HARDIK HUNDIA,BALOTRA vs. INCOME TAX OFFICER, BALOTRA

The Id. CIT(A), NFAC erred in not issuing direction to the AO not to charge interest u/s. 234A, 234B and 234C of the Act.

That the Assessee reserves its right to add, alter or subtract any grounds of appeal at the time or before final hearing of the case. 2 Assessment Year 2017-18) The sale issue challenged by assessee is that the CIT(A) was not justified in sustaining addition of Rs.41,51,000/- u/s 69A of the Act, as unexplained money during demonetization period being trading receipt of assessee concern.

Heard both the sides and perused the material on record. We find that while rejecting the appeal of the assessee, the Ld. NFAC/ CIT (A) has observed vide para 6.1 as under: "6.1 I have perused the assessment order of the AO and reasoned explanation given by him for adding the amount of Rs.41,51,000/- in the total income of the appellant. It is clear that there is not enough evidence submitted by the appellant to discharge the onus. Coming to the substantive part of addition, it is seen that appellant has not furnished any corroborative evidence to discharge its claim. The AO has done considerable due diligence to establish his claim. The appellant was asked for substantiating his contention with evidence at the time of appellate proceedings also. However, no response or evidence of any type has been filed by the appellant. It is difficult to differ with the order of the AO since the assessee has choosen not to reply. Infact, it is a case of habitual non compliance as can be seen from para 5.2 above. The appellant himself accepts that he has taken SBN during the demonetization period as a part of realization of his debts and the same were deposited in-his "Dank accounts. This was specifically prohibited by the Government during the period under consideration and any violation under that cannot be considered. After considering the above I am of the opinipn that no Interference is called for in the AO's order and therefore, the grounds off appeal are dismissed." 3 Assessment Year 2017-18)

The Ld. AR argued that the Id. CIT(A)/NFAC did not appreciate the fact of the case on merits while sustaining the addition of Rs. 41,51,000/- u/s. 69A of the Act treating an unexplained money in mechanical manner without application of mind that cash was deposited during the demonetization period out of debt realisation against sales and that the entire deposits made during the demonetization period was out of trade receipt of assessee concern, and same was duly recorded into the regular books of account of the assessee.

It is seen that while completing the assessment Ld A.O. itself accepted the cash deposited in the form of NON SBN as trade receipts after verifying genuineness of transaction, then how he can made the addition for SBN currency which is having bearing same nature and by accepting which assessee had not made violation of statute. It is noted that the Ld. Commissioner Appeal while passing order had duly acknowledged that receipts of debts duly accounted for in the books, but he did not give any reason of non-acceptance of the same. Meaning thereby that department has to demonstrate the fact of any form of alleged SBN currency amounting to Rs. 41,51,000/- deposited in its bank account during the demonetisation period and thus, the Id. CIT(A) NFAC erred in sustain the finding of the AO in making the said addition and in charging of tax at higher rate as per provisions of sec. 115BBE of the Act. 4 Assessment Year 2017-18)

On similar facts regarding issue of SBN deposit in the assessee Bank Account directly by the party, the Coordinate Jodhpur Bench in I.T.Α. Νo. 401/Jodh/2023 Assessment Year: 2017-18 has answered the question whether the assessee is under any obligation in such a situation as per the RBI circular or not, as the revenue while making the addition heavily relied upon the guidelines of the RBI and the relevant provisions thereof. The Specified Bank Notes (Cessation of Liabilities) Act, 2017, defines "appointed day" vide section 2(1)(a). As per section 2(1 "appointed day" means the 31st Day of December 2016. Section 5 of the Specified Bank Notes (Cessation of Liabilities) Act 2017 also deals with prohibition on holding transferring or receiving specified bank notes. Section 5 states that "on and from the person shall knowingly or voluntarily, hold, transfer or receive any specified bank note". Therefore, the SBN can be measured in monetary terms since the guarantee of the Central Government and the liability of Reserve Bank of India does not cease to exist till 31.12.2016. Thus, the assessee as per his regular practice has received directly into the bank account and the said money though not accepted directly by the assessee but the same has been deposited by the parties to whom the assessee has sold the goods. The RBI has placed the restriction and taking the declaration as per the Annexure-5 from the person whose deposit the money and undisputedly this money has not been deposited by the assessee in relevant year 2017-18 5 Assessment Year 2017-18) therefore, furnishing at Annexure-5 by the assessee is out of question. It was the Id. AO who might have issued the notices u/s 133(6) to the respective party or to the bank and called for the details to justify the averments made by the assessee and thus, when the sales is not disputed and in fact the part of the cash in the demonetised period is not disputed the action of the lower authority in sustaining the addition u/s. 69A is incorrect and thus hereby directed to be deleted. In nutshell when the sales are not in dispute and found genuine and even for that part of the cash is considered as explained in the same demonetisation period which are not SBN and out of the same sales merely the part of the other amount directly deposited into the bank account by the buyer though SBN cannot be considered as unexplained money in the hands of the assessee as the same has not been received by the assessee directly and the same was received by the bank which was permitted till 31st December to be received by the bank.

In the present case, the sales are not in dispute and accepted as genuine by the Department. Merely the part of the amount directly deposited into the bank account by the debtors though SBN cannot be considered as unexplained money in the hands of the assessee as the same has not been received by the assessee directly and the same was received by the bank which was permitted till 31st December to be received by the bank. In our view, the decision of the CIT(A)/NFAC in sustaining the addition u/s. 69A is not justified and thus the addition sustained is liable to be delated.

Considering the factual matrix and Coordinate Bench (Supra), we hold that the impugned order of the Ld. NFAC/CIT (A) is infirm and perverse to the facts on record. Accordingly, the addition of Rs. 41,51,000/- is deleted.

In the result, the appeal of the assessee is allowed. Order pronounced on.2.6.1.0.6./2025 under Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Λ (ANIKESH BANERJEE JUDICIAL MEMBER Dated 26../46./2025 Copies to: (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File (DR. MITHA LAL MEENA) ACCOUNTANT MEMBER By Oder