SUSHILADEVI PARASMALJIJAIN,HUBBALLI vs. THE INCOME TAX OFFICER, WARD -1(4), HUBLI
Income Tax Appellate Tribunal, ‘SMC’ BENCH: BANGALORE
Before: SHRI WASEEM AHMEDAssessment Year: 2017-18
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi dated 28/08/2024 vide DIN No. ITBA/NFAC/S/250/
2024-25/1068079170(1) for the assessment year 2017-18. 2. The issue raised by the assessee in ground No. 1 is general in nature and does not require any separate adjudication. Likewise, the issues raised in ground Nos. 12 & 13 in relation to levy of interest u/s 234B & 234C of the Act are consequential in nature and do not require
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any separate adjudication. Hence, the ground Nos. 1, 12 and 13 of the assessee’s appeal are hereby dismissed as infructuous.
The issue raised by the assessee in ground Nos. 2 to 8 of its appeal are interconnected and pertains to the addition of Rs. 44,32,000/- by treating the cash deposit during the demonetization as unexplained money.
The relevant facts are that the assessee is an individual and engaged in the business of wholesale trading of saree through proprietary concern in the name and style of “Saraswati Saree Center”. The assessee during the demonetization period i.e. between 9th November 2016 to 31st December 2016 made cash deposits of Rs. 44,32,000/- which included Rs. 30 Lakh in old currency and balance amount in new currency. The assessee during the assessment proceeding claimed the impugned cash deposit was made out of business transactions.
The AO through questionnaire issued u/s 142(1) of the Act, asked the assessee to furnish the details such cash sales, withdrawal and deposits during the demonetization as well as prior to the demonetization period. However, the AO found that the assessee failed to furnish, or file respond to the questionnaire. Hence, the AO in absence of required details treated the entire cash deposit of Rs. 44,32,000/- as unexplained/unaccounted money as per the provision of section 69A of the Act and added to the total income of the assessee. Page 3 of 9
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6. The aggrieved assessee preferred an appeal before the learned
CIT(A).
The assessee, before the learned CIT(A), submitted that during the year under dispute, the total aggregate sales amounted to Rs. 3,00,50,354/-, out of which cash sales was accounted for Rs. 2,04,30,828/- only. During the period from 01.04.2016 to 08.11.2016, she (assessee) received cash amounting to Rs. 1,50,79,675/- as part of sales realization. As of 08.11.2016, the closing cash balance stood at Rs. 31,30,306/-, which was subsequently deposited into the Karnataka Bank account during the demonetization period. Further, for the period from 09.11.2016 to 31.12.2016, the total cash sales amounted to Rs. 28,95,636/-, and out of this, a sum of Rs. 14,32,000/- was deposited in the bank account during said period in new denomination currency.
The assessee in support of her submission furnished cash deposit summary containing month wise detail of opening cash balance, cash from sales realization during the month, cash deposited during the month and closing balance for the moth. The said detail was provided from April 2016 to March 2017. 9. However, the learned CIT(A) found that the assessee during the assessment proceedings failed to furnish the details required by the AO. The details submitted during the appellate proceeding were in the nature of additional evidence which were submitted were without proper application of provision of rule 46A of the Income Tax Rules. Further, the learned CIT(A) held that the additional evidence furnished by the assessee were incomplete and not supporting the ground of appeal Page 4 of 9
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raised. Hence the learned CIT(A) confirmed the addition made by the AO.
Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before me.
The learned AR before us filed application under rule 29 of ITAT Rules 1963 to accept the extract of cash books of the year under consideration as additional evidence. The learned AR before us claimed that the cash book was not filed before the learned CIT(A) but other details furnished were sufficient to explain the source of cash deposit during the demonetization. Thus, the learned AR contended before us that the cash deposited in the bank account does not represent unexplained money under section 69A of the Act.
On the other hand, the learned DR before us vehemently supported the order of the authorities below.
I have heard the rival contentions of both the parties and perused the materials available on record. Admittedly the assessee during the demonetization period i.e. between 9th November 2016 to 31st December 2016 made cash deposit of Rs. 44,32,000/- out of which Rs. 30 Lakh was deposited on 10th & 11th November 2016 in old demonetized currency whereas remaining amount of Rs. 14,32,000/- was deposited in the month of December 2016 in new currency.
