VENKATAIAH DESHAGANI,NALGONDA vs. INCOME TAX OFFICER, NALGONDA

Facts of the case, in brief, are that the assessee is an individual and deriving income from the business of running a wine shop. The assessee filed his return of income for the A.Y 2017-18 on 9.10.2017 u/s 139(1) of the I.T. Act, 1961 declaring total income of Rs.13,28,100/-. The aforesaid return was selected for scrutiny under CASS to examine ‘Abnormal increase in cash deposits during demonetization period as compared to pre-

Feeling aggrieved, the assessee preferred an appeal before the learned CIT (A). The learned CIT (A) upheld the action of the Assessing Officer on the ground that the contention of the appellant cannot be accepted as the appellant was not authorized to accept the SBN currency against the sales made by him during demonetization period as per the guidelines applicable at that point of time.

The learned Counsel for the assessee submitted that given an opportunity, the assessee would be in a position to substantiate its claim with proper evidence before the Assessing Officer/learned CIT (A) that the addition made u/s 69A of the I.T. Act, 1961 was for the sales turnover made during the demonetization period which was duly explained before the Assessing Officer.

The learned DR, on the other hand, supporting the orders of the authorities below submitted that the assessee did not furnish the cash book for the financial year 2016-17 to substantiate its claim and the entire SBNs deposited in bank accounts to the tune of Rs.36,39,500/- during the demonetization period should be treated as unexplained money u/s 69A of the I.T. Act, 1961 and the grounds raised by the assessee should be dismissed and the order of the learned CIT (A) should be upheld.

I have heard both the parties and considered the relevant assessment order and appellate order passed by the learned CIT (A). I find that the Assessing Officer has made addition towards the cash deposit of Rs.36,39,500/- in Specified Bank Notes during the demonetization period. The assessee claimed that the source for cash deposit is partly out of opening cash in hands as on 8.11.2016 at Rs.25,09,646/- and the balance amount was deposited out of sales made during the month of November, 2016. The assessee has filed a cash book extract in support of his argument. The Assessing Officer and the learned CIT (A) did not consider cash book filed by the assessee only on ITA 588 of 2023 Venkataiah Deshagani the ground that the said cash book was filed in physical form but not a soft copy. In my considered opinion, when the assessee has filed an evidence whether it is in the form of soft copy or in physical form, the same should be considered by the authorities while examining the issue. In the present case, the Assessing Officer ignored the cash book filed by the assessee and made addition towards the total cash deposits even though the assessee claims that the source for cash deposit is out of opening cash in hand as on 8.11.2016 and before the date of demonetization. In case, source for cash deposit is one of opening balance, the same cannot be treated as unexplained money. Therefore, I am of the considered opinion that the issue needs to be examined by the Assessing Officer. Thus, I set aside the order of the learned CIT (A) and restore the issue back to the file of the Assessing Officer and direct the Assessing Officer to verify the claim of the assessee in the light of cash book and other evidences that may be filed by the assessee.

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