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Facts
The assessee, a food grain trader, deposited Rs.1,03,50,000/- during demonetization. Rs.15 lakhs were declared under PMGKY. The AO added back Rs.88,50,000/-. The CIT(A) restricted the addition to Rs.23 lakhs, confirming addition for Rs.15 lakhs and Rs.8 lakhs deposited in SBN.
Held
The Tribunal held that the addition of Rs.15 lakhs was not part of the original assessment order and should be deleted. The Tribunal further found that the addition of Rs.8 lakhs was from the declared turnover and supported by evidence, hence it was also deleted, relying on a coordinate bench's decision in a similar case.
Key Issues
Whether cash deposits made during demonetization, when explained as being from sales and other legitimate sources, can be added to income as unexplained. Whether additions confirmed by CIT(A) were justified when they were not part of the AO's original order or were from declared turnover.
Sections Cited
250, 147, 144, 144B, 69A, 115BBE, 139, 148, 68
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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI AMARJIT SINGH & SHRI ANIKESH BANERJEE
Instant appeal of the assessee was filed against the order of the National Faceless Appeal Centre (NFAC), Delhi *for brevity, ‘Ld.CIT(A)’) passed under section 250 of the Income-tax Act, 1961 (for brevity, ‘the Act’), date of order 05/11/2024 for A.Y. 2017-18. The impugned order was emanated from the order of the Ld. Assessment Unit, Income-tax Department (for brevity, ‘Ld.AO’) passed Hiralal Shivlal under section 147 read with section 144 read with section 144B of the Act, date of order 19/05/2023.
The assessee has taken the following grounds:-
The following grounds of appeal are without prejudice to one another:-
1. On the facts in circumstances of the appellant's case and in law the order passed by the Ld. CIT(A) u/s. 250 of the Income Tax Act, 1961 (the Act) dated 05- 11-2024 the same is erroneous and prejudicial to the interest of natural justice and fair play.
2. On the facts in circumstances of the appellant's case and in law the Ld. CIT(A) erred in holding that the cash deposited amounting to Rs.23,00,000/- as unexplained money and added to the total income u/s 69A of the Income Tax Act, 1961 without considering the fact that we have provided 100% evidence for the same.
3. The appellant craves leave to add to, alter, amend and/or delete all or any of the foregoing grounds of appeal.
The appellant prays this Hon'ble Tribunal to quash the impugned order passed by the Ld. CIT (A) by invoking the provision of section 250 of the Income tax Act, 1961.”
During the course of hearing, the Ld.AR argued and withdrew ground No.1; hence the ground no-1 of the appeal is dismissed as withdrawn.
The brief facts of the case are that the assessee is a trader, wholesaler and retailer of the food grain. During the demonetization, the assessee deposited cash amount to Rs.1,03,50,000/- in his bank account. Out of the total deposit, the assessee declared amount of Rs.15 lakhs relatedSBNin Pradhan Mantri Garib Kalyan Yojana (in short, ‘PMGKY’). Accordingly, the assessment was completed Hiralal Shivlal and the Ld.AO restricted the addition amount to Rs.88,50,000/- after deducting Rs.15 lakhs deposited in PMGKY from the total deposit of Rs.1,03,50,000/-. So, the addition amount to Rs.88,50,000/- was added back under section 69A of the Act read with section 115BBE of the Act. The said order was assailed before the Ld. CIT(A). The Ld.CIT(A), after considering the submission of the assessee accepted the cash deposit made in the denomination in Rs.2,000/- notes and accepted the related deposit of the asseesse is genuine. Only the balance amount of Rs.15 lakh& Rs. 8 lakh which were deposited in SBN on 10/11/2016 and 17/11/2016, respectively were confirmed for addition. The balance amount of Rs.23 lakhs was sustained, and rest was deleted. Accordingly, the appeal of the assessee was partly allowed. Finally, the assessee filed an appeal before the ITAT by challenging the addition confirmed by the Ld.CIT(A) amount to Rs.23 lakhs.
