RANJAN AGGARWAL, AMRITSAR V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-II, AMRITSAR

ITA 127/ASR/2022

AI Insights

The case involves an appeal by Sh. Ranjan Aggarwal against the order of the Commissioner of Income Tax (Appeals), which upheld the additions made by the AO regarding cash deposits and unsecured loans. The AO had added Rs. 79,04,500 to the assessee's income, claiming it was unexplained cash deposit during the demonetization period, and Rs. 9,00,000 as unexplained unsecured loans. The Tribunal examined the evidence presented, including sales records and bank transactions, and found that the cash deposits were from legitimate business activities and the loans were from identifiable lenders. The Tribunal's decision was influenced by precedents and the lack of dispute over the stock and purchases by the revenue.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114859 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-02-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 09-06-2022
• Other Referred Cases: Principal Commissioner of Income Tax, 20, Delhi v. Akshit Kumar, CIT vs. Om Overseas
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Set aside
• Section: 68; 143(3); 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No.127/Asr/2022 Assessment Year: 2017-18 Sh. Ranjan Aggarwal, Near Power House, Batala Road, Amritsar. [PAN: AARPA1665Q] (Appellant) Vs. DCIT/ACIT, Circle-2, Amritsar. (Respondent) Appellant by Sh. Ashwani Kalia, CA. Respondent by Sh. S.M. Surendra Nath Sr.DR Date of Hearing 28.02.2023 Date of Pronouncement 15.03.2023 ORDER Per:Anikesh Banerjee, JM: The instant appeal was filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, [in brevity the CIT(A)]order passed u/s 250of the Income Tax Act 1961, [in brevity the Act] for A.Y.2017-18. The impugned order was emanated from the order of ld. ACIT, Circle-2, Amritsar, order passed u/s 143(3) of the Act on dated 25.12.2019. The assessee has raised the following grounds which are read as under:- I.T.A. No.127/Asr/2022 Assessment Year: 2017-18 2 “1. That the Ld. A.O unlawfully made 8s worthy CIT(A) unlawfully confirmed an addition of Rs. 79,04,500/- to the returned income being the amount of cash deposited in two banks of Assessee firm during demonetization period although the cash deposit were duly recorded in regular books of account which had been duly audited by qualified chartered accountant & cash had been generated from genuine cash sale. 2. That during Inspection by Excise and taxation department on 02.11.2016, which is before the date of demonetization i.e 09.11.2016,the figure of sale given to the Excise & Taxation Department and mentioned in their order was INR 5,99,85,311/- which included the alleged cash sale which was main part of cash in hand as on 09.11.2016. 3. That Ld. A.O. unlawfully made and worthy CIT(A) has unlawfully confirmed addition of Rs. 9,00,000 being the amount of fresh unsecured loan although the same had been received through regular banking system from genuine, identifiable & credit worthy lenders of were duly recorded in books of account' which were duly audited by qualified chartered accountants. 4. That Ld. A.O. unlawfully applied & worthy CIT(A) has unlawfully confirmed the applicability of Section 68 (unexplained credits in books) is corresponding application of section 115BBE for computation of income tax. 5. That order of worthy CIT (A) in bad in law is on facts. 6. That the assessee craves to add/modify or amend any ground of appeal subsequently.” 2. Brief fact of the case is that the addition was made by the ld. AO related to deposit of cash amount of Rs.79,04,500/- in two bank accounts of the assessee, during I.T.A. No.127/Asr/2022 Assessment Year: 2017-18 3 demonetisation period and the creditors amount of Rs.9 lac related to unsecured loan. Both the additions are added back u/s 68 of the Act. During assessment the assessee submitted the relevant documents but both the addition was confirmed. Being aggrieved, the assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) has upheld the order of the ld. AO. Being aggrieved assessee filed an appeal before us. 3. The ld. Counsel for the assessee has filed written submission with relevant documents which are kept in the record. The assessee explained that the first issue related to deposit of cash Rs.79,04,500/- is fully supported by the sales during the period. The assessee first invited our attention on report of survey which was conducted in the business premises of assessee by the Excise and Taxation department, Punjab which was taken placed on 02.11.2016 i.e. before the start of demonetisation period effect from 09.11.2016. During course of inspection the order book, sale bill filed, purchase bill filed, loose paper are seized by the State Revenue. In addition. the physical stock verification was also conducted by the survey team and stock amounting to Rs.1,24,72,999/- was found during survey proceeding on 02.11.2016. The assessee submitted the trading account of the firm before the state authority for the period 01.04.2016 to 02.11.2016 and all the books of account. After verification of the documents of the assessee the state authority calculated the discrepancy of the stock and collected tax accordingly. The assessee claimed that there is a sufficient stock and purchase related to sale during demonetisation period. In paper book the assessee filed a copy of the order of the designated officer of the State I.T.A. No.127/Asr/2022 Assessment Year: 2017-18 4 Excise and Taxation department atAPB page 16-17. The copy of trading account from 01.04.2016 to 02.11.2016is enclosed inAPB page 18 and copy of monthwise trading account for F.Y. 2016-17 is enclosed in APB page 19. 