Lateef Abdul Mohd. Vs ITO (ITAT Hyderabad)
Introduction: The case of Lateef Abdul Mohd. vs ITO involves an appeal against the addition of Rs.30.00 lakhs for cash deposits made during demonetization and Rs.2,40,000 for low withdrawals. The Assessing Officer argued that the cash deposits were unexplained, while the appellant contended they were from sales prior to the currency ban.
Detailed Analysis: The appellant presented month-wise cash sales data for the financial years 2015-16 and 2016-17, demonstrating a consistent correlation between cash sales and bank deposits. Comparisons with the preceding and subsequent years were made to establish a regular trend. The appellant referred to a similar case precedent, Pr. CIT vs. Agson Global (P) Ltd, where the Delhi High Court ruled in favor of the taxpayer, emphasizing the importance of examining the trend of cash sales.
Conclusion: The Tribunal found merit in the appellant’s arguments, emphasizing the substantial and regular nature of cash sales corresponding to bank deposits. Drawing parallels with the precedent case, the Tribunal set aside the addition of Rs.30.00 lakhs. Additionally, the Tribunal rejected the Rs.2,40,000 addition, noting it was based on presumptions and lacked concrete evidence of unaccounted expenditures.
Assessing Officer in the instant case made an addition of Rs.30.00 lakhs being the cash deposits made by the assessee in old denomination of Rs.1000 currency notes during the demonetization period in his bank a/c maintained with Indian Overseas Bank. Similarly, the Assessing Officer made addition of Rs.2,40,000 on account of low withdrawals. I find the NFAC sustained both the additions, reasons of which are already reproduced in the preceding paragraphs. It is the submission of the learned Counsel for the assessee that the deposit of old currency notes in the Bank A/c is out of the sale proceeds effected prior to the ban of currency notes i.e. from the midnight of 8/11/2016. It is his submission that a perusal of the month-wise cash deposits made by the assessee during the financial year 2015-16 and 2016-17 would show that such cash deposits made in the Bank A/c is commensurate with the sales made by the assessee in every month both during the preceding year and subsequent year
ITAT find sufficient force in above arguments made by the learned Counsel for the assessee. The month-wise cash sales and cash deposits made by the assessee in the Bank A/c are already reproduced in the preceding paragraphs. A perusal of the same shows that the cash sales made by the assessee during every month is substantial. Similarly, the cash deposit made by the assessee in the Bank A/c from April, 2015 to Nov.2015 and thereafter is also commensurate with the regular trend. It is not a case where the assessee in this particular period has made substantial cash deposits in the Bank A/c. Therefore, the lower authorities, in my opinion, have erred in disbelieving the submissions made by the assessee,
I find an identical issue came before the Hon’ble Delhi High Court in the case of Pr. CIT vs. Agson Global (P) Ltd (Supra). In that case, the Assessing Officer had made addition of Rs.99.04 crores to the total income of the assessee apart from other additions on account of cash deposits made during the demonetization period. In appeal, the learned CIT (A) restricted the addition of Rs.73.13 crores. The Tribunal deleted the additions sustained by the CIT (A) of Rs.73.13 crores in respect of cash deposits made with the Bank during demonetization period. In appeal by the Revenue, the Hon’ble High Court dismissed the appeal filed by the Revenue by observing as under:
“17.6. Having regard to the extensive material which has been examined by the Tribunal, in particular, the trend of cash sales and corresponding cash deposited by the assessee with earlier years, we are of the view that there was nothing placed on record—which could have persuaded the Tribunal to conclude that the assessee had, in fact, earned unaccounted income i.e., made cash deposits which were not represented by cash sales. Therefore, in our opinion, the Tribunal correctly found in favour of the assessee and deleted the addition made by CIT(A) of Rs.73.13 crores, under Section 68 of the Act.”
Since the facts of the instance case are identical to the facts of the case decided by the Hon’ble Delhi High Court cited (Supra), therefore, I am of the opinion that the learned NFAC was not justified in sustaining the addition of Rs.30.00 lakhs made by the Assessing Officer in the Bank A/c during the demonetization period in old currency notes of Rs.1000. Accordingly, the order of the NFAC on this issue is set aside and the grounds raised on this issue are allowed.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal filed by the assessee is directed against the order dated 6.10.2021 passed by the National Faceless Appeal Centre (NFAC) Delhi relating to the A.Y 2017-18.
2. Although, a number of grounds have been raised by the assessee, however, these all relate to the order of the NFAC in sustaining the addition of Rs.30.00 lakhs made by the Assessing Officer u/s 69A being cash deposit in the Bank A/c during the demonetization period and addition of Rs.2.40 lakhs made by the Assessing Officer on account of low withdrawals.
3. Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 20.10.2017 declaring total income of Rs.11,39,450/-. During the course of assessment proceedings the Assessing Officer noticed that the assessee has deposited an amount of Rs.30.00 lakhs in cash during the demonetization period in old denomination i.e. Rs.1000 currency notes in his bank a/c held with Indian Overseas Bank. On being asked by the Assessing Officer to explain the source of such deposit, the assessee explained the same as out of sale proceeds of the business. According to the Assessing Officer, since the old denomination currency i.e. Rs.1000 and Rs.500 notes were banned by the Govt. of India from 08/11/2016 midnight, therefore, the sale proceeds received in old denomination, as admitted by the assessee himself cannot be treated as receipt from the business. He, therefore, held that the amount to the tune of Rs.30.00 lakhs stand unexplained. From various details furnished by the assessee, the Assessing Officer noted the following date-wise deposit of old denomination notes in the bank:
