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Facts
The assessee's appeal was filed with a delay of 12 days, which was condoned. The Assessing Officer treated a sum of Rs. 11,10,000/- deposited during the demonetization period as income from other sources under Section 69A of the Income Tax Act, 1961, after considering a portion of the total credit in the assessee's account.
Held
The Tribunal directed the Assessing Officer to consider the Rs. 11,10,000/- as business receipt and apply a net profit rate of 12% on the combined amount of Rs. 99,96,887/- and Rs. 11,10,000/- as business income. The grounds raised by the assessee were allowed for statistical purposes.
Key Issues
Whether the CIT(A) was justified in confirming the Assessing Officer's order, particularly regarding the treatment of cash deposits made during the demonetization period.
Sections Cited
69A
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Before: Shri S.S. Viswanethra Ravi & Shri Jagadish
Year: 2017-18 Bhura Ram Choudharay, Vs. The Income Tax Officer, 94/1, Rajeshwar Tube Corporation, Non Corporate Ward 1(1), K.K. Lane No. 1, Avinashi Road, Coimbatore. Coimbatore 641 001. [PAN:AINPC1427C] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri S. Bhupendran, Advocate (Virtual) ��थ� की ओर से/Respondent by : Ms. R. Anita, Addl. CIT सुनवाई की तारीख/ Date of hearing : 28.01.2025 घोषणा की तारीख /Date of Pronouncement : 26.02.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order dated 24.07.2024 passed by the Addl/JCIT(A)-3, Bengaluru for the assessment year 2017-18.
We find that this appeal is filed with a delay of 12 days. The assessee filed an affidavit along with hospital discharge summary stating the reasons. Upon hearing both the parties and on examination of the said affidavit, we find the reasons stated by the assessee are bonafide, which really prevented in filing the appeal in time. Thus, the delay is condoned and admitted the appeal for adjudication.
The assessee raised 3 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the order of the Assessing Officer.
4. We note that the Assessing Officer found total credit in assessee’s account to an extent of ₹.1,33,25,331/-. Further, the Assessing Officer observed that out of said amount, ₹.11,10,000/- deposited during demonetization period. The Assessing Officer applied net profit rate @ 8% of ₹.1,22,15,331/-[₹.1,33,25,331 – 11,10,000] as business income. Further, regarding the amount of ₹.11,10,000/-, which was deposited during demonetization period charged to tax under income from other sources under section 69A of the Income Tax Act, 1961 [“Act” in short] after giving benefit of ₹.3,61,335/-, thereby, the Assessing Officer determined the income of the assessee at ₹.17,25,891/- [8% of business income of ₹.9,77,226/- and ₹.7,48,665/- under section 69A of the Act]. The ld. CIT(A), on an examination of the profit and loss account & VAT return, held that the turnover of the assessee was ₹.99,96,887/- and applied 8% on the same. The ld. CIT(A) confirmed the addition made under section 69A of the Act, by assessing income of the assessee at ₹.15,48,416/- instead of ₹.17,25,891/-.
5. Before us, the ld. AR Shri S. Bhupendran, Advocate submits that the Assessing Officer and the ld. CIT(A) are not justified in considering the cash deposits made during demonetization period out of sales receipts. The ld. AR submits that the said cash deposits made during demonetization period also to be considered as business receipt and may be applied net profit rate at 8%.
The ld. DR Ms. R. Anita, Addl. CIT vehemently opposed the same. She submits that the assessee is not entitled to accept SBN during demonetization period since the specified bank notes [SBN] are no longer legal tender. She vehemently argued to adopt net profit at 15%.
7. Taking into consideration the submissions of the ld. AR and the ld. DR, we find force in the arguments of the ld. DR and accordingly, we direct the Assessing Officer to consider the amount of ₹.11,10,000/- as business receipt and adopt net profit at 12% on ₹.1,11,06,887/- [₹.99,96,887/- + ₹.11,10,000/-] as business income. Thus, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 26th February, 2025 at Chennai.