Loading judgment…
No AI summary yet for this case.
Before: Shri V. Durga Rao & Shri Manjunatha, G.
PER V. DURGA RAO, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi dated 30.03.2023 for the assessment year 2017-18. 2. The appeal filed by the Revenue is delayed by 32 days, for which, the DCIT, Non Corporate Circle-2, Coimbatore has filed a petition in the form of an affidavit for condonation of the delay explaining the cause for the delay in filing the appeal and prayed that the delay may be condoned and admitted the appeal for hearing. Against the submissions made in the affidavit by the Revenue, the ld. counsel for the assessee has not raised any serious objection. Consequently, since the Revenue was prevented by sufficient cause, the delay of 32 days in filing of the appeal stands condoned and admitted the appeal for adjudication.
Brief facts of the case are that the assessee has filed its return of income for the assessment year 2017-18 on 07.11.2017 declaring total income of ₹.3,24,82,320/-. The return filed by the assessee was selected for scrutiny through CASS for the main reason to verify the cash deposits in bank accounts during demonetization period. Notice under section 143(2) of the Income Tax Act, 1961 [“Act” in short] dated 25.09.2018 was issued and duly served on the assessee for producing evidence/ informations. Notice under section 142(1) of the Act along with a questionnaire was issued to the assessee on 30.10.2019 requiring the assessee to furnish brief write up of the case, complete financial statements along with details/proof, supporting materials. In response to the above notices, the assessee has uploaded all the financials for the financial year 2016-17 and other details called for along with its supporting materials. The assessee had also submitted bank statements and cash book for the financial year 2016-17. On perusal of the details furnished by the assessee, the Assessing Officer has noted that the aggregate cash deposits in demonetized currencies of ₹.500/- and ₹.1,000/- by the assessee was at ₹.1,53,84,000/-. The assessee has claimed that the cash balance available prior to demonetization period from cash sales was the source for the said SBN deposits. On perusal of the cash book, the Assessing Officer has noted that the total cash inflow for the period from 01.11.2016 to 08.11.2016 were claimed to have been received from cash sales of ₹.1,51,45,358/- which is substantial percentage of the total cash sales during the year and no details of the names and address, PAN or identity of the buyers was furnished by the assessee in support of its claim. After analysing the turnover details, details of cash sales and cash deposits from 01.04.2016 to 08.11.2016 as well as for the period from 01.04.2015 to 08.11.2015, the Assessing Officer has observed that nowhere in the comparable months of the earlier assessment year, for that matter, in any of the current assessment year also, the assessee has achieved such sales. The assessee has not furnished any justification or reasoning for the substantial increase in cash sales in October and also between 01.11.2016 and 08.11.2016. Thus, the Assessing Officer was of the opinion that the assessee has intended to accommodate the SBN deposits aggregating to ₹.1,53,84,000/- made into their bank account during the demonetization window. Accordingly, the Assessing Officer has assessed the entire amount of ₹.1,53,84,000/- as unexplained money under section 69A of the Act and added to the total income the assessee and brought to tax under section 115BBE of the Act.
The assessee carried the matter in the appeal before the ld. CIT(A). After considering the materials available on record as well as submissions of the assessee, the ld. CIT(A) has held that in the absence of any discrepancy in the books of accounts and when book results are accepted and the taxes are paid as per profit derived from books of accounts, the additions made under section 69A of the Act at ₹.1,53,84,000/- is unsustainable and deserves to be deleted and hence allowed the ground raised by the assessee.
Aggrieved, the Revenue is in appeal before the Tribunal and raised following grounds:
Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) was right in allowing the appeal of the assessee.
Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) was right in accepting the contention without considering the fact that the assessee has not furnished verifiable details of buyers of, in respect of the Cash Sales.
Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) was right in not considering the fact that the assessee reported a cash sale of Rs.1,51,45,358/- during the 8 days period from 01.11.2016 to 08.11.2016 alone, when the assessee’s total sale for any of the previous months or for the previous year is substantially low.
Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) was right in stating that the AO has not doubted the purchases made by assessee, when the fact is that the assessee has not submitted Purchase Ledger for verification, event though it was called for during the course of assessment proceedings.
Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) was right in not considering the fact that the assessee failed to submit the Sales Leger for the FY 2015-16 and FY 2016-17, even though it was called for during the course of assessment proceedings.
The case law relied on by the CIT(A) in the case of ACIT vs. Hirapanna Jewellers of ITAT Vishakapatnam Bench is relating to a survey case and hence not applicable to the assessee’s case. In a survey case, all the materials, documents are available for verification. In the instant case, the assessee has not submitted Purchase Ledger, Sales Ledger, Cash Book for the year under consideration and for the previous year, eventhough called for during scrutiny proceedings.
For these and other grounds that may be urged at the time of hearing, the appellant prays that this Hon’ble ITAT may be pleased to set aside the order of the CIT(A) and allow the appeal. The ld. DR has submitted that the assessee has not submitted purchase ledger, sales ledger, cash book for the year under consideration and for the previous year even though called for during scrutiny proceedings and strongly supported the order passed by the Assessing Officer.
On the other hand, by filing copy of screenshot of responses filed by the assessee dated 19.11.2019 and 26.12.2019 in reply to the notice issued under section 142(1) of the Act dated 30.10.2019, the ld. counsel for the assessee has submitted that complete details, as was required by the Assessing Officer through his notice under section 142(1) of the Act, were furnished by the assessee as could be evidently admitted by the Assessing Officer in the assessment order at para 3. 0. Further, the ld. counsel has strongly supported the order passed by the ld. CIT(A).
