Income Tax Appellate Tribunal - Raipur
Sukhdev Kumar Sood, Raipur vs Deputy Commissioner Of Income-Tax, ... on 13 February, 2024
आयकरअपीलीयअिधकरण, रायपुर यायपीठ,रायपुर
IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR
ीर वशसूद, याियक सद यएवं ीअ ण खोड़ पया, लेखा सद यकेसम ।
BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM
(ITA No.309/RPR/2023)
(Assessment Year: 2017-18)
Sukhdev Kumar Sood, V Deputy Commissioner of Income Tax,
Pro. M/s Sood Brothers, 631, M.G. Road, s Circle 1(1),
Raipur, (C.G.) Raipur, (C.G.)
PAN: AJKPS0692M
(अपीलाथ /Appellant) . ( यथ / Respondent)
.
िनधा रतीक ओरसे /Assessee by : Shri R.B. Doshi, CA
राज वक ओरसे /Revenue by : Shri Satya Prakash Sharma, Sr. DR
सुनवाईक तार ख/ Date of Hearing : 13.12.2 023
घोषणाक तार ख/Date of : 13.02.2 024
Pronouncement
आदे श / O R D E R
Per Arun Khodpia, AM:
The present appeal is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) (in short 'CIT(A)') dated 16.08.2023 for the assessment year 2017-18, which in turn has arisen from theorder u/s 143(3) of the Income Tax Act, 1961 (In short ' The Act') by office of the Assistant Commissioner of Income Tax (In short 'The AO') Circle 1(1), Raipur dated 29.12.2019.
2. The Grounds of appeal raised by the assessee are as under: 2 ITA No.309/RPR/2023
Sukhdev Kumar Sood
1) On facts and in the circumstances of the case, CIT(A) has erred in confirming addition of Rs. 21,00,000/- made by the Assessing Officer by invoking provision of section 68 on alleged unaccounted sum by ignoring that provision of section 68 is applicable to the sum credited in the books of account. The assessee prays that the addition of Rs. 21,00,000/- made u/s 68 be deleted.
2) On facts and in the circumstances of the case, CIT(A) has erred in confirming addition of Rs. 21,00,000/- made by the Assessing Officer under section 68 by treating cash (SBN) deposited during demonetization period as unexplained cash credit especially when the assessee's books of account have not been rejected and all the income and expenses and the book results have been accepted except the cash deposit without there being any iota of evidence, which would point out that the assessee had deposited his unaccounted money under the garb of sales. The assessee prays that the addition of Rs. 21,00,000/- made u/s 68 be deleted.
3) On facts and in the circumstances of the case, CIT(A) has erred in confirming addition of Rs. made by the Assessing Officer under section 68 by treating cash (SBN) deposited during demonetization period as unexplained cash credit by drawing his own presumption about availability of cash with the assessee by sitting on the chair of businessman on mere surmise and conjectures without duly appreciating the undisputed fact that he himself has accepted the books of account as well as the book results. The assessee prays that the addition of Rs. 21,00,000/- made u/s 68 be deleted.
4) On facts and in the circumstances of the case, CIT(A) has erred in confirming addition of Rs. 21,00,000/- made by the Assessing Officer under section 68 by treating cash (SBN) deposited during demonetization period as unexplained cash credit by ignoring the fact that there was sufficient cash balance in assessee's cash book and he himself has accepted the books of account as well as the book results. The assessee prays that the addition of Rs. 21,00,000/- made u/s 68 be deleted.
5) Without prejudice to ground nos. 1 to 4, on facts and in the circumstances of the case, CIT(A) has erred confirming action of the 3 ITA No.309/RPR/2023 Sukhdev Kumar Sood Assessing Officer in treating cash (SBN) of Rs. 21 ,00,000/- deposited during demonetization period as unexplained cash credit and applied tax rate as mentioned in section 115BBE in spite of the fact that he himself has not brought on records any evidences to prove that assessee had earned said income otherwise than from business activities income therefrom chargeable to tax at normal rates. The assessee prays that the income-lax be charged on such transactions @ 30%.
