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Income Tax Appellate Tribunal, KOLKATA-PATNA ‘e-COURT’, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
Assessment Year: 2017-2018 Ajay Kumar Keshan,.……………………………Appellant M/s. Abhijeet Service Station, Sowa Babu Chowk, Lal Bazar Bettiah, West Champaran-845438, Bihar [PAN:ABAPK5421A] -Vs.- Deputy Commissioner /Assistant Commissioner,......................Respondent Circle-1, Muzaffarpur-842002, Bihar Appearances by: Shri Vineet Jalan, CA and Shri Rajaram Choudhury, CA, Advocate, appeared on behalf of the assessee Shri Ashwani Kr. Singal, JCIT, appeared on behalf of the Revenue Date of concluding the hearing: November 28, 2024 Date of pronouncing the order: December 30, 2024 O R D E R
The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 1st December, 2022 passed for Assessment Year 2017-18.
(A.Y. 2017-2018) Ajay Kumar Keshan 2. Brief facts of the case are that the assessee operates business of petrol pump in the name and style of M/s. Abhijeet Service Station under the dealership of Reliance Industries Limited. For the impugned assessment year, the return of time was filed by the assessee declaring total income at Rs.23,22,540/-. The case was selected for scrutiny under CASS for the reasons that “large cash deposit during the demonetization period and abnormal increase in sale with decrease in profitability as compared to preceding previous year”. Consequently, notice under section 143(2) of the Income Tax Act, 1961 was issued on 10.087.2018 and the same was duly served. In response to the requisition made by the ld. Assessing Officer, the assessee has submitted his response and after considering the submissions made by the assessee, the ld. Assessing Officer made an addition of Rs.9,65,000/- under section 69 of the Act and also made an addition of Rs.68,174/- out of the total expenses debited under various heads to the tune of Rs.6,81,741/- being 10% of the total expenditure on adhoc basis since the appellant could not furnish the requisite details. Aggrieved by the order passed by the ld. Assessing Officer, the assessee preferred an appeal before the ld. CIT(Appeals).
After considering the submissions of the assessee, the ld. CIT(Appeals) dismissed the appeal filed by the assessee.
On being aggrieved, the assessee preferred an appeal before the Tribunal.
(A.Y. 2017-2018) Ajay Kumar Keshan 5. I have heard both the sides and perused the material available on record. It was the submission of the assessee that during the financial year 2016-17, the assessee deposited cash of Rs.11,63,41,000/-. The source for cash deposit is sale of petroleum products. He further submitted that during demonetization period, Rs.22,50,000/- was deposited out of sale of petroleum products. The assessee has clearly explained the source but without any basis, the ld. Assessing Officer made the addition and ld. CIT(Appeals) erroneously considered the same. He also relied on various decisions:- (i) ITA 76/Viz./2021 in the case of ITO -vs. Tatiparti Satyanarayana (ITAT, Visakhapatnam Bench); (ii) in the case of ITO -vs.- Ashapura Petrochem Marketing Pvt. Limited order dated 18.10.2023; Ld. Counsel for the assessee further submitted that the facts are similar to the facts of the present case. ITAT, Ahmedabad Bench has categorically held that the Notification dated 08.11.2016 will not applicable since in para 8(e) clearly establishes that it will be applicable to whom purchases of petrol & diesel etc. made. Since para 1(e) will be applicable to whom in the present case, the assessee was selling petrol and collected the specified bank notes from its retail customers. Therefore, the provision of section 68 cannot be invoked. He pleaded to set aside the orders passed by the lower authorities.
(A.Y. 2017-2018) Ajay Kumar Keshan 6. On the other hand, ld. D.R. has submitted that as per the cash book, the assessee is not having sufficient cash on hand to make the deposits, therefore, the assessee was not proved the source for cash deposits made during demonetization period. Therefore, the ld. Assessing Officer made the addition and ld. CIT(Appeals) confirmed the same. He, therefore, pleaded to uphold the orders passed by the revenue authorities.
It is an admitted fact that the assessee made cash deposits of Rs.11,63,41,000/- during financial year 2016- 17. The source for the cash deposits was sale of petrol. The only grievance of the revenue is that the assessee made cash deposit of Rs.22,50,000/- during demonetization period. It is also an admitted fact that as on 08.11.2016, there was cash balance of Rs.12,85,206/- in the cash book of the assessee. The finding of the ld. Assessing Officer is that the amount deposited in old demonetized currency amounting to Rs.22,50,000/- must be from the cash in hand as on 08.11.2016. Therefore, the assessee must have received cash in demonetized notes but the assessee was not entitled to accept the demonetized currency during demonetization period. Therefore, the ld. Assessing Officer made an addition of Rs.9,65,000/- as unexplained after deducting an amount of Rs.12,85,606/- out of total deposit of Rs.22,50,000/-.
(A.Y. 2017-2018) Ajay Kumar Keshan 8. After considering the contention of the assessee, the ld. Assessing Officer made an addition of Rs.9,65,000/- under section 68 of the Act mainly on the ground that the assessee was not authorized to accept specified bank notes during demonetization period as observed in the assessment order. Therefore, it is an admitted fact that cash deposit made is on account of sale of petrol and sales have been duly recorded in the books of accounts of the assessee. Hence, it is clearly established that the ld. Assessing Officer on one side accepted the source of cash deposit and at the same time he is making the cash deposit as unexplained cash credit, which is contrary in accordance with law and self-contradictory. The ld. Assessing Officer by following the Circular dated 08.11.2016 passed the order, which is not applicable to the assessee’s case since para (e) of the Circular deals with the case of purchase of petrol, diesel etc. and not to the sale of specified bank notes, therefore, invocation of section 68 has no legs to stand. The assessee also relied on various decisions of the Coordinate Bench of this Tribunal, wherein all the Benches of the Tribunal are opined the same view. Therefore, I have no hesitation to come to the conclusion that the assessee has explained his source of cash deposits and also ld. Assessing Officer as well as ld. CIT(Appeals) are not correct by saying that the assessee was not authorized to accept the specified bank notes during demonetization period as observed in the assessment order as well as ld. CIT(Appeals)’s order.