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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJPAL YADAV, HON’BLE & SHRI GIRISH AGRAWAL, HON’BLE
O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal by the assessee is directed against the order passed by the National Faceless Appeal Centre, Delhi, (hereinafter the “ld. CIT(A)”) dated 21/09/2022 for Assessment Year 2017-18 against the assessment order passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by ACIT, Circle-3(1), Kolkata, dated 30/12/2019. 2. The assessee has raised the following grounds of appeal:-
“1. That on the facts and circumstances of the case, the CIT(A)-NFAC had erred both in law and on facts by confirming the order of the Assessing Officer on making an addition of Rs.75,00,000/- being cash deposit during demonitization period which was fully explained to A.O. as well as CIT(A).
The assessee had also raised an additional ground vide its application dated 29/11/2022 filed on 20/12/2022, challenging the jurisdiction of the assessment completed u/s 143(3) in view of no notice issued u/s 143(2) of the Act, after the transfer of case from ACIT, Circle-1, Durgapur to the present Assessing Officer. 3.1. On this additional ground, upon specific query by the Bench relating to filing of return and availability of its copy, ld. Counsel for the assessee could not lay his hands on the same and thereby owing to incomplete records, did not press for the additional ground so raised. Accordingly, the additional ground raised by the assessee is dismissed as not pressed.
Now, delving upon the original ground of appeal, brief facts of the case are that assessee filed its return of income on 09/09/2017 reporting a loss of Rs. 37,62,376/-. Assessee is in the business of manufacturing of mild steel angle, mild steel channel, mild steel flats, hot rolled strips etc. Case of the assessee was selected for scrutiny under CASS. Statutory notices were issued and served upon the assessee which were duly complied with as noted by ld. Assessing Officer in the impugned order. In the course of assessment, ld. Assessing Officer noted that assessee has deposited cash of Rs.75,00,000/- in the bank account during the demonetization period of specific bank note (SBN) currency. Ld. Assessing Officer called for explanation in this respect. Details of the said cash deposit is tabulated as under:- Name of the Bank Acc. No. Amount Deposited Remarks regarding the cash deposit Oriental Bank of 5875015002403 75,00,000 The assessee had shown Commerce the realization of debtors and cash sale made during the year.
5. Assessee also submitted that at the cash verification stage i.e., before the selection of case for scrutiny, assessee had submitted that an amount of Rs.47,61,890/- pertained to realization from debtors which was realized during the period from 01/04/2017 to the date prior to the date of announcement of demonetization and the balance Rs.27,38,110/- pertained to sales made in cash to unidentified persons. In the course of assessment proceedings, assessee had also furnished the details of cash book and realization of debtors. It was also submitted that the closing cash balance as per its cash book as on 08/11/2016 i.e., the date of announcement of demonetization, was Rs.77,37,460/- consisting of Rs.75,00,000/- of SBN and balance Rs.2,37,460/- as non-SBN. Assessee furnished the relevant part of its cash book to corroborate these facts. He, thus, submitted that this deposit of cash is out of the opening cash balance as on the date of demonetization and its source is fully explained from its regular books of accounts which have been subjected to audit and produced during the course of assessment. However, ld. Assessing Officer proceeded to complete the assessment, not being satisfied with the submissions made by the assessee and made the addition u/s 68 r.w.s. 115BBE of the Act. 5.1. Aggrieved, assessee went in appeal before the ld. CIT(A) who dismissed the appeal of the assessee.
Aggrieved, assessee is in appeal before the Tribunal. 7. Before us, Shri Sushil Kumar Pransukha, FCA, represented the assessee and Shri P.P. Barman, Addl. CIT, represented the department. Ld. Counsel for the assessee, apart from reiteration of the facts narrated above, submitted that during the year under consideration, the turnover of the assessee is of Rs. 85.26 Crores which include both cash sales and credit sales. He further stated that assessee maintained regular books of accounts which are subjected to statutory
4 Assessment Years: 2017-18 Ruhr Ispat Pvt. Ltd. audit under the Companies Act, 2013, and also tax audit u/s 44AB of the Act. He pointed to the fact that auditors have certified the deposit of said cash during demonetization period by mentioning the same in Note No. 13 of the audited accounts which was required under MCA Notification No. G.S.R. 307(E), dated 30th March, 2017. He further submitted that, the entire amount of cash sale as well as realization from debtors has already suffered taxation as these are part of the turnover of the assessee, duly disclosed and reported in its audited profit and loss account. In respect of realization from debtors of Rs.47,61,890/-, he referred to the standard operating procedure (SOP) issued by the CBDT vide Instruction no. 03/2017, dated 21/02/2017 Annexure, of which para 4 was referred. The said para 4 is reproduced as under:- “4. Cash received from identifiable person (with PAN) 4.1 No additional information is required to be submitted by the person under verification as the information will be pushed to the AO of the identifiable persons (with PAN) 4.2 In case identifiable persons (with PAN) does not confirm the transaction, the response will be referred back for further verification."
