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Income Tax Appellate Tribunal, ‘C’ BENCH : BANGALORE
Before: SHRI N.V VASUDEVAN & SHRI LAXMI PRASAD SAHU
IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH : BANGALORE
BEFORE SHRI N.V VASUDEVAN, VICE PRESIDENT AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
ITA No.145/Bang/2022
Assessment year : 2017-18
M/s Ratanlal Jain, Vs. The Income Tax Officer, Laxmi & Laxmi, Ward-1(4), 1st Floor, ‘A’ Block, US Centre, Hubli. Coen Road, Hubli-580020. PAN – ABQPJ 5306 D APPELLANT RESPONDENT
Assessee by : Shri Sumermal D Ostawal, C.A Revenue by : Smt. Priyadarshini Basaganni, Addl. CIT (DR)
Date of hearing : 18.05.2022 Date of Pronouncement : 18.07.2022
O R D E R Per Laxmi Prasad Sahu, Accountant Member This appeal by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi dated 27.12.2021 for the asst. year 2017-18 with the following grounds of appeal.
“On the facts and in the circumstances of the case, the order of the Learned NFA C Appellate Commissioner of Income tax, [CIT(A)] is opposed to facts and law and accordingly, liable to be set aside to allow the claim/s of the Appellant.
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Assessed tax Rs.3,30,730/- and chargeable tax Rs.2,68,338/- While deciding the Appeal, the Learned CIT(A) firstly failed to precisely state the points for determination in terms of Sec 250(6) of the Income tax Act, 1961 (IT Act) and give reasons for the decision on such points. Be it be the conclusion for rejecting my claim itself is on wrong footing. Rs.62,392/-.
The CIT(A) also failed to appreciate the fact the Cash Balance as on 30-12-2016 of Rs 5,20,386/- Viz a viz Rs 6,01,153/- as arrived by the learned A.O. is the cash Balance on that date and not cash deposited in old currencies into the Bank Account (in view of conclusion drawn in Pg.]] of the Assessment Order)
The CIT(A) is right in stating that I had not uploaded the Statement of Bank Accounts, Financials of 2015-16 & 2016-17 and Cash Book of entire F.Y. 2016-17. Yes inadvertently they were missed. But the Learned CIT(A) ought to have appreciated that Cash Book for which the additions were made from 09-11-2016 to 30-122016 were filed along with Cash Sales details ( Day wise) and Collection of Debtors( Day wise) as the Cash Book is maintained Manually. The Learned CIT (A) also failed to appreciate that, Appellant rightly showed the above said Cash Balance as per the Books of Account maintained giving Full Details of Receipts and Payments of Cash.
The Learned CIT(A) ought to have appreciated that the Books of Accounts maintained manually were verified by the learned A.O. The non mentioning of Expenditure by the A.O. and Non acceptability of allowability does not take away the right of expenditure incurred for the business. He wrongly concluded without any proof that there has been no expenditure based only on the working provided by the A.O. in his assessemnt Order ( which itself is wrong) in between 09-11 - 2016 to 30- 12-2016 without any basis. The Learned CIT(A) confirming the Respondent AO figure of Collection from debtors and Cash Sales Figure as compared to the Regular Books of Account maintained and as stated by the learned A.O. It proves beyond doubt that the figures stated by the A.O. is pure guess work and accordingly has no legs to stand. There has been no difference in cash deposited into Bank Account as stated by us and as mentioned by the A.O. In the facts and circumstances of the case, Respondent AU and CIT(A) both erred arriving at the difference in cash balance as on 30-12- 2016.
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The Learned CIT (A) failed to appreciate the fact that the Cash Balance as per Book of Accounts of Rs 5,20,386/- is less than the Cash Balance as arrived by the Learned A.O of Rs 6,01,153/-.. Therefore there is no surplus cash as per Book of Accounts and The Learned A.O has not brought on record the conclusive evidence of excess cash held by the appellant than where is the question of unexplained money U/s 69A. A Paper Books providing all the details is attached separately. The Learned Respondent AO and CIT(A) erred in making additions u/s 69A of Rs 80,767/- ,which is Bad in Law for the fact that Books of Account are maintained as confirmed both by A.O. and CIT(A) (in view of observation in Pg. 10, Para 6.2.3 of the Assessment Order) The appellant in view of above grounds of Appeal and attached pray that he may be permitted to crave, to leave, to add or to amend all or any grounds of Appeal at the course of hearing.”
The brief facts of the case are that the assessee is a proprietor of the firm M/s Laxmi & Laxmi which is into the business of pharmaceutical distribution. The assessee filed its return of income for the asst. year 2017-18 on 31/10/2017 declaring a total income of Rs.12,03,410/-. The case was selected for scrutiny and statutory notices were issued to the assessee.
