DINESH KUMAR ACHARYA, BALODA BAZAR,BALODA BAZAR vs. INCOME TAX OFFICER, BHATAPARA, BALODA BAZAR
Facts
The assessee, a petroleum products dealer, filed his income tax return for AY 2017-18, which was selected for scrutiny. During the demonetization period, he deposited Rs. 1,50,000/- in cash, which the AO treated as unexplained money under Section 69A and made an addition. The CIT(Appeals)/NFAC sustained this addition, though other ad-hoc disallowances were deleted.
Held
The Tribunal observed that the department did not dispute the assessee's disclosed business activities, books of account, or agricultural income, from which the cash deposits were claimed to be accumulated savings. Since the department failed to bring any alternative source of income or evidence to dispute the explained source, the cash deposit of Rs. 1,50,000/- could not be considered unexplained money under Section 69A. The Tribunal, therefore, set aside the order of the CIT(A) and deleted the addition.
Key Issues
Whether cash deposits made during the demonetization period, explained by the assessee's disclosed business and agricultural income, can be added as unexplained money under Section 69A of the Income Tax Act.
Sections Cited
Section 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM The captioned appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC dated 30.12.2024 for the assessment year 2017-18 as per the following grounds of appeal: “1. On the facts and in the circumstances of the case, the Learned AO has erred on facts and in law in making addition of Rs.1,50,000/- on account of Cash deposit in Bank during demonetization period u/s.69A and the Learned ADDL/JCIT(A)-3, Delhi has erred in confirming the addition to the tune of Rs.1,50,000/- inasmuch as the said deposit was made out of explainable sources, as such, the addition so made is illegal, arbitrary, unjustified and unsustainable on several grounds, hence, it is prayed that the addition of Rs.1,50,000/- confirmed by the Learned ADDL/JCIT (A)-3, Delhi may kindly be deleted. 2. The Appellant craves leave to add, amend, alter vary and/or withdraw any or all the above grounds of Appeal.”
Brief facts in this case are that the assessee is a dealer of Indian Oil Corporation Ltd. and engaged in trading of petroleum products in the name and style of M/s. Jagannath Maharaj Petrolium, Kasdol. The assessee had filed his return of income for A.Y.2017-18 on 31.10.2017 declaring income of Rs.4,69,680/-. Thereafter, the case of the assessee was selected for scrutiny assessment.
During the course of assessment proceedings, it was observed by the A.O that though the assessee had made cash deposits of Rs.1,50,000/- in demonetized currency during demonetization period, but
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had failed to explain the source of the same. Accordingly, the A.O made an addition of Rs.1,50,000/- u/s.69A of the Act treating the same as unexplained money. Also, the A.O made ad-hoc disallowances viz. (i) disallowance out of office expenses: Rs.38,899/-; and (ii) disallowance out of sales promotion expenses : Rs.31,670/-.
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.
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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
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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.
In the result, appeal of the assessee is allowed. 10.
Order pronounced in open court on 04th day of April, 2025.
Sd/- (PARTHA SARATHI CHAUDHURY) �या�यक सद�य/JUDICIAL MEMBER रायपुर / Raipur; �दनांक / Dated : 04th April, 2025. SB, Sr. PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :
6 Dinesh Kumar Acharya Vs. ITO, Bhatapara ITA No.109/RPR/2025
अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. CIT-1, Raipur (C.G.) 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, रायपुर / DR, ITAT, “SMC” Bench, Raipur. गाड� फ़ाइल / Guard File. 5.
आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur
