JD IRON PVT LTD,DELHI V. WARD 13(1), DELHI, DELHI

ITA 1929/DEL/2024

AI Insights

JD Iron Pvt. Ltd. appealed against the order of the National Faceless Appeal Centre, which upheld the addition of Rs. 10,75,000 to the assessee's income under section 68 read with section 115BBE of the Income Tax Act, 1961, due to unexplained cash deposits during the demonetization period. The assessee argued that these deposits were from cash receipts from debtors, which were accounted for in their audited books. The Tribunal noted that the assessee had not been given a fair opportunity to present its case before the CIT(A) and decided to set aside the CIT(A)'s order, restoring the matter for re-examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31730 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR
• Assessee Lawyers: JITENDER WADHWA
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘SMC’: NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITA No.1929/Del/2024 [Assessment Year: 2017-18] JD Iron Pvt. Ltd. I-128, Naraina Vihar Industrial Area, New Delhi-110028 Vs Income Tax Officer, Ward-13(1), C.R. Building, New Delhi PAN-AAACJ3320P Assessee Revenue Assessee by Shri Jitender Wadhwa, CA Revenue by Shri Sanjay Kumar, Sr. DR Date of Hearing 20.12.2024 Date of Pronouncement 31.01.2025 ORDER PER BRAJESH KUMAR SINGH, AM, This appeal filed by the assessee is directed against the order dated 19.01.2024 of the National Faceless Appeal Centre, Delhi, relating to Assessment Year 2017-18, arising out of assessment order u/s 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’) dated 18.12.2019. 2. The grounds of appeal raised by the assessee are as under:- 1) That the appellant denies its liability to be assessed at total income of Rs.24,75,274/- and accordingly denies his liability to pay tax and interest thereon. 2) That having regard to facts and circumstances of the case, the learned CIT(A) has erred in law and facts in making the addition of Rs.10,75,000/- u/s 68 r.w.s 115BBE of Income Tax Act 1961 on account of unexplained cash deposits in Bank of Baroda which represent the receipt of cash from sundry debtors and it is duly accounted in the audited books of accounts. 2 ITA No.1929/Del/2024 3) That having regard to the facts and circumstances of the case, the Ld. CIT(A)has erred in law and on facts in not considering that the appellant has cash balance of Rs. 15,23,033/- as on 08/11/2016 in their audited books of accounts. 4) That having regard to the facts and circumstances of the case, the Ld. CIT(A)has erred in law and on facts in not considering the documents submitted by the assessee at the time of filing the appeal and during the assessment proceeding. 3. There is a delay of 36 days in filing of the appeal by the assessee before the Tribunal. In this regard, the assessee has filed a declaration dated 09.04.2024 submitting as under and requested to condone the delay:- 1. That the Commissioner of Income Tax (appeals) Order No. ITBA/NFAC/S/250/2023-24/1059945738(1) dated 19.01.2024 dismissing our appeal. 2. That under the circumstances of the delay of 92 days from 19.01.2024 to 20.04.2024 i.e., the date of filing of appeal, has occurred. 3. That upon receiving the order the company authorized Mr. Jagdish Gupta the director of the company to oversee and submit the appeal before the Tribunal. 4. That the delay in filing the appeal is neither intentional nor deliberate Mr. Jagdish Gupta being a senior citizen (73 years) facing some medical issued and he was on bed rest since 10th march 2024. Due to this medical condition, he was unable to consult with legal counsel regarding the appeal filing. 5. That it is in the interest of justice that the delay may very kindly be condoned and the petition be heard on its merits.” 4. We have considered the reasons for the delay very carefully and found it to be reasonable and bona fide. We, therefore, condone the delay in filing of this appeal and admit this appeal. 5. Brief facts of the case:- This case was selected for scrutiny through CASS to examine the issue relating to cash deposit during demonetization 3 ITA No.1929/Del/2024 period. There was an information that the assessee had deposited cash of Rs.15 lakhs in Bank of Baroda. The AO asked the assessee to give the source of cash deposited with documentary evidence. It was submitted by the assessee that cash of Rs.5 lakhs was deposited on 10.11.2016 and Rs.10 lakhs on 16.11.2016. On perusal of the sale chart reflecting the month wise sale summary for FY 2015-16 and 2016-17 of cash sale and credit sale, it was noticed that for FY 2016-17, there was no cash sales. Further, the assessee submitted the following cash in hand position from 01.04.2015 to 08.11.2016 as under:- Closing cash in hand as on 31.03.2015 Closing cash in hand as on 31.03.2016 Closing cash in hand as on 08.11.2016 Rs.4,93,130/- Rs.12,04,351/- Rs.15,23,033/- 5.1. The assessee submitted that cash balance was accrued by cash receipt from the customers to whom sales were made and also Rs.4,62,145/- received from sale of agricultural proceeds, which was prior to the period of demonetization. On going through the details of ledger with M/s DM Tools and Components, Vikas Auto Industries and PD Auto Industries, the AO noted that a cash of Rs.10,000/- or 20,000/- was being received by the assessee on every alternative day and till 31.10.2016 an amount of Rs.6,90,207/- has been shown to be received in cash. The assessee further submitted that the material was sold against which the party issued cheque, which was returned unpaid against which the party has given cash to the assessee. The AO noted that cash receipts of Rs.10,000/- or Rs.20,000/- shows that no payment in cash has been received in excess of Rs.20,000/- as the same is not allowable under the 4 ITA No.1929/Del/2024 Act. The AO held that there was no force in the contention of the assessee in respect of these documentary evidences filed. It was also noted that all these cash receipts have been shown up to 31.10.2019 and held that the cash receipts from these three parties till October, 2016 was not acceptable as it was nothing but an afterthought. Accordingly, the AO held that the amount of Rs.10,75,000/- received in cash from these three parties was not acceptable and the balance cash amounting to Rs.4,25,000/- was found to be acceptable. The AO added the sum of Rs.10,75,000/- u/s 68 r.w.s 115BBE of the Act. 6. Against the above order, the assessee appealed before the Ld. CIT(A). The Ld. CIT(A) gave various opportunities to the assessee vide notices dated 26.12.2020, 08.12.2021, 25.02.2022 and 19.09.2022, to which, the assessee did not respond. Accordingly, he held that the assessee failed to substantiate its case and provide any plausible explanation or evidences to support its claim during the appellate proceedings. In view of the detailed reasoning given by the AO in the assessment order, the Ld. CIT(A) held that there was no cause of interference with the said order and thereby dismissed the appeal of the assessee. 7. Against the above order, the assessee is in appeal before the Tribunal. 8. During the appellate proceedings, the ld. AR relied upon the written submission, which is reproduced as under:- 5 ITA No.1929/Del/2024 Sl. No. Particulars Facts 1. Brief facts of the case • The assessee is a private limited company engaged in the trading business of iron and steel. • The assessee had deposited Rs. 15,00,000/- in his bank account during demonetization • Out of Rs. 15,00,000/-, the Ld. A.O made the addition of Rs. 10,75,000/- U/s 68 of the Act. • During the assessment proceedings, the assessee had mentioned that it had cash receipts from three parties (Debtors) which are: -  Vikas Auto Inds.  PD Auto Industries  DM Tools & Components • The assessee had also provided the ledgers & confirmations of the above parties along with the necessary explanation in respect of the case but the Ld. A.O still made addition stating that no documentary evidence has been provided by the assessee 2. Cash deposited out of amount realized from debtors • Firstly, the Appellant already had a cash balance of Rs.15,23,033/- as on 08.11.2016 that can also be verified from its cash book (Page No. 117 of Paper book) • Secondly, this cash balance included the amount which was realized from its debtors in cash • Vikas Auto Inds.  It is a regular client of the assessee which had an opening balance of Rs. 3,10,970/- in the books of assessee.  The assessee had submitted during the assessment proceeding that there was a cheque return from this party and after regular follow up party has decided to make cash in small denomination.  The assessee had also provided the ledger confirmation from the party which shows that payment of Rs. 3,10,970/- was made in cash to the assessee (Page No. 166 of Paper book) • PD Auto Industries 6 ITA No.1929/Del/2024  The party has given its ledger confirmation for the year under consideration which was also produced during the assessment proceeding (Page No. 167 of Paper book)  The ledger clearly shows that they had made payment of Rs. 1,46,072/- to the assessee in cash throughout the year • DM Tools & Components  The party has given its ledger confirmation for the year under consideration which was also produced during the assessment proceeding (Page No. 168 of Paper book)  The ledger clearly shows that they had made payment of Rs. 6,90,207/- to the assessee in cash throughout the year. 9. The ld. DR supported the orders of the authorities below 10. We have considered the rival submissions and perused the materials available on record. It is seen that the assessee did not appear before the Ld. CIT(A), when the case was fixed for hearing on 26.12.2020, 08.12.2021, 25.02.2022 and 19.09.2022. The Ld. CIT(A) also gave a final opportunity vide notice dated 09.01.2024 when the assessee sought adjournment and the ld. CIT(A) observed that despite its submission that “detailed letter is attached”, no such letter was attached. Therefore, the submissions of the assessee before us have not been examined by the Ld. CIT(A). Further, no reasons have been furnished by the assessee for its non-appearance before the Ld. CIT(A). We therefore, in order to sub-serve the interest of justice, set-aside the order of the Ld. CIT(A) and restore the matter to his file to decide the matter on merits after considering the submissions made by the assessee before us after giving reasonable opportunity of being heard to the assessee. Further, the assessee is at 7 ITA No.1929/Del/2024 liberty to provide all the necessary information in support of its contention. Grounds of the appeal are allowed for statistical purposes. 11. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 31St January, 2025. Sd/- Sd/- [ANUBHAV SHARMA] [BRAJESH KUMAR SINGH] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 31.01.2025 f{x~{tÜ f{x~{tÜ f{x~{tÜ f{x~{tÜ Copy forwarded to: 1. Assessee 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi, "