Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘B’, CHANDIGARH
Before: SHRI A.D. JAIN & DR KRINWANT SAHAY
आयकर अपील�य अ�धकरण,च�डीगढ़ �यायपीठ, च�डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘B’, CHANDIGARH BEFORE SHRI A.D. JAIN, VICE PRESIDENT & DR KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ �नधा�रण वष� / Assessment Year : 2017-18 The Deputy Commissioner Vs. M/s Vidhata Industries बनाम Private limited, of Income Tax, Opp. New DMC Hospital, Circle-1, Main Road, Civil Lines, Ludhiana Ludhiana �थायी लेखा सं./PAN No: AACCV7502R अपीलाथ�/Appellant ��यथ�/Respondent �नधा�रती क� ओर से/Assessee by : Sh. Sudhir Sehgal, Advocate राज�व क� ओर से/ Revenue by : Shri Dharam Vir, JCIT, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 16.04.2024 उदघोषणा क� तार�ख/Date of Pronouncement : 22.04.2024 आदेश/Order Per Dr. Krinwant Sahay, A.M.:
This is Departmental appeal filed against the order dated 09.02.2023 of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, for the Assessment Year 2017-18.
The Department has taken following Grounds of appeal:
1. That the Ld. CIT(A), NFAC erred in law, in deleting addition/disallowance of Rs. 2,62,09,255/- made by the Assessing Officer in respect of unexplained cash credits in bank account of the assessee u/s 68 of the I.T. Act, 1961.
214-Chd-2023 –M/s Vidhata Industries Private Limited, Ludhiana 2 1(a) That the Ld. CIT(A), NFAC erred on facts and law ignoring the lack of evidence supporting the claim of the assessee company that the staff members/director travel on regular basis to multiple cities. In order to buy agro wood /ply wood raw material. 1(b) That the Ld. CIT(A), NFAC erred in ignoring and failing to take into account the perusal of the purchase ledger of the assessee company where it can be seen that purchases of the agro wood/raw material is not made from those cities.
2. That the appellant craves leave to add or amend any ground of appeal before it is finally disposed off.
3. The main contention of the Department is that the ld. CIT(A), NFAC has erred in deleting the addition of Rs. 2,62,09,255/- made by the Assessing Officer in respect of unexplained cash credits in the bank accounts of the Assessee u/s 68 of the Income Tax Act, 1961 (in short 'the Act'). On perusal of the ITR of the Assessee company, the Assessing Officer found that the Assessee company had made cash deposits in its bank account in various cities between April, 2016 to October, 2016 (prior to de-monetization period). On perusal of the replies filed by the Assessee company, the Assessing Officer arrived at the conclusion that the Assessee company did not have any sale outlet in different places where cash deposits were made and therefore, the Assessing Officer concluded it as unexplained cash deposits in the bank accounts. Before the ld. CIT(A), the Assessee company filed a detailed reply explaining the opening cash in hand as 214-Chd-2023 –M/s Vidhata Industries Private Limited, Ludhiana 3 on 1.4.2016 as per regular books of account, cash withdrawn during the year from bank accounts, cash sales as per the books of account and lastly the details of cash deposited from April, 2016 to October, 2016. In his order, the ld. CIT(A) has dealt with each and every point raised and doubted by the Assessing Officer and he finally concluded that the Assessee company had cash in hand as on Ist of April 2016 of Rs. 2,18,88,781.97. The cash withdrawn from different bank accounts during this period was to the tune of Rs. 5,60,50,000/- and the cash deposited in different bank accounts from April, 2016 to October, 2016 was Rs. 6,96,76,567/-.
The ld. CIT(A) further gave his finding that the Assessing Officer has nowhere doubted the books of account and the method of accounting of the Assessee. Once the Assessee has enough cash in hand at the beginning of the year and added with cash withdrawals from the bank accounts, if they are more than the cash deposits in bank accounts, there is no reason to make any addition u/s 68 of the Act as unexplained credits in the bank accounts.
