Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
सुनवाई क" तार"ख / Date of Hearing : 21/02/2024 घोषणा क" तार"ख/Date of : 29/02/2024 Pronouncement O R D E R PER S. BALAKRISHNAN, Accountant Member :
The captioned appeal is filed by the Revenue against the order of the Ld. Commissioner of Income Tax vide DIN & Order No. 2 ITBA/NFAC/S/250/2022-23/1051575314(1), dated 29/03/2023 arising out of the orders passed U/s. 143(3) of the Income Tax Act, 1961 [the Act] for the AY 2017-18.
Briefly stated the facts of the case are that the assessee, an individual, is proprietor of M/s. Buddi Wines filed his return of income admitting a total income of Rs. 13,54,420/- on 28/10/2017 for the AY 2017-18. The case was summarily processed U/s. 143(1) of the Act. Subsequently, the case has been selected for scrutiny under CASS to verify the cash deposits made by the assessee during the year. Thereafter, notice U/s. 143(2) of the Act was issued on 6/9/2018 and served on 12/9/2018. Subsequently, notices U/s. 142(1) of the Act were issued from time to time.
Simultaneously, information has been obtained from the Bank Authorities U/s. 133(6) of the Act and on verification of the same, it was noticed that the assessee has made cash deposits to the tune of Rs. 4,92,64,897/- during the entire year and has deposited an amount of Rs. 60,71,390/- during the demonetization period. The assessee was asked to furnish the sources for these cash deposits and other requisite information. It was observed that out of Rs. 3 60,71,390/- cash deposited during the demonetization period, an amount of Rs. 27,96,810/- was deposited in the new notes and the balance amount of Rs. 32,74,580/- was deposited in the form of specified bank notes [SBNs]. It was also observed that the assessee did not respond to the notices issued and thereafter summons U/s. 131 of the Act were issued on 25/11/2019 to appear before the Ld. AO on 27/11/2019. In response, the assessee appeared and his statement was recorded wherein the assessee was requested to show cause as to why the cash deposits made for Rs. 60,71,390/- during the demonetization period should not be treated as investment from other sources. The assessee was requested to submit the information by 29/11/2019. Since the assessee did not file any information on or before 29/11/2019, the Ld. AO concluded that the assessee is not interested in adducing any evidence to explain his case. The Ld. AO therefore made an addition of Rs. 32,74,580/- U/s. 69A of the Act. Further, the Ld.AO also observed that the assessee has made total cash deposits of Rs.4,92,64,897/- whereas the assessee has shown the turnover of Rs. 4,37,20,920/- while filing the return of income. Therefore, the Ld. AO treated the difference amount of Rs. 55,43,977/- has not explained by the assessee and taxed it U/s. 69A of the Act under “other sources”.
Aggrieved by the additions made by the Ld.AO, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) on appeal observed that once the cash deposit is treated as turnover, the same shall not be treated as unexplained money within the provisions of section 69A of the Act and therefore deleted the additions made by the Ld. AO by allowing the appeal of the assessee. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal by raising the following Grounds of Appeal:
“1. The Ld. CIT(A) erred in admitting the new / additional evidence ignoring the provisions of Rule 46A(2) of the Income Tax Rules, 1962.
2. The Ld.CIT(A) erred in taking into account the new / additional evidence, without providing any opportunity to the AO to examine / refute the said additional evidence, ignoring the provisions of Rule 46A(3) of the Income Tax Rules, 1962.
Whether the Ld. CIT(A) is correct in law and facts of the case, in allowing appeal of the assessee basing on the new / additional evidence admitted during the appellate proceedings without calling for any remand report from the AO? Any other ground that may be argued at the time of hearing.” 4.
3. The only contention of the Revenue emanating from the grounds raised
is with respect to admission of additional evidence by the Ld. CIT(A) ignoring the provisions of Rule 46A(2) and 46A(3) of the Income Tax Rules, 1962. At the outset, the Ld.
