ROHIT JAISWAL,KOLKATA V. DCIT, CIR-49(1), KOL, KOLKATA

ITA 548/KOL/2023

AI Insights

The case involves Rohit Jaiswal, an authorized dealer of TVS Motor Co. Ltd., who appealed against the order of the Commissioner of Income-tax (Appeals) which upheld the addition of INR 2,73,06,000 as unexplained money under Section 69A read with Section 115BBE of the Income-tax Act, 1961. The addition was based on an abnormal increase in cash deposits during the demonetization period in India. The Income Tax Officer (ITO) had questioned the source of these deposits and the investments in immovable properties during the same period. The Tribunal, after examining the detailed submissions and the records, concluded that the cash deposits were from regular business operations and not unexplained, thus allowing the appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 28874 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-08-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 05-06-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NICHOLASH MURMU
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Set aside
• Section: 250; 69A; 44AB

Judgement Text

" आयकर अपीलीय अधिकरण न्यायपीठ, कोलकाता । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA BEFORE DR. MANISH BORAD, ACCOUNTANT MEMBER & SHRI SONJOY SARMA, JUDICIAL MEMBER I.T.A. No. 548/KOL/2023 Assessment Year: 2017-18 Rohit Jaiswal AJ-55, Sector-IT, Salt Lake, Kolkata-700 091 West Bengal Vs DCIT, Circle 49(1) 169, Acharya jagadish Chandra Bose Rd, Kolkata-700 014 West Bengal [PAN : ACIPJ7386G] अपीलार्थी/ (Appellant) प्रत्‍ यर्थी/ (Respondent) Assessee by : Shri Miraj D. Shah, AR Revenue by : Shri Nicholash Murmu, DR सुनवाई की तारीख/Date of Hearing : 22.08.2024 घोषणा की तारीख /Date of Pronouncement : 16.10.2024 आदेश/O R D E R PER DR. MANISH BORAD, AM: This appeal at the instance of the assessee is directed against the order of Commissioner of Income-tax (Appeals) [learned CIT (A)] dated 26th April, 2023, which is arising out of the assessment order under Section 143(3) of the Income-tax Act, 1961 (the Act) dated 9th December, 2019. 2. Assessee has raised following grounds of appeal: - “1. That the order passed u/s 250 is bad in law as well as on facts of the case. 2. That the Hon'ble Commissioner of Income Tax (A) NFAC erred in law as well as on facts of the case by treating the 77.71% of cash deposited to the tune of ₹27306600/- as unexplained money u/s 69A r.w.s. 115BBE of he I.T. Act, 1961.” 3. Facts in brief are that the assessee is an individual carrying on the business as an authorized dealer of TVS Motor Co. Ltd. under the sole Page | 2 ITA No.548/Kol/2023 Rohit Jaiswal; A.Y. 2017-18 proprietorship concern Mr. Durga Distributors. Income of ₹44,47,190/- declared in the e-return for A.Y. 2017-18 filed on 7th November, 2017. Case selected for scrutiny through Computer Assisted Scrutiny Selection (CASS) followed by validly serving statutory notices. The ld. AO on the basis of details available on record, noticed that during A.Y. 2017- 18, demonetization scheme was announced on 8th November, 2016, and taking into consideration the report of the Income Tax Investigation Wing, Kolkata, stating that there is huge cash deposit from 9th November, 2016 to 31st March, 2017 in the bank account held by assessee, ld. AO asked the assessee to explain the source of alleged cash deposited in the bank accounts held in the name of assessee as well as in the name of sole proprietary concern of the assessee namely, M/s Durga Distributors. Ld. AO also asked the assessee to explain the source of investment for purchasing two immovable properties during demonetization period. In reply, Ld. Authorised Representative of the assessee submitted that the cash deposits are from regular cash sales of the TVS Vehicles. He also submitted that for the purchase of immovable properties maximum amount has been taken as loan from the bank and the remaining amount has been paid from the personal bank account of the assessee and his wife. The ld. Counsel for the assessee also furnished the details of bank transactions for the purchase of immovable property and also furnished the comparative details of cash deposits during the F.Ys. 2015-16 and 2017-18. But, ld. AO was not satisfied with these details and he came to the conclusion that there has been an abnormal increase in the cash deposits in the bank account during the period 9th November, 2016 to 31st December, 2016 as compared to Page | 3 ITA No.548/Kol/2023 Rohit Jaiswal; A.Y. 2017-18 the preceding year and also the sales have not increased to that extent. The ld. AO also observed that the assessee has failed to explain the source cash paid for purchase of immovable property between 9th November, 2016 to 31st March, 2017. The ld. AO accordingly, made the addition for total cash deposit in the bank accounts from 9th November, 2016 to 31st December, 2016 at ₹2,73,06,000/- as unexplained money u/s 69A read with section 115BBE of the Act and assessed income at ₹3,17,53,786/-. 4. Aggrieved, assessee preferred an appeal before the ld. CIT (A) and filed detailed submissions but ld. CIT (A) without specifically dealing with the two components of the additions, partly allowed the appeal of the assessee holding that the ld. AO erred in making the addition solely on the ground that there is an increase of 96.79% in the cash deposit and gave part relief to the assessee directing the ld. AO to assume that there was an increase of 22.29% in cash deposits as explained. The finding of the ld. CIT (A) reads as under:- “Decision 1 Ground No.1: The Ld. AO has erred in assessing the source of cash deposit and biasedly added back it to the total income u/s 69A of the act. The Ld. AO did not considered the fact that the cash deposit has been made out of the amount received from sales which was duly shown in VAT return and also included in turnover in audited books of accounts which was duly disclosed in income tax return. The order of the Ld. AO is erroneous, harsh, unjustified and is against the spirit of law. COME TAX DEPARTME 1.1 The AO in his order has analysed the increase in sales and cash deposit during the period 1/04/2015 to 08/11/2015 and 01/04/2016 to 08/11/2016( Page 9 of the assessment order). Using this as the basis he found an unusual spurt in cash deposit during the demonetisation period compared to the corresponding period in 2015-16. Percentage increase between Total cash deposit in Bank from (09/11/2016 to 31/12/2016) and (9/11/2015 to 31/12/2015) is 96.79 and between (01/04/2015 to 08/11/2015) and (01/04/2016 to 08/11/2016) is 22.29. Page | 4 ITA No.548/Kol/2023 Rohit Jaiswal; A.Y. 2017-18 1.2 Even if there is an unusual spurt in cash deposit the entire amount cannot be treated as unexplained. The appellant was in business even during the period of demonetization. Therefore it would be wrong to assume that cash deposited before and after demonetization in FY 2016-17 was proper and during demonetization the cash deposited was unexplained. 1.3 The AO is directed to assume that there was an increase of 22.29% in cash deposit during the demonetisation period compared to the same period in FY 2015- 16. This amount should be treated as coming from business. The balance should be treated as unexplained. 2 Ground No.2: The appellant prays for relief and seeks permission to adduce fresh grounds of appeal and/or modify the same before or at the stage of hearing of the appeal. 2.1 Ground No. 2 is general in nature and no such requirement arose during the course of appellate proceedings. Hence, this ground is infructuous and hence dismissed.” 5. Aggrieved, assessee is now in appeal before this Tribunal. The ld. Counsel for the assessee submitted that the assessee is an authorized dealer of TVS Motor Co. Ltd. the books of accounts are duly audited and is duly registered under the Value Added Tax Act (VAT). He also submitted that books of accounts have not been rejected by the ld. AO. The quantitative details are regularly maintained. The increase in the cash deposits is commensurate with the increase in cash sales. Cash sales are being carried out regularly. On the close of the month of October, 2016, cash-in-hand available with the assessee was ₹2,37,80,852/-. He stated that the ld. AO have even considered the cash deposits in new denomination notes as unexplained cash deposit. He further submitted that the ld. AO has himself observed in the assessment order that cash deposits during