TaxTMI 
TaxTMI 
2025 (12) TMI 284
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....like to substantiate further that the erstwhile counsel who represented the matter before CIT(A) only prepared the submission, uploaded it on the portal and did not follow up for the order since the order was pronounced much after the gap of 760 days after the submissions were uploaded at the portal which accounts for almost two years and one month. 2. During the first appeal proceedings the written submissions along with paper book were uploaded on 05.09.2021 and order was pronounced/uploaded on 05.10.2023 - a gap of 760 days after uploading of written submissions. 3. The Appellant had wind up his business, due to financially not viable and family disputes and was merely getting the return filed through an accountant for being compliant who was technologically challenged to figure out the complexities of online proceedings vis-à-vis online submission, adjournment and order under the tabs 'for your action' and 'for your information'. 4. It is further submitted that the Appellant has been a compliant tax payer since its inception in 2013. Also, it is further submitted that none of the lower proceedings specifically the assessment pro....
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.... down the plea and to shut the doors against him. If the explanation does not smack of mala fide or it is not put forth as a part of dilatory strategy, the Courts must show utmost consideration to such litigant. As observed by the Hon'ble Supreme Court in the case of N. Balakrishnan (supra) the length of delay is immaterial. It is the acceptability of the explanation. That is the only criteria before condoning the delay. Therefore, taking into consideration the overall circumstances we condone the delay in filing the appeal and proceed to decide it on merit." (Emphasis supplied) The Hon'ble Amritsar ITAT in Ram Lal & Sons Vs. Income Tax Officer in ITA No. 390/Asr/2005 reported at (2006) 99 TTJ (Asr) 63 held that assessee cannot be held responsible for delay occurred due to lapse on part of assessee's advocate. "5 ..... Therefore, the submission of the assessee that delay occurred due to lapse on the part of their advocate, appears to be correct. The bona fide of the assessee is further established as the advocate representing the case was changed. Under these circumstances, the observations made by the learned CIT(A) that assessee might have asked t....
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...., there was a reasonable cause for the delay in filing the appeal. Therefore, we condone the delay in filing the appeal before the Tribunal. 5. Brief facts of the case are, assessee filed its return of income on 05.10.2017 declaring total income of Rs. 3,49,095/- which was processed under section 143(1) of the Income-tax Act, 1961 (for short 'the Act'). The case was selected for scrutiny through CASS. Notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee. In response, ld. AR submitted relevant information from time to time. The AO observed that as per the information available with the Department, the assessee has deposited cash of Rs. 75,00,000/- in its bank account maintained with HDFC Bank. However, inspite of repeated directions, no satisfactory reply with nature and source of cash deposited as well as justification with regard to unusual drastically rise in the cash deposit was received from the assessee. He further observed that during the same period in FY 2015-16, cash deposit was made by the assessee of Rs. 22,38,000/-. Based on the above information, the AO proceeded to make the difference of cash deposit made by the assessee during th....
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.... is in appeal before us raising following grounds of appeal :- "1. That the Commissioner of Income Tax (Appeal) (LD. CIT(A)) has erred in law and on facts by rejecting the appeal of the appellant purely on Conjectures and surmises, by erroneously citing non-discharge of burden by the appellant. 2. That the impugned addition of Rs. 52,62,000 made by the AO and upheld by Ld. CIT(A) is in gross violation of the factual matrix of the case of the appellant vis-à-vis payment made to creditors leading to reduction in Creditors and capital over the years from the stressed sale made before demonetization. 3. That the Ld. CIT(A) has erroneously alleged that the appellant has non- submitted the complete books of accounts, when in fact, exhaustive General ground documents were submitted as requisitioned and books of accounts specifically were never requisitioned either during assessment or first review vide statutory notices issued during the pendency of both the proceedings. 4. That the action of the Ld. CIT(A) in confirming the impugned addition made by the AO has erred in recognizing that the AO has made the impugned addition solely on whims and fa....
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....l cash deposit in Bank from 09.11.2016 to 31.12.2016 (demonetization period) Rs. 75,00,000 It is submitted that the Learned Assessing Officer proceeded to make a net addition of Rs. 52,62,000/-, having accepted only Rs. 22,38,000/- of the total Rs. 75,00,000/- deposited by the Appellant during Assessment Year 2017-18, and that this adjustment was based solely on surmise and conjecture, in complete disregard of the explanations and evidence furnished by the Appellant. 7.4. That during the assessment proceedings, the Appellant had duly submitted an exhaustive list of documents as already mentioned above, and re- appended to the Paper Book submitted before this Hon'ble Bench as well (from Pages 1 - 71). The same proves the genuineness of the cash sales made during the A.Y. 2017-18 and none of these evidences stand discussed or rejected by the Ld. A.O. at the time of passing the impugned order. Furthermore, as also evident from the documents submitted during the assessment, the source of the cash deposited during the demonetization period was entirely from the cash sales and cash in hand available in the books of accounts. Furthermore, as also evident from the ....
