Seven Energies Limited, Hyderabad V. Income Tax Officer., Ward-3(1), Hyderabad

ITA 520/Hyd/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1150 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-06-2024
• Assessment Year: misc
• Appeal Filed On: 03-05-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M NAVEEN KUMAR
• Section: 68

Judgement Text

आयकर अपीलीय अिधकरण, हैदराबाद पीठ मŐ IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “SMC”, HYDERABAD BEFORE SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER आ.अपी.सं / ITA No. 520/Hyd/2024 (िनधाŊरण वषŊ / Assessment Year: 2017-18) Seven Energies Limited, HIG 85, Phase 5, KPHB Colony, Hyderabad. Telangana – 500085. [ PAN:AAOCS4784N ] Vs. Income Tax Officer Ward 3(1) Hyderabad अपीलाथŎ / Appellant Ů̝ यथŎ / Respondent िनधाŊįरती Ȫारा/Assessee by: Assessee राज̾ व Ȫारा/Revenue by: Shri M Naveen Kumar, DR सुनवाई की तारीख/Date of hearing: 13/06/2024 घोषणा की तारीख/Pronouncement on: 05/07/2024 आदेश / ORDER Aggrieved by the order dated 21/03/2024 passed by the learned Commissioner of Income Tax (Appeals)- NaƟonal Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), in the case of Seven Energies Limited (“the assessee”) for the assessment year 2017-18, assessee preferred this appeal. 2. Assessee is engaged in the business of solar power. It filed its return of income for the assessment year 2017-18 on 6/11/2017 declaring a loss of Rs. 5, 76, 360/-. During scruƟny, learned Assessing Officer noted that there were cash deposits to the tune of Rs. 33.75 Lacs in the account of the assessee during the moneƟzaƟon period. Assessee explained to the learned Assessing Officer that during the month of April/May, 2016 they withdrew certain amounts to the tune of Rs. 45 lacs, for the purpose of seƩling wages and other peƩy expenditure which remained payable due Page 2 of 4 to liƟgaƟon at sites, and also due to ongoing negoƟaƟons with the parƟes. According to the assessee, in that pursuit some amount of cash remained with the assessee and due to demoneƟzaƟon they got back the cash and deposited into the bank. 3. According to the learned Assessing Officer there were deposits on 19/11/2016, 21/11/2016 and 24/11/2016 at the rate of Rs. 5 Lacs on each occasion and on 8/12/2016 there was a deposit of rupees18.75 Lacs, totaling Rs. 2 33.75 Lacs; whereas there were withdrawals of 5 Lacs each on 21/4/2016, 27/4/2016, 30/4/2016, 5/5/2016 and 7/5/2016, and Rs. 10 Lacs each on 4/5/2016 and 6/6/2016 totaling rupees 45 Lacs. Learned Assessing Officer stated that a sum of Rs. 5 lakhs withdrawn on 21/4/2016 was immediately transferred and therefore, such sum is not available to be shown as a source to the deposits made during the modernizaƟon period. In respect of the balance amount that was withdrawn, learned Assessing Officer stated that these sums were withdrawn by one Narsimlu and Santhosh and there is no evidence on record to show that the same cash was available with the assessee Ɵll now my/December, 2016 to be deposited back into the bank. Learned Assessing Officer, accordingly, added the enƟre cash deposits during the moneƟzaƟon period to the tune of Rs. 33.75 Lacs to the income of the assessee. 4. Assessee preferred appeal before the Learned CIT(A) and pleaded the same, but the Learned CIT(A) also did not believe the version of the assessee that the earlier withdrawals are the source for the deposits holding that there is no proof for the same. Hence the assessee filed this appeal contending that the authoriƟes failed to consider the audited financial statements and the bank statements furnished by the assessee to appreciate his contenƟon that there was no addiƟonal income that remains unexplained. The cash deposits made in the months of November/December are purely out of the cash on hand, but not any addiƟonal income. Page 3 of 4 5. Per contra, Learned DR argued that there was no reason for the assessee to accumulate the withdrawn amount without exhausƟng the same and going for the next withdrawal, and the very fact that the assessee kept the funds idle in cash itself runs contrary to the ordinary course of human conduct, and therefore, the authoriƟes rightly rejected the contenƟons of the assessee and made and sustained the addiƟons. 6. I have gone through the record in the light of the submissions made on either side. There is no dispute of the fact that there were some transfers of funds by the Directors and withdrawals from bank by the assessee between 21/4/2016 and 7/5/2016 totaling to Rs. 45 Lacs, which according to the assessee were withdrawn for the purpose of seƩling the various and other peƩy expenses which remains unpaid due to some ongoing liƟgaƟon and negoƟaƟons, such funds were available in cash with the assessee and due to the sudden demoneƟzaƟon, the unspent amounts were deposited bank into the account of the assessee. It is only on suspicion the authoriƟes held that the assessee, being a business concern, will not keep the fund is idle without uƟlisaƟon and the withdrawals about 6 months prior to the demoneƟzaƟon, will not consƟtute an acceptable source to explain the deposits during the demoneƟzaƟon period. 7. Through a catena of decisions, the judicial of opinion is that no addiƟon could be made under secƟon 68 of the Act on the sole reason that there is a Ɵme gap between the date of withdrawal from bank account and redeposit the same into the bank, unless the learned Assessing Officer demonstrates that the amount in quesƟon was used by the assessee for any other purpose. Gordhan vs ITO in ITA No. 811/Del/2015 and ACIT vs. Baldev Raj Charla 121 TTJ 366 (Delhi) are to cite a few. Even if we accept the contenƟon of the learned Assessing Officer that out of the total withdrawal of rupees forƟfy Lacs, the Rs. 5 Lacs withdrawn on 21/4/2016 was not available to the assessee to make a deposit during the moneƟzaƟon period, sƟll the balance of Rs. 40 Lacs is sufficient to account for the deposits of Rs. 33.75 Lacs. Spending or otherwise of the withdrawn Page 4 of 4 amount is only a maƩer of suspicion entertained by the authoriƟes. No addiƟon could be made based on suspicion. There is no reason not to believe the plea of the assessee that the withdrawn amounts were meant to be spent towards wages and other peƩy expenses, but due to the ongoing liƟgaƟon the payment could not be materialized, leaving that amount in the hands of the assessee. In the circumstances, there is no reason for me not to believe this as a probable, and to accept the withdrawals as a source explaining the deposits. I, therefore, accepƟng the same, direct the learned Assessing Officer to delete the addiƟon. Grounds are accordingly answered. 8. In the result, appeal of the assessee is treated as allowed for staƟsƟcal purpose. Order pronounced in the open court on this the 5 th July, 2024. Sd/- (K. NARASIMHA CHARY) JUDICIAL MEMBER Hyderabad, Dated: 05 /07/2024 pvv/SPS Copy to: 1 Seven Energies Ltd, HIG 85, Phase 5 KPHD Colony, Hyderabad 500085 2 Income Tax Officer Ward 3(1), 727, Signature Towers, Sy. No.6(P) of Kondapur, Sy.37(P) of Kothaguda, Opp: Botanical Gardens, Serilingampally(M) RR Distt. 500084 3 Pr. CIT - Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order