TaxTMI 
TaxTMI 
2026 (5) TMI 990
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..../- made u/s. 69A r.w.s. 115BBE of the Income Tax Act on account of unexplained money being cash deposited in his bank account during the demonetization period, by holding that the same to be out of business receipts and cash-in-hand, not appreciating that no supporting details had been filed by the assessee during the assessment proceedings." 2) "The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal" 3. The relevant material facts, as culled out from the material on record, are as follows. The assessee is a closely held limited company and engaged in the business of manufacturing of cotton bales from raw cotton through ginning process and cotton yarn from cotton bales through spinning. It had e-filed its return of income (ITR) on 30.10.2017, declaring total income of Rs. 3,44,49,019/-, along with Audit Report in requisite form. Later on, the assessee company has e-filed revised ITR on 11.01.2019, without modifying its income declared in the Original ITR. The assessee's case was selected for complete scrutiny through Computer Aided Scrutiny Selection on the basis of original income tax return (ITR). Therefore, a digitally signe....
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....ish requisite details in respect of explanation of source of the cash. Till date nothing has been heard from you. Therefore, you are hereby show caused as to why the same should not be added to the total income for the year under assessment year u/s. 69A of the I.T. Act, 1961 being the unexplained cash." 5. However, assessing officer noted that except submitting a cash book on 26.12.2019, the assessee has not filed any explanation/narration to the entries recorded therein. Hence, assessing officer noted that it is clear that there is absolute non-cooperation on the part of the assessee in explaining the sources of the cash. Therefore, the issue was being dealt on merits. Perusal of the cash book revealed that assessee was keeping huge cash on hand and still withdrawing cash in small proportions from the bank. The assessing officer also noted that the assessee is regularly withdrawing cash despite having huge cash on hand. The purpose for which these withdrawals are made, is not explained. The most plausible inference that can be drawn is that, the assessee did not have physical cash, and therefore it had to withdraw cash to meet its requirements. Therefore, it is clear that the ....
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.... unexplained cash. Therefore, the cash withdrawal of one month was treated as explained cash. Therefore, the assessee is given benefit of Rs. 2,54,00,000/-which was withdrawn in the month of the October 2016. The remaining cash of Rs 9,75,50,000/- was treated by the assessing officer, as unexplained cash and added u/s. 69A r.w.s. 115BBE of the I.T. Act, 1961. 8. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the Ld. CIT(A) who has deleted the addition made by the assessing officer. The ld.CIT(A) noticed that assessing officer has not doubted purchase or sales or Gross profit or net profit as shown in audited annual accounts and in return of income. On perusal of paper book submitted by assessee, it is found that assessee has filed various submissions dated 20.11.2019, 20.12.2019, 25.12.2019, 26.12.2019 and 27.12.2019 on e-filing portal. It was observed by ld.CIT(A) that during the course of assessment proceedings, assessee has provided copy of cash book along with bank statements, vide letter dated 20.12.2019, which is not disputed by the assessing officer. On perusal of notice u/s. 142(1) of the Act issued in assessment proceed....
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.... cash is somebody else. Therefore, learned DR contended and that addition made by the assessing officer should be upheld. 11. The Ld. DR for the Revenue, also submitted that during the appellate proceedings, the Ld. CIT(A) has accepted the various additional evidences. The assessee has submitted a chart before the Ld. CIT(A), which was not available before the assessing officer, besides, assessee has submitted other additional evidences before the ld.CIT(A). Therefore, the assessee has submitted the additional evidences, hence, the matter may be restored back to the file of the assessing officer for fresh adjudication. 12. On the other hand, Ld. Counsel for the assessee submitted that the assessee is engaged in purchasing raw cotton from the farmers and the raw cotton (i.e. kapas) purchased from the farmers is further processed by the assessee. The books of accounts of the assessee are audited and during the assessment proceedings, the assessee has submitted various submissions on six occasions before the assessing officer and submitted the cash book, bank book, audited financial statement, the cash deposited in the previous year and the cash deposited in the subsequent year ....
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....efore us that assessee submitted additional evidences before the learned CIT(A) during the appellate proceedings. Therefore, matter may be remitted back to the file of the assessing officer for fresh adjudication, as it is violation of Rule 46A of the Income tax Rules. However, we note that whatever, the documents and evidences submitted before the assessing officer were also submitted before the Ld. CIT(A). The comparative chart of the cash deposit in three years is available in the cash book and bank book, which is already submitted before the assessing officer. Therefore, a comparative chart submitted by the assessee, before ld.CIT(A), which is prepared by the assessee, with the help of cash book, bank book is not treated as an additional evidence, because it is prepared with help of the Bank book and cashbook in easy to understand format, and since the Bank book and cash book were already before the assessing officer, therefore, such chart cannot be treated as an additional evidence. As all the figures of the said comparative chart submitted before the Ld. CIT(A) is available before the assessing officer, hence, there is no additional evidence submitted by the assessee, therefo....
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....he assessee has made the payment against the URD purchases approx. Rs. 5 Crore, during the assessment year under consideration and this fact had already been narrated by the Ld. CIT(A) in his order.We note that during the course of appellate proceedings, before ld.CIT(A), assessee has relied upon various submission filed on e-filing portal and contended that the assessing officer has passed assessment order hurriedly and his observation that assessee has not filed evidences as called for is incorrect. The assessee has referred to submissions during the course of assessment proceedings on 20.11.2019, 20.12.2019, 25.12.2019, 26.12.2019 and 27.12.2019 on e-filing portal along with the details as required by the assessing officer. With regards to claim of the assessing officer that assessee has not made any URD purchase in case, assessee has referred to submission dated 20.12.2019, which contained a summary of source of cash available and its utilization vide point No.34 wherein it is clear that assessee had made payments of Rs 4,98,21,831/- during the period from 01.04.2016 to 08.11.2016 and Rs. 1,52,22,199/- during the period from 31.12.2016 to 31.03.2017. The assessee has also claim....
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.... making addition of Rs 9,75,50,000/- out of aggregate cash deposited post demonetization for Rs 12,29,50,000/- in bank account. The assessing officer has not doubted purchase or sales or Gross profit or net profit as shown in audited annual accounts and in return of income. On perusal of paper book submitted by assessee, it is found that assessee has filed various submissions dated 20.11.2019, 20.12.2019, 25.12.2019, 26.12.2019 and 27.12.2019 on e-filing portal. It was observed that during the course of assessment proceedings, assessee has provided copy of cash book along with bank statements vide letter dated 20.12.2019 which is not disputed by the assessing officer. On perusal of notice u/s. 142(1) issued in assessment proceedings, it is found that the assessing officer has not issued any specific details regarding URD purchases in cash hence observation of the assessing officer that assessee has not made any URD purchase in cash even considering his peculiar business of cotton ginning is incorrect. On the contrary, the assessee had submitted complete cash book for year under consideration as well as earlier years from which it pointed out that URD purchases in cash is already ma....
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.... purchase and sale along with VAT return. However, the assessing officer has not asked for quantitative details in notice u/s. 142(1) of the Act hence it cannot be said that such details were not provided. Even otherwise, on perusal of assessment order, it is apparent that the assessing officer has accepted book result as shown by assessee. Had the assessing officer have any doubt regarding genuineness of such purchase or sale, he ought to have rejected books of account and estimated net profit/gross profit as the case may be.It is also relevant to refer extracts of show cause notice dated 20/12/2019 issued by the assessing officer. "Further, during the demonetization period, you had deposited cash of Rs. 12,29,50,000/- in the account held with State Bank of India - A/c No. 31559184504. In this regard, you have asked to furnish requisite details in respect of explanation of source of the cash. Till date, nothing has been heard from you. Therefore, you are hereby show caused as to why the same should not be added to the total income for the year under assessment u/s. 69A of the IT Act, 1961 being unexplained cash Your reply should to reach to this office within sti....
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.... 41081311 205857891 279938000 15130300 295068300 Purchase- URD (Cotton) 13638539 75802125 89440664 48099716 16944314 65044030 Bank Deposit 45827550 58251753 104079303 87141500 122976000 210117500 Factory Cons./ Labour Quarter 35000 3445 38445 11323265 0 11323265 Expense-Salary 5260526 4697161 9957687 5881381 878411 6759792 Misc. Expenses 296611 131595 428206 117259 48989 166248 Total 65058226 138886079 203944305 152563121 140847714 293410835 Closing Balance 100059939 2255171 2255171 129630050 3912636 3912636 The assessing officer himself has considered cash withdrawal of Rs. 2.54 Crores as explained sources for subsequent cash deposit in bank account during demonetization. On perusal of above referred chart it can be seen that assessee has made cash deposit of Rs. 4.81 Crores from April 2016 to October 2016 which is considered as explained by the assessing officer in assessment order. The nature of business, modus- operendi of the bu....
