INCOME TAX OFFICER, WARD-3(2), PURULIA, PURULIA vs. LADHURKA C S SHOP, PURULIA

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ITA 749/KOL/2024Status: DisposedITAT Kolkata19 May 2025AY 2017-184 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the deletion of the addition made by the AO. The Tribunal noted that although the assessee did not appear before the AO, all necessary documents were filed before the CIT(A). The CIT(A) had called for a remand report from the AO regarding the cash deposits. The AO, in his remand report dated 08.01.2024, confirmed that the cash deposits were out of cash sales of liquor. The CIT(A) had passed a detailed and speaking order based on this remand report, concluding that the cash deposit of Rs. 91,86,850/- was out of liquor sales amounting to Rs. 1,25,26,785/-. The Tribunal found no infirmity in the CIT(A)'s order, which was based on the AO's confirmation in the remand report. Therefore, the Tribunal upheld the CIT(A)'s decision to delete the addition made under Section 69A.

What were the facts?

The Revenue is in appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, dated 02.02.2024, for Assessment Year 2017-18. The appeal was filed with a delay of 3 days, which the Tribunal condoned. The core issue concerns the deletion of an addition of Rs. 91,02,400/- made by the Assessing Officer (AO) under Section 69A of the Income-tax Act, 1961, representing cash deposited in the assessee's bank account. The AO had reopened the assessment under Section 147 and issued notices under Sections 148, 143(2), and 142(1). The assessee, Ladhurka C S Shop, initially did not respond to the AO's notices. The AO treated the cash deposit as unexplained and made the addition. During the appeal proceedings before the CIT(A), the assessee provided details, leading the CIT(A) to call for a remand report from the AO.

What were the issues?

1. Whether the addition of Rs. 91,02,400/- made by the Assessing Officer under Section 69A of the Income-tax Act, 1961, on account of unexplained cash deposits in the bank account is sustainable? Assessee's Contentions: - The assessee contended that the cash deposits amounting to Rs. 91,86,850/- were made from cash sales of country spirits, which were duly reported in the Income-tax Return for the relevant financial year (FY 2016-17). - The assessee stated that all business transactions, including sales and purchases, were conducted through the SBI bank account (A/c No. 32306469707). - The assessee submitted that the AO incorrectly considered only a part of the bank account for the whole year, whereas the total deposit was Rs. 91,86,850/- (Rs. 52,44,050 + Rs. 39,42,800) from cash sales of Rs. 1,25,26,785/-, and the total debit was Rs. 91,66,999/-. Revenue's Contentions: - The Revenue, through the AO, initially treated the cash deposit as unexplained money, stating that the total deposits during FY 2016-17 were only Rs. 52,44,050/- and the total debit was Rs. 53,25,658/-. - The AO also noted that the bank statement submitted by the assessee was overwritten, making the submission suspicious, and the assessee did not reply to requests for explanation. - The AO inferred that the assessee either made payments in cash or used another undisclosed bank account, or deposited cash receipts in a partner's bank account.

Which sections of the Income-tax Act were involved?

Section 69A,Section 147,Section 148,Section 143(2),Section 142(1),Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM

For Appellant: Ms. Sruti Datta, AR
For Respondent: Shri Sallongyaden, DR
Hearing: 13.05.2025Pronounced: 19.05.2025

O R D E R Per Rajesh Kumar, AM:

This is an appeal preferred by the Revenue against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 02.02.2024 for the AY 2017-18.

2.

At the outset, we observe that the appeal of the Revenue is barred by limitation of 3 days for which condonation petition has been filed by the Revenue.

3.

After hearing the rival contentions and perusing the contents of the condonation petition, we are inclined to condone the delay by treating the reasons for delay to be bonafide and genuine.

4.

The issue raised by the Revenue in its appeal is against the deletion of ₹91,02,400/- by the ld. CIT (A) as made by the ld. AO u/s 69A of the Income-tax Act, 1961 (the Act) in respect of cash deposited in the bank account.

6.

In the appellate proceedings, the assessee filed all the information and details before the ld. CIT (A) and ld. CIT (A) called for the remand report from the AO, which was duly submitted and after taking into account the remand reports the addition was deleted. The ld. CIT (A) while deleting the addition observed and held as under:-

“4. Decision: 4.1. During the course of appeal proceedings, hearing notices were sent and the appellant e-filed documents / submissions. I have gone through the facts of the case and also submissions made by the appellant. The issues raised in the grounds which require adjudication, are as under: 4.2. The AO in the Assessment Order has stated that “further from the bank account submitted by the assessee it is noticed that there is total deposits during the FY 2016- 17 were only of Rs.52,44,050/-. Even bank statement submitted by the assessee was also overwritten, which further make submission of the assessee suspicious. Further even after requesting to explain such discrepancy, the assessee has not submitted any reply. The assessee made purchase of Rs.1,14,21,452/- but as per bank account statement there were total debit only of Rs.53,25,658/-, which shows that the assessee either made payments of purchases in cash or used another bank account which is not disclosed by the assessee during the assessment proceedings. From the above facts supports that the assessee used another bank account or to say the assessee deposited cash receipts in its partners (firms Bank account in which PAN of partner was given instead of Firm/assessee) bank account.Which also substantiated by concerned bank in reply to the notice issued u/s.133(6) during the assessment proceedings of partner.”

Whereas, the AO has treated part of the bank account for the whole year and stated that “the deposit during the F.Y.2016-17 were only Rs.51,44,050/0 and the total debit was only Rs.53,25,658/-.” But, actually the total deposit was Rs.91,86,850/- (Rs.52,44,050 + Rs.39,42,800), which was deposited out of cash sale of Rs.1,25,26,785/- and the rest was used for other business purposes. Further, the total debit was Rs.91,66,999/- (Rs.53,25,658 + Rs,38,41,341). 4.5. In view of the above, the AO was asked remand report to confirm the above contention of the appellant. Accordingly, the AO has submitted remand report on 08.01.2024 and stated that the total cash deposit during the year was Rs.9,86,850/- and the total debit was Rs,91,67,077/- in the said bank account of the appellant (A/c.No.32306469707) maintained in SBI, Purulia Branch. 4.6. In view of the above, I am of the considered view that the cash deposit made by the appellant in the said bank A/c. of SBI, Purulia Branch amounting to Rs.91,86,850/- was out of the liquor sales made by the appellant which was amounting to Rs.1,25,26,785/- during the year. The above facts also confirmed by the AO in the remand report dated 08.01.2004. Accordingly, the addition made by the AO on account of cash deposit u/s.69A of the Act is not sustainable and hereby deleted.

5.

As a result, the appeal filed by the appellant is hereby allowed”

7.

After hearing the rival contentions and perusing the materials available on record, we find that though the assessee did not appear before the ld. AO, however, in the appellate proceedings the assessee

8.

In the result, the appeal of the Revenue is dismissed.

Order pronounced in the open court on 19.05.2025.

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