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Income Tax Appellate Tribunal, PATNA BENCH AT KOLKATA
Before: SRI RAJPAL YADAV & DR. MANISH BORAD
order
: November 20th, 2024 ORDER
Per Manish Borad, Accountant Member:
The captioned appeal filed by the assessee pertaining to the Assessment Year (in short ‘AY’) 2017-18 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the ‘Act’) by the Commissioner of Income-tax (Appeals)-NFAC, Delhi [in short ld. ‘CIT(A)’] dated 01.11.2023 arising out of the assessment I.T.A. No.: 339/PAT/2023 Assessment Year: 2017-18 Smt. Ranju Kumari. order framed u/s 147 r.w.s. 144 r.w.s. 144B of the Act dated 25.03.2022.
1.1. The assessee is in appeal before this Tribunal raising the following grounds of appeal:
“1. For that the National Faceless Appeal Centre (NFAC), Delhi, ['the CIT(A)'] erred on facts and in law in dismissing the appeal filed by the appellant, vide order passed under section 250 of the Income Tax Act, 1961, ('the Act'), dated 01-11-2023.
2. For that the CIT(A) erred in confirming the assessment order passed by the National Faceless Assessment Centre, Delhi, ('the AO'), assessing the appellant under section 147 read with section 144 and 144B of the Act, vide order dated 25-03-2022 at an income of Rs 2,62,77,730/- against the current years income of Rs 3,07,646/-, by making addition of Rs 2,62,77,730/- after treating the entire deposits in bank account as unexplained money under section 69A of the Act.
3. For that the learned CIT(A) has erred in the facts and circumstances of the case in confirming the action of the AO in treating the entire cash deposited in the demonetization period amounting to Rs 2,62,77,730/- as unexplained money under section 69A of the Act, which is wrong, illegal and unjustified.
For that the learned CIT(A) has erred in the facts and circumstances of the case in confirming the action of the AO in arbitrarily invoking the provisions of section 115BBE of the Act on the deposits made during the demonetization period without making a specific allegation that the amount has been deposited out of source other than sale proceeds of a Petrol Pump, which is wrong, illegal and unjustified.
5. For that the learned CIT(A) has erred in the facts and circumstances of the case in confirming the action of the AO in arbitrarily initiating the reassessment proceedings under section 148 of the Act, which is wrong, illegal and unjustified.
For that the learned CIT (A) has erred passing an ex-party order without allowing proper opportunity of being heard, which is wrong, illegal and unjustified in the facts and circumstances of the case.
That the whole order passed by the CIT (A) is bad in facts and law.”
Page 2 of 9 I.T.A. No.: 339/PAT/2023 Assessment Year: 2017-18 Smt. Ranju Kumari.
At the outset, ld. Counsel for the assessee requested for not pressing the legal ground challenging the validity of reopening of the assessment proceedings. Accordingly, ground no. 5 raised by the assessee is dismissed as not pressed.
