DAWN E NETWORKS LIMITED,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD- 1(1)(3) (PREVIOUSLY WARD 1(1)(4)), AHMEDABAD

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.

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:-

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):-

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

अपीलाथ / The Appellant 2.  थ / The Respondent. 3. संबंिधतआयकरआयु / Concerned CIT 4. आयकरआयु(अपील) / The CIT(A)- 5. िवभागीयितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड फाईल/ Guard file.