BIBEKANANDA PRADHAN,RAJ SUNAKHALA vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1), BHUBANESWAR, BHUBANESWAR

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ITA 221/CTK/2024Status: HeardITAT Cuttack10 September 2024AY 2017-184 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had a reasonable cause for accepting SBN due to the exceptional circumstances of selling liquor, where opened bottles could not be returned. The AO had accepted the assessee's sales and stock, making the addition unsustainable.

What were the facts?

The assessee deposited cash in old currency notes (SBN) during the demonetization period, which were accepted from customers for liquor sales. The Assessing Officer (AO) made an addition of Rs. 16,80,000/- as unexplained income under Section 69, after allowing for average sales.

What were the issues?

Whether the addition of cash deposited in SBN during demonetization is justified when the assessee faced compulsion to accept such currency due to business exigencies.

Which sections of the Income-tax Act were involved?

Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH CUTTACK

Before: SHRI GEORGE MATHAN

Hearing: 10/09/2024Pronounced: 10/09/2024

(ननधाारण वषा / Assessment Year : 2017-2018) Bibekananda Pradhan, Vs DCIT, Circle-2(1), Bhubaneswar At: Kauripatana, PO: Raj Sunakhala, PS: Bolagarh, Dist: Khordha PAN No. :BJJPP 3423 R (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) ननधााररती की ओर से /Assessee by : Shri P.R.Mohanty, Advocate राजस्व की ओर से /Revenue by : Shri S.C.Mohanty, Sr.DR सुनवाई की तारीख / Date of Hearing : 10/09/2024 घोषणा की तारीख/Date of Pronouncement : 10/09/2024 आदेश / O R D E R This is an appeal filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 12.03.2024, passed in DIN & Order No.ITBA/NFAC/S/250/2023- 24/1062424984(1) for the assessment year 2017-2018, on the following grounds of appeal :-

1. For that order dated 12.03.2024 as passed under Section 250 of the I.T.Act, 1961 by the Commissioner of Income Tax (Appeals) Income Tax Department hereinafter referred to as the learned CIT(Appeals) dismissing the appeal is not just and legal on the facts and in the circumstances of the case.

2. For that the learned CIT(Appeals) without properly appreciating the submissions of the appellant from its proper perspective should not have confirmed the addition of Rs.18,16,000/- u/s.69 of the I.T.Act, 1961 on the facts and in the circumstances of the case.

3. For that the learned Assessing Officer having admitted that the appellant was having only cash sales and the appellant was used to deposit the cash in the bank account the learned AO Rs.18,16,000/- u/s.69 of the I.T.Act, 1961 on the facts and in the circumstances of the case.

2.

The assessee is represented by Shri P.R.Mohanty, Advocate and department is represented by Shri S.C.Mohanty, Sr. DR.

3.

The only issue involved in this case with regard to addition of Rs.16,800/- was made u/s.69 of the Act on account of cash deposited in the bank during demonetization period under SBN.

4.

It was submitted by the ld. AR that the cash was deposited out of the sales made during the year. The assessee is dealing in IMFL and accepted the SBN during demonetization period for which the ld. AR submitted that the cash was accepted in SBN under compulsion as the customers came to the shop and had taken the goods i.e. liquor bottle and after opening the same asked the assessee to accept sale consideration in SBN. In the case of liquor, once the bottle is opened, no one can accept it as sales return, therefore, the assessee has no other alternative but to accept the sale consideration in any denomination irrespective of the fact whether it is SBN or any other currency. It was the submission that the AO has not rejected the books of accounts nor stock declared by the assessee was disturbed. The sales declared by the assessee were also accepted. He, therefore, submitted that there was a reasonable cause in accepting the SBN which was deposited in the bank and the source of the same was duly explained and not doubted by the AO.

5. In reply, ld. Sr. DR submitted that the cash was received in SBN during the demonetization and the assessee being a trader in IMFL is not authorized to collect such SBN currency, therefore, the addition made by the AO is correct. Accordingly, the ld. Sr. DR vehemently supported the orders of the lower authorities.

6.

I have heard the rival submissions. It is perused that in this case the assessee has deposited total cash out of Rs.26,46,000/- in SBN during the demonetization period. The AO after giving credit of average sales of Rs.6,30,000/- held Rs.16,80,000/- as unexplained. From the perusal of the order, it is seen that the AO nowhere held that the SBN accepted by the assessee during the demonetization is unauthorized and he himself had accepted the sales as well as stock declared by the assessee. The assessee is dealing in IMFL and had made retail sales of liquor wherein many cases customers took the goods and opened up the cap. Once the liquor bottle is opened, it cannot be returned to the seller as it cannot be accepted by any other customer and is a total loss to seller. Due to this compulsion and exceptional circumstances, the assessee had to accept the SBN in those cases. Though I am of the view that SBN cannot be accepted during demonetization except authorized by the RBI, however, as the circumstances narrated above are beyond the control of the assessee, therefore, it is a reasonable cause where to protect the interest of business and to avoid total loss, SBN were accepted from such customers. The AO has already allowed Rs.6,30,000/- as unexplained out of such sales in SBN and also accepted the trading results declared by

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