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Income Tax Appellate Tribunal, AGRA BENCH ‘SMC’: AGRA
(ASSESSMENT YEAR: 2017-18) Income Tax Officer, Rajesh Kumar Gupta, Shivpuri. Raj Communication, Vs. New Colony, Bairad, Shivpuri-473793. Madhaya Pradesh PAN-AIEPG5553E (Appellant) (Respondent) Assessee by Shri Rajendra Sharma, Adv. and Shir Manuj Sharma Department by Shri Shailendra Srivastava. Sr. DR Date of Hearing 22/05/2025 Date of Pronouncement 24/06/2025 O R D E R [ PER MANISH AGARWAL, AM: This appeal is filed by the assessee against the order passed u/s 250 of the Income Tax Act, 1961 (‘the Act’, in short) by the ld. Addl./ Joint Commissioner of Income Tax (Appeals)-1, Mumbai (‘Ld. CITA’ in short) dated 11.02.2025 in Appeal No. CIT(A), Gwalior/10531/2019-20 for Assessment Year 2017-18.
Brief facts of the case are that the assessee is an individual and engaged in the business of prepaid recharge vouchers of Bharti Airtel Rajesh Kumar Gupta vs. PCIT Ltd. as distributors. The income of the assessee was of Rs. 2,12,718/- which was below the maximum amount not chargeable to tax therefore, no return of income was filed by the assessee for the impugned assessment year. The AO had information that assessee had deposited Specified Bank Notes (SBN) intro bank during the period of demonetization of Rs. 4,98,500/- and no return of income was filed therefore, the case of the assessee was taken for scrutiny. After considering the submissions, assessment was completed vide order passed u/s 144 of the Act dt. 22.12.2019 at a total income of Rs.7,10,718/- by making addition of Rs. 4,98,500/- u/s 69A towards the SBN deposited during the demonetization holding the same as unexplained.
Against the said order assessee preferred appeal before the ld. CIT(A) who vide impugned order dt. 11.02.2025 dismissed the appeal of the assessee.
Aggrieved by the said order of ld. CIT(A), assessee filed present appeal before the Tribunal on the strength of following grounds of appeal:
1. That the appellate order passed u/s 250 dt. 11.02.2025 is not in accordance with the provisions of section 250(6) of Income Tax Act. The appellate order passed u/s 258 is liable to be set aside.
2. That while passing the appellate order, the NFAC has completely ignored that provisions of section 69A are not attracted in the case of assessee. The AO has wrongly invoked the provisions of section 69A of Income tax Act, the addition made on this score is liable to be deleted.
3. That while sustaining the addition as made by the AO, the NFAC has completely ignored that the deposits with bank are not the income, so as to attract the provisions of section 69A of Income tax Rajesh Kumar Gupta vs. PCIT Act, addition made, invoking the provisions of section 69A are highly unjustified, no addition is liable to be made, addition made by the AO, sustained by CIT Appeal is liable to be deleted.
4. That while sustaining the addition, as made by the AO, the NFAC has completely ignored that the deposits with bank are fully explained with reference to the explanations furnished by the assessee before the AO, taking into consideration, the explanations furnished, no addition is liable to be made, addition made by the AO, sustained by CIT Appeal is liable to be deleted.
5. That the appellate order dt. 11.02.2025 is bad in law, liable to be set aside.”
All the grounds of appeal
are related to the addition of Rs. 4,98,500/- made u/s 69A by treating the cash deposited during demonetization period in SBN as unexplained u/s 69A of the Act thus the same are taken together for adjudication.
6. Before us, the Ld. AR of the assessee submitted that during the year under appeal, assessee was trading in recharge vouchers of Bharti Airtel and since the total income was below the maximum amount not chargeable to tax, no return of income filed. Regarding the source of cash deposited in SBN during the demonetization period, it is explained that the same is out of past savings and receipts from the customers against the sale of recharge vouchers. He further submitted that while dismissing the appeal of the assessee, ld. CIT(A) has observed that income of the assessee was low which might be used for household expenses and thus it is not possible to have such cash for making deposit in bank. In this context Ld. AR submitted that though the assessee has not maintained any regular books of accounts however, had prepared and filed the statement of affairs for the year ended on 31.3.2014, 3.3.2015 and Rajesh Kumar Gupta vs. PCIT 31.3.2016 according to which, as against the total capital of Rs. 8,51,234/-, assessee was having cash in hand of Rs. 5,31,385/- as at 31.3.2013 which was accumulated over the period and was available with the assessee when the demonetization was announced on 08.11.2016. It was submitted that the ld. CIT(A) without pointing out any defect in the same has rejected the plea of the assessee in absence of any corroborative evidence. It is further submitted by ld.AR that provisions of section 69A are also not applicable to the present case as bank deposit cannot be treated as money, bullion or jewellery or any valuable article or thing for the invocation of section 69A of the Act. In view of the above submission, it is prayed by ld. AR that the addition made on account of cash deposit in SBN deserves to be deleted.
7. Per contra, ld. Sr. DR vehemently supported the order of lower authorities and stated that assessee has made cash deposit during demonetization in SBN and claimed the said as deposited out of past savings without any evidence to support the claim. He thus prayed for the confirmation of the additions made by the lower authorities.
We have heard the rival submissions and perused the materials available on record. In the instant case, though the assessee has not filed the return of income for the year under appeal, however, was engaged in the business of recharge vouchers of Bharti Airtel and having regular source of income from such business. The major amount of the cash deposited in SBN was utilized in making payment to the Bharti Airtel for purchases of recharge vouchers, which fact Rajesh Kumar Gupta vs. PCIT remained uncontroverted. Assessee has deposited SBN during the demonetization out of the cash available as on the closing hours of 08.11.2016 i.e. the date when the demonetization was announced by the Hon’ble prime minister and was the last day upto which the SBN could be accepted as valid currency. The assessee has also filed statements of affairs for the preceding years wherein the cash in hand of more than Rs. 5.00 lacs was shown. Though the assessee was not required to maintain books of accounts as per section 44AA(2) but can prepare a statement of affairs for justifying his closing cash balance at the end of year. In preceding assessment years return of income were also filed and refunds were claimed. It is also a matter of common knowledge that in the business of recharge vouchers most of the sale is in cash and assessee used to deposit cash in bank to make the payment to the company for purchases of recharge vouchers. Under these circumstances, availability of cash amount of 4,98,500/- with the assessee as on the date of announcement of demonetization cannot be ruled out.
The Hon’ble Delhi High court in the case of CIT v. Kailash Jewellery House in (Delhi High Court) has held as under: “In the facts of above case cash of Rs.24,58,400/- was deposited in bank account. The Assessing Officer made the addition on the ground that nexus of such deposit was not establish with any source of income. The assessee claimed that it was duly recorded in the books on account of cash sales and was considered in the Profit and Loss Account. The Assessing Officer had verified the stock and cash position as per books and had accepted the same. Complete books of account and cash book was submitted to the Assessing Officer and no discrepancy was pointed out. On this basis CIT(A) deleted the addition. Tribunal also observed that it is not in dispute that sum of