TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 1476
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.... bogus unsecured loans for AYs 2014- 15 and 2015-16 was the source for cash deposits made in the books of account for the AY 2017-18 and the cash was kept idle till the time of deposit (i.e.) nearly three years. 2.2 The Ld.CIT(A) failed to appreciate that the amount admitted as additional income in the settlement application for the AY 2014-15 and 2015-16 claimed to have been utilized for the working capital requirements of the assessee company by the Authorized representative of the assessee during the course of hearing before ITSC and there would be no cash available with the assessee for depositing during demonetization period. 2.3 The Ld.CIT(A) erred in failing to appreciate that the assessee during FY 2016-17 was in acute financial crisis and even not able to pay the advance tax due for AY 2017-18. Further, the assessee company had not paid any advance tax for AY 2016-17, paid self-assessment tax of Rs. 1.50 Crore belatedly and filed return of income on 31/12/2016. This being the financial situation of the assessee, the Ld.CIT(A) ought to have rejected the claim of the assessee that the cash amounting 3.36 Crores was kept idle fora period of three years till the time of de....
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....mitted the application filed by the assessee on 09.09.2016 and passed final assessment order on 29.02.2018 admitting the claim of the assessee. Further, the Hon'ble ITSC had also accepted the prayer of the assessee for capitalization of additional income in the books of accounts for the relevant assessment year. The assessee further explained that it has generated unaccounted profit from its business for AYs 2014-15 & 2015-16 and the same has been used to take accommodation entries from Kolkata based companies for AYs 2014-15 & 2015-16. In the meantime, there was a survey conducted in the business premises of the assessee on 30.12.2015 and during the course of survey, it was ascertained that the company has taken bogus accommodation entries from Kolkata based companies, and accordingly, agreed to offer additional income. Subsequently, the assessee went before the Hon'ble ITSC and offered additional income towards accommodation entries received from Kolkata based companies. Thereafter, the assessee has re-paid loans taken from Kolkata based companies by cheque and received cash and said cash has been used for working capital requirements. Therefore, when the demonetization was annou....
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....h the cash deposits with the amount offered for A.Y.2014-15 & A.Y 2015-16 as an afterthought. * The assessee is trying to derive double benefit out of the Hon'ble Settlement Commission's order. In the first instance the money introduced in the books of the assessee and utilized for working capital during the FY 2013-14 & F.Y 2014-15 is covered by the money routed through Kolkata parties, which it had admitted before the Hon'ble Settlement Commission as income for the AY 201 4-1 5 & A.Y. 2015- 16. In the first place the assessee has utilized the said undisclosed admitted for the A.Y 2014-15 & A.Y 2015-16 for working capital needs of the company. Now again the assessee is trying to explain the source of cash deposits in November 2016 in specified bank notes as the same money admitted before the Hon'ble Settlement Commission which means the assessee wants to project the Kolkata loan route as the source for both money used for working capital needs during A.Y. 2014-15 & A.Y. 2015-16 and for the cash deposits, which is not the case as clearly and evidentially established by the Settlement Commission Order. In view of the above discussion it is concluded that by no st....
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....n available with the assessee again in the form of cash in hand in November, 2016 for the purpose of making cash deposits into bank account during demonetization period. But, fact remains that submission of the assessee's bogus loan entries taken from Kolkata based companies and subsequent return of said loan entries into Kolkata based companies and receipt of cash from them is not disputed. The AO had also not disputed the fact that the additional income offered by the assessee before the Hon'ble ITSC on account of undisclosed income generation for AYs 2014-15 & 2015-16 and utilization of undisclosed income for the purpose of obtaining bogus loan entries is also not disputed. The AO had also not disputed the fact that the ITSC has allowed capitalization of additional income for the relevant assessment year. Therefore, once, the AO accepted the fact that the assessee has offered additional income to tax and said income is available in the form of working capital, then, the AO cannot reject the explanation of the assessee for the simple reason that the application filed before the Hon'ble ITSC did not specify the nature of working capital whether it is in the form of cash in hand or....
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....owed the capitalisation of the additional income admitted before it and consequently the cash introduced in the books and deposited in the bank account during the demonetisation period to the tune of Rs. 3.36 crores which is represented by the said additional income cannot be considered for taxation once again by the AO. 18. However, the AO did not accept the explanation of the appellant stating that the unaccounted cash profit generated by the assessee during the financial years relevant to AYs 2014-15 and 2015-16, which was routed into the books of account during the said years in the form of unsecured loans from Kolkata companies, has been utilised for meeting the working capital requirements of the appellant as explained by the appellant itself in the application filed before the ITSC and that the same amount cannot be considered to have been available again with the appellant in the form of cash after a gap of 3 years for the purpose of making deposits in the bank account during the demonetisation period. The AO stated that the assessee deposited its unaccounted money in the bank account during the demonetisation period and has tried to take shelter under the order of the IT....
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....rom Kolkata parties represent loans introduced in the books of account through non-existing bogus companies. The appellant admitted the said bogus loans of Rs. 3.36 crores as its undisclosed income during the course of survey proceedings. Subsequently, the appellant filed an application before the ITSC on 29.08.2016 admitting the said loans shown in the names of Kolkata Companies as its additional income for AYs 2014- 15 and 2015-16. The appellant explained in the settlement application that it earned unaccounted profit of Rs. 1.86 crores and Rs. 1.50 crores during the FYs 2013-14 and 2014-15 on real estate transactions and the said cash profit has been routed into the books of account in the same financial years in the form of loans received from Kolkata companies. The appellant explained that the unaccounted income pertaining to AYs 2014-15 and 2015-16 shown in the books of account as loans received from Kolkata companies has now been offered as additional income in the settlement application. The appellant made a prayer to the ITSC for allowing capitalisation of the said amount. 22. The application filed by the appellant was allowed to be proceeded with by the ITSC u/s 245D(1)....
