SYED NAZAAR SYED FAYAZ,ERODE vs. ITO,WARD-1(4), ERODE

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi dated 06.09.2022 relevant to the assessment year 2017-18 passed under section 154 of the Income Tax Act, 1961 [“Act” in short].

The appeal filed by the assessee is delayed by 100 days in filing the appeal and filed a petition for condonation of delay in support of an affidavit by assigning detailed reasons for the delay to which; the ld. DR has not raised any serious objection. Consequently, since the assessee was prevented by sufficient cause, the delay in filing of the appeal stands condoned and the appeal is admitted for adjudication.

Brief facts of the case are that the assessee has filed his return of income for the assessment year 2017-18 on 29.03.2018 admitting total income of ₹.3,20,150/-. The return filed by the assessee was selected for scrutiny under CASS and issued notice under section 143(2) of the Act dated 24.09.2018. Notice under section 142(1) of the Act was also issued to explain the sources for cash deposits made during demonetization period. After considering the submissions of the assessee, the Assessing Officer has completed the assessment under section 143(3) of the Act dated 16.12.2019 by assessing the total income of the assessee at ₹.12,19,650/- after making addition towards unexplained cash deposit during demonetization period of ₹.8,99,500/-. Thereafter, the Assessing Officer has passed rectification order under section 154 r.w.s. 143(3) of the Act dated 10.02.2020 by assessing the total income of the assessee at ₹.10,65,650/- after reducing ₹.1,54,000/- since the assessee has deposited the said amount in new currency and a letter from the Corporation Bank was brought on record. On appeal, the ld. CIT(A) upheld the addition made by the Assessing Officer.

On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted the assessee was engaged in retail sales of mobiles and has no other source of income and prayed for deleting the addition towards deposit of ₹.3,50,000/-.

On the other hand, the ld. DR supported the order passed by the ld. CIT(A).

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. The assessee was engaged in retail sales of mobiles. Since the assessee could not furnish source for the cash deposit of ₹.8,99,500/-, the Assessing Officer treated the cash deposit as unexplained income under section 69 of the Act. During the course of rectification proceedings, the assessee has filed sales abstract for the period April, 2016 to March, 2017 for an amount of ₹.8,99,500/-, out of which ₹.1,54,000/- was deposited in new currency, the same was allowed under rectification order dated 10.02.2020 and the balance deposit of ₹.7,45,500/- was disallowed. However, the cash deposit during demonetization period i.e., on 10.11.2016 of ₹.3,50,000/- has been disallowed by the Assessing Officer for want of concrete evidence. We are of the considered opinion that the assessee, being a retail seller of mobile phone could have savings out of drawings atleast to the extent of ₹.2,00,000/-, in fact, the assessee has produced sales abstract for the period April, 2016 to March, 2017 before the authorities below. Accordingly, out of the addition of ₹.3,50,000/- we delete the addition to the extent of ₹.2,00,000/- and sustain the addition of ₹.1,50,000/- as unexplained income.

In the result, the appeal filed by the assessee is partly allowed. Order pronounced on 07th July, 2023 at Chennai.