SMT. ASHA GARG,INDORE vs. ITO 2(3), INDORE, INDORE
Facts
The assessee, running an online kiosk center, deposited Rs. 10,00,000 in cash during the demonetization period. The Assessing Officer treated this as unexplained income under Section 69A r.w.s. 115BBE of the Act and added it to the assessee's income. The CIT(A) upheld this addition.
Held
The Tribunal held that the cash deposit cannot be categorized as unexplained money, as it was utilized for making payments on behalf of students. However, since complete details were not provided, the Tribunal estimated the income element at Rs. 50,000 on the alleged sum.
Key Issues
Whether the cash deposit during the demonetization period can be treated as unexplained income, and if so, what is the extent of income to be assessed.
Sections Cited
144, 69A, 115BBE, 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE SMC BENCH, INDORE
आयकर अपील�य अ�धकरण, इंदौर �यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE SMC BENCH, INDORE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA No.381/Ind/2023 (Assessment Year: 2017-18) Abhay Kataria, ITO, 153, Teachers Colony, Neemuch Vs. Near Mahavir Vatika, Neemuch (Appellant / Assessee) (Respondent/ Revenue) PAN: AJFPK9979G Assessee by S/Shri Pankaj Shah & Soumya Bumb, ARs Revenue by Shri Ashish Porwal, Sr.DR Date of Hearing 27.02.2025 Date of Pronouncement 27.02.2025 O R D E R
This appeal by the assesse is directed against the order dated
14.08.2023 of the Commissioner of Income Tax (Appeals), National
Faceless Appeal Centre (NFAC), Delhi for A.Y.2017-18 which is
arising from the assessment order u/s 144 of the Act dated
19.12.2019 framed by Assessing Officer, Neemuch.
Assessee has raised following grounds of appeal:
ITA No.381/Ind/2023 Abhay Kataria– A.Y 2017-18
“1. On the facts and circumstances of the case and in law the learned Commissioner of Income tax (Appeals) ("CIT(A)") erred in upholding the addition made by the Assessing officer to the income of the Appellant. The Appellant prays that the additions be directed to be deleted.
On the facts and circumstances of the case and in law the learned Assessing Officer erred in making addition of the cash deposit during demonetization period of Rs. 10,00,000/- and treating it as unexplained u/s 69A of the Act. Therefore the said order is illegal, void and unwarranted and it is prayed that the said addition be directed to be deleted.
Without prejudice to above, on the facts and circumstances of the case and in law the learned Commissioner of Income tax (Appeals) ("CIT(A)") erred in applying provisions of Section 115BBE in the case of the Appellant by failing to take into consideration the evidences given under submissions. Accordingly, the Appellant prays that the application be directed to be deleted.
On the facts and circumstances of the case and in law the learned Assessing Officer erred in making addition of Rs. 70180/- treating it as income of the appellant on estimation basis. Accordingly, the Appellant prays that the application be directed to be deleted.
On the facts and circumstances of the case and in law the learned Commissioner of Income tax (Appeals) ("CIT(A)") erred in not giving reasonable opportunity of being heard and passed the order without considering the fact that the appellant has requested for adjournment, and so the Appellant prays that the impugned order being illegal, unwarranted and in gross violation of principles of natural justice be directed to be decided on merits.
The Appellant craves leave to add, alter or amend all or any of the foregoing grounds of appeal.”
At the outset Ld. Counsel for the assessee requested for no
pressing Ground No.4 and the same is dismissed as not pressed.
ITA No.381/Ind/2023 Abhay Kataria– A.Y 2017-18 4. The effective issue remaining for adjudication is that whether
the Ld. CIT(A) erred in upholding the addition of Rs.10,00,000/-
made by the Ld. A.O u/s 69A of the Act for alleged unexplained
cash deposit in the bank during the demonetization period.
