VENKAASALU SATHIYANARAYANAN,KRISHNAGIRI vs. ACIT, CIRCLE-1, HOSR

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ITA 672/CHNY/2024Status: DisposedITAT Chennai05 June 2024AY 2017-18Bench: SHRI ABY T. VARKEY (Judicial Member), SHRI AMITABH SHUKLA (Accountant Member)4 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee's explanation that the deposits were from cash on hand from accountable sources before demonetization, and the delay was due to bank rush, was plausible. The AO had not found any discrepancy in the assessee's books of accounts.

What were the facts?

The assessee, a wholesale distributor, deposited Rs. 10,51,000 in Specified Bank Notes (SBNs) between November 17 and December 3, 2016, after demonetization. The Assessing Officer (AO) added this amount to the assessee's income under Section 69A for not providing a proper reason for the delay in remittance.

What were the issues?

Whether the addition of SBN deposits made after demonetization is justified when the assessee provides a plausible explanation for the source of funds and the delay in deposit.

Which sections of the Income-tax Act were involved?

Section 69A,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI AMITABH SHUKLA

Hearing: 21.05.2024Pronounced: 05.06.2024

आदेश / O R D E R

PER ABY T. VARKEY, JM: 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 04.01.2024 for the Assessment Year (hereinafter in short ‘AY’) 2017-18.

2.

The main grievance of the assessee is against action of the Ld.CIT(A) confirming the addition of Rs.10,51,000/- as made by the AO

1.

(AY 2017-18) Venkatasalu Sathiyanarayanan :: 2 :: u/s.69A r.w.s.115BBE of the Income Tax Act, 1961 (hereinafter in short ‘the Act’).

3.

The brief facts are that the assessee is an individual and he is the wholesale distributor of products of M/s.Hindustan Unilever Ltd., (hereinafter in short ‘M/s.HUL"). The assessee has income from house property and income from other source. The assessee filed return of income for AY 2017-18 on 30.10.2017 declaring total income of Rs.21,92,920/-. Later, the case of the assessee was selected for scrutiny and the AO taking note that assessee has deposited cash deposits in Specified Bank Notes (hereinafter in short “SBNs") was of the view that the deposit made on 16.11.2016 to the tune of Rs.1,21,500/- appears to be deposited within a reasonable time from the date of demonetization and so he accepted it to be genuine, whereas, the balance amount deposited to the tune of Rs.10,51,000/- from 17.11.2016 to 03.12.2016, he added u/s.69A of the Act, for the reason that the assessee has not offered proper reason for the delay in remittance. And an appeal, the Ld.CIT(A) confirmed the action of the AO. Aggrieved, assessee is before us.

4.

We do not countenance this action of the Ld.CIT(A)/AO, we not that the assessee has brought to the notice of the authorities below that the deposits were made out of funds available from the funds in hand (from

(AY 2017-18) Venkatasalu Sathiyanarayanan :: 3 :: accountable sources) before the demonetization was declared. The assessee has shown to the authorities below that that he had cash on hand from the wholesale distribution of products of M/s.HUL well before the demonetization was declared on 08.11.2016; and thereafter, even though, he wanted to deposit the cash at the earliest, but due to heavy rush in the banks, assessee had to delay depositing the same. The assessee filed the relevant books viz., Cash Book/Bank Book and Stock, etc., before the AO and the AO could not find any discrepancy in the same vis-à-vis assessee’s explanation about the source of deposit of cash in bank. Therefore, the assessee’s explanation about the source of Rs.10,51,000/- ought not to have been brushed aside merely on the reason that assessee has not offered proper reason for delay in remittance. The assessee’s explanation is plausible for delay in remittance, therefore, we accept the same and direct deletion of the addition of Rs.10,51,000/-.

5.

In the result, appeal filed by the assessee is allowed for statistical purposes.

Order pronounced on the 05th day of June, 2024, in Chennai.

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