BHERUMAL SHANKARLAL JAIN,BANGALORE vs. DCIT CIRCLE 3(1)(1), BANGALORE

The brief facts of the case are that the assessee is an individual doing the business in cosmetics, salon equipments, writing instruments, Stationeries. He filed his return of income on 31/10/2017. The return was processed u/s. 143(1) of the Act and selected for limited scrutiny to examine the cash deposits during the year. Notice u/s. 143(2) was issued. The

As against the said order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) also without considering the various documents filed before him, had confirmed the addition.

The assessee challenged the said order before this Tribunal.

At the time of hearing, the Ld.AR submitted that the assessee had submitted all the details before the AO and explained that the addition could not be made u/s. 68 of the Act. The Ld.AR also submitted on what basis the AO had treated the cash deposits of 3 days as unexplained cash credit when the entire financials, bank accounts and other supporting documents would establishes the case that the deposits could not be treated as unexplained cash credit. The AO also filed a paper book enclosing the documents submitted before the AO as well as before the Ld.CIT(A) and submitted that there is no reason for treating the cash credits as unexplained and prayed to allow the appeal.

The Ld.DR submitted that the assessee had not submitted any single documents and no sale invoices were also produced and therefore prayed to dismiss the appeal.

The AO had made the addition u/s. 68 of the Act on the cash deposits made on three dates i.e. on 10/11/2016, 11/11/2016 and 12/11/2016. For making this addition, we do not find any valid reasons, stated by the AO. Further, the assessee before the AO had produced all the details including the cash book and bank statements. The Audit Report also furnished by the assessee. In the books of accounts, all the cash sales and cash received from the debtors were duly recorded which was verified by the Auditors and no infirmity has been pointed out by them. We also don’t know the basis for making the three days cash deposits as unexplained when there are other deposits during the same period. The cash deposits are vouched by the records and these are the cash receipts received while effecting cash sales which was recorded in the books of accounts and reported to the GST Authorities. The GST Authorities also accepted the sales turnover and assessment has been made accordingly.

We also noticed that the assessee had furnished the details of the cash deposits made during the A.Y. in the paper book at page 86. In page 88, the details of the arrival of opening balance as on 08/11/2016 was given. The opening balance available is Rs. 15,21,385/-. Similarly in page 91, the assessee had furnished the analysis of cash deposits. When we compare the figures, there is no much difference during the month of November 2016. Therefore all the details furnished by the assessee would indicate that the allegation made by the AO is not correct.

Further, the AO’s allegation that the assessee is having an Overdraft account with Canara Bank and therefore there is no chance for having the opening balance of cash as on 08/11/2016, is also on assumption and without any basis. In the present case, the assessee is maintaining the books of accounts and the same were audited and therefore the bald allegation is not sustainable.

When we consider the entire facts along with the various documents, we are not able to accept the addition made u/s. 68 of the Act. Therefore we are setting aside the order of the lower authorities by deleting the addition made u/s. 68 of the Act.

In the result, the appeal filed by the assessee is allowed.