Muon Computing P.Ltd, New Delhi V. ITO, Ward-17(2), New Delhi

ITA 7606/DEL/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9104 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 16-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV PUNDIR
• Keywords: TDS; Bogus
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI SMC-2 BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.7606/DEL/2019 ASSESSMENT YEAR : 2016-17 MUON COMPUTING P.LTD., G-28/119-120, 2 ND FLOOR, SECTOR-3, ROHINI, NEW DELHI-110085. PAN-AAHCM6193J VS ITO, WARD-17(2), NEW DELHI. APPELLANT RESPONDENT APPELLANT BY SH.K.SAMPATH, ADV. & SH. V.RAJ KUMAR, ADV. RESPONDENT BY SH.GAURAV PUNDIR, SR. DR DATE OF HEARING 20.07.2021 DATE OF PRONOUNCEMENT 04 .0 8 .2021 ORDER PER KUL BHARAT, JM : THIS APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMEN T YEAR 2016-17 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-6, DELHI D ATED 09.07.2018. THE ASSESSEE HAS RAISED FOLLOWING GROUND OF APPEAL:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(APPEALS) ERRED IN CONFIRMING THE ADDITION MA DE BY THE ASSESSING OFFICER IN A SUM OF RS.26,66,380/- ON ALLEGATION O F HIGH CASH IN HAND. THE ACTION BEING ERRONEOUS UNLAWFUL AND UNTENABLE MUST BE QUASHED WITH FURTHER DIRECTIONS FOR APPROPRIATE RELIEF. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOU NT OF ALLEGATION OF HIGH CASH IN HAND. 3. FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE RETURN OF INCOME WAS E-FILED ON 15.012.2016 DECLARING INCOME AMOUNTING TO RS.2,34,780/-. THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. IT IS RECORDED BY THE ASSESSING ITA NO.7606/DEL/2019 ASSESSMENT YEAR : 2016-17 PAGE | 2 OFFICER THAT THE CASE WAS SELECTED FOR LIMITED SCRU TINY. THE REASON FOR SELECTING CASE FOR LIMITED SCRUTINY IS STATED IN THE ASSESSME NT ORDER THAT THERE WAS HIGH CASH ON HAND DISCLOSED IN THE BALANCE SHEET AS COMP ARED TO THE PRECEDING YEAR AND RETURN FILED AFTER 07.11.2016. DURING THE COURSE OF HEARING, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO EXPL AIN THE SOURCE OF AND REASON FOR HOLDING HUGE CASH IN HAND OF RS.27,60,573/- AS ON 31.03.2016 AS PER AUDITED BALANCE SHEET OF THE COMPANY. IN RESPONSE THERETO, THE ASSESSEE HAD STATED THAT HE WITHDREW CASH OF RS.28,08,036/- DURI NG THE YEAR FROM THE BANK ACCOUNT. HOWEVER, THE EXPLANATION GIVEN BY THE ASSE SSEE WAS NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER ON THE GROUNDS THAT IN THE PRECEDING YEARS, CASH ON HAND AS ON 31.03.2014 WAS RS.1,44,019/- AND IT WAS RS.44,367/- ON 31.03.2015 HOWEVER, IT WAS RS.27,60,573/- ON 31.03. 2016. THEREFORE, THE ASSESSING OFFICER PROCEEDED TO MAKE ADDITION OF RS. 26,66,380/- ON THE BASIS THAT THE ASSESSEE HAD DELIBERATELY AND WITH A VIEW TO DEPOSIT CASH DURING DEMONETIZATION PERIOD I.E. BETWEEN 09.11.2016 TO 30 .12.2016 SUPPRESSED PAYMENTS MADE IN CASH AND DID NOT DISCLOSE IT IN B OOKS OF ACCOUNT DURING THE FINANCIAL YEAR 2015-16. 4. AGGRIEVED AGAINST THIS, THE ASSESSEE PREFERRED A PPEAL BEFORE LD.CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS, SUSTAINED TH E FINDINGS OF THE ASSESSING OFFICER. 5. AGGRIEVED AGAINST THIS, THE ASSESSEE PREFERRED A PPEAL BEFORE THIS TRIBUNAL. 6. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED T HAT BEFORE THE AUTHORITIES BELOW, ADDITION WAS MADE ON THE BASIS O F EXCESSIVE CASH ON HAND, ITA NO.7606/DEL/2019 ASSESSMENT YEAR : 2016-17 PAGE | 3 HE SUBMITTED THAT THE ASSESSEE HAD DEMONSTRATED BY FILING OF BANK STATEMENTS THAT THERE WERE WITHDRAWALS MADE BY THE ASSESSEE AN D SUCH WITHDRAWAL OF AMOUNT WAS NOT UTILIZED FOR ANY OTHER PURPOSES. HE CONTENDED THAT THE ASSESSEE PROVED THE SOURCE OF CASH IN HAND HOWEVER, THE BOTH AUTHORITIES WITHOUT BRINGING ANY CONTRARY MATERIAL PROCEEDED TO MAKE ADDITION IN THE HANDS OF THE ASSESSEE. HE SUBMITTED THAT FINDING O F AUTHORITIES BELOW IS PURELY BASED ON THE CONJECTURES AND SURMISES WITHOUT BEING SUPPORTED BY ANY MATERIAL EVIDENCE HENCE, DESERVES TO BE DELETED. 7. LD. SR. DR OPPOSED THESE SUBMISSIONS AND SUPPORT ED THE ORDERS OF THE AUTHORITIES BELOW. 8. I HAVE HEARD CONTENTIONS OF BOTH THE PARTIES AN D PERUSED THE MATERIAL AVAILABLE ON RECORDS. I FIND THAT LD.CIT(A) SUSTAIN ED THE FINDINGS OF THE ASSESSING OFFICER BY OBSERVING AS UNDER:- 4.3. I HAVE CONSIDERED THE ASSESSMENT ORDER AND TH E SUBMISSIONS OF THE APPELLANT. FROM THE ASSESSMENT ORDER IT IS SEEN THA T AO VERY CATEGORICALLY ANALYZED THE POSITION OF CASH IN HAND AS ON 31/03/2 014, 31/03/2015 AND 31/03/2016. FURTHER, THE AO IS ALSO GIVEN COMPA RATIVE ANALYSIS OF CASH DEPOSITED DURING THE F.Y.S 2014-15, 2015-16, 2 016-17 AND DURING THE DEMONETIZATION PERIOD. THE PERCENTAGE OF CASH D EPOSIT VIS-A-VIS TURNOVER HAS ALSO BEEN ANALYSIS FROM WHICH IT IS SE EN THAT THE PERCENTAGE OF CASH DEPOSIT VIS-A-VIS THE TURN OVER AS RISEN SH ARPLY FROM 0.55% IN F.Y. 2014-15 TO 28.05% IN F.Y. 2015-16. INCREASED TURN O VER HAS ALSO BEEN SHOWN FOR F.Y. 2015-16 WHICH HAS AGAIN DROPPED DRAS TICALLY IN F.Y. 2016- 17. IT IS NOTEWORTHY THAT EXPENSES PAYABLE OF RS. 2 3.32 LAKHS WERE SHOWN AS ON 31/03/2016 WHEREAS THE SAID AMOUNT ONLY 9.40 LAKHS AS ON 31/03/2015. IT IS ALSO NOTED FROM THE BALANCE SHEET THAT THERE IS INCREASE IN TDS PAYABLE ALSO FROM RS. 12,647/- AS ON 31/03/2 015TO RS. 1,93,151/- AS ON 31/03/2016. ITA NO.7606/DEL/2019 ASSESSMENT YEAR : 2016-17 PAGE | 4 4.4. FROM THE SUBMISSIONS MADE IT IS SEEN THAT NO E XPLANATION HAS BEEN GIVEN BY THE APPELLANT AS REGARD THE FINDING OF THE AO THAT THERE WAS A SHARP INCREASE IN THE EXPENSES PAYABLE COMPARED