Loading judgment…
Facts
The assessee, a wholesale business in fertilizers, biscuits, oil, and rice, filed an ROI declaring Rs.3,27,030/-. During demonetization, the AO found a cash deposit of Rs.37,51,000/-, treating Rs.20,51,000/- as unexplained cash credits under Section 68. The AO also estimated net profit at 8% on turnover, adding Rs.1,22,629/-, leading to a total assessed income of Rs.25,00,60/- and initiated penalty proceedings.
Held
The Tribunal noted discrepancies in submissions made to the AO and the NFAC. It restored the file to the Assessing Officer to provide the assessee a fresh opportunity to reconcile figures and produce evidence for the impugned transactions, emphasizing full compliance from the assessee.
Key Issues
Whether the addition of Rs.20,51,000/- as unexplained cash credits under Section 68 for demonetized currency deposits, taxable under Section 115BBE, was justified, given the assessee's claim that it originated from sales proceeds and cash in hand as per audited books.
Sections Cited
68, 143(3), 115BBE, 271AAC, 270A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2017-18 Anoop Kumar Gupta v. The Income Tax Officer Patel Nagar Ward 5(4) Fatehpur, Barabanki Barabanki-1 TAN/PAN:AHTPG8238Q (Appellant) (Respondent) Appellant by: Shri Rakesh Garg, Advocate Respondent by: Shri Sunil Kumar Rajwanshi, D.R. Date of hearing: 14 05 2025 Date of pronouncement: 22 05 2025 O R D E R
This appeal has been preferred by the assessee against order dated 11.03.2024, passed by the National Faceless appeal Centre, Delhi (NFAC) for Assessment Year 2017-18.
The brief facts of the case are that the assessee, carrying on business of Fertilizers, Biscuits, Oil and Rice on wholesale basis, e-filed his return of income on 30.03.2018, declaring a total income of Rs.3,27,030/-. During the year under consideration, the assessee had offered income from business at Rs.4,77,031/- @ 6.36% on the total turnover of Rs.74,95,733/- and gross profit of Rs.6,02,308/-. The case of the assessee was selected for scrutiny under CASS. The Assessing Officer (AO) noticed that the assessee had deposited a sum of Rs.37,51,000/- in his Current Account No.5807010050070 maintained with Union Bank of India, Fatehpur, during the demonetization period (from 08.11.2016 to 23.11.2016) in Specified Bank Notes (SBN). Not being satisfied with the explanations furnished by the assessee with regard to the cash deposits, the AO treated the amount of Rs.20,51,000/- [deposited during the period from 13.11.2016 to 23.11.2016) as unexplained cash credits and added the same to the income of the assessee under section 68 of the Income Tax Act, 1961 (hereinafter called “the Act’). The AO also estimated the net profit @ 8% on the gross turnover of Rs.74,95,733/- declared by the assessee, which came to Rs.5,99,659/-. The AO, after subtracting the net profit of Rs.4,77,031/- (declared by the assessee) from Rs.5,99,659/-, added Rs.1,22,629/- also to the income of the assessee. The AO completed the assessment under section 143(3) of the Act, computing the total income of the assessee at Rs.25,00,60/-.
2.1 The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under section 271AAC and 270A of the Act, separately.
Aggrieved, the Assessee preferred an appeal before the Ld. First Appellate Authority. The NFAC partly allowed the appeal of the assessee.
Now, the assessee has approached this Tribunal challenging the orders of the AO as well as the NFAC by raising the following grounds of appeal:
1. Because the CIT(A) has erred on facts and in law in upholding the addition of Rs.20,51,000/- being cash deposited in bank during demonetization as unexplained u/s 68 of the Act, which addition is contrary to facts, bad in law, be deleted.
2. Because the books of account having been audited the purchases and sales having been accepted, the cash deposited in bank is out of the sale proceeds, as marked in the regular books of account as maintained, there was no reason to disbelieve the submission advanced by the assessee and make the addition, the addition made be deleted.
3. Because in any case the addition of Rs.20,51,000/- being cash deposited in bank out of cash in hand as reflecting in the books of account treated as unexplained cash credit u/s 68 and taxed at special rate under the provision of section 115BBE is all contrary to facts bad in law be deleted.
The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that there is a delay of 281 days in filing the appeal before the Tribunal. He further submitted that the assessee had filed an application dated 25.04.2025 for condonation of delay, duly supported by an Affidavit, stating therein that the Auditors, who were looking after and managing the tax matters of the assessee, could not access the impugned appellate order and had not informed the assessee about the same on time and that when the assessee came to know about the appellate order in the month of February, 2025, immediately the appeal was filed before the Tribunal. It was submitted that the delay caused in filing the appeal was not deliberate and that it was beyond the control of the assessee, which may please be condoned and the appeal be heard on merits.
The Ld. Sr. D.R. had no objection to the delay being condoned.
In view of the prayer made by the Assessee, duly supported by an Affidavit and no objection by the Ld. Sr. D.R., I condone the delay in filing of the appeal and admit the appeal for hearing.
During the course of hearing before me, the Ld. A.R. submitted that the NFAC had observed that there were discrepancies between what was submitted before the AO and what was submitted before the NFAC and, therefore, the appeal came to be partly allowed. The Ld. A.R. prayed that the assessee may be provided with an opportunity to reconcile the differences before the AO.
The Ld. Sr. D.R. has no objection to the prayer made by the Ld. A.R.
I have heard both the parties and have also perused the material on record. In the appellate order, the NFAC had observed that that there were discrepancies between what was submitted before the AO and what was submitted before the NFAC and, therefore, the addition under section 68 of the Act made by the AO was confirmed. Looking into the specific facts of this case, I am of the considered view that the assessee deserves one more opportunity to present his case and, therefore, in the interest of substantial justice, I restore this file to the Office of the Assessing Officer with the direction to provide an opportunity to the assessee to reconcile the figures and produce the necessary evidences in support of the impugned transactions entered into by the assessee during the year under consideration. I also caution the assessee to fully comply with the directions of the Assessing Officer in the set-aside proceedings when called upon to do so, failing which, the Assessing Officer would be at complete liberty to pass the order in accordance with law, based on the material available on record even if it is ex-parte qua the assessee.
In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 22/05/2025.