EMGEE INTEGRATED LOGISTICS PRIVATE LIMITED,TIRUVALLUR vs. ACIT, CORP CIRCLE 2(1), CHENNAI

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi, dated 20.09.2022 relevant to the assessment year 2017-18.

Brief facts of the case are that the assessee filed its return of income for the assessment year 2017-18 on 31. 10.2017 by admitting loss of ₹.1,57,694/- under normal provisions of the Income Tax Act and book profit income of ₹.2,62,445/- under section 115JB of the Income Tax Act. The return filed by the assessee was selected for scrutiny under CASS and notice under section 143(2) of the Act was issued on 11.08.2018 and duly served on the assessee. Notice under section 142(1) of the Act dated 07.06.2019 was also issued on the assessee. The assessee has filed all the details. On perusal of bank statements, the Assessing Officer has noted that the assessee had deposited cash aggregating to ₹.1,05,55,000/- in its account held with Axis Bank during demonetization period in SBN. After considering the submissions of the assessee and verification of bank account statements towards withdrawals and rejecting the explanations of the assessee, the Assessing Officer treated the cash deposits of ₹.1,05,55,000/- as unexplained cash credit and added as income of the assessee under section 68 of the Act. On appeal, the ld. CIT(A) confirmed the addition.

On being aggrieved, the assessee is in appeal before the Tribunal. On verification of the bank statements of the assessee and not disputing the withdrawals made by the assessee within two months before the cash deposits were erroneously treated as unexplained cash credit under section 68 of the Act and prayed for deleting the addition.

On the other hand, the ld. DR has submitted that the assessee has not explained as to why he has withdrawn huge amount and kept for more than two months and redeposited. He further pointed out that the assessee has failed to explain the genuineness of the withdrawals and therefore, the deposits made by the assessee cannot be held as genuine deposits and strongly supported the orders of authorities below.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, the assessee is engaged in handling of internal coal movement for wagon loading/ship unloading at Krishnapatnam port and handles coal/bulk cargo transportation from Krishnapatnam port to power plants, cement and steel plants. The assessee has admitted to have withdrawn cash of ₹.32,40,000/- on 31.08.2016 from R.A. Puram Branch of Axis Bank and ₹.1,26,20,000/- between 22.8.2016 to 31.08.2016 from Begumpet Branch, Hyderabad of Axis Bank towards advance payment for purchase of land near their project sites (construction of temporary labour shed at various project sites) and since it was not happened due to some litigations in the land. It was further submitted before the Assessing Officer that the out of the above withdrawals, the assessee has deposited the cash with the same bank between 15.11.2016 and 19.11.2016 and 4 also on 07.12.2016 to the extent of ₹.1,05,55,000/-. The above facts have been verified by the Assessing Officer and the same are not in dispute. However, the Assessing Officer has treated the cash deposits as unexplained cash credit under section 68 of the Act, which was confirmed by the ld. CIT(A).

On perusal of the assessment order, we find that the Assessing Officer was of the opinion that the buyers and sellers will enter into an agreement by way of giving advance for purchase of the property after the property is identified and finalised by making an exhaustive test like EC, legal clearance and also more than ₹.2,00,000/- cannot be given as cash for purchase of the land. The ld. Counsel for the assessee has submitted that the purchase of land near their project sites are not in the metropolitan city and the project sites of the assessee are remote villages where, sellers will agree to sell the property against cash payment only. It was also submitted that until the deal is finalized the buyer will not get the copy of the document of the property for making exhaustive test like EC, legal clearance, etc. It was also submitted that the assessee has not retained the cash for longer period and nearly within two months of the cash withdrawals, the cash was deposited back assessee’s bank account on eight occasions when the purchase of the property could not be materialized due to litigations on the property.