M/S SHRIGOPAL RAMESHKUMAR SALES PVT. LTD ,NAGPUR vs. ASSISTANT COMISSIONER CENTRAL CIRCLE 1(3), NAGPUR

In its appeal, the assessee has raised following grounds:

That on facts the learned CIT Appeals erred in maintaining the addition of 2,50,00,000/- in as much as the Assessee has filed duly confirmed letter from Govindraja Group Mills accepting the account statement and no Cash Payment by said Govindraja Group and further in rejecting the explanation of Assessee that 2,50,00,000/- represents 2 L.C.'s of 1.25 Cr. each Feb 2013 for which it was claimed that double deduction was wrongly claimed. Therefore the addition maintained at 2,50,00,000/- is liable to be allowed.”

During the course of hearing, the Registry has pointed out a delay of 702 days in filing the present appeal before the Tribunal. The learned Counsel, Shri Kapil Hirani, appearing for the assessee, at the very outset, invited attention of the Bench to the Affidavit filed seeking condonation of delay and took us through the contents of the Affidavit and the supporting documents filed in support of prayer seeking condonation of delay. The sum and substance of the application seeking condonation of delay is that the appeal was filed through the Counsel of the assessee, Shri Vijay Chandak, Advocate, who, through his staff, filed the copy of the appeal before the Office of the Departmental Representative (DR), ITAT, on 07/05/2018, as is procedurally required to be filed before filing of the appeal with the Registry, which was within the prescribed period of 60 days from the date of the impugned order 26/03/2018, passed by the learned CIT(A). The learned Counsel further invited attention to the appeal fees challan of ₹ 10,000 which was also paid by the assessee on 04/05/2018. Further, it is the contention of the learned Counsel that due to inadvertence, the staff of the Counsel of the assessee, after filing the copy of the appeal before the D.R. Office, the said staff got the impression that the appeal has been duly filed and as such he did not proceed to file a separate copy of the same before the Registry, as 3 Shrigopal Rameshkumar Sales Pvt. Ltd. was statutorily required for the appeal to be registered. The learned Counsel further invited our attention to the acknowledgement on the set of the appeal which clearly depicted the date of filing of the same before the office of the D.R. as 07/05/2018. It is the case of the assessee that the Revenue has simultaneously preferred cross–appeal for the impugned assessment year and the Counsel of the assessee immediately upon realizing the inadvertence, filed the copy of the appeal before the Registry on 26/02/2020, which was accordingly then registered and the consequent delay of 702 days had accordingly occurred.

We have considered the arguments of the learned Counsel for the assessee and also perused the contents of the application seeking condonation of delay including the affidavit filed by Shri Vijay Chandak, Advocate, stating the above facts. It is an undisputed fact that the present appeal was filed with the office of the D.R. on 07/05/2018 and that the appeal fees pertaining to the said appeal was also paid by the assessee on 04/05/2018, which is well within the time limit of 60 days from the date of the impugned order passed by the learned CIT(A). It appears that the delay in filing of the appeal was solely on the inadvertence on the part of the staff of the Counsel of the assessee in assuming that having filed the copy of the appeal with the office of the D.R., the procedure filing of the appeal stood completed and consequently the copy of the appeal remained to be filed with the Registry, as was required to complete filing process. The cause of delay in filing of the appeal thus seems to be reasonable and on a conspectus of the facts and the affidavit so filed by the Counsel of the assessee, we are inclined

The assessee is engaged in the business of running a Ginning Mill and dealing in cotton. A search and seizure action under section 132(1) of the Income Tax Act, 1961 ("the Act") was conducted on the assessee on 12/02/2015. During the course of search, it is the case of the Revenue that certain files were seized and more particularly documents inventorised as B16, wherein certain recordings were found which showed the assessee having received alleged cash of ` 2,50,00,000. The Assessing Officer accordingly made addition.

On appeal, learned CIT(A) confirmed such addition made by the Assessing Officer. The assessee being aggrieved filed appeal before the Tribunal.

