2023 (2) TMI 1353

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....3(3) of the Act on 23-12-2019. The grounds raised by the assessee read as under: Ground 1: The Addition of income of Rs. 86,400 made under Sec 40(a)(ia) for non deduction of tax at source: The assessee was not liable to tax audit during the previous AY 2016-17. Hence, as per the proviso to Sec 194-I, the assessee was not liable to deduct tax at source during the payment of godown rent during the assessment year 2017-18. Hence disallowance U/s 40(a)(ia) itself is not tenable, so I plead to drop the addition made to the extent of Rs 86,400. Ground 2: The learned assessing officer failed to note that the assessee has recovered the amount from Debtors, which they could not get recovery for a long time. The debtor's breakup with the amo....

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....er perusal of case records, the appeal is disposed-off as under. 4.1 The disallowance u/s 40(a)(ia) stem from the fact that the assessee paid godown rent of Rs. 2.88 Lacs without deduction of tax at source (TDS) as required u/s 194-I. Accordingly, 30% of the same was disallowed u/s. 40(a)(ia) of the Act. 4.2 The second addition represents cash deposited by the assessee during demonetization period. It transpired that the assessee deposited cash of Rs. 25.45 Lacs during the period from 09-11-2016 to 31-12- 2016 in Corporation Bank, Madurai. Accordingly, the assessee was asked to explain the source of the same. The assessee submitted that cash sales during the demonetization period were Rs. 4.70 Lacs and cash collection from sundry debtors ....

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.... to make any submissions to controvert the findings of Ld. AO which led Ld. CIT(A) to endorse the view of Ld. AO. The Ld. CIT(A) noted that the Government of India issued a notification No.2652 dated 08.11.2016 which provided that the specified bank notes (SBN) shall cease to be legal tender with effect from 09.11.2016. The Government had given various options to persons holding such SBNs i.e., to exchange / deposit and obtain new currency by way of Exchange up-to Rs. 4000 over the Bank Counter; or Deposit into Bank Account (KYC complaint) without any limit; or allowed usage at exempted institutions ex. Petrol Pumps, Hospitals, Govt. Departments with certain restrictions. Evidently, individuals were not allowed to accept SBNs from 09.11.201....

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.... during the period from 09-11-2016 to 31-12-2016 in Corporation Bank, Madurai out of which an amount of Rs. 14.91 Lacs was deposited in Specified Bank Notes (SBN) currency i.e., Rs. 500/- and Rs. 1000/- notes which ceased to be legal tender after 08-11-2016. The closing cash balance with the assessee as per his cash book was Rs. 10.91 Lacs, the credit of which was given to the assessee and the balance amount of Rs. 3.95 Lacs was added to the income of the assessee. The assessee submitted that the impugned SBNs were sourced out of cash sales as well as receipts from sundry debtors post 08.11.2016 despite the fact that SBNs ceased to be valid legal tender after that date. The plea of Ld. AR is that though the cash was received post 08.11.2016....