TaxTMI 
TaxTMI 
2026 (1) TMI 913
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.... to tax audit report. (c) Custom duty paid as shown in the ITR is less than the Duty paid as per Export Import Data. 3. Accordingly, notices under section 143(2) and 142(1) of the Income-tax Act, 1961 (for short 'the Act') were issued and served on the assessee through ITBA Portal. The case of the assessee was transferred from Circle 3(1), Chandigarh to Circle 3(2), Delhi vide letter dated 04.12.2019. 4. The assessee provides Energy Metering Solutions to the State Electricity Boards with its products range of ISI Marked High Precision Electromechanical & Electronic Energy Meters. It is also an approved supplier of single phase and three phase static meters to Assam State Electricity Board for market sale. During assessment proceedings, the AO observed that assessee had deposited cash of Rs. 53 lakhs during demonetization period i.e. from 09.11.2016 to 31.12.2016. The AO issued notice u/s 142(1) of the Act for explanation and supporting documents for the cash deposit as per the format given at page 2 to 8 of the assessment order. In response, assessee submitted vide its letter dated 17.12.2019 that it had withdrawn the cash from his bank account for disbursing salary ....
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.... Natwar Goyal 14,00,000/- 6. Natwar Goyal & Sons (HUF) 4,50,000/- 7. Nikhil Goel 23,00,000/- 8. Nikhil Goel & Sons (HUF) 8,50,000/- 9. Rukmani Devi 1,70,00,000/- 10. Shakuntla Devi 31,50,000/- 11. Shanti Sarup Jindal 46,50,000/- 12. Yoginder Mohan Jindal 60,00,000/- Total 5,79,50,000/- 6. The AO analyzed the details submitted by the assessee which includes ITRs of the lenders. Based on the income declared in the ITRs, the AO observed that assessee has not proved the creditworthiness of the lenders, viz., Fortune Metals Ltd., Nikhil Goel, Rukmani Devi, Shakuntla Devi and Shanti Sarup Jindal. After analyzing the details submitted by the assessee relating to above 5 lenders and considering the reply of the assessee dated 26.12.2019, he observed that assessee has provided only acknowledgement of ITR and bank statement and no other details were provided like confirmations and loan agreements etc. He observed that the onus was on the assessee to offer an explanation where a sum credited in the books of account and also burden of the identity of source lies on the assessee and required to prove the genuineness of....
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....e observed that 7 parties to whom notice u/s 133(6) of the Act were issued, in the details, PAN numbers were wrongly mentioned by the assessee company for four suppliers, the details are reproduced at page 34 of the assessment order. Since the assessee could not furnish the confirmation from the above said parties, not submitted the invoices/ bills during assessment proceedings, also the PAN details provided are wrongly furnished, accordingly he proceeded to disallow the expenditure claimed by the assessee u/s 37(1) of the Act to the extent of Rs. 7,62,75,655/-. 10. Aggrieved with the above order, assessee preferred an appeal before the NFAC, Delhi and filed grounds of appeal, additional evidences, detailed submissions which are reproduced by the ld. CIT(A) in the impugned order. The matter was remanded to the AO and received the remand report. Assessee also filed rejoinder to the remand report. After considering the assessment order, remand report and rejoinder to the remand report, ld. CIT(A) deleted the additions made by the AO with regard to cash credit of Rs. 4.71 crores from 5 lenders and he has discussed each cash credit from lenders as under :- (i) FORTUNE METAL....
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....he appellant. For these reasons, the loan credit of Shri Nikhil Goel Rs. 23,00,000 assessed as unexplained credit u/s 68 is directed to be deleted." (iii) SMT. RUKMANI DEVI ld. CIT(A) deleted the addition by observing as under :- "I have gone through the remand report of the AO and the comprehensive rejoinder of the appellant already reproduced above while considering the cash credit of Rs. 2 crores from M/s Fortune Metals Ltd. The remand report of the AO is repetitive with no additional reasons brought out on record with regard to this creditor or other loan creditors. The reason given by the AO that "the contention of the assessee (of having availed loans from the creditors) cannot be accepted as the assessee has failed to prove why the lender has chosen to give loan to assessee company instead of deposit in any Bank" and " there are no evidence on record, which shows that the assessee was prevented from' furnishing these documents before the AO during the assessment proceedings" cannot be considered to be good and adequate reasons to disbelieve the credits and the appellant has to be taken as having proved the credit in accordance with the....
