TaxTMI 
TaxTMI 
2024 (10) TMI 421
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....pect to deposits in the Bank account. The ld.CIT(A) ought to have appreciated that the deposits in the Bank account are duly reflected in the Books of accounts and as such part of the Audited Balance Sheet. 4. On the facts and circumstances of the case, the ld.CIT(A) erred in upholding the additions made by the Assessing Officer in respect of the amounts advanced by N. Sanker, M. Satya Gopal, Y. Chenna Krishna Reddy and others and also Shanmukha Trading Company, Shivani Cotton Industries Pvt. Ltd., Vijaya Sai Lakshmi Srinivasa Cotton Mills, Ambica Dall Mill amounting to Rs. 15,40,50,000/- even though such entities have filed its return of income and confirmed such advances in the sworn statements recorded and supported by an agreement. 5. On the facts and circumstances of the case, the ld.CIT(A) ought to have appreciated that the amounts advanced by various entities were infact pertains to the Assessment Year 2016-17 but not during the assessment year 2017-18 and therefore, would have deleted the addition made. 6. On the facts and circumstances of the case, the ld.CIT(A) out to have appreciated that mere non filing of the return in time does not bar the c....
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....e appellant in the old demonetized high denomination notes during the demonetization period. During the course of search, a sworn statement under Section 132(4) of the Act was recorded from the Director of appellant company Shri Tandra Ramesh on 02-01-2017, wherein he had come forward to declare Rs. 40 crores under Pradhan Mantri Gareeb Kalyan Yojana (hereinafter referred as "PMGKY") - 2016. Further, statements were recorded from the director of the appellant company on 03-01-2017, 17-02-2017, and on 24-02-2017. Later, the director of the appellant company filed an affidavit on 03-03-2017 declaring Rs. 20.036 crores under PMGKY and also filed written submissions on 17-03-2017 before ADIT (Investigation) Unit and explained source for cash deposits of Rs. 20 crores and claimed that the appellant company has received Rs. 15.405 crores from various persons as advances and balance amount of Rs. 4.63 crores was out of cash balance available with the appellant and said cash balance is out of cash withdrawals from the bank during the earlier period. The investigation department has recorded the statement from all the persons from whom the appellant has claimed to have received advances, an....
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.....CIT(A) order. The main contentions of the appellant before the ld.CIT(A) are that the appellant has explained the source of cash deposits out of the advances received from various persons during the course of search proceedings itself. Although, the appellant has admitted for disclosure of the unexplained cash credits towards entire cash deposit in the bank account, but subsequently, able to explain source of Rs. 20 crores, out of advances received from 7 persons, amounting to Rs. 15.405 crores and a cash balance available as per books of accounts for Rs. 4.63 crores, and therefore, filed a retraction statement along with an affidavit and admitted Rs. 20.036 crores under PMGKY, 2016 and balance amount of Rs. 20 crores is explained out of known source of income. The AO, having accepted the advances received from parties in the assessment passed under section 143(3) of the Act for A.Y. 2016-17, has erred in rejecting the source for the cash deposit, even though, the closing cash balance as per books of accounts for the year ended 31-03-2016 was sufficient to explain the cash deposit during the demonetization period. The appellant had also filed certain additional evidence before the....
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....ry of human probabilities and therefore, based on the evidence found during the course of search and surrounding circumstances, the AO has rightly made additions towards cash deposits under section 68 of the Income Tax Act and thus, upheld the additions made by the AO. 7. As regarding the explanation of the assessee with regard to source of Rs. 4.603 crores out of withdrawal from bank accounts during earlier occasions, the ld.CIT(A) observed that the appellant has not filed any returns of income for AY 2013-14 to AY 2016-17 under Section 139(1) of the Act, and for the first time, the appellant has filed return of income, in response to notice issued under Section 153A of the Act, after the date of search. Although, the appellant claimed to have substantial income to be declared, but no return of income has been filed nor get its accounts audited. Therefore, the claim of cash balance in books of accounts is not with sufficient supporting documents. Therefore, the ld.CIT(A) rejected the arguments of the assessee and upheld the additions made by the AO towards source of cash deposits of Rs. 4.63 crores. 8. Aggrieved by the order of ld.CIT(A), assessee is in appeal before Tribuna....
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....evidence to justify advances received from various parties, but the AO rejected the explanation of the assessee only on the allegation that the appellant has dressed up the books of accounts, subsequent to search operation. But fact remains that, the AO has passed the assessment order for all these assessment years under Section 153A of the Act, based on the return of income filed, and other information submitted along with financial statements. The AO neither pointed out any discrepancy in the books of accounts for any of the assessment years nor made out a case for dressing up the books of accounts. Therefore, the allegation of the Assessing Officer that the appellant has dressed up the books of accounts, subsequent to search operation is not justified. The learned counsel for the assessee further referring to the decision of the Hon'ble High Court of Karnataka in the case of PCIT Vs. Basetteppa B. Badami (2018) 93 taxman.com-66 (Karnataka) submitted that when closing balance of cash in hand for the preceding assessment year is sufficient to cover the cash deposits in the subsequent year, no addition can be made towards cash deposit as an unexplained money under section 68 of....
