CHINNASAMY RAJENDRAN,SALEM vs. ITO, WARD-1(6), SALEM, SALEM

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ITA 326/CHNY/2023Status: DisposedITAT Chennai03 July 2023AY 2017-185 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee had filed fresh evidence (purchase ledger and cash book) to explain the source of the deposits. The Tribunal decided that these evidences require verification by the AO.

What were the facts?

The assessee deposited demonetized currency amounting to Rs. 9,00,000/- in their bank account. The Assessing Officer (AO) treated this as unexplained money, and the CIT(A) confirmed the addition.

What were the issues?

Whether the demonetized currency deposits can be treated as unexplained money, and if fresh evidence can be admitted to explain the source of such deposits.

Which sections of the Income-tax Act were involved?

Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ (SMC

Before: SHRI MAHAVIR SINGH

Hearing: 03.07.2023Pronounced: 03.07.2023

आदेश /O R D E R

1.

This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in order No.ITBA/NFAC/S/250/2022- 23/1049791022(1) dated 15.02.2023. The assessment was framed by the Income Tax Officer, Ward 1(6), Salem for the assessment year 2017-18 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 26.12.2019.

2.

The only issue in this appeal is as regards to the order of CIT(A) confirming the action of the AO in making addition of demonetized currency u/s.69A of the Act amounting to Rs.9,00,000/-.

3.

Brief facts are that the assessee is engaged in the business of running Dall mill in Salem, Tamilnadu. The AO during the course of assessment proceedings noticed that the assessee has made cash deposit in Specified Bank Notes (SBNs) (demonetized currency) during the period i.e., 09.11.2016 to 31.12.2016 amounting to Rs.58,52,500/- in Canara Bank. The AO has given details of cash deposits in demonetized currency in assessment order. The assessee has not disputed deposit of demonetized currency in bank account but assessee explained that the cash deposits are out of amount received from customers and amount received on account of sale proceeds of assessee’s business. The AO accepted the plea of the assessee as regards to deposits out of cash generated prior to 08.11.2016 but made addition of Rs.9,00,000/- of cash deposits in SBNs deposited on 29.11.2016, 01.12.2016 and 07.12.2016 as unexplained money u/s.69A of the Act. Aggrieved, assessee preferred appeal before CIT(A).

4. The CIT(A) confirmed the action of the AO by holding that the SBNs as per provision of section 5 of Specified Bank Notes (Cessation of Liability) Act, 2017, the assessee cannot hold, transfer or received any SBNs after 08.11.2016 because that is not legal tender. According to him, no legal sale / purchase could have been made with the use of prohibited currency and hence, he confirmed the action of the AO. Aggrieved, assessee is in appeal before the Tribunal.

5.

I have heard rival contentions and gone through facts and circumstances of the case. Before me, the ld.counsel for the assessee filed fresh evidences to explain the source of cash as under:- # Date Particulars Pgs. 1 ------ Purchase ledger of the appellant for this 1-5 A.Y. 2. ------ Cash Book of the appellant for this A.Y. 6-33 The ld.counsel for the assessee stated that these are fresh evidences and for that he also filed petition for admission of additional evidences under Rule 26 of the ITAT rules. He cited to following reason for admissibility of additional evidences:-

3. Challenging this order, an appeal was filed before the CIT(A). The appellant filed his Written Submissions challenging the addition. Since the AO had made the addition only on the basis of probability, the appellant did not file any documents to substantiate the source of the deposits since the same were never questioned nor doubted by the A0. The appellant now seeks to file his purchase ledger and cash book for the F.Y.2016-17 to fortify his submission as to the sources of the deposits.

4.

It is submitted that the non-fling of the above documents before the lower authorities was neither wilful nor wanton and only due to the reasons stated above. It is further submitted that if the above documents are not admitted as evidence, the appellant would be put to great hardship and irreparable loss. It is thus just and necessary that the above documents are admitted as additional evidence and taken on file in this appeal before this Hon'ble Tribunal.

6.

When these was confronted to ld.Senior DR, he could not controvert the above fact situation but argued that even though the assessee has made sales as per additional evidences, which is not verified, there will not be any impact on the assessment for the reason that the assessee has traded in currency, which is not legal tender.

7.

I have gone through the facts and additional evidences filed by assessee. I noted that these evidences require verification and AO after considering these evidences will consider the issue afresh. In term of the above, I remit this issue back to the file of the AO.

Accordingly, the appeal of the assessee is allowed for statistical purposes.

8.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court on 3rd July, 2023 at Chennai.

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