SRI NIDHI FINANCE,SALEM vs. THE INCOME TAX OFFICER, WARD 1(4), SALEM

This appeal filed by the assessee is directed against the order dated 28.06.2022 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2015-16.

We find that this appeal was filed with a delay of 658 days. The assessee filed notarized affidavit explaining the reasons for condonation of delay.

The ld. AR Shri S.R. Srikrishna, CA drew our attention to para 6 to 13 and argued the assessee was really prevented due to reasons stated in para 6 to 13 and prayed to condone the delay.

The ld. DR Ms. Gauthami Manivasagam, JCIT, vehemently opposed the submissions of the ld. AR. She argued that the reasons explained by the assessee are general in nature and no sufficient cause was explained in filing the appeal belatedly. She submits that in case, the Tribunal decides to condone the delay, that should be on cost. Taking into consideration the facts and circumstances of the case and submissions of the ld. AR and ld. DR, we deem it proper to condone the delay subject to the condition of payment of cost of ₹.50,000/- in favour of the State Legal Aid Authority, Hon’ble Madras High Court within 30 days from the date of receipt of this order and the assessee shall produce receipt of payment of cost before the Registry, ITAT on record.

Ground No. 1 raised by the assessee is general in nature and requires no adjudication.

Ground No. 2 & 3 raised, in terms of ground No. 4 and requested to take up Ground Nos. 2, 3 & 4 collectively for adjudicating the issue of confirming the addition made under section 68 of the Income Tax Act, 1961 [“Act” in short] in the facts and circumstances of the case.

We find the Assessing Officer made addition on account of unexplained cash credit under section 68 of the Act to an extent of ₹.4,46,524/- vide his order dated 11.12.2019 passed under section 143(3) of the Act. The ld. CIT(A) confirmed the same.

Before us, the ld. AR placed on record paper book consisting 308 pages. He drew our attention to page Nos. 147, 151, 152, 153 and 154 and argued, the ld. CIT(A), having filed evidence with regard to addition of ₹.1,38,000/-, confirmed the order of the Assessing Officer, which is not justified. The ld. AR argued the details with regard to the addition of ₹.1,38,000/- were filed before the ld. CIT(A), but no consideration as given. He argued that the assessee furnished the details in respect of the said amount forming part of total addition vide above stated pages.

The ld. DR submits that there was no evidence in respect of this issue before the Assessing Officer.

Having heard both the sides and upon perusal of the material on record, on verification of page 147 of the paper book, which clearly demonstrate that the assessee has filed cash deposit declaration before the Assessing Officer, but, however, it was not considered. Further, on examination of the counterfoils where the demonetization of cash deposits were duly recorded, as per the said counterfoils a sum of ₹.1,38,000/- deposited on 19th, 22nd and 23rd November, 2016 are non-SBN, but mistakenly taken as SBN by the Assessing Officer. On perusal of the impugned order, the ld. CIT(A) dismissed the said issue for not furnishing any documentary proof with regard to the claim of the said deposit is of non-SBN. On examination of paper book pages 150, 151, 152 & 153, we note that admittedly these evidences were before the Assessing Officer and not before the ld. CIT(A). Having examined, we find force in the argument of the ld. AR that the Assessing Officer mistakenly taken the said transaction as SBNs. Thus, the issue of addition of ₹.1,38,000/- is answered in favour of the assessee and delete the same to that extent.

Further, coming to interest part, we find the details of which are from page 170 to 196. The ld. AR submits the assessee has given the details of interest collected like name, address & mobile number. On perusal of the paper book from page 170 to 196, we find list of persons from whom loan repayments were collected in cash date-wise, the first transaction being on 09.11.2016 and the last transaction being on 23.11.2016. Last column clearly shows interest collected from 245 persons to an extent of ₹.1,29,558/-. There is no discussion by the ld. CIT(A) separately with regard to the said issue. On an examination of the said details, we find the assessee clearly established the source of cash deposit as per financials where principals along with interests are collected in cash, which are duly accounted in the books of account of the assessee. There was no adverse remark by the Assessing Officer in the assessment order regarding mismatch whatsoever with regard to books of account. Therefore, we find the order of the ld. CIT(A) is not justified, having all the details with proper explanation, the addition towards interest receipt to an extent of ₹.1,29,558/- is deleted.

Regarding other balance addition of ₹.1,78,966/- [4,46,524 – 1,38,000 + 1,29,558], the ld. AR drew our attention to para 4 of the assessment order and argued that the Assessing Officer did not make any adverse remarks to the books of account of the assessee. The Assessing Officer accepted the business of the assessee as finance business, sources were cash deposits as found in the bank account, are collected from customers during demonetization period. He argued that the assessee has given all details like name, address, PAN and mobile number for examination of the Assessing Officer. The ld. AR drew our attention to the order of the ITAT at page 242 of the paper and by referring to para 6 at page 246 of the paper book argued that the ITAT had given relief to the assessee therein, on finding no defect has been pointed out by the Assessing Officer in the books of accounts. On perusal of para 6 of the ITAT order, we note that the cash so deposited during demonetization period was added as unexplained cash credit under section 68 of the Act. The assessee therein proved the said deposits are out of cash so received by the assessee under sales, which were recorded in the books of account. In present case also, there is no dispute with regard to the business of the assessee i.e., finance business. The assessee has given complete details of cash transactions from page 53 to 118, wherein, name of the person, address of the person, nature of transaction, amount received and remarks in column-wise are reflecting. The Assessing Officer did not make any adverse remarks with regard to cash transaction. Further, we discussed the business activities of the assessee in the aforementioned paras, having no defects found in the books of account, the addition of ₹.1,78,966/- is deleted. Therefore, the order of the ld. CIT(A) is not justified. Thus, the ground raised by the assessee is allowed.

In the result, the appeal filed by the assessee is allowed. Order pronounced on 13th September, 2024 at Chennai.