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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
O R D E R Per Amarjit Singh (AM): The present appeal filed by the assesse is directed against the order passed by the NFAC, Delhi dated 16.03.2022 for A.Y. 2017-18. The assesse has raised the following grounds before us:
“1. On facts, in circumstances of the case and in law. National Faceless Appeal Centre erred in confirming addition of Rs. 1,06,86,819/- made by A.O under section 68 of the Income Tax Act. 1961. 2. On facts, in circumstances of the case and in law, National Faceless Appeal Centre erred in confirming addition under section 68 after considering average cash balance completely ignoring the fact that there was sufficient cash balance on the date of deposit of cash .
P a g e | 2 Pandurang Hari Vaidya and Company vs. ITO, Ward 22 (2)(5)
On facts, in circumstances of the case and in law, National Faceless Appeal Centre erred in confirming addition under section 68 when the amount of Rs. 1,29,88,000/- is already included in sales figure on which GST also has been paid and consequently amounts to double addition 4. The appellant craves leave to add, alter, modify or delete any of the above Grounds of Appeal.”
2. The assessee submitted that there is delay in filing this appeal by 215 days and requested for condonation of delay. In this regard, the assessee has filed an affidavit dated 12.06.2023 stating that order of ld. Commissioner of Income Tax (A) dated 16.03.2022 was not received by the assessee partnership firm. He further submitted that neither physical copy of the order nor copy of the order on the email given by the assessee was received. It is further submitted that when the assessee firm received show cause notice u/s 271AA(C)(1) of the I.T Act 1961 dated 09.02.2023 then assessee’s accountant informed about passing of order by the ld. CIT(A) on 09.01.2023.
3. Heard both the side and perused material on record in respect of delay in filing the appeal. We observe that there appear to be a bonafide cause for delay in filing this appeal because of not receiving the copy of order passed by the ld. CIT(A). In the light of the above after considering the decision of Hon’ble Supreme Court in the case of Collector Land Acquisition Vs. Mst. Katigir & Others, Civil Appeal No. 460 of 1987 dated 19.02.1987 wherein held that sufficient cause for the purpose of condonation of delay should be interpreted with a view to due even handed justice on merit in preference to the approach which scuttles a decision on merit. Therefore, we condone the delay in filing this appeal for adjudicating the case of the assesse on merit.
P a g e | 3 Pandurang Hari Vaidya and Company vs. ITO, Ward 22 (2)(5)
The fact in brief is that return of income declaring total income of Rs.11,19,795/- was filed on 07.11.2017. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 09.08.2018. The assessee firm is a partnership firm engaged in the business of jewellers and has retail showroom at Thane.
During the course of assessment proceedings the AO noticed that assessee has deposited high amount of cash in the bank account during the period between 09.11.2016 to 30.12.2016 as compared to period between 01.04.2016 to 08.11.2016. The assessing officer has drawn the following statistics from the bank statement which is reproduced as under: Description A/c No.- 0407511546 A/C No.-040100108532 Held and maintained held and maintained in in Cosmos Bank (INR) Cosmos Bank (INR) Opening Balance as on 24,47,170 95,818 01.04.2016 Total Credits during the FY. 5,10,98,320 1,82,32,297 2016-17 Out of total credits, Cash 2,74,33,000 1,03,43,000 deposits during F.Y. 2016-17 Out of total Cash deposit 55,56,000 63,30,000 amount of Cash deposited during the period between 09.11.2016 to 30.12.2016 Total Debit during the FY. 4,62,89,854 1,81,77,522 2016-17 Closing Balance as on 23,61,296 94,342 31.03.2017 Thereafter, the AO asked the assessee to furnish the comparative figures of cash deposited in the FY. 2015-16 & FY. 2017-18. Before the A.O. the assessee submitted the following statistics in respect of gross sale and cash deposited in the bank account: Month Gross Sales (INR) Cash deposited in bank (INR) April 2016 41,59,913 12,25,000 May 2016 50,88,930 28,96,000 June 2016 38,69,207 18,30,000
P a g e | 4 Pandurang Hari Vaidya and Company vs. ITO, Ward 22 (2)(5) July 2016 41,42,278 20,60,000 August 2016 53,52,921 33,20,000 September 2016 33,42,483 23,45,000 October 2016 2,39,31,864 64,70,000 November 2016 54,91,375 1,29,88,000 December 2016 55,10,055 90,000 January 2017 46,27,494 3,67,000 February 2017 58,15,264 16,10,000 March 2017 61,06,114 31,11,000 Total 7,74,37,898 3,83,12,000 After perusal of the aforesaid chart the A.O observed that sales in the month of October 2016 was unusually high and around 400% higher than the average sale of other month. The assessee was asked to explain the cash deposited in the month of October, 2016 of Rs.64,70,000/- as against sale of Rs.2,39,31,864/-. A show cause notice dated 19.11.2019 was issued to the assessee to explain the cash deposited, however the assessee has not made any compliance to the show cause notice issued, therefore, the amount of Rs.1,29,88,000/- deposited in cash during the period of 09.11.2016 to 30.12.2016 by the assessee as per the chart given above was treated as cash deposited from the undisclosed sources and added to the total income of the assessee u/s 68 of the Act.
The assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has partly allowed the appeal of the assessee to the extent of average cash deposited for the 11 month of the F.Y. 2016-17 other than for the month of November computed at Rs.23,02,181/-. Therefore, the ld. CIT(A) allowed the allowance to the extent of Rs.23,02,181/- and sustain the remaining addition of cash deposited to the amount of Rs.1,06,85,819/-.
P a g e | 5 Pandurang Hari Vaidya and Company vs. ITO, Ward 22 (2)(5)
During the course of appellate proceedings before us the ld. Counsel submitted that during the course of appellate proceedings the assessee has filed the monthly cash flow statement, monthly stock flow statement, sale register for FY. 2016-17 and audited copies of balance sheet and profit and loss account etc, however, the ld. CIT(A) has neither rejected the additional evidences, nor considered these evidences before sustaining the impugned addition made by the assessing officer. The ld. Counsel after referring page no. 71 of the paper book submitted that detail break-up of cash flow month wise was given showing the opening cash, monthly cash sale and cash payment and closing cash balance which was not considered by the Ld. CIT(A) also. The ld. Counsel referred page no. 73 of the paper book showing month wise opening stock of goods, month wise purchase and sale and month wise closing stock and also referred other pages considering date wise sale register with other particulars, In this regard the Ld. Counsel pointed out that the ld. CIT(A) has neither called any remand report from the AO nor taken into consideration these material before deciding the appeal of the assessee. On the other hand, the ld. D.R supported the order of lower authorities and submitted that assessee has not produced the relevant evidences of sale and purchase before the assessing officer and could not substantiate how the cash deposited in November 2016 was much more than the average cash deposited for other 11 months.
Heard both the sides and perused the material on record. Without reiterating the facts as elaborated above during the course of assessment the A.O has noticed high sale figure in the month of October and high amount of cash deposited in bank account in the month of November after the demonetization scheme was announced. The sale figure shown for the month of October 2016 was P a g e | 6 Pandurang Hari Vaidya and Company vs. ITO, Ward 22 (2)(5) Rs.2,39,31,864/- whereas the average sale for remaining 11 months of the order financial year was only Rs.48,64,184/- per month. Cash deposited in the month of November was Rs.1,29,88,000/- whereas average cash deposited for the other 11 months was only Rs.23,02,181/- per month. The AO has treated the whole cash deposited in the month of November 2016 as unexplained income u/s 68 of the Act stating that assessee had not explained the genuineness of sales and purchases with relevant supporting evidences. However, the ld. CIT(A) has restricted the addition after reducing the average cash deposited for the other months to the amount of Rs.23,02,181/- and sustained the addition to the amount of Rs.1,06,85,819/-. However, we find that the ld CIT(A) has not considered the details i.e. month wise opening stock, closing stock of purchase and copy of sale register along with other particulars before deciding the case of the assessee. Neither the ld. CIT(A) has rejected these evidences nor called any remand report from the AO before deciding the appeal of the assesse. In the light of the above facts and circumstances we consider that the case is required to the set aside for deciding on merit after considering the material furnished by the AO which were not considered by the ld. CIT(A). Normally, whenever any irregularity crept in the proceedings then after removing the irregularity proceedings is to be initiated from that stage but by remitting the issue to the ld. First appellate authority we would be multiplying litigation because the ld. CIT(A) would call for remand report from the AO and proceedings would be commenced on two stages in order to avoid that situation would deem it proper to set aside the issue to the assessing officer for deciding on merit after taking into consideration the detail and document as discussed above placed in the paper book.
It is needless to say that observation made by us will not injure or impair the case of the AO and will not cause any prejudice to the P a g e | 7 Pandurang Hari Vaidya and Company vs. ITO, Ward 22 (2)(5) Defence explanation of the assessee. Therefore, the appeal of the assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 31.05.2023 Sd/- Sd/- (Amit Shukla) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 31.05.2023 Rohit: PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT विभागीय प्रविवनवध, आयकर अपीलीय अवधकरण DR, ITAT, 4. Mumbai 5. गार्ड फाईल / Guard file.