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Facts
The assessee, a public limited company, engaged in various businesses including coaching classes, recruitment, data entry, trading in computers, and gold bullion, filed its return for AY 2017-18. During demonetization, the assessee deposited a large sum in cash. The Assessing Officer treated this as unexplained cash credit. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal found that the CIT(A) failed to properly consider the assessee's submissions. Due to this oversight, the Tribunal remanded the matter back to the CIT(A) for a fresh decision.
Key Issues
Whether the CIT(A) properly appreciated the facts and submissions before passing the order, and whether the large cash deposits made during demonetization are unexplained income.
Sections Cited
145, 68, 115BBE, 250, 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-MS. SUCHITRA KAMBLE
IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT MS. SUCHITRA KAMBLE, JUDICIAL MEMBER (Assessment Year: 2017-18) Dawn E-Networks Limited, Income Tax Officer, Vs. 410, Shanti Arcade, Ward 1(1)(3), Nr. Jaymangal Bus Stop, Ahmedabad Opp. Sola Housing Post (Previously Ward 1(1)(4), Office, 132 Ft. Ring Road, Ahmedabad) Naranpura, Ahmedabad-13 [PAN : AACCD 6280 C] (Appellant) .. (Respondent) Appellant by : Shri Tushar Hemani, Sr. Advocate, & Shri Parinmalsinh B. Parmar, AR Respondent by: Shri Santosh Kumar, Sr DR Date of Hearing 16.04.2025 Date of Pronouncement 15.05.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as "CIT(A)" for short) dated 24.01.2023 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for Assessment Year (AY) 2017-18. 2. The grounds of appeal raised by the Assessee are as follows:- Dawn E-Networks Ltd Vs. ITO Asst. Year : 2017-18 - 2–
1. Ld. CIT(A) has erred in law and on facts in confirming the action of AO in rejecting books of accounts by invoking provisions of section 145 of the Act.
2. Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.3,38,60,000/- made u/s 68 of the Act.
3. Ld. CIT(A) has erred in law and on facts in confirming action of AO in invoking provisions of section 115BBE of the Act.
Both the lower authorities have passed the orders without properly appreciating facts of the case and in complete ignorance of various submissions, explanations and information submitted from time to time. Such an act grossly violates principles of natural justice.”
The brief facts of the case are that the assessee is a public limited company, engaged in the business of running coaching classes, manpower recruitment, providing data entry related services to Government/semi-government and private organizations as well as trading in computers, computer peripherals and trading in gold bullion. The assessee has filed its return of income for the year under consideration on 07.10.2017 declaring total income of Rs.21,21,560/- During the assessment proceedings, the Assessing Officer noted that the assessee had deposited cash in ‘specified bank notes’ during demonetization period amounting to Rs.3,38,60,000/-, in the bank account maintained with State Bank of India, Ankur Road, Navrangpura, Ahmedabad, the same has been treated as unexplained cash credit u/s 68 of the Act. Dawn E-Networks Ltd Vs. ITO Asst. Year : 2017-18 - 3–
4. Aggrieved by the order of the Assessing Officer, the assessee has filed appeal before the Ld. CIT(A) who dismissed the appeal of the assessee.
Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.
We find from the record that the assessee has made cash sales of computer peripherals to 1373 individuals. Out of these, 48 entries were in the name of “Shantaben”, 14 entries in the name of “Gangaben” and 119 entries in the name of “Patani”. The addresses of 489 parties were of “Chali”. The assessee claimed that they are in the profession of earning income from Tuition. The assessee has shown purchases of computer peripherals from M/s. Ziya Traders, M/s. Laxmi Trading Co., Shri K. Hirala, Madhav Enterprise, M/s. M. K. traders, Krishna Trading and K.K. Enterprise and shown that payments were made to them in cash. The Assessing Officer has issued notices u/s. 133(6) of the Act to these parties. In response, the Assessing Officer held that these parties had denied any receipts in cash. Therefore, the Assessing Officer held that the expenditure recorded in cash book are not proved to be genuine. Further, assessee has shown cash sales to various parties and furnished addresses in e-response submitted on 15.02.2017. The Assessing Officer has issued notices u/s. 133(6) of the Act and all the notices issued returned unserved. Therefore, the Assessing Officer held that the cash sales recorded by assessee were not proved genuine. Dawn E-Networks Ltd Vs. ITO Asst. Year : 2017-18 - 4–
Further, the assessee has also shown trading in gold for the first time. While the original profession of the assessee was income from tuition, coaching and providing education facilities, only during the period of demonetization the assessee shown to be embarked upon the business of dealing in computer peripherals and also trading in gold. The assessee has shown sale of gold of 4000 gms for an amount of Rs.1,19,80,000/- on 01.03.2017 and again 2910 gms for an amount of Rs.87,15,450/- on 01.03.2017 and 21 gms for an amount of Rs.62,127/- on 20.03.2017. The assessee had cash deposit of Rs.6,49,090/- during the AY 2016-17, whereas the cash deposit during the AY 2017-18 was to the tune of Rs.3,84,17,000/- . Out of which, an amount of Rs.3,38,60,000/- was deposited during the period from 09.11.2016 to 31.12.2016. The Assessing Officer has examined month-wise opening and closing cash in hand for the current year and the preceding year which is as under:-
Month-wise Closing cash on Month-wise Closing cash on hand hand April, 2015 1,00,236/- April, 2016 5,65,695/- May, 2015 11,18,213/- May, 2016 18,60,148/- June, 2015 9,46,072/- June, 2016 5,90,500/- July, 2015 5,50,398/- July, 2016 74,62,776/- August, 2015 5,34,761/- August, 2016 1,45,18,661/- Sept, 2015 3,39,939/- Sept., 2016 2,19,81,929/- Oct, 2015 4,22,424/- Oct., 2016 3,27,83,586/- As on 8th Nov. 3,65,412 As on 8th Nov. 3,51,62,619/- 2015 2016 Dawn E-Networks Ltd Vs. ITO Asst. Year : 2017-18 - 5–
Having considered the entire facts and after rejecting the books of account, the Assessing Officer considered the amount of cash deposits of Rs.3,38,60,000/- as income from undisclosed sources and treated the same u/s 68 r.w.s. 115BBE of the Act.
We also find that the assessee has submitted the following details before the Ld. CIT(A):-
Particulars Pgs. of P/B Written submissions before CIT(A) 1-71 Acknowledgment of ITR & STI 72-75 Tax Audit Report 76-96 Audited Financial Statements 97-156 Submissions uploaded on 26.04.2019: 162-274 • Letter dated 26.04.2019; 164-166 • GP & NP ratios of three years; 165 • Bank statements; 167-196 • Details of sales & purchases (> Rs.1,00,000); 197-255 • Bank statement; 256-274 Submissions uploaded on 05.11.2019: 284-411 • Letter addressed to AO; 285-290 • Monthly purchase and sales details; 291-292 • Purchase register with invoices; 293-351 • Sales register with invoices; 352-404 Submissions uploaded on 12.12.2019: 412-665 • Letter addressed to AO; 414-418 • Purchase bills and sales invoices; 419-504 • Students register & fees receipts; 505-583 • Application forms; 584-605 • Details of purchase & sales of gold; 606-665 Submissions uploaded on 24.12.2019: 668-683 • Letter addressed to AO; 671-683 • Bank book; 684-713 • Cash book; 714-905 • VAT returns & CST returns 906-930 Dawn E-Networks Ltd Vs. ITO Asst. Year : 2017-18 - 6– Acknowledgment w.r.t. evidences uploaded on 24.12.2019 931-933 Receipts of admission fees and tuition fees 934-1545 Students admission application forms 1546-1716 Students register 1717-1764 Attendance register 1765-1789 Evidences w.r.t. purchases 1790-1842 Delivery challan 1843-1845 Acknowledgment w.r.t. evidences uploaded on 24.12.2019 1846-1847 Retail invoices 1848-2847 Acknowledgment w.r.t. evidences uploaded on 24.12.2019 2848-2849 Retail invoices 1850-3782 And we also find that the Ld. CIT(A) has miserably failed to consider the submissions made by the assessee and passed an order which does not commensurate with the judicial proprietary expected from the level of Commissioner of Income-Tax (Appeals). Hence, in the interest of justice, we remand the matter to the Ld. CIT(A) to pass an order de novo after due examination of the details filed by the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.