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....d available cash in bank account. 23. The ld.CIT(A) noticed that so far as observation of the assessing officer that the assessee was not having physical cash on hand and cash withdrawal might have been utilized somewhere and unaccounted cash was deposited in bank account, it is observed that observation of the assessing officer is without any evidences. The assessing officer has not made any independent inquiries regarding alleged utilization of available cash other than what has been explained by the assessee. It is relevant to refer to decision of the Hon'ble Ahmedabad Tribunal in case of Sudhirbhai Pravinkant Thaker Vs. ITO [2017] 88 taxmann.com 382 wherein it was held as under:- "Head Note: Section 68 of the Income-tax Act, 1961 Cash credit (Bank deposit) -Assessment year 2008-09-When assessee had demonstrated that he had withdrawn cash from bank and there was no finding by authorities below that this cash available with assessee was invested or utilized for any other purpose, it was not open to authority to make addition on basis that assessee failed to explain source of deposits [In favour of assessee] "4. We have heard the rival submissions....
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....ee had withdrawn amount of Rs. 9,10,000/-before the deposits made on various dates during the FY 2007-08. Therefore, the orders of the authorities below are set aside and the assessing officer is directed to delete the addition. Thus, ground raised in the assessee's appeal is allowed." 24. The ld.CIT(A) also relied to decision of the Hon'ble Ahmedabad ITAT in the case of Radhe Developers (India) Ltd in ITA No 237/AHD/2023 dated 16/11/2023 wherein it is held as under.- "10. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the cash deposited by the assessee was treated as unexplained income of the assessee by the assessing officer on the reasoning that the assessee failed to make satisfactory explanation regarding the sources of such cash deposit. The assessee during assessment as well appellate proceeding before the learned CIT(A) explained that the cash was deposited out of the opening cash balance and cash withdrawal made in the year under consideration. As such the assessee explained that the cash was withdrawn for the purpose of purchase of land, but the land deal did not materialize, ....
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....mation that the assessee has spent the cash withdrawal somewhere else towards the capital or revenue expenses. At this juncture, we also find pertinent to refer the order of this tribunal in case of Sudhirbhai Pravinkant Thaker vs. ITO reported in 88 taxmann.com 382, wherein similar facts and circumstances it was held as under: 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the judgements relied upon by the Id. counsel for the assessee. There is no dispute with regard to the fact that the assessee had deposited the cash of Rs. 11,27,800/- starting from 07/06/2007 to 31/02/2008. The cash withdrawn from the bank was of Rs. 4,20,000/- on 01/07/2006 Rs. 4,90,000/- on 06/07/2006 Rs. 83,000/- on 26/06/2007 Rs. 51,000/- on 20/11/2007 Rs. 1,28,000/- on 14/12/2007 and Rs. 2,00,000/- on 07/01/2008, However, the cash was deposited on 07/06/2007 of Rs. 2 lacs, on 08/06/2007 of Rs 2 lacs, on 11/06/2007 of Rs. 1,50,000/-, on 12/06/2007 of Rs. 2 lacs, on 13/06/2007 of Rs. 2,25,000/-. The total deposits till 13/06/2007 was of Rs. 9,75,000/- and the amount withdrawn till 06/07/2006 was of Rs. ....
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....orities below have not disputed the fact that the assessee had withdrawn amount of Rs. 9,10,000/- before the deposits made on various dates during the FY 2007-08. Therefore, the orders of the authorities below are set aside and the assessing officer is directed to delete the addition. Thus, ground raised in the assessee's appeal is allowed. 10.5 We also find pertinent to refer the order of Hon'ble Gujarat High Court in the case of Commissioner of Income-tax v. Shailesh Rasiklal Mehta reported in 176 taxman 270 wherein similar facts and circumstances it was held as under: 8. In relation to the first question it is an admitted fact that there was no evidence to disbelieve or disprove the fact that sufficient cash was available in the cash book on the two dates for making the deposits and there was no reason found by the Tribunal for disbelieving the books of account maintained by the assessee as narrated in paragraph No. 31.1 of the impugned order. 9. These are pure findings of fact recorded after appreciation of evidence and do not give rise to any question of law, much less a substantial question of law. 10.6 In view of the above, there c....