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.... and due to this reason, it cannot be considered that the said funds are available with the appellant in the form of cash after a gap of three years for the purpose of depositing the same in the bank account during the demonetisation period. 25. In this regard, it is considered that the AO has not properly appreciated the facts of the case while citing the above-mentioned reason for not accepting the explanation of the appellant. The AO failed to take into consideration the fact that the unsecured loans from the Kolkata Companies introduced in the books of account of AYs 2014-15 and 2015-16 have been repaid through the books of account by issue of cheques in the names of the said companies during the previous years relevant to the same assessment years, whose details are available in the written submission dated 26.12.2019 furnished by the appellant to the AO during the assessment proceedings. The said details of repayment are shown in the table below: S.no. Name of the Kolkata Company Amount repaid Date of Payment by Cheque Assessment Years 1 GCM Capital Advisors Ltd 1,00,00,000/- 13.09.2013 2014-15 2 J P Tradecom Pvt Ltd 65,00,000/- 13.09.2013 Sub Total for AY 14....
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....roduced in the books of account of the appellant by way of cash on 19.10.2016, immediately after the application filed by the appellant has been admitted by the ITSC vide order u/s 245D(2C) dated 19.10.2016. The additional income admitted by the appellant in the settlement application has been allowed to be capitalised by the ITSC in the final order dated 26.02.2018 passed u/s 245D(4). Since the capitalisation has been permitted by the ITSC, the said additional income brought into the books of account by way of cash on 19.10.2016 is not liable to be subjected to tax once again. Since the cash of Rs. 3.36 crores so introduced in the books on 19.10.2016 has been deposited in the bank account during the demonetisation period, it has to be considered that the source of the cash deposits made in the bank account during the said period to the extent of Rs. 3.36 crores is satisfactorily explained. 28. In view of the aforesaid discussion, it is held that the addition made towards unexplained money u/s 69A in respect of cash deposits to the extent of Rs. 3.36 crores made in the bank account during the demonetisation period is unsustainable on facts. Hence, the AO is directed to delete the....
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....books of account and without giving any reasons in support of the said addition. The addition made in the said manner is considered to be unsustainable. At the same time, since the claim of the assessee that cash balance was available in the books of account to make the said cash deposits has not been verified by the AO for its factual correctness, the AO is directed to verify the cash balance as per the books of the appellant as on the date of making the cash deposits in the bank account during the demonetisation period and delete the addition to the extent of the cash balance available in the books, in excess of Rs. 3.36 crores which has already been considered separately earlier. The Grounds of appeal Nos.4.1 and 4.2 are accordingly partly allowed. 7. The Ld.DR, Shri D.Hema Bhupal, JCIT, submitted that the Ld.CIT(A) erred in deleting the addition of Rs. 3.36 Crs. made towards unexplained money u/s. 69A of the Act, in respect of cash deposits made into bank account during demonetization period without appreciating the fact that the additional income admitted in the settlement application filed before the Hon'ble ITSC is in respect of unsecured loans for AYs 2014-15 & 2015-16, wh....
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.... the year 2014, but the same has been used for temporary requirements of working capital and once the application filed by the assessee has been admitted by the Hon'ble ITSC, the assessee has introduced cash in the books of accounts of the assessee. Further, in the month of November, 2016, after announcement of demonetization, cash in hand available with the assessee, has been deposited into bank account. These facts have been explained to the Ld.CIT(A). The Ld.CIT(A) after considering relevant facts has rightly accepted the claim of the assessee and directed the AO to delete additions made by the AO towards cash deposits u/s. 69A of the Act. 9. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The AO made additions towards cash deposits into bank account during demonetization period amounting to Rs. 3.78 Crs. u/s. 69A of the Act, as unexplained money on the ground that the assessee could not explain source for cash deposits. According to the AO, although, the assessee explains source for cash deposits out of cash in hand available as on the date of demonetization, but fact remains that source for cash depos....
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....eed to pay taxes. Since, it has filed application before the Hon'ble ITSC, the assessee has decided to offer additional income of Rs. 3.36 Crs. for AYs 2014-15 & 2015-16 on account of undisclosed income generated from business activity. The Hon'ble ITSC has accepted application filed by the assessee on 09.09.2016, and order was passed on 19.10.2016 admitting the application filed by the assessee. On admission of the application, the assessee introduced cash of Rs. 3.36 Crs. in its books of accounts and said cash was deposited during demonetization period on 11.11.2016 and on 12.11.2016. The Hon'ble ITSC has passed the final order on 26.02.2018 and accepted additional income of Rs. 3.36 Crs. and also allowed capitalization of the said income for above two assessment years. From the above, it is undisputedly clear that the assessee was having cash in hand on account of unaccounted income generated from business for AYs 2014-15 & 2015-16 and said cash has been utilized for availing bogus loan entries from Kolkata based companies. It was further noticed that when the Department has noticed bogus entries of unsecured loan, the assessee has agreed to offer additional income of Rs. 3.36 C....