Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 133741 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 1 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
10-01-2023
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Next Hearing Date
12-10-2022
Assessment Year
2017-2018
Appeal Filed On
30-11-2021
Judgement Text
आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,च瀃डीगढ़ 瀈यायपीठ च瀃डीगढ़ 瀈यायपीठच瀃डीगढ़ 瀈यायपीठ च瀃डीगढ़ 瀈यायपीठ , च瀃डीगढ़ च瀃डीगढ़च瀃डीगढ़ च瀃डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘B’ CHANDIGARH BEFORE: SMT. DIVA SINGH, JUDICIAL MEMBER & SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर आयकरआयकर आयकर अपील अपीलअपील अपील सं संसं सं./ ITA No. 389/CHD/2021 Assessment Year : 2017-18 The DCIT, Central Circle-II, Ludhiana. बनाम VS Shri Munish Avasthi, 172 Col. Gurdial Singh Road, Civil Lines, Ludhiana. 瀡थायी लेखा सं./PAN /TAN No: AAEPA1819K अपीलाथ牸/Appellant 灹瀄यथ牸/Respondent राज瀡व क琉 ओर से/ Revenue by : Smt. Amanpreet Kaur, Sr. DR िनधा榁琇रती क琉 ओर से/Assessee by : Shri Ashwani Kumar, C.A. तारीख/Date of Hearing : 13.10.2022 उदघोषणा क琉 तारीख/Date of Pronouncement : 11.01.2023 आदेश आदेशआदेश आदेश/ORDER PER DIVA SINGH The present appeal has been filed by the Revenue wherein the correctness of the order dated 27.09.2021 of CIT(A)-5 Ludhiana pertaining to 2017-18 assessment year is assailed on the following grounds : “1. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition without considering the facts that neither the assessee submitted the confirmations of persons from whom cash was received nor produced them during the assessment proceeding after many opportunities provided to the assessee. 2. The Appellant craves leave to add , amend, modify, vary, omit or substitute any of the aforesaid grounds of appeal any time before or at the time of hearing of the appeal. ITA 389 /CHD/2021 A.Y. 2017-18 Page 2 of 11 2. Inviting attention to the assessment order, the ld. Sr.DR submitted that the assessee was required to explain the cash deposits during the demonetization period. The reply of the assessee filed before the AO was considered to be not acceptable. 2.1 Inviting attention to para 4.5 of the assessment order the ld. Sr.DR submitted that the assessee was found to be making contradictory replies and ultimately the assessee stated that “the details of the parties from whom such amounts were received were not maintained”. It was submitted that the confirmations from the persons from whom cash was received were not produced. As a result of this, addition of Rs.80,94,250/- was made in the hands of the assessee. 2.2 Inviting further attention to the impugned order, it was her submission that without requiring the assessee to explain the sources and the parties from whom the receivables were received and deposited, the addition has been deleted and this is what has been highlighted by the Revenue in the ground raised. Accordingly, it was her prayer that the impugned order may be set aside and the assessment order instead may be upheld as on facts the assessee has failed to identify the parties. ITA 389 /CHD/2021 A.Y. 2017-18 Page 3 of 11 3. The ld. AR on the other hand relied upon the submissions advanced before the AO extracted in para 4.1 of his order and the submissions advanced before the CIT(A) supported by the written submissions filed before the Bench appearing in Paper Book pages 1 to 9; and the detailed submissions advanced before the CIT(A) addressing the past history on the issue alongwith statement of affairs as it 31.03.2013 and 31.07.2014 available at pages 10 to 22. Copy of the letter submitted before the Joint Director of Income Tax, Ludhiana offering additional income declared during the course of the search carried on 24.10.2013 available at pages 23 to 28 was relied upon. Copies of Income Tax Returns alongwith computation of income for 2013-14 and 2014-15 assessment years and copies of the respective assessment orders available at pages 29 to 37 and 38 to 43 were relied upon. Copies of statement of affairs as it 31.03.2015 and 31.03.2016 at pages 44 to 45 in the Paper Book were also relied upon. Based on this supporting evidences and the submissions recorded in the respective orders, the conclusion arrived at by the CIT(A) was heavily relied upon. It was further argued in support of the order that these were receivables of the assessee on which the assessee admittedly paid tax and these the assessee has received over a period of time and these have been deposited ITA 389 /CHD/2021 A.Y. 2017-18 Page 4 of 11 during this period. The availability of cash and receivables with the assessee over a period