TaxTMI 
TaxTMI 
2026 (7) TMI 1961
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.... Act, 1961 (for short 'the Act') along with questionnaire were issued and served on the assessee. In response, assessee submitted that the assessee company was incorporated on 03.05.2011 under the Companies Act, 1956 with the main objective of carrying on business of BFC's and during the relevant year, the assessee is engaged in NBFC activities. He further submitted that during the relevant year, the assessee was maintaining its bank account with ICICI Bank Ltd. having current account number 194505000067. He further submitted that during the course of demonetization period i.e. between 08.11.2016 to 31.12.2016, assessee has deposited total cash of Rs. 1,18,59.100/-, in the following manner :- Date Bank Account No. Total cash deposit (SBN in Rs.) 10.11.2016 194505000067 15,00,000/- 11.11.2016 194505000067 15,00,000/- 13.11.2016 194505000067 20,00,000/- 15.11.2016 194505000067 20,00,000/- 16.11.2016 194505000067 20,00,000/- 18.11.2016 194505000067 20,00,000/- 23.11.2016 194505000067 5,00,000/- 01.12.2016 194505000067 3,50,000/- 29.12.2016 194505000067 6,600/- 4. Further assessee s....
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....the assessee during A Y 2017-18. In response, assessee submitted its reply which is reproduced at pages 17 & 18 of the assessment order. 8. Accordingly, AO observed that assessee has failed to furnish any valid reply or valid documentary evidences in support of cash deposited during the demonetization period. AO further observed that as per ITR of AY 2016-17 assessee has shown closing cash in hand as on 31.03.2016 of Rs. 17,81,680/- so opening cash in hand as on 01.04.2016 will be amounting to Rs. 17.81,680/-, therefore credit of this amount has been given to the assessee. After considering the opening cash in hand as on 01.04.2016, AO observed that total deposit made during demonetization period i.e. between 08.11.2016 to 31.12.2016 minus opening cash in hand as on 01.04.2016 remained unexplained and unaccounted cash deposit by the assessee i.e. total amount of Rs. 1,00,77,4201- (Rs. 1,18,59,100 - Rs. 17,81,680) remained unexplained and unaccounted and added to the income of the assessee during the year under consideration. 9. Further AO also made additions on account of commission expenses of Rs. 47,806/- (20% of Rs. 2,39,030) and tour and travel expenses of Rs. 45,658/- (2....
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....t year. I find that the AO has not pointed out any mistakes in the cash book wherein cash in hand exceeds the cash deposits in the bank accounts during demonetization period The AO has not rebutted any of the details submitted by the appellant. The AO however did not buy the explanation of the Appellant that the cash receipts are on account of installments in cash against loans taken, since letters issued to some of these persons u/s. 133(6) returned back unserved. In this regard I find that the Appellant had requested the AO to share list of such persons so that it can follow up with them. The AO however, did not share the list. In fact the AO has not even mentioned names of such persons in the assessment order. In my considered opinion, mere non-service of letters issued u/s. 133(6) to some persons would not establish that such persons either do not exist or they have not undertaken any transactions with the Appellant. Non-service of letters could be on account of many factors, including change of address. I also find that pattern of cash receipts in the relevant year does not vary much when compared with earlier year or subsequent year. As regards, increase in cash deposits duri....
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....ormal compared to other periods, thereby justifying addition u/s. 68 of the Income Tax Act, 1961. 5. That the Ld. CIT (A) has erred in deleting Rs. 47,806/- on account of commission expenses by relying on Hon'ble ITAT in the case of ACIT V/s M/s Modi Rubber Limited ITA No. 1952/Del/2014 dated 15.05.2018. Wherein the Hon'ble ITAT deleted the disallowance as this disallowance has been made without pointing out without any defect in books or accounts or voucher maintain for these expenses. Whereas, in the present case the Assessee has not given any documentary proof/evidence of such expenses. 6. That the CIT(A) erred in deleting Rs. 45658/- on account of Tour & Travel expenses by relying on Hon'ble ITAT in the case of ACIT V/s M/s Modi Rubber Limited ITA No. 1952/Del/2014 dated 15.05.2018. Therefore, further appeal is recommended on this case." 13. At the time of hearing, ld. DR of the Revenue brought to our notice the findings in the assessment order and relied on the above findings and objected to the deletion of additions by the Id. CIT(A). He also relied on the decision of Hon'ble Supreme Court in the case of Sanjay Kapur vs. CIT (2022) 138 tax....
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....corded cash-in-hand. 2.2 Consistency and Historical Patterns The Revenue alleges that the deposits were "abnormal." On the contrary, the Assessee's history shows that cash handling is a routine feature. In the immediately preceding year (A Y 2016-17), the Assessee deposited Rs. 2.14 Crores in cash. In the current year, despite the demonetization crunch, the total cash recovery was actually lower than the previous year. The surge in deposits in November/December 2016 was not a result of "unaccounted income" but was a statutory necessity to deposit Specified Bank Notes (SBNs) which were already recorded in the books to preserve the company's liquidity and assets. 2.3 Violation of Natural Justice regarding Third-Party Inquiries The Ld. AO's reliance on unserved notices u/s. 133(6) is legally flawed. • The Assessee categorically requested the AO to provide the list of unserved notices so that the Assessee could facilitate the production of these parties or provide updated addresses. This request was recorded but ignored by the AO. • Furthermore, the AO accepted the confirmations of several other debtors from the ....
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.... and uphold the order of the Ld. CIT(A) in its entirety." 14. Considered the rival submissions and material placed on record. We observed that assessee was having sufficient cash in hand on 07.11.2016 (including SBNs) and the same was deposited in the bank accounts and the assessee also filed all the relevant details before the AO. Further we observed from the assessment order that the AO has not rebutted any of the details filed by the assessee nor has pointed out any mistakes in the audited books of accounts. Further the Assessing Officer made the impugned addition merely because some of the debtors (persons whom loan was advanced by the assessee) who had paid in cash to the assessee did not respond to the notices. Further we observed that the assessee has asked the AO to give details of such debtors so that it can follow up with them but no such list of debtors was provided to the assessee. Further we observed that in appeal, assessee submitted before the ld. CIT (A) that the cash deposits during demonetization period was bound to be on a higher side when compared to corresponding periods in previous years or subsequent year, since, the assessee was forced to deposit the cash....
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....s, including change of address. Further we also concur with the opinion of the ld. CIT (A) on the issue of increase in cash deposits during demonetization period that it is quite natural since the assessee was forced to deposit the entire cash in hand (SBNs) in the bank accounts during 08.11.2016 to 31.12.2016 which was not required in FY 2015-16 or 2017-18. And he rightly pointed out that the important point to consider here is that the assessee was having sufficient cash in hand to explain cash deposits and the AO has not found any mistake either in books of accounts or in details submitted by the Appellant. 17. In view of our above discussion, we are inclined not to disturb the findings of the ld. CIT (A) on the issue of deletion of addition of Rs. 1,00,77,420/- and the grounds are accordingly dismissed. 18. With regard to deletion of addition of Rs. 47,806 on account of commission expenses, after going through the detailed findings of the ld. CIT (A) at pages 7 to 10, we are inclined to uphold the detailed findings of the ld. CIT (A) on this issue. Accordingly, this ground is dismissed. 19. With regard to deletion of addition of Rs. 45,658/- on account of tour & travel....