CHANDOLU VIJAY KUMAR,GUNTUR vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1), GUNTUIR

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ITA 46/VIZ/2024Status: DisposedITAT Visakhapatnam21 March 2024AY 2018-19Bench: SHRI DUVVURU RL REDDY, HON’BLE (Judicial Member), SHRI S BALAKRISHNAN, HON’BLE (Accountant Member)8 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the cash deposits arising from credit sales to numerous small traders, who paid less than Rs. 10,000 per party and were not covered by GST/VAT, were genuine. However, cash deposits into a specific bank account without explanation were upheld.

What were the facts?

The assessee, a proprietor engaged in trading, made cash deposits into his bank account. The Assessing Officer (AO) added these deposits as unexplained income under Section 68 of the Income Tax Act, 1961, disbelieving the assessee's explanation of realization from credit sales.

What were the issues?

Whether cash deposits in bank accounts representing realization from credit sales to small traders are unexplained income under Section 68, and whether undisclosed cash deposits into a specific bank account are unexplained.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE

For Respondent: Dr. Aparna Villuri, Sr. AR
Hearing: 19/03/2024

Per contra, the Ld. DR heavily relied on the orders of the Ld. Revenue Authorities and submitted that the assessee has not filed the details of sundry debtors including PAN, Addresses, GST / VAT Nos of various parties. Therefore, the Ld. DR pleaded that the assessee has not proved the genuineness of the collection from the debtors and hence the orders of the Ld. Revenue Authorities be upheld. Countering the argument of the Ld. DR, the Ld. AR submitted that the bank account statement and the GST returns have been filed before the Ld. Revenue Authorities disclosing the cash and credit sales. The Ld. AR therefore submitted that the Revenue has not disputed the total turnover of the assessee. The Ld.AR also further submitted that the cash collection from the debtors comprises of more than 2000 parties who were all Kirana Traders or small / petty shop owners, who are not covered by GST/VAT provisions. He therefore once again pleaded that the addition may be deleted.

5.

We have heard both the sides and perused material available on record as well as the orders of the Ld. Revenue 6 Authorities. In this case we find that the Revenue has not disputed the total turnover of the assessee ie., Rs. 161,11,15,940/-. Further, the Revenue has also not doubted the genuineness of the cash expenditure amounting to Rs. 62,87,543/-. In this context, the argument of the Ld. AR deserves consideration wherein these cash expenses were incurred out of the cash collection from debtors and the balance of Rs. 1,35,08,689/- was deposited into the bank account. There is also merit in the argument of the Ld. AR that the parties are small traders who have paid cash amounting to less than Rs. 10,000/- per party. We also agree with the view of the Ld. AR that these small traders are not covered under the GST Act. Further, the Ld. AR has also demonstrated before us the cash book abstract detailing the cash sales, cash receipts from debtors and cash payment for expenditure and the balance cash available in the financial statements as detailed in page 312 of the paper book. We are therefore inclined to accept the view of the Ld. AR that these cash deposits arise out of the realization from various parties to whom the credit sales have been made by the assessee and hence the addition made by the Ld. Revenue Authorities deserves to be deleted. Thus, Ground No.2 raised by the assessee is allowed.

6.

With respect to Ground No.3, regarding the addition of Rs. 96,300/-, we find that the assessee has not explained the source of the above cash deposits into the Indian Bank Account before the Ld. Revenue Authorities. We also find from the Ld. CIT (A)- NFAC order that the assessee has not filed any details even before the Ld. CIT(A)-NFAC. Neither is it filed before us. We are therefore inclined to upheld the order of the Ld. Revenue Authorities on this ground as we find no infirmity in the order of the Ld. CIT(A)-NFAC. Accordingly, this ground raised by the assessee is dismissed.

7.

In the result, appeal of the assessee is partly allowed.

Pronounced in the open Court on 21st March, 2024.

1.

Sd/- Sd/- (दुव्िूरुआर.एलरेड्डी) (एसबालाकृष्णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) न्याययकसदस्य/JUDICIAL MEMBER लेखासदस्य/ACCOUNTANT MEMBER Dated : 21.03.2024 OKK - SPS 8 आदेशकीप्रतिलिपिअग्रेपिि/Copy of the order forwarded to:- निर्धाररती/ The Assessee–Chandolu Vijay Kumar, D.No. 5-84-2, 2nd 1. Lane, Pandaripuram, Guntur, Andhra Pradesh – 522007. रधजस्व/The Revenue –The Asst. Commissioner of Income Tax, Circle- 2. 1(1), O/o. Income Tax Office, CR Building, Kannavari Thota, Guntur, Andhra Pradesh – 522001.

3.

The Principal Commissioner of Income Tax, आयकरआयुक्त (अपील)/ The Commissioner of Income Tax 4. ववभधगीयप्रनतनिधर्, आयकरअपीलीयअधर्करण, ववशधखधपटणम/ 5. DR,ITAT, Visakhapatnam गधर्ाफ़धईल / Guard file 6. आदेशधिुसधर / BY ORDER

Sr. Private Secretary ITAT, Visakhapatnam

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