6) Without prejudice to ground nos. 1 to 4, on the facts and in the circumstances of the ease CIT(A) has erred in confirming action of the Assessing Officer in levying tax u/s 115BBE(1) @ 60% instead of 30% on alleged unaccounted sum of Rs. 21,00,000/- assessed u/s 68 since assessee had made said transactions prior to 15.12.2016, i.e. the date on which "The Taxation Law (Second Amendment) Bill, 2016" received ascent of the Hon'ble President of India, and amendment made by "The Taxation Law (Second Amendment) Bill, 2016" in section 1 15BBE(1), to charge tax @ 60% on deemed income instead of earlier rate of 30%, was substantive in nature, hence, either it would apply prospectively to the transactions made on or after 15.12.2016 and not retrospectively to the transactions made during the period from 01.04.2016 to 14.12.2016 or apply from A.Y. 2018/19 onwards. The assessee prays that the income-tax be charged on such transactions @ 30%.
7) The assessee reserves the right to add, amend or alter/withdraw any ground/grounds of appeal at the time of hearing.
3. Briefly stated, the facts in the present case are that the assessee is an individual, deriving income from trading of mobile phones and other electric gadgets. Return of income for assessment year 2017-18 was filed by the assessee on 02.11.2017, declaring a total income of Rs. 66,81,920/-. Subsequently, the case of the assessee was selected for scrutiny through 'CASS', under the category 'Complete Scrutiny'. Statutory notices u/s 143(2), 143(1) a/w questionnaire have been 4 ITA No.309/RPR/2023 Sukhdev Kumar Sood issued and served to the assessee. In response, the assessee has filed his submissions, which were considered and placed on record. While going through the submissions of the assessee, Ld. AO observed that the assessee during the demonetisation period have deposited an abnormal cash of Rs.21,00,000/-,considering the average deposit before demonetisation vs. actual deposit done by assessee during the demonetisation period. The assessee was required to file the replies submitted that source of cash deposit during the demonetization period was genuine which according to Ld. AO, the assessee was failed to do so also Ld. AO observed that the books of accounts of the assessee are manipulated. Which such observations considering an abnormal which may be in cash in hand in the books of assessee as unaccounted income of the assessee, which has been introduced in the books of account later on, deposit in the bank during the demonetization period. Ld. AO finally have made an addition on account of unaccounted cash credit u/s 68 of the Act for Rs. 21,00,000/-. Ld. AO also observed that the opening cash in hand for AY 2017-18 for Rs.16,23,399/- defers the closing cash in hand for the AY 2016-17 which was Rs.9,19,774/-.
4. Aggrieved by the aforesaid disallowance made by the Ld. AO, assessee preferred an appeal before the Ld. CIT(A), wherein the issue was deliberated upon and discussed at length, however, the contention of the assessee could not find favour and, therefore, the appeal of the 5 ITA No.309/RPR/2023 Sukhdev Kumar Sood assessee was dismissed with the following observations by the Ld. CIT(A).
Decision:
6. I have carefully considered the grounds of appeal, facts of the case and the contents of the assessment order along with assessee's reply. The assessee has deposited total cash of Rs.38,43,500/- including SBNs during the demonetization period. It has been claimed by the assessee that the deposits of cash were out of cash in hand available in day -- to- day cash book on respective dates.
6.1 The AO in the assessment order has highlighted that the closing cash balance as per cash flow statement filed for the period 01.04.2015 to 31.03.2016 is Rs.9,19,774/- whereas opening cash balance as per cash flow statement for the period 01.04.2016 to 31.03.2017 is Rs.16,23,399/- and hence cash in data filed by the assessee having several discrepancies are not reliable. The AO has also found that there is sharp jump in cash in hand in November 2016 which is ten times more than average cash in hand for any month för the year and the assessee did not require such huge cash in hand as monthly cash expenditure is in the range of 2-3 lacs. The assessee did not produce the sales bill for the A.Y. 2017-18 or evidence of receipts from debtors and why they paid during November,2016 month only.
