VASUDEV CHOTABHAI PATEL,VADODARA vs. THE INCOME TAX OFFICER, WARD-1(2)(5), VADODARA

The assessee, in this appeal, is aggrieved by the action of the Ld.CIT(A) in confirming the addition made by the Assessing Officer (in short “the AO”) of Rs.1.53 crores u/s.69A of the Act by treating the sales made by the assessee during the demonetization period as bogus and thereby treating the cash deposits made by the assessee as unexplained income of the assessee.

At the outset, the Ld. Counsel for the assessee has invited our attention to the impugned orders of the lower authorities to submit that both the lower authorities have made/confirmed the impugned addition by mentioning that the assessee has not filed the relevant details and evidences to show that the deposits made during the demonetization period were out of the sales of the assessee. He, in this respect, has submitted that the aforesaid observation of the lower authorities was factually incorrect. He has further submitted that the assessee is engaged in the business of running a Petrol Pump and that as per the Central Government Notification No.S.O.3544(E) dated 24/11/2016, the Petrol Pumps were allowed to accept cash in demonetization currency for the period upto 15/12/2016. He has submitted that the assessee has made cash sales and cash received thereof was deposited in the bank account, which included demonetization currency also. The Ld. Counsel, in this respect, has brought our attention to the papers filed in the paper-book to show that the assessee had furnished purchase register, sales register, stock statement, etc. to show that the sales made by the assessee were genuine. The Ld. Counsel has submitted that the assessee’s total sales were at Rs.9.40 crores out of which sales of Rs.7.65 crores were cash sales. He has further submitted that during the demonetization period, the cash sales were made of Rs.1.53 crores, which commensurate with the total cash sales of the assessee during the year. The Ld.Counsel submitted that even the assessee has filed VAT returns also in respect of the aforesaid sales. He, therefore, has Vasudev Chotabhai Patel vs. ITO Asst. Year 2017-18: submitted that the impugned addition made by doubting the sales of the assessee was not justified.

The Ld.DR, on the other hand, has submitted that as mentioned in the assessment order as well as in the impugned order of the Ld.CIT(A), the assessee had not furnished the necessary details. He has also submitted that the cash sales of the assessee during demonetization period were more, as compared to the earlier period sales, which showed that the assessee had exaggerated the sales which were not actual and, hence, introduced his unaccounted money in the garb of cash sales.

We have heard the rival contentions of the Ld.Representatives of the parties and gone through the material available on record. The assessee has produced on the file the relevant material to prove the sales made during the year including that were made during demonetization period. A perusal of the data submitted by the assessee shows that the assessee’s cash sales during demonetization period commensurate with the total sales and cash of the assessee for the year under consideration. So far as the contention of the Ld.DR that the cash sales have been slightly increased during demonetization period is concerned, the fact that the petrol pumps were allowed to accept demonetization currency during the relevant period, is a determining factor in this respect. When certain types of currency was barred from circulation, in that event, it was a normal tendency of the people to circulate/make purchases in demonetization currency since the said currency was accepted at petrol pumps, hence obviously, this factor was relevant for increase in cash sales of the assessee during the demonetization period. However, it is noted that such increase in sales of the assessee was not so high, but showed a normal increase under such circumstances. The assessee has duly proved Vasudev Chotabhai Patel vs. ITO Asst. Year 2017-18: that the amount deposited in the bank account was out of the cash sales made by the assessee. Therefore, there is no justification on the part of the lower authorities in making/confirming the impugned additions and the same are, accordingly, ordered to be deleted.