JAGDISH PRASAD,LUCKNOW vs. ITO RANGE-1(2), LUCKNOW

2017-18 against impugned appellate order dated 28/02/2024 (DIN & Order No.ITBA/APL/S/250/2023- 24/1061689837(1) passed by Addl/JCIT (Appeals). In this appeal the assessee has raised the following grounds:

“1. The Ld. CIT(A) NFAC erred on facts and in law in confirming the impugned addition of Rs.5,39,500/- made u/s 69A being cash deposited during demonetization period in demonetized currency without considering that during demonetization period an amount of Rs.39,500/- only has been deposited in demonetized currency and the rest cash was deposited in other than demonetized currency out of cash available from sale of electrical goods income from which was offered u/s 44AD of I.T. Act.

(A.1) In this case assessment order dated 06/12/2019 u/s 143(3) of the I.T. Act was passed wherein the assessee’s total income was assessed at Rs.8,79,916/-. In the aforesaid assessment order an addition of Rs.5,39,500/- was made by the Assessing Officer u/s 69A of the I. T. Act on the ground that the aforesaid amount was deposited by the assessee in demonetized currency during demonetization period. The assessee’s appeal against the aforesaid addition of Rs.5,39,500/- was dismissed by the learned Addl/JCIT(A) vide impugned appellate order dated 28/02/2024. The present appeal has been filed by the assessee against the aforesaid impugned appellate order dated 28/02/2024.

(B) In the course of appellate proceedings before the Income Tax Appellate Tribunal, brief facts were filed from the assessee’s side; which are reproduced below for the ease of reference:

(B.1) Further, paper book containing the following particulars was filed from the assessee’s side during appellate proceedings before the Income Tax Appellate Tribunal:

(C) At the time of hearing, learned A.R. for the assessee submitted that only an amount of Rs.39,500/- was deposited by the assessee in demonetized currency during demonetization period; and the Assessing Officer grossly erred in treating the entire amount of Rs.5,39,500/- being deposited in demonetized currency. Learned A.R. further submitted that aforesaid amount of Rs.39,500/- was available as cash in hand out of assessee’s business of sale of electrical and electronics goods from the proprietary firm Bharat Electricals. The learned A.R. for the assessee also submitted that the remaining amount out of the aforesaid Rs.5,39,500/-, i.e. Rs.5,00,000/- was deposited out of the assessee’s turnover of Rs.42,55,200/- which has been duly shown u/s 44AD of the Act in the income tax return filed u/s 139 of the Act. The learned A.R. for the assessee placed reliance on the aforesaid paper book and drew our particular attention to the certificate issued by bank wherein it has been clearly shown that the deposits in the bank (Bank of India, Chinhat Branch, Lucknow) in demonetized currency amounted to Rs.39,500/-. Relying on the submissions made, and the paper book filed from the assessee’s side as also the facts of the case referred to in foregoing paragraphs of this order, learned A.R. for the assessee contended that the aforesaid addition of Rs.5,39,500/- be deleted.

(C.1) Learned D.R. for Revenue relied on the orders of the learned CIT(A) and the Assessing Officer. However, he could not rebut the facts and submissions contended on behalf of the assessee. The learned D.R. for Revenue left the matter to the discretion of the SMC.

(D) The assessee is in the business of sale of electrical and electronics goods and has shown turnover of Rs.42,55,200/- u/s 44AD of the I. T. Act (under the scheme of presumptive taxation) and has shown income of Rs.3,22,850/- in the aforesaid turnover, in the return of income. Having regard to turnover of the assessee, nature and scale of assessee’s business, the claim of the assessee that part of the sale consideration received was in cash, and an amount of Rs.5,39,500/- deposited in cash in bank account is not unreasonable and further the cash balance of Rs.39,500/- in demonetized currency just before the demonetization is also not unreasonable or excessive. The addition made by the Assessing Officer is based only on doubt, surmises and guess work. As the assessee has opted for presumptive taxation u/s 44AD of the Act, the assessee is not required to maintain regular books of account and no adverse view can be taken against the assessee on this account. The certificate issued by bank to the effect that only Rs.39,500/- was deposited by the assessee in demonetized currency was available with the Assessing Officer and with the learned CIT(A) who, however, failed to take this certificate into consideration while passing their respective orders. No case has been made for sustaining the aforesaid addition of Rs.5,39,500/-. The mere fact that part of turnover was deposited in cash in bank should not colour decision of the authority. The mere fact that part of turnover was deposited in cash should not weigh so heavily in the minds of the authorities that it may lead to unjustly and unfairly reject reasonable explanation and ignore material evidence placed before the authorities. In the specific facts and circumstances of the present case, and the material evidence available on record; the explanation tendered from assessee’s side that an amount of Rs.39,500/- deposited in bank in demonetized currency was part of cash balance available just before demonetized; and total amount of Rs.5,39,500/- deposited in cash in bank was part of turnover is accepted. Accordingly, in specific facts and circumstances of the present case, the aforesaid addition of Rs.5,39,500/- is deleted and the appeal is allowed.

(D) In the result, the appeal of the assessee is allowed.

(Order pronounced in the open court on 31/12/2024)