MUTHUSAMY SENTHILKUMAR,NAMAKKAL vs. ITO, WARD-1,, NAMAKKAL

This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter in short ‘the Ld.CIT(A)’), Delhi, dated 27.09.2023 for the Assessment Year (hereinafter in short ‘AY’) 2017-18.

At the outset, it is noticed that there is a delay of ‘109’ days in filing of this appeal; and the assessee has filed an Affidavit, requesting to condone the delay, citing the cause of the delay, which we note that he came to know about the impugned order only in the first week of March,

The main grievance of the assessee is against action of the Ld.CIT(A) confirming the action of the AO making an addition of Rs.23,08,000/- as unexplained money u/s.69A r.w.s.115BBE of the Income Tax Act, 1961 (hereinafter in short “the Act"), despite assessee had brought to their notice that as on 08.11.2016 (i.e. before the demonetization was ordered) he had cash balance of Rs.46,53,764/-.

Brief facts are that the assessee had filed his return of income on 23.01.2018 admitting an income of Rs.8,38,730/-. Later, the return of income was selected for scrutiny. The AO noted in the assessment order that assessee is an individual engaged in the business of trading in poultry feeds in the name and style of a proprietorship concern, M/s.Harrin Feeds, and he noted that assessee had made huge cash deposits amounting to Rs.1,89,13,500/-, which includes a sum of Rs.57,08,000/- in demonetized currency [Specified Bank Notes (hereinafter in short “SBNs")] meaning remaining cash deposits of (AY 2017-18) Muthusamy Senthilkumar :: 3 ::

Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), who was pleased to confirm the same by reiterating the findings of the AO. Aggrieved by the action of the Ld.CIT(A), the assessee is before us.

Per contra, the Ld.DR does not want us to interfere with the action of the Ld.CIT(A).

We have heard both the parties and perused the material available on record. The assessee had deposited a huge sum of cash during demonetization period between 09.11.2016 to 30.12.2016 and the AO accepted the genuinety of Rs.34 lakhs, but didn’t accept the genuinety of Rs.23,08,000/-, so assessee is in appeal before us. In this regard it is noted that the assessee is in the business of trading in poultry feeds and deals with persons engaged in poultry farms and sell poultry feeds in rural areas mostly in cash. And the assessee in order to show the source of the cash deposited in Bank had given the details of stock of poultry feeds as well as the cash received and the cash on hand as on 08.11.2016 (before demonetization date) which has not been deposited. The assessee had shown cash on hand as on 08.11.2016 at Rs.46,53,764/- and the AO has accepted the genuineness and source of Rs.34 lakhs (Rs.57,08,000/- – Rs.23,08,000/-) because assessee had deposited ‘SBNs’ between 11th November to 15th November, 2016; and has not accepted SBNs deposits of Rs.23,08,000/-, even though, there was enough cash on hand, only on the reason that assessee had deposited the same after 18.11.2016 to 28.12.2016. The reason given by both the authorities below cannot be countenanced for the reason that AO accepted the reasonableness as to the part must be good for the whole, because there was no material on which it could be held that the balance constituted income from some undisclosed source to distinguish the case

In the result, appeal filed by the assessee is allowed.