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....ecord, which shows that the assessee was prevented from furnishing these documents before the AO during the assessment proceedings" cannot be considered to be good and adequate reasons to disbelieve the credits and the appellant has to be taken as having proved the credit in accordance with the requirements of law, in the absence of the AO having not brought on record any other material t~ disprove the assertions of the appellant. For these reasons, the loan credit of Smt. Shanti Sarup : Rs. 46,50,000 assessed as unexplained credit u/s 68 is directed to be deleted." 11. Since the ld. CIT(A) deleted the cash credit from the above said parties, he also deleted the relevant interest disallowance made by the AO. 12. With regard to additions made by the AO u/s 41(1) of the Act, ld. CIT(A), after considering the detailed submissions, remand report and rejoinder to the remand report, deleted the addition by observing as under:- " The AO himself has admitted that some of the creditors have been paid off even though for reasons best known did not quantify. The remand report in too many words did not support the impugned addition. On the contrary, the Appellant has pr....
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....as sought to be explained with reference to the cash withdrawal of Rs. 55 lakhs in October, 2016. The AO had pointed out that taking into account the pattern of cash withdrawals and the disbursement of the same. in the earlier months and in the last quarter of the relevant period post demonetisation, the claim of the appellant that the cash withdrawn was not applied for the intended purposes as in earlier months (principally salaries and wages) and therefore was the source of deposit is not acceptable. Per contra, the appellant had claimed that during the period of October to December 2016, the expenditures were paid off in cheques. It is strange that the appellant had once again reverted to the old procedure of cash disbursements in the last quarter after setting forth a procedure of cheque payments. The claim that the payments were made in cheques by way of salary and wages using multiple instruments were not made out by the appellant. Equally, the AO had brought on record the necessary evidence to prove that the appellant's claim of unspent cash withdrawals as source for the impugned deposit is not probable. The said inference sta....
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....he Hon'ble Court has held that application under the rule 46A must be made for admission of additional evidences with reasons showing the purpose of the addition al evidences and also reasons for not producing it earlier." 16. At the time of hearing, ld. AR of the assessee submitted that the assessee had deposited a sum of Rs. 53,00,000/- in bank during the demonetization period. The AO put the Assessee to question as to why the sum so deposited into the bank should not be added as an unexplained credit u/s. 68 of the Act. The Assessee answered by saying that it had withdrawn cash in the month of October 2016 for payment of salaries and wages which sum was retained by the Company and instead such salaries and wages were disbursed through cheques. On the onset of demonetization the said amount was lodged back into the bank. The details with regard thereto are to be found in the words of the AO on pages 13 to 16 of the impugned order. When the Assessee took up this issue before the Ld. NFAC the addition as made by the AO was confirmed by the NFAC with the observation that the inferences drawn by the AO stood to reason and so did not merit any interference. The findings of the ....
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....ithdrawn the cash, however not utilized the above said cash during the demonetization period. In this regard, it was submitted before us that assessee has withdrawn cash of Rs. 55 lakhs during October, however unutilized cash was redeposited during demonetization period. It was submitted before the ld. CIT(A) that assessee has incurred the expenditure through cheque payments. Ld. CIT(A) observed that assessee has reverted back to the old system of cash withdrawal and incurred expenditure out of cash. Since the assessee could not explain through evidences to prove that unspent cash withdrawal as source for impugned addition is not probable. He accordingly dismissed the claim of the assessee. From the record, we observe that assessee has deposited SBN Notes during demonetization period in one-go. We observe that assessee has withdrawn cash in the month of October, 2016 and the same cash was not disbursed or utilized for making salary payment or incurring any expenditure. Considering the fact that the above cash withdrawn by the assessee are in SBN, therefore, assessee has redeposited the cash during demonetization period and it is not the case of the Revenue that assessee has not inc....
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.... and order of the Hon'ble Allahabad High Court in Bimal Kumar Anant Kumar vs. CIT (2007) 288 ITR 278, the application under Rule 46A had to be made for admission of additional evidence with reasons stating the purpose of filing additional evidence and also the reasons for not doing so earlier. We observe that ld. CIT(A) has dealt with this issue and recorded its conclusion on page 95 of the impugned order. We further observe that the additional evidence which was submitted by the assessee was necessitated by the fact that sufficient and adequate opportunity was not provided by the AO for producing the same before him and notice for so doing was given to the assessee only on 28.12.2019, the assessment itself was completed on 30.12.2019. Resultantly, we observe that the assessee was not given sufficient opportunity for filing the details and the case is thus covered by clauses (b) and (c) of sub-rule 1 of Rule 46A. Further we observe that the objection to the admission of additional evidence has been taken despite the fact that the AO has been confronted with that material and in compliance to the directives of the ld. CIT(A), the AO has submitted a remand report too. In such circums....