ACIT, C.C.-1, RANCHI vs. M/S SHRI RAM AUTOMOBILES, RANCHI

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.

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

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.

In the result, appeal of the revenue is dismissed.