Before us, the learned Counsel for the assessee denied having received any amount in cash, as alleged by the authorities below. The learned Counsel, invited our attention to the statement recorded of the assessee under section 131 dated 07/04/2015, and which is placed on record at Pages–155 & 156 of the Paper Book, wherein the assessee, in the statement, categorically denied

It is the contention of the assessee that the said balance as appearing in the documents referred to and relied upon by the Assessing Officer is nothing but the balance pertaining to entities of Govindraja Mills Group and 6 Shrigopal Rameshkumar Sales Pvt. Ltd. books of accounts of the assessee against sales made by the assessee the said entities. He vehemently averted that no defect or deficiencies were found in the books of account.

That with respect to the amount of ` 2,50,00,000, appearing in the said document, the contention of the assessee is that the said amount pertains to two Letter of Credits (L.C.) of Canara Bank of ` 1.25 crore each dated 04/02/2013 and 07/02/2023 received by the assessee and which were reflected in the books of accounts in earlier financial year.

Our attention was invited to Page–115 of the compilation having submissions made before the learned CIT(A) wherein the extract of statement recorded of Shri Ramesh Rander, Director of assessee is placed wherein the assessee in response to specific query raised has denied receiving any amount in cash and further that the said amount was received by way of L.C. which according to the assessee was also stated in the statement recorded during the time of search. It is further submitted by the assessee that the said sum of ` 2.5 crore was received by way of two L.Cs each of ` 1.25 crore and that both the L.Cs were issued by Canara Bank, Arpukottai, Madurai, Tamil Nadu, in the first week of February 2013.

Our attention was further invited to the reply given to the subsequent question wherein the assessee has categorically stated that with respect to the terminology of cash payment being used, it is a general business practice to refer to the payments made vide cheque, RTGS, Draft, or any other mode as cash payment and that it does not actually signify the amount received in 7 Shrigopal Rameshkumar Sales Pvt. Ltd. liquid cash. The assessee further in his statement stated that there are no cash transactions involved which he even suggested be verified with the counterparty. The learned Counsel for the assessee further emphasized the fact that despite the assessee seeking that the said transaction be verified from the counterparty, no independent enquiries were conducted by the Assessing Officer with the said Shri Surenthira Kumar, nor Govindraja Mills Group as was mandatorily required to ascertain whether any cash was actually received by the assessee. He pointed out that the Department did not make any meaningful investigation to carry out the process to a logical end. They did not make any inquiry with the payees to ascertain the truth and to unravel the surrounding circumstances. He further emphasized that there is absolutely no other evidence whatsoever, corroborative or otherwise, to prove that the assessee received the said amount of ` 2.5 crore except the loose paper relied upon. He further emphasized the fact that the date of receipt of cash is nowhere mentioned in the documents referred to and relied upon by the Assessing Officer. It is further his case that the said document was not prepared by the Assessee nor any of its staff members and that the writing on the said page was not matched with the assessee nor any of its staff members to prove that the document was prepared by the assessee or its staff. It is the case of the assessee that it is solely on the basis of this page that the Assessing Officer without examining the party who has allegedly paid the cash and without bringing on record any independent evidence has made the addition of ` 2.5 crore. The learned Counsel for the assessee further very interestingly invited our attention to the copy of the assessment order filed for the assessment year 2014-15 wherein the similar addition has been made

The learned Departmental Representative on the other hand strongly relied upon the order of the Assessing Officer and submitted that on the facts and circumstance of the case, it is very clear that the said document belonged to the assessee and on a conspectus of the facts of the case and the contents of the document, it is very clear that the said amount was received in cash by 9 Shrigopal Rameshkumar Sales Pvt. Ltd. the assessee and which has rightly been added by the Assessing Officer and urged that the addition so made by the Assessing Officer be confirmed. He argued that these represented undisclosed sales and payment was hence not recorded in the books of account. Here, it is pertinent to quote herein below Q.70 and its answer thereto published in Law of Evidence and Cross– examination of Tax and Allied Laws: Frequently Asked Questions:–

