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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGH, VICE- & SHRI ARUN KHODPIA
This appeal by the Revenue is arising out of order passed by the CIT(A)-1, Trichy, vide 19/CIT(A)-1/TRY dated 26.06.2020. The assessment was completed by the Assistant Commissioner of Income Tax, Circle-3(1), Trichy, for the relevant assessment year 2016-17 u/s.143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide order dated 13.12.2018.
At the outset, it is noticed that appeal filed by the Revenue in 10 days. The learned Sr.DR submitted that the delay is due to pandemic period of Covid-19 and the Hon’ble Supreme Court in Misc. Application No.665 of 2021 vide order dated 23.03.2020 had given directions that delay is to be condoned during the period from 15.03.2020 to 14.03.2021 and they have condoned delay upto 28.02.2022 in Misc. Application No.21 of 2022 vide order dated 10.01.2022. Since, the Hon'ble Supreme Court has condoned delay during the said period, respectfully following the same, we condone the delay and admit the appeal.
The only issue in this appeal of the Revenue is as regards to order of the CIT(A) in deleting additions made by the Assessing Officer of cash in hand disclosed by the assessee in balance sheet as on 31.03.2016 at Rs.2,01,13,042/-, which was considered by the Assessing Officer as unexplained cash in hand.
We have heard rival contentions and gone through facts and circumstances of the case. The brief facts are that the assesse, a contractor, filed his return of income for relevant assessment year 2016-17 on 14.04.2017 declaring total income at Rs.3,49,90,760/-. The assessee’s case was selected for limited scrutiny under CASS for the reason that the assessee has shown high cash in hand as on 31.03.2016 in the balance sheet, as compared to preceding year and consequently, cash deposits made during demonetization period on 07.11.2016. As there was no explanation filed by the assessee, the A.O. treated cash in hand as unexplained amounting to Rs.2,01,13,042/- and brought the same to tax by observing in para 4 as under:-
“4. As there was no submission from the assessee side to the notice u/s.142(1) dated 18/10/2018, the assessee was called informed over the phone (ITR number). The assessee did not respond and hence a pre-assessment notice was issued on 04/12/2018 granting a final opportunity to produce any supporting evidence. Tilldate, there is no response from the assessee. As per ITR itself,the assessee has shown four bank accounts and as per the data available with the department, the assessee has more than five bank accounts. Despite so many bank accounts maintained by the assessee during the year the assessee has reported cash in Hand to the tune of Rs. 2,01,13,042-. It is pertinent to state that the assessee has filed the return of income for the Assessment Year 2016-17 only on 14/04/2017, i.e. after the commencement of demonetization. And assessee has not provided any explanation to the high cash in the entire cash-in-hand hand. In the circumstances, Rs.2,01,13,042/- is disallowed as unexplained.”
Aggrieved, the assessee preferred appeal before the CIT(A).
The CIT(A), after considering submissions of the assessee which are only based on decisions of High Courts, but not factual, deleted additions by observing in para 6.3 to 6.5 as under:-
6.3. It may be noted that in case of assessee for immediately next assessment year (A Y.2017-18) the assessing officer has accepted the cash balance as on 01.04.2016 of Rs.2,01,13,042/- and the cash balance as on 08.11.2016 of Rs.3,11,73.837/- as per para 3, page 2 of his assessment order.
6.4. Addition for A.Y. 2017-18 have been made only on account of agricultural income and disallowance of cash credit and no doubts has been expressed in any manner as to availability of cash in hand as an 01.04.2016. AO has hence accepted cash in hand as on 011.04.2016 in the assessment of A.Y. 2017-18 and it would appear strange that cash in hand has been taxed in A.Y.2016-17. When in the assessment of immediately succeeding year the figure of cash in hand has been accepted, there is no ground for addition of the same in the year A.Y. 2016-17. 6.5. As assessing office has himself accepted cash in hand as on 01.04.2016 and as net of tax returned income for A.Y. 2016- 17 itself exceeds cash in hand balance and even under general law whether u/s. 68 or any other section, only cash credits appearing in the books of assessee can be subjected to tax and not the assets which have already been shown and the asset side of the balance sheet.”
Aggrieved, the Revenue is now in appeal before the Tribunal.
During the course of hearing, the learned Senior DR pointed out to the assessment order that the assessee never produced any evidence to explain source of cash in hand as on 31.03.2016. He argued that the CIT(A) not at all examined generation of cash and never gave any reasoning and the order of the CIT(A) is very cryptic and without any basis. Hence, the learned Sr.DR stated that order of the Assessing Officer be affirmed. When this was pointed out to the learned counsel for the assessee, he only requested that matter can be referred back to the file of the Assessing Officer and he is ready to produce each and every details in regard to generation of cash amounting to Rs.2,01,13,042/- in his books of account. In term of the above, we remit this issue back to the file of the A.O with a direct to the Assessing Officer to examine generation of cash in hand and in case, the assessee satisfactorily explains generation of cash amounting to Rs.2,01,13,042/-, which is shown as closing balance as on 31.03.2016, the A.O. will accept claim. In case, the assessee is not able to prove, the AO will decide the claim in accordance with law and make addition.
The assessee will produce all the details before the Assessing Officer to substantiate the claim as to how he generated cash in hand. The issue is open limited to generation of cash of Rs.2,01,13,042/-. In term of above, the matter is remitted back to the file of the Assessing Officer.
In the result, appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open court on 13thMarch, 2023.