KUPPUSAMY BARATHAN,COIMBATORE vs. DCIT, NCC-4,, COIMBATORE

The assessee is an individual, engaged in the business of manufacturing and selling power loom control panels and accessories.

The assessee is a registered manufacturer and is eligible to supply the upgradation kits to the ordinary powerloom units under the Modified in- situ upgradation Scheme. The assessee has made cash deposit of Rs. 2,97,04,000/- during demonization period. The assessee has explained the cash deposit out of subsidy sales and duly recorded in books of account. The assessee has explained that he has an outstanding balance of Rs. 15,54,97,316/- in the advance from customers account as on 01.04.2016 and has received advance of Rs. 24,88,00,861/- from various customers during the year under consideration. The assessee further submitted that most of the customers are from rural areas, and used to pay advance money predominantly by way of cash. The A.O has made the addition as the assessee has not furnished any reconciliation of the subsidized sales and the subsidy receivable with the amount appearing against advance received in the balance sheet. On appeal, the Ld. CIT(A) confirmed the addition on the ground that the assessee has not submitted any evidence of nexus between the cash deposit and the advance received from the customers.

The Ld. Authorized Representative (A.R) of the assessee before us has submitted that the details of customer list, from whom the advance was received. The assessee has explained that the cash deposited was advance collected before demonetization period and duly recorded in the books of account.