Case Law Details
Keyur Rajeshbhai Agrawal Vs ITO (ITAT Ahmedabad)
Income Tax Appellate Tribunal (ITAT) Ahmedabad has set aside the assessment order against Keyur Rajeshbhai Agrawal concerning cash deposits of ₹1.58 crore made during the demonetization period. The case arose when the Assessing Officer (AO) added the entire deposit as unexplained cash credit without considering the taxpayer’s explanation or relevant legal provisions. The tribunal ruled that the order violated the principles of natural justice, as the assessee was not given a fair opportunity to present supporting documents, including a government press release that provided relief to sellers of SIM cards and recharge vouchers.
The taxpayer, engaged in the distribution of mobile recharge vouchers and SIM cards, had filed a return declaring an income of ₹4.98 lakh for Assessment Year 2017-18. The AO, upon identifying significant cash deposits, demanded an explanation. In response, the assessee submitted that the deposits originated from daily business collections, which were permitted under a press release dated November 24, 2016. However, the AO disregarded this submission and treated the entire sum as unexplained cash credit under Section 68 of the Income Tax Act. Additionally, a rectification order was later passed, raising an additional tax demand under Section 115BBE.
The taxpayer appealed before the National Faceless Appeal Centre (NFAC), but due to non-appearance at multiple hearings, the appeal was dismissed ex parte. On further appeal to ITAT Ahmedabad, the tribunal observed that the AO had failed to evaluate withdrawals and payments made to Airtel Ltd., which were critical to determining the legitimacy of the deposits. Additionally, the tribunal noted that the AO did not consider the press release that exempted businesses dealing in SIM cards and recharge coupons from scrutiny for cash deposits made during demonetization.
Citing violations of natural justice, the ITAT ruled in favor of the taxpayer, setting aside the assessment order and directing a fresh adjudication. The tribunal emphasized that the assessee must be given another opportunity to present supporting evidence, including bank statements and the press release. The case now returns to the assessing officer for reconsideration, with a mandate to ensure a fair and lawful assessment.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal is filed by the Assessee as against the appellate order dated 05.04.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the rectification order passed under section 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2017-18.
2. Today is the 8th time of hearing of this appeal. None appeared on behalf of the assessee in spite of service of notices to the assessee and no authorization given by the assessee to any Representative.
3. Brief facts of the case is that the assessee is an individual and engaged in distribution of Recharge coupons, Recharge vouchers and SIM Card of Airtel Ltd. For the Asst. Year 2017-18 assessee filed its Return of Income on 15-10-2017 showing total income of Rs.4,98,202/-. The return was taken for scrutiny assessment. Since there was huge cash deposit of Rs.1,58,04,250/- in the Savings Bank account with Kalupur Co-op. Bank Ltd., Bapunagar during the course of demonetization period. The assessee was asked to explain the source of cash deposit in the above bank account as well as asked to produce details and documents to substantiate the claim.
4. The assessee vide its reply dated 15-11-2019 submitted that the cash was deposited out of the daily collection received from recharge vouchers and other allied products namely sale of SIM Card and recharge coupons, etc. Thus the assessee was falling in the category exempt by the Press release dated 24-11-2016 and also offered detailed explanation along with the evidences. Without considering the above explanation offered by the assessee, the A.O. treated the cash deposit as unexplained cash credit and made addition of Rs.1,58,04,250/- by passing assessment order dated 26-12-2019 and demanded tax thereon. It is thereafter, the Assessing Officer found that he has not charged the unexplained credit taxable u/s. 115BBE thereby passed a rectification order dated 21-03-2023 raising additional demand of Rs.88,31,592/-.
5. Aggrieved against both the orders, assessee was in appeal before Ld. NFAC. The appellant’s case was fixed for hearing on 09-06-2023, 12-12-2023 and 03-01-2024, however as there was no response from the assessee, thereby both the appeals filed by the assessee were dismissed exparte.
6. Perusal of the assessment order makes it clear, the entire cash deposit of Rs.1,58,04,250/- is added as the income of the assessee before considering the withdrawals or payments made by the assessee to Airtel Ltd. Further as claimed by the assessee, the Assessing Officer is silent about the Press release dated 24-11-2016 which exempt the sellers of SIM Card and recharge coupons in depositing cash during demonetization period. Therefore in the interest of Principle of Natural Justice, the order passed by the Lower Authorities are hereby set aside with a direction to give one more opportunity of hearing to the assessee and then pass assessment order in accordance with the law. Needless to say, the assessee should cooperate by filing all relevant materials, bank statements and Press release dated 24-11-2016 before the A.O. for fresh adjudication.
7. In the result, the appeal filed by the Assessee is allowed for statistical purpose.
Order pronounced in the open court on 09-12-2024
Author Bio
