Sharda Alloys Private Ltd., Ahmedabad V. The ACIT, Circle-4(1)(1), Ahmedabad

ITA 263/AHD/2023

AI Insights

Sharda Alloys Pvt Ltd. appealed against the order of the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, which upheld the addition of Rs. 27,71,175 as unexplained cash deposits under Section 68 of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer, who considered the cash sales during the demonetization period as non-genuine. The Tribunal noted that the assessee had provided substantial evidence, including details of cash deposits, sales, and documentary proofs, which were overlooked by both the Assessing Officer and the CIT(A). The Tribunal referenced decisions from the Gujarat High Court and other Tribunal orders to support its decision to allow the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129064 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-09-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 19-04-2023
• Other Referred Cases: Vishal Exports Overseas Ltd. (ITA No. 2471/2009 order dated 03.07.2012), Nishita Silk Mills Ltd. vs. ITO (ITA No. 896/Ahd/2011 order dated 20.07.2012
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Principle of natural justice
• Section: 68; 143(1); 250; 143(2)

Judgement Text

ITA No. 263/Ahd/2023 Sharda Alloys Pvt Ltd. Vs. ACIT Assessment Years: 2017-18 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD \ BEFORE Ms. SUCHITRA R. KAMBLE, JUDICIAL MEMBER ITA No. 263/Ahd/2023 Assessment Year: 2017-18 Sharda Alloys Private Ltd., 51, Sahajanand Shopping Centre, Shahibaug Road, Ahmedabad-380004 PAN : AACCS 6833 Q Vs The ACIT, Circle 4(1)(1), Ahmedabad अपीलाथ / (Appellant) यथ / (Respondent) Assessee by : Shri S.N. Divatia, Advocate & Shri Samir Vora, AR Revenue by : Shri Ramesh Kumar, Sr DR सुनवाई की तारीख/Da te of Hear ing : 27/ 09/2 023 घोषणा की तारीख /Date of Pro noun ce men t : 13/1 0/20 23 O R D E R This appeal filed by the assessee is directed against the order of the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as "CIT(A)" for short] dated 09.03.2023 passed under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short] for the Assessment Year (AY) 2017-18. 2. The grounds raised by the assessee in its appeal read as under:- “1.1 The order U/s. 250 passed on 09.03.2023 by NFAC (CIT(A), I.T. Department, Delhi (for short CIT(A)) upholding the addition made u/s. 68 of Rs.27,71,175/- towards cash sales during October 2016 to 08.11.2016 as non-genuine and unexplained cash deposits is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has erred in not allowing sufficient opportunity before passing the impugned order. The ld CIT(A) has failed to appreciate that there was sufficient cause for failure to submit submission or comply to the notices issued by CIT(A). 2.1 The Ld. CIT(A) has grievously erred in law and on facts in confirming the cash sales during October 2016 to 08.11.2016 aggregating to Rs.27,71,175/- as non- ITA No. 263/Ahd/2023 Sharda Alloys Pvt Ltd. Vs. ACIT Assessment Years: 2017-18 Page 2 of 4 genuine and unexplained cash deposits and thereby making an addition of Rs.27,71,175/-as unexplained credit u/s.68. 2.2 That in the facts and circumstances of the case as well as in law, the ld. CIT(A) ought not to have upheld cash sales during October 2016 to 08.11.2016 aggregating to Rs.27,71,175/- as non-genuine and unexplained cash deposits and thereby made an addition of Rs.27,71,175/-as unexplained credit u/s.68. 2.3 The Ld. CIT(A) ought to be appreciated that the ld.AO had held the cash sales of Rs.27,71,175/- as non-genuine on presumption, surmise and conjecture, though complete evidence to prove the said sales was produce and the same were treated as genuine for the purpose of loss reported in the return of income.”” 3. The assessee is engaged in the business of trading of Ferrous and non Ferrous Metal Scrap, TMT Bars, Round Bar, HR Coil / Sheet, M. S. Channel etc. the assessee is also engaged in the business of agency services and earned a commission income. The original return of income for A.Y. 2017-18 was filed on 30.10.2017 declaring total loss of Rs. (-)4,96,44,004/-. The return was processed under Section 143(1) of the Act and selected for complete scrutiny. Notice u/s 143(2) of the Act was issued on 09.08.2018 which was served to the assessee. In response to the notices issued from time to time, the assessee company furnished the details/evidences. The Assessing Officer observed that the assessee has made substantial cash deposits during demonetization period. After taking cognizance of the assessee’s submissions / replies, the Assessing Officer made addition of Rs. 27,71,175/- under Section 68 of the Act as unexplained money. 4. Being aggrieved by the Assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that during the assessment proceedings, the assessee furnished the details of cash deposits in specified form relating to demonetization period along with the annual total sales and cash sales in preceding two years as well as documentary evidence such as copy of stock register, details about the debtors etc. All these documentary evidences were totally ignored by the Assessing Officer as well as the CIT(A). The addition made under Section 68 is on presumption, surmise and conjecture, though the complete evidence to prove the said sales were produced and ITA No. 263/Ahd/2023 Sharda Alloys Pvt Ltd. Vs. ACIT Assessment Years: 2017-18 Page 3 of 4 the same were treated as genuine for the purpose of loss reported in the return of income. The Ld. AR relied upon the decision of Hon’ble Gujarat High Court in case of Vishal Exports Overseas Ltd. (ITA No. 2471/2009 order dated 03.07.2012) as well as the order of the Tribunal in case of Nishita Silk Mills Ltd. vs. ITO (ITA No. 896/Ahd/2011 order dated 20.07.2012). 6. The Ld. DR relied upon the assessment order and the order of the CIT(A). The Ld. DR further submitted that the assessee has not given any prudent explanation for doing cash sales just before demonetization period that to from unknown parties. 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the evidences of the sales as well as cash sales were produced before the Assessing Officer as well as before the CIT(A). But both the authorities have failed to take into account the same while taking cognizance of the explanation given by the assessee about the cash sales during demonetization period. In fact, the assessee had case sales in F.Y. 2014-15 to the extent of Rs. 79,41,185/- which is prior to demonetization period. It is regular practice of the assessee company to have cash sales as well as the regular sales. The contention of the Revenue that the parties to whom the sale is made are unknown also appears to be incorrect. Thus, Section 68 of the Income Tax Act, 1961 will not be applicable in the present case when the assessee has explained each trail of cash sales through its stock register, cash book and trail balance. Therefore, the addition made by the Assessing Officer does not survive. The appeal of the assessee is allowed. 8. In result, appeal of the assessee is allowed. Order pronounced in the open Court on this 13 th day of October, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 13 th day of October, 2023 Bt* ITA No. 263/Ahd/2023 Sharda Alloys Pvt Ltd. Vs. ACIT Assessment Years: 2017-18 Page 4 of 4 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad 1. Date of dictation: .... Words processed by Hon’ble JM on her laptop...12.10.2023 2. Date on which the typed draft is placed before the Dictating Member: ...12.10.2023.... 3. Date on which the approved draft comes to the Sr. P.S./P.S.: ...12.10.2023.... 4. Date on which the fair order is placed before the Dictating Member for Pronouncement: ......13.10.2023..................... 5. Date on which the file goes to the Bench Clerk : ......13.10.2023............. 6. Date on which the file goes to the Head Clerk : .................................. 7. The date on which the file goes to the Assistant Registrar for signature on the order: ...... 8. Date of Despatch of the Order: ........................