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.... submitted during the course of search operation. Further, even during the course of post-search investigation, the appellant has admitted cash deposits into bank account as undisclosed income and also agreed to offer income under PMGKY. However, only in the month of March 2017, the appellant has filed an affidavit and stated that it could be able to explain the source to the extent of Rs. 20.063 crores out of known source of income, and the balance amount of Rs. 20 crores was offered under PMGKY. If we go by the conduct of the assessee during the search proceedings and subsequent post-search investigation, the appellant has come out with a make-believe theory in light of certain advances claimed to have received from various parties as source of income for cash deposited into bank account. Although all seven parties have confirmed advances given to the appellant, but fact remains that none of the creditors have any source of income to explain huge advances given to the appellant and further, all of them have filed return of income after the appellant has filed written retraction in the month of March 2017. Therefore, the AO, after considering all the relevant facts, has rightly di....
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....the details of seven creditors, including their identity and documents to prove transactions with the appellant. However, Assessing Officer disbelieved the explanation of the assessee only on the ground that this fact has not been disclosed during the course of search and only after post search investigation, the appellant has come up with a make-believe story and therefore, observed that it is an afterthought to circumvent additions towards cash deposit during the demonetization period. Therefore, it is necessary to adjudicate the issue in light of the statement recorded from the director of appellant company, statements recorded from creditors / lenders, and the evidence filed by the assessee to prove the advances received from seven parties. 13. The appellant has argued the issue on multiple propositions. The first and foremost proposition canvassed by the appellant is whether Section 68 can be invoked for deposits found in bank account or not. The main contention of the assessee is bank passbook is not a book as per section 2(12A) of the Act, and thus, the provisions of Section 68 of the Act cannot be invoked to cash deposits into bank account as unexplained cash deposit. Ac....
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....he assessee and any other income based on the incriminating material found as a result of search. Therefore, when an assessment is abated, then the appellant can file the return of income by making all the claims, including claims towards any loans, expenditure etc. In the present case, the assessment for A.Y. 2016-17 is abated and the assessee has filed the return of income for the first time under Section 153A and such return of income is supported by books of accounts maintained under Section 44AA of the Act and also audited and approved under the Companies Act, 2013, as well as under the provisions of 44AB of Income Tax Act 1961. Further, the AO has completed the assessment for AY 2016-17 under Section 143(3) read with Section 153A and in the said assessment, the AO has not raised any issues about the advances received from seven parties, amounting to Rs. 14.60 crores, along with corresponding cash balance available as on 31-03-2016 at Rs. 18.70 crores. Once the AO accepted the advances as genuine in the earlier assessment year, then in our considered view, the AO cannot question the advances received by the appellant in the present assessment year as non-genuine while examinin....
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....s given time to file the return of income belatedly up to 31-03-2017 for assessment year 2016-17. Although, the parties may not have filed return of income due to various reasons, but non-filing of return of income does not bar the creditors to advance the money to the appellant company. Further, it is to be examined in the broader perspective whether the creditors are having sufficient funds to give advances or not. The AO has recorded the statements wherein all the creditors have confirmed that they have advanced the money for better profits. Since there is no inconsistency in the evidence filed by the appellant and the documents submitted by the creditors, in our considered view, the reasons given by the AO to make additions towards cash deposit is not justified. Therefore, in our considered view, the Assessing Officer having noticed the fact that the parties have admitted in their statements made under Section 131, the AO ought to have accepted the explanation of the assessee. 16. Insofar as the theory of human probability applied by the AO, in our view, the theory of human probability can be applied when there is inconsistency in the documents submitted by the assessee. In ....
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....view, the appellant is able to explain the source of cash of Rs. 14.60 crores towards cash deposit to bank account out of advances received from 6 parties in earlier financial year and the corresponding cash balance available as per books of accounts, and thus, we direct the AO to delete the addition made to the extent of Rs. 14.60 crores. In so far as remaining cash deposit of Rs. 81 laces, out of advance received from one person in the FY 2016-17 relevant to AY 2017-18, all though the appellant filed all details, but failed to prove credit worthiness of the person and thus, in our considered view advance received from Sri. M Satya Gopal for Rs. 81 laces cannot be considered as source for cash deposit and thus, we confirm the addition to the tune of Rs. 81,00,000/-. 19. Coming back to source for cash deposits out of cash withdrawals from the bank account, in the earlier financial year amounting to Rs. 4.63 crores. Admittedly, the appellant has filed return of income up to assessment year 2012-13 under Section 139 of the Income Tax Act, 1961. From the assessment year 2013-14 to 2016-17, the appellant has not filed any return under Section 139 of the Act, however, for the first t....