Facts in brief are that the assessee is an individual and
carrying on the business of running a shop in the name of MP
Online Kisok Center. The assessee accepts amount from various
customers for further deposit towards Telephone, Electricity,
Tuition/Exam fees etc. Based on the reason that the cash of
Rs.12,17,000/- was deposited in the bank account held with SBI,
Neemuch during 9.11.2016 to 31.11.2016 case of the assessee
selected for scrutiny. The assessee did not file any return of
income. Thereafter certain opportunities were given and notice u/s
142(1) of the Act was issued. Ld.A.O concluded the assessment by
observing that except the alleged cash deposit of Rs.10,00,000/-
the remaining amount deposits at Rs.70,17,572/- relates to the
transactions of MP Online services and on which 1% of income was
estimated by Ld. A.O at Rs.70,176/- . For the cash deposited
during the demonetization period at Rs.10,00,000/- Ld. A.O treated
ITA No.381/Ind/2023 Abhay Kataria– A.Y 2017-18 it as unexplained income and added the same in the hands of the
assessee invoking Section 69A r.w.s. 115BBE of the Act. Income
assessed at Rs.10,70,180/-. Aggrieved assessee preferred appeal
before Ld. CIT(A) but failed to succeed. Now the assessee is in
appeal before this Tribunal.
Ld. Counsel for the assessee submitted that the alleged sum
though deposited during the demonetization period but has been
utilized for making on line payment on behalf of students to various
universities which mainly included Vikram University, Ujjain and
he further referred to the paper book placed at page 25 to 30
providing the details of the students for whom examination fees was
deposited by the assessee through its MP Online Kisok Centre. He
submitted that the alleged sum is part of gross receipt of
Rs.80,17,572/- but Ld. A.O was treated only the alleged sum as
unexplained cash and for the remaining amount has estimated it as
the business receipt including income @1%. He further stated that
since the alleged sum is part of business receipt only the income
element can be added but not the total sum.
ITA No.381/Ind/2023 Abhay Kataria– A.Y 2017-18 7. On the other hand Ld. Departmental Representative
vehemently argued supporting the orders of the lower authorities.
He further stated that the assessee was not authorized to received
old denomination notes during the demonetization period and
therefore the impugned addition deserves to be sustained.
I have heard rival contentions and perused the records before
me. Admittedly the assessee is running MP Online Kisok Centre
and is regularly making payments on behalf of its customers
towards, electricity, telephone, mobile, examination fees etc. In the
bank account maintained by the assessee total credit during the
year was Rs.80,17,572/- out of which Ld. A.O has accepted sum of
Rs.70,17,572/- as a genuine business transaction of MP Online
services but denied to treat the amount of Rs.10,00,000/- merely
on the ground that it was received during the demonetization
period. Though Ld. Departmental Representative has claimed that
assessee was not authorized to receive old demonetization notes
but this aspect can be dealt with the separate authorities
prescribed under law. I find that the amount deposited in the bank
account has been immediately utilized for making the payment for
ITA No.381/Ind/2023 Abhay Kataria– A.Y 2017-18 examination fees on behalf of the students. Ld. Counsel for the
assessee filed the details for the amount of Rs.4,54,390/- with the
name of students and the course they are pursuing. For the
remaining amount also the major payment has been made to
Vikram University, Ujjain but the students details are not available.
8.1 Now in the given facts and circumstances of the case where
the alleged sum has been immediately utilised for making payments
through on line mode to other authorities including universities on
behalf of the students and also considering the fact that the
assessee has been regularly carrying out the said activities in the
past also, I am of the considered view that firstly the alleged sum
cannot be categorized as unexplained money u/s 69A r.w.s.
115BBE of the Act and secondly only the income element can be
estimated. But since the assessee has not provided complete
details of the students, I estimate the income of Rs.50,000/- on the
alleged sum of Rs.10,00,000/- and give part relief to the assessee.
Accordingly grounds of appeal raised by the assessee are partly
allowed.
ITA No.381/Ind/2023 Abhay Kataria– A.Y 2017-18
In the result appeal of the assessee is partly allowed.
Order pronounced in the open court on 27.02.2025. Sd/-
(MANISH BORAD) Accountant Member
Indore, 27.02.2025 Dev/Sr. PS
Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore
