SHREE RAMRAJA HOMES PVT.LTD,JHANSI V. DCIT,CIRCLE 2(1)(1), AGRA

ITA 205/AGR/2024

AI Insights

The case involves Shree Ramraja Homes Pvt. Ltd., a real estate company, appealing against the order of the Commissioner of Income Tax (Appeals) which upheld the addition of Rs. 31,94,000 as unexplained money under section 69A of the Income Tax Act, 1961, for the assessment year 2017-18. The addition was initially made by the Assessing Officer following the company's failure to explain cash deposits of Rs. 34,00,000 made during the demonetization period. The CIT(A) reduced the addition after considering some bank withdrawals but upheld the majority of the addition. The Tribunal's decision partly allowed the appeal, reducing the addition further and rejecting the application of section 115BBE for the year in question.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669079 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Other Referred Cases: S.M.I.L.E. Microfinance Pvt. Ltd. Vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA.
• Assessee Lawyers: UTSAV SEHGAL
• Keywords: Opportunity of being heard; Onus to prove; Competent authority; Initiation of penalty proceedings
• Section: 147; 148; 144; 234B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH: AGRA BEFORE SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.205/AGR/2024 (ASSESSMENT YEAR: 2017-18) Shree Ramraja Homes Pvt. Ltd., 7, Om Building, New Road, Jhansi, Uttar Pradesh- 284002 PAN-AAPCS3955G Vs. DCIT, Circle-2(1)(1), Sanjay Place, Agra. (Appellant) (Respondent) Assessee by Shri Utsav Sehgal, CA Department by Shri Shailendra Srivastava. Sr. DR Date of Hearing 22/05/2025 Date of Pronouncement 24/06/2025 O R D E R [ PER MANISH AGARWAL, AM: This appeal is filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) Delhi [‘Ld. CIT(A) in short] dated 28.03.2024, in Appeal No. NFAC/2016-17/10165707 for Assessment Year 2017- 18 arising out of the order passed u/s 147 r.w.s 144 of the Income Tax Act, 1961 (the Act, inshort) dated 21.03.2022. 2. Brief facts of the case are that assessee is a Private Limited Company engaged in the business of Real estate and filed its return 2 ITA No.205 /Agr/2024 Shree Ramraja Homes Pvt. Ltd. vs. DCIT of income on 28.09.2017 declaring total income at Rs.46,53,593/-. The Assessing Officer has information in its possession that assessee has made cash deposit in specified bank notes (SBN) during the demonetization period of Rs.34,00,000/-, therefore, the case of the assessee was reopened by way of issue of notice u/s 148 of the Act on 31.03.2021 after recording the reasons and taking necessary approvals from the competent authority. The assessee has not filed any return of income in response to notice u/s 148 nor made any response to the notices issued by the AO on various occasions including show cause notice dated 08.03.2022. Therefore, the AO has completed the assessment u/s 144 of the Act by making addition of Rs.34,00,000/- by treating the same as unexplained money u/s 69A of the Act and further invoked the provisions of section 115BBE of the Act. 3. Against such order, the assessee preferred an appeal before the Ld. CIT(A) wherein it was claimed by the assessee that the cash was deposited out of the withdrawal made from time to time from its regular bank account and was redeposited when the demonetization was announced. After considering the submissions, the Ld. CIT(A) has allowed part relief to the assessee wherein the Ld. CIT(A) has reduced the addition to Rs.31,94,000/- from Rs.34,00,000/-. The relief was granted towards the bank withdrawals made during the month of September and October, 2016 totaling to Rs.2,06,000/-. 3 ITA No.205 /Agr/2024 Shree Ramraja Homes Pvt. Ltd. vs. DCIT 4. Against such order, the assessee is in appeal before the Tribunal by taking following the grounds of appeal: “1(a). That the learned Commissioner of Income-tax (Appeals), (hereinafter referred to as the 'CIT(A)'], NFAC, Income Tax Department has been arbitrary and unjust in passing order under section 250 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') by upholding the assessment order passed by the Ld. ITO, NFAC, Income Tax (hereinafter referred to as the 'AO'] in complete denial to the written submissions made and material placed by the appellant before the Ld. CIT(A), (b). That the Ld. CIT(A) passed the impugned order without giving proper opportunity of being heard to the appellant and formed unilateral opinion without delving into the facts and circumstances present in the case of the appellant and has grossly erred in law as well and in facts of the case in committing apparent miscarriage of justice by causally adjudicating the case on the basis of hypothetical facts not pertaining to the appellant and thereby dismissing the appeal without any just & valid reasons, 2. That the order passed by the Ld. CIT(A) is bad in law and liable to be quashed as the assessment order passed by the Ld. AO was in violation and complete disregard to the Standard Operating Procedure (SOP) mandated by the CBDT from time to time in it circulars for verification of cash transactions relating to demonetization period and so the impugned demand of Rs. 44,91,320 is liable to be quashed. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts by the upholding the impugned reassessment order passed by the Ld. AO since it was initiated and passed without complying with the mandatory conditions of section 147 to section 148A of the Act, 4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts by the upholding the impugned reassessment order passed by the Ld. AO since no valid satisfaction/approval under section 151 of the Act was obtained, 5(1). That on the facts and circumstances of the case, the Ld. CIT(A) was not justified in upholding the addition of Rs. 34,00,000 made under section 69A of the Act without appreciating the submissions filed and facts prevalent in the case of the appellant, (ii) That there is a direct nexus between cash in hand, cash withdrawals from bank account and subsequent cash deposits therein, therefore the impugned addition made by the Ld. AO is arbitrary and without any basis, 6(1). That the Ld. CIT(A) has upheld the addition of Rs. 34,00,000 made under section 69A of the Act solely because of time gap between cash withdrawal from the bank account and subsequent deposit into the same during the impugned period without appreciating the fact that since the appellant being a company maintained books of account under the Companies Act 2013, neither any defect has been pointed in the cash book of the appellant nor such books of account have been rejected and therefore, the cash deposited into the bank account cannot be treated as unexplained money since it was duly recorded in the books of account maintained by the appellant, (ii) That the Ld. CIT(A) has upheld the addition of Rs. 34,00,000 made under section 69A of the Act r.w.s 115BBE of the Act without establishing if during the impugned period such cash in hand was utilized by the appellant for making any other investment or was exhausted towards incurring any expenditure or was utilized by the appellant for any other 4 ITA No.205 /Agr/2024 Shree Ramraja Homes Pvt. Ltd. vs. DCIT purpose, but the Ld CIT(A) summarily rejected the appellant's explanation despite the appellant giving proof that the cash withdrawn from the bank was available for redeposit, 7. That the Ld CIT(A) has erred in law and on facts in uploading the addition of Rs. 34,00,000 made under section 69A of the Act r.w.s 115BBE of the Act by vaguely applying the principle of human probability by unilaterally making assumptions and treating cash deposited into the bank as unexplained without any concrete evidence and the burden of proof lies with the revenue authorities to show that the cash in hand is unexplained especially when the source of cash is explained and recorded in the books of account of the appellant, 8.(a) That in any view of the case, charge of interest under sections 234A, 234B and 234C of the Act is unwarranted. (b) That further in any view of the case, the initiation of penalty proceedings u/s 271AAC and 272A(1)(d) of the Act is unwarranted. 9. That the appellate order dated 28.03.2024 passed by the Ld. CIT(A) is against the law and facts of the appellant's case. The appellant also seeks permission to modify and/or adduce any other ground/grounds of appeal as circumstances of case might require or justify.” 5. Before us, the ld. AR of the assessee has not pressed the grounds of appeal No.1 to 4 taken against reopening of the assessment, thus the same are dismissed. 6. The grounds of appeal No.5,6 & 7 are in relation to the confirmation of the addition of Rs.31,94,000/- by the Ld. CIT(A) and for invocation of provisions of section 115BBE of the Act. Since, all these grounds are related to common issue, therefore, they are taken together for consideration. 7. Before us, the Ld. AR of the assessee submitted that the assessee has made cash withdrawal from its bank account from time to time which are tabulated as page 4 of the order of Ld. CIT(A). The said cash was available with the assessee and was redeposited by the assessee in the bank account when the demonetization was 5 ITA No.205 /Agr/2024 Shree Ramraja Homes Pvt. Ltd. vs. DCIT announced. Ld. Ar further submitted that the Assessing Officer has not doubted the books of accounts maintained in the regular course nor the same were rejected. He further submitted that without bringing any contrary evidence on record to controvert the evidences filed by the assessee, the action of the lower authorities in holding the cash deposits as unexplained money deserves to be held bad in law and consequent additions deserves to be deleted. Regarding the application of provisions of section 115BBE, the ld. AR submitted that the said provisions was inserted from 1.4.2017 and thus applicable from AY 2018-19. He further placed reliance on the judgment of hon’ble Madra High Court in the case of S.M.I.L.E. Microfinance Pvt. Ltd. Vs. ACIT, in W.P. (MD) No. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.) wherein it has been held that that the law applies to the transaction on or after 01.04.2017 only. He prayed accordingly. 8. Per contra, the Ld. Sr. DR supported the orders of lower authorities and requested for the confirmation of the additions made. 9. We have heard both the parties and perused the materials on record. In the instant case, the assessee has made no compliance before the Assessing Officer nor any evidence was filed in order to explain the sources of cash deposit in the bank account in SBN during demonetization period. Before the Ld. CIT(A) reply was submitted stating that the cash was deposited out of the bank withdrawals made during the year prior to demonetization and in 6 ITA No.205 /Agr/2024 Shree Ramraja Homes Pvt. Ltd. vs. DCIT support a copy of the bank statement was submitted. However, assessee has not filed any evidence like cash book etc. to substantiate its claim that the cash deposited of 34,00,000 was available with it as on the closing hours on 08.11.2016 when the demonetization was announced. The sum of Rs.34,00,000/- was deposited on four occasions in the bank account with Corporation Bank, however, source of the same was claimed as withdrawal in previous months. It was stated by the assessee that cash was withdrawn for construction activities in the normal course of business and the same was duly recorded in the books of accounts. It is a matter of fact that assessee is engaged in the business of Real Estate. It is not understandable that cash was withdrawal from time to time and were not utilized for the construction and kept by the assessee. This create serious doubts about the claim of the assessee where cash were withdrawn though sufficient cash was available. Therefore, it could be presumed that cash withdrawn earlier was utilized in construction activity and as and when funds were required, cash was withdrawn from the bank. It is also seen that the assessee is having opening cash in hand of Rs.10,55,414/- as on 01.04.2016. Looking to the over all facts of the case and also keeping in mind that assessee is having opening cash in hands of more than Rs.10,00,000/- and further cash withdrawals and also keeping in kind that lower authorities have not doubted the entries recorded in the books of account, in our considered opinion the addition toward cash deposited during demonetization be restricted to Rs.10,00,000/- as available with the assessee out of the opening cash and withdrawals 7 ITA No.205 /Agr/2024 Shree Ramraja Homes Pvt. Ltd. vs. DCIT made from time to time. Accordingly, as against total addition of Rs.31,94,000/- uphold by ld.CIT(A), we restrict the same to Rs.10,00,000/-. 10. With regard to the application of the provisions of section 115BBE, the Hon’ble Madras High Court in the case of S.M.I.L.E Microfinance Limited vs. ACIT (supra) has held that provisions of section 115BBE are applicable from AY 2018-19. The relevant observations of the Hon’ble Court are as under: 17. In the aforesaid objects and reasons nowhere it is stated that due to “demonetization” the unaccounted money ought to be charged 60% rate of tax. It only states that step had been taken to curb black money by withdrawing Specified Bank Notes of denomination of Rs.500 and Rs.1000. And also states the people may find illegal ways of converting their black money into black again, hence as per experts advice heavy penalty ought to be levied. From the language of the object “that instead of allowing people to find illegal ways of converting their black money into black again”, it is evident that the government is intended to impose the same for future transactions. Especially the use of word “again” in the object would clearly indicate it is for future transactions i.e. from 01.04.2017. Therefore this Court is of the considered opinion that the revenue is empowered to impose 60% rate of tax for the transactions from 01.04.2017 onwards and not prior to the said cut-off date. And for prior transaction the revenue is empowered to impose only 30% rate of tax. 11. Thus by respectfully following the judgment of Hon’ble Madras High Court in the case of S.M.I.L.E Microfinance Limited (supra), we hold that the provisions of section 11155BE are not applicable to the assessment year under appeal. In view of the above discussions, the grounds of appeal No. 5-7 taken by assessee are partly allowed. 8 ITA No.205 /Agr/2024 Shree Ramraja Homes Pvt. Ltd. vs. DCIT 12. The ground of appeal no. 8 is regarding charging of interest u/s 234B which is consequential in nature and the AO is directed to charge interest as per law on the tax on the income computed after giving effect to this order. 13. Next ground of appeal is regarding initiation of penalty proceedings u/s 271AAC which is premature and thus dismissed. 14. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 24.06.2025. Sd/- Sd/-/- (SUNIL KUMAR SINGH) (MANISH AGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 24.06.2025 PK/Sr. Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR 9 ITA No.205 /Agr/2024 Shree Ramraja Homes Pvt. Ltd. vs. DCIT "