SAVERY TRANSPORT FINANCE LIMITED,CHENNAI vs. ACIT NON CORP CIRCLE 6(1), CHENNAI

Aggrieved by confirmation of certain addition of Rs.14.84 Lacs and denial of deduction u/s 80G for Assessment Year (AY) 2017-18, the assessee is in further appeal before us. The appeal arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 01-03-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) r.w.s 147 of the Act on 31-12-2019. Having heard rival submissions, the appeal is disposed-off as under.

The assessee is a non-banking finance company. During assessment proceedings, it transpired that the assessee deposited cash of Rs.1586.77 Lacs from 09-11-2016 to 30-12-2016 and accordingly it was directed to establish the source thereof. The assessee furnished various details. It was noted that the cash of Rs.14.84 Lacs was deposited in Specified Bank Notes which was stated to be received back from various borrowers. Notices u/s 133(6) was issued to 108 parties which largely remained un-responded. Considering the same, Ld. AO added the amount of Rs.14.84 Lacs as unexplained investment. The assessee made donation of Rs.60 Lacs to Anna Charitable Trust and claimed 50% deduction u/s 80G. Since no response was received from donee entity u/s 133(6), the same was denied. The Ld. CIT(A) merely endorsed the action of Ld. AO against which the assessee is in further appeal before us. Our findings and Adjudication 3. From the facts, it emerges that the assessee is engaged in finance business and it is a regulated entity. Its books of accounts are subjected to Tax Audit and it has reflected revenue from operations for Rs.45.31 Crores. The assessee conduct substantial business in cash and it has regular cash inflows and outflows which is evident from assessee’s tabulation as extracted in the assessment order. The cash deposits are duly recorded in the cash book and the assessee has sufficient cash balance in the books to make these deposits. The books have not been rejected and no defect has been pointed out in the same. The assessee placed on record complete details of the borrowers who repaid the amount in cash. The enquiry by Ld. AO has happened after more than 3 years and therefore, merely on the fact that the borrower did not respond to the notice issued u/s 133(6), no adverse inference could be drawn against the assessee. The case law of this Tribunal in Vidhiyasekaran Pradeep Malliraj (ITA No.698/Chny/2022) as referred by Ld. CIT(A) has been distinguished in the case of M/s R.R. Foods (ITA No.1359/Chny/2023 dated 03-07-2024) since in the former case, the assessee could not fully substantiate the source of cash deposit with sufficient documentary evidences. The same is not the case here. Therefore, considering the facts of the present case, we delete the impugned addition and allow the corresponding grounds as raised by the assessee.