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2022 (6) TMI 690

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....ch was the same income as had been reflected in the original return of income filed earlier on 21.09.2017. The assessee declared income from salary, business and other sources. 2.1 During the course of assessment proceedings, the AO(Assessing Officer) observed that during the demonetization period the assessee had deposited Rs.10 lacs in her proprietorship concern M/s Syna Creations and Rs.17 lacs in another concern M/s Wool World. The AO required the assessee to submit details of all the cash deposits made during the period from 09.11.2016 to 31.12.2016 alongwith certified copies of bank accounts for financial year 2016-17 and also month-wise cash book and cash sales ledger for financial year 2016-17. The assessee was also required to explain the source of cash deposit made and also explain the reason for making such cash deposits alongwith details of persons from whom cash had been received and deposited, etc. In response, the assessee filed detailed submission and no adverse view was taken by the AO in the case of M/s Wool World but in the case of cash deposited in M/s Syna Creations, as per the AO, the assessee failed to submit any satisfactory reply regarding cash deposited a....

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.... of the Income Tax Act, 1961. 6. That the appellant craves leave to add or to amend any of the grounds of appeal before the appeal is finally heard or disposed-off." 3.0 The Ld. AR also drew our attention to the additional ground of appeal filed by the assessee which reads as under: "Notwithstanding the above said ground of appeal, the assessment as framed by the Assessing Officer deserves to be quashed since "Mandatory Approval" as given by the Ld. Addl. CIT u/s 153D is without any application of mind and being a 'Mechanical Approval" only, the assessment as framed by the Assessing Officer at an income of Rs. 20,30,070/- deserves to be quashed in view of the binding judgment of Hon'ble Jurisdictional Bench of ITAT, in the case of Inder International in ITA No.1573/Chd/2018." 3.1 The Ld. AR submitted that this additional ground goes to the very root of the matter and is a legal ground and, therefore, the same should be admitted and adjudicated in view of the judgment of the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. Vs. CIT, reported in (1998) 229 ITR 383 (SC). 3.2. The Ld.CIT DR opposed the prayer of admission of additional ground. 3.3. A....

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....nd the requisite information, details and explanation had been filed before the AO. It was further submitted that although the AO had accepted the deposit of Rs.17 lacs in the books of M/s Wool World, he did not accept the cash deposit of Rs.10 lacs in M/s Syna Creations, and that too, without assigning any reason. He drew our attention to the reply dated 20.11.2019 submitted to the AO in this regard wherein the assessee had produced details of cash sales, monthly cash book, monthly cash in hand, cash sale as well as the details of amounts received from the various debtors before demonetization period. The Ld. AR reiterated that nothing in this regard has been doubted by the AO. Our attention was also drawn to another reply submitted by the assessee dated 18.11.2019 wherein the assessee had filed copy of account of the assessee in the books of M/s Rajan Enterprises with whom major transaction with respect to purchase of cloth had taken place and it was pointed out that the AO had not doubted the veracity of the same. The Ld. AR submitted that, thus, in effect, the AO had made the addition without pointing out any discrepancy in the books of account especially when all the cash entr....

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....e Ld.CIT(A) has observed that most of the cash receipts were from M/s Rajan Enterprises, which was another family concern, and, apparently, there was an arrangement to route the cash between the different family concerns without conducting regular business actually. He also pointed out that the Ld.CIT(A) has rightly observed that there was no requirement to receive and deposit the cash every day when both the parties i.e. M/s Rajan Enterprises and M/s Syna Creations were situated at the same place and, therefore, these transactions were actually means to introduce unaccounted cash in the books of account under the garb of job work. The Ld.CIT DR submitted that, therefore, the appeal of the assessee deserved to the dismissed and he also supported the action of the AO in invoking the provisions of se 115BBE of the Act. 7.0 We have heard the rival submissions and have also gone through the records. First we would like to proceed to adjudicate on the merits of the case. In ground Nos.2, 3 and 4, the assessee has challenged the action of the Ld.CIT(A) in confirming the addition of Rs.10 lacs on account of deposit of cash during the demonetization period. It has been argued by the Ld. A....