Assistant Commissioner OF Income Tax Central Circle1-(1), Hyderabad V. Gokul Krishi Udyog Private Limited, Hyderabad

ITA 99/Hyd/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2893 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2017-2018
• Appeal Filed On: 03-02-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PAYING SUCH CASH. SINCE THERE
• Section: 68; 143(2); 72

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD ‘B’ BENCH, HYDERABAD. BEFORE SHRI RAMA KANTA PANDA, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA No.99/Hyd/2021 (Assessment Year : 2017-18) Asst. Commissioner of Income Tax, Central Circle 1(1), Hyderabad. Vs. M/s. Gokul Krishi Udyog Pvt. Ltd., Hyderabad. PAN AACCG3283E (Appellant) (Respondent) Appellant By : Shri K. A. Sai Prasad, C.A. Respondent By : Shri Kumar Aditya(D.R.) Date of Hearing : 17.08.2022 Date of Pronouncement : 26.09.2022 O R D E R Per Shri Rama Kanta Panda, A.M. : This appeal filed by the Revenue is directed against the order dt.11.11.2020 of the learned Commissioner of Income Tax (Appeals)-11, Hyderabad relating to Assessment Year 2017-18. 2. The facts of the case, in brief, are that the assessee is a company engaged in the business of dealer in pulses, food grains and manufacturer of besan. It filed its Return of Income on 2.11.2017 declaring total income of 2 ITA No.99/Hyd/2021 Rs.17,09,470/-. The case was selected for scrutiny under CASS and statutory notices were issued u/s. 143(2) and 142(1) of the Income Tax Act, 1961 (in short ‘the Act’) to the assessee to furnish certain information. 3. During the course of assessment proceedings, the Assessing Officer observed from the Bank account of the assessee maintained with the ICICI Bank that the assessee has made cash deposits of Rs.2,10,80,000 during the demonetization period. He, therefore, asked the assessee to explain the source for the cash deposits. It was explained that the source of the same are cash sales made during the regular course of its business. The assessee furnished books of accounts, vouchers, month-wise cash sales made during the F.Y. 2015-16 and F.Y. 2016-17. From the details furnished by the assessee, the Assessing Officer noted that there was substantial increase of sales in F.Y. 2016-17 as compared to the preceding year i.e. F.Y. 2015-16. He therefore asked the assessee to explain the reasons for such 3 ITA No.99/Hyd/2021 substantial increase in cash sales along with necessary evidences. 4. In response to the same assessee vide its reply dt.11.11.2019 submitted that the sales are increasing sometimes and decreasing sometimes depending on monsoon, market and other factors. The cash sales in F.Y. 2014-15 are more compared to F.Y. 2015-16. Same way, if the sales are compared with subsequent years i.e. F.Y. 2017-18, the sale for the F.Y. 2016-17 is less than the sales in F.Y. 2017-18. Hence, it is clear that the sales cannot be stagnant and same in all years and is increasing or decreasing depending on various factors. 4.1 However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. He observed that the assessee has failed to furnish the reasons for increase in cash sales along with necessary documentary evidences. He observed that there is substantial increase in cash sales when compared to the earlier year, the details of which are as under : 4 ITA No.99/Hyd/2021 Month Cash Sales in Rs. Month Cash Sales in Rs. Increase in % July 2015 37,10,741 July 2016 50,65,395 36 August 2015 31,42,464 Aug., 2016 58,52,523 86 Sept., 2015 41,97,344 Sept., 2016 57,24,110 36 Oct., 2015 19,53,192 Oct., 2016 56,15,706 188 Nov., 2015 47,12,257 Nov., 2016 113,67,967 141 Dec., 2015 68,25,610 Dec.,2016 87,08,625 28 Total 2,45,41,608 Total 4,23,34,326 72 He further noted that the assessee has made cash sales to unidentifiable persons and failed to prove the genuineness of the sales. The assessee could not explain the source of huge cash deposit during the demonetization period from 9.11.2016 to 30.12.2016. He, therefore, made addition of Rs.1,77,92,718 to the total income of the assessee u/s. 68 of the Act being the difference in sales between periods from July – December 2016 and July – December 2015. 5. In appeal, the learned CIT (Appeals) deleted the addition made by the Assessing Officer by observing as under : “4.3 I have considered the assessment order and submissions of the appellant. It is seen that the 5 ITA No.99/Hyd/2021 assessee had furnished all the details as called for viz. cash book, ledgers, purchase details, VAT returns etc. and also submitted documentary evidences. The assessee had discharged primary onus of proving the sources for such cash credits in the bank account by way of furnishing details. The assessee filed details of sales during the corresponding period for preceding and subsequent years also. The only issue considered by the Assessing Officer is increase in year on year sales and never doubted the purchases or stock available. As the assessee had discharged primary onus of providing details of purchase / sales along with evidences, the onus now is on the revenue to prove that the details furnished are not genuine. Since the Assessing Officer did not doubt the purchases and stock and there is nothing brought on record to prove contrary to the contentions of the assessee, the addition made on account of difference in increase of sales of Rs.1,77,92,718 cannot be sustained. The addition is deleted.” 6. Aggrieved with such order of CIT (Appeals), the Revenue is in appeal before the Tribunal by raising the following grounds : “1. The learned CIT (Appeals) erred on facts and in law in granting relief to the assessee. 2. The learned CIT (Appeals) erred in deleting the addition of Rs.1,77,92,718 u/s. 68 without appreciating the fact that the assessee had failed to furnish a reasonable explanation for the abnormal increase in sales during the period July to December, 2016. 6 ITA No.99/Hyd/2021 3. The learned CIT (Appeals) erred in holding that the assessee had discharged the primary onus of proving the sources for the cash deposits in the bank account. 4. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary.” 7. The learned Departmental Representative strongly challenged the order of the learned CIT (Appeals) in deleting the addition made by the Assessing Officer. Referring to the assessment order, he drew the attention of the Bench to the observations of the Assessing Officer while making the addition of Rs.1,77,92,718. Referring to the order of the learned CIT (Appeals), he submitted that the CIT (Appeals) has deleted the addition based on the submissions made by the assessee which are general in nature. He submitted that in the instant case the assessee has not discharged the primary onus cast on it by providing the name, PAN and address of the persons to whom cash sales are made. Referring to the bank pay in slips, copies of which are placed at pages 3 to 7 of the Paper Book, he submitted that when large number of Rs.2000 notes were deposited during the 7 ITA No.99/Hyd/2021 demonetization period, which were not easily available in the country, at that particular time, it was incumbent upon the CIT (Appeals) to obtain from assessee, the names of the so called purchasers who had withdrawn such amounts from the bank in new currency notes and purchased the goods from the assessee by paying such cash. Since there is substantial increase in the turnover during the demonetization period as compared to the cash sales in the corresponding period of preceding year, therefore, the learned CIT (Appeals) without appreciating the facts properly could not have deleted the addition. Referring to the decision of the Hon'ble Supreme Court in the case of Sumati Dayal Vs. CIT reported in 214 ITR 801 (SC) and CIT Vs. Durga Prasad More reported in 82 ITR 801 (SC), he submitted that the learned CIT (Appeals) in the instant case is not justified in deleting the addition. He accordingly submitted that the order of the learned CIT (Appeals) be reversed and that of the Assessing Officer be restored. 8 ITA No.99/Hyd/2021 8. The learned counsel for the assessee, on the other hand, submitted that the cash deposited during the demonetization period in specified notes is only Rs.17 lakhs out of the total deposit of Rs.2,10,80,000. The amount of Rs.17 lakhs is again within the cash balance available on the demonetization date. The learned counsel for the assessee submitted that the assessee was regularly filing VAT returns and there is no defect in the details of purchases and sales bills. Further there is no provision in the Act to obtain identity of a person such as name, address, PAN number, etc for cash sales. Since the assessee has not violated the law by making cash sales and turnover of assessee is regularly growing from year to year, therefore, merely on the basis of increase in turnover on year to year basis, no addition can be made especially when the purchases and stock are not in dispute. The learned counsel for the assessee relying on a number of decisions submitted that the order of the learned CIT (Appeals) being in consonance with law should be upheld and the grounds raised by the Revenue be dismissed. 