LOKESH GUPTA,DELHI vs. ITO WARD-29(8), DELHI

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)/Additional/Joint Commissioner of Income Tax(Appeals)- 1, Pune (hereinafter referred to as 'the CIT(A)') dated 03.10.2024, for Assessment Year 2017-18.

The appeal is time barred by 125 days. The assessee has filed an application citing reasons causing delay in filing of appeal. After perusal of the same, I am satisfied that delay in filing of appeal is attributable to assessee. The delay has been caused for the reasons stated in petition which appears to be bonafide.

Shri Deepanshu Jain, appearing on behalf of the assessee submits that the solitary issue in present appeal is against addition of Rs.5,00,000/- u/s. 69A r.w.s. 115BBE of the Income Tax Act,1961(hereinafter referred to as ‘the Act’). He submitted that the assessee is running a business of e-recharge of mobiles phones and is distributor of Aircel mobile connections. The substantial sales consideration was received by the assessee in cash. The assessee had filed his return of income for the impugned assessment year declaring income of Rs.4,19,980/-. The cash deposits amounting to Rs.15,57,500/- in the bank account no. 2018214000014 with Canara Bank was out of business receipts. The Assessing Officer (AO) partly accepted contention of the assessee and made addition of Rs.5,00,000/- only. Once having accepted that the cash deposits are from business receipts which have already been disclosed in the return of income, the entire cash deposits should have been accepted. The solitary reason for disallowing Rs.5,00,000/- is that the aforesaid amount was allegedly deposits in old currency which was no longer a legal tender. The ld. Counsel for the assessee stated that demonetization of Rs.500 and Rs.1000/- currency was declared on 08.11.2016. The assessee deposited Rs.10,57,500/- of demonetized currency on 10.11.2016 and the remaining amount of Rs.5,00,000/- was deposited on the very next day i.e. 11.11.2016 i.e. within two days of declaration of demonetization. He thus prayed for deleting the addition of Rs.5,00,000/- made u/s. 69A r.w.s. 115BBE of the Act.

Ms. Sudha Gupta, representing the department strongly supporting the impugned order prayed for dismissing appeal of the assessee. She submitted that (AY 2017-18) the assessee could have deposited entire demonetized currency on a single day instead of two days.

Both sides heard, orders of the authorities below examined. It is an admitted fact that during demonetization, the assessee had deposited Rs.15,57,500/- in old/demonetized currency. The demonetization of Rs.500/- currency notes and Rs.1,000/- currency notes was declared on 08.11.2016. The assessee deposited Rs.10,57,500/- in demonetized currency in his bank account on 10.11.2016 and the remaining amount of Rs.5,00,000/- was deposited on the very next date i.e. 11.11.2016. The assessee had deposited entire demonetized currency in two tranches on two consecutive dates, within three days from the date of declaration of demonetization. It is not a case of revenue that the assessee had deposited demonetized currency over the period of time or repeatedly deposited demonetized currency. It is an admitted fact that the assessee is engaged in the business of e-recharge of coupons and distribution of Aircel mobile connections. Most of the transactions carried out by the assessee were in cash, the sales turnover of the assessee which includes cash turnover has already been declared by the assessee in the return of income, which has not been disputed by the AO. Once having accepted business income of the assessee and also the part of cash deposits from the business turnover, I see no plausible reason to disallow Rs.5,00,000/- which is very much part of assessee’s business receipts. Thus, in facts of the case, I find merit in assessee’s plea. Accordingly, the addition of Rs.5,00,000/- is directed to be deleted.