KISHOR VITTHAL KOLHE,JALGAON vs. DCIT-CIRCLE-1, JALGAON, JALGAON

So far as the query raised by the Assessing Officer regarding the explanation for withdrawing huge cash when there was sufficient cash available in the books is concerned, it was submitted that since the assessee has availed loans from the bank, for its repayment and for the maintenance of buses, there was withdrawal of cash from the bank. So far as the query raised by the Assessing Officer regarding the vehicle-wise receipts in each trip is concerned, it was submitted that the same is not possible to maintain vehicle-wise receipts and expenditure. So far as the query raised by the Assessing Officer regarding sudden increase / decrease in cash receipts is concerned, it was submitted that during the year 2015-16 there were two buses and in March two more buses have been purchased and during the year 2016-17 there were seven buses, hence, the travel receipts were increased as compared to the year 2015-16. It was also explained by the assessee that the old currency notes were used for purchase of petrol and diesel and hence there is sudden surge in sales during the said period.

However, the Assessing Officer was not satisfied with the explanation given by the assessee. He noted that the assessee was showing cash in hand which is quite high. Further, there is an increase in cash in hand from 01.04.2016 to 08.11.2016. At the same time, there are instances of continuous withdrawals from the bank account. In view of the above discussion and rejecting the various explanations given by the assessee and applying the provisions of section 68 of the Act, the Assessing Officer made addition of Rs.64,94,250/- being the difference between the cash balance as on 01.04.2016 and the cash balance as on 08.11.2016 by observing as under:

In appeal the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer by observing as under:

Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal.

The Ld. Counsel for the assessee submitted that the assessee is maintaining day-to-day stock records and cash books which were produced before the Assessing Officer. No defects whatsoever were found by the Assessing Officer and there were no objections raised by the Assessing Officer regarding purchases and sales. Referring to the following decisions, he submitted that the addition made by the Assessing Officer u/s 68 of the Act by treating the sale proceeds credited to the Profit and Loss Account as unexplained cash credit cannot be sustained: i) PCIT vs. Tripati Proteins (P.) Ltd. (2024) 165 taxmann.com 175 (Guj) ii) CIT vs. Vishal Exports Overseas Ltd. (Tax Appeal No.2471 of 2009) iii) PCIT vs. Agson Global (P) Ltd. 441 ITR 550 (Del) iv) Abhijit Vivek Swami vs. ACIT vide v) Mohit Sukhija vs. NFAC (2025) 175 taxmann.com 94 (Del) vi) Balwinder Kumar vs. ITO vide vii) Raj Kumar Dhab Wasti Ram vs. ITO vide viii) ACIT vs. Ramlal Jewellers vide order dated 26.07.2023 ix) NECX (P) Ltd. Vs. ITO (2022) 145 taxmann.com 232 (Hyd) x) Anantpur Kalpana vs. ITO (2022) 138 taxmann.com 141 (Bangalore) xi) ACIT vs. M/s. Hirapanna Jewellers (2021) 128 taxmann.com 291 (Visakhapatnam-Trib.) xii) M/s. Singhal Exim Pvt. Ltd. Vs. ITO vide ITA No.6520/Del/2018 (Del) xiii) S.Balaji Mech Tech (P) Ltd. Vs. ITO (2025) 170 taxmann.com 639 (Del)

He accordingly submitted that the addition made by the Assessing Officer and sustained by the Ld. CIT(A) / NFAC should be deleted being not sustainable in law.

The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC. He submitted that the assessee has made huge deposit of cash in the bank account during the demonetization period. The Assessing Officer was very liberal in restricting the addition amount being the difference between the cash balance as on 08.11.2016 and the opening cash balance as on 01.04.2016. Since the Ld. CIT(A) / NFAC has already passed a speaking order by allowing certain relief, therefore, the same being in accordance with law, should be upheld and the grounds raised by the assessee be dismissed.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case made addition of Rs.64,94,250/- being the difference between the cash balance as on 08.11.2016 and 01.04.2016 out of the total cash deposit of Rs.2,60,27,680/- during the demonetization period treating the same as unexplained cash credit. We find the Ld. CIT(A) / NFAC substantially sustained the addition made by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that when the books of account are audited and the assessee has produced the daily cash book, stock register and no defects were pointed out by the Assessing Officer and the sales which have been recorded in the books of account have been accepted, in that case, the Assessing Officer cannot invoke the provisions of section 68 of the Act by treating the sale proceeds credited to the Profit and Loss Account as unexplained cash credit.

We do not find much force in the above arguments of the Ld. Counsel for the assessee. The Assessing Officer has given a categorical finding that the assessee could not substantiate with justifiable reasons regarding the necessity of withdrawal of cash from the bank when it was having huge cash balances in its books of account. Further, the assessee did not submit the vehicle-wise receipts or trip-wise expenditure. Therefore, the submission of the Ld. Counsel for the assessee that the Assessing Officer has not rejected or doubted the same cannot be accepted. The various decisions relied on by the Ld. Counsel for the assessee are distinguishable and not applicable to the facts of the present case. However, we find the assessee, apart from doing travel agency business, was also the dealer of petroleum products and such dealers were allowed to accept the specified bank notes during the demonetization period. Therefore, the possibility of some deposits out of such cash received cannot be ruled out. Considering the totality of the facts of the case and in the interest of justice, we are of the considered opinion that addition of Rs.32,47,125/- being 50% of the total addition made by the Assessing Officer under the facts and circumstances of the case will meet the ends of justice. We hold and direct accordingly. The grounds raised by the assessee are accordingly partly allowed.

In the result, the appeal filed by the assessee is partly allowed.