1 The assessee during the assessment proceeding claimed that the cash deposit is out of business proceeds and in support of the claim taxmann.com 141. The relevant observation of the Tribunal is extracted as under: Now the learned AR for the assessee before us filed the copy of abovementioned documentary evidence and pleaded to admit the same as additional evidence. At the outset, we find that these additional evidences are crucial evidence in order to decide the issue whether the loan taken by the assessee form Shri Suresh Patel was utilized for acquiring the land property or not and consequently the assessee should be allowed the claim of interest expenses as cost of improvement or not. Therefore, considering the importance of the additional evidence which has direct bearing on the outcome of the dispute, we hereby exercise the power conferred under rule 29 of Income-tax (Appellate Tribunal) Rule 1963 and admit the same.
6 In view of the above discussion and considering the nature of the evidence, I exercise the power conferred under rule 29 of the ITAT rule and accept the additional evidence. However, I note that the revenue authorities have not got the opportunity to verify these details. Therefore, for the sake of justice and fair play I hereby set aside the issue to the file of the AO for de-novo adjudication in the light of additional evidence furnished by the assessee and as per the law. Hence the ground of appeal of the assessee is herby allowed for statistical purposes.
The issue raised by the assessee vide ground No. 9 of its appeal pertains to the addition of interest income of Rs. 91,623/-. Page 7 of 9
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The AO during the assessment proceedings found that the assessee earned interest income of Rs. 69,623/- from the fixed deposit which was not offered to tax. Similarly, an amount of Rs. 22,000/- reflected in Form-26AS as interest from Shri Dalichand Amolakchand Kothari which was also not offered to tax. Hence the AO added the sum of Rs. 91,623/- (Rs. 69,623 + Rs. 22,000) to the total income of the assessee under the head income from other sources.
The aggrieved assessee preferred an appeal before the learned CIT(A) and submitted that impugned amount of interest income included in the profit and loss account under the indirect income head as “interest account”. Thus, the same has already been included in the income offered to tax. However, the learned CIT(A) dismissed the ground of appeal without assigning any specific reasons.
Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us.
The learned AR before us reiterated that the interest income was already included in the profit loss account and thereby same was offered to tax. Therefore, making the addition of the same under the head income from other sources will amount to double addition.
On the other hand, the learned DR vehemently supported the order of the authorities below. Page 8 of 9
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20. I have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the assessee has earned interest income on fixed deposits and from the party namely Shri
Dalichand Amolakchand Kothari for an amount aggregating to Rs.
91,623/- only. The AO alleged that the impugned interest income was not offered to tax whereas the assessee before the learned CIT(A) as well as before us submitted that impugned interest has already been part of the profit and loss account under the head “Interest Account”. In this regard, I perused the profit and loss of the assessee available on page 50 of paper book and found that the assessee on debit side of profit loss has shown interest account of Rs. 1,22,466/- only. I further perused the ledger copy of “Interest Account” available on page 94 of the paper book and on perusal of the same I notice that the assessee on debit side of the said ledger has claimed interest expenses of Rs.
3,03,400/- and on the credit side has shown interest income of Rs.
1,80,934/- which included the amount from Shri Dalichand Amolakchand
Kothari for Rs. 22,020/- and interest on FD with Karnataka Bank for Rs.
69,623/-. Thus, the assessee after netting of interest expenses and interest income claimed an expenditure of Rs. Rs. 1,22,466/- only. From the above it is transpired that the interest income as disputed by the AO has already been offered to tax by the assessee by netting of the same against the interest expenditure. Therefore, making further, addition of the same under the head income from other sources will amount to double addition. It is also pertinent to highlight that the ledger copy of “interest account” was submitted first time before the learned CIT(A) but same was not considered by the learned CIT(A) by holding that same was in the nature of additional evidence filed without complying with provision of rule 46A of the IT rules. However, I for the sake of brevity,
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cutting the unnecessary litigation and exercising the power conferred under rule 29A of the Act admit the same. Nevertheless, I note that the revenue authorities have not got the opportunity to verify these details.
Therefore, for the sake of justice and fair play I hereby set aside the issue to the file of the AO for de-novo adjudication in the light of additional evidence furnished by the assessee and as per the law.
Hence the ground of appeal of the assessee is hereby allowed for statistical purposes.
In the result, the appeal of the assessee is hereby partly allowed for statistical purposes.
Order pronounced in court on 3rd day of March, 2025 (WASEEM AHMED)
Accountant Member
Bangalore
Dated, 3rd March, 2025
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Copy to:
The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file
By order
Asst.