The assessee also did not comply to summons u/s 131 issued by the AO.
6.2 The claim of the assessee and the merits of addition is examined. The assessee is deriving income from trading of mobile phones and other electronic gadgets. The cash flow from 01.04.2015 to 31.03.2017 filed before the AO and reproduced in the assessment order was perused. The assessee has shown closing cash in hand as 31.03.2016 at Rs. 9,19,774/- whereas opening cash in hand as on 01.04.2016 has been shown at Rs.16,23,399/-. As held by the AO, such type of cash flow is not reliable. Explaining the methodology in the statement of facts for preparing such cash flow statements also reveal that the cash flow statement filed by the assessee is not reliable. 6 ITA No.309/RPR/2023
Sukhdev Kumar Sood Therefore, the other factors which needs to be considered is cash sales shown for the period just prior to announcement of demonetization and the remaining period of the year. The cash flow filed by the assessee reveals monthly cash sales of Rs. 13,52,203/- for the month of October 2016 and cash sale of Rs. 7,33,626/- for the period 01.11.2016 to 08.11.2016. Total cash sales claimed in the cash flow for the period 01.10.2016 to 08.11.2016 is Rs. 20,85,829/- whereas the cash sale for the whole year excluding the period from 01.10.2016 to 08.11.2016 is found at Rs. 14,98,209/-. Thus, the cash flow statement showing abnormally high sales in October 2016 and in the period from 01.11.2016 to 08.11.2016 is highly inflated just to explain the availability of cash in hand during the demonetization period. Considering the entirety of facts and circumstances of the case, it is held that the AO is justified in making addition of Rs. 21,00,000/- u/s 68 r.w.s. 115BBE for the unexplained cash deposits during demonetization period and the same is hereby confirmed. All grounds of appeal are hereby dismissed.
5. Aggrieved by the aforesaid order of Ld. CIT(A), assessee is in appeal before us.
6. At the outset, Ld. AR of the assessee has submitted a written synopsis the same is extracted as under:
Sukhdev Kumar Sood AX 2017-18 ITA no. 309/RPR/2023(Assessee) Ground no. 1 to 4 Submission of assessee l. Assessee is in business of trading of mobile phones and other electronicgadgets.
2. Computation of income and acknowledgement of return filed is at PN 9 to 14 of PB.
3. Source of cash deposit 7 ITA No.309/RPR/2023 Sukhdev Kumar Sood Out of cash available in regular books, cash book at PN 43 to 102 of PB.
4. Cash sales both in terms of volume & percentage to total sales is decreased as compared to last year. Comparative details at PN 2 of PB.
5. VAT returns - Sales disclosed by assessee reflected in VAT return as well, PN 30 to 37 of PB. Sales of October to December as per books and VAT return is also same. Not disputed
6. There is no difference in closing balance of cash as on 31.03.2016 & opening balance as on 01.04.2016. Same is verifiable from reply dt. 19.12.2019 filed before AO which is placed at PN 38 to 42 of PB, relevant explanation is at para no. '1.27 of such reply, PN 39 & 40 of PB.
7. All purchase & sales bills / vouchers were produced before AO for verification on 23.12.2019.
8. Neither cash book nor the audited financials submitted before AO disputed or controverted. They stood accepted by AO. When entries in cash book stood accepted, availability of cash could not have been disputed.
Reliance on:-
- Laichand Bhagat Ambica Ram vs CIT (1959) 37 ITR 288 (SC), PN 130 to 145 of PB.
- ACIT vs Hirapanna Jewellers (2021) 189 1TD 608 (Vishakhapatnam), para 9, PN 121 to 129 of PB, relevant finding at PN 126 & 128.
- ACIT vs Nitin Sankhla in ITA No. 98/RPR/2020 vide order cit.
08.06.2023, PN 146 to 172 of PB, relevant finding at PN 170.
- ITO vs Parmanand Gupta in ITA no. 82/RPR/2017 dated 04.08.2022, relevant finding in para no. 21, page no. 38, last five lines.