We heard the rival submissions and considered the documents available in the records.The Ld.AR filed a written submission which is kept in the record. We have gone through the impugned order of the Ld.CIT(A). The paragraphs5.3.1 &5.3.2 of the alleged appeal order are reproduced as below: - “5.3.1 It was submitted that the cash deposited in the banks includes the Rs. 2000/-notes also and the same are on account of sales. It is seen that on 10.11.2016 the appellant had deposited Rs. 15,00,000/- in SBN and on 17.11.2016 Rs. 8,00,000/- has been deposited in SBN. The remaining amounts are deposited in the form of new currency only. The demonetization period was the unique period when all the specified bank notes have become illegal tender as the demonetization being announced to curb the black money. 5.3.2 In view of the above discussion, the AO is directed to restrict the addition to Rs. 23,00,000/- deposited in the form of SBN as the source of which remain unexplained and
The Ld. DR argued and relied on the order of the revenue authorities.
We find that the Ld.CIT(A) has only upheld the addition related to the deposit in SBN amount to Rs.15 lakhs and Rs.8 lakhs. The Ld. CIT(A) erred in confirming the addition amount to Rs.15 lakhs which was not the part of the addition in impugned assessment order and the assessee had obtained the PMGKY related the alleged deposit. So, the addition amount of Rs.15 lakhs is unjustified and liable to be deleted. Related the addition amount to Rs.8 lakhs, the ld. AR stated that the assessee is a regular trader of food grain. The assessee filed the return under section 139 and also the return filed in pursuance of notice under section 148 of the Act. Further, assessee declared the entire deposit in his turnover and declared in return of income.In argument the Ld. AR stated that books of accountwereproduced including thestock register which are not at all rejected by the Ld.AO during the time of assessment. Finally, the assessee has declared his turnover in VAT return and the month-wise details of sales and purchases was duly submitted before the revenue authorities. The ld. AO had not rejected any of the documents and the veracity of the evidence was not challenged. The assessee submitted comparative chart of month-wise cash deposits for F.Y. 2015-16 and FY 2016-17 which is reproduced as below: - Hiralal Shivlal FY 2015-16 FY 2016-17 Month Cash deposited Month Cash deposited Apr -15 53,50,000 Apr -16 69,50,,000 May-15 51,00,000 May-16 72,00,000 Jun-15 40,50,000 Jun-16 78,00,000 Jul-15 45,50,000 Jul-16 76,00,000 Aug-15 48,00,000 Aug-16 52,00,000 Sep-15 47,40,000 Sep-16 70,05,800 Oct-15 51,50,000 Oct-16 88,50,000 Nov-15 60,00,000 Nov-16 57,50,000 Dec-15 54,50,000 Dec-16 67,00,000 Jan-16 58,50,000 Jan-17 64,50,000 Feb-16 57,00,000 Feb-17 61,20,000 Mar-16 67,00,000 Mar-17 87,00,000 6,34,40,000 8,44,35,800 On perusal of the chart, we find that in November 2015, the assessee deposited cash of Rs.60 lakhs whereas cash deposited in November, 2016 was Rs.57,50,000/-. In comparison with demonetization period, the assessee deposited lesser cash in the impugned assessment year. Further, the Ld.AR relied on the order of the co-ordinate bench of ITAT, Delhi Bench “C” in the case of J.R. Rice India (P) Ltd vs ACIT (2025) 157 taxmann.com 337 (Delhi Trib) where it was held that the cash deposited in bank maintained by the assessee company during the demonetization period was duly sourced from cash sale and recovery from the trade debtors through sundry debtors in cash. Source of cash deposits were properly explained by the assessee and thus, the impugned addition made under section 68 of the Act on account of said deposits was unjustified. The above order of the co-ordinate bench is squarely covers the facts of assessee’s case in hand. Accordingly, we find that the addition sustained by the Ld.CIT(A) amount to