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Income Tax Appellate Tribunal, ‘C/SMC’ BENCH: CHENNAI
Before: SHRI V. DURGA RAO
आदेश / O R D E R
Per V. Durga Rao, Judicial Member: These two appeals filed by the assessee are directed against the orders of the Learned Commissioner of Income Tax (Appeals)-13, Chennai in & 171/2018-19/CIT(A)-13/AY-2016-17 dated 29.07.2019 relevant to the Assessment Years 2016-17.
& 3464/Chny/2019 :- 2 -: 2. There is a delay of 57 days in filing the appeals filed by the assessee, for which, two separate affidavits have been filed for condonation of delay, wherein the Id. counsel for the assessee has stated that the delay is due to circumstances beyond his control.
Hence, the delay may be condoned.
On the other hand, the Id. D.R has not raised any serious objection.
I have gone through the affidavits filed by the assessee and find that there is a sufficient cause prevented by the assessee not to file appeals in time. In my opinion, it is a fit case to condone the delay in both the appeals. Accordingly, the delay of 57 days in filing of both the appeals are condoned and the appeals are admitted for adjudication. : 5. The brief facts of the case are that the assessee is an individual carrying on retail business in pipes and other hardware in the name and style of Popular Pipe Centre. The assessee has filed his return of income for the assessment year under consideration by declaring total income of Rs. 7,85,470/-. The Assessing Officer (AO) after following the due procedure, completed the assessment for assessing the total income of the assessee is at Rs. 26,35,570/-. In the assessment year, & 3464/Chny/2019 :- 3 -:
the A.O has noted that an amount of Rs. 46,83,225/- has shown as cash in hand in his business concern and Rs. 41,33,661/- has been shown as cash in hand in his wife’s business concern, totaling to Rs. 88,16,916/- shown as cash in hand in his and his wife’s business concern. The reasons for the same were not explained with documentary proof. Accordingly, the A.O has disallowed 40% of the cash in hand shown in the return of income after giving credit to the closing balance of Rs. 58,003/-.
On appeal before the Ld. CIT(A), the assessee has submitted a detailed explanation, which is reproduced as under:
"For the AY 2016-17, the appellant filed the return o/income admitting an income of Rs.7,95,74/. The appellant has maintained regular books of accounts and the same were duly audited under section 44AB of the Act. During the course of assessment proceedings, the AO found that appellant had shown dosing cash balance of R$.46,83,25/~, The appellant explained that he had promoted year-end sales by allowing heavy discount for the goods and the appellant was able to make good, cash sales during the- period. He had also taken loans from Lakshmi Vilas Bank through OD and other loan of about Rs.60,00,000 and Rs.26,00,000 and the same were withdrawn from the loan amount and in cash to meet some urgent expenses to be incurred. The AO however not accepted the explanation and without giving any reasons, proceeded to estimate 40% of the cash balance as not explained and brought to tax after allowing closing cash balance of the previous year. The appellant further submitted that he maintains the hooks of accounts- in his regular course of business which were duly audited and the cash balance was arrived at from the hooks of accounts only and it was neither notional or imaginary. The turnover of the year was more than Rs. 2.5 Crores and major sales are cash safe's generating cash, on hand, further, the appellant had admittedly availed loans which urns also the reasons for the cash balance in the books. The sundry creditors for goods was about Rs, 40 lakhs which go to show that the stile consideration was not & 3464/Chny/2019 :- 4 -: used to discharge the creditor's liability but kept as cash. The appellant thus explained the ash availability as per books and the AO is not justified in doubting the same without any basis or material. Such estimated addition cannot he made especially on the cash balance available which cannot at all be treated as income especially when the cash balance is as per audited books of accounts.”
The Ld. CIT(A) after considering the above explanation of the assessee, he has deleted the addition to the extent of 50% and sustained the addition of Rs. 7,87,500/-.
On appeal before the Tribunal, the ld. counsel for the assessee has reiterated the same arguments, which is placed before the A.O and submitted that the assessee has maintained the books of accounts and the same are duly audited u/s. 44AB of the Act and also submitted that the cash balance represented cash sale during the last quarter of the financial year. The A.O as well as the Ld. CIT(A) without considering the same, addition was confirmed.
On the other hand, the ld. Departmental Representative has supported the orders passed by the authorities below.
Both the parties have been heard, perused the material available on record and gone through the orders of the authorities below. The A.O has made addition of Rs. 48,50,100/- being 40% of cash balance shown in the balance sheet as income of the assessee. According to the A.O, cash balance shown by the assessee of Rs. 46,83,255/- is on & 3464/Chny/2019 :- 5 -: the high side and therefore, on the above amount 40% i.e., Rs.
18,50,100/- was treated as income of the assessee. On appeal, the Ld. CIT(A) granted partial relief to the extent of Rs. 10,62,600/-. I find that the assessee is maintaining the books of accounts and the same were audited u/s. 44-AB of the Act. The turnover of the assessee for the year under consideration as submitted by the assessee before the Ld. CIT(A) is at Rs. 2.5 crores and the major sales are cash sales only and obviously generates cash in hand. When the assessee has submitted the same before the A.O as well as Ld. CIT(A) they have not pointed out any defect in the books of accounts and only says that the cash in hand shown by the assessee is excessive. I find that the A.O without any basis, simply says that the cash in hand is excessive and therefore, estimated 40% of the cash in hand as an income and subsequently, partial relief granted by the Ld. CIT(A) and when the assessee is explaining in detail without considering the same estimation made by the A.O without giving any reasons, in my opinion, it is not correct.
Even, the Ld. CIT(A) has granted partial relief without giving any reasons why entire addition cannot be deleted. Further, the Ld. CIT(A) also failed to consider the explanation of the assessee. In view of the above, the addition made by the A.O cannot be survived. Accordingly, the addition made by the A.O is deleted. & 3464/Chny/2019 :- 6 -: 11. In the result, the appeal filed by the assessee in ITA No.3463/Chny/2019 is allowed.
So far as the appeal in is concerned, the facts of this case are similar to the earlier appeal in therefore, no separate adjudication is required in view of our decision above as the addition made by the A.O and partial relief granted by the Ld. CIT(A) cannot be survived.. Hence, the appeal filed by the assessee in is also allowed.
In the result, both the appeals filed by the assessee in & 3464/Chny/2019 for Assessment Years 2016-17 are allowed. Order pronounced on 24th November, 2021 in Chennai.