VENKATACHALAM VIKKRAM ,SALEM vs. ITO, WARD 1(4),SALEM, SALEM

This appeal filed by the assessee is directed against the order dated 28.08.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2017-18.

Brief facts of the case are that the assessee is an individual and proprietor of petrol bunk namely M/s. R.V. Vikram Agencies, a dealer of Indian Oil Corporation. The assessee filed his return of income admitting total income of ₹.3,48,200/-. The Assessing Officer noted at page 2 of the assessment order that the assessee had deposited old SBNs to an extent of ₹.11,13,500/-. The Assessing Officer did not allow the above sum for the reason that the Govt. Of India allowed the petrol bunk to receive the old SBNs of ₹.1000 till 24.11.2016 and ₹.500 till 15.12.2016. Since the assessee received old SBNs after the aforesaid dates, the above said amount of ₹.11,13,500/- was treated as assessee’s unexplained credit and brought to tax under section 68 of the Income Tax Act, 1961 [“Act” in short]. Further, the Assessing Officer also disallowed the interest payment to an extent of ₹.45,936/- under section 40(a)(ia) of the Act. The ld. CIT(A) confirmed the same.

The ld. AR Shri T.S. Lakshmi Venkataraman, FCA submits that once the Assessing Officer has not doubted the cash deposits out of sale, the deposit of invalid currencies cannot be treated as unexplained income of the assessee, in as much as, when the currencies itself are invalid, there is no character of income embedded in those currencies to treat them as unexplained income. He further submits that due to the circumstances beyond his control, the assessee could not file explanation/documentary evidence in support of his claim before the ld. CIT(A) and prayed to afford an opportunity to the assessee.