Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI PAVAN KUMAR GADALEShri SagarSanjeevShetty
Appellant by : Shri. Bharat, L. Gandhi.AR Respondent by : Shri.Nayanjyoti Nath, Sr.DR Date of Hearing 06.12.2023 Date of Pronouncement 20.12.2023 आदेश / O R D E R
PER PAVAN KUMAR GADALE JM:
1. The assessee has filed the appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi /CIT (A) passed u/sec 143(3) and 250 of the Act. The assessee has raised the following grounds of appeal:
1. The assessee has already offered tax to said amount in hands of his Partnership firm M/s Sea Prince Bar And Sagar Sanjeev Shetty, Mumbai. - 2 - Restaurant PAN: ADEFS6624F and charging tax on said amount twice is against the Article 265 of Constitution of India.
2 The said account of the assesse is used for the business of partnership firm and the said account is duly audited by the Chartered accountant thus have evidentiary value
3. The assesse has already explained the cash credit in firm M/s Sea Prince Bar And Restaurant hence section 68 of Income tax Act is not applicable.
4. Burden of proof is on revenue which is not discharged in view of acceptance of said amount in hands of M/s Sea Prince Bar And Restaurant and already accepting taxes on said amount in hands of M/s Sea Prince Bar And Restaurant.
5 The additions cannot be made on arbitrary estimations.
6. None of Judgement relied by the Ld. Assessing and Appellate Commissioner is applicable to facts of the present case.
There is huge recovery by way of cash sales at the time of demonetization and it is business decision to accept the cash from customers for pending recoveries for the profit and survival of the business at the time of demonetization. Needless to say that all cash received is offered to tax in the hands of M/s Sea Prince Bar And Restaurant by the assessee.
8. Addition based on presumptive percentage is without any basis without supporting any evidence.
The Appellant is disputing the full tax liability under section 249 (4) of the income tax act, 1961. And the appellant reserves his rights to modify, amend, alter, add or delete any of the grounds with the permission of this on honourable tribunal. Sagar Sanjeev Shetty, Mumbai. - 3 - Relief Claimed: Reliefs: a. This tribunal may please be set aside the order of the CIT Appeals and the assessing officer, b. Any other relief switch to the facts and circumstances of the case is concerned. c. Cost of this appeal may be provide.
The brief facts of the case are that, the assessee is an individual and is engaged in the Hotel business. The assessee has filed the return of income for the A.Y 2017-18 on 22.03.2018 disclosing a total income of Rs. 30,11,150/-. Subsequently the case was selected for limited scrutiny under CASS and notice u/sec 143(2) and U/se 142(1) of the Act are issued. In compliance to the notice, the assessee has filed the details in support of the return of income filed through ITBA. Whereas, the Assessing Officer (AO) found that the assessee is an individual and is a partner of M/s. Sea Prince Bar and Restaurant. The assessee has offered income from business and income from other sources. The A.O has received the information that, there were cash deposits of Rs.51,68,500/- in the F.Y 2016-17 in the bank accounts, in particular during the demonetization period from 09.11.2016 to 31.12.2016. The A.O has issued a show Sagar Sanjeev Shetty, Mumbai. - 4 - cause notice to explain the sources of deposits. In compliance, the assessee has filed the explanations and details on 19.12.2019 referred at Para 3.1 of the AO order.
The AO on perusal of the facts and information found that the explanations of the assessee cannot be accepted and made analysis of the details filed and dealt at Para3.3 of the order as under:
“3.3 On analysis of the submissions made by the assessee, the following observations have been made:
On the 8th of November, 2016, the government of India had announced demonetization of Rs. 500 and Rs. 1000 currency notes, hence these currencies failed to be a legal tender from 9th November, 2016 onwards. This led to a short term liquidity crunch across the country, as the new notes were circulated in a gradual manner. In this background, the assessee's argument that there has been an increase in cash receipts implies that the assessee has either accepted the erstwhile Rs. 500 and Rs. 1000 currency notes, or the cash was deposited from the unaccounted cash in hand with the assessee.
2. As per the submission provided by the assessee, cash receipts in November, 2016 is Rs. 12,65,246 and cash receipts in December, 2016 is Rs. 15,45,200. On analysis of the cash sales for the FY 2016-16, excluding the months of November and December, the average cash sales in Rs. 9,14,456. The average cash sales for the month of November and December, 2016 is Rs. 14,05,223. This indicates that there has been an increase in cash sales of 53.4% during the months of November and December as compared to the rest of the year.