Aggrieved with the order of the ld. CIT(A), NFAC, the Department has filed this appeal before the Tribunal against the action of deleting the addition of Rs. 2,62,09,255/- made by the Assessing Officer. The Department has also raised the issue that the ld. CIT(A) has not taken
214-Chd-2023 –M/s Vidhata Industries Private Limited, Ludhiana 4 into consideration the purchases made by the company and that the findings of the ld. CIT(A) was not based on complete evidence in this case. The ld. DR relied heavily on the order of the Assessing Officer.
The Assessee is engaged in the business of trading of knitted clothes and manufacturing and sale of plywood. During the proceedings before us, the Assessee company in its reply, has filed a Chart showing cash in hand, withdrawals, cash sales and total cash deposits in a tabular form, which is as under:- SL Particulars Amount in Rs. 1. 2,18,88,781.97 Opening cash in hand as on 01.04.2016 as per regular books 2. 5,60,50,000.00 Cash withdrawn during the year from the regular bank accounts of the assessee 3. Cash sales as per regular books of accounts 12,81,926.00 4. 6,96,76,567.00 Total cash deposited from April 2016 to October 2016 in the regular bank accounts of the assessee
The ld. Counsel for the Assessee also contended that the staff of 7. the company / directors usually carry the cash for the purchase of ‘agrowood’ and raw material from various agriculturists and farmers from different places and states in the country. The ld. Counsel further contended that the agrowood is a basic raw material for manufacturing of plywood. The ld. counsel has also brought on record that the Assessing Officer never doubted / questioned cash in hand in the books of account. It is because cash in hand is always available
214-Chd-2023 –M/s Vidhata Industries Private Limited, Ludhiana 5 with the Assessee because of the nature of business carried on by the Assessee. The Assessing Officer has also not questioned the cash sales during the period nor any question has been raised on withdrawals of cash of Rs. 5,60,50,000/- from the regular bank accounts of the Assessee.
Without bringing on record any adverse findings regarding cash in hand as per books of account, cash sales as per books of account, cash withdrawals as per books of account and cash deposits in different bank accounts as per books of account, the Assessing Officer has simply made addition of Rs. 2.62 Crores as unexplained credits invoking the provisions of section 68 read with section 115BBE of the Act.
We have considered the facts mentioned in the assessment order by the Assessing Officer and findings of the ld. CIT(A), NFAC on this issue. We have also considered the arguments of the ld. DR and the counter arguments of the ld. Counsel for the Assessee on this issue. We find that, nowhere in the assessment order, the Assessing Officer has doubted the genuineness of the business of the Assessee nor any shortcoming has been pointed out in the books of account. The Assessing Officer has fully accepted the cash in hand as opening balance in the books of account, cash sales during the period, cash 214-Chd-2023 –M/s Vidhata Industries Private Limited, Ludhiana 6 withdrawals from various bank accounts of the Assessee and the cash deposits in the various accounts of the Assessee at different places. From the Chart given above, it is evident that the opening cash in hand as on 1.4.2016, cash sales and the total cash withdrawals during this period put together, is more than the cash deposits in the bank accounts during this period form April, 2016 to October, 2016. Regarding cash deposits made in different cities where the Assessee company has no outlets, it has been argued by the ld. Counsel of the Assessee that it was done in order to facilitate employees / directors to purchase agrowoods and raw material from agriculturists. We have considered it and in our opinion, unless such purchases of agrowoods / raw materials are proved bogus, deposits of money for their purchases cannot be questioned. Therefore, we find no reason to disturb the findings of the ld. CIT(A) regarding deleting the addition/disallowance of Rs. 2,62,09,255/-. Accordingly, Department’s appeal on this issue stands dismissed.
Ground No.2 is general in nature.
In the result, the appeal is dismissed. Order pronounced on 22.04.2024.