9 ITA No.99/Hyd/2021 9. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and learned CIT (Appeals) and the Paper Book filed on behalf of the assessee. We have also considered various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs.1,77,92,718 being the difference in sales between periods from July – December 2016 and July – December 2015 on the ground that such cash sales are made to unidentifiable persons and the assessee failed to prove the genuineness of the sales and has made substantial cash deposit during demonetization period between 9.11.2016 to 30.12.2016 and the assessee failed to substantiate the source of the cash deposit. We find the learned CIT (Appeals) deleted the addition made by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the ld. DR that when large number of Rs.2000 notes were deposited in the bank account during the demonetization period, the assessee was duty bound to give the names of persons to whom he has sold such goods 10 ITA No.99/Hyd/2021 and who in turn has given such large number of Rs.2000 notes that were deposited in the bank account. It is the submission of the learned counsel for the assessee that out of total deposit of Rs.2,10,80,000 during the period from 9.11.2016 to 30.12.2016 only an amount of Rs.17,00,000 has been deposited in specified notes and the remaining deposits were made in other than specified notes. It is also the submission of the learned counsel that when the VAT returns were filed depicting such high turnover and the purchase and closing stocks are not disputed by the Assessing Officer, therefore, he cannot doubt the sales merely on the ground that the assessee has made cash sales and could not give the name, address and PAN number of the so called purchasers. 10. We find the order of the learned CIT (Appeals), in the instant case, is not on sound reasoning and without appreciation of the facts properly. It is the submission of the assessee before the CIT (Appeals) that out of total deposit of Rs.2,10,80,000 deposited during the 11 ITA No.99/Hyd/2021 demonetization period, the deposit in old notes is only Rs.17 lakhs as per the certificate obtained from ICICI Bank, copy of which is placed at page 8 of the Paper Book. However, a perusal of the pay in slips of the Bank filed by the assessee at pages 3 to 7 of the Paper Book shows that the assessee has deposited large number of Rs.2000 notes totalling to Rs.1,62,30,000/- during the demonetization period which was not easily available in the market at the relevant time. Therefore, merely filing the details such as cash book, ledger, purchase details, VAT returns, etc are not sufficient especially when the assessee had made huge cash sales during the demonetization period as compared to the earlier year during the same period. In our opinion, the matter has not been properly adjudicated in the way the same should have been adjudicated. It is settled proposition of law that the powers of CIT (Appeals) are co-terminus with that of the powers of Assessing Officer. In the instant case, although the Assessing Officer has categorically asked the assessee to substantiate the huge cash deposits during the demonetization period by giving PAN numbers of so called 12 ITA No.99/Hyd/2021 purchasers, ;the assessee has not filed such details and the learned CIT (Appeals) without verifying the pay in slips along with the bank statements was carried away by the submissions made by the assessee. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of CIT (Appeals) with a direction to adjudicate the issue afresh after considering the nature of huge cash deposit made in large number of Rs.2000 currency notes in the bank totalling to Rs.1,62,30,000/-. Needless to say the CIT (Appeals) shall give due opportunity of hearing to the assessee. We hold and direct accordingly. The grounds raised by the Revenue are allowed for statistical purposes. 11. In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open court on 26th Sept., 2022. Sd/- Sd/- (LALIET KUMAR) (RAMA KANTA PANDA) Judicial Member Accountant Member Hyderabad, Dt.26.09.2022. * Reddy gp 13 ITA No.99/Hyd/2021 Copy to : 1. M/s. Gokul Krishi Udyog Pvt. Ltd., 28/A, Survey No.49/50 & 51, Narapally Village,Ranga Reddy District, Telangana-501 301 2. ACIT, Centrall Circle 1(1), Hyderabad. 3. Pr. C I T (Central), Hyderabad. 4. CIT(Appeals)-11, Hyderabad. 5. DR, ITAT, Hyderabad. 6. Guard File. By Order Sr. Pvt. Secretary, ITAT, Hyderabad.