Itat Kolkata removes section 69a addition

Islampur CS Shop 2 vs Ito (Itat Kolkata)

Case Islampur CS Shop 2 vs Ito Itat Kolkata was heard, focusing on 2017-18. The dispute arose when the appraiser, alcoholic business, deposited 19 70,600 in old currency banknotes during the demonetization period (November 9, 2016 – December 31, 2016). The assessment officer (AO) initiated the proceedings in accordance with Section 147, citing insufficient amount of evidence confirming the legitimacy of these deposits. The appraiser argued that the cash was received from legal sales of alcoholic beverages, backed by a book for sale and bank statements. However, the AO and the income tax authorized (CIT (A)) supported the annex according to Section 69A, considering deposits as incomprehensible income. The appraiser appealed to the tribunal, arguing that the IRB governing principles allowed to accept these banknotes by December 31, 2016.

Itat Kolkata ruled in favor of the appraiser, emphasizing that Until the “appointed date” (December 31, 2016), there was no legal ban on receiving or holding the specified banknotes. The tribunal noted that income bodies did not challenge the nature of the business or the source of monetary deposits, but only focused on the validity of the adoption of the old currency. Referring to a similar resolution of the ITAT Visakhapatnam bench, the tribunal concluded that adding in accordance with Section 69A was not justified. He ordered the AO to delete the addition that allowed to challenge the appraiser. The resolution emphasizes that enterprises with a real source of income during the demonetization cannot be punished only for the delivery of old currency records.

Speeches: Sri Sudzhit Basu, lawyer and Mrs. Figant Guha, lawyer, appeared on behalf of the appraiser

Full text of order Itat Kolkat

This appeal is aimed at an instance of the evaluator against the order of LD. Income tax authorized (appeal), National Belless Appeal Center (NFAC), Delhi from 15^then May 2024 was held for the year 2017-18.

2. Appeal is forbidden for 77 days when appealing the appraiser. However, the appraiser has applied from 14t^H January 2025, saying that the appraiser is not aware of the order accepted by LD. Cit (appeal) and he did not receive a physical copy of the order. When the appraiser learned about the order accepted by LD. CIT (appeal), the evaluator approached LD. AR to give preference to appeal because there was a 77 -day delay in appealing to the tribunal. Therefore, he pleaded to overthrow the delay.

3. Considering the facts and circumstances of the case, I tend to indulge the delay because the delay is not related to the care of the appraiser, and the evaluator has determined a sufficient reason for delay. Hence the delay.

4. The brief facts of the case are that the appraiser is a firm that runs alcohol business. As per the ITS DATA, It Was Found One Shri Kamlesh Singha (Pan Begps0018p) Had Deposted Cash Amounting to Rs.17,57,860/- In the Bank Account Bearing No.68410 Account Bearing No. 68410101010050072 In Union Bank of India, Islampur Branch During Demonetization Period IE 09.11.2016 – 31.12.2016, and the same was shown by the evaluator in ITR. In view of these facts, LD. The assessment officer initiated the proceedings in accordance with Section 147 and published a notification in accordance with Section 148 of the Law. In response to the said message in accordance with section 148, the appraiser did not provide income, as required within 30 days from the date of service of the notification. However, the appraiser submitted some information on 09.09.2021 at the counter of the jurisdiction, which was subsequently loaded by LD. Jao, but the same in examination was not enough satisfactory evidence. The appraiser only submitted a copy of the bank statement, but no confirming evidence of monetary deposits was submitted, except for the book on sale, and stated that the specified amount was deposited outside the income from cash in cash during the demonetization period. Since the appraiser has not provided any information to support the cash deposited during the demonetization period, LD. The assessment officer made a supplement of 19.70 600 rubles/- in accordance with section 69A of the Law. Suffered from the LD Order. The appraiser, the appraiser preferred the appeal over the LD. Cit (appeal).

5. After consideration of the written submission submitted by the appraiser, LD. CIT (appeals) rejected the appeal filed by the appraiser.

6. About the victim, the appraiser preferred the appeal over the tribunal. The main complaint of the appraiser is that the income authorities were not considered a source of monetary deposits, even though the appraiser applied an account for the sale of alcoholic beverages and banking reports.

7. I heard both sides. This was the appraiser that the appraiser works in the alcoholic beverage store, and throughout the financial year 2016-17. The total turnover of the evaluator is 1.80.71.107/- even before demonetization, the evaluator won the amount of 1.00.00 000 Rs. Even after demonetization, the evaluator deposited cash into a bank account, but the only statement of LD. Officer of evaluation and LD. Cit (appeal) is that during the demonetization period, the evaluator deposited the amount of 17,57,816 rubles/-. He then stated that the appraiser has no other source of income other than alcohol income. He then stated that there was no ban under the law on demonetization to obtain the said banknotes of the bank. Therefore, he pleaded to postpone orders accepted by the income by the authorities.

8. On the other hand, it was a LD. The doctor that the appraiser deposited the amount of 19.70 600 rubles/- in old currency, which is an invalid currency, so it is illegal and is fundamentally unjustified. Therefore, the income authorities made a supplement in the amount of 17,57,816 rubles/- in accordance with Section 69A of the Law.

9. I studied the material available on the record. The appraiser also appealed the re -opening of the grade. However, LD. The advocate of the appraiser argued before the bench for his services. The only statement is that throughout the financial year, the appraiser has won more than 1 Crown in a bank account and only 19.70 600 rubles/- deposited during the demonetization period, and there is no bar other than old currency records and LD. The assessor lawyer has prepared a sales register and an account account. The income authorities also did not challenge the sale of the appraiser, but the only objection of the LD. Appraiser as well as LD. Cit (appeals) was that the appraiser accepted the specified banknotes. Even though the India’s reserve bank has prohibited to engage in designated banknote banknotes since 08.11.2016, except for certain emergency services. As for this aspect, I find no merit in the reasons provided by LD. Officer of evaluation and LD. Cit (appeal). Undoubtedly, since 08. The bill stipulates that the specified banknotes (Old Rs 500 and 1000 Rs) will cease to be the obligations of the India Reserve Bank (RBI) since December 31, 2016. In addition, these notes will no longer be guaranteed by the central government. According to the said bill on the “appointed date”, no person must consciously or voluntarily retain, transfer or receive any specified banknotes of the bank, which is a punishment of offense and is prohibited by law.

9.1. Further, according to Section 3 of the said draft law, on the appointed day and from this day, despite everything contained in the Law on the Reserve Bank of India in 1934 (2 from 1934) or in any other law at that time, the banknotes that have ceased to be a legal payment, given November 201 (2) Section 26 of the India Reserve Bank of 1934 (1) Section 26 of the said Law.

201 Therefore, I believe that there is no empty ban on obtaining these banknotes by 31.12.2016. In this case, however, the appraiser explained the source of his monetary deposits, and the income authorities were not allocated equally. Therefore, I believe that when the appraiser explained the reasons for the acceptance of these banknotes, even after 08.11.2016. Ld. The evaluation officer had to accept the explanation provided by the appraiser when he did not challenge the nature of the business and the source of monetary deposits as discussed above. Thus, the appraiser was engaged in alcohol selling business, and alcohol selling operations should only be in cash. Therefore, according to the above discussion, LD. The assessment officer is not entitled to the deposit. On this aspect, several coordinate benches of the tribunal took the same look. Relevant ITAT conclusions, a vesahpatnam bench as below:-

“9. We They heard both the parties and viewed all the documents that are recorded. We Add that with the appraiser there was a sufficient balance of funds, as described in detail on page # 30 of the paper book. The specified banknotes (termination The Liability Law), 2017, defines the “appointed day” visits of section 2 (l) (a). According to Section 2 (L) (A), “Appointed Day” means December 31, 2016. Section 5 of the Law on Banknotes (Termination of Liabilities) of 2017 also concerns the prohibition, transfer or receipt of these banknotes. Section 5 states that “on the appointed day and from it, no person must consciously or voluntarily retain, transfer or receive any banknote specified.” We Thus, you will find that these banknotes can be measured in monetary terms, since the Guarantee of the Central Government and the responsibility of India’s reserve bank will not cease to exist until 31.12.2016. In view of the above, the dispute of LD. D -p, treating SB NS from the sale of funds as illegal and thus referring to the provisions of Section 69A is not valid in law. Therefore, we reject this reason for income. “

11. Given the decision of the ITAT coordinate bench, the hysakhpatny from 16^then March 2022 in Its No. 76/name. Appraiser as well as LD. CIT (appeals) was wrong in supporting the addition of monetary deposits to the bank account in accordance with Section 69A of the Law and the tax recovered in accordance with Section 115BB of the Law. So I’m sending LD. Assessment officer to delete a supplement to monetary deposits to the bank in accordance with Section 69A of the Law. Therefore, the grounds raised by the appraiser are allowed.

12. As a result of the appeal appealed by the appraiser is allowed.

Order spoken in open court on 21.03.2025.