DCIT, JAIPUR vs. RAMAVATAR GUPTA, JAIPUR

The Revenue in this appeal is aggrieved by the action of ld. CIT(A) in deleting the addition made by the Assessing Officer (in short, “the AO”) of Rs. 1,47,95,000/- u/s 69A of the Income Tax Act (In short ‘the Act’), in respect of the cash deposited by the assessee in specified bank notes/demonetization currency during the demonetization period from 08.11.2016 to 31.12.2016.

The assessee is an owner of private petrol pump. After the announcement of demonetization scheme, the Government to mitigate the hardships faced by the citizens had given certain exemptions to certain entities to accept the demonetized currency including to the petrol pumps operated by Public Sector Companies. The assessee, though, operated a private petrol pump, however, was under bona fide belief that it was entitled to accept the demonetized currency and hence, accepted the old/demonetized currency notes against the sale of the fuel/oil. The AO, however, held that the assessee had accepted the demonetized currency against the RBI mandate. He observed that such an exemption to accept demonetized currency on sale of petrol was available only to the petrol pumps operated by Public Sector Companies and not to privately owned petrol pumps. He, therefore,

In appeal, the ld. CIT(A), observed that the assessee was under bona- fide belief that he was entitled to accept the demonetized currency on sale of petrol/diesel. He further observed that the AO has not disputed the sale of the petrol/diesel, against which, the said currency was accepted. He, therefore, observed that the assessee, thus, had duly explained the source of such deposits and hence, it was not a case where the assessee had failed to disclose the source of the said deposits in the bank account. He, therefore, relying upon the decision of the Co- ordinate Jaipur Bench of the Tribunal, in case of “ACIT Vs. Chandra Surana” in ITA No. 166/JP/2022 and further on the decision of the Chennai Bench of the Tribunal in the case of “Mr. Ganapathy Palaniyappan Vs. DCIT” in ITA No. 557/Chny/2022 dated 04.01.2023 and also upon other decisions of the Tribunal, deleted the additions so made by the AO.

After hearing both the learned Representatives of the parties, we do not find any reason to interfere with the above order of ld. CIT(A). Though, the assessee might have violated RBI notifications, but for that a separate action could be initiated against the assessee, if so provided under law. However, it is not a case of unexplained cash deposits.

There is no merit in the appeal of the revenue and the same is accordingly dismissed.