TaxTMI 
TaxTMI 
2025 (3) TMI 1755
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....the returned income uls 69A of the I.T. Act, 1961, when, in face of fresh evidence produced by the assessee during appellate proceedings, the AO was not given reasonable opportunity to examine the said evidence or produce any evidence or documents or any witness in rebuttal of the additional evidence produced by the appellant as per rule 46A(3) of the I.T. Rule, 1962. b) Whether the Ld. CIT(Appeals) was justified on the facts of the case and in law, in directing the AO to delete the entire addition made on account of cash transaction of Rs. 6,84,68,020/- with Shri Gurubasavaj Urban Credit Sauharda Co-op Ltd. treated as undisclosed income and added the same to the returned income uls 69A of the I.T. Act, 1961, when book of accounts of assessee are thoroughly audited by the CA and in the audit accounts there is no mentioned about the bank account with Shri Gurubasavara Urban Credit Souharda Co-op Ltd., and it is only an afterthought by the assessee after receipt of notice u/s 148 to show the unaccounted transactions as unaccounted purchases and sales. - c) Any other ground that may be raised subsequently. 3 The assessee has raised the following grounds of cross o....
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....ed 31.3.2021, consequential proceedings and the assessment order passed under section 144B read with section 147 is invalid, bad in law and liable to be quashed. 10. Prayer: In view of the above and other grounds of cross objections to be adduced at the time of hearing, the Appellant prays that the order of the NFAC be upheld or alternative the assessment order under section 147 of the Act be quashed. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal at any time before or at, the time of hearing of the appeal, so as to enable your honors to decide the appeal according to law. The cross objector prays accordingly. 4. The brief facts of the case are that the assessee being an individual engaged in the wholesale trading business of Kirana items and filed his return of income on 5.9.2014 declaring total income of Rs. 14,08,240/- for the assessment year 2014-15. The said return was processed u/s 143(1) of the Act by accepting the returned income. The information in this case was received on insight portal under high risk cases that the assessee had made cash deposit of Rs. 6,84,68,020/- in the bank account maintained with S....
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....eted u/s 143(3)/147 r.w.s. 144B of the Act, the assessee preferred an appeal before the ld. CIT(A)/NFAC. 5.1 The Ld. CIT(A)/NFAC partly allowed the appeal of the assessee on the ground that the assessee made cash sales to the retailors and such sale proceeds were deposited in the bank account maintained with Shri Guru Basava Urban Credit Souhardha Co-operative Bank Ltd., Bijapur and subsequently these sale proceeds were utilized to make payment to the vendors against the purchases made. The assessee submitted the party wise breakup of purchases, corresponding cash sales and bank statement. The ld. CIT(A) was of the view that during the assessment proceedings the AO neither rejected the books of accounts nor doubted the purchases made by the assessee. Since the purchases were accepted, the AO could not disallow the sales merely on the basis that sales were made in cash. The ld. CIT(A) was also of the view that addition of cash deposit u/s 69A of the Act would result in double taxation of the same amount once in the form of business income and again at the rate of 60% u/s 115BBE of the Act. The Ld. CIT(A)/NFAC held that as the assessee proved the business activity with sales invoi....
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....d. AO is illegal & bad in law & liable to be quashed as ld. AO erred in not issuing the notice u/s 148 of the Act on or before 31/03/2021. Further the ld. AR submitted that generation of Notice and issuance of Notice is two separate things. Merely because the Notice is generated on 31st March, 2021 does not mean the same is issued on 31st March, 2021 as can be seen from the screen shot of the Income Tax Portal which says "issued on 01st April, 2021". Lastly the ld. AR submitted that as the assessee had already declared the additional Income by way of filing the Return & paid the due taxes on the undisclosed turnover, the question of unexplained Money does not arise in the present case. 8. We have heard the rival submissions & perused the material available on record. It is an undisputed fact that in view of the information that the Assessee has made cash deposits of Rs. 6,84,68,020/- in the bank account with Shri Gurubasava Urban Credit Souhardha Co-Operative Bank, Bijapur, the notice under section 148 of the Act dated 31/03/2021 was issued by the AO on a reason to believe that the income chargeable to tax had escaped assessment and requiring the Assessee to furnish a return of ....
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....ervations/reasons :- (i) The assessee submitted the party wise break up of purchases, corresponding cash sales, bank account statements. The AO neither rejected the books of A/c nor doubted the purchases made by the assessee. Since the purchases were accepted, the AO could not disallow the cash sales. (ii) The assessee proved that cash deposited was out of business income/receipts and gross profit is already declared in the return of income filed in response to notice u/s 148; (iii) addition of entire cash deposit u/s 69A of the Act would result in double taxation of the same amount once in the form of business income and again at the rate of 60% u/s 115BBE; (iv) On perusing the assessment orders in similar cases of other traders wherein the cash was also deposited in the same bank account with Sri Gurubasava Urban Credit Souhardha Co-Operative Bank, Bijapur, the AO made addition of Gross Profit of the cash deposits. (v) The AO did not find any deficiency in the documentary evidences filed by the assessee. The assessee accepted to be owner of money, satisfactorily explained the source of money and also offered the profit element for taxa....
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....n that the provisions of section 69A of the Act do not apply in the case of the assessee especially when the AO has not brought any contrary material on record to disproof the claim of the assessee. Merely by stating that assessee appears to be clever in accepting & disclosing the additional income will not give entitlement to AO to apply rigorous provision of section 115BBE of the Act. 8.6 Now with regard to the first grounds of appeal of the revenue we are of the opinion that the power of the CIT(A) are co-terminus with that of the AO i.e. he can do all that the AO could do. We found the order of ld. CIT(A) to be reasonable and logical on the given state of facts and the grounds raised by the assessee on merits of the case by considering the documents/records produced by the assessee. 8.7 Hon'ble Madras High Court in the case of Arul Murugan and Co. (1982) 51 STC 381 has observed as follows:' "In a tax appeal, the appellate authority is very much committed to the assessment. The appellate authority can itself enter the arena of assessment, either by pursuing further investigation or causing further investigation to be done. It can do so on its own initiativ....
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....ted at 2.56% on the undisclosed sales of Rs. 7,02,66,851/- in the return of income in addition to income declared as per original return of income. The assessee has adopted the same GP ratio of 2.56% to the undisclosed transactions. The Assessee has also furnished the month wise purchase and sales transactions before the AO. During the course of the assessment proceedings the assessee submitted that he made various sales to retailers in cash and collected all the funds generated from such sales and deposited the amount in the bank account of Shri Gurubasava Urban Credit Souhardha Co-Operative Bank, Bijapur. The funds that were deposited in the bank account were to the extent of the purchases that were made to carry out the sales. The bank subsequently issued certain cheques drawn in favour of various suppliers of goods to the assessee corresponding to the amount of cash deposited in the bank account. Hence, the sales and purchases were not forming part of the books of accounts of the Assessee. Therefore we are of the considered opinion that the assessee has properly explained the nature & source of the transactions. Even if for a moment we presume that it is only a afterthought by ....