TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 208
X X X X Extracts X X X X
X X X X Extracts X X X X
.... its return of income for A.Y. 2016-17 on 31.03.2017, declaring total income of Rs. 43,320/-, which was processed under section 143(1) of the Act. The case was thereafter selected for limited scrutiny under Computer Assisted Scrutiny Selection (CASS), the specific reason being that "cash deposit during demonetization period (9th November to 30th December 2016) is reported as per SFT reporting, no return was filed for the preceding assessment year and current year return filed after 07.11.2016". 2.2 In the course of assessment proceedings, statutory notices were issued under sections 143(2) and 142(1) of the Act. The Assessing Officer has noted that the first notice under section 143(2) was issued through ITBA Module on 19.09.2017. Thereafter, notices under section 142(1) along with questionnaire were issued on 18.07.2018, 08.10.2018, 27.10.2018, and 15.11.2018, requiring the assessee to furnish explanation regarding cash deposits aggregating to Rs. 25,54,242/- made in two bank accounts, namely: Bank Account No. Amount State Bank of India, Navrangpura Branch 00000035352519594 Rs. 23,62,242/- Corporation Bank, Navrangpura Branch 33501601000433 Rs. 1,92,000/- Total - Rs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re amount of cash advances had been duly offered to tax on mercantile basis in the year of rendering service. It was submitted that the assessee maintains books of account on mercantile system, and the advances received in cash during FY 2015-16 (A.Y. 2016-17) were duly credited to sales in FY 2016-17 (A.Y. 2017-18), thereby negating any inference of concealment or suppression. 3.4 The Ld. CIT(A), after considering the submissions of the assessee, remand report and rejoinder, accepted that the assessee was engaged in the business of tour operation, and had declared receipts of Rs. 5,41,474/- for A.Y. 2016-17. However, the CIT(A) noted a contradiction in the assessee's stand who on the one hand claiming total turnover of Rs. 5,41,474/-, and on the other, seeking to explain cash deposits of Rs. 25,54,242/- as advance receipts for future tours. It was held that the assessee had not brought sufficient evidence on record to establish the precise reconciliation of how and when the advances were adjusted, and whether these were offered to tax in a time-linked manner. Accordingly, taking a liberal view, the CIT(A) accepted cash deposits to the extent of Rs. 5,41,474/- as forming part of d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nces and taxable receipts in F.Y. 2016-17 (PB Pages 39-40) - Profit & Loss Account for F.Y. 2016-17 showing service income of Rs. 25,47,401/- (PB Page 53) - Partners' capital accounts, ITRs, and confirmations (PB Pages 78-90) - Bank book evidencing deposit trail (PB Pages 44-52). 4.3 It was further contended that in the remand proceedings, the Ld. Assessing Officer had independently examined 25 customers (out of 75) by issuing notices under section 133(6) of the Act, and in response, 13 customers furnished confirmations of having made cash payments to the assessee firm for advance booking of tours. None of the parties denied the transactions, and the confirmations included necessary particulars such as amount paid, purpose of payment, and PAN details. Two notices returned unserved and ten parties did not respond, but no adverse inference can be drawn in absence of any contrary material. 4.4 The Ld. AR further submitted that the advances so received from customers were duly reflected as liabilities in the books of the assessee at the close of the financial year 2015-16 and were subsequently recognised as revenue in the Profit and Loss Account for F.Y. 2016-17 when the tours ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unt of unexplained cash deposits, as the assessment was completed ex-parte under section 144 of the Act. Before the CIT(A), the assessee filed an application under Rule 46A along with detailed evidences including bank book, receipt registers, confirmations from customers, and financial statements of subsequent year, which were forwarded to the Assessing Officer for remand report. The Assessing Officer, in the remand proceedings, issued notices under section 133(6) to 25 customers (out of 75) and obtained confirmations from 13 parties. The CIT(A), after considering the additional evidences and remand report, granted partial relief by reducing Rs. 5,41,474/-, being the turnover declared by the assessee in its return of income under section 44AD for A.Y. 2016-17 and confirmed the balance addition of Rs. 20,12,768/- for want of sufficient evidence of adjustment in the subsequent year. 6.2 On careful scrutiny of the order of the CIT(A) and the remand report, we observe that the crucial aspect regarding verification of the assessee's contention that the advances received during F.Y. 2015-16 were accounted as revenue in F.Y. 2016-17 has not been specifically verified or addressed by the ....