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Facts
The assessee, a company, declared an income of Rs. 21,40,590/- for AY 2017-18. The Assessing Officer (AO) noticed an unusual increase in cash in hand after August 2016, suspecting camouflage of unaccounted money. The AO also noted unaccounted cash deposits during demonetization, adding Rs. 22,48,159/- to the total income. Additionally, Rs. 65,486/- was added on account of delayed PF contributions.
Held
The Tribunal noted that the assessee did not file documentary evidence before the lower authorities. However, in the interest of justice, the Tribunal decided to remit the issue of addition made under section 68 regarding cash deposit to the CIT(A) for a final opportunity to substantiate the case with documentary evidence. The second ground of appeal regarding PF contribution was dismissed.
Key Issues
Whether the addition made on account of cash deposit during demonetization period is justified without providing a final opportunity for substantiation? Whether the disallowance of PF contribution made beyond the due date is justified?
Sections Cited
Sec. 143(2), Sec. 142(1), Sec. 68, Sec. 36(1)(va), Sec. 2(24)(x)
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Income Tax Appellate Tribunal, NAGPUR “SMC” BENCH : NAGPUR
Before: SHRI V. DURGA RAO
ORDER PER V. DURGA RAO, J.M. : This appeal by the assessee has been directed against the order dated 15.03.2023, of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC”], Delhi, relating to assessment year 2017-2018. 2. At the outset, there is a delay of 254 days in filing the appeal before the Tribunal. The assessee has filed affidavit seeking 2 ITA.No.42/NAG./2024 for condonation of the delay . I am satisfied with the averments stated in the affidavit and condone the delay of 254 days in filing the appeal before the Tribunal and proceed to decide the appeal on merits.
Briefly stated facts of the case are that the assessee is a company and has filed it’s return of income on 15.09.2017 declaring income at Rs.21,40,590/-. The case of the assessee was selected for scrutiny under CASS. The Assessing Officer issued statutory notices u/sec.143(2) and 142(1) of the Act calling explanation of the assessee. In response to the said notices, the assessee has uploaded details and documents which were verified on test-check basis by the Assessing Officer. During the course of assessment proceedings, the Assessing Officer noted that the assessee has claimed the deposit of cash in bank account, is mainly upon recovery from the debtors. However, on examination of the pattern of opening cash in hand on the first day of all the months i.e., for F.Ys. 2015-2016 and 2016- 2017, the amount is of Rs.5,00,000/- to Rs.17,00,000/-, which pattern is followed up-to August 2016. But, after August, 2016, the assessee suddenly jacked up the cash in hand. Therefore, the Assessing Officer noted that assessee was involved in an attempt to camouflage the unaccounted money as having received from debtors.
3 ITA.No.42/NAG./2024 He further noted that during demonetization period the assessee has unaccounted deposit of Rs.32,00,000/-. On an average the Assessing Officer gave benefit of Rs.9,50,841/- as cash in hand and added the differential sum of Rs.22,48,159/- [i.e., Rs.32,00,000/- (-) Rs.9,50,841/-] to the total income of the assessee. Since the assessee-company deposited the employee’s contribution to the provident fund beyond the “due date”, the Assessing Officer considered the amount as income of the assessee as defined u/sec.36(1)(va) and u/sec.2(24)(x) and added a sum of Rs.65,486/- to the total income of the assessee. Accordingly, the Assessing Officer determined the total income of the assessee at Rs.44,54,235/- as against the returned income of Rs.21,40,590/- vide order dated 27.12.2019.
On being aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the learned CIT(A). The learned CIT(A), in absence of any documents placed on record, confirmed the additions made by the Assessing Officer.
Aggrieved by the order of the learned CIT(A), the assessee carried the matter in appeal before the Tribunal.
4 ITA.No.42/NAG./2024 6. During the course of hearing, Learned Counsel for the Assessee submitted that the authorities below erred in law in making addition u/sec.68 of the Act. He submitted that the assessee is ready to furnish all the documentary evidences in respect of addition made on account of differential cash deposit of Rs.22,49,159/- estimated by the lower authorities in the event of granting one more opportunity to substantiate it’s case in the larger interest of justice.
The Learned DR on the other hand strongly relied on the orders of the lower authorities. He submitted that the assessee did not chose to appear before the lower authorities by placing relevant documents in respect of cash deposit of Rs.32 lakhs during demonetization period and, the average benefit of Rs.9,50,841/- has been rightly given by the lower authorities. He submitted that the addition made by the lower authorities be confirmed by dismissing the appeal of the assessee.
I have heard the submissions of both the parties and perused the material on record. I find that it is an admitted fact that before the lower authorities the assessee did not file any documentary evidence to substantiate it’s case with respect to cash deposited during demonetization period. However, upon hearing the 5 ITA.No.42/NAG./2024 submissions of the Learned Counsel for the Assessee during the course of hearing to the effect that the authorities below did not altogether ruled-out the cash deposit made during the demonetization period and had given average benefit and as such, in the event of providing one more opportunity to the assessee, the assessee company is ready to furnish all the information as called for by the learned CIT(A). I, therefore, in the larger interest of justice, deem it fit and appropriate to remit the issue of addition made u/sec.68 of the Act on account of differential amount of cash deposit in bank arrived at by the lower authorities at Rs.22,48,159/-, back to the file of learned CIT(A) with a direction to provide one more final opportunity to the assessee to substantiate it’s case with all documentary evidences before him. The learned CIT(A) is directed to provide adequate opportunity of being heard to the assessee. In the event of assessee’s failure to substantiate it’s case, the learned CIT(A) is at liberty to pass appropriate orders as per fact and law. Needless to say, it is the assessee’s sole risk and responsibility to plead and prove it’s case in consequential proceedings.
The Learned Counsel for the Assessee during the course of hearing did not press ground no.2 which is pertains to employee’s 6 ITA.No.42/NAG./2024 contribution of PF amount deposited by the assessee beyond the “due date” which issue has now been settled by the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd., vs. CIT & Ors. (2022) 448 ITR 518 (SC) against the assessee by holding that it is an essential condition for the deduction that such amounts are deposited on or before the due dates mandated by the concerned law. Accordingly, ground of appeal
no.2 of the assessee is dismissed.
10. In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 03.02.2025.