MARUTI TECHNOFAB INDUSTRIES PVT LTD,BARSHI vs. THE INCOME TAX OFFICER, WARD-2(1), SOLAPUR

This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)-11, Pune [‘the CIT(A)’] dated 29.05.2023 for the assessment year 2016-17.

Briefly, the facts of the case are that the appellant is a company incorporated under the provisions of the Companies Act, 1956. The Return of Income for the assessment year 2016-17 was filed on 19.09.2016 declaring Rs.Nil income after claiming carry Rs.43,305/-. Against the said return of income, the assessment was completed by the Assessing Officer vide order dated 12.12.2018 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total income of Rs.2,71,790/-. While doing so, the Assessing Officer made addition of Rs.3,15,099/- being the amount declared during the course of survey proceedings conducted u/s 133A of the Act on 14.01.2016. The factual background of the case is as under : The Assessing Officer conducted the survey operations in the business premises of the appellant under the provisions of section 133A of the Act on 14.01.2016. During the course of survey proceedings, the Assessing Officer found that the cash available as per the books of account is Rs.3,15,099/-, which was not physically available for verification as on the date of survey proceedings. When the appellant was asked to explain the shortfall in cash, the appellant had stated that the cash was utilized for expenses which were not recorded in the books of account. Subsequently, this cash was deposited in the said bank account. The appellant also agreed to offer this shortfall in cash to tax. Subsequently, the Assessing Officer held that the cash deposit made in the bank account is out of unexplained sources and, accordingly, brought to tax as unexplained money of the assessee. 3. Being aggrieved by the above addition, an appeal was filed before the ld. CIT(A), who vide impugned order held that the retraction statement is not valid in law, as it is made after lapse of long time and the statement made during the survey operations is important piece of evidence and can be used during the course of assessment proceedings placing reliance on the decision of the Hon’ble Bombay High Court in the case of Pebble Investment and Finance Ltd. vs. ITO, 2017-TIOL-188-HC-MUM-IT (Bombay) and the decision of the Hon’ble Delhi High Court in the case of Raj Hans Towers (P) Ltd. vs. CIT, 373 ITR 9 (Delhi). Similarly, the ld. CIT(A) also rejected the explanation that the cash deposit in the bank account was made out of the earlier withdrawals, as the Assessing Officer made addition only for the cash deposit made in the bank account. 4. Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal. 5. It is contended that the addition cannot be made merely based on the statement given during the course of survey proceedings u/s 133A of the Act. It is further submitted that the statement given u/s 133A cannot be given any credence in view of the fact that it was retracted statement and no addition can be made for the deficit in cash. The cash deposit in the bank account was made only out of the earlier withdrawals, as can be found from the cash book etc.

On the other hand, ld. Sr. DR supporting the order of the ld. CIT(A) submits that the order of the ld. CIT(A) is based on the proper appreciation of evidence as well as the legal position governing the facts of the case and, therefore, no interference is called for.

I heard the rival submissions and perused the material on record. The issue in the present appeal relates to the addition on account of cash deposits made in the bank account in view of the non-availability of cash as per books of account as on the date of survey operations i.e. 14.01.2016. It is well settled position of law that the statement recorded on oath during the course of survey proceedings u/s 133A can be used for the purpose of assessment. The retraction statement is not valid in law, as it is made after lapse of 2 and ½ years. Therefore, I am of the considered opinion that having regard to the statement given by the assessee on oath during the course of survey proceedings, the cash balance as on the date of survey i.e. 14.01.2016 was not available and deemed to have been used only for the purposes, which is not recorded in the books of account. In the present case, the appellant had not deposited the cash as per the books of account as on the date of survey proceedings i.e. 14.01.2016, was not shown to have been deposited in the bank account. It was only on 28.03.2016, the assessee had made a cash deposit of Rs.2,05,000/-, so the Assessing Officer would be justified in making addition of differential available as per books of account after excluding the amount of Rs.3,15,099/- from the available books of account. Therefore, the Assessing Officer was not justified in making the entire amount of Rs.3,15,099/- as the same was not shown as applied for the business purposes. Therefore, the orders of the lower authorities are set-aside and the assessment order is restored to the file of the Assessing Officer for de novo assessment on the lines indicated above in accordance with law after affording reasonable opportunity of being heard to the assessee. Thus, the grounds of appeal filed by the assessee stand partly allowed.