SOUTHERN STEEL,ERODE vs. ITO,WARD-1(4), ERODE

The assessee has raised following grounds of appeal:-

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 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 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 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.