TaxTMI 
TaxTMI 
2025 (10) TMI 1450
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....n account of unexplained cash deposits during demonetization period due to sales credited to its books of account to the extent unsupported by past trend. 3. The Ld. CIT(A) has erred in law and on facts by deleting the disallowance of Rs.2,95,000/- u/s 14A of the I.T. Act read with Rules 8D of I.T. Rules 1962 as the express provision of section 14A r.w.s 8D do not draw any relation to such expenditures in relation to exempt income." (B) The facts of the case, in brief, are that the assessee company is engaged in the business of coaching classes for competitive exams and also conducts programs for the National Skill Development Corporation. The company provides coaching through its 140 centres across India. The assessee filed its return of income on 31/10/2017 showing total income of Rs.9,60,27,210/-. The Assessing Officer processed the return filed by the assessee u/s 143(3) of the Act and determined the total income of the assessee company at Rs.11,47,89,400/- by making addition of Rs.1,84,67,187/- under section 68 of the I.T. Act and an addition of Rs.2,95,000/- 14A of the Act read with Rule 8D of the I.T. Rules, 1962. Aggrieved, the assessee carried the matter in app....
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....s which is grossly unjustified as has no legs to stand. Kindly refer (page 9 to 14 of CIT Appeals order ). i). Second issue of disallowance u/s 14A is fully covered issue by host of jurisdictional high court and apex court decisions as applied by the first appellate authority where it is held that disallowance u/s 14A cannot exceed exempt income and when there is no exempt income no such disallowance could be made. (Last three pages of CIT Appeals order) j) In present second appeal filed by the revenue on both issue of addition of Rs.1,84,67,187/- on cash deposits out of sales/gross receipts and Rs.2,95,000/- for disallowance u/s 14A, assessee seeks to plead that impugned asst is totally invalid on following multiple counts :. In present second appeal, assessee seeks to plead that impugned asst is totally invalid for three counts: a) DOUBLE TAXATION OF SALES ON GROSS RECEIPT BASIS WIRCH IS HIGHLY UNJUSTIFIED :- Firstly, adhoc and estimated addition of Rs.1,84,67,187/- is made by AO despite assessee has duly discharged his burden before AO with submitting all exhaustive documentary evidences of sales summary(gross receipts from various co....
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....ssment order, the assessing officer completely. lost the track of assessment of revenue transactions and ventured into applying case laws applicable on capital transactions of loans, share capital etc which is patent and clear in the assessment order . from the assessment order, few admitted facts can be culled out as under :- i) AO has no case that respondent is not engaged into business of coaching classes for competition exams and has 140 centres throughout the country from where fees are collected from students. ii) AO has no case that books of accounts prepared by the respondent assessee are not correct and proper in terms of section 145 of Income Tax Act . iii) AO has no case that cash deposited in bank accounts is not shown or net disclosed in the audited books of accounts as sales /gross receipts in profit & loss account and profit on the same after deduction of expenses is offered in ROI filed. Notably the return of income has been accepted by the AO as noted in PARA 14 of assessment order and over and above such acceptance of return of income, addition again of part of gross receipts is made . iv) AO has no case that cash deposited to t....
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....ation notes which it encashed on 19th January 1946 and it was not open to ITAT to accept genuineness of those books and accept assessee's explanation in part and reject the same in regard to balance sum. ( It fully applies in present case) ; viii) ITAT Delhi third member decision in case of JMK Exports in ITA 1428/Del/2021 order dated 26.03.2024 (Honorable VP Saktijit Dey - Third member) ix) ITAT Delhi in case of Durga Fire Work vs ITO Ward 59(8) in ITA No.383/Del/2024 order dated:03.07.2024 x) ITAT Delhi in case of AG India Retail Pvt Ltd vs ACIT in ITA No.449/Del/2024 order dated 27.08.2024 (Delhi-Trib.) xi) ITAT Chandigarh in case of Roop Fashion. Ludhiana vs DCIT CC-1 in ITA No. 136/Chd/2021 order dated 14 June 2022 Time and again, numerous judgements of the Hon'ble Supreme Court and the Hon'ble High Courts have held the incidence and levy of 'double taxation' as unlawful and a nullity in the eyes of Law, prominent among these being the judgements of Hon'ble Supreme Court in the undermentioned cases viz. ● Laxmipat Singhania vs. CIT 72 ITR 291 (SC) ● CIT vs. Devi Prasad Vishwanath Pra....
