9911796707
TMI Blog2024 (9) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar Aggarwal, AM And Hon ble Shri Manu Kumar Giri, JM For the Appellant : Shri P.M. Kathir, Advocate For the Respondent : Ms Gouthami Manivasagam, IRS, JCIT ORDER PER MANU KUMAR GIRI (JUDICIAL MEMBER) This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in order No.ITBA/NFAC/S/250/2023-24/1060281525 (1) dated 30.01.2024. The assessment was framed by the Assistant Commissioner of Income Tax, Corporate Circle 2, Madurai for the assessment year 2017-18 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter the Act ), vide order dated 06.12.2019. 2. Brief facts of the case are that the assessee is an individual and filed its e- Return of Income on 07.11.2017 declaring total income of Rs. 26,26,990/- and deemed income of Rs. 18,86,370/- u/s. 115JB of the IT Act. The case was selected for complete scrutiny under CASS. Therefore, notice u/s. 143(2) of the Act was issued. Subsequently, notices u/s. 142(1) u/s. 143(3) of the act were issued from time to time. In response, the appellant submitted his reply. During the assessment year the appellant had cash deposited in Bank account during the demo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned are petrol pumps, pharmacies and utility services, but there is no reference to the private nursing homes, which is the appellant's business. Thus, the situation is that the appellant cannot take cash in form of SBNs to provide the hospital services during the said demonetization period. Further, the ld.CIT(A) observed that the cash is also shown as taken for special diet kitchen services which is not medical services and not covered at all by the RBI guidelines. Therefore, when the appellant is not allowed to conduct business transactions in the specified bank notes, to state that the cash was generated from such business defies logic and legality. Further, the appellant apart from producing the cash book and financial statements has not provided any proof of the entries therein. Thus, the ld.CIT(A) observed that mere existence and audit of books of accounts does not mean the same are to be accepted as they are. The ld.CIT(A) confirmed the action of the ld. Assessing Officer. Aggrieved, assessee is in appeal before the Tribunal. 4. Before us, the ld.Counsel for the assessee submitted case law paper book (Pages 1-59) and paper book containing 1-46 pages and referred deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gone through orders of the authorities below. The facts borne out from records indicates that the assessee is running a critical 75-bed hospital in the city saving life, surgical and diagnostics goods, which is considered to be essential goods. The assessee has deposited a sum of Rs. 38,54,885/- during the demonetization period of 10.11.2016 to 30.12.2016. The assessee has deposited Rs. 23,49,500/- in SBN (denominations of Rs. 500 and Rs. 1000) out of Rs. 38,54,885/-. The aforesaid SBN deposit of Rs. 23,49,500/- in Bank was made partly out of the cash balance of Rs. 2,94,888/- on hand on 08.11.2016 at the time of demonetization and balance of Rs. 20,54,613/- was made out of in-patient collections made during the demonetization period. The assessee claims that source for cash deposit is out of realization of cash sales made includes before and after the demonetization period. The assessee has filed necessary details (as mentioned in para 4 above) including list of parties from whom cash collected after demonetization period and deposited into bank account. The Assessing Officer is not disputing all these claims of the assessee including evidence filed in support of justificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible to transact or receive any specified bank notes after demonetization as per notification/GO issued by RBI and Government of India. The Assessing Officer, had discussed the issue with reference to GO issued by RBI and Government of India and concluded that since the assessee has accepted demonetized currency in violation of circular/notification issued by the Government of India, the source explained by the assessee cannot be accepted. In other words, the Assessing Officer never disputed fact that the assessee has made sales in cash before demonetization period and also realized cash from debtors against cash sales made before demonetization period. Therefore, to decide the issue whether the assessee can accept specified bank notes even after it was banned for legal tender after 09th November, 2016 and further, the same can be added u/s. 69 of the Act as unexplained investment and also can be taxed u/s. 115BBE of the Act, it is necessary to examine the case in light of business model of the assessee, and evidence filed during the course of assessment proceedings. 9. The provisions of section 69 of the Act, deals with unexplained investment, where in the financial year immediat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k notes has came out of undisclosed source or under any circumstances only to change the colour of the money. From the details filed by the assessee, it is evident that during the month of November and December, the assessee has made almost more than 5 crores cash deposit which includes various demonetized currency and regular notes. Further, the Assessing Officer has accepted fact that out of total cash deposits, only a sum of Rs. 1,82,37,000/- is in specified bank notes. From the above, it is very clear that there is no significant change in the pattern of cash sales, cash collection and cash deposit during demonetization period, when compared to earlier period in the same financial year and also during immediate preceding financial year. Therefore, we are of the considered view that the assessee has satisfactorily explained source for cash deposit made during demonetization period in specified bank notes and thus, the Assessing Officer is completely erred in making additions u/s. 69 of the Act. 10. Coming back to the observations of the Assessing Officer with regard to GO/notification issued by the RBI and Government of India, to deal with specified bank notes. The Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the year etc. Therefore, from the circular issued by the CBDT, it is very clear that, while making additions towards cash deposits in demonetized currency, the Assessing Officer needs to analyze the business model of the assessee, its books of account and analysis of sales etc. In this case, if you go through analysis furnished by the assessee in respect of total sales, cash sales realisation from debtors and cash deposits during financial year 2015-16 2016-17, there is no significant change in cash deposits during demonetization period. Therefore, we are of the considered view that when there is no significant change in cash deposits during demonetization period, then merely for the reason that the assessee has accepted specified bank notes in violation of circulation/notification issued by Government of India and RBI, the source explained for cash deposits cannot be rejected. In our considered view, to bring any amount u/s. 69 of the Act, the nature and source of investment, needs to be examined. In case the assessee explains the nature and source of investment, then the question of making addition towards unexplained investment u/s. 69 of the Act does not arise. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sits during demonetization period, assessee could not explain proper source. In this case, on perusal of details and records, we find that the assessee has filed all details to explain source for cash deposits and on the basis of details filed by the assessee, the Assessing Officer never disputed fact that source for cash deposit is not out of ordinary business receipts, which has been accounted in the books of accounts of the assessee and further, there is no deviation in cash deposits during demonetization period when compared to earlier period in same financial year and in earlier financial year. Therefore, we reject the case laws relied upon by the ld. DR. 15. In this view of the matter and by considering facts and circumstances of this case, we are of the considered view that the Assessing Officer erred in making additions towards cash deposits during demonetization period u/s. 69 of the Act. The ld. CIT(A), without appreciating relevant facts simply sustained additions made by the Assessing Officer. Thus, we set aside the order passed by the CIT(A) and direct the Assessing Officer to delete additions made towards cash deposits u/s. 69 r.w.s. 115BBE of the Act. 16. In the resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he has collected cash in demonetized currency from customers even after 09.11.2016 and said cash receipts is not violation of Specified Bank Notes (Cessation of Liabilities) Act, 2017. We find that although, the Government of India RBI issued various notifications and circulars barring people transacting in SBNs, but, as per Specified Bank Notes (Cessation of Liabilities) Act, 2017, no person shall accept or transact any SBNs from the appointed date. As per said Act, appointed date is 31.12.2016. From the above, it is very clear that up to appointed date, persons can transact in SBNs. However, the only requirement is, they should be able to establish source for said cash deposits. This principle is further fortified by the decision of the ITAT Chennai Bench in the case of Amar Sparklers Factory v. ITO in ITA No.808/Chny/2023 order dated 11.10.2023, where the Tribunal after considering relevant facts has held as under: 7. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. In so far as addition of Rs. 6,62,783/-, we find that the assessee itself has admitted shortage of source in their cash flow statement filed be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew notes deposited during demonetization period, the day book, Cash book, ledger maintained for business, cash balance as per cash book etc. All these details were duly submitted by assessee vide reply dated 12-12- 2019. The assessee also submitted month-wise cash deposits in all bank accounts, details of old notes deposited at the time of demonetization period. Pertinently, the assessee also furnished details of name, address and PAN of cash depositors who deposited cash during demonetization period. The same has been detailed on pages 24 to 35 of the paper book. Apparently, the same could not be faulted with by Ld. AO. There is no allegation of any irregularity in the books of accounts. 6. We find that the only reasoning to treat the said deposits as unexplained cash credit u/s 68 is that the assessee was debarred from dealing in SBN after 08-11-2016. However, in the present case, the cash so received by the assessee is backed by sales carried out by the assessee as recorded in the books of accounts. Therefore, the source of cash is duly explained. The provisions of Sec.68 could be invoked only in cases when there was unexplained cash credit in the books of accounts maintained by ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
