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TaxTMI 
TaxTMI 
TaxTMI 
2023 (7) TMI 1280
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.... to add, alter or delete any ground(s) either before on in the course of hearing of the appeal." 2. Brief facts of the case are that the assessee is engaged in the business of textile value addition work and job work on retail basis. The assessee filed return of income for A.Y. 2016-17 on 26/03/2017 declaring income of Rs. 3,23,570/-. The case was selected for scrutiny. During the assessment, the Assessing Officer noted that during demonetization period from 09/11/2016 to 31/12/2016, the assessee made cash deposit of Rs. 62.00 lacs in bank account maintained with Bank of Baroda, therefore, the case of assessee was scrutinized as per guidelines issued by Central Board of Direct Taxes (CBDT) vide Circular No. 225/391/2017 dated 24/11/2017. During the assessment, the Assessing Officer asked to furnish cash from various persons, details of textile labour income and income on sale of plot. The Assessing Officer recorded that no documentary evidence was furnished, proof of genuineness of certain transactions. The assessee was also asked to furnish source of cash in hand in his balance sheet as on 31/03/2016 with necessary evidence. The assessee furnished cash book of F.Y. 2015-16 statin....
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....e department on 02/02/2021. Such submission of assessee are recorded in para 6.2 of order of ld. CIT(A). The assessee in his submission submitted that he engaged in textile value addition business and also engaged in development of plots. The assessee also engaged in grey fabric manufacturing and trading business. The case of assessee was selected for limited scrutiny whether cash in hand shown in return of income is correct by issuing notice under Section 143(2) of the Act on 19/09/2017. Thereafter notice under Section 142(1) was issued for seeking various information. The assessee furnished reply by way of e-reply alongwith covering letter and by furnishing evidence of bank book and statement of all banks, Income tax return, computation of income, trading account, Profit & Loss Account, balance sheet and audit report for A.Y. 2015-16 and 2016-17 with cash book. The Assessing Officer issued show cause notice for making addition of cash receipt from sundry creditors. The assessee filed detailed reply in response to the show cause notice. The reply was not considered and assessment order was passed by making addition under Section 68 of the Act of cash credit of Rs. 24,91,375/-. The....
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....course of scrutiny assessment, the assessee tried to contact at their address but were not available and on enquiry by the occupant, it was informed that the said parties were tenant and have left and new tenants are occupying the premises. The assessee further stated that the Assessing Officer started his investigation by referring that the assessee made cash deposit of Rs. 62.00 lacs during demonetization period and case was scrutinized to verify the cash on hand as on 31/03/2016. The Assessing Officer has not made any enquiry about deposit in bank during demonetization period. The cash deposit during demonetization period was duly substantiated. Such notices were issued before framing of assessment order. The said notices were issued well in advance before framing of assessment order so issuance of notice in next year how can be considered in assessment or preceding years. The assessee reiterated that the Assessing Officer not asked about the cash deposit of Rs. 62.00 lacs so no details for such cash deposit was furnished. The assessee has made disclosure under IDS 2016 on 15/09/2016 declaring cash on hand of Rs. 50.00 lacs and the same has been source of cash deposit during dem....
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....ition as proposed in the assessment order, however, books of account was not rejected and made addition under Section 68 of the Act. Thus, impliedly accepted the submission of assessee. The ld. AR of the assessee submits that books of assessee cannot be rejected when debtors could not be traced. The assessee made sales to the impugned debtors in A.Y. 2015- 16 and the amount was reflected in sundry creditors in the audited balance sheet as on 31/03/2015 so the books of account of current year cannot be rejected when books of account of preceding year was duly audited and debtors of Rs. 28,94,233/- were appearing in the audited financial statement. The sales made during the earlier year were supported by bills and challans. In the course of assessment proceedings, the assessee filed sales register for financial year 2014-15, copies of bills and ledger accounts of the parties. The assessee also filed cash book of current year where sale proceeds were received from debtors and creditors. No defects were found by Assessing Officer. The auditors has not made any clarification in the audit report of F.Y. 2014-15. The ld. AR submits that the assessee has made declaration in IDS-2016 of Rs.....
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....e Tribunal by holding that the amount received from debtors at the end of year was duly accounted in the books of account of next year and addition of sundry debtors was held as not sustainable. To support his submission, the ld. AR of the assessee also relied upon the decision of Bangalore Tribunal in Anantpur Kalpana vs ITO ITA No. 541/Bang/2021, Sanand Textiles Industries Ltd. Vs DCIT ITA No. 995/Ahd/2014, decision of Hon'ble Rajasthan High Court in Smt. Harshila Chordia Vs ITO 298 ITR 349, Kolkata Tribunal in Shri Sanjeev Kejriwal Vs ITO ITS No. 371/Kol/2010, Hon'ble Supreme Court in CIT Vs Devi Prasad Vishwanath 72 ITR 194 (SC) and the decision of Delhi Tribunal in Racmann Springs (P) Ltd. Vs DCIT 52 TTJ 660. The ld. AR of the assessee further submits that when books of account was rejected, profit is required to be estimated on the credit made by way of cash in the books. To support such submission, the ld. AR relied on the decision of Hon'ble Apex Court in the case of Brij Bhushan Lal Parduman Kumar Vs CIT 115 ITR 524 (SC) and decision of Ahmedabad Tribunal in Shree Sanand Textiles Industries Ltd. Vs DCIT ITA No. 995/Ahd/2014. 6. In alternative and without preju....
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....year is added in the income, it will be taxed twice which is against the law. I find that the Assessing Officer has not referred the contents of reply and conveniently overlooked and simply rejected such contention. The Assessing Officer straightway proceeded to make the addition under Section 68 by making reliance on the report of Inspector that parties are not available at the address provided by assessee. It is settled position that for making addition under Section 68, maintenance of books of account is compulsory and any sum found to be credited and the name of creditors which remained outstanding is treated as cash credit. 9. I find that the assessee right from the beginning has a clear stand that he made sales to the impugned debtors in A.Y. 2015-16 and the amount was reflected in sundry creditors in the audited balance sheet as on 31/03/2015 so the books of account of current year cannot be rejected when books of account of preceding year was duly audited and debtors of Rs. 28,94,233/- were appearing in the audited financial statement. Further, the sales made during the earlier year were supported by bills and challans. I find merit in the contention of ld AR for the asses....