7.1. In view of the above, ld. Counsel for the assessee referred to the details of the sundry debtors from whom this amount of Rs.47,61,890/- was realized which is tabulated as under:-
SI. No. Name of Debtors PAN AMOUNT 1 Incorporated DA UB AAACI7444M 1,186,045.00 Verhoden Ltd. 2. Jainex Steel In Duster AADFJ4906F 1,933,986.00 3. Zooks International AAAFZ1430B 598,299.00 4. Sarva Mangalam AAICS5924J 279,113.00 Gunjan Steel (P) Ltd. 5 New Kundu Hardware BPRPK0186E 364,416.00 6. Pachal Transformers AADCP8057C 400,031.00 Pvt. Ltd. Total: 4,761,890.00
In respect of cash sales, it was reiterated that assessee had submitted date-wise details of cash sales including Excise duty and VAT charged on each sale which were tallied with the Excise return and VAT return. He referred to the “tax invoices/excise invoices-cum-challans”, forming part of the paper book, placed at page nos. 46 to 64. It was also asserted that since the sale was made in cash, party-wise details were not required to be maintained. He also submitted that, there was no revision to the Excise return and VAT return filed by the assessee. He also referred to the audited balance sheet as on 31/03/2017 placed at page 130 of the paper book to demonstrate that assessee had trade receivables of Rs.10,45,71,347/- as on 31/03/2016 and Rs.12,48,57,833/- as on 31/03/2017. Ld. Counsel for the assessee also emphasised on the fact that deposit of cash was also intimated electronically to the Department vide its transaction no. 4228483876, dated 25/07/2017. 8.1. Ld. Counsel for the assessee, thus, asserted that addition made by ld. Assessing Officer tantamounts to taxing the same income twice, since the deposit of cash is out of the realization from debtors which has already been reported in its turnover and the cash sales and, therefore, the addition so made, ought to be deleted.
We have heard the rival contentions and perused the material on record. 9.1. It is a fact that amount of deposit of cash is arising out of the opening balance of cash as on 08/12/2016 which in turn is out of realization from debtors of Rs.47,61,890/-. The same has been detailed in the order of ld. CIT(A) which is reproduced as under:- “(a) Incorporated DA UB Verhoden Ltd. Date Amount Date Amount Date Amount 04.04.2016 80,000 22.04.2016 65,000 22.05.2016 75,000
6 Assessment Years: 2017-18 Ruhr Ispat Pvt. Ltd. 08.04.2016 90,000 24.04.2016 35,000 24.05.2016 75,000 11.04.2016 50,000 25.04.2016 38,000 30.05.2016 25,545 12.04.2016 19,500 30.04.2016 80,000 16.04.2016 80,000 05.05.2016 1,00,000 19.04.2016 54,000 09.05.2016 78,000
(b) Pachal Trasformers Pvt. Ltd. Date Amount Date Amount Date Amount Date Amount 01.06.2016 15,000 14.06.2016 20,000 28.06.2016 18,000 07.07.2016 17,000 03.06.2016 20,000 16.06.2016 12,000 29.6.2016 19,000 08.07.2016 20,000 05.06.2016 19,000 19.06.2016 20,000 02.07.2016 20,000 16.07.2016 18,000 08.06.2016 20,000 22.06.2016 18,000 04.07.2016 18,000 11.07.2016 20,000 11.06.2016 55,000 25.06.2016 20,000 05.07.2016 20,000 13.07.2016 12,000 14.07.2016 19,000 19.07.2016 14,031
(c) Jainex Steel In duster Date Amount Date Amount Date Amount 02.04.2016 92,000 22.05.2016 37,500 02.07.2016 75,000 04.04.2016 74,000 25.05.2016 90,000 03.07.2016 80,000 06.04.2016 89,000 30.05.2016 95,000 04.07.2016 55,000 08.04.2016 95,000 07.04.2016 75,000 05.07.2016 80,000 05.05.2016 90,000 09.06.2016 52,000 06.07.2016 55,000 10.05.2016 89,000 12.06.2016 55,000 08.07.2016 28,986 15.05.2016 90,000 20.06.2016 95,000 18.05.2016 75,000 30.06.2016 80,000 20.05.2016 72,500 11.07.2016 95,000 9.2. Dates noted in the above tables are prior to the date of announcement of demonetization which forms part of the daily accounted cash in the cash book of the assessee. Further, the cash sales made by the assessee forms part of its Excise return and VAT return which were not subjected to revision. 9.3. We note that assessee has a turnover of Rs.85.28 Crores in the year under consideration and of Rs.86.92 Crores in the immediately preceding year. At such volume of turnover, the quantum of cash sales and realization in cash are normal in the conduct of its business. We also note that all the details in respect 7 Assessment Years: 2017-18 Ruhr Ispat Pvt. Ltd. of collection from the debtors were identified and submitted before the ld. Assessing Officer as well as before the Investigation wing of the Department, prior to the assessment proceedings.
Considering the factual matrix, corroborated with documentary evidence, we are inclined to accept the contentions of the ld. Counsel for the assessee and direct to delete the addition made by ld. Assessing Officer and confirmed by ld. CIT(A), by setting aside their orders. Accordingly, ground taken by the assessee in this respect is allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 01.02.2023.