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....ders vide ITA No. 908/AHD/2019 dated 27 April, 2022 wherein on similar facts addition made by Assessing Officer u/s. 69A was deleted. It is relevant to refer to decision of the Hon'ble Calcutta High Court in the case of CIT Vs Associated Transport Pvt Limited 212 ITR 417 wherein it is held as under.- "Section 69A of the Income-tax Act, 1961 Unexplained moneys Assessment year 1979-80-Assessing Officer treated high denomination notes worth Rs. 81,000 as unexplained money, disbelieving assessee's explanation as to how he came into possession of same and added same in income of assessee and also imposed penalty Tribunal found that assessee had sufficient cash in hand and in books of account of assessee cash balance was usually more than Rs. 81,000- It, deleted addition and cancelled penalty Whether finding of Tribunal being on basis of appreciation of facts against which no question of perversity had been raised, Tribunal was right in deleting addition and consequent penalty - Held, yes" 6.14 So far as cash deposited during demonetization is concerned, on similar facts, the Hon'ble Delhi ITAT in case of Om Parkash Nahar vs Income-tax Officer vide IT Appeal....
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....amba Contractors And Builders Ltd. in ITA No 204/Del/2023 dated 23.04.2024 has held as under:- "7. We have heard both the parties and perused the material available on record. In the present case on 22.11.2016 the police intercepted two vehicles carrying cash amounting to Rs. 2,22,76,000/- which belongs to M/s Omaxe Limited. Consequently, a survey was conducted on 22.11.2016 at office of M/s Omaxe Limited at (1) Kalkaji, New Delhi, (2) Shop No-19B, 1st Floor, Omaxe Celebration Mall, Sector-48, Gurugaon and (3) Omaxe Residency 2 Gomti Nagar Extension, Amar Shaheed Path, Lucknow. During the course of survey at registered office of M/s Omaxe Limited, the cash in hand as on 08.11.2016 and cash deposited during the demonetization were impounded. 8. During the assessment proceedings, a show-cause notice dated 16.12.2019 was issued to the Assessee to explain the closing cash balance as per pages impounded and to explain the source of cash deposit. In response, assessee submitted that the impounded pages contain cash balances of Rs. 1,11,75,337/- as on 08.11.2016 of various site office of the assessee but, does not contain cash balance as on 08.11.2016 of New Imprest-Real....
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.... its bank account are matter of records and not subject to manipulation. Ld CIT(A) also held that wisdom behind maintaining higher cash balance cannot be subject matter of finger pointing by the assessing officer and is to be left to the business prudence of the assessee. 11. Ld CIT(A) as regards allegation of 'cash book is prepared in such a way that nearby cash withdrawal can be shown as cash deposit' held that cash withdrawals or deposit are reflected in the bank statements as well as cash book and same cannot be manipulated. Ld. CIT(A) has also held that Ld. assessing officer has ignored the main cash book and considered only the site cash books for arriving at cash balance as on 08.11.2016, whereas the existence of main cash book cannot be denied since most of the cash deposits or withdrawals have been routed through main cash book. Therefore, the observation of Ld. assessing officer that cash book is prepared in such a way that nearby cash withdrawal can be shown as cash deposit is not tenable. 12. As regards allegation of Ld. assessing officer on comparing charts of FY 2015-16 and FY 2016-17, there was no match of the cash deposits with the correspo....
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....ioned and in support of said contention the assessee submitted summary of all the cash books which shown the cash balance as on 08.11.2016. 17. It is also pertinent to notice that the books of the assessee are audited, Ld assessing officer has not pointed any defect in the cash book of the assessee nor he rejected its book of account and only on the basis of assumption that the cash withdrawal have been utilized without corroborating the same. The Ld. CIT(A) has considered all the documents produced by the assessee and proceeded to delete the addition after countering each and every allegation made by the A.O. by appreciating material available on record. Further in the case of group companies involving identical issue arising out of same impounded documents and survey of same flagship company, the Co-ordinate Bench of the Tribunal decided the issue in the favor of the Assessee thereon, which are as under: • The DCIT, Central Circle 29, New Delhi vs. M/s Atulah Contractors and Construction Private Limited (ITA No. 2438/DEL/2022, J.K. 2017-18) • The DCIT, Central Circle 29, New Delhi vs. M/s Bhanu Infrabuild Private Limited (ITA No. 2433/DEL/2022, ....