ASTRA IDL LIMITED,LASUDIA MORI, INDORE vs. ITO - 1(1), MAIN BUILDING, INDORE

आयकर अपील�य अ�धकरण, इंदौर �यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE SMC BENCH, INDORE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA No.229/Ind/2024 (Assessment Year: 2017-18) Astra IDL Limited, ITO 1(1), 18/2, Lasudia Mori, Indore Vs. Dewas Naka, Indore (Appellant / Assessee) (Respondent/ Revenue) PAN: AAACZ2814J Assessee by Shri Manoj Fadnis, AR Revenue by Shri Ashish Porwal, Sr.DR Date of Hearing 01.08.2024 Date of Pronouncement 06.08.2024 O R D E R

This appeal by the assesse is directed against the order dated 25.01.2024 of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centers,(NFAC), Delhi for A.Y.2017-18 which is arising from the assessment order u/s 144 of the Act dated 28.12.2019.

ITA No.229/Ind/2024 Astra IDL Limited

“Ground No. 1 That the Ld. CIT(A) erred in confirming addition of Rs. 28,72,000/- on account of amount deposited in bank account during demonetization period. Ground No. 2 That the Id. CIT(A) erred in confirming the ld. AO invoking the provision of section 69A of Income Tax Act, 1961. Ground No. 3 That the addition confirmed by ld. CIT(A) is bad in law and may be deleted. Ground No. 4 That the assessee craves leave to add, amend, modify, rescind, supplement or alter the grounds taken herein above either before or at the time of hearing of this appeal.”

engaged in business. Income Tax Return for Assessment Year

2017-18 e-filed on 28.11.2017 declaring NIL income. For the

reason high value receipt of cash shown from third parties in

response data & cash deposits during demonetization period, the

case selected for scrutiny through CASS followed by validly

issuance of notices u/s 143(2) and 142(1) of the Act. During the

course of assessment proceedings assessee furnished audited

financial statements. Ld. A.O on verification of the bank accounts

of the assessee company held with Axis Bank and State Bank of

India observed that total sum of Rs.28,72,000/- has been deposited

during the demonetization period i.e. from 15.11.2016 to

ITA No.229/Ind/2024 Astra IDL Limited 1.12.2016. It was claimed by the assessee that the said sum was

part of the amount received from outstanding sundry debtors. Ld.

A.O was of a view that the sum is a colourable transaction merely

showing the amount received from outstanding debtors and the

same being not supported by complete address of the sundry

debtors and that the assessee has converted its undisclosed income

in the garb of outstanding debtors which are not recoverable. Ld.

A.O proceeded to make addition of Rs.28,72,000/- as unexplained

income u/s 69 r.w.s. 115BBE of the Act. Dis satisfied with the

order of Ld. A.O, assessee preferred appeal before Ld. CIT(A) and

furnished various details including audited statements for F.Y.

2015-16 and 2016-17 along with list of debtors from which the

alleged sum was received. However Ld. CIT(A) did not allowed the

application of the assessee under Rule 46A and rejected the same

only for not submitting these details before Ld. A.O. Ld. CIT(A)

further observed that the assessee failed to furnish the full address

of the debtors and also failed to explain why the assessee received

the outstanding amount from debtors in cash rather than through

cheque. Ld. CIT(A) though gave an opportunity to the assessee via

ITA No.229/Ind/2024 Astra IDL Limited video conferencing but the assessee failed to avail this opportunity.

Ld. CIT(A) accordingly dismissed the appeal of the assessee.

3.1 Aggrieved assessee is now in appeal before this Tribunal.

3.2 Ld. Counsel for the assessee referred to the paper book Vol.1

containing 90 pages and Vol.II containing 139 pages in total 369

pages and mentioned that the assessee company is regularly

maintaining books of accounts and audited statements are

prepared. A considerable amount was outstanding as sundry

debtors in the books as on 31.3.2016. He also referred to the

details of sundry debtors as on 31.3.2015, 31.3.2016 and

31.3.2017 placed at page 261 to 283 in order to demonstrate that

the assessee company is trying to recover the amount from its

debtors. He also submitted that the debtors are mostly small

parties engaged in kirana and medical business and the sum

received from these debtors during the year from each party per day

below Rs.20,000/-. He also submitted that these being genuine

transactions through which the assessee has received the cash and

the same were utilized for depositing the same in the bank account.

3.3 On the other hand Ld. Departmental Representative strongly

stated that the details of sundry debtors with address were never

ITA No.229/Ind/2024 Astra IDL Limited filed before the lower authorities and there was no mechanism

available with the A.O to verify the genuineness of the outstanding

debtors as the details of address were not furnished . He further

submitted that the matter needs to be restored to the file of the A.O

with the direction to carry out verification of these sundry debtors

for which notices can be sent for verifying the genuineness of the

transaction of receiving the outstanding amount from old sundry

debtors.

before me. The only effective issue raised in the grounds of appeal

is whether Ld. CIT(A) erred in confirming the addition made by the

Ld. A.O towards unexplained cash deposit in the bank account of

the assessee company held with Axis Bank and State Bank of India

for a total sum of Rs.28,72,000/- during the demonetization period.

The claim of the assessee is that there were outstanding debtors

and the assessee was making all necessary efforts to recover the

outstanding receivables. The alleged sum is the amount received

from outstanding debtors which are spread over various villages

and the individual amount recovered is less than Rs.20,000/-. Ld.

Departmental Representative has submitted that the assessee did

ITA No.229/Ind/2024 Astra IDL Limited not appear before the Ld. A.O and Ld. CIT(A) has not admitted the

additional evidence and therefore the matter needs to be restored to

the file of A.O who shall thereafter carry out investigation and issue

notices to each sundry debtors so as to confirm that they actually

given the amount to the company or whether the assessee has

converted its unaccounted income in the grab of outstanding

debtors.

4.1 I observe that the assessee is a limited company incorporated

on 22.6.2006. It has been regularly carrying out the business

activity. It suffered huge loss in the preceding A.Y i.e. 2016-17 at

Rs.7,31,45,339 and the book loss is Rs.7,39,85,210/-. So far as

outstanding sundry debtors balance is concerned I note that on

31.3.2016 it stood at Rs.4,93,88,972/-. Further from perusal of

audited balance sheet for FY 2014-15 I observe that the

outstanding trade receivables as on 31.3.2015 were

Rs.5,09,51,300/- and the turnover of the company for F.Y 2014-15

was approximately to Rs.11.55 crores. But the turnover of the

company came down drastically during F.Y 2015-16 and F.Y 2016-

a limited company is regularly maintaining its books of accounts

ITA No.229/Ind/2024 Astra IDL Limited which are duly audited and the audited financial statements are

regularly uploaded on the web site of Ministry of Corporate Affairs.

The assessee company rather no one was not aware that any such

demonetization scheme will be announced and it was regularly

making efforts to recover the funds outstanding from the

outstanding debtors. The list of sundry debtors as on 31.3.2015,

31.3.2016 and 31.3.2017 have been filed from page 261 to 283 of

the paper book Vol. II and there are approximately 1600 names of

which are mainly kirana and medical stores spread over various

villages and towns. List of these debtors have been compiled on the

basis of the books of accounts regularly maintained by the

assessee. Further details has been filed for F.Y 2015-16 and 2016-

17 showing that there has been regular efforts of the assessee

company to recover its outstanding debtors.

4.2 I also note that the recovery from the sundry debtors during

the year are from various parties and amount of each party on a

particular date is not exceeding Rs.20,000/- and therefore there

was no requirement to receive them by cheque. The list of amount

received from all the debtors during the demonetization period are

placed at page 223 to 229 of the paper book. All these details

ITA No.229/Ind/2024 Astra IDL Limited including audited financial statement for preceding two financial

years and the figure of outstanding receivables shown therein

proves that the outstanding debtors were part of the audited

financial statement and have duly passed through the revenue

authorities during the preceding years.

4.3 I find that the alleged sum of cash deposit is purely from the

recovery from sundry debtors and is well explained from the details

filed by the assessee before me. It would be rather impractical and

just will add to prolonged litigation if the file is restored to the A.O

for sending notices to so many parties in huge numbers, located

across various villages and there is a rare possibility that these

parties would give any reply because some of them would be either

not existing and some may not to give any reply since there is no

more business connection with the assessee company.

4.4 I therefore find merit in the submission made by the Ld.

Counsel for the assessee and the details submitted before me and I

am satisfied with the source of alleged cash deposit during the

demonetization period is the amount recovered from the

outstanding debtors duly reflected in audited financial statements

of preceding years filed with the Revenue authorities much prior to

ITA No.229/Ind/2024 Astra IDL Limited announcement of demonetization scheme. The finding of Ld. CIT(A)

is set aside and the addition of Rs.28,72,000/- made for alleged

unexplained cash deposit is deleted. Ground No.1 to 3 are allowed.

Ground No.4 is general in nature which needs no adjudication.

Order pronounced in the open court on 06.08.2024.

Sd/-

(MANISH BORAD) Accountant Member

Indore,_06.08.2024 Dev/Sr. PS

Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore