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Income Tax Appellate Tribunal, PUNE BENCHES “A” :: PUNE
Before: SHRI SATBEER SINGH GODARA & DR. DIPAK P. RIPOTE
आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the assessee against the order of ld.Commissioner of Income Tax(ld.CIT(A))[NFAC], under section 250 of the Act dated 07.11.2023 emanating from the assessment order under section 143(3) of the Act dated 05.11.2018 . The grounds of appeal
raised by the assessee are as under :
1. The Hon. CIT(A) erred in confirming the addition of Rs.39,67,841/- made by the ld AO by holding the cash on hand as at 31.03.016, as reflected on the asset side of the audited balance sheet of M/s Jayhind Agency, the proprietary firm of the appellant dealing in food grains, oil and other related products to be unexplained cash credit, liable for tax u/s 68 of the I.T Act, Dilip Juharmal Jain [A] 1961, which addition being not justified may kindly be deleted. 2. The appellant craves leave to add, alter, amend and/or vary the grounds of appeal at any time before the decision of the appeal.”
2. Submission of ld.Authorised Representative(ld.AR) :
Submission of ld.Departmental Representative(ld.DR) : 3. The ld.DR for the Revenue relied on the order of the Lower Authorities.
Dilip Juharmal Jain [A] Findings and analysis: 4. The only issue for consideration is addition of Rs.39,67,841/- made under section 68 of the Act by the Assessing Officer(AO).
The Assessee is a trader and trading in foodgrains, oil and other grossery items under the proprietary concern M/s.Jai Hind Agency. During the year, assessee’s turnover was Rs.16,09,72,189/- and Net Profit was Rs.16,38,103/-. During the assessment proceedings, the AO observed that assessee had shown cash in hand in the balance sheet at Rs.39,67,841/-. The AO added the said amount under section 68 of the Act. The AO had alleged that such high cash in book is not possible in the said business. The AO had discussed demonetization in the assessment order.
5.1 For ready reference section 68 is produced as under : Cash credits. 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year :
Dilip Juharmal Jain [A] Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless— (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:
Thus, as per section 68 of the Act, where any sum is found credited in the books of assessee and the explanation offered is not satisfactory then the credited amount can be added under section 68 of the Act. In this case, admittedly Rs.39,67,841/- was shown as cash in hand in the balance sheet. The cash in hand in the balance sheet is on the asset side of the balance sheet. Therefore, we asked a specific question to ld.DR how an item appearing on the asset side of the balance sheet can be added under section 68 of the Act. However, ld.DR simply relied on the order of the AO and ld.CIT(A). An item appearing on the Asset side of Balance Sheet is not a “Credit in the books”, hence it cannot be added under section 68 of the Act. It is also a fact that the assessee had uploaded on Income Tax Portal Audit Dilip Juharmal Jain [A] Report, Financial Statements on 12.10.2016. Thus, the Audit Report was uploaded much before demonetization dated i.e.08.11.2016.
In these facts and circumstances of the case, we are of the considered opinion that the addition made under section 68 of Rs.39,67,841/- is unsustainable in law. Therefore, we direct the AO to delete the addition of Rs.39,67,841/- made under section 68 of the Act. Accordingly, grounds of appeal raised by the assessee are allowed.
In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 24th Jan, 2024.