We have considered facts of the case, arguments canvassed by both the sides and the legal position on this issue at length. The only dispute in the present appeal is the addition of ` 2,50,00,000 emanating out of certain document which is a part of documents seized and inventorised at B/16, the contents of which are reproduced by the Assessing Officer at Page–11 of the assessment order. The whole dispute is with respect to whether the assessee received the said amount in cash, whether the impugned document holds any evidentiary value and whether this particular sum amounts to income of the assessee, as has been added by the Assessing Officer and confirmed by the learned CIT(A). On a basis of the submissions made by the respective parties as well as the evidence on record, we inclined to accept the argument of the learned Counsel for the assessee. It is an undisputed fact that the said document referred to and relied upon by the Assessing Officer while making the impugned addition does not bear any signature of the assessee whatsoever and further the argument that the said document was not prepared by the assessee nor any of its staff members has not been controverted by the Assessing Officer. It is further an undisputed fact that apart from the said document there is absolutely no corroborative evidence found during the course of search to suggest that the assessee actually received any amount in cash much less cash of ` 2,50,00,000, as alleged by the Assessing Officer.

It is further an undisputed fact that despite the assessee seeking that the genuineness and veracity of the said cash payment of ` 2,50,00,000 be cross verified from the parties from whom it is alleged to have been received, no enquiry of whatsoever nature was made by the Assessing Officer from the broker who allegedly prepared the impugned document or from Govindraja Mills Group and have allegedly made the payment of the said sum. The whole basis of the Assessing Officer to have made the addition is simply the noting in the document and which further was explained by the assessee as being nothing but Letter of Credits received by the assessee from the said Govindraja Mills Group against the sales made to the said party. The assessee has all along including in his statement recorded pursuant to the search have denied having received any amount in cash whatsoever much less the amount of ` 2,50,00,000, as alleged by the Assessing Officer.

It is further undisputed that the balance of ` 5,10,19,465, appearing in the said document is the sum total of the recoverables as appearing in the books of accounts of the assessee pertaining to the balance against sales made to companies belonging to Govindraja Mills Group. The Assessing Officer thus proceeded to make the addition solely on the basis of this particular document, ignoring the statement recorded of the assessee and without examining the party who has allegedly paid the cash or the party who has allegedly prepared the said document and without bringing on record any independent evidence to suggest that the assessee in fact received the said amount of ` 2.5 crore. What is very important is that, as rightly pointed out by the learned Counsel for the assessee that the Assessing Officer also made

It is trite law that presumption however strong cannot substitute for evidence.

What is important further is that, during the course of search, no sales whatsoever has been found outside the books of accounts, and the balance as appearing in the page referred to and relied upon by the Assessing Officer is the sum total of recoverable as duly appearing in the audited books of accounts of the assessee and emanating out of sales made by the assessee to the companies of Govindraja Mills Group. The entire sales having already been recorded in the books of accounts and no sales having been found to have been made out of the books of accounts there is absolutely no occasion for the assessee to have received the said amount of ` 2.5 crore in cash as alleged and more particularly when there is absolutely no evidence whatsoever from the person who allegedly has made the payment in cash and forming that the said amount was actually paid by him. The learned Departmental Representative cannot change the colour and complexion of the case by posing facts aline in assessment. A passing references also been made to certain SMS which, however, as mentioned by the learned CIT(A) himself that the date of the said SMS not mentioned, hence, the same cannot be relied upon reaching any conclusions. The said document in absence of any corroborative evidence justifying the authenticity and veracity of the same cannot solely be the basis for making any addition much less the addition of ` 2,50,00,000, as has been made by the Assessing Officer in the present case and more particularly when it has not been established that the assessee actually received the said sum and further when the entire balance, as mentioned in the impugned document, is duly accounted for in the books of accounts of the assessee and the entire sales having been duly recorded in the books of accounts and no sales have been found to have been made

In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on 30/12/2024