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Income Tax Appellate Tribunal, BENCH : COCHIN
Before: SMT. BEENA PILLAI & Ms. PADMAVATHY S.
Date of hearing : 12.01.2023 Date of Pronouncement : 20.01.2023 O R D E R
Per Padmavathy S, Accountant Member:
This appeal of the revenue is against the order of CIT(A), Kochi- 1 dated 22.9.2020 for AY 2017-18.
The department raised the following grounds:-
“1. The order of the learned CIT (Appeals) is erroneous and contrary to facts and circumstances of this case. 2. On the facts and circumstances of the case & in law, the Ld. CIT(A) erred in deleting the addition of Rs.2,06,21,400/- made by the AO on account of unexplained cash credit appearing in assessee's bank accounts maintained with Axis Bank and Dhanalaxmi Bank.
3. On the facts and circumstances of the case & in law, the Ld. CIT(A) erred in holding that the assessing officer has added Rs.2,06,21,400/- on suspicion, surmise and conjectures.
4. On the facts and in the circumstances of the case, learned CIT(Appeals) erred in allowing relief to the assessee without calling for Remand report from the A.O. 4.1 Learned CIT(Appeals) ought to have considered that when additional evidences were submitted by the assessee, the assessing officer has to be given an opportunity to examine the evidence and documents as stipulated in Rule 46A(3) of Income Tax Rules. 4.2 The learned CIT(A) ought to have considered the fact that during the assessment proceedings, the assessee was given ample opportunities to furnish valid proof to show that the cash deposits arose out of the cash counter collection.
The learned CIT(Appeals), Kochi-1 is not justified in deleting the addition made by the AO solely based on an affidavit from Mrs. Muhsina Shafeek who has given a contradictory confirmation to the department and not considering the fact that reply/confirmations were not received from 7 out of 10 patients.
6. The learned CIT(A) is not justified in deciding that cash deposits in bank accounts are payments made by the patients as the deposit to Dhanalaxmi bank account are in Rs.2000 denomination notes. 6.1 The learned CIT (Appeals)-1, Kochi ought to have considered the fact that Rs.2000 denomination notes were in circulation only after 2nd week of November 2016 and RBI has capped the withdrawal limit from ATM per day at Rs.2500/-subject to the withdrawal sealing from an account at Rs.24,000/- per week consequent to demonetization. 6.2 The learned CIT(A) out to have considered that in such a situation, it is most unlikely that the assessee could collect more than 2 crore in cash within one month with substantial amount of Rs.2000/- denomination notes. 6.3 The learned CIT(A) is also not justified in not adjudicating the issue of deposit in Axis Bank Account.
For these and other grounds that may be urged at the time of hearing, it is requested that the order of the Commissioner of Income Tax(Appeals) may be set aside and that of the Assessing Officer restored.”
The assessee is a private limited company and filed the return for AY 2017-18 on 24.10.2017 declaring a total income of Rs.5,08,97,890. The case was selected for scrutiny through CASS for the reason that there are large value cash deposits during demonitisation period. During the course of assessment, the AO picked up 10 random sample of patients and called for details of cash payments made by them to the assessee. The AO stated that there were deviations in the confirmations received from the patients with regard to the payments made. According to the AO, one of the patients, Smt. Muhsina Shafeek against the cash receipt of Rs.16,4769 during the month of December had confirmed the payment of Rs.5,062 only. The AO also called for further details in the form of cash book from the assessee. The AO concluded the assessment by making an addition of Rs.2,06,21,400 towards cash deposits made during the month of December on the ground that the assessee did not furnish valid bills and did not explain the source for the cash deposits during the demonitisation period.
The assessee contended that the AO has made the entire addition based on confirmation received from one patient by stating that the entire deposit made during the month of December as unexplained. The assessee also contended that the AO did not provide sufficient time for the assessee to collate the details with regard to the bills as called for by the AO. Before the CIT(A), the assessee submitted the cash book and the related bills pertaining to the impugned addition made by the AO. The assessee also furnished the affidavit before the CIT(A) wherein Mrs. Muhsina Shafeek had stated that there was a mistake on her part while giving confirmation and that the difference amount of Rs.11,417 was also actually paid to the assessee. The CIT(A) after examining all the relevant details held that the AO’s action of addition is without proper verification of books of accounts and other evidence and accordingly based on the submissions made before him by the assessee, deleted the said addition. Aggrieved, the Revenue is in appeal before the Tribunal.
5. The ld. DR submitted that all the evidence pertaining to the impugned addition was submitted before the CIT(A) and not before the AO. Accordingly, the CIT(A) ought to have given an opportunity to the AO to examine the said details as per Rule 46A of the Income Tax Rules. It is submitted that the CIT(A) has examined the said evidence without giving an opportunity to the AO and deleted the impugned addition. The ld. DR therefore submitted that the order of the CIT(A) deleting the addition needs to be set aside.
The ld AR submitted that the CIT(A) called for details with regard to the cash deposits and has examined the same and allowed the claim on merits. The ld AR also submitted that the only basis on which the AO has made the addition is the amount mistakenly confirmed by one of the patients. This according to the ld. AR is not correct and therefore the order of the CIT(A) deleting the addition on merits is to be upheld.
7. We heard the rival submissions and perused the material on record. The AO during the course of assessment has picked up random samples of patients to get a confirmation with regard to the payments made by them to the assessee. Based on the confirmation received, the AO has confronted the assessee to produce further details in terms of cash book and bills for the month of December. It is noticed that the AO had concluded the assessment by stating that in spite of giving several opportunities the assessee did not furnish the required details of cash book and supporting bills and accordingly made the addition towards the entire month’s deposit u/s. 68. We also notice that the CIT(A) has taken cognizance of the submissions made by the assessee in terms of cash book and cash receipts pertaining to the month of December and accordingly has decided the case on merits. The CIT(A) has also considered the affidavit filed by the assessee wherein it is submitted that the confirmation submitted by one of the patients is given mistakenly and the same is subsequently corrected. Considering the fact that the assessee is in the business of running a hospital and the volume of transactions as has been submitted by the assessee (1400 bills per day) in our considered view, the time provided by the AO to the assessee for collating the details is not sufficient and the addition made merely for the reason that one patient has confirmed a different amount has been paid to the assessee is not tenable. The CIT(A) has considered all these facts and the evidence submitted and has decided the case on merits. We therefore see no reason to interfere with the decision of the CIT(A).
In the result, the appeal filed by the revenue is accordingly dismissed.
Pronounced in the open court on this 20th day of January, 2023.