DINESH KUMAR ACHARYA, BALODA BAZAR,BALODA BAZAR vs. INCOME TAX OFFICER, BHATAPARA, BALODA BAZAR

Aggrieved the assessee carried the matter in appeal before the Ld. CIT(Appeals)/NFAC who had granted partial relief to the assessee to the extent of deleting the ad-hoc disallowances. The appeal before this bench is with regard to the addition u/s. 69A of the Act which was sustained by the Ld. CIT(Appeals)/NFAC.

At the time of hearing before this bench, the Ld. Counsel submitted that the source of the cash deposits of Rs.1,50,000/- during demonetization period was out of the accumulated savings of the assessee arising from the disclosed source of business. He further submitted that the assessee owns 8 acres of agricultural land and was deriving agricultural income therefrom and the same had been disclosed in the return of income of the assessee since F.Y.2013-14, the accumulation in savings are also from this source. Therefore, since the source of cash deposits are explained it cannot be unexplained money in the hands of assessee and the addition should be deleted.

The Ld. Sr. Departmental Representative (for short ‘DR’) relied on the orders of the sub-ordinate authorities.

I have heard the parties herein, carefully considered the materials available on record and analyzed the facts and circumstances of the case. On a perusal of the order of the Ld. CIT(Appeals)/NFAC, it is observed that such cash deposits of Rs.1,50,000/- had been done during the demonetization period. As per the CBDT Circular No.03/2017, dated 21.01.2017, it is stated that cash deposits upto Rs.2,50,000/- made by the assessee is not the subject matter of further verification. In this regard, the Ld. Sr. DR explaining the exception of the said circular submitted that if the assessee who is doing business and deriving income from business, then with regard to such assessee this circular will not be applicable. Meaning thereby, the aforesaid circular will only apply to persons having income other than business income.

I have carefully considered these parameters and at the same time, it is observed that the department has neither disputed the business activities of the assessee i.e. trading of petroleum products nor the purchase/sales of the assessee. Further, the department had not disputed the books of account of the assessee a/w. agricultural income. The only grievance of the department is that the cash deposits of Rs.1,50,000/- was made during the demonetization period for which the addition had been made u/s. 69A of the Act treating the same as unexplained money. That when the business of the assessee was not disputed by the department, then there is no parameter by which, it can be said that the money or source of money is unexplained. Further, the department has not brought out on record any other alternative source of income by the assessee or any evidence to show that there may be possibility of earning income from other sources apart from the disclosed sources of business. In such scenario, it cannot be said that such cash deposits of Rs.1,50,000/- is unexplained so to invoke Section 69A of the Act. Accordingly, I set-aside the order of the Ld. CIT(Appeals)/NFAC and delete the addition of Rs.1,50,000/- made/sustained by the sub-ordinate authorities.

As per the above terms, the grounds of appeal raised by the assessee are allowed.