the period 9th November, 2015 to 31st December, 2015 were ₹1,38,75,500/- but while making the impugned addition for the cash deposit during the period 9th November, 2016 to 31st December, 2016, the ld. AO grossly erred in making the addition for total cash deposit ignoring the actual cash sales made during this period. He further submitted that the finding of the ld. CIT (A) is not specific and not in order and is merely based on surmises Page | 5 ITA No.548/Kol/2023 Rohit Jaiswal; A.Y. 2017-18 and conjunctures, where he has assumed the increase in 22.29% in cash deposits as explained but the excess is unexplained. Lastly, he stated that when the ld. AO has accepted that the alleged cash deposit is on account of cash sales then the addition if any could have been made only to the extent of profit element that too if it is proved that sales were not recorded in the books of accounts. 6. On the other hand, the ld. DR vehemently argued supporting the order of both the parties. 7. We have heard the rival contentions and perused the records placed before us. The addition for cash deposits during demonetization period from 9th November, 2016 to 31st December, 2016, are in dispute before us. The ld. AO has made the addition u/s 69A read with section 115BBE of the Act at ₹2,73,06,000/-. The impugned addition has been made by the ld. AO on the basis of two observations firstly, that there has been abnormal increase in cash deposits during the said period as compared to the deposit in similar period during preceding financial year and that, the assessee has utilized the cash deposited in the bank account during this period for purchases of immovable properties. Now, during demonetization period, one property was purchased for consideration of ₹5,35,63,536/- for which housing loan of ₹4 crore was taken and the remaining amount has been paid from the personal bank account of the assessee as well as his wife. Another immovable property was purchased for a consideration of ₹3 crores and for making the said purchase, assessee took loan of ₹2.09 cr. from Punjab National Bank and the remaining amount has been given from the bank account of the assessee. So far as the source of investment for purchase of property is concerned, major portion is from the bank loan and remaining amount is from the personal account of assessee and his wife to this extent the details have been filed. But the Page | 6 ITA No.548/Kol/2023 Rohit Jaiswal; A.Y. 2017-18 ld. AO noted that there has been cash deposits in the sole proprietary concern i.e. M/s Durga Distributors and the cheques has been issued from there to the assessee which has further been utilized for making payment for purchase of immovable property, therefore, source of investment in immovable property stood explained by assessee. But the focus of the ld. AO was on the cash deposits in the business bank account of the assessee. We observe that the assessee maintains various bank accounts. The comparative analysis of the total cash deposits in all the bank accounts during the preceding F.Y. 2015-16 and the current F.Y. 2016-17 has been reproduced by the ld. AO at page no.8 and 9 and the same is mentioned below:- A (a) Total cash deposits in bank F.Y. 2015-16 (b) Total Cash deposit in bank from 01.04.2015 to 08.11.2015 (c) Total Cash deposit in bank from 9.11.2015 to 31.12.2015 9,49,69,041 5,30,71,400 1,38,75,500 B (a) Total cash deposit in Bank F.Y. 2016-17 (b) Total cash deposit in Bank from 1.04.2016 to 08.11.2016 (c) Total cash deposit in bank from 9.11.2016 to 31.12.2016 12,51,58,986 6,48,99,886 2,73,06,000 C 1. Percentage increase between B (a) and A (a) 2. Percentage increase between B(b) and A(b) 3. Percentage increase between B (c) and 4 (C) 31.79% 22.79% 96.79% 8. Now, before moving to analyse the cash deposits mentioned in the chart reproduced above, we will first take note of the fact that assessee is regularly maintaining its books of accounts along with quantitative details. Assessee is registered with the Value Added Tax Department (VAT). Quarterly returns and annual return under VAT have been filed. Tax audit report u/s 44AB of the Act also filed. Books of accounts have not been rejected by the ld. AO which means that the figures