DCIT, CENTRAL CIRCLE-4, NEW DELHI vs. CREAMY FOODS LTD., G.NOIDA

The above captioned cross appeals by the Revenue and the assessee are preferred against the order of the ld. CIT(A) – 23, New Delhi dated 24.06.2022 pertaining to Assessment Year 2018-19.

Since the underlying facts are common in the cross appeals, they were heard together and are disposed of by this common order for the sake of convenience and brevity.

The common grievance relates to the addition on account of unexplained cash found during the course of search and seizure operation carried out in the SMC group of cases on 21.11.2017.

Briefly stated, the facts of the case are that during the course of search and seizure operation, cash amounting to Rs. 2,65,31,500/- was found from the premises at (i) E-13/29, Harsha Bhawan, Connaught Place, New Delhi Including Noida Office and its plant, out of which cash of Rs. 2,09,99,150/- was seized, which can be understood from the following chart:

The assessee was asked to explain the availability of cash found from the premises as mentioned above. Statement of the Accountant, Shri Pradeep Mishra was also recorded, who failed to explain and reconcile the cash found with the cashbook. The Assessing Officer was left with no choice but to treat the cash of Rs. 2,65,31,500/- as unexplained money and added the same u/s 69A of the Act.

The assessee agitated the matter before the ld. CIT(A) and explained that cash found during the course of search belonged to various companies/concerns of SMC group and cash so found was available in cash book of the companies/concern of SMC group.

After considering the facts and submissions and after verifying the availability of cash with different companies/concern of the SMC group, the ld. CIT(A) observed that the sole ground for making addition by the Assessing Officer on account of unexplained cash is that Shri Pradeep Mishra, Accountant could not explain the entire cash found.

The ld. CIT(A) was convinced that there were other concerns also operating from the same premises and cash balance in those concerns as on the date of search was not taken into account while making the addition.

It was also explained that cash of Rs. 5,71,500/- found from the premises at A – 15, Sector – 136, Noida does not belong to the assessee but to a group concern SMC Foods Ltd. Details of availability of cash with different concerns of the group were furnished along with the assessment order in the respective cases.

After verification, the ld. CIT(A), observed that Triaksh Education Pvt Ltd and Bharat Bhushan Infratech Pvt Ltd do not operate from the same premises and, therefore, cash of Rs. 2,38,786/- and Rs. 6,476/- respectively belonging to these two concerns cannot be considered as cash found from the premises belonging to the group concerns and directed the Assessing Officer to sustain the addition to the extent of Rs. 12,79,368/- and deleted the balance for which both the revenue and the assessee are in appeal before us.

Representatives of both the sides were heard at length. Case records carefully perused.

It is the say of the ld. DR that the assessee furnished the statement of cash available with the group companies and individuals only before the ld. CIT(A) and the ld. CIT(A) simply accepted the submissions of the assessee without calling for any remand report from the Assessing Officer. The ld. DR stated that these documents need verification and, therefore, the issue may be restored to the file of the Assessing Officer.

The ld counsel for the assessee reiterated what has been stated before the lower authorities. It is the say of the ld. counsel for the assessee that the very same Assessing Officer assessed the nine group concerns/companies and accepted the availability of cash in hand in the respective books of accounts. Therefore, it would be a futile exercise to remit the matter to the file of the Assessing Officer for verification of availability of cash, which has also been verified by the Assessing Officer at the time of framing the respective assessment orders.

We have carefully perused the orders of the authorities below.

From the above, cash belonging to Triaksh Education Pvt Ltd and Bharat Bhushan Infratech Pvt Ltd. cannot be considered to be found from the same premises, as these premises do not function/operate from the same premises. Therefore, availability of cash to the extent of Rs. 2,45,262/- cannot be considered in the hands of the assessee.

As a result, appeal of the assessee is, accordingly, partly allowed.

Out of the total availability of cash in the hands of the group concerns, if the addition, as mentioned hereinabove is reduced, total cash available comes to Rs. 2,64,09,136/- and the Assessing Officer has made addition of Rs. 2,65,31,500/– which leaves a deficit of Rs. 1,22,364/-. But at the same time, we cannot ignore the fact that Rs. 5,71,500/- belongs to SMC Foods accepted by the Assessing Officer.

As a result, appeal of the revenue is dismissed.

Before parting, the contention of the ld. DR that the issue may be restored to the file of the Assessing Officer, we do not find any merit in this contention of the ld. DR as details/documents were also before the Assessing Officer during the course of assessment proceedings and moreover, all the nine group companies were assessed by the same Assessing Officer who accepted the cash in hand of all the group concerns in their respective assessments. Therefore, we do not find it necessary/logical to remit the matter for verification of the same facts which have already been verified by the Assessing Officer.

In the result, the appeal of the assessee in is partly allowed whereas the appeal of the Revenue in ITA Nos. 2197/DEL/2022 is dismissed.