ACIT, C.C.-1, RANCHI vs. M/S SHRI RAM AUTOMOBILES, RANCHI
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Income Tax Appellate Tribunal, “DB” BENCH: RANCHI
Before: Shri Rajesh Kumar & Shri Sonjoy Sarma]
Per Rajesh Kumar, AM:
This is an appeal preferred by the revenue against the order of the Commissioner of Income Tax- Patna-3, [hereinafter referred to as ‘ Ld. CIT(A) ’] dated 17.02.2020 for the assessment year 2013-14.
The only issue raised by the revenue is against the deletion of addition of Rs. 10,53,41,542/- by the Ld. CIT(A) as made by the AO on account of unexplained cash credit during the year.
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Facts in brief are that the assessee did not file any return of income u/s 139(1) of the Act for the instant assessment year. Accordingly a notice u/s 148 of the Act was issued on 28.1.2016 and the case of the assessee was selected for scrutiny. The statutory notices were issued to the assessee and the same were not served and consequently replied by the assessee resulting into framing of ex-parte assessment u/s 144/148/143(3) of the Act on 28.07.2016. In the said assessment , the AO estimated the income of the assessee from the business. Besides the AO noticed from the available information that the assessee has deposited cash aggregating to Rs. 10,53,41,542/- in various bank accounts and held that since the assessee has not filed any return of income, the entire sale consideration is treated as unexplained cash credit u/s 68 of the Act and added to the income of the assessee. Finally the income was assessed at Rs. 10,57,41,540/- in the above mentioned assessment order dated 28.07.2016.
During the appellate proceedings, it was submitted before the first appellate authority that the assessee is engaged in the business of selling petrol, diesel and mobil for the last several years from a petrol pump outlet situated in Khori Mahual More, near Rajdhanwar on National Highway and sale proceeds of petrol, diesel and mobil were regularly deposited in the bank during the normal course of business. It was submitted before the Ld. CIT(A) that notices issued could not be complied with due to the illness of the principal working partner Shri Sharwan Kumar Sahu nor return of income was filed. It was also submitted that the assessee duly filed the return of income in response to notice issued u/s 148 of the Act on 26.09.2016 and the assessee furnished all the evidences before the Ld. CIT(A) Sale bills ,purchase bills , bills of expenses, bank statement, other bills and vouchers etc, audited books of account, tax audit report etc. which were forwarded to the AO for submitting the remand report thereon but the AO reiterated his observations as made in assessment proceedings without giving any opportunity of hearing to the assessee. The said remand report was confronted to the assessee and the assessee filed detailed reply to the said remand
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report. Finally considering all the evidences ,remand report and reply of the assessee thereto , the Ld. CIT(A) allowed the appeal of the assessee by observing as under:
I have carefully considered the finding of the Ld. AO, submission of the appellant, remand report of the AO and appellant’s joinder to remand report. The undisputed fact is that the appellant is engaged in the business of selling of petrol, diesel and lubricants through its petrol pump located at Rajdharwar, Giridih. As the appellant has not fiied return of income for A.Y.2013-14 and moreover, the AO has some information regarding huge cash deposits in the bank, issued notice u/s.148 of the Act. During the re-assessment proceeding, the AO on perusal of bank statement noted that the appellant deposited cash aggregating to Rs.10,53,41,542/-. Accordingly, the AO show-caused the appellant to prove / establish the source of cash deposits / cash credits in to the bank account. As the assessee failed to submit any explanation / details the AO treated the same as unexplained cash credit u/s.68 and made an addition of Rs.10,53,41,542/-. Further, as the assessee not filed the ROI for A.Y.2013-14 the AO by referring to the ROI filed for A.Y.2011-12 & A.Y.2012-13 made an estimated addition of Rs.2,00,000/- as income of the year. On the other hand the appellant submitted that its books of accounts for A.Y.2013-14 were audited u/s.44AB by M/s.S.K.Patodia & Associates as on 30.09.2013, however the return of income could not be filed due to the illness of the main working partner Shri Sharwan Kumar Sahu. With regard to cash deposits the appellant by producing all the documentary evidences stated that its petrol pump is located on a Highwayand most of the sales are done in cash. The appellant further referring to its audited books of accounts submitted that the total sales during the year was Rs.13,03,33,369/- of which cash sales are Rs.10.91,47,556/- and credit sales are only Rs.2 16,72,353/-. Accordingly, the appellant submitted that out of the total cash sales of Rs.10.91 crore it has deposited aggregate cash of only Rs.10.53 Crores. The appellant also drew my attention to the fact that for A.Y.2015-16, the assessment was made