9. No addition u/s 68 could be made since no credit entries has been disputed.
10. Cash deposits accounted in regular books as sales. Such sales accepted by the AO. Books not rejected by AO. Profit arising out of sales returned and assessed by the AO. Credits for cash accruals could not have denied.
11. Profit from sales already taxed by AO. Adding cash deposits amounts to double addition. Reliance on: -
- CIT vs Kailash Jewellery House in ITA no. 613/2020, order dt.
09.04.2010 of Delhi High court, PN 112 of PB.8 ITA No.309/RPR/2023
Sukhdev Kumar Sood
- Anantpur Kalpana vs ITO in ITA no. 541/Bang/2021 dt. 13.12.2021, PN 113 to 120 of PB, relevant finding at PN 117.
- ACIT vs Vishal Exports Overseas Ltd. In ITA no. 790/Ahd.//2005 order dt. 07.08.2009, "C" Bench, affirmed in ITA no. 2471 of 2009 vide order dated 03.07.2012.
12. Closing stock disclosed by assessee accepted by the AO. On one hand, the AO disputed sales and on the other hand, he accepted the disclosed closing stock.
13. On 28.09.2019, assessee filed monthly cash flow statement of FY 2015/16 & FY 2016/17 but in such cash flow cash receipts & cash payments made were not included due to which there was mismatch in cash balance as on 31.03.2016 & 01.04.2016. The assessee filed corrected cash flow statement & day to day cash book before AO.
Ground no. 5 & 6 AO : Tax levied @ 60% Submission of assessee Amount added by AO represents sale proceeds / receipt from debtors. The source being explained, it could not be brought to tax u/s 1 15BBE.
7. At the outset, Ld. Authorized Representative (in short, 'AR') of the assessee (in short, 'The AR'), while referring to ground No. 1 to 4 of the present appeal has submitted that the cash deposit by the assessee was towards the sale proceeds from the business of the assessee and all such cash receipts are duly recorded in the cash book of the assessee copy of which is placed at page no. 43 to 102 of assessee's PB. Ld. AR further drew our attention to the Gross Profit % and Net Profit % of the assessee for the year under consideration which were 7.57% and 4.27% respectively, it is pointed out that this similar percentage in the previous year as accepted by the department were 6.07% and 2.09% respectively, this shows that the profit 9 ITA No.309/RPR/2023 Sukhdev Kumar Sood percentage during the relevant year were slightly more than the previous year. It is further submitted that the cash sale % of the current year was 2.26% only as compared to the preceding year of 17.21%. Such facts proves that the cash sales during the year under consideration in terms of percentage was less than the cash sale in the previous year, therefore, there was no occasion for the department to raise doubt on this aspect. Ld. AR further in order to substantiate his contentions have mentioned that the sales disclosed by the assessee in VAT return was also the same as declared by the assessee for the month of October to December in the books of accounts, such sales were never disputed. Regarding difference in closing balance of preceding year and opening balance of cash for the relevant year, it is explained that the figures picked-up by Ld. AO are from cash flow statement wherein cash receipts and cash payments made were not included. The corrected cash flow statement and day to day cash book was furnished before the Ld. AO. While making such arguments Ld. AR submitted that the assessee has produced all the purchase and sale deals/vouchers before the Ld. AO for verification on 23.12.2019. Ld. AR further contended that neither the cash book nor the audited financials submitted before Ld. AO are disputed or controverted. They stood accepted by the Ld. AO, when entries in cash book stood accepted the availability of cash could have been disputed. On this aspect, Ld. AR placed his reliance on following judgments: 10 ITA No.309/RPR/2023
Sukhdev Kumar Sood
- Lalchand Bhagat Ambica Ram vs CIT (1959) 37 ITR 288 (SC), PN 130 to 145 of PB.
In the case of Lalchand Bhagat Ambica Ram Vs. CIT [1959] 37 ITR 288 (SC), the Hon'ble Apex Court decided the matter in favour of assessee of the ground that it was clear on the record that the assessee maintained the books of accounts according to the mercantile system and there was sufficient cash balance in its cash books and the books of account of the assessee were not challenged by the Assessing officer. If the entries in the books of accounts are genuine and the balance in cash is matching with the books, it can be said that the assessee has explained the nature and source of such deposit.