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....o [1970].76 ITR 690 (SC); Brij Bhusan Lal. Parduman Kumar v. CIT [1978] 115 ITR 524 (SC); ChouthmalAgarwalia y. CIT [1962] 46 ITR 262 (Assam); R:V.S. and Sons Dairy Farm v. CIT [2002] 257 ITR 764 (Mad); International Forest Co. v. CIT [1975].101 ITR 721 (J & K) ; M. Durai Raj v. CIT [1972] 83 ITR 484 (Ker); Ramchandra Ramnivas v. State of Orissa [1970] 25 STC: 501 (Orissa); Action Electricals v. Deputy CIT [2002] 258 JTR 188 (Delhi) and Kamal Kumar Saharia v. CIT [1995]. 216 ITR 217 (Gauhati) indicate that the AO is not fettered by any technical rules of evidence and pleadings, and he is entitled to act on material which are not acceptable in evidence in a court of law, but while making the assessment under the principles of best judgment, the Income-tax Officer is not entitled to make a pure guess without reference to any evidence or material. There must be something more than a mere suspicion to support the assessment" 3.5 In support of the same we rely upon following cases :- 3.6 Lucknow Bench decision in case of DCIT vs Veena Awasthi in ITA No.215/Lkw/2016 order dated 30.11.2018 (Jurisdictional tribunal bench decision) 3.7 Delhi bench ITAT decision in....
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....e to prove the nature and source of the credit. The distinction between the two has to be appreciated and given effect to. g) It is settled law that revenue cannot take shifting stands on the same facts. Some coaching fees we accept, some coaching fees we will not accept or profit we accept but gross receipts we not accept cannot be countenanced as it violates the rudimentary doctrine of real income and rationality. In this regard reliance is placed on :- i) Hon'ble ITAT Chandigarh in the case of (Bansal Rice-Mills)- (Third Member) on addition of certain deposits by assessee out of its sale proceeds which was treated by the AO as unexplained credit has held that: "The Accountant Member was fully justified in deleting the addition as the actual deposit of this amount in the books of account was not doubted. Even if these deposits were treated as on account of bogus sales no addition could be sustained as the assessee had already accounted for the sale proceeds in the manufacturing, trading and profit & loss account for the year ending 31-3-1987. The addition on this account had to be off set by the sale proceeds of paddy shown by the assessee ....
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....n the SCN but with copies thereof. This would include their own statements, documents seized during the search and documents gathered from other sources including statements of bank accounts, relied upon against them to be provided copies thereof. Such a requirement inheres in the principles of natural justice and would be applicable even if the statute governing the proceedings does not specifically mandate it." 4. Judicial Propriety and theory of Binding precedents : - For the doctrine of stare decisis, (stand by decided cases) we placed heavy reliance on the jurisdictional high court epochal decision in case of Mohan Lal Santwani vs UOI reported in (2022) 449 IFR 476 (All) order dated 25.04.2022 . In such background we humbly request to consider all the decisions on which reliance is placed upon. In the case. of Union of India Vs. Kamlakshmi Finance Corpn. Ltd. 1992 (Suppl) SCC.443 (para 6) Hon'ble Supreme Court upheld the observation of Hon'ble: High Court on the conduct of an Assistant Collector and the harassment to the assessee caused by the failure of these officers to give effect to the order of authorities higher to them in the appellate hierarch....
