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Facts
The Revenue appealed against the CIT(A)'s order deleting an addition of Rs. 3,96,26,000/- made by the Assessing Officer under Section 68/69A for unexplained cash credits. The addition stemmed from cash deposits made by the assessee, a petrol pump owner, during the demonetization period, which the AO considered unexplained. The CIT(A) had deleted the addition by relying on judicial precedents and the assessee's explanation that deposits were from petrol sales.
Held
The Tribunal acknowledged that while the assessee largely discharged the onus of explaining the cash deposits from her petrol pump business, a complete explanation for all deposits was not provided. To balance justice, the Tribunal decided to impose a lump sum addition of Rs. 1,00,000/- as unexplained cash credit, partially upholding the Revenue's contention.
Key Issues
Whether the CIT(A) was correct in deleting the addition of unexplained cash credit made by the AO under Section 68/69A for cash deposits during demonetization, and whether the assessee had sufficiently explained the source of such deposits.
Sections Cited
147, 144, 68, 144B, 69A, 271AAC, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. Naveen Chandra
Asstt. Year : 2017-18 Income Tax Officer, Vs Promila Devi, Ward-3, 726/1, Lal Bahadur Shastri Rohtak, Haryana-124001 Nagar, Rohtak, Haryana-124001 (APPELLANT) (RESPONDENT) PAN No. AMAPD4208K Assessee by : None Revenue by : Ms. Harpreet Kaur Hansra, Sr. DR Date of Hearing: 05.05.2025 Date of Pronouncement: 05.05.2025 ORDER
Per Satbeer Singh Godara, Judicial Member:
This Revenue’s appeal for Assessment Year 2017-18, arises against the CIT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2023-24/1058463963(1) dated 05.12.2023, in proceedings u/s 147 r.w.s. 144 of the Income Tax Act, 1961 (in short “the Act”).
Case called twice. None appears at the assessee’s behest. She is accordingly proceeded ex-parte.
Coming to the Revenue’s sole substantive ground seeking to revive the Assessing Officer’s action making section 68 unexplained cash credit addition in the assessee’s hands
“6. Decision: The appellant in its grounds of appeal assailed the AO in assessing the income u/s 144 r.w.s. 144B r.w.s. 147 of the Act and making addition of Rs. 39626000/- u/s 69A of the Act being the cash deposit in the bank account during the demonetization period. Statutory notices by system as well SMS on the registered mobile number. However, no compliance was made accordingly the AO proceeded to add the cash deposit of Rs. 39626000/- u/s 69A of the Act. The AO in the assessment order noted that the assesee had made compliance from time to time and not finding the submission tenable proceeded to add the cash deposit in the assessment order framed u/s 144 r.w.s. 144B r.w.s 147 of the Act. It is to state that the submission of the appellant was forwarded to the JAO and a remand report was called for providing his comments. However, no remand report was received despite reminder. Therefore, the appeal is decided on merit as emanating out from the assessment order and the submission of the appellant. 6.1 The appellant in its submission stated that it is running a petrol pump in the name of Kisan Sewa Kendra at Nidana Khas, Meham for last many years and is regularly filing her ROI. The submission of the appellant is perused. It is seen from the Cash Transaction 2016 statement of the Income Tax department mentioning the amount of Rs. 6821000/- was deposited in the Oriental Bank of Commerce A/c No. 003240111000195/-of the Promila Devi Prop Kamal Kisan Sewa Kendra during the demonetization i.e., from 8.11.2016 to 31.12.2016 period. The appellant had submitted the cash deposit statement for the period 8.11.2016 to 31.12.2016, the copy of VAT return, the monthly cash summary from the sales of the petrol, and total sales, the bank statement and the letter of allotment of the petrol pump. Further, the appellant also relied on a number of judical decisions. As is seen that there was a cash deposit of Rs. 6821000/- the AO added the total cash deposited during the impugned A.Y. 6.2 The submission of the appellant is examined perused and the case laws are perused. The Hon’ble ITAT-Ahmedabad in in case of ITO Vs Ashapura Petrochem Marketing Pvt. Ltd. held that addition under section 68 of the Income Tax Act towards unexplained cash credit unjustified as source of cash deposit on account of sale of petrol, diesel and other petroleum products duly proved. The relevant part of the order is reproduced below: “2.1 During demonetization period i.e., 09.11.2016 to 31.12.2016, the assessee Page 9 of 11deposited Specified Bank Notes (SBN) of (Denomination of Rs. 500 & Rs. 1000) in the Co-operative Bank of Rajkot Ltd. of Rs.
Promila Devi 1,24,59,500/-. AO noticed that the cash deposit made during the demonetization period was much higher than during the normal period. Therefore the A.O. relied on Notification dated 08.11.2016 issued by Department of Economic Affairs, Ministry of Finance, Government of India that the petrol pump was operated by the assessee (namely Reliance Industries Ltd.) was not an authorized Public Sector Oil Marketing Company. During the demonetization period, the assessee ought not to have collected Specified Bank Notes, therefore the same was added as unexplained cash credit u/s. 68 of the Act and also initiated Penalty proceedings u/s. 271AAC of the Act. … … 7. We have given our thoughtful consideration and perused the materials available on record including the Paper Book filed by the assessee. The addition made by the Ld. Assessing Officer of Rs. 1,24,59,500/- u/s. 68 of the Act mainly on the ground that the assessee was not authorized to accept Specified Bank Notes during demonetization period as observed in the assessment order. Thus, it is an admitted fact that the cash deposit is on account of sale of petrol, diesel and other petroleum products. These sales have been duly recorded in the books of accounts and appropriate VAT taxes also collected by the assessee. The Manager of the assessee company also filed a Notarized Affidavit dated 29-03-2017 accepting the above facts during the course of assessment proceedings. Thus, it is clearly established that the Ld. A.O. on one side accepting the source of cash deposit and on the other side, he is making the cash deposit as unexplained cash credit which is self-contradictory. The Assessing Officer following the Circular dated 08-11-2016, which is not applicable since Para (e) of the Circular deals with the cases of purchase of petrol, diesel etc., and not to sale of petrol, diesel by accepting Specified Bank Notes. Thus, the invocation of Section 68 is invalid in law. 7.1 Further the assessee filed complete details of Purchase register, Sales register, Cash Book, Bank statement, Month-wise details of purchase and sales, Copies of VAT returns etc. However, the Ld. A.O. is not able to find any defect in the books of accounts, except general statements made in the assessment order. Though the A.O. has doubted the sales made during the year, he is not doubted the purchases made or stock maintained by the assessee during the year. Further the assessee also demonstrated the fluctuations in the sales during the entire period and there is no drastic increase in sales during the period of demonetization. It is further noticed that it is the month of May 2016 sales reported at 84.81 lacs. Similarly, in the month of November 2016 (demonetization period), the sales are reported at 1.04 crores which is not found to be drastic higher figure. Thus, the deletion made by the Ld. CIT(A) does not require any interference.
Promila Devi 9. Respectfully following the above judicial precedents, we have no hesitation in confirming the deletion of Rs. 1,24,59,500/- made u/s. 68 of the Act. Thus, the grounds raised by the Revenue are devoid of merits, hence, the same are hereby dismissed.
10. In the result, the appeal filed by the Revenue is hereby dismissed. Order pronounced in the open court on 18-10- 2023.” 6.3 The facts of the case are analyzed in the light of the ratio of the above judgement and respectfully following the decision of the Hon’ble ITAT the addition made by the AO of Rs. 39626000/- is deleted. The Ground of appeal no 1 to 4 are allowed.”
4. Learned departmental representative vehemently argues during the course of hearing that the Assessing Officer had rightly made the impugned addition which deserves to be revived in the Revenue’s instant appeal once the assessee had failed to prove source of her cash deposits during demonetization. These Revenue’s vehement contentions hardly deserves to be accepted in entirety. This is for the precise reason that although the assessee prima facie appears to have discharged her onus of explaining source of her cash deposits from petrol pump business for the last very many assessment years, the department endeavour’s to treat all of her sales as unexplained, could not be accepted. The fact also remains that some element of failure to explain source of cash deposits, in these facts couldn’t be altogether ruled out. Be that as it may, it is deemed appropriate in the larger interest of justice that a lump sum addition of Rs.1,00,000/- only would just and proper with a rider that the same shall not be treated as a precedent,
So far as the assessee’s assessment under Section 115BBE is concerned, we quote S.M.I.L.E Microfinance Limited Vs. The ACIT CC-1 in W.P.(MD) No.2078 of 2020 & W.M.P. (MD) No. 1742 of 2020 held that the said provision applied for transactions done on or after 01.04.2017 only. Necessary computation shall follow as per law.