- ACIT vs Hirapanna Jewellers (2021) 189 1TD 608 (Vishakhapatnam), para 9, PN 121 to 129 of PB, relevant finding at PN 126 & 128.
9. In view of the foregoing discussion and taking into consideration of all the facts and the circumstances of the case, we have no hesitation to hold that the cash receipts represent the sales which the assessee has rightly offered for taxation. We have gone through the trading account and find that there was sufficient stock to effect the sales and we do not find any defect in the stock as well as the sales. Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. This view is also supported by the decision of Hon'ble Delhi High Court in the case of Kailash Jewellery House (Supra) and the Hon'ble Gujarat High Court in the case of Vishal Exports Overseas Ltd. (supra),Hence, we do riot see any reason to interfere with the order of the Ld. CIT(A) and the same is upheld.
- ACIT vs Nitin Sankhla in ITA No. 98/RPR/2020 vide order cit. 08.06.2023, PN 146 to 172 of PB, relevant finding at PN 170.
20. We have considered the rival contentions and perused the orders of the authorities below along with the relevant documents placed on record. The judicial pronouncement placed before ITAT to substantiate the contentions by the other parties. The factual matrix of the present case shows that there was a deposit of Rs. 2.90 Crs of old demonetized notes by the assessee after announcement of demonetization on 08.11.2016. It is an admitted fact that the assessee has opening balance of more than Rs.2.90 crs when the demonetisation was pronounced, and this fact is not disputed by 11 ITA No.309/RPR/2023 Sukhdev Kumar Sood the department. The ld. AO has observed that there was no cash sales between 1st April, 2016 to 4th November, 2016. However, the assessee is in a trade wherein cash sales is a regular feature which is demonstrated by placing necessary evidence before us. Like, the abstract of cash sales of previous year and for the current year. It was also the fact that total turnover of the assessment year under consideration was Rs.105.18 crs out of which Rs. 18.21 crs was in cash and it was the observations of the ld. CIT(A) that the same cannot be considered as unusual which is further substantiated by the figures of the sale in the previous year wherein the total turnover of the assessee was 200.53 cr. And cash sales was Rs. 92.62 crs. It is also admitted fact that books of accounts of the assessee were accepted by the revenue, thereby they have accepted the purchase sales, stock, bank accounts etc. of the assessee. The ld. AO on one hand has accepted the books of accounts of the assessee on the other hand treated the sale of the assessee has bogus, shows that ld. AO is blowing hot and cold at the same time which is unacceptable. The ld. CIT(A) has observed that when the purchases were accepted, the respective sale cannot be doubted. The addition u/s 68 of the Act cannot be made in respect of the amount which were found to be properly recorded into the books of accounts and no negative inference towards such transactions in the books of accounts were drawn by the revenue. We are drawing guidance from the case laws referred to hereinabove wherein it is clearly held that any addition on account of treating the sale of the assessee as bogus without rejecting the books of accounts is unjust, unfair and bad in law. Respectfully following decisions relied upon, we are of the considered opinion that in the circumstances when the assessee has sufficient opening cash balance at the time of pronouncement of demonetization which was not disputed by the department, if the same is being deposited by the assessee in its bank accounts, the same cannot be treated as unexplained or bogus unless any contrary observations borne from available records or otherwise brought on by the revenue against the assessee. Ld. CIT(A) has appreciated the facts of the case, considered all the aspects correctly and has appropriately allowed the appeal of the assessee. The case of the Vaishnavi Bullion (supra), since has distinguishing facts and circumstances not comparable with the present case, the same cannot be applied to rescue the contention of the revenue. The department was unable to brought before us anything which inspires us to agree with the contentions of the department to substantiate their claim that the deposits made by the assessee out of its cash sales were not explained or are bogus, we therefore having no distinguished view then the view taken by ld. CIT(A), upheld the finding of the ld. CIT(A) and therefore, decided this issue against the revenue. In the result, grounds no 2 to 7 on this single issue of the appeal of the revenue are dismissed.
