RAJENDRA MOHANLAL AGRAWAL,JALNA vs. INCOME TAX OFFICER, WARD-1, JALNA, JALNA

The Assessing Officer thereafter issued notice u/s 133(6) of the Act to these 13 persons, in response to which these persons have denied to have made any such huge payments against purchase of beedi / cigarettes as claimed by the assessee. The Assessing Officer, therefore, held that the contention of the assessee that the said credited to the cash book of the assessee is out of cash received from his debtors is nothing but a failed attempt to explain the cash robbed. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of Rs.42,14,940/- u/s 68 r.w.s. 115BBE of the Act. While doing so, he relied on various decisions.

In appeal, the Ld. CIT(A) upheld the action of the Assessing Officer by observing as under: “8. I have considered the facts of the case and the submissions made by the appellant. The issue under dispute is genuineness of cash of Rs.42,14,940/- credited in the books of the appellant on 01/07/2016. The appellant has claimed that the said cash was collected by his son from the debtors to whom sales were made by him. After making verifications, the assessing officer held that the said cash was not collected from the so-called debtors and held the Said cash credit as unexplained and made addition u/s, 68 of the Act. 9.1 The first contention of the appellant is that the provisions of section 68 cannot be applied to the sales credited in the P&L account. The said contention cannot be accepted because there is no such restriction in section 68 of the Act. As per section 68, any sum found credited in the books of a taxpayer, for which he offers no explanation about the nature and source thereof or the explanation offered by him, in the opinion of the Assessing Officer, is not satisfactory, may be charged to income-tax as the income of the taxpayer of that year. Thus, for invoking the provisions of section 68 of the Act, following conditions should be fulfilled:- i) A sum should be credited in the books of the assessee in the financial year immediately preceding the assessment year. ii) Either the assessee unable to furnish explanation about the nature and source of the credit entry or the A.O. is in the opinion that the explanation offered by him is not satisfactory. 9.2 In the present case, cash of Rs. 42,14,940/- was credited in the books of accounts on 01/07/2016 and the explanation filed by the appellant was found not satisfactory by the assessing officer, because for 3 persons, no addresses were provided by the appellant. The remaining 13 persons denied of paying such cash to the appellant when notices u/s 133(6) of the Act were issued. Thus, the explanation filed by the appellant was found not satisfactory. In view of these facts, the appellant's contention that the provisions of section 68 are not applicable to sales credited in the books of accounts, is rejected. 10. Next contention raised by the appellant is that he is under no obligation to provide confirmations of debtors from whom cash was collected. This, contention of the appellant is not acceptable because the primary burden to prove the genuineness of credits in the books of accounts, is on the assessee especially when he is claiming that the cash was collected from its debtors to whom sales were made on earlier occasions. Considering that the assessee is claiming that cash of more than Rs.40,00,000/- was collected on a single day and as high as Rs.9,07,110/- from a single person, the appellant is expected to discharge his primary-burden. It is further seen that there are many-persons from whom cash more than Rs. 2,00,000/- is claimed to have been collected on 01/07/2016. Thus, this contention of the appellant is rejected.

The appellant has further contended that the assessing officer has not doubted the correctness of his books of accounts. This contention is factually incorrect because as per findings of survey, the appellant was not recording all his sale transactions in the books of accounts and admitted that for the year under consideration, sales to the tune of Rs. 6,50,00,000/- were not recorded in the books. He also declared additional income on such undisclosed sales. Further, the assessing officer did not accept such additional income and made further additions by estimating the profit on these undisclosed sales. This discussion clearly demonstrates that the books of accounts of the appellant do not reflect his true business affairs. Hence, this contention of the appellant does not have any merits.

The appellant has relied on various case-laws. It is a well settled legal position that any decision/judgement by a judicial body is given in the context of facts of a particular case and unless the facts are similar, the said decision cannot be applied to any other case. It is seen that the facts of the case-laws relied on by the appellant are distinguishable from the facts of present case. Therefore, the case- laws relied upon by the appellant-will not be applicable to the present case. 14. Considering the totality of facts of the case, I am of the opinion that the appellant has failed to satisfactorily explain the source of cash amounting to Rs.2,14,940/- credited in his books of accounts on 1/07/2016. Accordingly, the addition of Rs. 42,14,940/- made by the assessing officer is upheld. The ground no.1 raised by the appellant is DISMISSED.”

The Ld. Counsel for the assessee at the outset filed certain evidences in the shape of affidavits from the various parties and submitted that these are additional evidences which go to the root of the matter for deciding the issue. He submitted that despite being asked by the assessee during the course of assessment proceedings the Assessing Officer never supplied the copies of statements of the various parties from whom he has obtained such statements and which is the basis for making huge addition. In this regard, he relied on the following decisions: i) Kishanchand Chelaram vs CIT, (1980) 125 ITR 713 ii) Andaman Timber Industries vs. CCE 281 CTR 214 (SC)

He submitted that given an opportunity, the assessee is in a position to substantiate his case by producing the evidence to the satisfaction of the Assessing Officer regarding the genuineness of such cash received from the various parties which was robbed. He further submitted that there is no dispute to the fact that theft has taken place and the copy of the FIR and complaint to the police is also on record with the department. He accordingly submitted that the matter may be restored to the file of the Assessing Officer for giving an opportunity to the assessee to substantiate his case.

The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A). He submitted that despite number of opportunities given by the Assessing Officer, the assessee could not satisfactorily substantiate the source of cash of Rs.42,14,940/- supposed to have been robbed from the son of the assessee. Even before the Ld. CIT(A) also, he failed miserably to substantiate the source of such cash. He accordingly submitted that the order of the Ld. CIT(A) being a reasoned one should be upheld and the grounds raised by the assessee be dismissed.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs.42,14,940/- u/s 68 r.w.s. 115BBE of the Act on the ground that the assessee failed to substantiate the source of cash of Rs.42,14,940/- credited to the books of account which has been claimed as collection from the various customers situated at nearby towns / villages on 01.07.2016 and which was robbed from his son along with personal cash of Rs.4,85,060/-, both totaling to Rs.47 lakhs which was claimed as expenses under the head “Loss from theft”. We find the Ld. CIT(A) sustained the addition, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that the Assessing Officer has not provided the copies of statements recorded from the various persons who have denied to have given any such cash to the assessee which is the basis for addition made by the Assessing Officer. Further, no opportunity of cross-examination was given. Since the Ld. Counsel for the assessee has now filed the affidavits from certain parties in shape of additional evidences and submitted that the affidavits of the remaining parties also can be filed before the Assessing Officer, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his case by filing requisite details to his satisfaction and decide the issue as per fact and law after giving due opportunity of being heard to the assessee. The assessee is also hereby directed to make his submissions, if any, before the Assessing Officer on the appointed date without seeking any adjournment under any pretext, failing which the Assessing Officer is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, the appeal filed by the assessee is allowed for statistical purposes.