of time is a fact not in dispute. It was submitted that it is old admitted surrendered income. Appropriate entries in the respective accounts over the years right from 2013-14 assessment year have been made and they demonstrate this fact. Accordingly, it was his prayer that the addition on facts may be deleted. Reliance was placed upon decision of the Apex Court in the case of Ashish Plastic Industries Vs ACIT 373 ITR 45 (S.C) so as to submit that the facts are identical as the issue for consideration is that it would amount to double taxation as the assessee herein has already paid due taxes on it. 4. We have heard the rival submissions and perused the material available on record. On a consideration of the factual matrix as available on record, we find that the appeal of the Revenue has to be dismissed. Before arriving at this conclusion, we have taken into consideration not only the facts of the present case and the finding arrived at but also the position of law as considered by the Apex Court referred to for our consideration by the ld. AR. We are further guided by the fact that the factual reasons for deleting the addition as brought on record by the ld. CIT(A) remained unrebutted. Accordingly, first we set out the specific reasoning which has led to the grievance caused to ITA 389 /CHD/2021 A.Y. 2017-18 Page 5 of 11 the Revenue. For ready reference, para 4.2 of the impugned order is extracted hereunder : "4.2 Grounds of Appeal Nos. 2 & 3 relate to addition of Rs. 80,94,250/- on account of cash deposited in the bank account of the assessee. The AO has mentioned that the assessee is an individual having salary income from M/s. Sporting India Ltd., partner in M/s. Sobhagia Clothing Company and the return was filed declaring an income of Rs. 1,28,16,731/- which includes apart from the above, rental income, agriculture income and income from other sources. It is further mentioned that the case was selected for limited scrutiny for the reason that the assessee has made large value of cash deposit during the demonetization period and accordingly vide notice u/s 142(1), the assessee was asked to explain the source of cash deposit and also to explain reason for making large cash deposits during the demonetization as compared to the returned income. The response filed by the assessee vide reply dated 07.10.2019 is reproduced in the assessment order wherein the assessee stated that during the course of search conducted in Sportking Group of cases, the assessee surrendered a sum of Rs. 2.35 crore on account of undisclosed income in various years earned out of trading of textile fabrics and invested in associated concern, cash & other receivables. The assessee submitted that these investments form part of statement of affairs for various years starting from 31.03.2013 which were also filed during the course of assessment proceedings u/s 153A and in response to summons, after demonetization. The assessee claimed that there was balance of Rs. 83.66 lacs under the head receivables and during the year the same were liquidated and received in cash which was one of the source of cash deposit in the various accounts. It was also stated that the assessment for the year 2008-09 to 2014-15 were already completed where various details in respect of cash sales, total sales, cash-in-hand etc. were filed. After receiving the reply, the assessee was asked to give detail of the identity of the person from whom he has received Rs. 83.66 lacs in cash (Rs. 25 lacs in July, 2016; Rs. 35 lacs in August, 2016 and Rs. 23,65,650/- in October, 2016) and nature of the transaction along with details of currency received. The assessee was also asked to produce those persons for examination. It was also asked that the assessee was maintaining cash-in-hand of less than Rs. 2 lacs in Financial Year 2014-15 & 2015-16 but in Financial Year 2016-17, the 'cash-in- hand was above Rs. 25 lacs in the month of July, 2016 to November, 2016. As per the AO, no reply was received and then a final show-cause notice dated 29.11.2019 was given which is reproduced in the assessment order where reference of earlier notice and reply was mentioned and assessee was show- cause as to why the cash amounting to Rs. 80,94,250/-credited in the bank account during the demonetization period should not be considered as unexplained money and charged as income u/s 69A of the Income Tax Act, 1961. The reply dated 03.12.2019 filed by the assessee is reproduced in the assessment order where the assessee submitted that the with regard to the name & address no such details were available with the assessee. It was further