The effective grievance in the remaining grounds of appeal
are that ld. CIT(A) erred in confirming the action of the Assessing Officer (hereinafter referred to as ld. 'AO') by not condoning the delay in filing the appeal and also passing an ex-parte order without allowing proper opportunity of being heard thereby confirming the addition u/s 69A of the Act at Rs. 2,62,77,730/- for alleged unexplained cash deposited in the current bank account of the assessee’s sole proprietorship concern. Assessee has also challenged the validity of invoking of Section 115BBE of the Act by ld. AO. 3.1. Brief facts of the case as culled out from the records are that the assessee is an individual and running sole proprietorship concern M/s. Pappu Fuel Station engaged in purchase and sale of petrol, diesel and lubricant and the petrol pump has been allotted by BPCL. The assessee did not file the return of income for AY 2017-18. During FY 2016-17 demonetization scheme was announced. As per the data available on ITBA module, it was noticed that during the year sum of Rs. 2,62,77,730/- was deposited in the current bank account held with State Bank of India. Based on information and after taking necessary approval from the competent authority case of the assessee reopened by issuing of notice u/s 148 of the Act and assessment proceedings were carried out. However, even after issuing various notices there was no compliance and ld. AO passed the best judgment Page 3 of 9. I.T.A. No.: 339/PAT/2023 Assessment Year: 2017-18 Smt. Ranju Kumari. assessment order u/s 144 of the Act and made the addition for the alleged cash deposit of Rs. 2,62,77,730/- u/s 69A of the Act and also invoked Section 115BBE of the Act. 3.2. Aggrieved, the assessee preferred appeal before ld. CIT(A) but the same was delayed by 151 days. The reasons for delay stated by the assessee was that she was not aware of the income tax proceedings and only after being served with the penalty notice she came to know about the assessment order and thereafter filed the appeal. In reply to the notice of hearing by ld. CIT(A), NFAC the assessee filed written submission including audited profit and loss account, affidavit for condoning the delay with reasons and also informing about the activity of the assessee of running a petrol pump and that the cash deposits are on account of sale from petrol, diesel, gas and lubricant. However, ld. CIT(A) even after taking note of the assessee’s submission and the information about running of the petrol pump did not condone the delay and dismissed the assessee’s appeal. Aggrieved, the assessee is now in appeal before this Tribunal.
4. Ld. Counsel for the assessee has file a detailed paperbook consisting of various details of purchase, sale and deposit in the bank account, ledger account in the books of BPCL, bank statement, information about the death of her husband and she being not aware about the income tax proceedings and also stating that the notice of hearing by the ld. AO as well as ld. CIT(A) were not sent on the e-mail address mentioned in the income tax return furnished in compliance to notice u/s 148 of the Act. He further submitted that all the cash deposits in the bank account held with State Bank of India are duly accounted for is regular books and Page 4 of 9 I.T.A. No.: 339/PAT/2023 Assessment Year: 2017-18 Smt. Ranju Kumari. they are part of the total sales shown in the audited financial statements and also that the assessee was authorised to receive the cash against sale of petrol, diesel and gas which are authorised by the Public Sector Oil Marketing Companies during the demonetization period as per the notification of Ministry of Finance dated 08.11.2016. He thus prayed that the declared net profit in the audited financial statement at Rs. 3,07,646/- may please be accepted. 4.1. On the other hand, ld. DR submitted that assessee did not avail the opportunity granted by the lower authorities and the matter may at best can be restored to the jurisdictional assessing officer for examining it afresh.
We have heard rival contentions, perused the records placed before us. The only issue for our consideration is that whether ld. CIT(A) was justified in upholding the action of the ld. AO for making deposit for unexplained cash deposit of Rs. 2,62,77,730/- allegedly deposited by the assessee in the current bank account of her sole proprietorship concern M/s. Pappu Fuel Station held with State Bank of India. Admittedly, assessee has not filed the return of income but in compliance to notice u/s 148 of the Act she has furnished the return on 11.01.2022 wherein detail of e-mail address and phone number are provided. Ld. CIT(A) has not condoned the delay but even though the assessee has furnished the information about running the petrol pump allotted by BPCL and that the cash deposited are on account of sales made from the petrol pump. Ld. CIT(A) has not devoted any energy on the merits and has summarily dismissed the assessee’s appeal by not condoning the delay. At this juncture, we notice that the assessee Page 5 of 9 I.T.A. No.: 339/PAT/2023 Assessment Year: 2017-18 Smt. Ranju Kumari. had furnished following documents in the paperbook dated 09.09.2024:
1. 1. Comparative statement of month wise purchase, sale and deposit in the bank account of the assessee.
