Appeal details
Counselvise Citation
[2024] 101 COUNSELVISE.COM (IT) 6157 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
01-07-2024
Appeal Filed By
Department
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
11-06-2024
Assessment Year
misc
Appeal Filed On
20-02-2024
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SMT. BEENA PILLAI, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA No.296/Bang/2024 Assessment year : 2017-18 The Assistant Commissioner of Income Tax, Circle 2(2)(1), Bangalore. Vs. Prakashchand Lacchiram Jain, 1 st Floor, BMTC Building, Koramangala 6 th Block, Bengaluru – 560 095. PAN : ABXPJ 0907D APPELLANT RESPONDENT Appellant by : Shri Subramanian S., Jt.CIT(DR)(ITAT), Bengaluru. Respondent by : Shri K.R. Vasudevan, Advocate Date of hearing : 12.06.2024 Date of Pronouncement : 02.07.2024 O R D E R Per Laxmi Prasad Sahu, Accountant Member This appeal is filed by the assessee against the order dated 08.01.2024 of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the AY 2017-18 on the following grounds:- “1. On the facts and circumstances of the case, the learned CIT(A) erred in deleting the addition of Rs. 2,21,98,000/- made by the AO u/s 68 of the IT Act, 1961. 2. On the facts and circumstances of the case, the learned CIT(A) erred in deleting the above mentioned addition as the ITA No.296/Bang/2024 Page 2 of 9 assessee has never produced the details of the persons including PAN and address either before the assessing officer or before the Ld. CIT(A). 3. On the facts and circumstances of the case, the learned CIT(A) erred in deleting the above mentioned addition as the assessee was not able to produce the confirmation of sales from third party either before the assessing officer or before the Ld. CIT(A). 4. On facts and circumstances of the case, the Ld. CIT(A) has not appreciated that the turnover of Rs 2,21,98,000/- has been reduced from the turnover and the corresponding income of Rs 13,62,957/- has also been reduced from the reported Income of the assessee and afterwards Rs 2,21,98,000/- has been added as unexplained cash deposits during the previous year which implies that Rs 2,21,98,000/- were not treated as sales receipts by the Assessing Officer. 5. On the facts and circumstances of the case, the learned CIT(A) erred in deleting the above mentioned addition as section 68 of the IT Act, 1961 states that in failure of satisfactory explanation of the nature and source of cash credits in the bank account, the assessing officer can invoke section 68 of the IT Act, 1961. In this case, the assessee failed to discharge the onus of proving the nature and source of cash credits made during demonetization time and thereby unexplained cash credits were added as Income by the assessing officer by invoking the section 68 of the IT Act, 1961. Hence, Ld. CIT(A) ought not to have deleted the addition made under section 68 of the IT Act, 1961.” 2. Briefly stated the facts of the case are that the assessee filed return of income on 07.09.2016 declaring income of Rs.46,64,480. The case was selected for scrutiny and statutory notices were issued to the assessee. During the assessment proceedings, the AO noted that assessee has deposited cash during the demonetisation period as under:- ITA No.296/Bang/2024 Page 3 of 9 3. The AO observed that the cash deposits were unusual and raised suspicion on genuineness of sales recorded by assessee and assessee was unable to give correct position of monthly closing balance cash in hand, details of sales and KYC were not furnished. Accordingly he treated the entire cash deposits in bank account as unexplained cash credit u/s 68 and taxed u/s. 115BBE of the Act. 4. The assessee filed appeal before the CIT(Appeals). The ld. CIT(A) after considering the submissions, cash book, sales register, monthly VAT return, VAT audit report, and sales invoices, day wise receipt of monthly savings scheme from each customer, noticed that cash balance on 01.04.2016 was Rs.59,82,342.47 and on 08.11.2016 was Rs.2,20,11,837.75. Comparing the cash deposits for FY 2015-16, 2016-17 & 2017-18 he noted that there is no abnormal cash deposits during the demonetisation period and AO has not mentioned any discrepancies in entries in cash book or sales register. He noted the entire cash is generated from sales consideration and monthly investment scheme and allowed the appeal of the assessee. Aggrieved, the revenue is in appeal before the ITAT. ITA No.296/Bang/2024 Page 4 of 9 5. The ld. DR relied on the order of the AO and supported the grounds of appeal and further submitted that documents submitted before the CIT(Appeals) were never submitted to the AO during assessment proceedings. The details of persons including PAN, KYC and address were also not submitted before the AO. The assessee was unable to produce confirmation of sales from third parties before the AO. The assessee failed to discharge the onus of proving the nature and source of cash deposits made during demonetisation period. Accordingly the AO rightly invoked section 68 of the Act. 6. The ld. AR relied on the order of the ld. CIT(Appeals) and submitted that entire details were submitted during the course of assessment proceedings which is evident from paperbook pages 1 to 769. The AO has not observed any defect in cash book produced during assessment proceedings. Sales registers were also produced. The KYC in case of sales for more than Rs.2 lakhs is not required to be obtained as per Rule 114B of the I.T. Rules, 1962. The cash received and cash deposits in bank account for FY 2015-16 to 2017-18 comparatively is placed in the PB. He relied on the following judgments in support of his arguments:- - M/s. Manasa Medicals (ITA No.552/Bang/2022) - M/s. Sahana Jewellery (ITA No.999/Chny/2022) 7. He further submitted that the books of accounts has been audited and AO has not found any mistake and not rejected the books of account and made addition u/s 68 which is completely wrong. ITA No.296/Bang/2024 Page 5 of 9 8. In the rejoinder, the ld. DR submitted that the CIT(Appeals) has not called remand report from the AO and accepted the documents submitted by the assessee. He submitted that the assessee is maintaining huge cash in hand in spite of maintaining bank account and during the period of demonetisation substantial amount is deposited into the bank account. He relied on the decision of the coordinate Bench of Tribunal in ITA No.375 & 564/Bang/2022, AY 2017-18, order dated 15.9.2022 in the case of Bhoopalam Marketing Services Pvt. Ltd. He further submitted that for cash deposits during demonetisation period the CBDT has framed SOP and issued notifications from time to time, but in the light of the said Notifications both the revenue authorities have not considered the issue. Therefore, he requested that the matter may be sent back to AO for fresh consideration in the light of the above judgment. 9. Considering the rival submissions we note that the AO has made addition u/s. 78 of the entire cash deposited during the demonetisation period of Rs.2,21,98,000 for want of proper explanation from assessee’s side and there was cash deposit during demonetisation period of Rs.1,72,98,000 as noted supra. We are in agreement with the submissions made by the ld. DR. We further note the following cash deposits : Sl. No. Date Bank Amount Rs. 1. 11.11.2016 Axis Bank 9,00,000 2. 11.11.2016 Bank of India 9,00,000 3. 12.11.2016 Axis Bank 8,98,000 4. 14.11.2016 Axis Bank 15,00,000 ITA No.296/Bang/2024 Page 6 of 9 5. 15.11.2016 Axis Bank 50,00,000 6. 15.11.2016 Bank of India 50,00,000 7. A/c No. 840610100010763 2,00,000 8. 17.11.2016 Axis Bank 20,00,000 10. We note from the cash book of assessee that assessee had maintained huge cash balance and it is surprising that assessee did not deposit any cash in his bank account from 1.4.2016 to 8.11.2016 and in the very short period of demonetisation assessee deposited huge cash, this requires explanation. The assessee is also filed month wise opening cash receipts, cash deposit and closing cash in hand since April, 2015 to 8.11.2016. We also note that from page 35 onwards of PB for Sept. 2016 opening cash in hand is Rs.1,11,75,456 and cash receipt is Rs.9,22,869, however closing balance has been arrived at Rs.11,09,04,347 and the same figure for Oct. 2016 has been taken as opening cash balance and cash receipts is Rs.1,20,04,260 and closing balance is Rs.2,33,27,999. However the opening cash balance plus receipts for the month of September is Rs. 1,21,03,325 ( 1,11,75,456+9,27,869). The month of October 2016 is also wrong it should be as per the details available Rs. 2,41,07,585 (1,21,03,325+1,20,04,260) In this regard, the ld. AR submitted that there is a typographical mistake. These mistakes have not been observed by any of the lower authorities and there is no comment found. The ld. DR has relied on the decision in the case of Bhoopalam Marketing Services P. ltd. noted supra in which it has been held as under:- ITA No.296/Bang/2024 Page 7 of 9 “7.1 We have carefully gone through the various standard operating procedures laid down by the central board of direct taxes issued from time to time in case of operation clean. The 1st of such instruction was issued on 21/02/2017 by instruction number 03/2017. The 2nd instruction was issued on 03/03/2017 instruction number 4/2017. The 3rd instruction was in the form of a circular dated 15/11/2017 in F.No. 225/363/2017-ITA.II and the last one dated 09/08/2019 in F.no.225/145/2019-ITA.II. These instructions gives a hint regarding what kind of investigation, enquiry, evidences that the assessing officer is required to take into consideration for the purpose of assessing such cases. 8. In 1 of such instructions dated 09/08/2019 speaks about the comparative analysis of cash deposits, cash sales, month wise cash sales and cash deposits. It also provides that whether in such cases the books of accounts have been rejected or not where substantial evidences of vide variation be found between these statistical analyses. Therefore, it is very important to note that whether the case of the assessee falls into statistical analysis, which suggests that there is a booking of sales, which is non- existent and thereby unaccounted money of the assessee in old currency notes (SBN) have been pumped into as unaccounted money. 8.1 The instruction dated 21/02/2017 that the assessing officer basic relevant information e.g. monthly sales summary, relevant stock register entries and bank statement to identify cases with preliminary suspicion of back dating of cash and is or fictitious sales. The instruction is also suggested some indicators for suspicion of back dating of cash else or fictitious sales where there is an abnormal jump in the cases during the period November to December 2016 as compared to earlier year. It also suggests that, abnormal jump in percentage of cash trails to on identifiable persons as compared to earlier histories will also give some indication for suspicion. Non-availability of stock or attempts to inflate stock by introducing fictitious purchases is also some indication for suspicion of fictitious sales. Transfer of deposit of cash to another account or entity, which is not in line with the earlier history. Therefore, it is important to examine whether the case of the assessee falls into any of the above parameters are not. ITA No.296/Bang/2024 Page 8 of 9 8.2 The assessee is directed to establish all relevant details to substantiate its claim in line with the above applicable instructions. We are aware of the fact that not every deposit during the demonetisation period would fall under category of unaccounted cash. However the burden is on the assessee to establish the genuineness of the deposit in order to fall outside the scope of unaccounted cash. The Ld.AO shall verify all the details / evidences filed by the assessee based on the above direction and to consider the claim in accordance with law. Needless to say that proper opportunity of being heard must be granted to the assessee. The assessee may be granted physical hearing in order to justify its claim. In the result, the appeal filed by assessee as well as the appeal of revenue stands allowed for statistical purposes.” 11. We note that CBDT has issued Notifications from time to time for operation clean money and both the revenue authorities have not considered the case of the assessee in light of the same. Respectfully following the above judgment, we remit this issue to the AO for fresh consideration and decision as per law in the light of above decision. 12. In the result, the appeal by the revenue is allowed for statistical purposes. Pronounced in the open court on this 02 nd day of July, 2024. Sd/- Sd/- ( BEENA PILLAI ) (LAXMI PRASAD SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore, Dated, the 02 nd July, 2024. /Desai S Murthy / ITA No.296/Bang/2024 Page 9 of 9 Copy to: 1. Appellant 2. Respondent 3. Pr.CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore.