12 ITA No.309/RPR/2023
Sukhdev Kumar Sood
- ITO vs Parmanand Gupta in ITA no. 82/RPR/2017 dated 04.08.2022, relevant finding in para no. 21, page no. 38, last five lines.
21. On appeal, the CIT(Appeals) was of the view that though it was an admitted fact that the assessee had imported silk yarn from China and sold the same to the various weavers who were spread across the country, but on account of beggaries of their occupation could not furnish their complete contact details, however, for the said standalone reason the AO could not have justifiably recharacterized the aforesaid amount of duly accounted sale proceeds that were deposited by the out station based purchasers in the bank accounts of the assessee, as an unexplained cash credit u/s.68 of the Act. For the sake of clarity, the relevant observations of the CIT(Appeals) are culled out as under:
"Decision- I have considered the rival submission of both the parties. The assessee imports the silk from China and received the import items at Chennai and as per standing instruction the forwarding agent at Chennai despatches the goods on the destinations. From the facilitation counter the weavers deposit the cash and received the delivery of the silk, so as to work upon the yarn. He has furnished the import evidence and payment of custom duty. He had furnished the cash book and sales account. He had furnished the invoices issued in the names of various persons as mentioned by the learned AR. I am not able to convince myself with the findings of the learned AO because he had made addition of Rs.5.228 crores which was part of turnover of the assessee. The inability of the assessee to furnish the names of the parties who had purchased the yarn from him can be understood but the basic fact should not have been forgotten by the AO that he should also have tried to confirm at least from sales account viz-a-viz the bank account of the assessee. After import of the silk yarn assessee has not consume the whole imported silk. He had sold to various weavers and they may not be in the position to furnish the details of contact because of beggaries of the occupation. In my considered view the deposits in the bank appearing as HEFT and RTGS and cash represent the sale proceeds from various sundry debtors and the same is reflected in the sales account. The addition made by the AO is hereby-s deleted. The ground of appeal is allowed. (Relief Rs. 522,81,663/-)"
After having given a thoughtful consideration to the aforesaid observation of the CIT(Appeals), we find no reason to take a different view. At this stage, we may herein observe that it is a matter of fact borne from record that the assessee had duly accounted for the aforesaid amount of Rs. 5,22,81,663/- 13 ITA No.309/RPR/2023
Sukhdev Kumar Sood as his sale proceeds for the year under consideration. As observed by the CIT(Appeals), it is a matter of fact borne from record that the assessee had imported silk yarn from China, which, thereafter, had been sold to the various weavers etc. who were spread across the country. Although the A.O had dubbed the aforesaid amount of Rs. 5,22,81,663/- as unexplained cash credits u/s. 68 of the Act, however, we find that at the same time he had accepted the sales as were duly accounted by the assessee in his books of account. In sum and substance, though the A.O had on the one hand accepted that the amounts in question were the sale proceeds that stood credited in the books of account of the assessee and had brought the profit resulting there from as disclosed by the assessee to tax in his hand, but at the same time had held the said amounts as unexplained cash credits within the meaning of section 68 of the Act. Apart from that, the re-characterization of the duly accounted sales of the assessee which were earlier accepted by the AO in the original assessment that was framed by him vide his order passed under Sec. 143(3), dated 18.06.2010, without rejecting his books of accounts under Sec. 145(3) of the Act is beyond comprehension. In sum and substance, the recharacterization of the duly accounted cash sales of the assessee as unexplained cash credits u/s 68 by the AO without rejection of the books of account of the assessee u/s 145(3) of the Act is beyond comprehension. As stated by the ld. AR, and rightly so, the acceptance of the cash sales as disclosed by the assessee a/w simultaneous re- characterization of the same as unexplained cash credits u/s 68 had clearly subjected the assessee to a double tax jeopardy.
