SOUNDARAPANDIAN EDISON AMAL RAJ,SALIGRAMAM vs. DCIT NON CORPORATE CIRCLE 1(8), CHENNAI
What did the Tribunal hold?
The Tribunal found that the AO should have limited the addition to the demonetization period deposits. However, due to inconsistencies in the provided cash details, the matter was restored to the AO for detailed verification.
What were the facts?
The Assessing Officer added cash deposits of Rs. 40,80,787/- to the assessee's income, including Rs. 19,44,419/- during the demonetization period, as the assessee failed to provide a cash book. The CIT(A) upheld the addition.
What were the issues?
Whether the addition of entire cash deposits was justified, or only those during the demonetization period, and the adequacy of evidence provided by the assessee.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI SS VISWANETHRA RAVI & SHRI AMITABH SHUKLA
आदेश / O R D E R
PER AMITABH SHUKLA, A.M :
Aforesaid appeal by assessee for Assessment Year (AY) 2017- 18 arises out of the order of Learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [hereinafter “CIT(A)”] dated 19-10-2023 in the matter of assessment framed by Ld.
Assessing Officer [AO] u/s. 143(3) of the Act on 21-12-2019. The grounds raised by the assessee are as under:
The order dated 17.10.2023 of the Learned CIT(A) faceless authority in ITA DIN & Order No: ITBA/NFAC/S/250/2023- 24/1057222872(1) for the Assessment year AY 2017-2018 is contrary to facts, opposed to law and untenable.
2. Ld CIT(A) faceless grossly erred in not examining the details cash deposits by the students filed in the Appellate proceedings. 3. The learned Assessing Officer erred in adding the cash deposits collected from the students who have directly deposited the cash during the demonetization period. 3.1 The Ld CIT(A) and Ld AO further grossly erred in not considering the cash deposits during the entire year and disallowing the deposits only during demonetization period.
3.2 The Ld CIT(A) and Ld AO ought to have considered that the Appellant is carrying on training of Students in various Centres across the State. 3.3 Ld AO ought to have considered that the business model is collecting cash from the Students in the earlier years and subsequent years.”
All the above three grounds are revolving around the central controversy of addition of cash deposit of Rs. 40,80,787/- and hence are adjudicated together. The brief facts of the case are that the A.O noted there were cash deposits in assessee’s bank account during the demonetization period from 09.11.2016 to 31.12.2016 amounting to Rs. 19,44,419/-. The A.O also noted that there were total cash deposits of Rs. 40,80,787/-. It is the case of the A.O that the assessee failed to file any cash book for verification of cash of deposits and merely submitted that the cash represents fees collected from students and which was directly deposited by their parents in assessee’s bank accounts. For want of supportive evidence, the A.O met the addition of Rs. 40,80,787/-.
The first appellate authority wholly concurred with the findings of the A.O and dismissed assessee’s appeal. Aggrieved by the order, the assessee is in appeal before the Tribunal.
During the course of present proceedings, the Ld. A.R of the assessee reiterated the same set of arguments and heavily relied upon documents filed before lower authorities. The assessee submitted that as per its present business practices, the students / their parents are permitted to directly deposit the requisite fees into the indicated bank accounts of the assessee. It was thus stated that the said statements assume the status of cash book of the assessee and which was filed before the A.O.
The Ld. D.R vehemently argued in favour of order of authorities below. It was submitted that even the details, stated by the assessee to be in the nature of cash book, filed by the assessee suffer from inconsistencies like no names of persons are clearly evident.
We have heard rival submissions in the light of facts of the case and evidences placed on record. It is noteworthy that the A.O has written in the opening para of the order that the inquiry letters were issued to the assessee with the objective of inquiring the cash deposits made during the demonetization period. In that scheme of things, the A.O ought to have made addition, if any of Rs. 19,44,419/- being the cash deposits appearing in assessee’s account qua the demonetization period and not of entire cash deposits. Be that as it may, it is seen that there are instances in the cash details filed by the assessee where specific details of the depositors are not available.
We hold the view that justice would be met if the matter is restored back to the file of A.O for examining the cash deposits in detail. The order passed by the A.O is set aside for fresh adjudication. The A.O is directed to verify the cash deposits of the assessee in detail and pass an assessment order afresh in accordance with law. The assessee is directed to render all cooperation to the A.O in this regard. Hence, the appeal filed by the assessee is allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 30th April, 2024.
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