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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGH, VICE- & SHRI G. MANJUNATHA
आयकर अपील�य अ�धकरण, ‘बी’ �यायपीठ, चे�नई IN THE INCOME TAX APPELLATE TRIBUNAL , ‘B’ BENCH, CHENNAI �ी महावीर �संह, उपा�य� एवं �ी जी. मंजुनाथ, लेखा सद%य के सम� BEFORE SHRI MAHAVIR SINGH, VICE-PRESIDENT AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER
आयकरअपीलसं./I.T.A.No.363/Chny/2022 (�नधा�रणवष� / Assessment Year: 2017-18) M/s.Southern Steels, Vs The Income Tax Officer, 106/9, Parri Nagar, Ward-1(4), Perundurai Rod, Erode-638 011. Erode. PAN: ACVFS 3268F (अपीलाथ�/Appellant) (��यथ�/Respondent)
: Mr. S.Sridhar ,Erode Advocate अपीलाथ�क�ओरसे/ Appellant by : Mr. N.Sanjay Gandhi, Addl.CIT ��यथ�क�ओरसे/Respondent by
: 15.09.2022 सुनवाईक�तार!ख/Date of hearing 15 .09.2022 घोषणाक�तार!ख /Date of Pronouncement : आदेश / O R D E R PER G.MANJUNATHA, AM:
This appeal filed by the assessee is directed against
order passed by the learned Commissioner of Income Tax
(Appeals), National Faceless Appeal Centre (NFAC), Delhi
dated 21.03.2022 and pertains to assessment year 2017-18.
The assessee has raised following grounds of appeal:-
“1. The order of the Learned CIT(A) is bad and erroneous in law and against the principles of natural justice.
The Learned CIT(A) erred in not considering the written submissions and grounds of appeal in proper perspective.
The action of the learned CIT(A) in sustaining the order of the Assessing Officer is not justified, for the transactions, resulting in the cash deposits in to the Bank, have been duly entered in the regularly maintained books of account, that the
2 ITA No. 363/Chny/2022
business results have been accepted and that the books of accounts are not rejected. [Relying on 189 ITD 608 (Viz).
The Learned CIT(A) erred in sustaining the additions made by the Assessing officer without considering the explanation given by the appellant about the sources of the cash deposits.
The CIT(A) erred in not looking at the law in proper perspective i.e., sec.69A, can be invoked, ONLY when the alleged money was not found recorded in the books of accounts, which is not the case of the appellant.
The action of the CIT(A) is erroneous, for he failed to even look into "The Specified Bank Notes(Cessation of liabilities) Act, 2017, which plays a vital role in the alleged addition. [Relying on ITA No.646/Bang/2021 dt.18/02/2022; ITA No.76/Viz/2021 dt.16/03/2022 and ITA No. 1185/Del/2021 dt. 06/04/2022] .”
Brief facts of the case are that the assessee is engaged in
the business of trading in steels and running lorry transport filed
its return of income for the assessment year 2017-18 on
02.11.2017 declaring total income of Rs.6,92,890/-. The case
was selected for scrutiny and during the course of assessment
proceedings, the Assessing Officer noticed that during
demonetization period, the assessee has made cash deposits
to the tune of Rs.26,64,000/- to its bank account. The assessee
has stated that source for cash deposit is out of cash balance
available in book as on 07.11.2016 of Rs. 22,21,581/- and
out of cash balance, the assessee has deposited cash
between 09.11.2016 and 31.12.2016. The explanation offered
3 ITA No. 363/Chny/2022
by the assessee was not considered by the Assessing Officer
and according to the Assessing Officer, while submitting cash
transaction of 2016 to the Department in column B.1, the
assessee has shown cash availability of Rs.15,12,154/- out of
earlier income and savings. Therefore, rejected cash book
furnished by the assessee and allowed source to the extent of
Rs.15,12,154/- out of total deposits of Rs.26,64,000/- and
balance amount of Rs.11,51,846/- has been added u/s.69 of the
Act, as unexplained income. The assessee carried the matter in appeal before the first appellate authority, but could not
succeed. The learned CIT(A) for the reasons stated in his
appellate order dated 21.03.2022 sustained additions made by
the Assessing Officer towards cash deposits during
demonetization period. Aggrieved by the learned CIT(A) order,
the assessee is in appeal before us.