submitted that the additional incomes of Rs. 50 lacs during the assessment year 2013-14 and Rs.185 lacs during the assessment year 2014-15 were duly ITA 389 /CHD/2021 A.Y. 2017-18 Page 6 of 11 declared in the return filed and assessment order was passed on 23.03.2016 where the income declared as business income stand duly accepted. As per the assessee, out of the total income declared, a sum of Rs. 83,65,650/- was outstanding as amount receivable in balance sheet of the assessee as on 31.03.2016 and the same amount was received by the assessee during the months of July, August and October, 2016, the details of parties from whom such amounts were received were not maintained. It was further argued that the amount reflected in the balance sheet were part of the income already offered for taxation which have already been accepted. As per the assessee, he has already discharged his tax liabilities in earlier years in respect of surrendered/recovered income and relied upon the judgment of Hon'ble Punjab & Haryana High Court in the case of DCIT (Inv.) Circle, Faridabad vs. Om Parkash Aggarwal (HUF) reported in 53 Taxmann.com 395 and further the AR referred to the judgment of Hon'ble Supreme Court in the case of Ashish Plastic Industries vs. ACIT reported in 373 ITR P. 45 where it was held that in a circumstances, where the assessee was able to prove that tax on income declared from sale of aforesaid material had been paid by the sister concern, benefit thereof should be extended to the assessee whereas in the instant case, tax has been paid by the assessee himself on Rs. 83.66 lacs in the earlier years. The assessee also referred to the cash balances in different years and submitted that no specific reason can be attributed for the same. Regarding the application of Section 69A, the assessee submitted that the provision is attracted wherein, the assessee is found to be the owner of any money not recorded in the books of accounts or the assessee offers no explanation about the nature & source of acquisition of the money or the explanation so offered is not satisfactory and argued that in the present case, the amount deposited is only out of amount already offered to tax in the earlier years. It was submitted that therefore the amount deposited in the bank cannot be treated as unexplained. The reply of the assessee was considered but not found acceptable by the AO who observed that the different replies were submitted by the assessee during the demonetization period and during the assessment proceedings. As per the AO, regarding the identity of the person from whom the cash was received, on one side it is mentioned that "no such details are readily available with the assessee at this moment" and later on it is mentioned "the details of the parties from whom such amounts were received, were not maintained". It is further mentioned by the AO that the assessee neither submitted confirmation of the persons from whom the cash was received nor produced them during the assessment proceedings, thus it is only an afterthought of the assessee and the assessee has tried to get the benefit of old admitted surrender. As per the AO, the assessee has claimed receivables from the trading in textiles but did not provide even VAT or TIN No. and it was beyond probability that receivables would be received from unknown persons in the months before demonetization and the assessee would deposit the same in the SBNs. The justification for late deposit being laziness on the part of the assessee was also not found tenable. The AO by placing reliance in the case of CIT vs. Miscellaneous Application Unnerikutty (1985) 154 ITR 844 (Kerala) held that the assessee could not explain the source of cash deposits and the same are considered to be unexplained money u/s 69A of the Income Tax Act, 1961 and addition of Rs. ITA 389 /CHD/2021 A.Y. 2017-18 Page 7 of 11 80,94,250/- was made to the income of the assessee on account of unexplained money u/s 69A of the Income Tax Act, 1961. The facts of the case, the basis of addition made by the AO and the arguments of the AR during the course of appellate proceedings have been considered. The AR reiterated that the appellant declared certain income in the return for the assessment year 2013-14 & 2014-15 which were duly accepted by the then AO while framing assessment u/s 153A for the relevant assessment year, out of which some amount was standing in the balance sheet as amount receivables which was liquidated in cash during the year under consideration and deposited in the bank account. The AR submitted that at the time of demonetization a sum of Rs. 