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Facts
The assessee, a partnership firm engaged in the retail of Bharat Petroleum, deposited a large sum of cash during the demonetization period. The Assessing Officer (AO) made an addition of the entire amount as unexplained income. The CIT(A) restricted the addition to 20%, treating the remaining 80% as explained.
Held
The Tribunal held that the CIT(A) was not justified in treating 80% of the cash deposits as explained solely on the basis that the assessee was a petrol outlet. The assessee failed to provide any supporting evidence, such as sales register or cash book, to substantiate the source of the deposits.
Key Issues
Whether the CIT(A) was justified in reducing the addition for unexplained cash deposits without any supporting evidence from the assessee, solely based on the assessee's business type.
Sections Cited
143(1), 143(2), 142(1), 144, 69A, 115BBE
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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & MS ASTHA CHANDRA
ITO, Ward 6(3), Pune Janata Automobiles Vs. S No.550, Nana Peth, Pune – 411002 PAN: AALFJ9487F (Appellant) (Respondent) Assessee by : None Department by : Shri Ramnath P Murkunde Date of hearing : 05-06-2025 Date of pronouncement : 11-06-2025 O R D E R PER R.K. PANDA, VP :
This appeal filed by the Revenue is directed against the order dated 27.06.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2017-18.
This appeal was fixed for a number of times but was getting adjourned from time to time due to non-appearance from the side of the assessee for which the notice was sent through the Ld. DR to be served on the assessee. Despite such service of notice on the assessee, there was no compliance from the side of the assessee. When the name of the assessee was called today, neither anybody appeared nor there was any application for adjournment. Under these circumstances, we deem it proper to dispose of this appeal based on the material available on record and after hearing the Ld. DR.
Facts of the case, in brief, are that the assessee is a partnership firm engaged in business of retail outlet of Bharat Petroleum Corporation Ltd. (BPCL). It filed its return of income on 30.07.2018 declaring total income of Rs.21,45,600/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). Subsequently, the case was selected for scrutiny through CASS and accordingly statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee. In the questionnaire issued along with the notice u/s 142(1) of the Act, the assessee was specifically asked to explain the source of deposit of Rs.1,17,92,810/- made in State Bank of India during the demonetization period along with other details. Since there was no compliance from the side of the assessee, another notice was issued to the assessee. Again there was no compliance from the side of the assessee. The Assessing Officer therefore, proceeded to complete the assessment u/s 144 of the Act. Since there was no explanation regarding the source of cash deposits in specified bank notes during the monetization period, the Assessing Officer, invoking the provisions of section 69A r.w.s. 115BBE of the Act, made addition of Rs.1,17,92,810/- treating the same as unexplained money.
In appeal the Ld. CIT(A) / NFAC treated an amount of Rs.23,58,562/- being 20% of the cash deposits as income from unexplained source and deleted the balance amount of Rs.94,34,248/- by observing as under: “3.1 In its submissions, the appellant submitted that it is in the business of running a petrol pump which is an outlet of Bharat Petroleum Corporation, which is clearly mentioned as an exemption as per guidelines of the RBI laid down vide its Gazette Notification no.2653, dated 08.11.2016. Therefore, the action of the AO in treating the entire cash deposits made during the demonetization period as unexplained money is without proper basis. However, the appellant did not submit any details evidencing the sales and details of cash collected etc. Thus, the appellant failed to discharge the onus in explaining the nature and sources of the entire cash deposits. Therefore, the entire cash deposits cannot be presumed to be received on sale of petrol. Therefore, to protect the interests of revenue, 20% of the cash deposits are hereby treated as from unexplained sources and the addition to this extent is hereby sustained. Therefore, out the addition of Rs.1,17,92,810/- made by the AO, an addition of Rs.23,58,562/- is sustained and the balance addition of Rs. 94,34,248/-is hereby deleted.”
Aggrieved with such order of the Ld. CIT(A) / NFAC, the Revenue is in appeal before the Tribunal by raising the following grounds:
1. On the facts and circumstances of the case, the Ld. CIT(A) erred in restricting the addition made u/s 69A of the Act being unexplained cash credits in the bank account to the extent of 20% merely on the ground that the assessee firm is an outlet of Bharat Petroleum Corporation.
2. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the major part of addition without relying on any supporting evidences or documents or response being submitted by the assessee firm which could form basis of such decision.
3. On the facts and circumstances of the case, the Ld. CIT(A) erred in holding that 80% of cash deposits during the year made by the assessee firm is from sale of petrol in the absence of sales ledger, cash book and details of cash collected by the assessee firm to prove that the cash so deposited were out of sale of such products.
4. The appellant craves leave to add to, amend, alter any of the above grounds of appeal.
We have heard the Ld. DR and perused the record. A perusal of the grounds raised by the Revenue shows that the Revenue is aggrieved by the order of the Ld. CIT(A) / NFAC giving relief to the assessee to the extent of Rs.94,34,248/-. It is an admitted fact that due to non submission of evidence to the satisfaction of the Assessing Officer regarding the source of cash deposit of Rs.1,17,92,810/- made by the assessee in State Bank of India during the demonetization period, the Assessing Officer, invoking the provisions of section 69A r.w.s. 115BBE of the Act, made addition of the same treating the same as unexplained money. We find the Ld. CIT(A) / NFAC directed the Assessing Officer to treat 20% of such cash deposits as out of unexplained source and deleted the balance addition, thereby giving relief of Rs.94,34,248/- to the assessee and sustaining an amount of Rs.23,58,562/-. We do not find any merit in the reasonings given by the Ld. CIT(A) / NFAC deleting the addition to the tune of Rs.94,34,248/-. Merely because the assessee firm is an outlet of Bharat Petroleum Corporation Ltd., the same cannot be the ground for treating 80% of such money as out of cash receipts on account of sale of petrol especially when the assessee has not substantiated with any evidence that the same is out of sale proceeds. No supporting evidence or documents were submitted by the assessee during the course of assessment proceedings since the same is passed u/s 144 of the Act. Since the assessee during the course of assessment proceedings had not produced the sales register, cash book or any other details to prove that the cash so deposited was out of sale of products, therefore, the Ld. CIT(A) / NFAC, in our opinion is not justified in considering 80% of such cash deposits as out of sale of petroleum products by the assessee. Under these circumstances, we are of the considered opinion that the Ld. CIT(A) / NFAC was not justified in considering 80% of such cash deposits as explained. We, therefore, set aside the order of the Ld. CIT(A) / NFAC on this issue and restore the order of the Assessing Officer. The grounds raised by the Revenue are accordingly allowed.
In the result, the appeal filed by the Revenue is allowed.
Order pronounced in the open Court on 11th June, 2025.
Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 11th June, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: अपीलार्थी / The Appellant; 1. 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune
S.No. Details Date Initials Designation 1 Draft dictated on 05.06.2025 Sr. PS/PS 2 Draft placed before author 09.06.2025 Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to the Head 9 Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order