ITO vs Ramesh Chandra Agarwal

1.

That the ITA No.6689/Del/2025 filed by Deptt. on 24.10.25 is fatally defective as Form No.36 by Deptt. is unsigned, the name of applicant in the verification portion has been mentioned that of assessee i.e., "Ramesh Chandra Agarwal against correctly as "Manglałzom Gante", being the name of income tax officer (applicant) and also not accompanied by grounds of appeal before ITAT etc, hence, the unsigned appeal filed with above fatal defects is nonest and inadmissible for prosecution in law.

2.

That Ld. CIT(A) erred in law in dismissing on merits the Addl. G. No.2 taken before CIT(A) which reads as under:-

Addl. G. No.2

"That the jurisdictional notice U/s.143(2) Did.24.09.18 since issued without mentioning as to whether case has been selected for scrutiny as limited scrutiny (CASS) or for complete scrutiny (CASS) or for compulsory manual scrutiny in view of CBDT Circular issued U/s.119 No. F. No. 225/157/2017/ITA-II Dated 23.06.2017 and as has been held by Hon'ble ITAT Kolkatta in Sajal Biswas Vs. ITO (ITA No. 1244/Kol/2023), is illegal and unsustainable in law, making the consequential asstt. order also illegal and unsustainable in law."

3.

That on calculating tax at normal rate of tax as 30% against incorrectly calculated by A.O. @60% U/s.115BBE on addition of Rs.35,00,000/- made U/s.68, the net tax effect in Deptt. appeal will not exceed Rs.60,00,000/-, hence the appeal of the Revenue is incompetent due to "low tax effect" as per latest CBDT circular/instructions.

4.

That under the facts and circumstances Ld. CIT(A) has been fully justified in law as well as on merits in deleting the addition of Rs.35,00,000/- made by the A.O. for cash deposited in bank during demonetization period in specified bank notes [SBN].

3.1

That without prejudice, the Ld. A.O. erred in law in calculating the tax rate U/s.115BBE @60% on addition of Rs.35,00,000/- against correctly as 30%, as the increased rate U/s. 115BBE of 60% has been applicable only w.e.f. A.Y.18-19 and not A.Y.17-18.

5.

That under the facts and circumstances Ld. CIT(A) has been fully justified in deleting the addition of Rs.1,04,08,500/- U/s.37(1) claimed by the assessee as business loss/business expn./bad debt for unrecoverable advance for purchase of land [stock in trade] given in earlier Yrs to 04 parties, which had become unrecoverable.

6.

That Ld. CIT(A) has been fully justified in deleting the disallowance oRs.25,00,000/- made by the A.O. being cost of acquiring the land [stock], which is included in purchases and paid to Mrs. Nirmala Devi.”

“2.

Brief facts of the case are, the case of the assessee was selected for scrutiny on the basis that the assessee has deposited cash during demonetization period of Rs. 1,71,50,000/-. The assessee did not submit the relevant evidences before the Assessing Officer nor produced any books of account, cash book, ledger etc. during the assessment proceedings. The Assessing Officer observed on perusal of cash flow chart that the assessee did not make cash sales in the preceding month. After considering the opening cash in hand during the month of November, 2016 amounting to Rs.1,20,246/- and Rs.20,00,000/- declared in PMGKY-2016, the difference of Rs.1,50,29,754/- was considered as unexplained cash credits. Accordingly, he proceeded to make addition u/s. 68 of the Income-tax Act, 1961 ("the Act" for short) and taxed the same u/s. 115BBE of the Act. Further, he observed that the assessee has contributed in Pradhan Mntri Garib Kalyan Yojna to the extent of Rs.20,00,000/- in cash. Accordingly, he proceeded to make the above said addition of Rs.20,00,000/-.

3.

Aggrieved with the above order, the assessee preferred an appeal before NFAC, Delhi and the assessee filed a detailed submission before the learned CIT(A). The same is reproduced by the learned CIT(A) at pages 2 to 40 of the impugned order. After considering the detailed submissions of the assessee, learned CIT(A) deleted the additions made by the Assessing Officer and found that the source of cash is out of business carried on by the assessee and also deleted the amount contributed in Pradhan Mantri Garib Kalyan Yojna. 4. Aggrieved with the above order, Revenue is in appeal before us and at the same time, assessee has also filed a cross-objection.

5.

At the time of hearing, learned AR of the assessee submitted that the appeal preferred by the Revenue is below the tax effect as per Circular issued by CBDT No. 09/2024 dated 17.09.2024. Further, he submitted that the assessee has raised ground No.3 in cross objection, as per which, the provisions of section 115BBE are not applicable for assessment year 2017-18 based on the decision of Hon'ble Madras High Court in the case of S.M.I.L.E. Microfinance Ltd. vs. ACIT, W.P. (MD) No. 2078 of 2020 & 1742 of 2020 dated 19.11.2024. By applying the decision of Hon'ble Madras High Court, the tax should be calculated on the basis of normal tax rate of 30%. It being so, the total tax demand on the additions made by the Assessing Officer would be Rs.53,40,823/- as under:

6.

Further, learned AR submitted that the additions made u/s. 68 does not fall under exceptions issued by the CBDT vide Circular No. 05/2024 dated 15.03.2024, as referred in para-3 of the Circular dated 17.09.2024. He filed a copy of the said circulars.

7.

On the other hand, learned DR relied on the findings of the lower authorities.

8.

Considered the rival submissions and material placed on record.

9.

After giving effect to the decision of Hon'ble Madras High Court in the case of S.M.I.L.E. Microfinance Ltd. (supra), the tax demand relating to the additions proposed by the Assessing Officer is reduced to Rs.53,40,823/-, which is below the monetary limit fixed by CBDT, to which the Revenue cannot contest in appeal before ITAT.”