80,94,250/- was deposited and during the course of assessment proceedings, the assessee was asked to submit the details along with the sources, in response to which the assessee had submitted that during the search u/s 132 on 24.10.2013 the appellant declared a sum of Rs. 50 lacs in assessment year 2013-14 and Rs. 185 lacs in assessment year 2014-15 as additional income which was duly declared while filing the returns of income. The said income was stated to have been earned out of trading of textiles and invested in gold/diamond jewellery, Long Term Capital Gain, capital invested in associate concerns, cash and other receivables. As per the AR, all these investment form part of statement of affairs for various years starting from the year ended on 31.03.2012 and out of the said amount, part amount of Rs. 83.66 lacs held under the head receivables was liquidated and received in cash during the year under assessment. The statement of affairs was duly accepted by the AO while framing the assessment u/s 153A for assessment year 2013-14 onwards. As per the AR, now while framing the assessment u/s 143(3) the AO rejected the contention of the appellant by stating it to be an afterthought and that the appellant has tried to get the benefit of old admitted surrendered income. The AR referred to the provision of Section 69A and argued that only such amount which the assessee is owner and which has not been recorded in the books of accounts, if any, maintained by the assessee, can be held to be unexplained money in the hands of the assessee u/s 69A of the Act. As per the AR, in the present case, the assessee has time and again reiterated before the AO that the cash deposit was out of receivables shown in the asset side of the balance sheet. As per the AR, these receivables were already taxed at the time of surrender of income in the earlier years accepted by the then AO, also during the course of assessment statement of affairs were submitted which clearly depicts the amount outstanding as receivables. The AR argued that when the said amount have already been declared by the appellant and tax thereon has been paid, then there is no good reason to doubt the said transaction especially when the said sum has already been accepted by the department in assessee's own case. As per the AR the cash deposit from old receipts cannot be said to be unexplained which are duly recorded in the books maintained by the assessee which were liquidated in this year and cash was deposited out of said source. The AR referred to various case laws in support of his contention and argued that as per the tax laws jurisprudence, a sum when already offered to tax can in no circumstances be taxed again and same would tantamount to double taxation. As per the AR, in such circumstances no deeming provisions should be invoked in the year under consideration by placing reliance on ITA 389 /CHD/2021 A.Y. 2017-18 Page 8 of 11 various case laws. It is further submitted by the AR that there is nothing on record to refute the appellant's submissions or to even remotely indicate any other source of income from where the said sum can possible be earned by the appellant during the year under consideration. As per the AR, throughout the assessment proceedings, the AO has not challenged or disputed the statement of affairs already submitted before him and he has not pointed out any defect based upon which it can be said that the amount have not been realized out of the receivables. The AR referred to a case law where the assessee surrendered an income of Rs. 5 crore in the assessment year 2010-11 and disclosed it as sum recoverable in respect of advances to various parties and the same forms part of Statement of Affairs as on 31.03.2010. Further, as and when the advances were liquidated, the same were received back in cash and deposited in various bank accounts of that appellant and as such the same relates to undisclosed income surrendered during the course of search which has already been subject to tax in assessment year 2010-11. As regards the change of stand about the identity of the persons concerned/ parties, the AR has submitted that the existence of such receivable is not in doubt as these were surrendered during the search and accepted by the department and tax has been paid in respect of these amounts and that these were being reflected on the asset side of the statement of affairs of the assessee filed before the AO from 31.03.2013 onwards. To verify these contentions/claims of the AR, the assessment record for Assessment Years 2013-14 & 2014-15 also were called from the AO and it is seen that during the Assessment Year 2013-14 the assessee had declared the sum of Rs. 50 Lakh as income offered u/s 132(4) under the head 'Other Income(s)' and in reply to the query by the AO the details were submitted vide letter dated 17.03.2016 as under: Surrender on account of (A.Y. 2013-14) Amount (in Rs.) Diamond 1117500 Receivables/other valuables 3882500 Total 5000000 The statement of affair in the shape of balance sheet as on 31.03.2013 was also filled alongwith the letter dated 02.02.2016 where the amount of Rs. 38,82,500/- was shown on the assets side as 'other assets due to surrender' (with opening balance 0.00). The fact of surrender of Rs. 50 Lakh on account of income earned from trading of textile fabrics as per the statement of the assessee and offering of this income as additional income over and about the normal income has also been mentioned in the assessment order dated 23.03.2016 passed under section 153A for assessment year 2013-14. Similarly from the assessment record for Assessment Year 2014-15, it is seen that during the Assessment year 2014-15 the assessee has declared the sum of Rs. 18500000 as income offered u/s 132(4) under the head 'Other Income(s)' and in reply to the query by the AO, the details were submitted vide letter dated 17.03.2016 as under:- Surrender on account of (A.Y. 2014-15) Amount (In Rs.) Diamond 2235000 ITA 389 /CHD/2021 A.Y. 2017-18 Page 9 of 11 Receivables/other valuables 4483150 Investment in Sobhagia Clothing co. 4900000 Long Term Capital Gain 6881850 Total 18500000 The statement of affair in the shape of balance sheet as on 31.03.2014 was also filled alongwith the letter dated 02.02.2016 where the amount of Rs. 15247500/- was shown on the assets side as 'other assets due to surrender' (with opening balance Rs. 3882500/-). The fact of surrendered of Rs. 18500000/- as undisclosed business income from trading of textile fabrics as per the statement of the assessee and offering of this income as additional income over and about the normal income has also been mentioned in the assessment order dated 23.03.2016 passed under section 143(3) for assessment year 2014-15. The amount reflected in the balance sheets were a part of income early offered for taxation which had duly been accepted by the AO in the relevant year. The bare reading of section 69A reveals that this provision is attracted where the assessee is found to be the owner of any money which is not recorded in the books of accounts maintained by him for any source of income and the assessee offers no explanation about the nature & source of acquisition of money or explanation so offered is not satisfactory. In the present case, the amount deposited is only out of the amount already offered to tax in the earlier years, as income surrendered during A.Y. 2013-14 and 2014-15, which has been duly accepted by the then AO. There is merit in the argument of the AR that under such circumstances cash deposit from old receivable cannot be said to be unexplained. The assessee has all along maintained the stand that these are out of receivables. The existence of receivables and payment of tax on these amounts is already on the assessment record relating to assessment year 2013-14 & 2014-15. The assessee has paid tax on these amounts. Therefore taxing the sum again will amount to double taxation. The identity & details of receivables was never called in question at the time of surrender made through the letter to JCIT/Addl. DIT (Inv.), nor during the assessment year 2013-14 & 2014-15 by the AO. Once the surrender in cash & receivables are accepted by the department and the receivables have been T liquidated during the year and not appearing i n the statement of affairs as on 31.03.2017 onwards, then it has t o be assumed that cash received is out of these receivables. This is not a case of creating of new asset by the assessee and rather the receivables appearing on the asset side of balance sheet have change to cash. Thus, it is not a case that assessee is found to be owner of any unaccounted asset making it liable for addition u/s 69A. Once the overall surrender & its components have been accepted in past, then i t cannot be reopened now, because a certainty has to be reached for the assessee. Tax has already been paid on this sum, therefore charging the tax again would amount to double taxation. Therefore, to conclude, from the very beginning, the assessee has explained the source of cash deposit as 'liquidation of receivables' and the existence of the receivables is not in doubt as these were part of surrendered income u/s 132(4), duly assessed during the assessment year 2013-14 & 2014-15. This is not a case of creation of new asset by the assessee, rather the receivables were appearing on the asset side of the balance sheet and it has changed the shape as cash returned from those receivables without affecting the overall figure of assets. One form of assets has changed to another from i.e. from the receivables to cash/bank ITA 389 /CHD/2021 A.Y. 2017-18 Page 10 of 11 balance. The assessee has not introduced any new asset in the books of accounts. Hence, the arguments of the AR are found acceptable and the addition of Rs. 80,94,250/- made by the AO u/s 69A is not found sustainable and therefore deserves to be deleted.” 