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....herence to the rule of law with due regard to the prescribed procedures. Violation thereof may not always result in invalidation of the judicial action but normally it may cast a shadow of improper exercise of judicial discretion." In the case of Union of India Versus Namit Sharma 2013 (1) SCC 745 ( para 108.14) Hon'ble Supreme Court explained the precedent and judicial discipline and held as under :- "108.14. Under the scheme of the Act of 2005, it is clear that the orders of the Commissions are subject to judicial review before the High Court and then before the Supreme Court of india. In terms of Article 141 of the Constitution, the judgments of the Supreme Court are law of the land and are binding on all courts and tribunals. Thus, it is abundantly clear that the Information Commission is bound by the law of precedence i.e. judgments of the High Court and the Supreme Court of India. In order to maintain judicial discipline and consistency in the functioning of the Commission, we direct that the Commission shall give appropriate attention to the doctrine of precedence and shali not overlock the judgments of the courts dealing with the subject and principles....
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....104/Del/2022. Order dated 28.12.2022 80 To 85 10. ITAT Delhi Bench 'A' in case of A.G. India Retail Pvt Ltd Vs The ACIT in ITA No.449/DEL/2024. Order dated 27.08.2024 86 To 97 C. CASH SALES RECORDED IN BOOKS OF A/C CANNOT BE SUBJECTED TO SECTION 68 AS UNEXPLAINED CASH CREDIT AS IT AMOUNTS TO DOUBLE TAXATION. 11. Hon'ble Delhi High Court in case of CIT Vs Kailash Jewellery House in ITA 613/2010. Order dated 09.04.2010 98 To 99 12. Hon'ble Delhi High Court in case of PCIT(Central)-3, Delhi Vs M/s Agson Global Pvt Ltd in ITA 68/2021. Order dated 19.01.2022 100 To 152 13. Hon'ble Delhi High Court in case of J.M. Wire Inds. Vs CIT in Income Tax Reference No.96/1989. Order dated 15.07.2010 153 To 154 14. Hon'ble Delhi High Court in case of CIT-IV Vs Girnar Pvt Ltd in ITA 121/2014. Order dated 01.04.2014 155 To 156 15. Hon'ble Delhi High Court in case of PCIT-20 Vs Akshit Kumar in ITA 348/2019. Order dated 17.11.2020 157 To 171 16. Hon'ble Madhya Pradesh High Court in case of Man Mohan Sadani Vs CIT in M.A.I.T No.2/2006. Order ....
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....unds 1 and 2 of appeal pertain to an addition of Rs.1,84,67,187/- made by the Assessing Officer under section 68 of the I.T. Act on account of cash deposits made by the assessee during demonetization period. On perusal of records, it is found that the Assessing Officer has accepted the books of account; and no defects have been pointed out either by the Assessing Officer or by the learned CIT(A) in the books of account. The nature of business of the assessee (running coaching classes for competitive examinations) is such that a substantial amounts of revenues are received in cash; which is the consistent trend in earolier and following years also. In fact, as per materials on record; ratio of cash received to total receipts is 81.41%, 92.13%, 50.25% and 73.19% respectively in assessment year 2014-15, 2015-16 and 2017-18. Increase in the percentage figure in assessment year 2017-18 compared to assessment year 2016-17 is explained by the fact, that in assessment year 2017-18 the assessee discontinued the practice to receive payments through online mode. Simultaneously, as explained, the discounts given on online payment was no longer necessary (due to discontinuation of online paymen....
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.... Patiala 391 ITR 218 (P&H), it was held by Hon'ble High Court that disallowance u/s 14A of I. T. Act cannot exceed exempt income. In the case of DCIT vs. UP Power Corpn. Ltd. (order dated 04/10/2019 in I.T.A. No.152/Lkw/2017) it has been held by Co-ordinate Bench of ITAT, Lucknow, following order of Hon'ble Allahabad High Court in the case of CIT vs. Shivam Motors (P) Ltd., [order dated 05/04/2014 in I.T.A. No.88/2014], that no disallowance can be made under section 14A in the absence of any exempt income. The relevant portion of order of Hon'ble Allahabad High Court in the aforesaid case, is reproduced as under: "S. 14A of the Act provides that for the purposes of computing the total income under the Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. Hence, what s.14A provides is that if there is any income which does not form part of the income under the Act, the expenditure which is incurred for earning the income is not an allowable deduction. For the year in question, the finding of fact is that the assessee had not earned any tax free i....