9911796707
TMI Blog2023 (1) TMI 1432X X X X Extracts X X X X X X X X Extracts X X X X ..... g cash deposits out of specified bank notes after 08.11.2016 and also by considering Specified Bank Notes (Cessation of Liability) bill, 2017 held that the AO is incorrect in treating receipt of specified bank notes from cash sales as illegal and thereby, by invoking provisions of section 69 of the Act. AO as well as the CIT(A) has erred in sustaining addition towards cash deposits to bank account u/s. 69 of the Act and also levied tax u/s. 115BBE of the Act. Hence, we direct the AO to delete addition made towards cash deposits u/s. 69 of the Act. Appeal filed by the assessee is allowed. - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For the Appellant : Shri. Y. Sridhar, FCA For the Respondent : Shri. P. Sajit Kumar, JCIT ORDER PER G. MANJUNATHA, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 03.06.2022 and pertains to assessment year 2017-18. 2. The assessee has raised the following grounds of appeal: 1. The Ld. CIT(A) has erred in the facts and circumstances of the case. 2. The Ld. CIT(A) erred in co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... called upon to explain source for cash deposits and also reasons for cash deposits in specified bank notes. In response, the assessee submitted that he is in the business of wholesale purchase and sale of fruits and his business predominantly deals with cash. The assessee has filed a chart giving details of cash deposits from April, 2014 to December, 2016 and argued that if you consider pattern of cash deposits in previous years, there is no abnormal excess in cash deposits in the month of November, 2016. 4. The AO, however was not convinced with the explanation furnished by the assessee. According to the Assessing Officer, the assessee has deposited cash in excess of closing balance held as on 08.11.2016 and thus, opined that the assessee could not explain source for cash deposits in specified bank notes to the extent of Rs. 1,58,71,000/- and thus, cash deposits amounting to Rs. 1,58,71,000/- has been treated as unexplained money u/s. 69A of the Income-tax Act, 1961 (hereinafter referred to as the Act ) and levied tax u/s. 115BBE of the Act. The relevant findings of the AO are as under: 3. The assessee has made the following cash deposits in various banks as shown below: Sl.No Nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d without reliance on facts not furnished to the affected party. Natural justice, must warn, cannot be perverted into anything unnatural or unjust and cannot therefore be treated as a set of dogmatic prescriptions applicable without reference to the circumstances of the case. The question merely is, in all conscience have you been fair in dealing with that man? If you have been not arbitrary, not absent-minded, not unreasonable or not unspeaking, you cannot deny that there has been no 'natural justice' breached, rather fullest natural justice has been followed but it is the person who has not availed any chances for the reasons best known to him.' 6. The Hon'ble Supreme Court in the cases of Roshan Di HattiVs.CIT(1977) 107 ITR 938 (SC) and Kale Khan Mohammad HanifNs.CIT (1963) 50 ITR 1 (SC) held that the law is well-settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him. Where the nature and source of the receipt, whether it be of money or other property, cannot be satisfactorily explain by the assessee, it is open to the revenue to hold that it is the income of the assessee and no further burden lies on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sellers were not allowed to accept demonetized notes. Therefore, the plea that the assessee was dealing with perishable goods and was forced to accept the demonetized cash in not acceptable. Hence, ld. CIT(A) rejected argument of the assessee. As regards, the source for cash deposits, the CIT(A) observed that the assessee could able to explain source for cash deposits out of business receipts and therefore, same cannot be taxed as unexplained credit u/s. 115BBE of the Act. The relevant findings of the ld. CIT(A) are as under: 9.1 The only dispute in this assessment is with regard to Rs.1,58,71,000/- deposited during the demonetization period i.e. from 08.11.2016 to 31.12.2016 in the form of demonetized currency of Rs.500/- and Rs.1000/-, which the banks generally writes as OHD (Old High Denomination Notes). In some of the entries the banks has mentioned this narration, however; in most. of the narrations it is not mentioned. Since banks were supposed to transmit this data on daily basis to Reserve Bank of India, this information should be available with each Branch of the bank, which the AO has failed to obtain. Atleast a sincere effort could have been made. The assessee was also u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of books of accounts by Assessing Officer made it legal. 9.4 The Opening Cash Balance before demonetization has already been allowed by the Assessing Officer and assessee has admitted that atleast to the extent of Rs.1,25,11,000/he has deposited into the bank account on various dates, is liable to be taxed as Income from Other Sources. Assessee gets part relief. Further, on this amount assessee is eligible to get the reduction of profit declared in the return of income to the extent of turnover of Rs.1,25,11,000/-. The total cash Turnover of the assessee is Rs.11 ,28, 14, 800/-. The Gross Tumover claimed is Rs.26,52,95,215/-. The Net Profit declared is Rs.42,26,367-. The AO is directed to allow the proportionate relief. 7. The Ld. Counsel for the assessee, submitted that the Ld. CIT(A) erred in confirming the addition made by the Assessing Officer towards cash deposits in specified bank notes without appreciating fact that the assessee has explained source for cash deposits and further, said cash was recorded in the books of accounts maintained by the appellant for the relevant period. The Ld. Counsel for the assessee, referring to the financial statement for assessment year 2015- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Counsel for the assessee, that up to 31.12.2016 people are allowed to accept specified bank notes, he referred to section 3 of the Specified Bank Notes (Cessation of Liability) Bill of 2017, and argued that it is only from appointed date holding and transacting with specified bank notes made illegal. Otherwise, from 08.11.2016 onwards, RBI has put restrictions in dealing with demonetized currency notes. Therefore, the argument of the assessee that up to 31.12.2016 is allowed to transact with old notes is incorrect. 9. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The fact born out from record indicates that the assessee is a trader of fruits in Koyambedu market. The assessee purchases and sells fruits in Koyambedu market. The assessee predominantly deals with cash which is evident from the fact that more than 70% of his turnover for earlier financial years is in cash. If you see pattern of cash deposits from financial year 2014-15 to financial year 2016-17, the assessee has made huge cash deposits month on month to various bank accounts which is almost equal to cash deposits made in the month of November ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank notes from 08.11.2016 onwards except for certain emergency services. We do not find any merit in the reasons given by the AO and CIT(A) for simple reason that no doubt from 08.11.2016 midnight onwards demonetized currency notes of Rs. 500 and Rs. 100 was legally barred. Further, the RBI has issued various guidelines and SOPs for dealing with specified bank notes from 08.11.2016 onwards till the bill Specified Bank Notes (Cessation of Liabilities) bill, 2017 was notified by the Government. As per said bill, from the appointed date, no person shall knowingly or voluntarily, hold, transfer or receive any specified bank note. Further, as per section 3 of said bill, on or from the appointed date notwithstanding anything contained in the Reserve Bank of India Act, 1934 or any other law for the time being in force, the specified bank notes which have ceased to be legal tender, in view of the notification of the Government of India dated 08.11.2016 shall cease to be liabilities of the RBI u/s. 34 and shall cease to have the guarantee of the Central Government under sub-section (1) of section 26 of the said Act. From the above bill, it is very clear that, on or from the appointed date ..... X X X X Extracts X X X X X X X X Extracts X X X X
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