3.1 The ld. Counsel for the assessee further argued in relation to addition of the unsecured loan. The assessee filed the bank account as proof of transaction, confirmation, copy of ITR of the loan creditors. The assessee has taken loan from Mr. Chander Mohan Aggarwal amount to Rs.1 lac and Mr. Paramjit Singh Bhuller amount of Rs.8 lacs. The copy of the relevant documents is enclosed in APB page 22 to 38. 4. The ld. Sr. DR vehemently argued and placed that the assessee has abnormal sale during demonetisation period and argued in favour of the revenue. 5. We heard the rival submission and relied on the documents available in the record. The assessee has placed the documents and the primary evidence related to stock report of inspection of stock by the Excise and Taxation department of Punjab. In the order of the state authority specifically mentioned that the stock counted by the state authority related to M/s S.B. Brothers and M/s Shivam Industries which are the business entity of the assessee. The relevant paragraph of the order of the state authority is reproduced as below: I.T.A. No.127/Asr/2022 Assessment Year: 2017-18 5 I.T.A. No.127/Asr/2022 Assessment Year: 2017-18 6 5.1 We find that the assessee has a sufficient stock to convert in sale. Accordingly, the source of cash was explained which are generated from the sale of goods. The ld. AO pointed out that the sales are made by cash. The ld. Counsel placed that the stock of assessee was never be disputed. We respectfully relied on order of Hon’ble High Court of Delhi in the case of Principal Commissioner of Income Tax, 20, Delhiv. AkshitKumar[2021] 124 taxmann.com 123 (Delhi) “Income from other sources (Sale of opening stock) - Assessment year 2014-15 - Assessee was engaged in business of textiles - All sales undertaken by assessee were in cash only - Noting such peculiarities, Revenue decided for spot verification at place from where assessee purportedly carried on business - Survey revealed that business premises was abandoned and that there was no proof of any business undertaken by assessee - Based on survey report, Assessing Officer concluded that entire cash deposit found in assessee's bank account was unexplained income and not sale proceeds - Additions were thus made towards unexplained income - On appeal, Tribunal recorded that assessee had closed business in July, 2015 and survey was carried out in November, 2016 - It was also noted that entire opening stock, sales and closing stock of assessee was accepted during scrutiny assessment of previous year - Based on such findings, Tribunal deleted additions made - Whether where quantum figure and opening stock was accepted in previous years during scrutiny assessments, receipt from sales made by assessee proprietary concern out of its opening stock could not be treated as unexplained income to be taxed as 'income from other sources'” The assessee already declared the cash as turnover &paid the tax accordingly. The stock and purchase was never be disputed by the revenue. We respectfully relied on jurisdictional High Court in the case of CIT vs. Om Overseas, 173 Taxman 185, (P & H) “In the absence of any illegality or perversity in the finding of fact arrived at by the CIT(A) sand the Tribunal that the assessee’s books of account were rejected by the AO and the addition was made without pointing out any specific defect in the books of account, impugned addition was rightly deleted and no substantial question of law arises for determination.” I.T.A. No.127/Asr/2022 Assessment Year: 2017-18 7 Accordingly, the addition made by the ld. AO amount to Rs.79,04,500/- is liable to be quashed. 5.2 In verification of the loan creditors the assessee has filed the document related to identity, transaction, the entire transaction was made through bank account which was produced before the bench. We set aside the order of the ld. CIT(A). The addition amount of Rs. 9 lacs related to loan creditors u/s 68 of the Act is liable to be quashed. 6. Accordingly, appeal of the assessee in Ground no. 1 to 3 are allowed. Ground no. 4 is only for academic purpose. Ground no. 5 &6 are general in nature. 6. In the result, the appeal of the assessee bearing ITA No.127/Asr/2022 is allowed. Order pronounced in the open court on 15.03.2023 Sd/- Sd/- (Dr. M. L. Meena) (ANIKESH BANERJEE ) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order