5. DR fully supported the order of the Ld. AO and pleaded that the order of the Ld. AO be upheld.
Per contra, the Ld. Authorized representative [AR] submitted that once the difference in turnover is taxed as unexplained, subsequent addition of cash deposits during the demonetization period could not be made as the cash deposits made during the demonetization period is already included in the turnover. The submission of the Ld. AR is that these amounts were taxed twice in the case of the assessee. Further, the with respect to the addition of Rs. 55,43,977/-, the Ld. AR submitted that the assessee’s bank account was utilized by his sister concern to draw a Demand Draft on their behalf. He further submitted that this was also confirmed by the sister concern by way of an affidavit. Further, the Ld. AR pleaded that these amounts were utilized for the purpose of taking a Demand Draft favouring Andhra Pradesh Beverages Corporation for procurement of the stock by the sister concern which is evidenced by the bank statements submitted in the paper book. The Ld. AR therefore pleaded that the order of the Ld. CIT(A) be upheld.
We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue 6 Authorities. It is an admitted fact that there is a difference in the turnover to the extent of 55,43,977/-. The explanation of the assessee is that this amount is being deposited by the sister concern of the assessee for the purpose of taking a Demand Draft favouring Andhra Pradesh Beverages Corporation for procuring of stock by them. In this connection, the submission of the Ld. AR is that the sister concern has filed an affidavit stating that it has deposited the cash in the sister concern account since it could not procure the Demand Draft from their bank account. We also found from the bank statements filed by the assessee in the paper book that these amounts have been deposited for the purpose of procuring stock from Andhra Pradesh Beverages Corporation. The contention of the Ld. AO is that these cash deposits belong to the assessee and hence taxed as unexplained cash U/s. 69A of the Act.
Further, it is noticed that the sister concern by way of an affidavit has confirmed the cash deposits in the assessee’s bank account stating their inability to obtain Demand Draft from their bank account. The details with the dates of cash deposits are also made in the affidavit and it corresponds to the bank statements provided by the assessee. In the light of the peculiar circumstances as 7 stated above, on merits, we are of the considered view that these cash deposits do not belong to the assessee but for only to accommodate the sister concern to obtain the Demand Draft favouring Andhra Pradesh Beverages Corporation for procuring stock for their entity and therefore it cannot be treated as income in the hands of the assessee.
With respect to the grounds raised by the Revenue regarding the admission of additional evidence by the Ld.CIT(A) under Rule 46A(2) and 46A(3) of the Income Tax Rules, 1962, we find that Rule 46A(4) confers powers to the Ld. CIT(A) to direct the production of any document or examination of witness to enable to dispose of the appeal. The Ld. CIT(A) has concurrent powers like that of the Ld. AO. Further, section 250(4) of the Act confers powers to the Ld. CIT(A) to make such further enquiries as he thinks fit or may direct the Ld. AO to make further enquiry or report of the same. For the sake of brevity, we extract below section 250(4) of the Act.
Sec. 250(4): The [Joint Commissioner (Appeals) or the] Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the [Joint Commissioner (Appeals) or the] Commissioner (Appeals).
8 From the plain reading of the above, the Act confers powers U/s. 250(4) of the Act to the Ld. CIT(A) to dispose of the appeal by making further enquiry as he thinks fit and if the Ld. CIT (A) thinks fit, he may direct the Ld. AO to make further enquiry and report the same to the Ld. CIT(A). In the instant case, the Ld. CIT(A) has exercised his powers U/s. 250(4) of the Act. In the light of the facts and circumstances of the case as discussed above, we find no infirmity in the order of the Ld.CIT(A) and hence the Grounds raised by the Revenue on the issue are dismissed.
In the result, appeal filed by the Revenue is dismissed.
With respect to the Cross Objection filed by the assessee, the legal ground raised in the CO is not pressed and therefore the same is dismissed. The other cross objections raised by the assessee in its CO are in favour of the order of the Ld. CIT(A) and therefore dismissed as infructuous.
Ex-consequenti, appeal of the Revenue is dismissed and the Cross Objection raised by the assessee is disposed as indicated herein above.