TaxTMI 
TaxTMI 
2023 (10) TMI 15
X X X X Extracts X X X X
X X X X Extracts X X X X
....sh and collects outstanding debts in cash. d. Unfortunately, most of these small shopkeepers, vendors and weekly market hawkers are not maintaining any bank account as they are residing in remote village areas and the banking facilities are not available to them. e. They are very poor and needy people who make their livelihood by selling items of daily use and they are aloof to the modern world. Please refer Page No. 1 to 3 of the paperboook. 2. The Ld. CIT(A), unfortunately, without taking into consideration the facts of the case, as stated above, has observed as under (vide Para 3 of the appeal order): In Para 3.3.1: a. The cash book revealed the balance as on 08.11.2016 was Rs. 253.40 only. (There was no transaction after this). b. Though the assessee contended that these old notes were received from third parties. In Para 3.3.3: a. The AR has not been able to controvert the fact that balance as per cash book was mere Rs. 252.40 only whereas Rs. 28,00,000 has been deposited in his bank account. b. The source of this cash with documentary evidence needs to be produced. c. The AR has failed to discharge the onus cast upon him in this regard. 3. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er Page 35 of the paperbook) The said cash book contains the following particulars during the material period i.e., 08/11/2016 to 12/11/2016: Particulars Amount (in Rs.) Opening cash in hand as on 08/11/2016 252.40 Add: Cash sales on 09/11/2016 89,275.34 Add: Cash realized from debtors on 09/11/2016 1,64,850.00 Add: Cash sales on 10/11/2016 1,66,221.59 Add: Cash realized from debtors on 10/11/2016 4,47,695.00 Add: Cash sales on 12/11/2016 16,19,020.82 Add: Cash realized from debtors on 12/11/2016 4,67,245.00 Total 29,54,560.15 Less: Cash deposit made in the bank on 12/11/2016 28,00,000.00 Cash Balance as on 12/11/2016 (as appearing in cash book filed) 1,54,560.15 Cash Balance as on 12/11/2016 (as appearing in cash book filed) The demonetized currency amounting to Rs. 28,00,000 was deposited in the bank on a lumpsum basis and the remaining demonetized currency was kept in hand as the exchange scheme was available, to meet any un-foreseen expenses. Further, while filing the appeal before the Ld. CIT(A), the appellant had also furnished balance sheet of the appellant as on 08/11/2016 showing debtor balance at Rs. 52,28,780.01 and extract of ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ficate thereof is attached herewith vide Annexure A to this submission. The above statistics clearly shows that the cash transactions effected by the assessee between 08/11/2016 to 12/11/2016 were in the regular course of business and therefore, treating the same as unexplained money is submitted to be unjustified, unwarranted and illegal. More significantly after the deposit of Rs. 28,00,000/- in old currency upto 12/11/2016, the appellant has deposited a further sum of Rs. 1,51,90,000 from 13/11/2016 to 30/12/2017 in new currency, as apparent from the cash book filed' on 15/11/2019 which has been accepted by the lower authorities. " Please further appreciate the fact that, in spite of negligible cash in hand i.e., cash balance below Rs. 10,000, on several occasions before, during and after the demonetization, the assessee has deposited large sum of money in the bank account, within a short period of time, out of cash sales &. realization from sundry debtors. Details of such occasions are as under: SI. No. Period Op. Bal Cash Sales Cash recvd. From debtors Cash paid for expenses Cash deposited Closing Balance 1. 22/10/16 to 28/10/16 (7 days) 3736.99 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reply filed by him, informing him of whether the reply was discarded or not, before the thumping addition of Rs. 28,00,000/- was made to the income of the assessee for the relevant A.Y. As explained by the assessee vide the letter dated 21.12.2019, the sundry debtors are small vendors, or weekly market hawkers etc. and they make up 90% of the assessee's turnover. In the instant case, it is not possible for the assessee to obtain any identification of the debtors, as they form a part of the unorganised sector and are not very well informed of maintaining identity proof and maintaining books of accounts of their business. Furthermore, they do not have access to banking facilities of their own and reside in remote village areas with inadequate banking services available, that too at a time when there was immense rush to get old notes exchanged for new ones. Such a condition may be considered to be of an extraordinary nature, but nevertheless possible. Further, it was pointed out in the condition's precedent to the application of Section 69A, the relevant portion of which is reproduced below: 'In coming to the conclusions that the explanation offered by the ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t any specific defects in the books of accounts maintained by the appellant nor rejected the books of accounts. In other words, the Ld. AO has accepted the book results of the appellant. Thus, the cash deposits made out of cash generated from cash sales &. realization from sundry debtors, which were duly recorded in the books of accounts, cannot be treated as un-explained money u/s 69A as the same have been already credited in the profit/loss account of the previous year and further, the same would amount to double taxation which is not permitted under the law. Reliance is placed on the following judgements, which were recently noticed by the appellant: a. DCIT vs. Roop Fashion [2022 145 taxmann.com 216 (Chandigarh)] b. Ananpur Kalpana vs. ITA [2022 138 taxmann.com 141 (Bangalore)] Copy of both the judgments have been attached as Annexure C to this submission. In view of the submissions made above in Para 3 & 4, it is humbly submitted that the Ld. CIT(A) has totally erred in dismissing the appeal of the appellant and confirming the addition of Rs. 28,00,000/- only on the grounds that cash balance as on 08/11/2016 was Rs. 252.40 even though cash book from 08/11/201....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 28 lacs simply on the basis of allegation that the appellant had deposited the said sum using old currency denominations which were declared illegal/illegitimate tender by the Government of India and Reserve bank of India without parting with any such notification/order which was alleged to have been issued by Government of India and/or Reserve Bank of India and such action of the Ld. AO (please read as Ld. Lower Authorities) is arbitrary, unjustified, unwarranted and illegal. e. Grounds of 2nd Appeal No. 5 For that the Ld. AO (please read as Ld. Lower Authorities) failed to appreciate that the action of the appellant in depositing the cash in its bank account was in accordance with the Notification No 2652 dated 08.11.2016 read with the relevant provisions of Specified Bank Notes (Cessation of Liabilities Act) 2017 and action of the Ld. AO (please read as Ld. Lower Authorities) in ignoring the said notification as well as the provisions of the said act including submissions of the appellant without any reasons whatsoever is arbitrary, unjustified, unwarranted and illegal. Submissions; The Ld. AO in his assessment order simply alleged that the assessee was not authori....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rranted and illegal. g. Grounds of 2nd Appeal No. 7 For that the Ld. AO (please read as Ld. Lower Authorities) erred in making allegations of money laundering against the appellant even though the transactions of the appellant were duly explained and were in regular course of its business and such allegation of the Ld AO (please read as Ld. Lower Authorities) is arbitrary, unjustified, unwarranted and illegal. Submissions: In this regard, the appellant assessee had made detailed submissions vide Page 21 to Page 24 of the paperbook. The said submissions were exactly quoted by the Ld. (IT(A) in his appeal order. However, the said submissions have not been expressly denied or discarded by the Ld. (IT(A) before confirming the addition of Rs. 28,00,000. The Ld. (IT(A) has totally failed to adjudicate the submissions and contentions of the appellant assessee with respect to the allegations made by the Ld. AO that the appellant has allowed money Laundering and helped in conversion of black money. The said action of the Lower authorities in treating the regular business transactions effected by the appellant as a tool to facilitate money Laundering and to convert black mo....