RANJAN AGGARWAL,AMRITSAR vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-II, AMRITSAR
What did the Tribunal hold?
The Tribunal held that the cash deposits were explained by genuine cash sales supported by stock reports from the Excise and Taxation department. The unsecured loan was also found to be supported by documentary evidence and banking transactions.
What were the facts?
The assessee deposited cash of Rs. 79,04,500/- in bank accounts during the demonetization period and received an unsecured loan of Rs. 9,00,000/-. The Assessing Officer added these amounts to the assessee's income under Section 68, which was upheld by the CIT(A).
What were the issues?
Whether cash deposits during demonetization and unsecured loans are unexplained credits under Section 68 when supported by sales and documentary evidence.
Which sections of the Income-tax Act were involved?
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Cases cited in this judgment(2)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- CIT v. Om Overseas60 citing173 Taxmann 185 · 2009 · HC · Read judgment
- Principal\nCommissioner of Income Tax, 20, Delhi v. Akshit Kumar IT\nAppeal 348 of17 citing124 Taxmann.com 123 · 2021 · HC
Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
ORDER Per:Anikesh Banerjee, JM:
The instant appeal was filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, [in brevity the CIT(A)]order passed u/s 250of the Income Tax Act 1961, [in brevity the Act] for A.Y.2017-18. The impugned order was emanated from the order of ld. ACIT, Circle-2, Amritsar, order passed u/s 143(3) of the Act on dated 25.12.2019.
The assessee has raised the following grounds which are read as under:-
“1. That the Ld. A.O unlawfully made 8s worthy CIT(A) unlawfully confirmed an addition of Rs. 79,04,500/- to the returned income being the amount of cash deposited in two banks of Assessee firm during demonetization period although the cash deposit were duly recorded in regular books of account which had been duly audited by qualified chartered accountant & cash had been generated from genuine cash sale.
That during Inspection by Excise and taxation department on 02.11.2016, which is before the date of demonetization i.e 09.11.2016,the figure of sale given to the Excise & Taxation Department and mentioned in their order was INR 5,99,85,311/- which included the alleged cash sale which was main part of cash in hand as on 09.11.2016.
3. That Ld. A.O. unlawfully made and worthy CIT(A) has unlawfully confirmed addition of Rs. 9,00,000 being the amount of fresh unsecured loan although the same had been received through regular banking system from genuine, identifiable & credit worthy lenders of were duly recorded in books of account' which were duly audited by qualified chartered accountants.
4. That Ld. A.O. unlawfully applied & worthy CIT(A) has unlawfully confirmed the applicability of Section 68 (unexplained credits in books) is corresponding application of section 115BBE for computation of income tax.
5. That order of worthy CIT (A) in bad in law is on facts.
6. That the assessee craves to add/modify or amend any ground of appeal subsequently.”
2. Brief fact of the case is that the addition was made by the ld. AO related to deposit of cash amount of Rs.79,04,500/- in two bank accounts of the assessee, during demonetisation period and the creditors amount of Rs.9 lac related to unsecured loan.
Both the additions are added back u/s 68 of the Act. During assessment the assessee submitted the relevant documents but both the addition was confirmed. Being aggrieved, the assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) has upheld the order of the ld. AO. Being aggrieved assessee filed an appeal before us.
The ld. Counsel for the assessee has filed written submission with relevant documents which are kept in the record. The assessee explained that the first issue related to deposit of cash Rs.79,04,500/- is fully supported by the sales during the period. The assessee first invited our attention on report of survey which was conducted in the business premises of assessee by the Excise and Taxation department, Punjab which was taken placed on 02.11.2016 i.e. before the start of demonetisation period effect from 09.11.2016. During course of inspection the order book, sale bill filed, purchase bill filed, loose paper are seized by the State Revenue. In addition. the physical stock verification was also conducted by the survey team and stock amounting to Rs.1,24,72,999/- was found during survey proceeding on 02.11.2016. The assessee submitted the trading account of the firm before the state authority for the period 01.04.2016 to 02.11.2016 and all the books of account. After verification of the documents of the assessee the state authority calculated the discrepancy of the stock and collected tax accordingly. The assessee claimed that there is a sufficient stock and purchase related to sale during demonetisation period. In paper book the assessee filed a copy of the order of the designated officer of the State Excise and Taxation department atAPB page 16-17. The copy of trading account from 01.04.2016 to 02.11.2016is enclosed inAPB page 18 and copy of monthwise trading account for F.Y. 2016-17 is enclosed in APB page 19.
