KOTHIWAL ICE AND COLD STORAGE PRIVATE LIMITED,ETAH V. INCOME TAX OFFICER, ETAH

ITA 309/AGR/2024

AI Insights

The case involves Kothiwal Ice and Cold Storage P. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, confirming the assessment of total income at Rs.109.90 Lacs for the Assessment Year 2017-18. The primary issues in the appeal were the additions made to the income due to unexplained cash deposits during the demonetization period and the disallowance of certain expenses. The Tribunal found that while there were substantial cash transactions, the assessee had maintained proper books and the income was derived from legitimate business activities. The Tribunal also noted that the disallowances made were not adequately supported by evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473835 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASSESSEE; SHAILENDER SHRIVASTAVA LD.
• Keywords: Business income
• Section: 68; 133(6); 13

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, AGRA BEFORE HON’BLE SHRI SATBEER SINGH GODARA, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं. / ITA No.309/Agr/2024 (िनधाŊरणवषŊ / Assessment Year: 2017-18) Kothiwal Ice and Cold Storage P. Ltd. Sadabad Road, Jalesar UP 207302 बनाम/ Vs. ITO Etah ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AACCK-1353-P (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : None ŮȑथŎकीओरसे/Respondent by : Shri Shailender Shrivastava – Ld. SR. DR सुनवाईकीतारीख/Date of Hearing : 19-02-2025 घोषणाकीतारीख /Date of Pronouncement : 28-03-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 01-06- 2024 confirming assessment of total income at Rs.109.90 Lacs vide AO’s order dated 27-12-2019. The registry has noted delay of 13 days which stand condoned. At the time of hearing, none appeared for assessee and accordingly, the appeal was heard with the able assistance of Ld. Sr. DR. The assessee runs a cold storage and it earned rentals from farmers in cash. 2 2. Proceedings before lower authorities 2.1 During Assessment proceedings it transpired that assessee deposited cash of Rs.168.38 Lacs during demonetization period and accordingly, the assessee was directed to explain the sources of the same. The assessee submitted that the rental income was earned out of cold storage activities. The assessee furnished cash book and details of rent received along with name and addresses of the farmers. The assessee stated that substantial business was in cash. The Ld. AO noted that there were abnormal cash receipts from April, 2016 to 08-11-2016 and cash balance of Rs.216.88 Lacs was reflected as on 08-11-2016. The cash receipts from farmers were high in the month of October, 2016. The cash balances so shown were not commensurate with corresponding balances shown in earlier years. Out of list of 76 farmers, notices u/s 133(6) was sent to 49 persons. However, only 8 farmers confirmed the payments whereas other notices were either not delivered or remained non-complied with. Few of the framers appeared and confirmed the payments to the assessee. The Ld. AO, after reducing confirmed amounts, added cash deposits of Rs.100.66 Lacs to the income of the assessee u/s 68 r.w.s. 115BBE. 2.2 The assessee claimed loading and unloading expenses for Rs.29.72 Lacs which were held to be excessive since rental income was similar and there was no change in warehousing capacity. The Ld. AO disallowed part expenses for Rs.12.35 Lacs. The Ld. AO found discrepancies in General Reserve Balance and added differential of Rs.0.40 Lacs to the income of the assessee. The Ld. CIT(A) fully confirmed the assessment against which the assessee is in further appeal before us. 3 Our findings and Adjudication 3. From the facts, it clearly emerges that the business model of the assessee is that it earns rental income from farmers in cash. The assessee has apparently maintained proper books of accounts and reflected cash balance as on 08-11-2016 for Rs.216.88 Lacs which has been sourced to make the impugned deposits. The enquiries as made by Ld. AO confirmed the contentions of the assessee. No adverse inference could be drawn by the fact that the notices remained non-complied with since it would not be in the hands of the assessee to ensure compliances thereof. Nevertheless, there is no contradicting fact on the submissions of the assessee. Under these circumstances, we would hold that a lump sum addition of Rs.5 Lacs would meet the end of justice to plug possible revenue leakages. The same would be assessable as normal business income only. 4. So far as the disallowance of loading and unloading expenses is concerned, the same could not be sustained since the same has been computed merely on the basis of ratio analysis without bringing on record to support the finding that the expenditure was not genuine. Similarly, mere discrepancy in the General Reserve balance could not be held to be the income of the assessee. Both these items stand deleted. 5. The appeal stand partly allowed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (SATBEER SINGH GODARA) (MANOJ KUMAR AGGARWAL) Ɋाियक सद˟ /JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER 4 Dated: 28-03-2025 आदेश की Ůितिलिप अŤेिषत / Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT AGRA "