SHRI. GANESH AGENCIES ,BIDAR vs. INCOME TAX OFFICER, WARD-1, BIDAR

Thus, the ld AO is aggrieved with the deletion of addition and Assessee is still aggrieved with the appellate order preferred an appeal before us raising the ground of appeal

The learned assessing officer has challenged the appellate order for the reason that the learned CIT – A deleted the addition of ₹ 14,514,700 without allowing the opportunity to the assessing officer to examine the evidences produced by the assessee during the appellate proceedings and present his findings through the remand report, so appellate order is in violation of rule 46A (3) of The Income Tax Rules 1962. Thus, the AO’s grievance is deletion of the addition without allowing him and opportunity to contest for examining the evidence.

The ld. AR has submitted that notice under section 148 of the Act was issued to the assessee for assessment year 2017 – 18 on 24/6/2021. It was submitted that that there is an amendment to the provisions of section 148 of the act by The Finance Act, 2021 by way of substitution and a new procedure of conduct of enquiry under section 148A (a), issuance of show cause notice under section 148A (b), submission of response under section 148A (c) and issuance of order under section 148A (d) before issue of notice under section 148 was provided with effect from 1 April 2021. Further, where limitation for any action under the act falls between 20 March 2020 and 31st of March 2021, the time limit for the same shall be extended to 30 June 2021. In this case the learned assessing officer has issued the notice under section 148 of the act on 24/6/ 2021 i.e., after 1 April 2021 presumably in view of TOLA. It was submitted that in cases where notices issued under section 148 of the older provision is hit by the decision of the honourable Supreme Court in case of Ashish Agarwal wherein it was held that notices issued under section 148 of the act after 1/4/2021 was subject matter of challenge before the various High Court which quashed such notices. The legality of such notices was eventually decided by the honourable Supreme Court and further in case of Mr Rajeev Bansal it resulted into issue of notification dated 11/05/2022 whereby the procedure to be followed for all cases was laid down. However, the learned assessing officer on 30/3/2022 has concluded the assessment proceedings on the strength of the notice issued under section 148 despite it being set-aside and converted into a notice under section 148A (b) and the assessee taking issuance of fresh notice in compliance with Supreme Court judgement. It was further submitted that even if assessment is already concluded and those two judgements of Honourable Supreme court apply to the facts of the case because amendment applies to all 90,000 notices issued between 1/04/2021 and 30/6/2021 and no distinction is made between cases where assessment order is passed and cases where assessment order is not passed. Therefore, the assessment order in question is bad in law and liable to be treated as illegal on facts and circumstances of the case.

Contesting the above fact, the learned departmental representative stated that the assessment in this case has already been completed prior to those decisions rendered by the honourable Supreme Court and therefore those decisions do not apply to the facts of the present case. Accordingly, the reopening is valid. It was further stated that the learned CIT(A) does not decide such issues.

Defending the appeal of the learned assessing officer, the learned departmental representative vehemently supported the order of the learned assessing officer and stated that the learned CIT – A has deleted the addition without confronting the facts to the assessing officer which is mandatory in terms of the provisions of rule 46A of the income- tax rules.

Contesting the appeal of the revenue, the learned authorised representative relied upon the orders of the learned CIT – A holding that that amount of cash deposited in the bank account of the assessee is part of the receipts of income of the assessee and therefore addition under section 69B of the act as undisclosed income does not apply. The amount is deposited in the bank account during demonetisation period which is arising from the regular business operations of the assessee, and the source of such funds is regular sales accounted for by the assessee. Therefore, the learned CIT – A correctly relying upon the several judicial precedents has deleted the addition.

On the issues of the illegality of notices u/s 148 of the Act, he reiterated the decisions of Honourable supreme court and stated that it was concerned with ninety thousand notices and all those notices were held to be invalid but converted as a notice under the new provision. As such order passed based on illegal notices is invalid.

We have carefully considered the rival contentions and perused the orders of the learned lower authorities. We find that ld CIT (A) has deleted the addition on the merits as under: -

In this case it is not disputed that ld. AO has asked for any information. It is submitted that ld. AO did not issue any show cause notice or communication asking for details. It is stated that ld. AO passed assessment order making the addition straight way. In these circumstances, The ld. DR could not shows that how there is a violation of provision of rule 46A of the income Tax Rules 1963 when the ld CIT (A) has relied up on the audited accounts, nature of business and then held that the amount of cash deposit is part of the annual turnover of the assessee and cannot be held to unexplained income of the assessee. It was also not shown to us that whether the ld. AO issued any notices to the assessee for asking any information. Claim of the assessee that after issue of notice u/s 148 of the Act the ld. AO passed assessment order making the addition remains unchallenged. We also find that even on the merits of the addition, the ld CIT (A) has given a correct finding and same is sustainable.

In view of this, we uphold the order of the ld CIT (A) deleting the above addition u/s 69 of the Act of Rs. 14,514,700- as the impugned cash deposit is part of the regular books of accounts of the assessee, which forms part of the sales turnover and resultant profit arising there on is already offered to tax in the regular return of income. Accordingly, appeal of the ld AO is dismissed.

In view of dismissal of appeal of the ld AO, no decision was made by the ld. CIT (A), the issues in appeal of the assessee are not required to be decided as are academic and hence dismissed.

In the result both the appeals are dismissed.