3.1 The ld. Counsel for the assessee further argued in relation to addition of the unsecured loan. The assessee filed the bank account as proof of transaction, confirmation, copy of ITR of the loan creditors. The assessee has taken loan from Mr. Chander Mohan Aggarwal amount to Rs.1 lac and Mr. Paramjit Singh Bhuller amount of Rs.8 lacs. The copy of the relevant documents is enclosed in APB page 22 to 38.
The ld. Sr. DR vehemently argued and placed that the assessee has abnormal sale during demonetisation period and argued in favour of the revenue.
We heard the rival submission and relied on the documents available in the record. The assessee has placed the documents and the primary evidence related to stock report of inspection of stock by the Excise and Taxation department of Punjab.
In the order of the state authority specifically mentioned that the stock counted by the state authority related to M/s S.B. Brothers and M/s Shivam Industries which are the business entity of the assessee. The relevant paragraph of the order of the state authority is reproduced as below:
5.1 We find that the assessee has a sufficient stock to convert in sale. Accordingly, the source of cash was explained which are generated from the sale of goods. The ld. AO pointed out that the sales are made by cash. The ld. Counsel placed that the stock of assessee was never be disputed. We respectfully relied on order of Hon’ble High Court of Delhi in the case of Principal Commissioner of Income Tax, 20, Delhiv.
AkshitKumar[2021] 124 taxmann.com 123 (Delhi)
Income from other sources (Sale of opening stock) - Assessment year 2014-15 - Assessee was engaged in business of textiles - All sales undertaken by assessee were in cash only - Noting such peculiarities, Revenue decided for spot verification at place from where assessee purportedly carried on business - Survey revealed that business premises was abandoned and that there was no proof of any business undertaken by assessee - Based on survey report, Assessing Officer concluded that entire cash deposit found in assessee's bank account was unexplained income and not sale proceeds - Additions were thus made towards unexplained income - On appeal, Tribunal recorded that assessee had closed business in July, 2015 and survey was carried out in November, 2016 - It was also noted that entire opening stock, sales and closing stock of assessee was accepted during scrutiny assessment of previous year - Based on such findings, Tribunal deleted additions made - Whether where quantum figure and opening stock was accepted in previous years during scrutiny assessments, receipt from sales made by assessee proprietary concern out of its opening stock could not be treated as unexplained income to be taxed as 'income from other sources' The assessee already declared the cash as turnover &paid the tax accordingly. The stock and purchase was never be disputed by the revenue. We respectfully relied on jurisdictional High Court in the case of CIT vs. Om Overseas, 173 Taxman 185, (P & H)
In the absence of any illegality or perversity in the finding of fact arrived at by the CIT(A) sand the Tribunal that the assessee’s books of account were rejected by the AO and the addition was made without pointing out any specific defect in the books of account, impugned addition was rightly deleted and no substantial question of law arises for determination.
Accordingly, the addition made by the ld. AO amount to Rs.79,04,500/- is liable to be quashed.
5.2 In verification of the loan creditors the assessee has filed the document related to identity, transaction, the entire transaction was made through bank account which was produced before the bench. We set aside the order of the ld. CIT(A). The addition amount of Rs. 9 lacs related to loan creditors u/s 68 of the Act is liable to be quashed.
6. Accordingly, appeal of the assessee in Ground no. 1 to 3 are allowed. Ground no. 4 is only for academic purpose. Ground no. 5 &6 are general in nature.
In the result, the appeal of the assessee bearing is allowed.
Order pronounced in the open court on 15.03.2023
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