KOLKATA CRAFT COMBINE SOCIETY,KOLKATA V. ITO, WARD-50(3), KOLKATA

ITA 882/KOL/2024

AI Insights

The case involves the Kolkata Craft Combine Society, an NGO, which appealed against the addition of Rs. 39,42,500 to its income for the Assessment Year 2017-18. This addition was initially made by the AO under section 143(3) of the Income Tax Act, 1961, due to cash deposits during the demonetization period, which the AO deemed unexplained. The CIT(A) upheld this addition, leading to the appeal before the ITAT. The ITAT found that the assessee had not been given a fair opportunity to present its case and thus remitted the matter back to the AO for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 313025 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: Manish Kumar Dubey vs. ITO, Ravinder Kumar v ITO, Spectra Equipment (P.) Ltd. v. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard
• Section: 143(3)

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'एसएमसी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA श्री संजय शमाा, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI SONJOY SARMA, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 882/KOL/2024 Assessment Year: 2017-18 Kolkata Craft Combine Society Vs. ITO, Ward-50(3), Kolkata (Appellant) (Respondent) PAN: AACAK6895J Appearances: Assessee represented by : P.K. Himmatsinghka, FCA. Department represented by : Sailen Samadder, Add. CIT, Sr. DR. Date of concluding the hearing : April 3rd, 2025 Date of pronouncing the order : May 1st, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2017-18 dated 20.02.2024, which has been passed against the assessment order u/s 143(3) of the Act, dated 24.12.2019. Page | 2 I.T.A. No.: 882/KOL/2024 Assessment Year: 2017-18 Kolkata Craft Combine Society. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “(1) That under the facts & circumstances of the case, Ld CIT(A), NFAC erred in confirming the addition Rs. 39,42,500/- made by AO u/s 69A being cash deposited into bank during the demonetisation period, despite the appellant had sufficient cash balance Rs. 40,24,219/- as on 08-11-2016 out of cash withdrawal from banks Rs. 1,06,50,700/- from 04-04-2016 to 07-11-2016 and the entire cash deposits & withdrawals are recorded in books maintained by the NGO (assessee). (2) That the Ld CIT(A), NFAC erred in confirming the addition of Rs. 39,42,500/-made by the AO without considering the cash withdrawal from bank time to time before the commencement of demonetisation period. (3) That the Ld AO did not brought any evidence that cash drawn from banks Rs. 1,06,50,700/- from 04-04-2016 to 07-11-2016 spent elsewhere also, and the appellant had no balance in hand to deposit the impugned amount into the bank, the addition is therefore liable to be deleted. (4) That the appellant craves to add or amend any grounds of appeal on or before the date of hearing.” 3. Brief facts of the case as culled out from the assessment order are that the assessee claims to be an NGO registered under the Societies Registration Act to explore various avenues of craft and working with underprivileged community. The assessee had filed the return of income declaring loss of Rs. 4,18,323/-. The case was selected for complete scrutiny and a sum of Rs.39,42,500/- was added to the income on account of deposits in the bank account and the total income was assessed at Rs. 39,42,500/-. Aggrieved with the assessment order, the assessee preferred an appeal before the Ld. CIT(A), who vide order dated 20.02.2024 dismissed the appeal. The findings of the Ld. CIT(A) are extracted as under: “7. APPELLATE FINDINGS: Page | 3 I.T.A. No.: 882/KOL/2024 Assessment Year: 2017-18 Kolkata Craft Combine Society. 7.1 Grounds of appeal No. 1 &.2 are pertaining to addition of Rs. 39,42,500/- u/s 69A of the Act and invoking section 115BBE of the AO vide order dated 24.12.2019 u/s 143(3) of the AO. It is seen from the order of the AO that the appellant cooperated with the AO in the initial period but not in the later period. According to AO, the appellant failed to produce books of account before him to explain the cash deposits during the demonetization period. The appellant in his submission dated 17.01.2024 furnished that cash in old currency was received from artisans related to the business of the appellant and the same was deposited in his bank account. The appellant further submitted that the cash which was deposited in the bank was not taken from any other person but was his own cash which was lying with him at a different location. The appellant also furnished a table in which he has shown that amount of Rs.95,79,700/- was withdrawn from the bank on different dates. The appellant did not furnish why that cash was withdrawn and was remained Unutilized on the date of demonetization. I have noticed that the appellant has failed to furnish evidence in the shape of books of accounts to support his contention. He has not even furnished cash book to prove that so much cash was lying in his books of accounts. He only furnished bank statement pertaining two accounts but no narration of entries was given by him. From this, it appears that the appellant has no explanation and source of the cash which was deposited in the said bank account(sic). The Ld. AO has rightly made addition on this account. The grounds of the appellant are dismissed. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. 4. Rival submissions were heard and the record and the submissions made have been examined. The Ld. AR submitted before us that the assessee imparts education and training to artisans for how to earn livelihood. The only source of income is grants from the State Government and Central Government. It was submitted that during the demonetization period, certain cash which had been earlier withdrawn from the bank itself, was deposited in the bank account subsequently and the details of cash withdrawn could not be filed and the cash book could also not be produced before the Ld. AO. It was submitted that the Ld. AO did not specifically ask for the cash book, Page | 4 I.T.A. No.: 882/KOL/2024 Assessment Year: 2017-18 Kolkata Craft Combine Society. therefore, no cash book was produced. Reliance was placed upon the decision of Coordinate Bench of ITAT, Delhi in the case of Manish Kumar Dubey vs. ITO in ITA No.2484/Del/2023 order dated 05.09.2024 and several other cases. It was submitted that the provisions of section 69A are not applicable at the same are applicable if the cash found is not recorded in the books of account. The Ld. DR countered this argument by submitting that if the cash withdrawn earlier was available, which was later deposited in the bank account, how the assessee could do his work without making any payment to the trainees/artisans. The Ld. DR also submitted that the cases relied upon by the assessee refer to a normal period and drew our attention to page 2 of the written submissions filed by the Ld. Sr. DR. It was noted that cash was withdrawn through self-cheque by one Saptarshi Mitra and to D. Bhaskar etc. which was for payment to artisans and therefore, not available with the assessee. The entire training expenses were claimed at Rs. 1,23,27,480/-. It was submitted that the withdrawal of cash was a regular feature of the appellant which only proves that the cash expenditure is also a regular feature of the appellant and the money withdrawn had been utilised for incurring the day-to-day expenditure of the assessee. Reliance was also placed on the decisions in the cases of Ravinder Kumar v ITO [2020] 118 taxmann.com 166 (Delhi) and Spectra Equipment (P.) Ltd. v. ITO [2025] 170 taxmann.com 343 (Hyderabad – Trib.). It was further submitted that the order of the Ld. CIT(A) may be confirmed and the appeal may be dismissed. 4. We have considered the rival submissions made. Since the assessee could not produce the cash book before the Ld. AO, therefore, Page | 5 I.T.A. No.: 882/KOL/2024 Assessment Year: 2017-18 Kolkata Craft Combine Society. in the interest of justice it was considered imperative to set aside the order of the Ld. CIT(A) as well as the Ld. AO and remit the matter to the Ld. AO for granting another opportunity to the assessee for making the submission and to reframe the assessment de novo. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in the appeal are allowed for statistical purposes. 5. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 1st May, 2025. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 01.05.2025 Bidhan (P.S.) Page | 6 I.T.A. No.: 882/KOL/2024 Assessment Year: 2017-18 Kolkata Craft Combine Society. Copy of the order forwarded to: 1. Kolkata Craft Combine Society, AA-169, Salt Lake, Sector-1, Kolkata, West Bengal, 700064. 2. ITO, Ward-50(3), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "