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Facts
The assessee-company filed its return for AY 2017-18, reporting an income of Rs. 10,00,840/-. During scrutiny, the AO found unexplained cash deposits of Rs. 26,80,000/- made during the demonetization period (08.11.2016 to 31.12.2016), which the assessee attributed to cash sales. The AO added this amount under Section 69A read with Section 115BBE, and the CIT(A) confirmed the addition, stating the explanation was unsatisfactory.
Held
The Tribunal confirmed the addition made by the AO under Section 69A, upholding the CIT(A)'s order. It ruled that the assessee failed to discharge the burden of proving the source and nature of the cash deposits, as no cash book or comparative statements for cash sales and deposits from prior years were provided. Consequently, the grounds of appeal raised by the assessee were dismissed.
Key Issues
Whether the addition of Rs. 26,80,000/- as unexplained cash deposits under Section 69A read with Section 115BBE was justified, given the assessee's claim that the deposits originated from cash sales during the demonetization period and their failure to substantiate the source.
Sections Cited
143(3), 147, 142(1), 143(2), 69A, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM
Before: SHRI K. NARASIMHA CHARY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
आदेश /O R D E R
PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, Delhi [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No.
I.T.A.No.316/VIZ/2024 J.R. Jewellers Private Limited ITBA/NFAC/S/250/2024-25/1065665060(1) dated 14.06.2024 for the A.Y.2017-18 arising out of the order passed under section 143(3) r.w.s. 147 of Income Tax Act, 1961 (in short ‘Act’) dated 20.12.2019.
Brief facts of the case are that, assessee-Company filed its return of income admitting a total income of Rs. 10,00,840/-. Subsequently, the case was selected for scrutiny under CASS. Thereafter, notice under section 142(1) of the Act was issued and served on the assessee. Ld. Assessing Officer [hereinafter in short “Ld. AO"] observed that assessee has made substantial cash deposits during the demonetization period. Notice under section 143(2) of the Act was issued and served on the assessee. Thereafter a final show-cause notice was issued and served on the assessee to show cause why an amount of Rs. 26,80,000/- be added back to the total income of the assessee. In response, assessee-Company submitted a reply. On going through the reply and submissions of the assessee-Company, Ld. AO concluded that the explanation provided by the assessee-Company is not satisfactory and thereafter proceeded to frame the assessment by adding an amount of Rs. 26,80,000/- under section 69A r.w.s. 115BBE of the Act.
3. On being aggrieved by the order of the Ld. AO, assessee filed an appeal before Ld. CIT(A). Ld. CIT(A) based on the submissions of the assessee concluded that the assessee has failed to satisfactorily explain the Page No. 2
I.T.A.No.316/VIZ/2024 J.R. Jewellers Private Limited nature and source of cash deposits and accordingly confirmed the addition made by the Ld. AO for Rs. 26,80,000/-.
On being aggrieved by the order of the Ld. CIT(A), assessee is in appeal before us by raising following grounds of appeal: - “1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case.
2. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs.26,80,000 made by the assessing officer u/s.69A of the Act towards alleged unexplained cash deposits in the bank account of the appellant.
The learned Commissioner of Income Tax [Appeals) ought to have held that the assessing officer having accepted the bookresults and not chosen to reject the books of account, is not justified in making addition u/s 69A of the Act.
4. The learned Commissioner of Income Tax (Appeals) ought to have appreciated that the assessing officer is not justified intaxing sales on one hand and considering on the other hand the cash deposited out of the sale proceeds as unexplained.
5. Any other ground that may be urged at the time of appealhearing.”
Ground Nos. 1 &5 are general in nature and needs no adjudication.
Ground Nos. 2, 3 & 4 is respect to the addition of Rs. 26,80,000/-made by the Ld. AO under section 69A of the Act. On this issue, Ld. Authorised Representative [hereinafter “Ld.AR”] submitted that assessee has made cash sales and the deposits during demonetization period arise from the cash sales made by the assessee. He therefore pleaded that since the source for deposits have been explained addition may be deleted. He also further submitted that Page No. 3
I.T.A.No.316/VIZ/2024 J.R. Jewellers Private Limited the cash book and the sales invoices have been submitted before the lower authorities which was not considered.
Per contra, Ld. DR fully relied on the orders of the Revenue Authorities.
We have heard both the sides and perused the material available on record. It is an undisputed fact that the assessee has made cash deposits amounting to Rs. 26,80,000/- during the demonetization period i.e., from 08.11.2016 to 31.12.2016. The claim of the Ld.AR is that these cash deposits are from the cash sales made by the assessee and hence properly explained. However, Ld.AO in Para No. 11 of his order, observed as follows: -
“11. It is apparent from the cash book submitted by the company that from 01-10-2016 till November there are only debits in the Cash Book except on the last date and there is no credit at all. There was no cash sale above Rs.20,000/- and majority of them is above Rs.19,000/- which suggests that this modus operandi was used to avoid the statutory provision of the Income-tax Act, 1961. A total of Rs. 2680000/- deposited in the bank account maintained by the company during demonetization period.”
Further, Ld. AO in Para Nos. 12.1 & 12.2 observed as follows: -
“12.1 The details show that the assessee has deposited cash in the bank account only during demonetisation period, and during other periods of the F Y 2016-17, the assessee has not deposited Cash in its bank account. 12.2 There was no cash deposits made during F Y 2017-18 and F Y 2018- 19. The Reserve Bank of India (RBI) had withdrawn Legal Tender character of old bank notes in the denomination of Rs 500/- and Rs 1000/- w.e.f. 8th November, 2016, through Specified Bank Notes (cessation of liabilities) Act, 2017 and Specified Bank Notes (deposit of confiscated notes) Rules, 2017.”
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I.T.A.No.316/VIZ/2024 J.R. Jewellers Private Limited 10. The onus is on the assessee to prove the sources of cash deposits made during the demonetization period. From the observation of the Ld. AO and Ld.CIT(A), we find that the assessee has not satisfactorily explained the sources for the deposit of cash during the demonetization period. Even before us, assessee has not submitted the cash book disclosing the cash sales and the cash deposits. Merely the assessee has submitted the sales invoices, quantitative details of purchase and sales of gold ornaments and statement of cash receipts. Ld. AO has in his findings categorically mentioned that assessee has not provided any details to show that the assessee has deposited the cash in the bank account evenly during the entire year, but has made such cash deposits during the demonetization period. Further the assessee has also not provided even before us a comparative statement of the cash sales and cash deposits into the bank account of the preceding assessment years. In the light of facts and circumstances as discussed aforesaid, we are of the considered view that there is no infirmity in the order of the Ld. CIT(A) and hence grounds raised by the assessee are dismissed.
In the result, appeal of the assessee is dismissed.