PEELA GOVIND APPARAO,VISAKHAPATNAM vs. INCOME TAX OFFICER, WARD-4(3), VISAKHAPATNAM

PER SHRI DUVVURU RL REDDY, JUDICIAL MEMBER

This appeal filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [CIT(A)-NFAC] vide DIN & Order No. ITBA/NFAC/S/250/2022-23/1047331575(1), dated 15/11/2022

2 arising out of the order passed U/s. 144 of the Income Tax Act,

1961 [the Act] for the AY: 2017-18.

“1. The order of the Ld. CIT(A) is contrary to the facts and also the law applicable to the facts of the case.

an individual and carrying on wholesale trade in Cement. The

assessee filed his return of income regularly up to the AY 2016-

disputes, the assessee did not file his return of income.

Thereafter, the assessee discontinued the business slowly in a

phased manner and the business was totally stopped during the

3 FY 2018-19. During the FYs 2016-17 to 2018-19, the assessee

sustained losses and hence the assessee furnish the return of

income for the AY 2017-18. Notices U/s. 142(1) of the Act were

issued on 29/1/2018; 19/06/2018; 04/09/2019. On

25/11/2019 show cause notice was also issued to the assessee

but there was no reply from the assessee. Thereafter, the Ld. AO

passed ex-parte order u/s. 144 of the Act and determined the

total income at Rs. 24,92,280/- which includes two additions

viz., (i) deposits in SBI, Kotapadu during demonetization period

and treated the same as unexplained money U/s. 69A of the Act

and charged the tax as per section 115BBE of the Act for Rs.

21,17,600/- and (ii) total deposits in CC Account and Current

Account amounting to Rs.46,83,500/- treated as ‘turnover of the

assessee’ and estimated the income thereon @ 8% ie., 3,74,640/-.

The deposits in the bank account represent the realization of the

amounts partly from sundry debtors of earlier years and partly

from the current year sale proceeds. Considering the above stated

facts, the Ld. AO estimated the income before the demonetization

period and after demonetization period and brought to tax the

entire deposits during the demonetization period U/s. 115BBE of

the Act which works out to Rs. 21,17,000/- and passed the

assessment order on 29/11/2019. On being aggrieved by the

4 order of the Ld. AO, the assessee preferred an appeal before the

Ld. CIT(A)-NFAC. On appeal before the Ld. CIT(A)-NFAC, inspite

of issuance of notice, the assessee did not respond and therefore

the Ld. CIT(A)-NFAC passed the order confirming the order of the

Ld. AO. On being aggrieved by the order of the Ld. CIT(A)-NFAC,

the assessee is in appeal before the Tribunal by raising the above

mentioned grounds of appeal.

has failed to consider the cash deposits during the

demonetization period as the assessee’s business turnover and

considered them only as cash deposits and estimated the income

@ 8% ie., before demonetization. The Ld. AR further submitted

that the Ld. AO has treated the entire cash deposits made during

the demonetization period as unexplained cash deposits and

made an addition u/s. 68 of the Act and U/s. 115BBE of the Act.

But the said amount pertains to the sale proceeds of the

assessee. This fact was not considered by the Ld. AO and the Ld.

CIT(A)-NFAC and erred in invoking the provisions of section

115BBE of the Act against the deposits made by the assessee

during the demonetization period. Therefore, the Ld. AR pleaded

5 for estimation of income @ 8% on the deposits made during the

demonetization period also.

Per contra, the Ld. DR submitted that the assessee has not

furnished any details regarding the cash deposits and therefore,

the Ld. AO as well as the Ld. CIT(A)-NFAC have rightly invoked

the provisions of section 115BBE of the Act and pleaded for

confirming the orders of the Ld. Revenue Authorities.

available on record and the orders of the Ld. Revenue

Authorities. During the course of arguments, it is the submission

of the assessee that this Tribunal may be pleased to estimate the

profit of the assessee @ 8% on the deposits made by the assessee

during the demonetization period but the Ld. DR requested that

in the absence of any details, the estimation @ 12.5% is

justifiable. Considering the peculiar facts and circumstances of

the case as well as considering the nature of business of the

assessee and accepting the contention of the Ld. DR, I find it

reasonable to estimate the profit of the assessee @ 12.5% on the

cash deposits made by the assessee during the demonetization

period considering the said deposits are his business

income/turnover. Accordingly, I direct the Ld. AO to consider the

6 profit of the assessee @ 12.5% on the deposits made by the assessee during the demonetization period. It is ordered accordingly. Thus, the grounds raised by the assessee are partly allowed. 6. In the result, appeal of the assessee is partly allowed.

Pronounced in the open Court on the 28th February, 2023.

Sd/- (दु�वू� आर.एल रे�डी) (DUVVURU RL REDDY) �या�यकसद�य/JUDICIAL MEMBER Dated : 28.02.2023 OKK - SPS आदेश क� ��त�ल�प अ�े�षत/Copy of the order forwarded to:- �नधा�रती/ The Assessee – Peela Govind Apparao, Prop. Govind 1. Enterprises, D.No. 27-9, 9th Ward, Gavarapeta, Gondupalem Vilalge, K. Kotapadu Mandal, Visakhapatnam. राज�व/The Revenue – Income Tax Officer, Ward-4(3), Pratyakshakar 2. Bhavan, MVP Double Road, Visakhapatnam. 3. The Principal Commissioner of Income Tax, आयकर आयु�त (अपील)/ The Commissioner of Income Tax 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, �वशाखापटणम/ DR, ITAT, 5. Visakhapatnam गाड� फ़ाईल / Guard file 6. आदेशानुसार / BY ORDER

Sr. Private Secretary ITAT, Visakhapatnam