As per the information available with the Department, the assessee had deposited Rs.30,92,500/- in his bank account maintained with M/s Kotak Mahindra Pvt. Ltd., Koppikar Road, Hubli during the demonetization period (9/11/2016 to 30/11/2016). In this regard, notice was issued to the assessee asking him to furnish source of cash deposits and also to submit cash book, sales register, purchase register etc. At the same time, bank account details of the assessee were
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obtained by issuance of notice u/s 136(1) of the Act. The assessee furnished the relevant details and he has also produced cash book, sales register etc. and the same were cross verified on the basis of bank account statement furnished by the bank. On verification, the AO observed the following discrepancies :-
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From the above total, the AO noticed that there was difference of Rs.80,767/- which was treated as unexplained money u/s 69A and brought to tax u/s 11BBE @ 60%.
Aggrieved from the order of AO, the assessee filed appeal before the CIT(A), who after considering the submissions of the assessee upheld the order of the AO. 6. Aggrieved from the order of the CIT(A), the assessee filed appal before the Income-Tax Appellate Tribunal.
The ld.AR submitted that the lower authorities have ignored the reconciliation statement produced before them. It is the plea of the assessee that on the basis of books of accounts maintained, no defects were pointed out in the books of accounts. The detail summary of reconciliation is produced at paper book page no.21. He also submitted that while calculating closing cash balance, the revenue authorities have not accepted the expenditure incurred during the demonetization period, which were necessary for running the business of the assessee and these expenses were extracted from the books. The AO has verified reconciliation statements and not rejected the books of accounts. He further submitted that AO made the estimation of difference of Rs.80,767 without any factual data which does not corresponds to books of accounts produced before him and AO has not considered any expenditure while arriving at closing cash balance
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The ld.DR supported the order of the lower authorities. He further submitted that there was a difference between the cash sales and cash collection from the debtors. As per the books of the assessee, the cash collection from the debtors in the demonetization period is Rs.25,25,883/- and as per the Income-tax Officer, it is Rs.24,75,554/-. The difference in cash sales during the demonetization period has not properly explained by the assessee.
In the rejoinder, the ld.AR submitted that details of the cash sales and cash collection were produced before the revenue authorities and which are also placed on the paper book. The lower authorities have not been pointed out any mistakes and how the revenue authorities have arrived at this figure.
We have heard the rival submissions and carefully considered the same along with the order of the authorities below as well as the documents referred to and relied on before us during the course of the hearing. We observe from the paper book filed by the assessee particularly in the page No.21 of the paper book. In the reconciliation statement produced by the assessee there are differences among the 3 heads. Cash sales, cash collection form Debtors and expenses debited/incurred.
Further from the perusal of the paper book filed by the assessee, the details of cash sales and cash collection from debtors and also cash book and sales register have been filed before the AO and no error has
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been pointed out. Further, we observe that there is a claim of expenditure at Rs.2,44,691/- during the demonetization period and it has been paid through cash. But the AO has not considered any expenditure while arriving at closing cash balance. Once the books of accounts have been accepted by the AO then the entry made in the books of account will also have to be accepted. On careful examination of the reconciliation statement which is placed at page No.21, closing cash balance as on 30th December, 2016 has been arrived by the assessee at Rs.5,20,386/- is correct. Therefore, there is no error in the closing cash balance as computed by the assessee. Accordingly we allow the appeal of the assessee.
In the result, the assessee’s appeal is allowed. Order pronounced in court on 18th day of July, 2022 Sd/- Sd/- (N.V VASUDEVAN) (LAXMI PRASAD SAHU) Vice President Accountant Member Bangalore, Dated, 18th July, 2022 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore.
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Date of Dictation …………………………………… 2. Date on which the typed draft is placed before the dictating Member ……………………. 3. Date on which the approved draft comes to Sr.P.S .……………………………. 4. Date on which the fair order is placed before the dictating Member ……………….. 5. Date on which the fair order comes back to the Sr. P.S. ………………….. 6. Date of uploading the order on website…………………………….. 7. If not uploaded, furnish the reason for doing so ………………………….. 8. Date on which the file goes to the Bench Clerk ………………….. 9. Date on which order goes for Xerox & endorsement…………………………………… 10. Date on which the file goes to the Head Clerk ……………………. 11. The date on which the file goes to the Assistant Registrar for signature on the order ………………………………. 12. The date on which the file goes to dispatch section for dispatch of the Tribunal Order …………………………. 13. Date of Despatch of Order. ……………………………………………..