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Income Tax Appellate Tribunal, ‘D‘ BENCH
Before: SHRI AMIT SHUKLA & SHRI GAGAN GOYAL
आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the Revenue against the order dated 24/06/2022 passed by NFAC, Delhi for the quantum of assessment passed u/s. 143(3) for the A.Y.2017-18.
In the grounds of appeal, the Revenue has challenged the addition of Rs.1,88,08,770/- on account of deposits of Specified
Shri Mangesh Moreshwar Mhatre Bank Notes (SBN). The relevant grounds raised by the Revenue reads as under:-
“1. On the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made on account of deposit of Specified Bank Notes (SBN) of Rs. 1,88,08,770/- despite the fact that during the course of assessment proceedings, the assessee himself admitted deposit of Specified Bank Notes to the tune of Rs. 1,88,08,770/-.
2. On the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made on account of deposit of Specified Bank Notes (SBN) of Rs. 1,88,08,770/- by admitting fresh evidence during appellate proceedings without giving opportunity to the department by remanding back the issue.
3. On the facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in upholding addition @ 10% of Rs. 8,58,000/- without considering the facts of the case.
The facts in brief are that assessee is an individual filed return of income for A.Y.2017-18 at Rs.7,54,290/-. The case was selected for CASS for limited scrutiny to verify source of cash deposits during the demonization period. From the statement of financial transaction available in ITBA system, the ld. AO noted that assessee is maintaining cash credit account with Bassein Catholic Co-op Bank Ltd and the total cash deposits in the said account during demonetization period aggregating to Rs.3,40,91,205/-.
In response to the show-cause notice, assessee submitted that he is distributor of mobile recharge voucher of Bharti Airtel Ltd. from his proprietorship concern, M/s. Shreee Enterprises. The source of income was commission as he is selling all kinds of Shri Mangesh Moreshwar Mhatre recharge vouchers. In the assessment order it has been noted that the assessee has submitted that out of total aggregate deposit of Rs.3,52,77,135/-, Rs.1,64,68,366/- was in legal notes. The remaining cash amount of Rs.1,88,08,770/- was SBN and was purely from this business which falls within the exception laid down in the Notification No.3804(E) by GOI dated 08/11/2016. The ld. AO asked for various details to explain the nature and source of cash deposits in his account which has been highlighted in the assessment order in page 213. Further, he noted that assessee has failed to produce the details as asked by him and therefore, he treated the deposits of cash aggregating to Rs.1,88,08,770/- as unexplained money added u/s.69A.
The ld. CIT (A) took note of certificate from the bank and details of SBN deposits which has been highlighted from pages 3- 7 of the appellate order, wherein, he has noted that most of the deposits do not fall within the meaning of SBN. From the perusal of the details as noted by the ld. CIT (A), we find that there are hardly any deposits of SBN Rs.1000/- note and Rs.500/- note. Most of the notes deposited are in denomination of Rs.100/- note, Rs.50/- note, Rs.10/- note and few of them are of new currency Rs.2000/- notes. Thus, the entire basis for assessment that there was cash deposits in demonetization and specifically cash deposits in SBN, which fact has been found to be completely incorrect. The details of these deposits are appearing from pages 115-121, which is from certificate issued by the bank. The total aggregate deposits in the bank account during the year was Rs. 3,54,67,435/-, whereas the only amount of Shri Mangesh Moreshwar Mhatre Specified Bank Notes was Rs.8,58,000/- and the total legal notes was Rs.3,46,09,435/-. In the assessment proceedings, what assessee had submitted that deposits of new currency was Rs.1,64,68,365/- and other deposits contain legal notes which were not demonetized. Thus, the entire premise of making the addition by the ld. AO that cash deposit is in the form of SBN has been found to be incorrect. Now, in so far as the source of deposits have been stated to be from the sales made by the assessee which has been duly reflected in the profit and loss account which is aggregating to Rs.30,66,48,306/- and commission and brokerage income of Rs.4,98,715/-. Out of total sales of Rs.30,66,48,306/-, assessee had shown purchase of Rs.30,48,60,842/- apart from commission income. Thus, it cannot be said that cash deposits and outside the books.
However, the ld. CIT (A) has made adhoc addition of Rs.8,58,000/-, i.e., 10% out of SBN as unexplained which is exactly the amount which has been deposited on account of Specified Bank Notes. Thus, we do not find any infirmity in the order of the First Appellate Authority which is based on pure finding of fact and accordingly, the grounds raised
by the Revenue are dismissed and only addition of Rs.8,58,000/- is sustained.