8. Based on aforesaid submissions and findings in the case laws referred it is the submission that no addition u/s 68 could be made since no credit entries has been disputed. Since the cash deposited was accounted for in regular books as sales, and the books of assessee were neither rejected nor the transaction therein are disputed by the Ld. AO in such a situation, where profit arising from such sale was accepted as returned income of the assessee, treating the cash 14 ITA No.309/RPR/2023 Sukhdev Kumar Sood deposits therein as unexplained cash credit under the provisions of section 68 amounts to double addition which is not permissible under the law, reliance was placed on the following judgments:
- CIT vs Kailash Jewellery House in ITA no. 613/2020, order dt.
09.04.2010 of Delhi High court, PN 112 of PB.
- Anantpur Kalpana vs ITO in ITA no. 541/Bang/2021 dt. 13.12.2021, PN 113 to 120 of PB, relevant finding at PN 117.
- ACIT vs Vishal Exports Overseas Ltd. In ITA no. 790/Ahd.//2005 order dt. 07.08.2009, "C" Bench, affirmed in ITA no. 2471 of 2009 vide order dated 03.07.2012.
9. It is further debated by the Ld. AR that the closing stock disclose by the assessee was accepted by the Ld. AO on one hand and the sale was disputed on the other hand.
10. In terms of aforesaid arguments by the Ld. AR it is the submission that the addition made by Ld. AO u/s 68 of the Act and confirmation of the same by Ld. CIT was bad in law specially when the Assessee's books of accounts have not been rejected and all the income and expenses recorded in such books of accounts which were the basis of arriving at the returned income were not disputed, therefore, the order of Ld. CIT(A) is liable to be set aside and the addition made by the Ld. AO deserves to be deleted.
11. Ld. Sr DR on the other hand vehemently supported the orders of Revenue Authorities.
12. We have considered the rival submissions, perused the material available on record and case laws relied upon by the assessee. On 15 ITA No.309/RPR/2023 Sukhdev Kumar Sood perusal of the facts of present case, order of the Ld. AO and Ld. CIT(A), it is noticed that Ld. AO has made an addition of Rs.21 Lacs on the basis of abnormal cash deposit during the demonetization period as compared to average daily cash deposits in regular course of business. It was the observation of the Ld. AO that the assessee was unable to produce sale bills before him, the assessee was also apparently failed in producing the details of debtors as claimed by the assessee that cash was received from them. The addition was made on account of improper explanations by the assessee to explain the source of cash deposit, wherein the assessee has first claimed that the sale of electronic products was increased during the demonetization period but was unable to produce the sale bills before the Ld. AO. With a change in stand taken on the explanations, the assessee tried to explain that the cash receipts were from debtors but again failed to submit substantial proof to buttress this claim. Ld. CIT(A) also has given the similar findings that the assessee was squarely failed in explaining about the cash deposits during the demonetization period even the closing (as on 31.03.2016) and opening (01.04.2016) cash balance of the assessee was not matching having a difference of Rs. 7,03,625/- (Rs.16,23,399- Rs.9,19,774). Such observations of the revenue authorities, shows that the assessee was unable to substantiate his contentions with any corroborative evidence regarding receipt of cash on account of sale as well as recovery from debtors. From the material placed before us in the form of paper book, again such contentions 16 ITA No.309/RPR/2023 Sukhdev Kumar Sood could not be substantiated. Here again the assessee failed in proving that the so-called debtors from whom the cash was collected during the demonetization period belongs to the relevant AY or preceding years so the profit from sale to such debtors have been brought to tax in the return of income of the year under consideration. The mismatch in closing and opening cash balance in the assessee's cash flow statement, which was noted by both the revenue authorities, could not be disproved even before us by placing any cogent evidence.
13. The contentions of the Ld. AR before us are that since the audited financial of the assessee were accepted by the department by computing the assessed income taking the returned income of the assessee by adding the addition u/s 68, without rejecting the books of the assessee goes against the mandate of law, which says that once the books of accounts of the assessee are accepted by the revenue, thereby recognized the sale of the assessee and by accepting the returned income, the profit generated from such sale was also accepted by the department. The cash received which was disputed by the department and the addition was made by triggering the provisions of section 68 was also included in such accepted sale by the department, under such facts and circumstances addition u/s 68 without rejecting the books of assessee is not justified, similar issue was dealt with and decided by this tribunal in the case of ACIT vs. Nitin Sankhla in ITA No. 98/RPR/2020 order dated 08.06.2023, wherein the 17 ITA No.309/RPR/2023 Sukhdev Kumar Sood appeal of the department was dismissed on account of treating the sale of the assessee as bogus without rejecting the books of accounts of the assessee. In present case, since there was a difference in closing and opening cash balance in the Assessee's cash flow statement, which was observed by both the revenue authorities, also the assessee was unable to substantiate with supporting documents like sale bills and details of debtors that the cash deposited was received on account of sales or debtors having transactions bearing impact on the profit of current year. Under such circumstances the plea of the assessee that since the books of accounts were not rejected by the Ld. AO the addition u/s 68 cannot be sustained is incomprehensible since the difference in opening cash balance with the closing cash balance of the previous year without any plausible explanation and in absence of details of debtors it cannot be conclusively establish that the cash recover from debtors pertains to and have profit included in the current years returned income. In view of such facts the case laws relied upon by the Ld. AR, distinguishable on facts, cannot rescue the contentions raised.
14. It is also worthwhile to note that if the sales made by the assessee was the actual source of impugned cash deposits, then acceptance of returned income and addition u/s 68 may cause double addition. However, in view of various deficiencies in the books of assessee qua difference in cash balance, actual receipt from current 18 ITA No.309/RPR/2023 Sukhdev Kumar Sood sales or from debtors, which were called for explanations, but the assessee was unable to demonstrate before both the Authorities below, thus, it cannot be conclusively construed that the returned income offered by the assessee was again taxed under the provisions of section 68. Therefore, the contention that addition u/s 68 without rejection of books was invalid cannot be concurred with, but, we in our considered view are of the opinion that the issue in present case requires certain verifications qua the closing balance of cash as on 31.03.2016 and its matching with the opening cash balance as on 01.04.2016 from the audited accounts of the assessee, the verification of sale bills and sales recorded in the books of accounts, the verification of impact of cash collected from debtors on the returned income of the assessee for the year under consideration. Consequently, following the principle of natural justice the issue in the present appeal is remitted back to the file of Ld. AO for verification of all these material aspects and to re-adjudicate the issue afresh. Needless to say, reasonable opportunity of being heard shall be provided to the assessee. The assesses is directed to vigilantly assist in the set aside proceedings, failing which the Ld. AO would be at liberty to decide the issue in accordance with law.
15. In the result, ground no. 1 to 4 of the assessee are partly allowed for statistical purposes.
19 ITA No.309/RPR/2023
Sukhdev Kumar Sood
16. Ground no. 5 & 6: These grounds are relating to challenging the chargeability of tax under sec. 115BBE. Since the main issue in the present appeal is restored back to the file of Ld. AO ground no. 5 & 6 which are consequential in nature are also restored back to the file of Ld. AO.
17. In the result, the present appeal of the assessee is partly allowed for statistical purposes.
order pronounced in the open court on 13/02/2024.
Sd/- Sd/-
(RAVISH SOOD) (ARUN KHODPIA)
याियकसद य / JUDICIAL MEMBER लेखासद य / ACCOUNTANT MEMBER
रायपुर/Raipur; दनांक Dated 13/02/2024
Vaibhav Shrivastav
आदे शक ितिल पअ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant-
2. यथ / The Respondent-
3. आयकरआयु (अपील) / The CIT(A),
4. आयकरआयु / CIT
5. वभागीय ितिनिध, आयकरअपीलीयअिधकरण,रायपुर/ DR, ITAT, Raipur
6. गाडफाईल / Guard file.
// स या पत ित True Copy // आदे शानुसार/ BY ORDER, (Assistant Registrar) आयकरअपीलीयअिधकरण, रायपुर/ITAT, Raipur