RHYTHM INFRASTRUCTURE LTD,MUMBAI vs. DCIT,CENTRAL CIRCLE 1(2), MUMBAI

Rhythm Infrastructure Ltd. (assessee / appellant) has preferred this appeal vide A.Y. 2017-18 against the appellate order passed by Commissioner of Income-tax (Appeals)-47, Mumbai [the learned CIT (A)] dated 4th November, 2022, wherein the appeal filed by the assessee against the assessment order passed on 30th December, 2019, under Section 143(3) of the Income-tax Act, 1961 (the Act) by the Dy. Commissioner of Income-tax, Central Circle 1(2), Mumbai (the learned Assessing Officer), was dismissed.

the Ld CIT(A) further erred both in law and on facts in not appreciating the details submissions and the legal position emerging from the case laws cited before him and in holding that he addition of Rs 83,20,00/- was rightly made by the Ld AO. On facts and in law the decisions of both the lower authorities are not justified and impermissible. It be so held now and additions made be directed to be deleted.

The Ld CIT(A) ought to have accepted the submissions o the appellant and directed to delete the additions made by Ld AO considering the entirety of facts and further, when the books of account have not been rejected.

The order passed by Ld CIT (A) is illegal and invalid to the extent the addition made by Ld AO is confirmed by him.

The assessee challenged the same before the learned CIT (A). The learned CIT (A) vide ground no.6 categorically held that cash deposited in the bank account of the assessee during the demonetization period has nothing to do with the cash offered as income at the time of survey action, for the simple reason that assessee has not incurred any cash expenditure after the date of survey on 17th June, 2016 till the date of demonetization i.e. 8th November, 2016, which is very unusual and cannot be correct. He further referred to the conduct of the assessee and the statement recorded by the survey team holding that such statement is absurd. He held that assessee has not explained or furnished the details of sale of scrap in earlier years. Further, if the scrap is sold, there is no evidence of tax collection source and it is not accounting in the books of accounts and deposited with the government. Accordingly, he confirmed the addition of ₹83,20,000/- under Section 69A of the Act.

The learned Departmental Representative vehemently submitted that the order of the lower authorities have correctly held that cash deposited by the assessee of ₹83,20,000/- is unaccounted cash of the assessee. He further submitted that the cash flow statement submitted by the assessee has already been proved as incorrect by the learned CIT (A) as there is no cash expenditure by the assessee after the date of survey till the date of demonetization, which cannot be correct. Accordingly, he

We have carefully considered the rival contentions and perused the orders of the lower authorities. The fact shows that survey took place at the business premises of the assessee on 7th September, 2015. Assessee disclosed unaccounted income of ₹7.35 crores. It is also a fact that assessee did not offer disclosure so made by it. However, it is also fact that though assessee has not owned complete disclosure of ₹7.35 crores, the cash flow statement submitted before us categorically shows that as on 7/9/2015 the assessee has cash on hand of Rs 1,35,79,500/-. In the same cash flow statement assessee has also shown several admitted cash receipts, some of the cash receipts have also been owned by the assessee to avoid unnecessary litigation. Further in assessment year 2013 – 14 to 2016 – 17 there are several additions made in the hence of the assessee on account of cash receipts. Regarding sale of scrap paragraph number 6.14 of the learned CIT – A shows that that there are certain works contract tax shown as payable by the assessee on sale of scrap. The learned assessing officer is confirmed the addition also 41 of the reason that the assessment order for assessment year 2013 – 14 till 2016 – 17 has not attained finality. In view of this we set-aside the whole issue back to the file of the learned assessing officer to consider the amount of disclosure made by the assessee and owned by the assessee. If the learned assessing officer finds that that the amount of cash deposited by the

In the result, appeal filed by the assessee is allowed for statistical purposes.