GIRIJA SANKAR ACHARYA,BALASORE vs. ACIT,CIRCLE, BALASORE, BALASORE

This is an appeal filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 11.10.2023, in DIN & Order No.ITBA/NFAC/S/250/2023- 24/1056983739(1), for the assessment year 2017-2018. 2. The assessee has taken four grounds of appeal which are related to the addition made of Rs.26,03,500/- u/s.69A of the Act by holding the cash deposit in SBN during demonetization as unexplained money of the assessee.

Brief facts of the case are that the assessee is engaged in the wholesale trading and the return of income was filed on 20.10.2017 at an income of Rs.25,76,020/-. The case was taken for scrutiny for the reason that during the demonetization period the assessee has made cash deposit in SBN of Rs.27,40,000/- on various dates. During the course of assessment proceedings, after considering the cash balance available on the closing of Rs.8.11.2016, the AO has made the addition of the balance amount of Rs.26,03,500/- by treating the same as unexplained money of the assessee u/s.69A of the Act.

In first appeal, the ld. CIT(A) concur with the findings of the AO and confirmed the addition. Thus, this present appeal is preferred by the assessee before us. 5. During the course of hearing, the ld. AR of the assessee submitted that the assessee is engaged in wholesale trading business where the sales have been made on credit basis and assessee's employees collected the dues by visiting the shops of the buyers situated in nearby surrounding villages and after returning from the collection duties after 2-3 days, the entire amount collected were handed over along with the respective money receipts issued by them. At that time when the cash is handed over by these collection agents to the assessee, the necessary entries have been passed in the books of account for such cash collection as per each and every individual's money receipt issued by the respective agents. This practice was followed by the assessee since past long. Admittedly as on 8.11.2016 the cash available was of Rs.1,36,590/-, however, subsequently the collection agents i.e. the staff who returned back after collection from debtors on 9.11.2016 & 10.11.2016, had handed over cash to the assessee along with respective money receipts which was then recorded in cash book. As the Hon'ble Prime Minister has announced demonetization w.e.f. closing of Rs.8.11.2016. The entire cash available with the assessee as on 10.11.2016 which includes the closing balance on 8.11.2016 and cash collected by his staffs upto 8.11.2016 handed over to the assessee on 9th & 10th of November, 2016, being majority was in SBN currency, the same is to be deposited at first opportunity in the bank. The said amount of Rs.27,20,000/- was deposited on 10.11.2016, which is duly backed by the cash balance available on that date with the assessee. Likewise regarding the remaining cash of Rs.20,000/- deposited on 14.11.2016, the ld. AR submitted that since the cash balance as per cash book was sufficient to prove the source of the cash deposited in SBN currency during the demonetization in the bank account, therefore, the addition made and confirmed by the ld. CIT(A) deserves to be deleted. He further submitted that the sales declared by the assessee as well as the other books of account maintained in the regular course have not been doubted and trading results were accepted.

Per Contra, ld. Sr. DR vehemently supported the orders of the lower authorities and submitted that the assessee was having only cash balance of Rs.1,36,590/- as on 8.11.2016 and no plausible evidences were submitted with respect to the cash stated to have received by its 9th & 10th November, 2016. Thus, it is an afterthought to introduce his black money in the books and, therefore, he prayed for confirmation of the addition made by the lower authorities.

We have perused the material available on record and considered the rival submissions put forth by the parties. From the perusal of cash book submitted by the ld. AR of the assessee during the appellate proceedings, it contained two type of cash books, one is consolidated cash book and other is detailed cash book for the period from 1st November, 2016 to 30th November, 2016. We find that the assessee is having cash balance of Rs.1,36,590/- on 8.11.2016 and there were entries of cash received from collection agent against money receipts issued by them which were recorded in the cash book on 9th & 10th November, 2016. As a result, there was a cash balance of Rs.27,26,063.92 when the cash of Rs.27,20,000/- in SBN currency was deposited in the bank on 10.11.2016. Likewise on 14th November, 2016 when Rs,20000/- was deposited in the bank in SBN, the same was backed by sufficient cash balance available on account of collection of money receipt from the collection agents through money receipts. The relevant extract of the cash book is reproduced herein below:-

The assessee has filed cash book and money receipts before the AO in terms of the e-filing acknowledgement No.07042114629007, which is reproduced as under :-

As the assessee has discharged its burden by submitting every plausible detail with respect to the availability of cash as explained through cash collection made by his staff during the period from 1st November to 8th November, 2016, which was handed over to him on 9th & 10th November, 2016 and recorded in the cash book, therefore, the cash deposit in SBN on 10.11.2016 in the bank account cannot be held as unexplained. It is also a matter of fact that the said cash was realization of the credit sales made by the assessee and since such credit sales as well as the closing cash balance and the profits computed from such sales had been accepted by the AO without making any adverse comments with regard to the genuineness of the same, merely doubting the availability of the cash on assumptions and presumptions without pointing out any specific defects in the details submitted by the assessee is not permitted. In view of these facts and circumstances, we are of the considered view that the assessee has been sufficiently able to prove the source of cash deposit in bank in SBN currency during the demonetization and accordingly the addition made by the AO and upheld by the ld. CIT(A) of Rs.26,03,500/-is hereby deleted.