ASHOK AGENCIES,SALEM V. DCIT, CIRCLE-1(1), SALEM

ITA 502/CHNY/2025

AI Insights

The case involves Ashok Agencies, a partnership firm engaged in manufacturing, which appealed against the order of the Learned Commissioner of Income Tax (Appeals) regarding additions made to their income for the Assessment Year 2017-18. The additions were related to cash deposits made during the demonetization period, which the AO initially deemed unexplained income. The CIT(A) had partially upheld this addition, leading to the current appeal. The Tribunal found that the CIT(A) had not adequately considered the additional evidences provided by the appellant, which warranted a reassessment by the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633436 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Other Referred Cases: State Of Rajasthan vs Asharam @ Ashumal [2023] 6 SCC 314, M/s.Shobika vs. ITO \\u2013 ITA No.2131/Chny/2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N. RAJA KUMAR
• Assessee Lawyers: P.M. KATHIR; OBSERVING
• Keywords: Set aside; Additional evidence; Corroborative evidences

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0001ी एबी टी. वक , ाियक सद\u0011 एवं एवं एवं एवं \u0001ी अिमताभ शु\u0018ा, लेखा सद क े सम\u001b BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.502/Chny/2025 िनधा\u000eरण वष\u000e/Assessment Year: 2017-18 Ashok Agencies, 70/71, Chinnathirupathy Main Road, Salem-636 008. v. The DCIT, Circle-1(1), Salem.. [PAN: AAFFA 4962 N] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) अपीलाथ\u0016 क\u001a ओर से/ Appellant by : Mr.P.M. Kathir, Advocate \u0017\u0018यथ\u0016 क\u001a ओर से /Respondent by : Mr.N. Rajakumar, Addl.CIT सुनवाईक\u001aतारीख/Date of Hearing : 13.05.2025 घोषणाक\u001aतारीख /Date of Pronouncement : 11.06.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 11.02.2025 for the Assessment Year (hereinafter referred to as \"AY”) 2017-18. 2. At the outset, the Ld.AR of the assessee brought to our notice that the Ld.CIT(A) while adjudicating the grounds raised by the assessee against additions made by AO in respect of cash deposited during demonetization, noted the assessee’s explanation about the nature & ITA No.502/Chny/2025 (AY 2017-18) Ashok Agencies :: 2 :: source of cash deposits [during demonetization period] as its trade receipts/cash sales made in the normal course of business, which was not accepted by the Ld.CIT(A) on the ground that the assessee didn’t file any supporting evidence for such explanation; and according to Ld CIT(A), the assessee failed to furnish month-wise details, which comprises of month- wise opening cash-in-hand, cash sales, expenses/drawing in cash, cash deposited/withdrawals from bank and closing cash in hand. And that the assessee didn’t furnish party wise details of cash sales wherein name and complete address and the amount of party wise cash sales has not been provided. Therefore, he rejected the explanation of assessee by observing as under: In view of the above discussion, it is pertinent to note that the appellant has not explained the source of cash deposit amounting to Rs. 52,57,364/- during the demonetization period. The question of raised by the AO in the assessment order not answered by the appellant. Thus, the contention of the appellant is found not tenable at this point. In respect of the same, the appellant is unable to provide any supporting documents for his contention of genuineness. After examining the submission, it is very clearly evident that the appellant. In the garb of cash sales, has adjusted his undisclosed money during demonetization period and was unable to provide any of the evidences to establish the genuineness of the claims or any evidence for its subsequent reinvestment into business. It is evident that the appellant failed to provide any supporting documents for deposited the cash amounting to Rs.52,57,364/- during the demonetization period and the contention of the appellant remained unjustified and unsubstantiated. Hence, the ground is noted as partially allowed. 3. According to the Ld.AR, the assessee is a partnership firm, engaged in the business of manufacturing of undertaking & packing materials who filed its Return of Income (RoI) on 02.12.2017 declaring Rs.93,95,450/- for AY 2017-18 which return was selected under CASS and the AO was of ITA No.502/Chny/2025 (AY 2017-18) Ashok Agencies :: 3 :: the view that the assessee didn’t furnish the complete documents called for by him, which prompted him to come to conclusion that the assessee had deposited unexplained cash amounting to Rs.1,68,78,000/- during demonetization period and completed the assessment u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) by assessing the total income of Rs.2,62,73,450/- in place of Rs.93,95,450/- as returned by the assessee. Thus, the AO made addition of Rs.1,68,78,000/- as unexplained income of the assessee by order dated 29.12.2019. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) wherein the assessee filed the details/explanation about cash deposited during demonetization. But the Ld.CIT(A) was of the view that the assessee didn’t file any relevant documents to support its assertion that the cash deposits [during demonetization period] was its trade receipts/cash sales. The Ld.CIT(A) is also noted to have found fault on the part of assessee having not furnished month wise details which comprises of month wise opening cash in hand, cash sales, expenses/drawing in cash, cash deposited/withdrawals from bank and closing cash in hand. And further, the Ld.CIT(A) was of the view that the assessee also didn’t furnish party wise details of cash sales wherein name and complete address and the amount of party wise cash sales has been provided. Therefore, the Ld.CIT(A) dismissed the appeal of the assessee. ITA No.502/Chny/2025 (AY 2017-18) Ashok Agencies :: 4 :: 4. According to the Ld.AR, the Ld.CIT(A) has made the aforesaid finding without asking the assessee to file all these details, which could have been filed, provided the Ld CIT(A) had asked for it and in such an event, the assessee would have filed it. Before us, the assessee has filed a Paper Book along with the following additional evidences for admission: 1. The ROI of Appellant for this A.Y was picked up for scrutiny. The AO had called for certain specific details from the appellant which were submitted from time to time. No additions were proposed by the AO at all. However, in the order of assessment, the AO has added a sum of Rs. 1,68,78,000/- stating the same to be cash deposits and as unexplained income. 2. The Appellant submitted detailed written submissions and submitted that the cash deposited in the bank account during the demonetization period was Rs.52,57,364/- only and not Rs.1,68,78,000/-. It was even clarified that the SBNs deposited amounted to only Rs.30,50,510/-. Certificates from the bank were also produced to prove the same. The appellant was hopeful that the same would be sufficient to delete the addition in full. However, the CIT(A) vide his order dated 11.02.2025 merely restricted the addition to Rs.52,57,364/- 3. The appellant now submits the relevant extracts of its cash book, sales ledger and ledger showing the cash balance on each day of the F.Y.2016-17 to prove the availability of cash in hand to account for the cash deposits. If these additional evidences are not admitted, justice cannot be rendered in the present case. FACTS: 1. The appellant is a firm engaged in the business of manufacture of textbooks, notebooks and packing and packaging materials in two separate units, namely Ashok Agencies and Salem Printpack. 2. For the A.Y.2017-18, the appellant filed its ROI on 02.12.2017 declaring income of Rs.93,95,445/-. This ROI was picked up for scrutiny, during which the Assessing Officer (AO) called for various details, which were furnished by the appellant from time to time. The AO never proposed the addition finally made through any Show-cause Notice (SCN). The AO had in the order of assessment dated 29.12.2019 added a sum of Rs.1,68,78,000/- as unexplained income, stating that the same were the cash deposited by the appellant in its bank accounts with the Andhra Bank. The income was assessed at Rs.2,62,73,450/- 3. The appellant had obtained certificates from the Andhra Bank(Pgs. 79 & 80 of PB) certifying that it had deposited only Rs.52,57,364/- in its bank accounts during the demonetization period, out of which the SBNs amount to only Rs.30,50,510/-. The appellant then filed a rectification petition with the AO pointing out this mistake (Pg.81 of PB) which was rejected by the AO vide order dated 26.02.2020 (Pg.83 of PB). ITA No.502/Chny/2025 (AY 2017-18) Ashok Agencies :: 5 :: 4. The appellant filed an appeal before the CIT(A) challenging the order of assessment dated 29.12.2019 challenging this addition and the appellant also uploaded the certificates obtained from the bank. The CIT(A) vide his order dated 11.02.2025 restricted the addition to Rs.52,57,364/- and directed the AO to delete the remaining addition. The present appeal has been filed challenging this upheld portion of the addition. SUBMISSIONS: 5. Firstly, the appellant would like to submit that the addition is incorrect for the reason that the cash deposited were out of the cash sales effected by the appellant during the year and the withdrawals from the bank account. The appellant has filed before this Hon’ble Tribunal its cash book for both the units for the month of November, 2016 (Pg.168 to 206). From the same, it can be seen that the cash balance as on 08.11.2016 for Ashok Agencies was Rs.41,42,710/- (Pg.179 of the PB) and for Salem Printpack, the same was Rs.2,82,871 (Pg.203 of the PB). The daily cash balance ledger at Pg.155& Pg.164 evidence the same. Thus, the total cash in hand as on 08.11.2016 with the appellant was Rs.44,25,581/-. The SBN of Rs.29,87,500/- was deposited out of this cash balance and remaining SBN of Rs.63,010/- was deposited in the appellant’s bank account by the customers directly, as confirmed by the bank at Pg.80. 6. The remaining cash deposited was in non SBNs which were also out of sales and cash withdrawals. The appellant has also placed the comparison of figures of cash sales, cash deposits, cash withdrawn and cash in hand for each month for the F.Ys.2015-16 and 2016-17 at Pg.132. One important aspect to be observed here is that the appellant had out of cash sales effected from 01.04.2015 till 08.11.2015 of Rs.1,95,18,215/-, deposited cash of Rs.1,55,93,313/-, which amounted to 79.8% of the cash sales till that point. For the F.Y.2016-17, the cash sales from 01.04.2016 till 08.11.2016 stood at Rs.2,88,87,020/- and out of the same, Rs.2,25,47,596/- was deposited in the bank account, which amounted to 78% of the sales. This shows that the appellant’s actions during the year were comparable with that of the earlier year and there was no abnormality in its actions. The cash in hand as on 08.11.2016 was sufficient to account for the cash deposited during the demonetization period. 7. As submitted earlier, the appellant has now submitted its ledger showing daily cash balance for both units at Pgs.150 – 167 of the PB, cash book for both the units for the month of November, 2016 at Pgs.168 to 206 of the PB and sales ledger for both units at Pgs.207 – 226 of the PB. It is humbly prayed that the same be admitted as additional evidence and the matter be remanded back to the AO to consider these evidences and delete the addition made. 8. The appellant submits that these evidences have to be admitted as, in the absence of the same, justice cannot be rendered in the present case. In such a case, the additions are to be admitted as held by the Hon’ble Supreme Court in the case of State Of Rajasthan vs Asharam @ Ashumal [2023] 6 SCC 314, which has been relied on by this Hon’ble Tribunal in M/s.Shobika vs. ITO – ITA No.2131/Chny/2024. ITA No.502/Chny/2025 (AY 2017-18) Ashok Agencies :: 6 :: 5. Be that as it may, we are not inclined to go into the merits of the submissions made by the assessee (supra), because all these evidences were not filed before the AO/Ld.CIT(A); and taking note of the scheme of the Act, the primary authority to assess the income of an assessee is the AO who is clothed with the duty of Investigator as well as that of the Adjudicator. Therefore, in the interest of justice for both the parties, we are inclined to set aside the impugned order of the Ld.CIT(A) and restore the assessment back to the file of the AO with a direction to admit these additional evidences and thereafter, assess the income of the assessee in accordance to law after hearing the assessee. 6. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 11th day of June, 2025, in Chennai. Sd/- (अिमताभ शु\u0018ा) (AMITABH SHUKLA) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे ई/Chennai, !दनांक/Dated: 11th June, 2025. TLN आदेश क\u001a \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ /Appellant 2. \u000e\u000fथ /Respondent 3. आयकरआयु\u0015/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u000eितिनिध/DR 5. गाड फाईल/GF "