TaxTMI 
TaxTMI 
2023 (8) TMI 1455
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....(A) has erred in appreciating the facts that the assessee company failed to produce documentary evidence regarding amount payable on account of wages etc for which cash withdrawal was made? iii) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) is right in not appreciating the fact that the assessee could not explain the reason for hording such cash for a long time despite the fact that company is a running concern and requires frequent cash payment? iv) Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) is right in ignoring that there is no pattern of such huge cash deposits in the preceding year?. 3. The ld. CIT(DR), supporting the assessment order, submitted that in the circumstances of the case and in law the Ld. CIT(A) is right in deleting addition of Rs. 2 Cr. made us 68 of the Act ignoring the impounded documents seized from the business premises of M/s Omaxe Limited as Annexure A-4 (Page No. 87 to 91 and 97-100) clearly evidencing that the company M/s Omaxe Forest SPA and Hills Developers Ltd. was having Cash-in-hand as on 08.11.2016 was Rs. 5,15,350/- only (as per page nos. 87 to 91 and as per page ....
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....ngs:- 9.2 I have carefully considered the assessment order and the submissions of the appellant as well as the assessment records. The findings regarding various observations made by the A leading to the impugned addition of the amount of cash deposited postdemonetization, are as follows: 9.3 The AO has observed that cash withdrawals made by the assessee are not near the dates of cash deposits, and further that if the assessee had withdrawn cash for wage payments/deals, it is not understandable as to why such expenses were not actually incurred. The AO has observed that the assessee company being a running concern, could not have mounted cash for so long and hence the assessee cannot be given favour in a case where the cash is withdrawn long time back. In this regard, it is important to consider the following comparative charts incorporating monthly opening cash balance, cash sales, cash withdrawals, cash deposits, cash expenses and monthly closing cash balance as per the cash books of the appellant for F.Ys. 2015-16 and 2016- 17 submitted during the appellate proceedings: 9.4 It is pertinent to mention here that similar comparative charts for F.Ys. 2015-16 and 2016-17 were....
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....financial statements of the appellant which was signed prior to demonetization. Maintenance of large cash in hand is evident in the audited statements of the appellant in the earlier years as well. Further, the levels of cash withdrawals from bank accounts and cash deposits into bank accounts are also high. The cash withdrawal from bank accounts of the appellant was Rs. 1,01,74,500/- during F.Y. 2015-16 and the same was Rs.6,30,90,000/- during F.Y. 2016-17. Cash amounting to Rs.5,71,40,000/- was withdrawn by the appellant from April to October, 2016 i.e. before the demonetization. Similarly cash deposited into bank accounts was Rs. 1,70,00,000/- during F.Y. 2015-16 as compared to cash deposit of Rs.3,00,00,000/- (normalized to Rs. 1,00,00,000/- after adjusting for the forced deposit of Rs.2,00,00,000/- due to demonetization) during F.Y. 2016-17 which needs to be considered alongwith opening cash balance of Rs.4,34,574/-as on 01.04.2016. Therefore, the trend of substantial cash withdrawals and deposits was similar in both the years. Infact, substantial cash withdrawals as well as deposits into the bank accounts is very much a regular feature of the business of the appellant and henc....
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....and the same was not deposited back into the bank accounts till the month of March, 2016. 9.8 The decisions of the jurisdictional High Court cited by the appellant in the cases of Kulwant Rai (supra) and Jaya Aggarwal (supra) are also in support of these findings. In the case of Kulwant Rai, the assessee had cited withdrawal of a sum of Rs. 2 lakhs from his bank account as the source for cash found during search and the same was not accepted by the AO on the assumption that such withdrawn amount may have been spent for some other purposes. The court held that in the absence of any material in support of the view that withdrawals were spent for some other purpose, the Tribunal was right in treating the withdrawals as source of cash found. Similar is the case of the assessee where cash withdrawals from bank accounts are the source of subsequent cash deposits into such bank accounts in the absence of any material in support of the view that withdrawals were spent for some other purposes. Further, in the case of Jaya Aggarwal, the jurisdictional Court held that where the assessee withdrew cash of Rs. 2 lakhs from bank account to buy property and re-deposited cash of Rs. 1,60,000/- f....
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....gh the main cash book and if the said cash book is ignored, it would amount to ignoring. The cash withdrawals made from bank accounts as well as cash deposits therein. Further, the AO has not cited any statement recorded or logical reasoning as to why the main cash book has been ignored. Therefore the observation of the AO that the cash book has been constructed in such a manner so as to explain the cash deposits, is untenable. 9.10 The AO has further observed that since the assessee is a builder and has stated that all sales are via cheque / RTGS/ DD etc, there is no question of accepting cash generation through sales. Regarding this observation, it is noted that the appellant itself has not shown any significant cash sales in an attempt to explain the cash deposited during demonetization. In fact, the cash sales are almost NIL for F.Y. 2016-17. Therefore, this argument does not carry any force. 9.11 It has also been observed by the AO that the flagship company, M/s Omaxe Ltd has surrendered a huge amount as unaccounted income, however, the assessee has not disclosed any such unaccounted income. The said observation is not rational, firstly since any disclosure made by the f....
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.... during April to October 2016 i.e. prior to demonetization declaration. 7. After noting above factual position of trend of deposits and withdraws by the assessee from its bank account the ld. CIT(A) further observed that the assesseee has prepared cash book in the manner showing that nearby cash withdrawals can be seem shown or seem as cash deposited during demonetization period and the fact that the bank withdrawals or deposits duly reflected in the bank accounts, statements as well as cash book which cannot be manipulated by the assessee in any manner. The ld. CIT(A) noted that the side cash books as well as main cash books clearly show balance of Rs. 2,07,23,542/- as on 08.11.2016. The ld. CIT(A) went in detail and gathered that the AO has ignored main cash books of assessee and has considered only the side cash books of assessee in arriving at the cash balance as on 08.11.2016 which is not a correct approach. Since the assessee company, as per the AO is in the business of real estate, then the keeping cash on sites of construction and keeping main cash books in the central office is a normal practice to be adopted by such company therefore ignoring main cash book is a vital om....