TEKNOKRAFT,KOLKATA vs. ITO, WD. 36(4), KOLKATA

ORDER Per Shri Rajesh Kumar, AM Appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 23.11.2023 for AY 2017-18. 2. The only issue raised in the various grounds of appeal is against the order of Ld. CIT(A) confirming the addition of Rs.66,12,953/- as made by the AO u/s. 68 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) on account of cash deposited into the bank during demonetization period in specified notes.

3. The facts in brief are that the assessee filed the return of income on 26.10.2017 declaring total income of Rs.1,49,028/- which was selected for scrutiny under CASS. Accordingly, the assessee was called for to explain the cash deposited during demonetization period of Rs.95,46,530/- into the bank account out of which Rs.80,71,500/- was deposited in old specified bank notes. The assessee was issued show cause notice as to why the said amount should not be treated as unexplained cash credit within the meaning of section 68 of the Act and added to the income of the assessee as per the provisions of section 115BBE of the Act, which was replied by the assessee by submitting that the cash was deposited out of sales which was floated by bills and vouchers issued along with VAT charged at the applicable rates and these bills can be verified and matched with the books of account of the assessee. The AO computed the difference between the cash balance as on 01.10.2016 and 08.11.2016 which worked out to Rs.66,12,953.25 and treated the same as unaccounted cash Teknokraft, AY 2017-18 and accordingly, the addition was made in the hands of the assessee. In the appellate proceeding, the appeal of the assessee was also dismissed by upholding the order of the AO as the evidences were not filed before the Ld. CIT(A).

4. At the outset, the Ld. Counsel for the assessee drew the attention of the Bench to application filed under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 (in short “Rules”) and prayed before the Bench that assessee has filed certain evidences which are comprised in the paper book and were not before the authorities below. The Ld. AR submitted that the said evidences comprised of cash memos, sale register, purchase register and copy of cash book from 01.10.2016 to 31.12.2016. The ld. AR stated that the said evidences could not be filed before the AO as these ware never called for by the AO in the assessment proceeding. Similarly, the Ld. AR submitted that in the appellate proceeding, the assessee could not appear on the various opportunities/dates granted by Ld. CIT(A) resulting into passing of ex parte order. The Ld. AR submitted that these evidences were not even before the appellate authority. The Ld. AR, therefore, prayed that in the interest of natural justice and fair play, these evidences may be admitted and may be restored to the file of the AO so that the issue involved in the present appeal could be decided on merit after correct appreciation of these evidences which are of paramount importance and go to the root of the issue.

5. On the other hand, Ld. DR fairly agreed that if the matter is restored to the file of the AO with a direction to de novo examine the issue and decide it accordingly after examining the evidences as filed by the assessee under Rule 29 of the Rules then the revenue does not have any objection nonetheless emphasized the point that the assessee had failed to furnish these evidences in the assessment proceeding as well as in the appellate proceeding.

Teknokraft, AY 2017-18 of the AO with the direction to decide the issue afresh by examining these evidences after affording reasonable opportunity of hearing to the assessee.