ASHOKKUMAR RAGHUNATHDAS AGARWAL,AHMEDABAD vs. ITO, AAYKAR BHAWAN, VEJALPUR, AHMEDABAD

PER SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER

This is an appeal filed by the assessee against the order of the ld.Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 12.10.2023 for the assessment year 2017- 18 under section 250 of the Income Tax Act, 1961 (“the Act” for short).

ITA No.1078/Ahd/2023 2

cash in the bank account and such deposits were duly accounted for in the audited books of accounts regularly maintained by the assessee, as well as part of the profit offered by the assessee to tax vide the timely-filed ITR and Tax Audit Report.

“The Hon' CIT(A) has erred in law and facts in confirming the assessment order passed by the Id. AO without considering that the entire assessment proceedings and consequential assessment order are bad in law, and void-ab-initio in view of the facts that the Ld. AO had issued Three Show Cause Notices PROPOSING ADDITIONS UNDER SEC. 69A, SEC. 68 AND both, respectively, and later in the assessment order, additions had been made by invoking both Sec. 68 & Sec. 69A, as also conducting the assessment proceedings inappropriately, thus vitiating the entire assessment proceedings and rendering the assessment order invalid."

ITA No.1078/Ahd/2023 3 4. Application for condonation of delay At the outset, we note that the present appeal is delayed by a period of 10 days, for which the assessee had filed application for condonation of delay, along with Affidavit. The assessee submitted that the delay is owing to the fact that the assessee is of advance old age and due to oversight, the assessee did not check his email ID, and thereafter the assessee was travelling abroad and therefore, there was a delay of 10 days in filing of the present appeal. However, the delay in filing of the present appeal is due to bona fide reasons and accordingly, it was submitted that the same may be condoned.

“The Hon' CIT(A) has erred in law and facts in confirming the assessment order passed by the Id. AO without considering that the entire assessment proceedings and consequential assessment order are bad in law, and void-ab-initio in view of the facts that the Ld. AO had issued Three Show Cause Notices PROPOSING ADDITIONS UNDER SEC. 69A, SEC. 68 AND both, respectively, and later in the assessment order, additions had been made by invoking both Sec. 68 & Sec. 69A, as also conducting the assessment proceedings inappropriately, thus vitiating the entire assessment proceedings and rendering the assessment order invalid." 8. On going to the facts of the instant case, the contention of the assessment order and the order passed by Ld. CIT(Appeals) , we are

ITA No.1078/Ahd/2023 4 of the considered view that the additional ground raised by the assessee have no merit whatsoever. The additional ground raised by the assessee is vague and the only the only technical plea which has been taken by the assessee is that the assessing officer is precluded from invoking section 68 and 69A, simultaneously, while making the additions.

Accordingly, the additional ground raised by the assessee is hereby dismissed.

On merits: 10. The brief facts of the case are that during the course of assessment, the assessing officer observed that the assessee had deposited cash amounting to ₹ 35, 58, 500/- in the bank account. On being questioned, the assessee submitted that the aforesaid amount had been received by the assessee from it’s debtors and the details of such debtors were furnished to the assessing officer during the course of assessment proceedings. The assessing officer was of the view that the cash book which has been uploaded by the assessee on 11-12- 2019 was only an afterthought and the cash deposits during the

ITA No.1078/Ahd/2023 5 period had been camouflaged as cash sales. Accordingly, the assessing officer rejected the books of accounts of the assessee under section 145(3) of the Act and further observed that on verification carried out, it is seen that the name and address of the parties furnished by the assessee are not matching. Further, the Assessing Officer also observed that the assessee has not furnished day-to-day register with supporting evidences and has also failed to furnish copies of purchase bills etc. The assessee has also not furnished ledger account of debtors. The assessing officer was of the view that the assessee has manipulated the total sales figures, expenditure et cetera to show maximum cash in hand so that unaccounted money can be brought in books. Further, the assessing officer observed that on perusal of Tax Audit Report, it is seen that no quantitative details of stock have been mentioned in Form 3CD. Accordingly, the assessing officer rejected the books of accounts of the assessee and added a sum of ₹ 25,58,500/-as unexplained cash credit under section 68 of the Act.

The facts emanating from the order of the AO that the case of the appellant was selected for scrutiny through CASS mainly on the ground that the appellant had deposited cash during demonetization. The AO had made enquiries and asked to submit the replies alonwith supporting documentary evidences. The appellant submitted replies which had been considered however, the appellant had not submitted the requisite documentary evidence and considering all the facts and circumstances of the case, the AO had rejected the books of accounts and made addition of Rs.35,58,500/- u/s 69A of the I.T. Act, 1961. Aggrieved for the same, the appellant preferred to file appeal. Notice u/s 250 of the IT. Act, 1961 was issued as mentioned supra. However, the appellant

ITA No.1078/Ahd/2023 6

has not filed any documentary evidences in respect of the grounds raised during the appellate stage on the given date. Tie appellant submitted his detailed reply on 20.07.2021 through ITBA portal; in which it was submitted that the appellant had submitted all the requisite documentary evidences before the AO during the course of assessment proceedings which had not been incorporated while finalizing the assessment order. The contention of the appellant has been considered and found not acceptable as even appellate stage, the appellant has merely writing the same in his written submission whereas no such enclosures have been attached for verification at this stage. Further, the appellant was provided sufficient opportunities as mentioned supra to submit the details and documents in respect of grounds raised at appellate stage. However, the appellant did not bother to submit any details on the given date. It is imperative to understand here that a failure to explain the source of income attracts this section; the decking provisions are applicable to the year of finding. The burden of proof lies squarely upon the appellant assessee. It is his/her onus to explain the deposit and its source. Section 69A has basically been incorporated to detect tax evasion in respect of clandestine deposits made by the assessee which are not disclosed or recorded in the books of account, if any, maintained by the assessee. Thus, it is amply clear that adequate opportunity was provided to the appellant to explain the deposits made in the bank account. However, the appellant felled to explain the same, resultantly the AO added the said amount as un money u/s 69A. It is relevant to point out that the appellant even during the proceedings has also not produced any explanation with respect to the cash deposit along with documentary evidences. The appellant has also not filed any documentary evidences. Therefore, the addition made by the AO is sustainable in the eyes of law.

ITA No.1078/Ahd/2023 7 divergence in the pattern of turnover of the assessee, which would support the fact that the cash deposited against the sale is booked in assessment year 2017-18 are in fact out of sales consideration received from the customers. Secondly, the counsel for the assessee submitted that the CIT has erred in facts and in holding that the assessee has not submitted adequate details in support of the sales made by the assessee. The counsel for the assessee submitted that all the details viz sales invoices, transporters delivery challan, debtors ledger is, creditors ledgers, sales register and statement of sales (with complete details of cash consideration received from various customers) were submitted by the assessee before the Tax Authorities. However, despite of the plethora of documentary evidences furnished, the CIT has unjustifiably taken the view that the assessee has failed to furnish documentary evidences. Thirdly, the counsel for the assessee submitted that the assessing officer has not mentioned even a single finding on the basis of which he has concluded that the assessee has shown incorrect sales and has not given any adverse finding regarding correctness/completeness of accounts, invalidity of the documents furnished, manipulation of books of accounts or even about any errors/mistake in the books of accounts. The assessing officer, it was submitted by the counsel for the assessee, has not made any case about any irregular system of accounting or non-compliance of any applicable Accounting Standards. Merely on the basis of a simple analysis of cash sales, it was grossly unjustified to reject the duly audited books of accounts of the assessee.

ITA No.1078/Ahd/2023 8 noteworthy. We note that vide letter dated 20-07-2021, the assessee submitted a detailed written submission along with necessary supporting documents in support of its contention. Further, the assessee has also submitted various written submissions along with supporting documents during the course of assessment hearing. Before us, the counsel for the assessee submitted that so far as non- submission of stock register is concerned, the assessee does not follow the practice of maintaining a day-to-day stock register. However, the accounting principles do not prescribe maintaining of a day-to-day stock register, and the books of accounts cannot be rejected on this basis alone. Further, the counsel for the assessee submitted that all purchases are fully vouched and have been made through cheques, details of all sale bills have been submitted and further, details of transportation bilty has also been submitted before the Tax Authorities. Further, the allegation of the assessing officer that the sales have been manipulated is also controverted by the fact that the sales of the assessee had reduced during the impugned year under consideration and therefore, there is no question of artificially inflating/manipulating the sales so as to provide a false basis of deposit of money during demonetisation period. The counsel for the assessee is drew our attention to page 92 onwards of the paper book, wherein all lorry receipts against invoices have also been submitted before the tax authorities in support of genuineness of sales by the assessee. Further, we observe that the assessing officer has not given any concrete basis for rejecting the books of accounts in the assessment order. Also, maintenance of stock register is not a mandatory requirement for auditing the accounts of the assessee. The assessing officer has not doubted the genuineness of purchases made by the assessee. This coupled with the fact that the sale/turnover of the assessee has reduced during the year under consideration also

ITA No.1078/Ahd/2023 9 lends support to the fact that the sales have not been manipulated by the assessee. Accordingly, looking into the instant facts, we are of the considered view that the additions on account of cash deposits made in the bank account of the assessee during the demonetization period are not liable to be sustained, looking into the instance facts.

Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad,dated 14/06/2024