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including paper book filed by the assessee. In this case, it is an admitted fact that in response to the notice under section 142(1) of the Act along with questionnaire dated 30.10.2019 requiring the assessee to furnish brief write up of the case, complete financial statements along with details/proof, supporting materials and details & clarification, the assessee has uploaded all the financials for the financial year 2016-17 and other details called for along with its supporting materials through online. The assessee also furnished bank statement and cash book for the financial year 2016-17. By considering the details furnished by the assessee, the Assessing Officer has observed that the assessee has deposited cash of ₹.1,53,84,000/- during demonetization being receipts of cash sales. However, the Assessing Officer has doubted the cash sales by comparing with the cash sale in the preceding as well as succeeding year for relevant month, the cash sale made during the month of October and the first week of November, 2016 being substantially high for the reason that the assessee has not furnished the details of the names and address, PAN or identity of the buyers in support of its claim. Accordingly, the Assessing Officer treated the entire amount of ₹.1,53,84,000/- as unexplained money under section 69A of the Act and added to the total income of the assessee and brought to tax under section 115BBE of the Act.
On appeal, the ld. CIT(A) has observed that the Assessing Officer has made addition solely on comparison basis. The Assessing Officer has not doubted the purchases made by the assessee anywhere. The audited books and the audit report submitted by the assessee shows that there was an increase in stock with purchase and decrease in stock by sales. Further the Assessing Officer has not found any discrepancy in monthly opening stock, purchases, sales and closing balance. Effectively, the Assessing Officer has not rejected the stock register and has accepted it and in fact, the Assessing Officer has not found any fault in the books as there was no mistake. However, once the audited books are accepted by the Assessing Officer, the book results have to be accepted. The Assessing Officer cannot disallow cash sales while at the same time accepting the purchases and the monthly stock. Purchases, sales and the stock are interlinked and inseparable. Every purchase increases the stock and every sale decreases the stock. To disbelieve the sales either the assessee should not have the sufficient stocks in their possession or there must be defects in the stock registers/stocks. Once there is no defect in the purchases and sales and the same are matching with inflow and the outflow of stock, there is no reason to disbelieve the sales. The Assessing Officer accepted the sales and the stocks. He has not disturbed the closing stock which has direct nexus with the sales. The ld. CIT(A) has further observed that movement of stock is directly linked to the purchase and the sales. Audit report under section 44AB of the Act, the financial statements furnished by the assessee clearly shows the reduction of stock position and matching with the sales which goes to say that the cash generated represent the sales. The assessee has furnished the trading account, P&L account and reduction of stock is matching with the corresponding sales. The Assessing Officer did not find any defects in the books of accounts and trading account, P&L account and the financial statements and failed to disprove the condition of the assessee. Moreover, the ld. CIT(A) has observed that the Assessing Officer has not been able to find any fictitious purchases that could have been the root cause of unaccounted money being deposited in the Banks under the garb of sales, Once the purchases are genuine, the sales could not have been doubted. An abnormal increase in cash sales cannot alone be the ground to out rightly reject them.
The case of the Assessing Officer is that no details of the names 9. and address, PAN or identity of the buyers were furnished by the assessee in support of its claim. All have been shown as cash sales across the counter. For that, the ld. CIT(A) has opined that the limit of transaction beyond which PAN is mandatory is ₹.2 lakhs. Hence the seller is not required to obtain PAN from purchaser till this limit. The assessee has not made any sales above ₹.2 Lakhs hence merely on suspicion it cannot be inferred that the sale is bogus. Hence rejecting the cash sales bills on this count cannot be done. It is a true fact that the books of the assessee have been audited and no fault has been found.
With regard to the contention of the ld. DR is that the assessee has not submitted purchase ledger, sales ledger, cash book for the year under consideration and for the previous year, even though called for during scrutiny proceedings. The above submissions are not found to be correct for the reason that in response to the notice issued under section 142(1) of the Act dated 30.10.2019, the assessee has submitted complete details, as was required by the Assessing Officer through his notice under section 142(1) of the Act, as could be evidently admitted by the Assessing Officer in the assessment order at para 3. 0. Moreover, the assessee has also furnished copy of screenshot of reply filed by the assessee on 19.11.2019 and on 26.12.2019 in reply to the notice issued under section 142(1) of the Act dated 30.10.2019, wherein, the assessee has uploaded the details of TDS expenses, financial statement, purchases, sales, etc., which are sufficient to prove the genuineness of the purchases and also the cash sales
In this view of the matter and considering the facts and circumstances of the case, we are of the opinion that the Assessing Officer has erroneously made addition under section 69A of the Act. After considering relevant facts, the ld. CIT(A) has rightly deleted he addition made by the Assessing Officer and thus, we are included to uphold the findings of the ld. CIT(A) and dismiss the appeal filed by the Revenue.
In the result, the appeal filed by the Revenue is dismissed Order pronounced on 10th April, 2024 at Chennai. (MANJUNATHA, G.) JUDICIAL MEMBER Chennai, Dated, 10.04.2023 Vm/- आदेश की "ितिलिप अ"ेिषत/Copy to: 1. अपीलाथ"/Appellant, 2.""थ"/ Respondent, 3.आयकर आयु"/CIT, 4. िवभागीय "ितिनिध/DR & 5. गाड" फाईल/GF.