PONSANKAR AGENCIES,ERODE vs. DCIT, CIRCLE-1,, ERODE

The assessee has filed condonation petition stating the reasons for delay in filing the appeal. We have considered the petition of delay in filing the appeal and satisfied that there was sufficient cause for not filing the appeal within the prescribed time limit. Hence, the delay is condoned accordingly.

The only effective ground of appeal in this appeal of assessee is against the order of Ld. CIT(A) in confirming the cash deposits during demonetization period of Rs. 79,10,093/-.

The assessee is a firm engaged in the business of trading in pipes, fittings and other building and water line materials. The assessee has filed its return of income declaring total income of Rs.23,91,900/- on 03.03.2015. The assessee has made cash deposit of Rs.1,00,35,000/- in Specified Bank Notes (SBN) during demonetization period. The assessee has explained the cash deposits , out of cash balance as on 09.11.2016 of Rs. 21,24,906/- and cash collection from the debtors during demonetization period.

The Ld. Authorized Representative (A.R) of the assessee has submitted that the assessee maintains proper books of accounts and the amount deposited is duly reflected in books of accounts. The Ld. AR has submitted that the A.O has made addition only because the assessee was not allowed to accept the SBNs ignoring the scope and effect of the provisions of the Specified Bank Notes (Cessation of Liabilities) Act, 2017, and relied upon the order of ITAT, Chennai in the case of Tamil Nadu State Marketing Corporation Ltd. vs. ACIT in dated 07.10.2024. The Ld. AR further submitted that the A.O has not rejected the books of account and gross profit shown for the A.Y 2017-18 is much higher compared to the gross profit in the preceding years.

The Ld. Departmental Representative (DR), on the other hand, has relied on the orders of lower authorities. available on record. The A.O has made addition of Rs. 79,10,093/- u/s. 69A of the Act for the reason that the assessee has deposited SBN during demonetization period. Assessee has explained the source of cash deposit from the business and the A.O has not examined the books of account which is duly audited. The Co- ordinate Bench of this Tribunal in the case of Tamil Nadu State Marketing Corporation Ltd. vs. ACIT, supra, has clarified that merely for the reason that there is a violation of certain notifications/GO issued by the Government in transacting with SBNs, the genuine explanation offered by the assessee towards source for cash deposit cannot be rejected, unless the A.O makes out a case that the assessee has deposited unaccounted cash into bank account in SBNs. In light of the above, we set aside the orders passed by the lower authorities and remit the mater back to the file of A.O for denovo assessment after examining the books of account and profit of the assessee. We also direct the assessee to appear before the A.O on the date of hearing without fail and furnish complete details for its fresh consideration. Therefore, the appeal filed by the assessee is allowed for statistical purposes only.

In the result, the appeal filed by the assessee is allowed for statistical purposes.