The learned A.R. for the assessee submitted that the
Assessing Officer as well as learned CIT(A) erred in rejecting
cash book furnished by the assessee to explain source for cash
deposits, even though, the Assessing Officer has admitted fact
that the assessee has cash balance of Rs.22,21,581/- as on
4 ITA No. 363/Chny/2022
07.11.2016 without appreciating fact that the assessee is in
business and required to maintain books of account on day to
day basis. Therefore, the learned A.R. submitted that source to
the extent of cash available in books of account should be
allowed.
The learned DR, on the other hand, supporting order of
the learned CIT(A) submitted that the assessee during the
demonetization period had submitted details to the department
and claimed that it had cash balance of Rs.15,12,154/-, out of
earlier income and savings. Therefore, cash book prepared and
produced before the Assessing Officer is only an afterthought
to circumvent cash deposits made during the demonetization
period and thus, the Assessing Officer has rightly made
additions and their orders should be upheld.
We have heard both the parties, perused material
available on record and gone through orders of the authorities
below. Admittedly, the assessee is in the business of trading in
steels and lorry hire business. The turnover of the assessee
for the financial year 2015-16 was at Rs.1.45 crores and same
has been jumped to Rs.13.33 crores for the period from
5 ITA No. 363/Chny/2022
01.04.2016 to 31.03.2017 relevant to the assessment year
2017-18. The assessee’s turnover is over and above threshold
limit for maintenance of books of account and audit of books of
account u/s.44AB of the Act. Therefore, the assessee is
required to maintain regular books of account on day to day
basis. Therefore, on this ground cash book furnished by the
assessee before the Assessing Officer cannot be doubted and
cannot be called as an afterthought. Further, as per cash book
furnished by the assessee cash balance available as on
07.11.2016 was at Rs.22,21,581/-. In fact, the Assessing Officer
has accepted cash balance available as on 07.11.2016.
Therefore, once there is no dispute about cash balance
available before demonetization period, then cash deposits
made during demonetization period to the extent of cash
balance available in the books of account cannot be doubted. In
this case, the Assessing Officer has summarily rejected cash
book furnished by the assessee and allowed relief to the extent
of Rs.15,12,124/- only on the basis of report submitted by the
assessee to the department. No doubt, the assessee must
have submitted some report stating that cash balance available
was at Rs.15,12,124/-. However, when evidence furnished
6 ITA No. 363/Chny/2022
proves otherwise, and which was not disputed then, evidences
should be considered, but not other reports submitted by the
assessee. Therefore, we are of the considered view that the
Assessing Officer ought to have allowed relief of Rs.22,21,581/-
out of total cash deposits of Rs.26,64,000/- during the
demonetization period. Hence, we direct the Assessing Officer
to allow source for cash deposits to the extent of cash available
as on 07.11.2016 to the tune of Rs.22,21,581/-. For balance
amount of Rs.4,42,419/-, the assessee could not offer any
explanation. Therefore, we direct the Assessing Officer to
sustain additions towards cash deposits during demonetization
period to the extent of Rs.4,42,419/-.
In the result, appeal filed by the assessee is partly
allowed. Order pronounced in the open court on 15th September, 2022
Sd/- Sd/- (महावीर �संह) (जी. मंजुनाथ) (Mahavir Singh) (G. Manjunatha ) उपा�य�/ Vice-President लेखा सद'य / Accountant Member चे)नई/Chennai, *दनांक/Dated 15th September, 2022 DS आदेश क� ��त,ल-प अ.े-षत/Copy to: 1. Appellant 2. Respondent 3. आयकर आयु/त (अपील)/CIT(A) 4. आयकर आयु/त/CIT 5. -वभागीय ��त�न3ध/DR 6. गाड� फाईल/GF.