Loading judgment…
Facts
The assessee declared total income of Rs. 28,15,120/- with a turnover of Rs. 40,87,76,295/-. The Assessing Officer (AO) rejected the assessee's books of account as unreliable due to abnormal cash deposits and lack of customer PANs, making an addition of Rs. 1,27,90,780/- for deposits during demonetization.
Held
The CIT(A) affirmed the addition but reduced it to Rs. 6,93,095/-, considering the cash balance on 08.11.2016 and the SBN deposits made during demonetization. The Tribunal agreed with the CIT(A)'s findings after independent verification.
Key Issues
Whether the CIT(A) erred in partially confirming the addition made by the AO on account of unexplained cash deposits during the demonetization period, after considering the cash balance and SBN deposits.
Sections Cited
250, 263
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRYSHRI PRABHASH SHANKAR
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 22.03.2025, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. CIT(A)) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2017-18.
& CO No. 211/M/2025 Fairdeal Electronics 2. At the outset it is observed that there is a delay of 10 days in filing of instant appeal by the Revenue, on which the Revenue has claimed that due to revision of scrutiny report in view of the CBDT dated 15.03.2024, the delay of 10 days in filing of instant appeal has been occurred, therefore, in the interest of revenue, the delay may be condoned. Thus, considering the reasons stated above as reasonable and plausible and for substantial justice, the delay is condoned.
We observe that in the CO as well, there is a delay of 9 days in filing the same, on which the Assessee has stated that the notice of hearing on 26.06.2025, against which the assessee was supposed to file cross objection on 28.07.2025, was received by the Office Assistant of Assessee’s Chartered Accountant, who instead of handed over the said notice to the Assessee’s Chartered Accountant, somehow kept the same in his drawer and forget to inform the Ld. Chartered Accountant, which resulted into delay of 9 days in filing of instant CO. The delay occurred was neither intentional nor malafide or willful but beyond the control of the assessee. Considering the reason stated by the assessee for condonation of delay in filing of CO, as reasonable and plausible, the delay is condoned.
Coming to the merits of the case, we observe that in the instant case, the Assessing Officer in compliance to the order dated 22.03.2022 u/s 263 of the Act, in setting aside proceedings, framed the assessment denovo and by considering the fact “that the assessee had declared its total income of Rs. 28,15,120/- by filing its return of income on 30.10.2017 and as per the audited financials, has disclosed a turnover of Rs. 40,87,76,295/-“, held the books of account of the Assessee, as not reliable, as cash deposit were round figures which were abnormal. Further the cash register does not contain & CO No. 211/M/2025 Fairdeal Electronics the PANs of the customers and therefore the figure in the document furnished, was self-serving. Thus, the AO ultimately made the addition of Rs. 1,27,90,780/- deposited during the demonization period.
The Ld. Commissioner in impugned order considered the reasons cited by the Ld. AO for not accepting and rejecting the books of account, as non-convincing, by observing in impugned order as under.
“That the Assessee runs large business and maintains books of account, which are subject to audit and network of cross matching information. When books are maintained and also audited, then prima facie, the creditability of the same has to be accepted, unless reliable information to the contrary has comes on record. Further the Ld.AO has not brought on record any convincing facts to question the creditability of the books. Therefore, rejection of the explanation of the assessee qua books of account was not correct”.
The Ld. Commissioner, however ultimately affirmed the addition {Rs. 1,27,90,780/-} to the extent of Rs. 6,93,095/- only by observing and holding as under:
“During demonstration, as per ITA information related to the Assessee, the Assessee during the demonization had deposited cash of Rs. 1,55,76,830/- in Kotak Mahindra Bank Account No. 1211212237, out of which the amount of Rs. 1,10,62,000/- was in SBN deposit and amount of Rs. 45,14,830/- was new currency deposit. The SBN deposited during demonization has to be explained from the cash balance in the books as on 08.11.2016 as circulation of SBN was proscribed during the period of demonetization and therefore SBN deposited in excess of cash balance as on 08.11.2016 is unexplained money and assessable as such. In the present case, the cash balance as on 08.11.2016 was Rs. 1,03,68,905/- as per the cash book furnished by the Appellant. Therefore, Rs. 6,93,095/- is unexplained money. The addition made buy the AO is confirmed to this extent”.
Both the parties being aggrieved have preferred their respective appeal and CO, which are under consideration before us.
We have heard the parties and perused the material available on record. Admittedly, the Ld. Commissioner has thoroughly examined the reason for rejecting the books of account by the Assessing Officer and ultimately did not ascribe such view of the Assessing Officer and therefore accepted the explanation of the Assessee to rely on its audited account. Further the Ld. Commissioner, also considered the cash balance, as per books of account, available as on 08.11.2016 to the extent of Rs. 1,03,68,905/- and the amount deposited in SBN to tune of Rs. 1,10,62,000/- and ultimately treated the differential amount of Rs. 6,93,095/-, as unexplained money.
In our considered view, the decision of the Ld. Commissioner in deleting the main addition and sustaining the remaining part of addition, is based on the independent verification of the facts qua availability of cash amount before the demonization and/or as on 08.11.2016 and the amount deposited by the Assessee during the demonization in ‘SBN’ and ‘New Currency’, as well as books of account and cash book furnished by the Assessee. We even otherwise, do not find any material or reasons to contradict findings of the Ld. Commissioner, in deleting the addition of Rs. 1,10,62,000/- to the extent of Rs. 1,03,68,905/- and sustaining the addition to tune of Rs. 693095/- being differential amount, between the amount deposited by the assessee during the demonetization period in SBN and the cash balance available in the books as on date 08.11.2016. Thus, on the aforesaid reasons, instant appeal and CO respectively filed by the Revenue Department and the Assessee, are liable to be dismissed.
Order pronounced in the open court on 31.10.2025.