A.G. INDIA RETAIL PRIVATE LIMITED,DELHI, INDIA vs. THE ASSISTANT COMMISSIONER OF INCOME TAX, CR BUILDING

The Ground no 1(v) was not pressed, hence the same is dismissed.

The representatives of both the sides were heard at length, the case records carefully perused and with the assistance of both the ld. Counsels, we have considered the documentary evidences brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules and have also perused the judicial decisions relied upon by both the sides.

Before proceeding further, we find that the assessee, vide an application dated 16.07.2024, has craved leave to raise the following additional ground of appeal:

The ld. DR strongly objected to the admission of this additional ground stating that no point of law is involved and the assessee is raising the additional ground purely on facts and, therefore, as per the ratio laid down by the Hon'ble Supreme Court in the case of NTPC 229 ITR 383, such ground cannot be allowed to be raised at this stage.

Per contra, the ld. Counsel for the assessee stated that all the relevant details are very much on record and as per CBDT Instruction No. 20/2015 dated 29.12.2015, the impugned assessment order is null and void ab initio. The ld AR relied on the judgment of the Hon'ble Supreme Court in the case of NTPC 229 ITR 383 and Singhad Technical Education Society 397 ITR 344.

We have carefully considered the orders of the authorities below qua the additional ground raised

Briefly stated, the facts of the case are that the assessee is engaged in the business of trading of various types of plastic sheet, plastic items and ball bearing and others merchandise items.

The Assessing Officer passed assessment order u/s 143(3) dated 27.12.2019 with income assessed at Rs.1,21,14,522/- in place of returned income of Rs 87,00,522/- with total addition of Rs.34,14,000/- u/s 68 read with section 115BBE of the Act.

Aggrieved, the assessee went in appeal before the ld. CIT(A) who dismissed the appeal after confirming the order passed by the Assessing Officer for making addition of Rs.34,14,000/- (60 % of cash deposited during demonetization of Rs.58,17,266/-) being sourced from recorded cash sales in defect free audited books of accounts.

The ld. CIT(A) rejected the assessee’s claim that it had made cash deposits in bank during demonetization period from out of accumulated cash sales available upto 31.10.2016 as not corroborated with any evidence. He also accepted the Assessing Officer’s finding

Aggrieved, the assessee is in appeal before us.

The ld counsel of the assessee has vehemently argued that exhaustive evidence like Cash Book with cash deposit summary, Sales Tax returns, Detailed cash deposit summary, Detailed cash deposit summary with source of cash deposited were filed during assessment proceedings.

Before us, the ld. counsel for the assessee vehemently submitted that the AO had the details of cash sales as per cash book and cash summary flow chart and he made assessment without rejecting the trading results of the assessee. It was submitted that it amounted to double taxation of the same profit. It was argued that cash flow statement is merely rejected by the Assessing Officer on false hypothesis and conjectures without bringing on record any material evidence to show any other utilization of such cash available in hands of assessee. It was further argued that there is no SCN issued

The ld. counsel for the assessee further submitted that having accepted the books of accounts by both the authorities, book results could not be disturbed once it is admitted that cash sales are recorded in books and forming part of turnover of the business. For this proposition the ld. counsel for the assessee relied upon :

The ld. counsel for the assessee further submitted that on basis of undisputed fact that there is no SCN issued prior to impugned asst, same is fatal defect leading to nullification of impugned assessment. The ld. counsel for the assessee referred to para 4 of CBDT Instruction No.20/2015 dated 29.12.2015 which is reproduced as under :-

We have heard the rival submissions and have perused the relevant material on record. We find that the Assessing Officer has made the addition only on the ground that the assessee has not explained the holding of cash receipt in hand instead of depositing the same in bank as was done in A.Y 2016-17. The Assessing Officer came to the conclusion that as the assessee has not kept cash in hand in earlier years, therefore, the amount of Rs. 57,17,266/- “definitely bears some unaccounted income of the assessee” which the assessee has deposited in the bank account in the garb of cash sales and he estimated a 60% of cash deposited as income u/s 68 r.w.s 115BBE of the Act.

We find that the Assessing Officer has not questioned the cash sales and has also not rejected the books of account. The AO has accepted the sales made during the year and the books of accounts of the assessee. We find considerable force in the ld AR argument that when the AO has not questioned the audited books of account and the cash

In that view of the matter, we are of the considered view that the ratio of Hon’ble Supreme Court decision in case of Lalchand Bhagat Ambica Ram vs CIT (1959) 37 ITR 288 forcefully apply to the facts and circumstances of the instant case. The Hon’ble Supreme Court Lalchand Bhagat Ambica Ram (supra) had held that when entries in books of accounts in regard to cash balances were held to be genuine, there can be no escape from the conclusion that assessee had offered reasonable explanation as to source of all high

In conclusion therefore, we hold that the addition made by the Assessing Officer is based on suspicions, conjectures and surmises. We also hold that the addition is not legally permissible and the ld. CIT(A) fell in error in sustaining the addition. Accordingly, the grounds 1(i) to 1(iv) raised by the assessee are allowed. As we have decided the case on merits we are not giving any opinion on the additional ground taken by the assessee.