TaxTMI 
TaxTMI 
2025 (8) TMI 1115
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....sed the appeal filed by the Revenue. 6. The subject matter of the appeal before the ITAT was an order passed by the Commissioner of Income Tax dated 15.07.2022, pertaining to assessment year 2017-18. The brief facts are that the assessee respondent company is engaged in the business of real estate. For the assessment year 2017-18, it filed e-filed return of income on 15.10.2017 declaring income of Rs. 1,18,30,950/ -. Its case was picked up for complete scrutiny under CASS. Statutory notice(s) were issued/ served upon the assessee along with questionnaire which was duly responded to. 7. The learned Assessing Officer (AO) noticed that on 22.11.2016, in the post-demonetization period, the police intercepted two vehicles carrying cash amounting to Rs. 2,22,76,000/- which was belonging to M/s. Omaxe Ltd., the holding company of the assessee. The said cash was requisitioned under Section 132A of the Income Tax Act, 1961 (the Act) by the Income Tax Authority and a survey under Section 133A was also conducted at the office premises of M/s. Omaxe Ltd., wherein certain documents were impounded which contained noting of cash balances as on 8.11.2016, of various group companies belonging....
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....ssed. 13. The case of the Revenue before the ITAT was that the impounded documents seized from the office of the assessee's holding company, namely M/s. Omaxe Limited depicting that on 08.11.2016 the assessee had cash in hand of Rs. 3,87,270/- only and that no documentary evidence has been produced by the assessee in support of its claim that the impounded documents contained cash balance available at site offices maintained at the corporate headquarter for various exigencies. 14. In substance; it is the case of the Revenue that the impugned cash deposit has not been satisfactorily explained. The ITAT has from paragraph 9 onwards stated as under :- "9. We have given our careful thought to the rival submissions of the parties and perused the records. It is observed that the Ld. CIT(A) has looked into each ground on the basis of which the Ld. AO did not accept the explanation offered by the assessee before him. In para 5.1 of the appellate order the Ld. CIT(A) enumerated five reasons given by the Ld. AO. As regards the observation of the Ld. AO that cash withdrawals made by the assessee are not near the dates of cash deposit and if the assessee had withdrawn cash f....
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....61 - 26,75,000 - 58,79,084 2,87,39,477 September, 2016 2,87,39,477 - 23,54,000 15,06,000 8,87,910 2,86,99,567 October, 2016 2,86,99,567 - 2,10,000 32,55,000 - 2,23,918 3,19,40,649 November, 2016 3,19,40,649 - 8,00,000 - 2,80,00,000 43,25,083 4,15,566 December, 2016 4,15,566 - 7,50,000 - 3,94,966 7,70,600 January, 2017 7,70,600 - 5,50,000 - 2,11,735 11,08,865 February, 2017 11,08,865 - 8,00,000 - 4,20,846 14,88,019 March, 2017 14,88,019 - 10,50,000 - 10,03,432 15,34,587 - 1,94,90,000 32,55,000 3,07,62,112 1.71,01,371 9.1 In para 5.2.2 of his appellate order, the Ld. CIT(A) extracted the set of comparative chart furnished during assessment proceedings as under: - Month Opening cash in hand cash sales cash deposit in bank cash withdrawal from bank Closing cash in hand Apr-15 8639336 5000000 5900000 8653753 May-15 8653753 &....
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.... left to the business prudence of the assessee. However, the fact remains that high levels of cash balance have been shown in ITR filed by the appellant even prior to demonetization, as observed above. Further, the levels of cash withdrawals from bank accounts and cash deposits into bank accounts are also high for the two financial years under consideration. The cash withdrawal from bank accounts of the appellant was Rs. 4,37,25,200/- during F.Y. 2015-16 and the same was Rs. 1,94,90,000/-during F.Y. 2016-17. Similarly cash deposited into bank accounts was Rs. 83,00,115/- during F.Y. 2015-16 as compared to cash deposit of Rs. 3,07,62,112/- (normalized to Rs. 27,62,112 after adjusting for the forced deposit of Rs. 2,80,00,000 due to demonetization) during F.Y. 2016-17 which needs to be considered alongwith the high opening cash balance of Rs. 2,66,53,070/- as on 01.04.2016. Therefore, the trend of cash withdrawal and deposit was similar in both the years. Infact, substantial cash withdrawals as well as deposits into the bank accounts is very much a regular feature of the business of the appellant and hence there is nothing unusual in either the cash withdrawals or the cash depo....
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....bservation of the Ld. AO that the assessee has prepared cash books in such a way that nearby cash withdrawals can be shown as cash deposited during demonetization, the Ld. CIT(A) held it to be untenable by recording the following observation and findings: "5.2.6. ... In this regard it is a matter of fact that the bank withdrawals or deposits are reflected in the bank accounts statements as well as cash book and cannot be manipulated in any manner. The appellant has duly given the site cash books as well as main cash book whose total cash balance as on 08.11.2016 is Rs. 3,19,48,225/-. The said cash balance has mostly been built up by cash withdrawals from bank accounts, which are undisputed, and the opening cash company M/s. Omaxe Ltd. surrendered huge amount has been countered by the Ld. CIT(A) by observing thus: "5.2.8. ... The said observation is not rational, firstly since any disclosure made by the flagship company does not automatically translate into any acceptance of tax evasion by the appellant. Secondly, the surrender/disclosure made by the flagship company, M/s Omaxe Ltd, is on account of a totally different issue as evident from the statement of Sh. Roh....
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....s, has legal backing, to negate the observation made by AO. In this regard the following findings of CIT(A) may be highlighted. i. from the comparative charts for complete financial years 2015-16 and 2016-17, it is seen the appellant usually maintained a high cash balance in the books of accounts. ii. the opening cash balance of Rs. 86,39,336/- was in place on 01.04.2015 as is clear from the ITA and Audit Report for assessment year 2015-16 which period is much before the demonetization. iii. as per the chart FY 2016-17, the opening cash balance as on 01.04.2016 was Rs. 2,66,53,070/-, as per the ITR and Audit Report for the year 2016-17 which was filed on 12.10.2016 before demonetization and therefore, not a subject matter of manipulation. iv. the cash balance has been maintained at further higher levels for the remaining financial year up to the date of demonetization by making further major cash withdrawals of Rs. 84,24,500/- in September, 2016. v. the substantial cash withdrawals as well as deposits into the bank accounts are very much a regular feature of the business of the appellant. The assessee has low or negligible level of cash ....