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....ture, without any real consideration of the Appellant's substantive evidence and submissions. Now in this respect it is further submitted that: * No enquiry was conducted by the Ld. A.O. under Sec.142(2) of the Act to substantiate the finding and allegation that the source of cash deposited in the bank by the Appellant was ingenuine: 8.4 That the Ld. AO has made the entire impugned addition merely on the basis of surmises and conjectures without conducting any specific enquiry whatsoever in this regard to substantiate his findings and alleging that the money deposited into the bank account was out of bogus sale while making the impugned addition u/s 69A r.w.s 115BBE of the Act. Furthermore, it is pertinent to note that the Ld. A.O., in making the addition, has not provided any specific rationale nor has he demonstrated any reasonableness in evaluating the adequacy of the explanation and supporting documents regarding the disputed cash deposit. The deposit was necessitated by the demonetization announcement, which rendered currency notes of rupees five hundred and one thousand to become invalid as legal tender, thus requiring their deposit into a bank account. ....
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....neither the books of accounts were challenged nor the cash sales made during the year were rejected. Rather the cash deposited (arising from the cash sales and the cash in hand) during the demonetization period - that has been added back. The Appellant was not asked either during the assessment nor even during appellate proceeding for producing books of accounts. 16. If these were the materials on record which would lead to the inference that the appellant might be expected to have possessed as part of its cash balance at least Rs. 1,50,000 in the shape of high denomination notes on January 12, 1946, when the Ordinance was promulgated_was there any material on record which would legitimately lead the Tribunal to come to the conclusion that the nature of the source from which the appellant derived the remaining 141 high denomination notes of Rs. 1,000 each remained unexplained to its satisfaction. If the entries in the books of account in regard to the balance in Rokar and the balance in Almirah were held to be genuine, logically enough there was no escape from the conclusion that the appellant had offered reasonable explanation as to the source of the 291 high denomination notes....
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....nation notes, there was no basis for the conclusion that the appellant had satisfactorily explained the possession of Rs. 1,50,000 in the high denomination notes of Rs. 1.000 each leaving the possession of the balance of 141 high denomination notes of Rs. 1.000 each unexplained. Either the Tribunal did not apply its mind to the situation or it arrived at the conclusion it did merely by applying the rule of thumb in which event the finding of fact reached by it was such as could not reasonably be entertained or the facts found were such as no person acting judicially and properly instructed as to the relevant law could have found or the Tribunal in arriving at its findings was influenced by irrelevant considerations or indulged in conjectures, surmises or suspicions in which event also its finding could not be sustained. The lower authorities in the present case have accepted the cash sales, which was duly declared in the books of accounts by the Appellant. However, the cash deposited by the Appellant in his bank account emanating out of such sales has been added back. The said addition is made only on the basis of surmises and conjectures and no enquiry has been conducted by the....
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.... (v) ITAT, Delhi Bench in ITO Karnal vs. JK Wood India Pvt. Ltd., ITA No. 1550/Del/2020; (vi) ITA, Delhi Bench in Harisons Diamond Pvt. Ltd. vs. ACIT, Delhi, ITA No. 1426/Del/2021; (vii) ITAT, Bangalore Bench in Anantpur Kalpana vs. ITO in ITA No. 541/Bang/2021; 8.14 It is submitted that the Appellant's sole source of income is its fabric- trading business. Confronted with cut-throat competition in the imported fabrics segment and the attendant customs formalities, the Appellant in this A.Y. elected to source exclusively from domestic suppliers. This shift produced enhanced gross profit margins, owing to the elimination of direct trading or customs-related expenses that had been incurred in the previous years.(See the Audit Profit & Loss Account for the year ended March 31.2017, 2016 and 2015 at Pgs.2, 8 and 13 of the PB 1. respectively). The Ld. A.O. has previously accepted cash deposits of Rs. 22,38,000 in the immediately preceding assessment year, yet in the current assessment year 2017-18 he has disallowed the remaining Rs. 52,62,000/- treating it as "unexplained" despite the identical transactional pattern which was based domestically now due to....
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....ns as substandard or as mere afterthoughts, effectively masking their own failure to conduct a proper enquiry. 8.17 The Ld. A.O. has therefore by his action of choosing to accept the part of cash sales as legitimate and rejecting the balance part is blowing hot and cold at the same time which invalid in the eyes of law as per the decision of Radhasaomi Satsang v Commissioner of Income Tax [1992] 60 Taxman 248 (SC) wherein it was held that without any change in facts, no change in opinion can be made. A review of Table 3 shows the department has annually accepted all of the Appellant's purchases without question. Only in the year under review (A.Y. 2017-18) were the bank deposits from sales of those purchases singled out for scrutiny, resulting in an unwarranted addition to the Appellant's income despite no queries ever having been raised during the previous years, about the underlying purchases, the corresponding sales or the customs duties paid thereon. * The Learned CIT(A) erred in dismissing the Appellant's appeal by concluding that books are incorrect on surmises and conjectures and not proceeding to reject them and making addition on estimate basi....
