TaxTMI 
TaxTMI 
2022 (8) TMI 1483
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....ic for which the Hon'ble Supreme Court has directed that the period from 15.03.2020 to 28.02.2022 is to be excluded for the purpose of computing the limitation period. Further, a period of 90 days is allowed after 28.02.2022 vide same order. Considering the facts and the explanation of the department placed on record, we condone the delay in filing the appeal and admit it for adjudication. 3. Before us, Shri Chinthapalli Mehar Chand, JCIT represented the Revenue and Shri K.P. Dewani, Advocate represented the assessee. 4. Grounds of appeal raised by the Revenue are reproduced as under: "1. The Ld. CIT(A) has erred in holding that assessee has shown huge amount of Rs. 3.83 crores without considering the facts that the assessee has not submitted full details of the cash bills for sale of medicine, hospital receipts from OPD & IPD, nursing fees either during assessment proceedings or during remand report proceedings. 2. The Ld. CIT(A) has erred in holding that only 4% of cash deposit in SBN should be treated as income of the assessee without considering the facts that assessee has not submitted full details of sales of medicine which is stated to be the sour....
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....in SFT 14". In the said assessment, ld. AO after verification of books of account accepted the cash in hand as on 31.03.2016 at Rs. 57,11,652/- which is evident from para 5 and 6 of the said order. Assessment for AY 2016-17 was completed by accepting the returned income of Rs. 93,91,690/-. Despite this acceptance of cash in hand of Rs. 57,11,652/- as on 31.03.2016 and completion of assessment at returned income for AY 2016-17, ld. AO in the present case noted that credit of Rs. 57,11,651/- cannot be given for the opening cash balance as per revised return of AY 2016-17 as it is a non-est return and to this extent, the amount is to be brought to tax u/s. 69A of the Act as unexplained money. 5.2. Further, in respect of the impugned year, ld. AO noted that assessee had cash balance of Rs. 3.83 Cr. as on the date of announcement of demonetization i.e. on 08.11.2016. Ld. AO held the said cash balance as undisclosed money/investment u/s. 69A of the Act to bring it to tax read with section 115BEE, after making the following observations, which are as follows: (i) that assessee has made cash deposits into bank at least sixteen times between 01.04.2016 and 08.11.2016; (....
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....ended that once the amount has been recorded in the books of account, no addition can be made u/s. 69A of the Act. Assessee also submitted before the Ld. CIT(A) that its gross income before interest and remuneration to partners is assessed at Rs. 1,93,84,546/- and thus, cash balance as on 08.11.2016 is based on considering gross receipts recorded in the books which have not been disputed and accepted. 6.3. Based on submissions made by the assessee and by considering that the issue involved is purely of factual in nature, Ld. CIT(A) called for a remand report from the Ld. AO. Remand report is annexed to the order of Ld. CIT(A) as annexure. From the perusal of the remand report, ld. AO has made the following observations, which are extracted as under: (i) On verification of the case records, it is seen that various details which in the course of assessment proceedings by issue of notice u/s. 142(1) has been submitted by the assessee from time to time. From the details available on record, it is seen that complete cash book for the period from 01.04.2016 to 31.03.2017 was submitted in the course of assessment proceedings. (ii) The bank account statements were dire....
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....which is the balance of cash in hand in the cash book of the assessee on the date of announcement of demonetization. (vi) In respect of discrepancy noted by Ld. AO in the remand report for the three dates it was pointed out that the difference arose because Ld. AO took the receipts both of cash and cheque together for these three dates. If the amount of cheque receipts for these three dates are removed, then the receipts for these three dates in cash tallies as recorded in the cash book. It was thus demonstrated that there is no difference/mistake as observed by AO in the remand report for which reference was made to the cash book placed on record. (vii) Opening stock of medicines was verified from the audited trading account which has been accepted in the assessment for AY 2016-17 and expenditure in the current year has not been doubted or disputed by the Ld. AO. Further, in this respect it was pointed out that aggregate purchase for all the quarters taken together are matching and minor variations in purchases on quarterly basis has no bearing on the computation of total income for the year. (viii) In respect of increase in creditors, the gross receipts....