u/s.143(3) vide order dated 28.11.2017 wherein the aggregate cash of Rs. 10,73,15,950/- was deposited and the AO after due verification has accepted the returned income. Accordingly, the appellant submitted that the findings of the AO in the assessment order as well as in the remand report are contrary to the facts on record. On a careful consideration I find considerable force in the submission of the appellant. It is a fact that the patrol pump is located on a Highway and most of its sales are in cash. It is also a fact that out of total cash sales of Rs.10.91 crores the appellant deposited only Rs.10.53 crores. Further, it is not the case of the AO that the cash deposited was from some other source, other than the sale proceeds from petrol pump Further, no addition on account of similar cash deposits was made in the earlier years or in subsequent years. As brought out on record, the AO after extensive verification of cash deposit of Rs.10.73 Crores in A.Y.2015-16 has accepted the returned income in the order passed u/s. 143(3) dated 28.11.2017. Therefore, I hold that the cash deposits made are from the cash sale proceeds of petrol, diesel etc. Accordingly, the AO is directed to delete the addition made of Rs.10,53,41,542/-. With regard to estimated addition made of Rs.2,00,000/-, the fact is that the appellant got its account audited u/s.44AB from M/s.S.K.Patodia & Associates as on 30.09.2013 itself, however could not file the return due to illness of its main working partner. However, the appellant e-filed the ROI on 26.09.2016 declaring total income of Rs.36,390/-. Though the ROI is filed after the completion of assessment u/s.147/144 dated 28.07.2016, however the same along with audited B/S, P & L A/c and it schedules are available before the AO in the remand proceedings. Further, during the remand proceeding, the AO has not pointed any defect in the books of accounts produced before him. Under these circumstances, the estimated addition made of Rs.2,00,000/- is directed to be deleted and the AO is directed to accept the returned income of Rs.36,390/-.
4 ITA No. 30/Ran/2020 AY: 2013-14 M/s Shri Ram Automobiles Accordingly, these grounds are allowed.” 5. We have heard rival submissions and perused the material on record.We Note that the assessee could not file any return of income due to illness of principal partner Shri S. K. Sahu however return was filed in response to notice issued u/s 148 of the Act on 26.1.2016 along with computation of income. We observe that when the assessee failed to respond the notices issued, the AO added the entire cash sales as unexplained cash credit u/s 68 despite knowing the fact that the assessee was engaged in the business of selling petrol, diesel and mobil through a petrol pump. In the appellate proceedings, the assessee filed all the evidences before the Ld. CIT(A) and Ld. CIT(A) forwarding the same to the AO for remand proceedings. However the AO reiterated his observations in the remand report that the assessee did not comply with the various notices issued during the assessment proceedings without allowing any opportunity to the assessee. Thereafter the ld CIT(A) confronted the remand report with the assessee and the assessee filed a detailed submissions. The Ld. CIT(A) after considering all the evidences such as bills, vouchers, books of account, purchase bills, sales bill, VAT return filed by the assessee deleted the addition in respect of cash sales. The Ld. CIT(A) observed that the total sales of assessee were Rs. 13,03,33,369/- out of which cash sales were Rs. 10,91,47,556/- and credit sales were Rs. 2,16,72,353/-. The Ld. CIT(A) given finding a fact that the assessee has deposited Rs. 10,53,41,542/- out of cash sales. The Ld. CIT(A) also referred to AY 2015-16 where assessment u/s 143(3) was framed vide order 28.11.2017 wherein the aggregate cash of Rs. 10,73,15,950/- deposited was accepted after due verification of records and the return of income. The Ld. CIT(A) has deleted the addition in respect of estimated income of Rs. 2,00,000/- made by the AO on the ground that the AO has not pointed out any defect in the books of account and evidences filed by the assessee in the remand proceedings and directed the AO to delete the addition and accept the income of Rs. 36,390/- returned by the assessee. Having considered all these facts, we are of the view that the Ld. CIT(A) has taken a very reasoned view and passed a speaking order which does not require any interference at our end . Accordingly we uphold the order of Ld. CIT(A) by dismissing the appeal of the revenue.
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In the result, appeal of the revenue is dismissed.
Order is pronounced in the open court on 6th November, 2023
Sd/- Sd/- (Sonjoy Sarma /संजय शमा#) (Rajesh Kumar / राजेश कुमार) Judicial Member /+या�यक सद(य Accountant Member / लेखा सद(य Dated: 6th November, 2023 SM, Sr. PS
Copy of the order forwarded to: 1. Appellant- ACIT, CC-1, Ranchi 2. Respondent – M/s Shri Ram Automobiles, 11, M. R. Tower, Line Tank Road, Ranchi-834001.
Ld. CIT(A)-Patna-3 4. PCIT- , Ranchi 5. DR, Ranchi Bench, Ranchi True Copy By Order
Assistant Registrar ITAT, Kolkata Benches, Kolkata
