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Facts
The assessee, engaged in trading Petroleum Products, declared income for AY 2017-18. During demonetization, discrepancies were found in cash deposits, leading to additions by the AO. These included unexplained money and cash credits related to demonetized notes and alleged agricultural income.
Held
The Tribunal condoned the delay in filing the appeal. It found sufficient cash in hand to explain the deposit of Rs.2,35,000/-. The Tribunal also held that the receipt of Rs.16,96,240/- from debtors was genuine and related to business sales, and the addition for agricultural income was also deleted based on supporting evidence.
Key Issues
Whether the additions made by the Assessing Officer for unexplained cash deposits, unexplained cash credits, and alleged agricultural income during the demonetization period are justified.
Sections Cited
250, 143(3), 69, 115BBE, 68, 69A, 142(1), 143(2)
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
आदेश / ORDER
The captioned appeal at the instance of assessee pertaining to A.Y. 2017-18 is directed against the order dated 12.08.2024 of National Faceless Appeal Centre (NFAC) Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Assessment Order dated 27.12.2019 passed u/s.143(3) of the Act.
Registry has informed that there is delay of 214 days in preferring the instant appeal before this Tribunal. Assessee has filed an application for condonation of delay explaining the reasons which led to delay in filing of the appeal.
After hearing both the sides and perusing the averments made in the condonation application, I am satisfied that there was ‘reasonable cause’ which prevented the assessee to file the appeal within the stipulated time. I note that the assessee would not have gained from filing the appeal with a delay. I therefore in light of judgments of Hon’ble Apex Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. reported in (1987) 2 SCC 107 and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382) condone the delay of 214 days in filing the appeal before this Tribunal and admit the appeal for adjudication.
Assessee has raised as many as 15 grounds of appeal raising various issues which revolve around the following three additions confirmed by ld.CIT(A) :
(a) Unexplained money u/s.69 r.w.s.115BBE – Rs.2,35,000/- (b) Unexplained cash credit u/s.68 r.w.s.115BBE – Rs.60,96,240/- (c) Unexplained cash credit u/s.68 r.w.s.115BBE – Rs.1,65,900/-.
Brief facts of the case are that the assessee is an individual and engaged in the business of Trading in Petroleum Products of BPCL under the name M/s.Sahyadri Service Station. Income of Rs.7,71,120/- declared in the e- return for A.Y. 2017-18 filed on 22.01.2018. After the case selected for scrutiny under CASS followed by validly serving statutory notices u/s.143(2) and 142(1) ld. Assessing Officer carried out the proceedings. During the year, demonetization was announced and ld. AO asked the assessee to match the Specified Bank Notes (SBNs) deposits made during the period 09.11.2016 to 31.12.2016. Ld. AO observed that there is a discrepancy in the details of cash deposited to the extent of Rs.2,35,000/- and the assessee has been unable to prove and accordingly made addition u/s.69A of the Act. Further, ld. AO observed that assessee is claiming to have received Rs.16,96,240/- from various sundry debtors during the demonetization scheme for which assessee filed the list of such debtors. Ld. AO failed to find any justification and made addition thereof. Thirdly, ld. AO observed that assessee has claimed to have earned Agricultural Income but against the cash deposit of Rs.1,65,900/-, the income has been declared at Rs.1,80,900/-. Though the assessee submitted 7/12 extract but in the absence of the name of assessee in such document and in absence of other details ld. AO denied the benefit of exemption and made addition of Rs.1,65,900/- for unexplained cash credit u/s.68. Income assessed at Rs.28,68,260/-. Aggrieved assessee preferred appeal before ld.CIT(A) but failed to succeed and ld.CIT(A) dismissed the assessee’s appeal confirming the additions made by the ld.AO. Aggrieved assessee is now in appeal before this Tribunal.
Ld. Counsel for the assessee vehemently argued referring to various grounds and additional grounds of appeal and also referred to the paper book running into 561 pages and prayed that the impugned additions deserves to be deleted.
