Anil Kumar Rathi, Hyderabad V. ITO, Ward-5(1), Hyderabad

ITA 29/Hyd/2023

AI Insights

The case involves Anil Kumar Rathi, an individual engaged in retail and wholesale business, who appealed against the order of the Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre, Delhi. The dispute arose from the assessment year 2017-18, where the Assessing Officer added Rs. 21,48,000 to the assessee's income, suspecting the genuineness of the sales bills during the demonetisation period. The assessee argued that the bills' format does not affect the transaction's genuineness, and the VAT/GST returns could verify the transactions. The Tribunal found that the lower authorities did not adequately verify the cash balance and sales pattern and thus set aside their orders for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133399 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-02-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 05-01-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reason to believe
• Section: 44AB

Judgement Text

आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “SMC”, HYDERABAD BEFORE SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER आ.अपी.सं / ITA No. 29/Hyd/2023 (निर्धारण वर्ा / Assessment Year: 2017-18) Anil Kumar Rathi, Hyderabad [PAN No. ADOPR7989J] Vs. Income Tax Officer, Ward-5(1), Hyderabad अपीलधर्थी / Appellant प्रत्‍यर्थी / Respondent निर्धाररती द्वधरध/Assessee by: Shri Siddharth Toshnival, AR रधजस्‍व द्वधरध/Revenue by: Ms. P. Sumitha, DR सुिवधई की तधरीख/Date of hearing: 23/02/2023 घोर्णध की तधरीख/Pronouncement on: 27/02/2023 आदेश / ORDER Aggrieved by the order dated 09/11/2022 passed by the learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), in the case of Anil Kumar Rathi (“the assessee”) for the assessment year 2017-18, assessee preferred this appeal. 2. Assessee is an individual. He is carrying on business impact on retail and wholesale basis. He filed the return of income for the assessment year 2017-18 on 7/11/2017 declaring an income of Rs. 18,700/-. Learned Assessing Officer found that during the demonetisation period the assessee deposited a sum of Rs. 15,48,000/- on 7/12/2016 in the form of old demonetised currency and also a sum of Rs. 6 lakhs on 22/12/2016. ITA No. 29/Hyd/2023 Page 2 of 6 3. Basing on the information furnished by the assessee, learned Assessing Officer recorded that the cash deposited pertains to the business receipts only, but the learned Assessing Officer observed that the bills uploaded by the assessee were not as per the prescribed sale bill format, no information with reference to the name of the purchaser, name and address of the seller, bill number, VAT/GST number, description of goods etc., were not visible and not available on the sale bills. On this premise, learned Assessing Officer added the total amount of Rs. 21,48,000/- to the income of the assessee. 4. Assessee preferred appeal before the Ld. CIT(A) and contended that having not found any discrepancy in the books of accounts and not rejecting the same, it is not open for the learned Assessing Officer to show certain frivolous discrepancies to make the addition in question. It was also contended that the assessee is maintaining the books of accounts regularly and audited under section 44AB of the Income Tax Act, 1961 (for short “the Act”). 5. Ld. CIT(A), however, observed that the assessee failed to prove the genuineness of the bills as found out by the learned Assessing Officer and, therefore, the addition had to be confirmed. Ld. CIT(A) accordingly confirmed the addition and dismissed the appeal. 6. Assessee is therefore before me in this appeal, stating that the form of bill does not prove the genuineness of the transaction of sale, and when once the VAT/GST returns were also furnished, the genuineness of the transactions could have been tested with reference to such information and also keeping in view the pattern of the business conducted by the assessee. As a matter of fact, never the learned Assessing Officer disputed the cash sales conducted by the assessee and also during the months of October and November, 2016 the cash sales were reduced. Grievance of the assessee is that the authorities failed to consider the contentions raised by the assessee in their proper perspective. ITA No. 29/Hyd/2023 Page 3 of 6 7. Ld. DR heavily placed reliance on the orders of the authorities below and stated that the cash on hand at the closing of 8/11/2016 has to be justified with proper and acceptable evidence, and since the assessee failed to produce such clinching evidence, the authorities below are justified in making and sustaining the addition. 8. I have gone through the record in the light of the submissions made on either side. According to the cash book the extracts of which are produced by the assessee, the assessee had shown a cash balance of Rs. 15,16,742/-. Whether or not this fact is trustworthy could be verified through the other material supposed to be maintained by the assessee. Assessee submits that he has been submitting the VAT statements regularly. Further the learned Assessing Officer could also verify whether or not the assessee has been conducting cash sales, having regard to the nature of business of the assessee. These sales could be verified with reference to the VAT statements for the relevant period. 9. According to the assessee, as on 1/4/2016, the opening balance was Rs. 17,59,972/- and this fact could be verified from the ITR and audited accounts of the assessee. During the year, according to the assessee the sales upto 8/11/2016 are to tune of Rs. 37,24,591/- and the final cash balance as on 8/11/2016 was shown. The learned Assessing Officer can verify the pattern of the cash sales of the assessee during the demonetisation period vis-à-vis the rest of the year, the genuineness of the sales with reference to the VAT statements etc. 10. Apart from this vide instruction No. 03/2017, dated 21/2/2017 the Central Board of Direct Taxes instructed that for seeking information and analysing the instances of deposits of the specified banknotes, with a view to maintain consistent approach, the source of specific verification guidelines were given in annexure how to be followed. Vide paragraph 1.4 of the annexure, it is specified that in case of persons engaged in the business of the requirement to maintain books of accounts, no additional ITA No. 29/Hyd/2023 Page 4 of 6 information is required to be submitted by the person under verification, is total cash out of failure income or savings is not more than the closing the cash balance as on 31/3/2016, with the rider that if the learned Assessing Officer has any reason to believe that the closing cash balance as on 31/03/2016 was increased by revising the return or backdating transactions in the books of accounts, further education may be carried. 11. In this case, the closing balance as on 31/3/2016 for shown by the assessee as Rs. 17, 59, 972/-and this fact could be verified from the ITR and the audited accounts of the assessee. Under the instruction at 1.4 of the annexure the condition of verification of total cash out of failure income, being less than the closing balance as on 31/3/2016 stands satisfied. If for any reason the learned Assessing Officer deems it necessary, but the learned Assessing Officer can verify the correctness of the closing balance as on 18/11/2016 with reference to the sale is during the year and VAT statements are is submitted by the assessee. Without undertaking this exercise, merely because the sales bills uploaded by the assessee are not in the format expected by the learned Assessing Officer, it cannot be said that the genuineness of the assessee holding a part of an amount as the closing cash balance as on 8/11/2016, was not properly approved. The correctness of the cash balance does not depend upon the particular format of the cash bills. 12. With this view of the matter, I am of the considered opinion that this is a fit case to set aside the orders of the authorities below and to restore the issue to the file of the learned Assessing Officer with a direction to have a fresh look and to verify the correctness of the quantum of the closing balance of cash as on 8/11/2016 with reference to the other attendant circumstances like the assessee entertaining the cash sales, the pattern of such sales during the year, with reference to the VAT statements submitted by the assessee. I accordingly set aside the impugned orders ITA No. 29/Hyd/2023 Page 5 of 6 and restore the issue to the file of the learned Assessing Officer to comply with the above direction. 13. In the result, appeal of the assessee is treated as allowed for statistical purpose. Order pronounced in the open court on this the 27 th day of February, 2023. Sd/- (K. NARASIMHA CHARY) JUDICIAL MEMBER Hyderabad, Dated: 27/02/2023 TNMM ITA No. 29/Hyd/2023 Page 6 of 6 Copy forwarded to: 1. Anil Kumar Rathi, C/o. Siddharth Toshnival, Advocate, 3-5-144/5, Eden Garden, Hyderabad. 2. Income Tax Officer, Ward-5(1), Hyderabad. 3. DR, ITAT, Hyderabad. 4. GUARD FILE TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD