M/S MADHESWARA AGENCIES,HOSUR vs. ITO, WARD 1, HOSUR

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ITA 551/CHNY/2022Status: DisposedITAT Chennai21 July 2022AY 2017-183 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee was permitted to deposit demonetized currency until December 31, 2016, and the lower authorities overlooked this fact. The addition of Rs. 46,000 was deleted.

What were the facts?

The assessee, a distributor of prepaid cards, deposited Rs. 46,000 in demonetized currency on November 29, 2016. The Assessing Officer added this amount to the assessee's income as unexplained, citing that the deposit was made after the permitted date for accepting such currency.

What were the issues?

Whether the addition of Rs. 46,000 deposited in demonetized currency was justified when the assessee had explained the source and the deposit was within the extended period for depositing such currency.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: HON’BLE SHRI MAHAVIR SINGH & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

आयकर अपील सं./ (िनधा�रण वष� / Assessment Year: 2017-18) M/s. Sri Madheswara Agencies, ITO बनाम/ Represented by its partner K. Enbasekaran Ward-1, No.99, JMG Golden Complex, Hosur. Vs. Opp: Bus Stand, Hosur – 635 109. �थायी लेखा सं./जीआइ आर सं./PAN/GIR No. ABBFS-2569-Q (अपीलाथ�/Appellant) : (��थ� / Respondent) Shri T.S. Lakshmi Venkatraman (FCA) – Ld. AR अपीलाथ� की ओरसे/ Appellant by : ��थ� की ओरसे/Respondent by : Shri P. Sajit Kumar (JCIT) – Ld. DR सुनवाई की तारीख/Date of Hearing : 21-07-2022 घोषणा की तारीख /Date of Pronouncement : 21-07-2022 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 24-06-2022 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 30-12-2019. The grounds taken by the assessee are as under: 1. The learned CIT(A) is not justified in sustaining the addition for a sum of Rs.46,000/-made originally by the AO u/s 69A r.w.s. 115BBE of the Act.

2 - 2. The reason stated by the CIT(A) to upheld the order is that the appellant did not bring any material on record to establish that the amount was out of his business receipts which is against the facts. The appellant has discharged the onus casted upon them by furnishing cash book before the AO where source was explained. It is also pertinent to point out that the books of accounts were accepted by the AO which is documentary evidence in its own value.

3. The CIT(A) is not justified in rejecting the explanation of the Appellant based on conjecture and surmise but without possessing any material on record that the source for cash deposit made by the appellant is from undisclosed source.

4.

In view of the above grounds and other submissions to be made at the time of appeal hearing the addition sustained, a sum of Rs.46,000/-to the returned income may be deleted and justice rendered.

2.

As evident, the sole grievance of the assessee is addition of Rs.46,000/- u/s. 69A. The Ld. AR field written submissions. The Sr. DR justified the additions on the given factual matrix. Having heard rival submissions, our adjudication would be as under.

3.

The assessee being resident firm is stated to be engaged as distributor of prepaid cards of BSNL on commission basis. During assessment proceedings, it transpired that the assessee deposited sum of Rs.49.12 Lacs in one of the accounts maintained with Corporation Bank. Out of this deposit, a sum of Rs.46000/- was deposited on 29.11.2016 in the denomination value of one thousand rupees and five hundred rupees. It was submitted that as per prevailing government notifications, the assessee was permitted to receive cash in demonetized currency. In support, the assessee also submitted letter from BSNL. In terms of government notification, the persons involved in recharge of prepaid sim cards were allowed to accept cash in the denomination value of one thousand rupees till 24.11.2016. Since the deposit of Rs.46,000/- was made after that date, the same was added to assessee’s income as unexplained which would be taxable at higher rate u/s 115BBE.

3 - 4. During appellate proceedings, the assessee submitted that these deposits were out of business receipts only. These notes could be deposited till 31.12.2016 provided the source of the same was explained by the assessee, The Specified Bank Notes (SBN) continued to be legal tender till 30.12.2016. However, rejecting the same, Ld. CIT(A) upheld the stand of Ld. AO against which the assessee is in further appeal before us.

5.

Upon careful consideration of material facts, we find that as per extant provisions, the assessee was permitted to accept demonetized currency till 24.11.2016 and the only reason to suspect the source of the same is the fact that the same was deposited on 29.11.2016. The adjudication of lower authorities overlooks the fact that the assessee deposited as much as Rs.49.12 Lacs out of which only an amount of Rs.0.46 Lacs is suspected to be unexplained income of the assessee. It could also be seen that the demonetized currency could be deposited till 31.12.2016. Therefore, we do not concur with the stand of Ld. CIT(A). By deleting the impugned addition, we allow the grounds raised

by the assessee.

6. The appeal stand allowed. Order pronounced on 21st July, 2022.

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