SADASIVAM LENIN,MADURAI vs. ITO, NON CORP WARD-2(3), MADURAI

आदेश /O R D E R

PER MANJUNATHA. G, ACCOUNTANT MEMBER:

:-2-: ITA. No: 496/Chny/2023 “1. The order of the CIT(A) - 16, Chennai dated 20.02.2023 vide DIN &Order No. ITBA/APL/M/250/2022-23/1049966755(1) for the above mentioned Assessment Year is contrary to law, fact and in circumstances of the case.

2. The CIT(A) - 16 erred in confirming the addition of Rs. 44,81,500/beinmg the cash deposits in SBN s during demonetization period as unexplained money within the scope of Section 69A of the Act without assigning proper reasons and justification.

3. The CIT(A) - 16 failed to appreciate that the provisions of section 69A of the Act had no application to the facts of the case and ought to have appreciated that the rejection of explanation for the source of cash deposits on mere suspicion and surmises was wrong, incorrect, erroneous, invalid, unjustified and not sustainable both on facts and in law.

6. The CIT(A) - 16 failed to appreciate that the provisions governing the conduct of the first appeal proceedings were not followed and ought to have appreciated that non granting of personal hearing would vitiate the impugned order.

:-3-: ITA. No: 496/Chny/2023 The assessee has filed his return of income for the assessment year 2017-18 on 17.10.2017, by declaring taxable income of Rs. 5,01,430/-. The case was selected for scrutiny under CASS to verify cash deposits during demonetization period. During the course of assessment proceedings, the Assessing Officer noticed that, assessee has made cash deposits to KarurVysya Bank, HDFC Bank and State Bank of India during demonetization period and thus, called upon the assessee to file necessary evidences and also explain source for cash deposits. In response, the assessee submitted that, he is into the business of trading of medical equipments and source for cash deposits during demonetization period in specified bank notes is out of collections from debtors and sales pertains to said debtors are already accounted in the books of accounts before demonetization period. In support of his claim, the assessee has filed the list of debtors from whom cash has been collected against sales. The Assessing Officer, however was not convinced with the explanation furnished by the assessee and according to the Assessing Officer, although the assessee has filed list of debtors from whom cash was collected, but failed to furnish day-book, parties ledger accountetc and therefore, rejected arguments of the assessee and made :-4-: ITA. No: 496/Chny/2023 addition of Rs. 44,81,500/- u/s. 69A of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) as unexplained money towards cash deposits into various bank accounts during demonetization period.

4. Being aggrieved by the assessment order, the assessee preferred an appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee has filed details of cash receipts from sundry debtors and also cash book to explain source for cash deposits. The ld. CIT(A), after considering relevant submissions of the assessee and also taken note of relevant facts opined that, although the appellant has filed cash book and other details to prove source for cash deposits, but failed to furnish list of sundry debtors with opening and closing balance along with financial statements for the financial years 2014-15, 2015-16 & 2016-17. Therefore, rejected arguments of the assessee and upheld additions made by the Assessing Officer. Aggrieved by the ld. CIT(A) order, the assessee is in appeal before us.

5. The Ld. Counsel for the assessee, Shri. N. Arjun Raj, CA, submitted that the ld. CIT(A) is erred in confirming additions :-5-: ITA. No: 496/Chny/2023 made towards cash deposits during demonetization period, even though the appellant has filed necessary details including the cash book, list of debtors from whom cash was received and also necessary sales bills to explain source for cash deposits. The Ld. Counsel for the assessee, took us to paper book filed by the assessee and argued that, the assessee has filed ledger extract of parties along with sales bills to prove corresponding cash receipts against sales. The assessee has filed all evidences, but the ld. CIT(A) ignored evidences filed by the assessee and sustained additions towards cash deposits during demonetization period.

:-6-: ITA. No: 496/Chny/2023 7. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. There is no dispute with regard to the quantum of cash deposits into bank account during demonetization period. The assessee has explained source for cash deposits out of sales made immediately before the date of demonetization. The assessee had also furnished a chart explaining name and details of the persons from whom cash was collected against sales. The Assessing Officer, never disputed the fact that the assessee has furnished list of debtors from whom cash was collected. The only observation of the Assessing Officer was that, the appellant could not file day-book, parties account etc. Before the ld. CIT(A), the assessee has filed cash book, ledger extract and argued that source for cash deposits is out of sales made before the date of demonetization period. The ld. CIT(A), accepted the fact that the assessee has filed cash book and list of debtors from whom cash was collected, but rejected arguments of the assessee, on the ground that the assessee did not furnish list of debtors with opening and closing balance for three financial years. We find that, the Assessing Officer has made additions towards cash deposits on the ground that no cash book was furnished even though the assessee has :-7-: ITA. No: 496/Chny/2023 furnished list of debtors. The ld. CIT(A), sustained additions on the ground that, although the assessee has furnished cash book, ledger extract, but not filed list of debtors with opening and closing balance for last three financial years. In our considered view, both authorities have given exactly opposite reasons for making additions and sustaining additions towards cash deposits. On the other hand, the appellant has filed list of debtors from whom cash was collected and also corresponding sales bills and also proved sales was declared before the date of demonetization. The appellant has also filed ledger extract of the parties along with cash book and from the details furnished by the assessee, there is no dispute with regard to the fact that, the assessee has received cash against sales. From the above, it is undisputedly clear that the appellant has filed all possible evidences to prove source for cash deposits during demonetization period. In our considered view, when the appellant has furnished necessary details to prove source for cash deposits, the Assessing Officer and ld. CIT(A) ought to have accepted explanation furnished by the assessee and thus, we are of the considered view that the Assessing Officer and ld. CIT(A) are erred in making additions towards cash deposits u/s. 69A of the Act. Thus, we set aside :-8-: ITA. No: 496/Chny/2023 the order of the ld. CIT(A) and direct the Assessing Officer to delete additions made towards cash deposits into bank account during demonetization period.