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2025 Supreme(Online)(ITAT) 6974
INCOME TAX APPELLATE TRIBUNAL (KOLKATA BENCH)
RAJESH KUMAR, AM, PRADIP KUMAR CHOUBEY, JM
ITO, Ward 50(2) – Appellant
Versus
Dipika Singh – Respondent
Income Tax Appeal
For the Appellant: S/ Shri Soumitra Choudhury, Anirban Gupta
For the Respondent: Ms. Ruchika Sharma
The court ruled that wrongly invoked tax provisions leading to double taxation are impermissible when transactions are duly recorded.
Headnote:(A) Income Tax Act, 1961 - Sections 69A and 145(3) - Appeal against addition of unexplained money and estimation of profit on suppression of sales - Delay in filing appeal condoned due to genuine reasons - Addition under Section 69A held improper as cash deposits were accounted for; no double addition permissible - Estimation of profit on undisclosed sales without rejecting books of accounts found unsustainable. (Paras 2, 3, 9, 10)
(B) Court’s findings: The provisions of Section 69A were wrongly invoked as transactions were duly recorded; allowing an addition of cash sales violated the principles of taxation and constituted double taxation, thus the additions were deleted. (Paras 8, 9, 10)
Facts of the case:
The assessee’s cash deposits during the demonetization period were scrutinized by tax authorities leading to unspecified additions as unexplained money; however, it was established that these deposits were reflected in the financial records as part of business income.
Findings of Court:
The appeal was allowed, and the additions made by the Assessing Officer were direly set aside due to incorrect legal interpretation and absence of evidence for double taxation.
Issues: The main issue addressed was the misuse of provisions of Section 69A and the legality of assessing undisclosed income without evidence against submitted records.
Ratio Decidendi: The court established that unverifiable assumptions cannot underpin taxation, and all recorded sales must not lead to dual taxation, reinforcing the necessity for an evidentiary basis in tax assessments.
Result: Appeal of the assessee is allowed.
ORDER
Per Rajesh Kumar, AM:
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 12.08.2024 for the AY 2017-18.
02. At the outset, we note that the appeal of the assessee is barred by limitation by 85 days. At the time of hearing the counsel of the assessee explained the reasons for delay in filing the appeal. The Ld. A.R did not raise any objection in condoning the delay. After hearing the rival contentions and perusing the materials available on record, we find that the delay is for bonafide and genuine reasons, hence, we condone the delay and admit the appeal for adjudication.
03. The only issue raised by the assessee in the various grounds of appeal is against the confirmation of addition of ₹20,63,763/- by ld. CIT (A) as made by the ld. AO on account of cash deposited during the demonetization period u/s 69A of the Act as unexplained money. The assessee has also challenged the estimation of profit at the rate of 3.68% on the undisclosed sales of ₹60,43,953/- thereby making an addition of ₹2,22,417/- without rejecting the books of accounts u/s 145(3) of the Act, which was also confirmed by the ld. CIT (A).
04. The facts in brief are that the assessee filed the return of income on 17.12.2017, declaring total income of ₹3,75,760/-. The assessee derived income from business and profession and other sources during the year. The case of the assessee was selected for scrutiny and statutory notices along with questionnaire were issued and duly served upon the assessee. The ld. AO during the course of assessment proceedings observed from the record that the assessee had deposited cash into two bank accounts with Syndicate bank, Rajarhat branch cash aggregating to ₹22,00,350/-. Accordingly, show cause notice was issued to assessee as to why the same should not be added u/s 69A of the Act. There was no compliance by the assessee and accordingly, the ld. AO made an addition of ₹20,63,763/- as unexplained money u/s 69A of the Act, after allowing the deduction of cash in hand as per cash book of ₹1,36,587/-. The ld. AO also noted that during the year the assessee has deposited into these bank accounts a sum of ₹2,87,71,678/-. However, as per the return of income and audited accounts, the total sales declared were only ₹2,05,27,375/- and if the cash deposited during the demonetization period is excluded then the suppressed turnover on the basis of total deposits in the bank accounts worked out to ₹60,43,953/- which was not disclosed by the assessee. The ld. AO accordingly estimated the income on the said suppressed sales at the rate of 3.68% thereby making an addition of ₹2,22,417/-.
05. In the appellate proceedings, the ld. CIT (A) affirmed the order of the ld. AO when the assessee did not comply with the various notices issued. The ld. CIT (A) dismissed the appeal ex-parte.
06. The ld. A.R argued that infact the sales were duly recorded in the books of account and the profit earned during the year from the business was offered to tax and due taxes were paid. Therefore, at the very first place the invocation of section 69A is wrong as the same is not applicable to the case of the assessee. Therefore the Ld .A.R prayed that the addition so made under the wrong provisions of Act by misconstruing the provisions of law may be deleted by setting aside the order of Ld. CIT(A). The Ld. A.R submitted that undoubtedly the provisions of Section 69A were not applicable to the present case. In defense of arguments the Ld. A.R relied on the decision of Co-ordinate Bench in the case of JMK Exports vs. ACIT in ITA NO. 1428/Del/2021 for AY 2017-18 dated 26.03.2024. Further he submitted that sales were not doubted by the AO and therefore how there can be a double addition first by way of profit on such sales and thereafter by adding the entire amount of cash sales deposited during demonetization period by placing reliance on the decision of Co- ordinate