TO THE EARLIER YEAR. DESPITE HAVING ADEQUATE OPENING BALANCE AND NOT ENO UGH EXPENDITURE AS ON 01/12/2015 FURTHER CASH WAS WITHDRAWN. SIMILAR P ATTERN IS ALSO SEEN IN SUBSEQUENT MONTHS WHERE THE OPENING CASH BALANCE AS ON 01/01/2016 WAS RS. 15,32,504/-, AS ON 01/02/2016 RS. 23,23,354 /- AND AS ON 01/03/2016 THE SAME WAS RS. 24,71,301/- AND ULTIMAT ELY CLOSING BALANCE WAS RS. 27,71,301/-. FURTHER, FROM THE CASK BOOK IT IS NOTED THAT MOST OF THE EXPENDITURE IN CASH HAS BEEN INCURRED O N ACCOUNT OF BUSINESS PROMOTION, CONVEYANCE EXPENSES, TELEPHONE EXPENSES ETC. WHEN ALL THE FACTS ARE SEEN IN TOTALITY, I.E., PATTERN OF CASH W ITHDRAWAL AS PER THE CASH BOOK, INCREASED EXPENSES PAYABLE AT RS. 23.32 LAKHS AS ON 31/03/2016 AS COMPARED TO RS. 9.40 LAKHS AS ON 31/03/2015, THE FACT THAT PERCENTAGE OF CASH DEPOSIT VIS-A-VIS TURNOVER WAS ABNORMALLY H IGH FOR THE YEAR UNDER CONSIDERATION, SHARP DECREASE IN THE TURNOVER FOR F .Y. 2016-17 AND ALSO SHARP INCREASE IN THE CASH DEPOSITED DURING THE F.Y . 2016-17, THE FINDINGS OF THE AO HAVE TO BE UPHELD. GROUNDS OF APPEAL NOS. 1 & 2 ARE DISMISSED. 9. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT REVENUE HAS NOT BROUGHT ANY MATERIAL SUGGESTING THAT THE WITHDRAWAL MADE B Y THE ASSESSEE WERE UTILIZED FOR MAKING PAYMENTS. IT IS ALSO NOT BROUG HT ON RECORD THAT THE AMOUNTS SO WITHDRAWN FROM THE BANK ACCOUNT WAS UTIL IZED FOR ANY OTHER UNDISCLOSED PURPOSES. FURTHER, IT IS NOTICED THAT LD.CIT(A) OBSERVED THAT DESPITE HAVING SUFFICIENT CASH IN HAND, THE ASSESSE E WITHDRAW THE AMOUNT. IT IS CORRECT THAT THE ASSESSEE HAS WITHDRAWN HIGHER A MOUNTS THAN THE IMMEDIATE PRECEDING YEARS BUT THAT CANNOT BE SOLE REASON FOR MAKING ADDITION PURELY ON THE BASIS OF SUSPICION. FURTHER, I FAILED TO UNDER STAND THE REASONING OF THE ASSESSING OFFICER THAT THE AMOUNT WAS WITHDRAWN TO JUSTIFY THE CASH DEPOSITS DURING DEMONETIZATION PERIOD I.E. BETWEEN 09.11.201 6 TO 30.12.2016. IT IS ALSO ITA NO.7606/DEL/2019 ASSESSMENT YEAR : 2016-17 PAGE | 5 SEEN THAT THE CASH WAS WITHDRAWN MUCH PRIOR TO SUCH EVENT. SO FAR OBSERVATION REGARDING SHARP INCREASE IN PAYABLE EXP ENSES IS CONCERNED, THERE IS NO FINDING BY THE ASSESSING OFFICER THAT SUCH EX PENSES ARE BOGUS. THEREFORE, IN MY CONSIDERED VIEW, THE ADDITION HAS BEEN MADE PURELY ON THE BASIS OF SUSPICION. SUCH ACTION OF AUTHORITIES BEL OW CANNOT BE AFFIRMED. I, THEREFORE, DIRECT THE ASSESSING OFFICER TO DELETE T HE IMPUGNED ADDITION. THUS, GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS ALL OWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ABOVE DECISION WAS PRONOUNCED ON CONCLUSION OF VIRT UAL HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 04 TH AUGUST, 2021. SD/- (KUL BHARAT) JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI