AI Drafter 
TaxTMI 
TaxTMI 
2025 (4) TMI 261
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....he source of these cash deposits during the assessment proceedings. 2. On the facts and in the circumstances of the case and in law the Ld. CIT(A) has grossly erred in deleting the disallowance of expenditure u/s 40A(3) of the IT. Act amounting to Rs. 6,48,20,559/- made by the AO without appreciating the fact that the assessee has failed to furnish supporting documentary evidences to substantiate his claim during the assessment proceedings." 3. Succinctly, the fact as culled out from the records is that the assessee is engaged in trading of FMCG Goods as a retailer and wholesaler. The assessee is Proprietor of M/s. Bansal Sales Corporation. The assessee filed its return of income for the above A.Y. 2017-18 on 26.09.2017 with a taxable income of Rs 5,50,970/- It was noted that during demonetization period i.e 09.11.2016 to 31.12.2016, the assessee deposited cash to the tune of Rs. 78,82,290/- in his HDFC Bank account. Hence, the case was selected for manual scrutiny and notices u/s 143(2) and 142(1) were issued. Ld. AO after considering the details and submission made by the assessee completed the assessment u/s 143(3) of the IT Act on 26.12.2019 by assessing the total i....
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.... (6) The cash deposited during FY 2016-17 and the corresponding previous year cash deposits also did not show any huge variation. 4.11 In view of the above, the addition of Rs.79.81,000/- made by the AO as unexplained cash is not acceptable as the appellant sufficiently demonstrated the sources with all the documents called for by the AO. Hence, the AO is directed to delete the addition. The grounds taken by the appellant on this issue are allowed. 5.1 While completing the assessment, the AO found that the appellant is making payments of Rs.20,000/- or more in cash regularly which is in contravention of Sec. 40A(3) of the Act. The AO issued a notice dated 14.12.2019 and the relevant portion of the notice is at Page No.3 of the assessment, where he posted some of the examples of those cash payments. This issue was discussed further in Para 2 of the assessment order by reproducing the copies of those cash payment details from April, 2016 to December, 2016. As per the AO, such cash payment details for January, 2017 to March, 2017 was not available and he has taken average 9 months (April, 2016 to December, 2016) and quantified the sum into Rs. 6.48.20,559/- ....
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....4820559/- towards disallowance of alleged cash payments in excess of limits prescribed u/s 40A(3) of IT Act which comprises Cash deposited in to the Bank and petty Expenses of business to a limited extent is without perusing the the details documents/evidences available on record and wholly unjustified and arbitrary. 5.3 Upon receipt of the details, it is noticed that whatever cash deposited into the bank was treated as expenditure incurred by cash in violation of Sec.40A(3) of the Act. The details of notices issued to the AO and the Range Head and their non- compliance is discussed in Para 4.8 and 4.9 of this appeal order. From the detailed written submissions, the following facts are noticed (a) The AO called for the details of Cash Book with day to day opening and closing balance for various months. The appellant uploaded the same and it was reproduced in the previous paragraphs in Annexure VI. (b) The appellant was into the business of sale of FMCG products and daily cash sales and the opening balance deposited into the bank account was mentioned as payments. (c) The AO, without having any common understanding considered these cash deposits i....
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....gaged in trading of FMCG Goods as a retailer and wholesaler. The assessee is Proprietor of M/s Bansal Sales Corporation. The assessee filed his return of income for the AY 2017-18 on 26.09.2017 declaring income of Rs. 5,50,970/- Subsequently, assessment was completed u/s 143(3) of the IT Act on 26.12.2019 by assessing the total income at Rs 7,33,52,530/-. While completing the assessment, the AO has made an addition u/s 68 of the Act to the tune of Rs 79,81,000/- as unexplained cash deposits and disallowance of cash payment u/s 40A(3) of the Act to the tune of Rs. 6,48,20,559/-. Aggrieved by the above order, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) vide his order dated 22.11.2023 allowed the appeal of the assessee and deleted both the additions made by the AO. 1. Both the issues are discussed as below: Issue-1: Addition on account of unexplained cash deposits u/s 68 of Rs. 79,81,000:- The Ld. CIT(A) allowed the appeal of the assessee on this ground and deleted the addition made by the AO of Rs. 79,81,000/- holding that all the written submissions filed by the appellant during the course of appeal proceedings were made available to th....
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....1,000/-, was unverifiabile in the absence of bank deposit slips and bank certificate during the demonetization period. Hence the AD treated unexplained cash credit of Rs. 79,81,000/- and added to the total income of the assesses of the 1.1. Act. Issue 2 Disallowance of cash peyments/40431 of 6.48.29.58 The Lil CITIA) allowed the appeal of the assesses on the ground and deleted the sition made by the AD of Rs. 6,48,20,559/ by giving folowing findings. (a) The AO called for the details of Cash Book with day to day opening and closing balance for various months. The appellant uploaded the same. (b) The appellant was into the business of sale of FMCG products and daily cash sales and the opening balance deposited into the bank account was mentioned as payments. (c) The AO, without having any common understanding considered these cash deposits into the bank account as cash payments made in violation of 40A(3) of the Act. Out of total purchases of Rs. 7,45,96,081/- a sum of Rs.6,48,20,559/- was disallowed and added back. No prudent assessee incurs expenditure in cash like this regularly and submit such ledger to the AO in a tax audit case. (d)....
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.... assessee under the bonafide that he is not required to do so, did not produced the relevant Books of Accounts physically before the AO and submitted the requisite details/information/extract of Books of Accounts electronically in E-proceedings through online mode. Therefore the copy of Cash Book is attached herewith as additional Evidences. Therefore, Your honour is requested to admit the additional evidences and place the same on record for disposal of relevant grounds of appeal." Therefore, it is clear that the assessee did not produce relevant documents during the course of assessment proceedings before the AO. However, even if as per claim of the assessee he was submitting other documents then the above mentioned relevant extracts of books could also had been submitted as required by the AO. This proves that the notices were not being complied with and the relevant books of accounts were later on submitted with Id. CIT(A) as additional evidence. Further, it is also submitted that as per u/r 46A(1) of the 1. T. Rules 1962, the appellant shall not be entitled to produce before the Commissioner (Appeals) any evidence other than the evidence pro....
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....(A) order, citing history of replies furnished by the assessee. However, on perusal of screenshots, it can be seen that the screenshots are nothing but, summary of notices received by the assessee. Moreover, it cannot be inferred that the required replies to these very notices were completely submitted from these screenshots. The acknowledgements issued by the department of these replies were also not found either in the screenshots (on Pg. 21 of id. CIT[A]) or in the voluminous paper book submitted before the Hon'ble bench by the id. A/R 2.3 As per id. CIT(A)'s own order, the AO fumished his reply in the remand proceedings on 10.11.23 requesting the id. CIT(A) to clarify as to what was required at his end. But instead of clarifying as to what details were being sought from the AO, Id. CIT(A) passed his order just after 12 days from the date of submission of AO in remand proceedings on 22.11.23. The Id. CIT(A) proceedings are not time bound and once the AO had started communication in remand proceedings, the Id. CIT(A) should have clarified the issues, the AO had asked for. There was no reason to pass the order hurriedly. For the sake of justice Id. CIT(A) should h....
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....ing day to day Op. Balance, Receipts, cash Payment and closing Balance. 19-22 7. Other Details/documents annexed to Letter dated 13.1.2019 23-53 8. Letter dated 26.11.2019 before the AO, along with Annexure thereof. 54-58 9. Letter dated 14.12.2019 before the AO. 59-59 10. Bank Certificate for deposit of demonetized currency 60-60 11. Details of cash collection against cash sales and collection from debtors/retailers during the period 01.11.2016 to 08.11.2016. 61-65 12. The Date and amount wise details of cash deposited in to the Bank during the relevant F.Y.2016-17. 66-77 13. Other Details/documents annexed to Letter dated 14.12.2019 78-78 14. Letter dated 16.12.2019 before the AO. 79-79 15. Copy of Audit report in Form No.3CD. 80-90 16. Copy of Cash Book for the relevant F.Y.2016-17. 91-158 6.1 The ld. AR of the assessee also filed a detailed written submission in support of the contentions recorded in the order of the ld. CIT(A) which reads as follows: 1. The assessee is a Registered Dealer of certain Well-known/reputed manufactures and thus engaged in Trading of FMCG Product....
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....ficate dated 02.12.2019 of HDFC Bank towards deposit of old/new currency during the period of demonetization period. (reproduced at Page No.19 of Order of ld.CIT(A). 11.The ld. CIT(A) also observed that E-proceeding history was downloaded and furnished by the appellant before him which reveals the fact that the appellant has furnished response to each notice.(Page No.20 of Order of ld.CIT(A). 12. The ld.CIT(A) Called remand report of the AO and discussed the same in his order.(Page No.23-26 of Order of ld.CIT(A). 13.The ld.CIT(A) after considering the written submission along with relevant details and evidences available on record, remand report of the AO deleted relevant addition of Rs.7981000/-towards cash deposited in to the Bank during the period of demonetization disputed in Ground No1 of the Appeal of the assessee.(Page No.9-27 of Order of ld.CIT(A). 14. In respect of Ground No.2, the ld. CIT(A) observed the written submission of the assessee along with details and documents available on record.(reproduced at page No.28-29 of Order of ld.CIT(A) . 15. The ld.CIT(A) after considering the written submission along with relevant details....
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....before ld. CIT(A) along with Application for admission of additional Evidences. 20. The ld. CIT(A) deleted the relevant additions on the basis of Extract of cash Book and other relevant details already submitted before the AO and thus available on record, without taking in to account the Cash Book submitted by the assesse as additional Evidence. 21. The ld. CIT(A) has passed his order after calling remand report of the AO and the AO has not found any defect in Details/documents submitted before the ld. CIT(A). 22. The AO has not denied the submission of details/documents during the course of assessment proceedings as available on E-proceeding Tab of the assesse on Web Portal of the Department. 23. Thus ld. D/R has no substance in disputing the submission of relevant details and documents during the course of Assessment proceedings duly available on E-proceeding Tab of the assesse. 24. The case law relied by ld. D/R are clearly distinguishable on facts and not applicable to present case of the assesse. 25. The assessee reiterate on submission/details/documents submitted before the ld. CIT(A) and rely on the Order of ld. CIT(A). ....