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....ack of reconciliation between opening stock of medicines and other minor discrepancies as pointed out by the Ld. AO in the remand report, he made an upward estimation and directed the AO to increase the declared book profit by 4% of the total amount deposited by the assessee in SBNs. He, thus made an addition on estimate basis by quantifying it at Rs. 13,32,000/- (4% of Rs. 3.30 Cr.) to be treated as business income of the assessee. 8. Aggrieved by the above findings, Revenue is in appeal before the Tribunal in respect of Rs. 3.83 Cr. and the assessee is in cross objection in respect of the upward adjustment of Rs. 13.32 lakhs. 9. Before us, Ld. Sr. DR placed reliance on the order of ld. AO. Ld. Counsel for the assessee reiterated the submissions made before the authorities below which we have captured in the above narrative of the facts of the case and therefore, are not repeated to avoid duplicity. 9.1. Admittedly, it is a fact that Ld. AO has made the addition of balance of cash in hand on the date of announcement of demonetization i.e. on 08.11.2016 which is of Rs. 3,83,33,860.74 as appearing in the cash book for the relevant date, placed on record at page 76 of the pa....
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.... tax u/s. 69A of the Act. It is also important to note that SBNs were allowed to be accepted at pharmacy by the government during the demonetization period. Assessee has deposited cash out of its balance cash in hand, duly recorded in its books of account which were the results of pharmacy sales and hospital receipts. In this respect a useful reference is made to the decision of Hon'ble Supreme Court in the case of Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288 (SC) wherein it has been held as under: "21. The position as it obtained in this case was closely analogous to that which obtained in Messrs. Mehta Parikh & Co. v. The Commissioner of Income-tax, Bombay (1). In that case the assessee had to satisfactorily explain the possession of 61 High Denomination Notes of Rs. 1,000 each and the Tribunal came to the conclusion that the assessee had satisfactorily explained the possession of 31 of these notes and not of the remaining 30. The High Court had treated the finding of the Tribunal as a finding of fact. It was held by this Court that the entries in cash-book and the statements made in the affidavit in support of the explanation, which were binding on the Revenu....
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....ncy notes to the value of Rs. 7,000 only could form part of the cash balance of the assessee. It therefore upheld the assessment to the extent of Rs. 25,000. On a reference to the High Court it was held (1) that the burden of proof lay upon the Department to prove that the sum of Rs. 32,000 represented suppressed income of the assessee from undisclosed sources, and the burden was not on the assessee to prove how it had received these high denomination currency notes; for, until the Demonetisation Ordinance came into force high denomination currency notes could be used as freely as notes of any lower denomination and no one had any idea that it should be necessary for him to explain the possession of high denomination currency notes, the assessee had naturally not kept any statement regarding the receipt of these currency notes, and it was for the first time on January 12, 1946, when the Ordinance came into force, that it became necessary for the assessee to explain its possession of these currency notes and (ii) that the explanation given by the assessee that the notes formed part of the cash balance of Rs. 34,000 and odd was fairly satisfactory and was not found by the Tribunal to....
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....nstant case, the Income-tax Officer, having verified from the banks the receipt of the amount in high denomination notes by the assessee and having considered other possible sources of receipt of Rs. 1,000 denomination notes, was justified in adding the balance amount of Rs. 1,04,000 as income from undisclosed sources. The Tribunal observed that the Income-tax Officer had discharged the initial burden cast upon him by collecting specific information about the acquisition of high denomination notes by the assessee and it was for the assessee to dislodge such finding by means of appropriate evidence. Since, according to the Tribunal, the assessee failed to do so, there was no justification for interfering with the order of the Commissioner (Appeals). We find it difficult to agree with this finding of the Tribunal. In our opinion, the Tribunal took a wholly erroneous approach in the matter. What the assessee is required to prove in such cases is the source of money and once he is successful in proving the same, he cannot be put to further proof of acquisition of such amount in the currency notes of particular denomination. If the explanation shows that the receipt was not of income na....
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....the Ld. CIT(A) and the same is upheld. " 10. Considering the factual matrix and circumstances of the case, books of account, submissions and explanations made by the assessee and the Revenue, remand report of the ld. AO, judicial precedents, notification issued by the Department of Economic Affairs and other corroborative material placed on record, we find no reason to interfere with the finding of the Ld. CIT(A) in respect of deletion of addition of Rs. 3.83 Cr. relating to balance of cash in hand on the date of announcement of demonetization. Accordingly, the addition so made by the Ld. AO of Rs. 3.83 Cr. stands deleted. Grounds of appeal raised by the revenue are dismissed. 11. Coming to Cross Objection filed by the assessee, challenging the enhancement done by the ld. CIT(A) by estimating the business income of Rs. 13,32,000/- @ 4% of the SBNs of Rs. 3.30 Cr. deposited by the assessee in its bank account. In this respect, the first and primary objection of the assessee is that deposit of SBNs is from the hospital and pharmacy receipts, on which tax is paid by the assessee on the income embedded in such receipts. Thus, on such receipts, further estimation of income is unju....