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.... over-the-counter cash transactions during the festival season starting October 2016. It is respectfully submitted that the Ld. A.O. and the Ld.CIT(A) has therefore erred in confirming the addition of ?52,62,000, flagrantly disregarding the core facts of the Appellant's case - namely, that the cash generated from the impugned sales was applied directly to discharge trade creditors, as evidenced by the substantial reduction in outstanding payables during the year under review as visible vide the table below. Consequently, this urgent strategy led to a significant reduction in debt liability by Rs. 1,02,73,252 during F.Y 2016-2017. This was achieved as creditors were promptly repaid immediately following the sale of stock. See: TABLE 5 Sr No. Particulars Opening value as on 01.04.2016 Addition/ Purchase during the year Closing value as on 31.03.2017 Difference T. Uniexcel Polychem 86,12,054 15,63,054 70,49,000 2. Uniclear Logistics 32,18,252 32,18,252 3. Him Logistics Pvt Ltd 6000 6000 4. Shaoxing County Honest Imp. & Exp. Co. Ltd 10,41,117.98 10,41,....
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.....20 In rebuttal to the above, it is being submitted that books of accounts have never been sought by the CIT(A). Copy of the screenshot of the Appellate proceedings is reproduced below: 8.21 It is also submitted that a perusal of the statutory notices issued in the course of the Assessment Proceedings (see PB II, pp. 1-22) make it evident that the Ld. A.O. never required the production of the Appellant's complete books of account, underscoring the absence of any genuine inquiry into the Appellant's records. It is further submitted that the Ld. CIT(A) likewise made no request for the production of the Appellant's books of account, yet upheld the impugned addition in a cursory manner-effectively rubber-stamping the AO's conclusion without any independent scrutiny. A screenshot of the first- appeal portal and the notices issued during those proceedings are annexed at Pages 28-31 and 32-36 of PB II for the Bench's reference. 8.22 In furtherance to the above, the Appellant lastly submits that the Ld. A.O. and the Ld.CIT(A) have grossly erred in making/sustaining the impugned addition without first rejecting the duly audited books of account under Se....
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....s Supplied] Furthermore, in the case of CIT Karnal vs. Om Overseas, [2008] 173 Taxman 185 (Punjab & Haryana) the High Court has overturned any rejection of the books, bereft of justification and pinpointing the deficiencies in the audited books of accounts. See: "4. Aggrieved against the said order, the assessee filed an appeal before the Commissioner of Income-tax (Appeals), Karnal. The appeal filed by the assessee was partly allowed by the CIT(A), Karnal vide his order dated 12-8-2004 and the addition of Rs. 20,83,752 made by the Assessing Officer was deleted. While allowing the said deletion the CIT (Appeals), Karnal, observed as under :- "The matter has been considered. It is seen that the addition has been made by the Assessing Officer without pointing out any specific defect in the books of account. The Assessing Officer has rejected the books of account only on the ground that the appellant has not been able to keep records of raw material consumed in respect of each and every item produced by the appellant. The Assessing Officer has rejected without any justification the explanation of the appellant that consumption of raw material for each of the....
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....ubmitted that, following A.Y. 2017-18, the Appellant discontinued the clothing business due to internal disputes involving his sons and the Karta, followed by the ill health of the Karta in the year 2019. This is corroborated by the fact that all subsequent returns filed in the Appellant's name show no business activity. In view of the foregoing-and having regard to both jurisdictional and substantive infirmities in the impugned additions-the balance of convenience decisively favors the Appellant. Accordingly, it is most respectfully prayed that the Bench delete the additions made by the Learned AO and upheld by the Learned CIT(A)." 9. On the other hand, ld. DR of the Revenue brought to our notice page 7 of the first appellate order and submitted that the cash deposit made by the assessee during the current financial year is very abnormal as observed by ld. CIT(A) i.e. to the extent of 80.82% compared to previous year of only 2.52%. Therefore, he submitted that he relies on the detailed findings of the lower authorities for making the above addition of cash deposits. 10. Considered the rival submissions and material available on record. We observe that the AO has....
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....assessee has devised distress sale programme during the year and achieved sales. Since assessee has sold mostly on cash sales during the year, there is a possibility that assessee had cash at his disposal during the demonetization period and accordingly deposited the above cash. Further we observe that AO has observed that there is a cash deposit during the year and applied unjustified way of giving credit of cash deposit made by the assessee during the previous year without proper justification or verification of the nature of business. During the previous financial year, assessee has achieved Rs. 8.8 crores of turnover and deposited Rs. 22,38,000/- whereas in the current financial year assessee has achieved Rs. 96,51,000/- turnover only and made the cash deposit of Rs. 78,00,000/-. There is a complete shift in the pattern of sales compared to previous financial year and AO has proceeded to give the credit of the cash deposit of previous year without proper application of mind compared to the nature of transactions for the year under consideration. Even the ld. CIT(A) ignored the above facts. 12. With regard to issues raised by the assessee relating to no enquiry conducted by t....