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Income Tax Appellate Tribunal, KOLKATA BENCH ‘SMC’, KOLKATA
Before: SHRI SONJOY SARMA, HON’BLE & SHRI GIRISH AGRAWAL, HON’BLE
O R D E R
PER SONJOY SARMA, JM:
This appeal in for A.Y. 2017-18 is preferred by the assessee against the order of the Commissioner of Income Tax, National Faceless Appeal Centre, Delhi (NFAC) [Ld. CIT in short], dated 29.09.2022. The assessee has raised the following grounds of appeal:
“1. That, the Ld. Commissioner of Income Tax (Appeals) has erred in not appreciating the submission as abstracted by him in his appeal order therefore, inter alia erred in confirming the addition of the appeal order and therefore, the addition confirmed may please be deleted.
2. That, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the addition of Rs. 24,07,000/- in respect of unexplained cash deposited in Bank account.
That, the Ld. Commissioner of Income Tax (Appeals) has erred in not appreciating the facts that the cash deposited by the appellant in the bank account is out of his business receipts as declared by him u/s 44AD and business proved by the appellant and accepted by the Ld. Commissioner of Income Tax (Appeals) in his body of order.
4. That, the Ld. Commissioner of Income Tax (Appeals) has erred in not appreciating the facts that the appellant is poor farmer and has no means to generate such huge cash other than his trading activity. And Assuming that the cash is deposited not from appellant business activity but out of other sources without any evidence. The aforesaid grounds are without prejudice to each other and the appellant craves leave to add/delete/alter and/or amend any of grounds as aforesaid as and when necessary. Therefore, your Appellant prays before the Hon'ble Members of the Appellate Tribunal for justice against decision made by the Ld. of Commissioner of Income Tax (Appeals).”
The sole issue in the present appeal relates to confirmation of addition of Rs. 24,07,000/- on account of deposit of cash in two bank accounts of the assessee during the year under consideration. The assessee filed its return of income on 20.02.2018 by declaring total income of Rs. 3,21,920/-. The case of the assessee was selected for scrutiny for the issue of cash deposit during the demonetization period. Statutory notices were issued and served upon the assessee which were duly complied with by the assessee. The ld. Assessing Officer completed the assessment by holding that the deposits made by the assessee during the period of demonetization of Rs. 24,07,000/- was unexplained money and added to the income of the assessee.
3. Dissatisfied with the above order, assessee went in appeal before the ld. CIT(A) wherein the ld. CIT(A) dismissed the appeal filed by the assessee.
Against the same order, assessee is in appeal before the Tribunal. Before us, ld. counsel for the assessee submitted that the assessee has always been regularly filing his return of income with substantial amount of income since assessee did not maintain any books of accounts as assessee filed its return of income u/s 44AD of the Act on presumptive basis, therefore, at the time of hearing before the AO necessary accounts could not be produced like cash book, ledger, cash flow statement etc. to demonstrate to prove the fact that availability of cash in the hands of assessee which was deposited during the demonetization period and absence of those the ld. AO without considering the fact of the case arbitrarily added whole sum of deposit made by the assessee during the period of demonetization as unexplained income u/s 69A of the Act. He contended that those deposits were made by the assessee are most of them from cash sales made during the demonetization currency note of Rs. 500/- & Rs. 1,000/- which were allowable as legal tender in terms of notification dated 09.11.2016 clause 1(i) issued by the Department of Economic Affairs which has been placed in the paper book submitted by the assessee at page no. 55 before the Hon’ble Tribunal. Besides that the ld. AR submitted that the arbitrary view taken by the AO that all the deposits were made by the assessee in his bank account termed as unexplained money in the hands of assessee is not correct as because while doing business, assessee has to going through various transactions with different customers which are sometimes paid their dues in cash and sometimes it remain credited for couple of months. During the period of demonetization, various customers preferred to clear their earlier dues in specified notes and those deposits are nothing but those were collected from sales only made by the assessee doing his business. Therefore, the view taken by the AO and subsequently upholding by the ld. CIT(A) by making an addition of Rs. 24,07,000/- in the hands of assessee by treating as unexplained cash needs to be deleted.
We after considering the facts of the case and going through various documents placed before us, we note that the approach taken by the AO while making the addition of Rs. 24,07,000/- in the hands of assessee by assuming that deposits made during the demonetization period is an unexplained money is not correct as because while doing business one has to keep certain cash with him and dealing with the customers as well as creditors. The ld. AO while making the addition, he never taking into consideration of those facts by simply making the whole deposits made during the demonetization as unexplained money without considering various circumstances while running a business by assessee has to undertaken with customers satisfaction and in certain cases, he has to provide credit facility to them for smooth running of his business activities. Besides that he has to keep certain cash for doing his business to deal with his supplier too. Therefore, we are not satisfied with the view taken by the ld. CIT(A) by affirming the order passed by the ld. AO by sustaining the addition of Rs. 24,07,000/- and which is not in accordance with law as the AO never discussed any other surrendering facts and not taking into consideration while framing the assessment order. We, accordingly, direct the AO to delete the addition of Rs. 24,07,000/- in this respect and allow the appeal of the assessee.
In the result, the appeal of the assessee is allowed.