SUNNY KAPOOR,BAREILLY vs. ITO-2(2), BAREILLY NEW

Learned counsel for the assessee, at the very outset, invited my attention to a petition dated 09/02/2022 received by the assessee on 10/02/2022 wherein the assessee has taken an additional ground of appeal Assessment year:2017-18 2 which he is stated that this is a legal ground and his coming out of the facts of the case therefore, in view of the judgment of Hon'ble Supreme Court in the case of NTPC, the same may be admitted and adjudicated first. Learned D. R. did not object to the admission of additional ground of appeal. The additional ground of appeal is reproduced below:

I find that the above additional ground is a legal ground and is coming out of the material placed on record therefore, the same was admitted and lcf was asked to proceed with his arguments.

Learned counsel for the assessee submitted that the Assessing Officer had made addition on the basis of deposit in the bank account and had invoked the provisions of section 69A and section 115BBE which are not applicable as the provisions of 69A are applicable in the case of unexplained investments outside the books of account whereas the deposits made in the bank account cannot be said to be unexplained and which was also recorded in the books of account of the assessee. In this respect my attention was invited to the definition of unexplained money u/s 69A of the Act. Therefore, it was argued that since the Assessing Officer has made the addition u/s 69A, which is not applicable to the assessee therefore, the assessment order passed may be quashed. Explaining the facts of the case, Learned counsel for the assessee submitted that the assessee had deposited certain amount of money in his bank account and the Assessing Officer had made the addition of Rs.18,42,780/- and learned CIT(A) allowed partial relief to the assessee but confirmed the addition to the extent of Assessment year:2017-18 3 Rs.7,68,000/-. Learned counsel for the assessee submitted that learned CIT(A) has upheld the addition by holding that the old currency, which was discontinued, could not have been accepted by the assessee as part of the sales as the old currency did not remain legal tender after the demonetization on 09/11/2016. Learned counsel for the assessee further submitted that the only reason for sustaining this addition was that the assessee had accepted old currency and had credited the cash book with cash sales. Learned counsel for the assessee submitted that nowhere in his order, learned CIT(A) has denied that the sales were not made. Therefore, it was prayed that the appeal filed by the assessee may be allowed.

Learned D. R., on the other hand, submitted that the additional ground taken by the assessee is not sustainable. He submitted that the assessee was not able to explain the deposits and therefore, section 69A was rightly invoked by the Assessing Officer. As regards the cash sales with old currency notes, Learned D. R. submitted that the learned CIT(A) has rightly sustained the addition by holding that after the demonetization, such currency did not constitute legal tender and therefore, appeal filed by the assessee be dismissed.

I have heard the rival parties and have gone through the material placed on record. First of all, I would take the additional ground of appeal where Learned counsel for the assessee has taken a ground that section 69A was not applicable as the assessee had duly recorded the transaction in the books of account and section 69A applies only to those unaccounted assets which are not recorded in the books of account. In this respect it is important to first visit the provisions of section 69A, which for the sake of completeness are reproduced below: Assessment year:2017-18 4

In the result, the appeal of the assessee stands partly allowed.