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Facts
The assessee's appeal is against the addition of ₹.1,04,03,630/- confirmed by the Ld. CIT(A)/NFAC, representing cash deposits made during the demonetization period. The assessee explained these deposits as cash realized from debtors, providing details of sales and debtor payments.
Held
The Tribunal held that the assessee had provided complete details of debtors, including PAN numbers, and the Assessing Officer had not conducted any independent inquiry. The Tribunal found that the quantum jump in cash payments by debtors could be attributed to the demonetization period, where people aimed to dispose of old currency.
Key Issues
Whether cash deposits made during demonetization, explained as realization from debtors with supporting documentation, can be added as unexplained income under Section 68 of the Income Tax Act.
Sections Cited
68 of Income-tax Act, 1961
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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI SANDEEP SINGH KARHAIL, HONBLEShri Aditya Ramachandran Shri Sunny Kachhwaha
O R D E R PER NARENDRA KUMAR BILLAIYA (AM)
This appeal by the assessee is preferred against the order dated 21.07.2023 by National Faceless Appeal Centre, Delhi [hereinafter in short “Ld. CIT(A)”] pertaining to A.Y.2017-18.
(A.Y: 2017-18) Atmaram Hazarilal Agarwal 2. The solitary grievance of the assessee is that the Ld. CIT(A) / NFAC erred in confirming the addition of ₹.1,04,03,630/- under section 68 of Income-tax Act, 1961 (in short “Act”) being cash deposited during demonetization period.
At the outset, we observe that filing of appeal is delayed by 143 days. The assessee has filed a letter for condonation of delay supported by an affidavit. We have gone through the contents of the affidavit and find that the assessee is prevented by reasonable and sufficient cause and therefore, the delay is condoned.
Briefly stated the facts of the case are that the, assessee filed its return of income on 26.10.2017 declaring a total income of ₹.38,16,480/-. The return was selected for scrutiny assessment proceedings and accordingly, statutory notices were issued and served upon the assessee. During the course of the scrutiny assessment proceedings, the Assessing Officer came to know that the assessee has made following cash deposits in the bank accounts: -
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(A.Y: 2017-18) Atmaram Hazarilal Agarwal Aggregate Aggregate gross gross amount amount credited to credited to the account in Account the account cash from 9th Sr.No. Bank Name Account No. Holder in cash day of Name from 1st November, April, 2016 2016 to 30th to 8th day of November, December, 2016 (Rs.) 2016 (Rs.) 1. South Indian Bank 0306083000002386 Colour Plus 1,69,23,925/- 70,26,000/- 2. Union Bank of India 316001010501341 Colour Plus 10,000/- 57,56,630/- 3. Union Bank of India 317401010043117 Colour Plus 0/- 1,21,000/-
The Assessing Officer was of the opinion that the cash deposits during demonetization are much higher than average cash deposits in period prior to demonetization. The Assessing Officer, accordingly asked the assessee to explain. The assessee filed a detailed reply explaining that the cash deposits during demonetization is cash realized from debtors. It was explained that during the year under consideration the assessee has made total sales at ₹.16,90,11,095/- out of which cash sales was ₹.4,08,18,396/-. The explanation of the assessee was dismissed by the Assessing Officer who was of the firm belief that the assessee has artificially created bogus receipts in the form of payments from debtors by manipulating his books of accounts. The Assessing Officer went on to estimate the payments from debtors in cash at ₹.25,00,000/- and giving the benefit of the same the Assessing Officer
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(A.Y: 2017-18) Atmaram Hazarilal Agarwal added ₹.1,04,03,630/- as unexplained cash deposits under section 68 of the Act.
Assessee carried the matter before the Ld. CIT(A) but without any success.
Before us, the counsel reiterated its claim and the Ld. DR supported the findings of the Assessing Officer.