On the other hand, ld. Departmental Representative supported the orders of the lower authorities.
I have heard the rival contentions and perused the record placed before us. Though the assessee has raised multiple grounds of appeal but they all revolve around three additions made for unexplained money/unexplained credit amounting to Rs.2,35,000/-, Rs.16,96,240/- and Rs.1,65,900/-.
9. So far as the addition of Rs.2,35,000/- is concerned, ld. AO made addition alleging that the source of cash deposit on 03.12.2016 in SBNs amounting to Rs.2,35,000/- is not explained because the assessee did not have sufficient cash in hand. Before me, assessee filed the details of cash book at pages 438 to 447 and 455 to 470 along with SBN details during November and December 2016 and after going through the same I find that the assessee had sufficient cash in hand to explain source of deposit of Rs.2,35,000/-. Therefore, the impugned addition of Rs.2,35,000/- is hereby deleted.
10. Next issue relates to addition of Rs.16,96,240/- which the ld. AO has made on the ground that assessee has been unable to explain the source of receipt of the alleged cash from its outstanding debtors during the demonetization period. I note that the assessee received the alleged sum in SBNs during the demonetization period. Assessee has also furnished details of receivables appearing in the assessment order at para 7. Assessee has also furnished Audited Balance Sheet and Profit and Loss Account along with relevant Annexures. Sundry Debtors are part and parcel of the regular business activity carried out by the assessee and ld. AO has disputed receipt of such sum from the outstanding debtors merely referring to the demonetization period but no finding is made against the assessee by making the necessary verification of the debtors list filed before ld. AO. I find merit in the contention of ld. Counsel for the assessee. I find that the assessee received the same from the outstanding debtors in SBNs during the demonetization period which were against the sales made for Petroleum products. Since the genuineness of the same is not in dispute, I fail to find any justification in the addition made by ld. AO. Finding of ld.CIT(A) is set aside and the addition of Rs.16,96,240/- is hereby deleted.
11. Last issue is regarding addition of Rs.1,65,900/-. Assessee declared Agricultural income in its return at Rs.1,80,900/- and regarding the cash deposit of Rs.1,65,900/- on 02.12.2016 assessee stated that the said sum is from Agricultural income. However, ld. AO did not accept the contention. I observe that during the course of assessment proceedings itself assessee has filed the 7/12 extract in support of the holding of the Agricultural land by his family members. Assessee is engaged in Agricultural business and runs business on portion of Agricultural land. It has also been submitted that during June 2016 that assessee was carrying out farming of Soyabean in the Agricultural land owned by his family. Normally Soyabean crops grown 4 to 4 ½ months and sale is made directly to the local customers/transfers. After the crop is grown 4 to 4 ½ months ends in the months of October/November, 2016 and assessee has to make the sale of the Agricultural produce in the SBNs else the crop could have spoiled. Considering the submissions of the assessee and also considering the amount of income earned from Agricultural sources and the fact that ld. AO has not placed any tangible evidence on record to prove that the said receipts were not from Agricultural sources inspite of the fact that assessee has filed 7/12 extract showing the ownership of the Agricultural land by his father and sale of Soyabean produce, I fail to find any consistency in the finding of ld.CIT(A) affirming the addition of Rs.1,65,900/-. Finding of ld.CIT(A) is hereby reversed and accordingly addition of Rs.1,65,900/- made by the ld. AO u/s.68 stands deleted.
To sum up, the total addition of Rs.20,97,140/- made by ld. AO for A.Y. 2017-18 in the hands of assessee stands deleted. Effective grounds of appeal raised by the assessee on merits are allowed.
13. Dealing with remaining grounds would be merely academic in nature and thus held to be infructuous.
In the result, the appeal filed by the assessee is allowed as per the observations made in the order.
Order pronounced on this 18th day of September, 2025.