Sagar Sanjeev Shetty, Mumbai. - 5 -
3The cash receipts from sale proceeds in December is Rs. 15,45,200, whereas the cash deposited in December, 2016 is Rs. 38,03,500. The assessee has argued that the remaining money is cash in hand with the assessee which was from sale proceeds of earlier months. On analysis of the cash receipts and cash deposit every month, it can be observed that the assessee has regularly deposited the cash received from sale proceeds into his account, therefore the argument of the assessee that the amount of Rs. 22,58,300 is from cash in hand from sale proceeds of earlier months cannot be accepted.
Also, on analysis of the trend in sales, an increase in cash sales of 53% during November and December, 2016, cannot be accepted because demonetization was the time of severe liquidity crunch across the country and during such times and increase in cash receipts that too such a significant increase is not possible.
5On analysis of the cash deposited in the FY 2016-17, it can be observed that there was a cash deposit of Rs. 1,27,43,180 across the year, which is an average of Rs. 10,61,931/- per month. Whereas in the FY 2017-18, the total cash deposit is Rs. 62,50,000 which is a significant decrease of 49.04% as compared to F.Y. 2016-17.
Therefore, on analysis of the cash receipt for the year FY 2016-17 & FY 2017-18, along with the cash receipts received in November and December, 2016 with the cash receipts in other months, it can be seen that there has been an unusual increase in cash receipts and cash deposit in the months of November and December, 2016In this background, the cash book of the assessee is rejected”
Sagar Sanjeev Shetty, Mumbai. - 6 -
4. Finally the AO has made addition of cash deposits of Rs.50,09,500/-as unexplained cash credit and assessed the total income of Rs.80,20,650/- and passed the order u/s 143(3) of the Act dated 20.12.2019.
Aggrieved by the order, the assessee has filed an appeal with the CIT(A). The CIT(A) considered the grounds of appeal, submissions of the assessee and findings of the AO but has sustained the addition and dismissed the assessee appeal. Aggrieved by the CIT(A)order, the assessee has filed an appeal before the Honble Tribunal.
6. At the time of hearing the Ld. AR submitted that the CIT(A) has erred in confirming the addition by the AO overlooking the factual information filed in the proceedings. The Ld.AR emphasized that the CIT(A) has ignored the fact that the assesseee is a partner of M/s. Sea Prince Bar and Restaurant and the cash balance available with the assessee is offered to tax in the hands of the partnership firm and was explained. Further the Ld.AR submitted that the assessee has a good case on merits and has filed an application for admission of the additional evidence under Rule 29 of ITAT rules. Per contra, the Ld. DR submitted that the evidences were not examined by the Sagar Sanjeev Shetty, Mumbai. - 7 - lower authorities and the Ld. DR supported the order of the CIT(A).
7. We heard the rival submissions and perused the material on record. The sole crux of the disputed issue that the CIT(A) has erred in sustaining the addition by the A.O. as the transactions are not supported with the documentary evidences. The Ld.AR emphasized that the assessee has submitted the details as called for by the authorities. Whereas the CIT(A) has overlooked the facts that the assessee is a partner in a firm and the cash deposits were pertaining to the firm income which was explained and the assessee bank account was used for the purpose of business and hence cannot be again taxed in the hands of the assessee. The assessee is filling the application for admission of additional evidences under Rule 29 of ITAT rules with (i) Cashbook of sea prince bar and restaurant (ii) Bank statement of Indusind Bank (iii)sales Ledger (iv) Income Tax return and (v) Pan card of sea Prince Bar and restaurant. Whereas these details were not available earlier and could not produce before the lower authorities. Further the evidences play a important role in decision making in the adjudicating proceedings. Therefore considering the facts, circumstances and additional Sagar Sanjeev Shetty, Mumbai. - 8 - evidences, the assessee should not suffer for non filing of material information, as the evidences played vital role in decision making and admit the additional evidence. Accordingly, to meet the ends of justice, set aside the order of the CIT(A) and restore the entire disputed issues along with the additional evidence to the file of the assessing officer to decide afresh on merits and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. Accordingly, allow the grounds of appeal of the assessee for statistical purposes.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 20.12.2023.