We have carefully considered the orders of the authorities below. The cash transactions statement filed by the assessee is as under: - PAN : AAAPA5615K Transaction Number : 3655979708 Cash Transactions 2016 INCOME TAX DEPARTMENT Information from Bank/Institution 1. Bank/Institution UNION BANK 2. Account Number 316001010501341 3. Transaction Cash Deposit 4. Amount 5756630 5. Response The account relates to this PAN Explanation of Transaction(Cash Deposit) A Account Details A.1 Bank/Institution UNION BANK A.2 Branch/IFS Code BHULESHWAR MUMB AI A.3 Account Number 316001010501341 A.4 5756610 Cash Deposit in the account between 9th Nov 2016 and 30th Dec 2016 (as reported) A.5 5756630 Cash Deposit in the account between 9th Nov 2016 and 30th Dec 2016 (as confirmed by depositor) Remarks B Source of Cash Deposit B.I Cash out of earlier income or savings 1553680 Remarks The cash deposits of Rs 381000 are out of cash balance held in proprietary concern as on 08/11/2016 and c ash deposits of Rs.1172680 are out of cash he Id in personal balance sheet as on 08/11/2016 B.2 Cash out of receipts exempt from tax Remarks B.3 Cash withdrawn out of bank account 0 B.4 Cash received from identifiable persons (With PAN) 4202950
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(A.Y: 2017-18) Atmaram Hazarilal Agarwal Sl.No PAN of Person Name of Person Nature of transaction Account Remarks Received HASLEN ISLAM BANJARA 1 CAMPB8436P Cash Sales 489760 CASH RECEIVED ON VARIOUS DAYS 2 AULPN2256N JAMEL AHMED Cash Sales 493396 CASH RECEIVED ON VARIOUS DAYS 3 CNFPB3253E Cash Sales 357500 SAI MOHD VALI MOHD CASH RECEIVED ON BANJARA VARIOUS DAYS 4 DKJPK4496L Cash Sales 484722 SALAMUDDIN SALA HUDDIN CASH RECEIVED ON KHAN VARIOUS DAYS 5 APSAR LALCHI BANJARA BXNPB3654E Cash Sales 490560 CASH RECEIVED ON VARIOUS DAYS 6 CMAPK4793G SALEEM KHAN Cash Sales 363550 CASH RECEIVED ON VARIOUS DAYS 7 BNUPB7948G MUMTAJ MALHU BANJARA Cash Sales 486462 CASH RECEIVED ON VARIOUS DAYS 8 AFAPI4643G IRSHAD ALI Cash Sales 537000 9 BWWPM3185P ABDUL HASAN Cash Sales 500000 B.5 Cash received from identifiable persons (Without PAN) 0 B.6 Cash received from un-identifiable persons 0 B.7 Cash Disclosed To be disclosed under PMGKY Remarks Balance (A.5 - B.I - B.2 - B.3 - B.4 - B.5 - B.6 - B.7) B.8 0
A perusal of the aforementioned details shows that the assessee has given complete details of the debtors from whom it has received the cash. It can also be seen that the assessee has furnished the PAN Numbers of the debtors. Ironically, the Assessing Officer has not done anything and do not even care to make any enquiry from the aforementioned persons but simply proceeded on surmises and conjectures and in his wisdom even went on to estimate the unexplained portion of the total cash deposits. The Assessing Officer has observed that “The quantum jump in cash payment by debtors does not stand the test of principle of human probability”. In fact, in all fairness during the demonetization period every person wanted to get rid of the demonetized currency and therefore, in all probability the Page No. 5
(A.Y: 2017-18) Atmaram Hazarilal Agarwal debtors repaid the debts in the demonetized currency to get rid of them. Therefore, the test of human probability is in favour of assessee.
However, considering the nature of evidences furnished by the assessee, in the light of the fact that the Assessing Officer has not pointed out a single error or defect in the books of accounts of the assessee, we do not see any merit in the impugned addition. We accordingly, direct the Assessing Officer to delete the addition. Appeal of the assessee is accordingly, allowed.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 28th May, 2024.