4.1 We find that the position of fact as appreciated in as much as that the receivables have already been subjected to tax is not in dispute. Accordingly, in these peculiar facts, we find no good reason to interfere with the impugned order. We further find support from the decision of the Apex Court wherein in the case of Ashish Plastic Industries (2015) 373 ITR 45 (S.C.), the issue was remanded back to consider whether the assessee was able to prove that tax on the income generated from the sale of material had been paid to that extent, the Court held that the benefit should be extended to the assessee. For ready reference, we reproduce from the Head Notes : “ In survey operations conducted at the factory premises of the assessee o n September 23, 1993, the stocks at the premises were physically verified and excess stocks worth Rs. 13,92,000 were found and admitted. On this basis the addition was made and the assessment order was passed by the assessing authority in respect of the assessment years 1992-93 and 1993-94. Before the Commissioner (Appeals), the assessee sought to explain this difference stating that up to September 23,1993, sales of 32,809 kgs. of finished products were made by one of the sister concerns of the assessee, and these were wrongly shown to be of the assessee. The assessee was asked to produce the books of account of the sister concern for the two assessment years. The sales of the finished products of 32,809 kgs. as shown in the sales register of the si ster concern tallied with the impounded stock register, the sales proceeds were shown to have been received by the sister concern through its bank account and the cheques received against those sales had been cleared even prior to the date of survey. Notwithstanding this finding, the Commissioner (App eals) upheld the order of the assessing authority. ITA 389 /CHD/2021 A.Y. 2017-18 Page 11 of 11 This order was upheld by Appellate Tribunal and the High Court dismissed the appeal of the assessee on the ground that no substantial question of law arose. Upon the assessee's special leave petition, the court granted special leave limited to the question whether in respect of sales of 32,809 kgs., which were shown in the register of the sister concern, there had been double taxation : H e l d, that the orders of the authorities should be sustained but if the assessee was able to prove that tax on the income generated from the sale of 32,809 Kgs. of material had been paid by the sister concern, to the exte nt was paid, benefit should be extended to the assessee. [Matter remanded.] Decision of the Gujarat High Court affirmed with directions. 5. In the result, the appeal of the Revenue is dismissed. Order pronounced in the Open Court on 11 th January, 2022. Sd/- Sd/- (VIKRAM SINGH YADAV) (DIVA SINGH) लेखा लेखालेखा लेखा सद瀡य सद瀡यसद瀡य सद瀡य/ Accountant Member 瀈याियक 瀈याियक瀈याियक 瀈याियक सद瀡य सद瀡यसद瀡य सद瀡य/ Judicial Member “Poonam” आदेश क琉 灹ितिलिप अ灡ेिषत/ Copy of the order forwarded to : 1. अपीलाथ牸/ The Appellant 2.灹瀄यथ牸/ The Respondent 3.आयकर आयु猴/ CIT4.आयकर आयु猴 (अपील)/ The CIT(A)5. िवभागीय 灹ितिनिध, आयकर अपीलीय आिधकरण, च瀃डीगढ़/ DR, ITAT, CHANDIGARH 6.गाड榁 फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar
AI Insights
The case revolves around an appeal by the Revenue against the order of the CIT(A) which had deleted an addition made by the AO on account of unexplained cash deposits during the demonetization period in India. The AO had added Rs. 80,94,250 to the income of Shri Munish Avasthi, the respondent, alleging that he failed to provide satisfactory explanations and confirmations regarding the sources of these cash deposits. The CIT(A) found that these amounts were from receivables that had been declared and taxed in previous years, and thus, the addition was unjustified. The Tribunal agreed with the CIT(A), emphasizing that the income had been previously declared and taxed, and re-assessing it would lead to double taxation.
