/250/2023- 24/1061689837(1) passed by Addl/JCIT (Appeals). In this appeal the assessee has raised the following grounds:
“1. The Ld. CIT(A) NFAC erred on facts and in law in confirming the impugned addition of Rs.5,39,500/- made u/s 69A being cash deposited during demonetization period in demonetized currency without considering that during demonetization period an amount of Rs.39,500/- only has been deposited in demonetized currency and the rest cash was deposited in other than demonetized currency out of cash available from sale of electrical goods income from which was offered u/s 44AD of I.T. Act.
2. That the authorities below further erred in not considering that the cash of Rs.39,50O/- only was deposited in demonetized currency which was available as cash in hand out of sale of electrical and electronic goods from the firm M/S Bharat Electricals and the turnover of Rs.42,55,200/- has been duly show u/s 44AD of I.T. Act in the ITR Filed u/s 139 of I.T. Act.
3. The Ld. C.I.T. (Appeals) failed to appreciate that Assessee has offered income on presumptive basis u/s 44AD being Gross Receiving Rs.42,55,200/- and has shown Income Rs.3,40,416/-which has accepted by Ld. A.O. However, Ld. A.O. again made the addition of Rs.5,39,500/- u/s 69A r. w. s. 115 BBE of I.T. Act being cash deposited during demonetization period without appreciating that Cash was deposited out of business receiving from sale of electrical goods. Thus, no addition can be made in the present sets of facts and circumstances.
4. That the authorities below further erred on facts and in law in not considering that the Assessee has duly furnished the bank certificate and the VAT Assessment order in support of the business receipts and the bank certificate duly confirms that cash of Rs.39,500/- only was deposited during demonetization period.
5. That the authorities below erred on facts and in law in not considering that when the receipts have been accepted to be business receipts and profit on presumptive basis have already been declared out of those receipts, then cash deposited in bank against such business receipts cannot be regarded as unexplained money u/s 69A of I.T Act
6. That the present additions are highly excessive contrary to facts, law and without affording proper opportunity to have its say on the reasons relied upon by the AO.”
(A.1) In this case assessment order dated 06/12/2019 u/s 143(3) of the I.T. Act was passed wherein the assessee’s total income was assessed at Rs.8,79,916/-. In the aforesaid assessment order an addition of Rs.5,39,500/- was made by the Assessing Officer u/s 69A of the I. T. Act on the ground that the aforesaid amount was deposited by the assessee in demonetized currency during demonetization period. The assessee’s appeal against the aforesaid addition of Rs.5,39,500/- was dismissed by the learned Addl/JCIT(A) vide impugned appellate order dated 28/02/2024. The present appeal has been filed by the assessee against the aforesaid impugned appellate order dated 28/02/2024.
(B) In the course of appellate proceedings before the Income Tax Appellate Tribunal, brief facts were filed from the assessee’s side; which are reproduced below for the ease of reference:
753020110000381 with Bank of India, Chinhat Branch, Lucknow. Copy of Same is at page 5 in Paper Index before CIT (A). On perusal of the same it is evident that from 23.11.2016 to 29.12.2016, assessee has deposited in piece meals being Sale Proceeds of Electrical Goods in New Currency which is received out of sale on day to day basis. The funds so deposited in Bank Account were used for the purchase of Electrical goods through Cheque.
Assessee also submitted following documents before CIT (A)
i. Bank Certificate which is at page -5 of paper index .
ii. VAT Order of F. Y. -2016-17 which is at page 6 of Paper Index.
iii. List of Tax Invoices of Purchases and copy of Purchase Invoices and Proof of Registration with VAT Authorities which are at page 7 to 18 of the Paper Index.
iv. Copy of Bank Statement of Bank of India, Chinhat Branch, Lucknow, Account No. 753020110000381, which is at page 24 to 35 of Paper Index.
It is prayed that once the Sales of Rs. 42,55,200/- has been accepted and Income as per 44AD Rs.3,40,416/- has been assessed by Ld. A. 0., no separate addition for Cash Deposit of Rs. 5,39,500/- in bank account during demonetization period should be made u/s 69A of I. T. Act r. w. s. 115BBE of I. T. Act as Assessee has deposited only Rs. 39,500/– in old currency on 12.11.2016 being Cash in hand as on date of demonetization and rest deposit of Rs. 5,00,000/- in new currency from 23.11.2016 to 29.12.2016 which is verifiable from the bank Certificate. Same is reproduced here under :-
Accordingly, it is prayed that once the Turnover of Rs. 42,55,200/- and Income of Rs. 3,40,416/- has been assessed u/s 44AD of I. T Act by Ld.
(B.1) Further, paper book containing the following particulars was filed from the assessee’s side during appellate proceedings before the Income Tax Appellate Tribunal:
(C) At the time of hearing, learned A.R. for the assessee submitted that only an amount of Rs.39,500/- was deposited by the assessee in demonetized currency during demonetization period; and the Assessing Officer grossly erred in treating the entire amount of Rs.5,39,500/- being deposited in demonetized currency. Learned A.R. further submitted that aforesaid amount of Rs.39,500/- was available as cash in hand out of assessee’s business of sale of electrical and electronics goods from the proprietary firm Bharat Electricals. The learned A.R. for the assessee also submitted that the remaining amount out of the aforesaid Rs.5,39,500/-, i.e. Rs.5,00,000/- was deposited out of the assessee’s turnover of Rs.42,55,200/- which has been duly shown u/s 44AD of the Act in the income tax return filed u/s 139 of the Act. The learned A.R. for the assessee placed reliance on the aforesaid paper book and drew our particular attention to the certificate issued by bank wherein it has been clearly shown that the deposits in the bank (Bank of India, Chinhat Branch, Lucknow) in demonetized currency amounted to Rs.39,500/-. Relying on the submissions made, and the paper book filed from the assessee’s side as also the facts of the case referred to in foregoing paragraphs of this order, learned A.R. for the assessee contended that the aforesaid addition of Rs.5,39,500/- be deleted.
(C.1) Learned D.R. for Revenue relied on the orders of the learned CIT(A) and the Assessing Officer. However, he could not rebut the facts and submissions contended on behalf of the assessee. The learned D.R. for Revenue left the matter to the discretion of the SMC.
(D) The assessee is in the business of sale of electrical and electronics goods and has shown turnover of Rs.42,55,200/- u/s 44AD of the I. T. Act (under the scheme of presumptive taxation) and has shown income of Rs.3,22,850/- in the aforesaid turnover, in the return of income. Having regard to turnover of the assessee, nature and scale of assessee’s business, the claim of the assessee that part of the sale consideration received was in cash, and an amount of Rs.5,39,500/- deposited in cash in bank account is not unreasonable and further the cash balance of Rs.39,500/- in demonetized currency just before the demonetization is also not unreasonable or excessive. The addition made by the Assessing Officer is based only on doubt, surmises and guess work. As the assessee has opted for presumptive taxation u/s 44AD of the Act, the assessee is not required to maintain regular books of account and no adverse view can be taken against the assessee on this account. The certificate issued by bank to the effect that only Rs.39,500/- was deposited by the assessee in demonetized currency was available with the Assessing Officer and with the learned CIT(A) who, however, failed to take this certificate into consideration while passing their respective orders. No case has been made for sustaining the aforesaid addition of Rs.5,39,500/-. The mere fact that part of turnover was deposited in cash in bank should not colour decision of the authority. The mere fact that part of turnover was deposited in cash should not weigh so heavily in the minds of the authorities that it may lead to unjustly and unfairly reject reasonable explanation and ignore material evidence placed before the authorities. In the specific facts and circumstances of the present case, and the material evidence available on record; the explanation tendered from assessee’s side that an amount of Rs.39,500/- deposited in bank in demonetized currency was part of cash balance available just before demonetized; and total amount of Rs.5,39,500/- deposited in cash in bank was part of turnover is accepted. Accordingly, in specific facts and circumstances of the present case, the aforesaid addition of Rs.5,39,500/- is deleted and the appeal is allowed.
(D) In the result, the appeal of the assessee is allowed.
(Order pronounced in the open court on 31/12/2024)
Author Bio