2. Copy of the ledger account of the assessee in the books of accounts of Bharat Petroleum Corporation Limited.
3. Copy of the bank statement of current account number 34510854825 with State Bank of India.
4. Copy of the First Incidence Report along with the death certificate in respect of the assessee's spouse.
5. Copy of the relevant page of the ITR for the assessment year 2021- 22, evidencing mentioning of the email address and contact number of the assessee’s accountant/counsel.
6. Copy of the notification number SO 3408(E), dated 08-11-7016, issued by the Ministry of Finance (Department of Economic Affairs), permitting deposit of cash in SBN notes by Petrol Pumps.
7. Copy of the decision of the Hon'ble ITAT, Rajkot Bench, Rajkot delivered in the case of Avadh Petroleum, in ITA number 52/RRJT/2022. 5.1. Though the assessee has furnished the details of income in the income tax return and also furnished the copy of audited profit and loss account before ld. CIT(A) but they all have went unnoticed. The copies of bank statements have been filed for the first time before this Tribunal. At this stage, either the matter may be restored to the file of jurisdictional assessing officer for carrying out one more round of assessment proceedings but we on examining the documents find that the assessee has successfully demonstrated that it is running a petrol pump allotted by BPCL. This fact was placed before both the lower authorities also. Considering this fact, restoring the issue to the file of the ld. AO
Page 6 of 9 I.T.A. No.: 339/PAT/2023 Assessment Year: 2017-18 Smt. Ranju Kumari. will unnecessarily give rise to one more round of proceedings which we do not deem proper under the given facts of the case.
6. We have gone through the details filed before us and the fact remains undisputed that the assessee has been running a petrol pump and the alleged cash of Rs. 2,62,77,730/- was received by her during the year at the petrol pump namely M/s. Pappu Fuel Station. During the demonetization period, the assessee was entitled to receive the old notes at her petrol pump for selling petrol, diesel and lubricant etc. A copy of bank statement held with State Bank of India placed at page 52-80 of the paperbook indicates that the cash deposited in the bank account has been utilized for issuing cheque to BPCL for the purchases made by the assessee. The ledger account issued by BPCL placed at page 40- 51 asserts the fact that the cheques issued from State Bank of India has been received by BPCL against the sales made to the petrol pump run by the assessee. Monthly details of purchase sales have also been placed before us and there is no major increase in sales during the demonetization period and they have normally been consistent throughout the year. Therefore, we are of the considered view that the alleged cash deposit is from sale of petroleum products at the petrol pump allotted by BPCL (a public sector undertaking) which is run by the assessee in the name of M/s. Pappu Fuel Station. So far as the net profit earned during the year is concerned, assessee has declared a net profit of Rs. 3,07,646/- and gross profit of Rs. 9,29,949/- on the gross sales of 3.23 Crore. Books of accounts have been audited by the Chartered Accountant Farm namely Sujit Mishra and Associates dated 30.09.2017. Quantitative records are duly maintained. Gross Page 7 of 9 I.T.A. No.: 339/PAT/2023 Assessment Year: 2017-18 Smt. Ranju Kumari. profit margine at the petrol pumps are normally ranging between Rs. 1.5 to Rs. 3 per litre for petrol and around Rs. 2 to Rs. 3 for diesel. Considering this aspect, we find that the assessee has disclosed the net profit in consonance with the generally accepted market practice and the same should be accepted as the net profit for the year. 6.1. We, accordingly sustain the addition of Rs. 3,07,646/- being the net profit from petrol pump and delete the remaining amount of addition of Rs. 2,59,70,084/- and partly allow the grounds of appeal
raised on merits of the case. 6.2. We, further hold that since the alleged cash deposits are on account of business activity carried out by the assessee and has been duly explained and no addition has been sustained u/s 69A of the Act, provisions of Section 115BBE of the Act will have no application. 6.3. Accordingly, ground nos. 1, 2 & 3 are partly allowed, ground no. 4 is allowed, ground no. 5 is dismissed as not pressed (as referred supra) and remaining grounds being general in nature needs no adjudication.