mentioned in the profit and loss account have been accepted. The assessee has been subjected to scrutiny proceedings for A.Ys. 2014-15 and 2015-16 and except minor additions of ₹61,561 and ₹1,64,742/-, income of the assessee has been assessed at ₹80,05,931/- and ₹75,64,210/-. Page | 7 ITA No.548/Kol/2023 Rohit Jaiswal; A.Y. 2017-18 9. Now coming to the cash sales and cash deposits for the year is concerned, we note that in the immediately preceding financial year cash sales during the period of 1st April, 2015 to 8th November, 2015 amounted to ₹15,23,82,543/- and the corresponding figure for F.Y. 2015-16 is amounting at ₹17,67,00,524/-. It clearly shows that the cash sales for the period 1st April, 2016 to 8th November, 2016, has increased by approx 16%. Further, we observe that during the period 9th November, 2015 to 31st December, 2015, the cash sales were ₹1,38,75,500/- but the figure for the period of 9th November 2016 to 31st December, 2016, is ₹2,73,06,000/-. Now, the ld. AO has made the addition for total cash deposits of ₹2,73,06,000/- without taking into consideration the actual cash sales for the very same period in the preceding year and also not considering the increase in the sales during the period. Ld. AO even not considered that cash sales declared by the assessee are subjected to VAT and are forming part of the books of accounts and shown in the VAT returns. Ld. AO without placing any evidence on record to prove that the alleged cash deposits are not recorded in the books has moved ahead to make the impugned addition and even included the cash received in new denomination notes. The ld. AO also erred in making the addition for the total cash deposits, even when it has been judicially settled from time to time that only profit element in the unrecorded sales is only to be added as income. Further, the finding of the ld. CIT (A) is also cryptic and he has merely disposed off the appeal by observing that 96.79% increase in sales is too high and the ld. AO should only accept 22.29% and such finding of Ld. CIT(A) is neither here nor there and is not based on any facts. 10. We thus, fail to find any justification in observation of the lower authorities and find that the addition made by the ld. AO is merely on surmises and conjunctures because the assessee has duly recorded the Page | 8 ITA No.548/Kol/2023 Rohit Jaiswal; A.Y. 2017-18 cash sales in its books and the alleged cash deposit is from the available cash in hand in the regular books of accounts. The assessee is regularly making cash sales from past many years. Books of accounts are not rejected Quantitative details are maintained, because, as being an authorized dealer of TVS Motor Co. Pvt. Ltd., the purchases are duly recorded and the sales if any made in cash are also recorded in the quantitative details and VAT returns. Therefore, in absence of any evidence of any unrecorded sales placed by the Revenue authorities and considering the fact that the assessee is a dealer of a reputed company i.e. TVS Motor Company Ltd., we fail to find any merit in the finding of both the lower authorities and are inclined to hold that the assessee has successively explained the source of cash deposits in the bank account during 9th November, 2016 to 31st December, 2016, which are from regular cash sales and therefore, impugned addition u/s 69A read with section 115BBE of the Act is uncalled for. The finding of the ld. CIT (A) is set aside and the impugned addition stands deleted. Effective ground no.2 raised by the assessee is allowed. 11. Ground no. 1 is general in nature w2hich needs no adjudication. 12. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 16th October, 2024 at Kolkata. Sd/- Sd/- (SONJOY SARMA) (DR. MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated 16/10/2024 *SS, Sr.Ps Page | 9 ITA No.548/Kol/2023 Rohit Jaiswal; A.Y. 2017-18 आदेश की प्रतततिति अग्रेतषत/Copy of the Order forwarded to : 1. अिीिार्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. संबंतित आयकर आयुक्त / Concerned Pr. CIT 4. आयकर आयुक्त ( अिीि ) / The CIT(A)- 5. तवभागीय प्रतततनति , अतिकरण अिीिीय आयकर , कोिकाता/DR,ITAT, Kolkata, 6. गार्ड फाईि / Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अिीिीय अतिकरण ITAT, Kolkata "