Pankaj Gupta Vs ITO (ITAT Cuttack)
ITAT Cuttack held that addition towards the unexplained investment for SBN deposits during demonetization period sustained in absence to establish source of the same without documentary evidences.
Facts- The assessee is an individual carrying on business of FMCG goods on wholesale and retail trading in the name and style of M/s Santoshi Agencies at Sohella, District Bargarh. The assessee maintains computerized cash book, journal, Ledger, purchase register and sales register in the regular course of his business. The assessee in the course of his business caters to shopkeepers Located in nearby small villages, small hawkers etc. on credit as well as in cash and collects outstanding debts in cash.
Unfortunately, most of these small shopkeepers, vendors and weekly market hawkers were not maintaining any bank accounts as they were residing in remote village areas and the banking facilities were not available to them.
They were very poor and needy people who made their livelihood by selling items of daily use and they were aloof to the modern world. The cash book revealed the balance as on 08.11.2016 was Rs. 253.40 only.
AO passed an order u/s. 143(3) of the IT Act, without issuing a specific show cause notice (SCN) for addition of the concerned amount for the specific reason, and without considering the assessee’s replies and evidence.
The appeal of the assessee was dismissed by simply holding that the appellant was not authorized to receive SBNs during the impugned period without quoting any source of Law.
Conclusion- Admittedly, if the assessee desires to take the stand that the SBNs were the currency received between 08.11.2016 to 12.11.2016, it would be incumbent upon the assessee to prove to the revenue as to from whom he had received the SBNs. In the absence of such proof, the deposit of SBN to the extent of Rs.28 lakhs will have to be treated as the unexplained investment of the assessee.
In result, the appeal of the assessee was dismissed.
FULL TEXT OF THE ORDER OF ITAT CUTTACK
This is an appeal filed by the assessee against the order of the ld. CIT(A)-2, Bhubaneswar, dated 11.01.2023, passed in I.T. Appeal No.Sambalpur/1 0308/2019-20 for the assessment year 2017-2018.
2. None for the assessee, however, the assessee has filed his written submissions, which read as under :-
1. Nature of business and the modus operandi thereof, as submitted before the Ld. CIT(A):
a. The assessee is an individual carrying on business of FMCG goods on wholesale and retail trading in the name and style of M/s Santoshi Agencies at Sohella, Dist: Bargarh.
b. The assessee maintains computerized cash book, journal, Ledger, purchase register and sales register in the regular course of his business.
c. The assessee in the course of his business caters to shopkeepers Located in nearby small villages, small hawkers etc. on credit as well as in cash and collects outstanding debts in cash.
d. Unfortunately, most of these small shopkeepers, vendors and weekly market hawkers are not maintaining any bank account as they are residing in remote village areas and the banking facilities are not available to them.
e. They are very poor and needy people who make their livelihood by selling items of daily use and they are aloof to the modern world.
Please refer Page No. 1 to 3 of the paperboook.
2. The Ld. CIT(A), unfortunately, without taking into consideration the facts of the case, as stated above, has observed as under (vide Para 3 of the appeal order):
In Para 3.3.1:
a. The cash book revealed the balance as on 08.11.2016 was Rs. 253.40 only. (There was no transaction after this). Though the assessee contended that these old notes were received from third parties, .
In Para 3.3.3:
a. The AR has not been able to controvert the fact that balance as per cash book was mere Rs. 252.40 only whereas Rs. 28,00,000 has been deposited in his bank account.
b. The source of this cash with documentary evidence needs to be produced.
c. The AR has failed to discharge the onus cast upon him in this regard.
3. If all the above allegations/findings vis- a -vis the written submissions and the paper book filed before the Ld. CIT(A) are taken into consideration, the following facts are emerging, which are to be adjudicated by this Hon’ble Bench.
The said observation of the Ld. CIT(A) is submitted to be mis-conceived and perverse in as much as the appellant has filed, before the Lower authorities, the entire computerized cash book on 15/11/2019. Besides, extract of cash book from 08/11/2016 to 12/11/2016, duly certified by a Chartered Accountant, was also filed before the Ld. CIT(A) while filing the appeal and also while filing the written submissions as a part of the paperbook.
a. With regard to allegation as appearing in Para 3.3.1(a) of the appeal order:
(Please refer Page 35 of the paperbook for evidence of filing of cash book before the Ld. AO)
(Please refer Page 44 to 50 of the paperbook for evidence of filing of balance sheet & cash book from 08/11/16 to 12/11/16 (CA certified) before the Ld. CIT(A))
Hence, the finding of the Ld. CIT(A) that the cash book revealed no transactions after 08/1112016, is submitted to be totally incorrect and un-true in the facts and circumstances of the case.
During the course of assessment proceedings as well as the appellate proceedings, the dealer never contended that the demonetized notes were received from any third parties.
Rather, the constant stand of the appellant, right from the response filed against cash transaction notice dated 06/02/2017 i.e., before the close of the previous year itself, was as under:
“Old assessee – Maintains regular books of accounts – subject to audit u/s 44AB – Trial Balance as on 0811112016 – Cash deposited commensurate with sales and realization of petty sundry debtors whose PAN is not known”
Hence, the finding of the Ld. CIT(A) that the demonetized notes were received from third parties is against the facts involved in the instant case.
(Please refer Page 25 of the paperbook for mail dated 06/02/2017) (Please refer Page 26 to 27 of the paperbook for copy of reply filed against notice dated 06/02/2017)
c. With regard to allegation as al1pearing in Para 3.3.3(a) of the appeal order:
The said allegation is submitted to be quite unfortunate as the entire cash book was filed before the Ld. AO on 15/1112019 vide E-filing Ack. No. 15111912141675.
(Please refer Page 35 of the paperbook)
The said cash book contains the following particulars during the material period i.e., 08/11/2016 to 12/11/2016:
