TaxTMI 
TaxTMI 
2026 (9) TMI 310
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....thout properly appreciating the correct facts and circumstances of the case and the submissions made by the appellant based merely on conjectures and surmise. 02. BECAUSE, the Assessing Officer has erred on facts and in law in reopening the case on grounds of "Unexplained Cash Credit" to the tune of Rs. 17.15,56,550.00 totally disregarding the fact that the said transactions had been duly scrutinized during assessment proceedings itself for the relevant year without any adverse findings on this account. 03. BECAUSE, the Assessing Officer has erred on facts and in law in wrongly Initiating penalty u/s. 274 r.w.s. 271(1)(c) of the Income Tax Act, 1961 without properly appreciating the correct facts and circumstances of the case and the submissions made by the appellant. 04. BECAUSE, the Assessing Officer has erred on facts and in law in wrongly initiating Interest u/s. 234A, 234B and 234C of the Income Tax Act, 1961 without properly appreciating the correct facts and circumstances of the case and the submissions made by the appellant. 05. BECAUSE, the order is bad both on facts and in law and is not maintainable. 06. BECAUSE, the appellant....
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....ee don't have any cogent force as it is seen from account no.50065635570 with Allahabad Bank, total credit turnover Rs. 17,15,56,550/- was in cash out of total credit turnover of Rs. 47,71,02,115/- during the year under consideration. In a private limited company, this huge amount of cash deposition is suspicious. Prima facie, this cash deposit is not as per accounting norms of the private limited company. The assessee has undertaken financial transactions much beyond the taxable limit. However, the source of entering such huge transactions is not conclusively proved from the details and data collected during the course of inquiry conducted by the Investigation Wing. During the course of assessment Proceedings the assessee was not proved that the assessee is not a beneficiary of unexplained credits by way of unexplained cash credits amounting of Rs. 17,15,56,550/- for the year under consideration. In view of the above, unexplained cash credits amounting of Rs. 17,15,56,550/- is added u/s 68 of the Act to the total income of the assessee as unexplained cash credit." (B.1) The assessee's appeal against the assessment order was dismissed by the Ld. CIT(A) vide impugned app....
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....py of Reply dated 23.03.2022 56-61 (iii) Copy of Purchases Invoice sample basis 62-82 (iv) Copy of credit sale invoice submitted during Assessment Proceeding vide reply dated 10.03.2022 83-101 9. (i) Copy of Show cause notice u/s 147 dated 24.03.2022 106-112 (ii) Copy of Reply dated 28.03.2022 113-329 (iii) Copy of Cash sale ledger dated 01.04.2013 to 31.03.2014 330-341 (iv) Copy of sale fabric ledger from 01.04.2013 to 31.03.2014 342 (v) Copy of sale return ledger from 01.04.2013 to 31.03.2014 343-366 (vi) Copy of sale invoice on sample basis from 01.04.2013 to 31.03.2014 367-372 (vii) Copy of purchases ledger along with invoices from 01.04.2013 to 31.03.2014 373-393 (viii) Copy of purchases return ledger from 01.04.2013 to 31.03.2014 394 (ix) Copy of sundry creditors ledger from 01.04.2013 to 31.03.2014 submitted during Assessment Proceeding vide reply dated 24.03.2022 395-418 10. Copy of Appeal order dated 30.03.2022 passed by Commissioner of Income tax (Appeals) National Faceless Appeal Centre (NFAC) Delhi u/s. 250 of the I. T. Act, 1961. 419-437 11. Copy of Assessment order u/s 147 r.w.s 144....
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.... of the Company and all prescribed accounting standards have been adhered to in prescribed manner. Similarly, there was no change in the method of valuation of closing stock, consistently followed by the appellant. The books of accounts for the relevant year are duly supported by relevant bills and vouchers and a copy of Income Tax Return Acknowledgment along with Computation of Total Income, Audit Report and Balance Sheet and Profit & Loss account with all relevant Schedules for A.Y. 2014-15 were submitted before the Assessing Officer during the assessment proceedings also. 04. That, the following addition has been made during the reassessment proceedings :- SI. No. Particulars Amount (Rs. ) 01. Addition u/s. 68 on account of alleged Unexplained Cash Credit 17,15,56,550.00 Total 17,15,56,550.00 Addition u/s. 68 on account of alleged Unexplained Cash Credit - Rs. 17,15,56,550.00 05. That, the Assessing Officer has erred on facts and in law in making a huge addition of Rs. 17,15,56,550.00 (Rupees Seventeen Crore Fifteen Lakhs Fifty Six Thousand Five Hundred and Fifty only) u/s.68 of Income Tax Act, 1961 on account of Unexplained Cash Cred....
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....made by the appellant during the course of reassessment proceedings also. That, looking at the nature of business done by the appellant company, it is most respectfully submitted that a major portion of the appellant's sales are made to small weavers who use the raw materials to make Sarees, Dupatta and other Dress Materials etc. It is pertinent to note that these weavers mostly belongs to the remote and undeveloped regions near Varanasi and therefore, transaction of business from them are mainly done through cash leading to a major portion of sale proceeds of the appellant company coming In Cash. However, the appellant company had deposited the cash against the sale proceeds for making payment to the creditors, hence the same should not treated as escapement of income and no adverse inference may be drawn in the case of the appellant company. (d) That, regarding details of alleged unexplained cash credit amounting to Rs. 17,15,56,550.00, it is most respectfully submitted that the appellant company had made a total deposit of Rs. 17,27,80,500.00 against the total Sale Proceeds of Rs. 27,29,32,931.23 during the relevant financial year. That, a detailed chart showing bre....
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....umstances of the case, penalty proceedings initiated u/s. 274 r.w.s. 271(1)(c) on account of addition on alleged unexplained cash credit in case of the appellant needs to be dropped. (C.2) He also drew our attention to the statement of facts and the grounds of appeal furnished before the Ld. CIT(A), which is reproduced below, for the ease of reference: - 01. BECAUSE, Assessing Officer has erred on facts and in law in wrongly making a huge addition of Rs. 17,15,56,550.00 (Rupees Seventeen Crore Fifteen Lakhs Fifty Six Thousand Five Hundred and Fifty only) u/s. 68 of Income Tax Act, 1961 on account of Unexplained Cash Credit without properly appreciating the correct facts and circumstances of the case and the submissions made by the appellant based merely on conjectures and surmise. 02. BECAUSE, the Assessing Officer has erred on facts and in law in reopening the case on grounds of "Unexplained Cash Credit" to the tune of Rs. 17.15,56,550.00 totally disregarding the fact that the said transactions had been duly scrutinized during assessment proceedings itself for the relevant year without any adverse findings on this account. 03. BECAUSE, the Assessing O....
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....long with Computation of Total Income, Audit Report and Balance Sheet and Profit & Loss account with all relevant Schedules for A.Y. 2014- 15 were submitted before the Assessing Officer during the assessment proceedings also. 04. That, the following addition has been made during the reassessment proceedings :- SI. No. Particulars Amount (Rs.) 01. Addition u/s. 68 on account of alleged Unexplained Cash Credit 17,15,56,550.00 Total 17,15,56,550.00 Addition u/s. 68 on account of alleged Unexplained Cash Credit - Rs. 17,15,56,550.00 05. That, the Assessing Officer has erred on facts and in law in making a huge addition of Rs. 17,15,56,550.00 (Rupees Seventeen Crore Fifteen Lakhs Fifty Six Thousand Five Hundred and Fifty only) u/s.68 of Income Tax Act, 1961 on account of Unexplained Cash Credit without appreciating the correct facts and circumstances of the case and the submissions made by the appellant. The correct facts relating to the alleged Unexplained Cash Credits are as follows :- (a) That, before going into the details of the assessment order it is pertinent to understand the nature of work and modus operandi of the appellant....
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....te that these weavers mostly belongs to the remote and undeveloped regions near Varanasi and therefore, transaction of business from them are mainly done through cash leading to a major portion of sale proceeds of the appellant company coming In Cash. However, the appellant company had deposited the cash against the sale proceeds for making payment to the creditors, hence the same should not treated as escapement of income and no adverse inference may be drawn in the case of the appellant company. (d) That, regarding details of alleged unexplained cash credit amounting to Rs. 17,15,56,550.00, it is most respectfully submitted that the appellant company had made a total deposit of Rs. 17,27,80,500.00 against the total Sale Proceeds of Rs. 27,29,32,931.23 during the relevant financial year. That, a detailed chart showing break up of total turnover is given below :- SI. No. Particulars Amount (Rounded Off) 01. Cash Sale 17,28,96,462.00 02. Credit Sale (Out of this sale Cash amounting to Rs. 18,22,990.00 has been received and rest of the amount of Rs. 9,85,22,711.00 has been realized in bank after reducing Sale Return of Rs. 3,09,235.00 as shown below) ....
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.... below, for the ease of reference: - 1. ANTECEDENT 1.1 That, the appellant is a Company duly incorporated under the Companies Act, 1956 vide Incorporation No. U17291UP2011PTC044984 of 2011 and its registration number is 44984 having registered address at C.K. 23/40, Lakhi Choutra, Chowk, Varanasi - 221001 (U.P.) with the Registrar of Companies, U.P., Kanpur. The company was incorporated with the main objects amongst others, of carrying on the Retail and Wholesale business of trading in Raw Silks and Fabric etc. The appellant company is being regularly assessed to Income Tax since its inception and the books of account as well as the trading results reflected therein have been accepted all along in the past. 1.2 That, the appellant had maintained all the relevant books of account which are required to be maintained in the regular course of business e.g., Cash Book, Ledger, Journal, Bank Book, Bills and vouchers pertaining to Purchases, Sales and Expenses. It is pertinent to note that the appellant is regularly audited by an independent auditor and even during the relevant financial year the audit of appellant company has been concluded without any adverse ....
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.... to note that these weavers mostly belong to the remote and undeveloped regions near Varanasi and are uneducated and having no bank accounts. Owing to the above facts transaction of business from them are mainly done through cash leading to a major portion of sale proceeds of appellant company coming in Cash. This methodology has been followed consistently by the appellant even in the past without any adverse finding on this account. (c) That, the case of the appellant company for Assessment Year 2014-15 itself had already been selected for physical scrutiny wherein detailed examination of books of account of the appellant were carried out and assessment was completed and the returned total income of Rs. 15,41,020.00 was accepted. A copy of said order passed on 13.12.2015 by Deputy Commissioner of Income Tax, Circle - 1, Varanasi, accepting the returned income of the appellant was submitted before the Assessing Officer / National Faceless Assessment Center during the reassessment proceedings and copy of the is being enclosed herewith for your kind perusal and verification. (Annexure - 2). It is hard to comprehend that huge cash credits to the tune of Rs. 17,15,56,....
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....erve to be quashed looking at the above facts and the same are summarized as follows - (i) That, scrutiny assessment of appellant had already been concluded after examination of books of account of appellant without any adverse remarks, by completing assessment accepting the income returned by the appellant, the Assessing Officer has chosen to ignore the Assessment Order: (ii) That, the amount of Rs. 17,15,56,550.00 was the proceeds from cash sales made by the appellant which was already part of the turnover of the appellant and the same income being already disclosed in Trading and Profit and Loss Account of the appellant cannot be treated as" Income that has escaped assessment". It is pertinent to note that all supporting evidence related to such cash sales including a copy of Sales Registers showing Cash Sales, Credit Sales and Sales Returns separately along with copy of Cash Book, Summary of Cash Sales and Sales Invoice on sample basis were already submitted during the assessment proceedings. The assessing officer while choosing to disregard the submissions of the appellant has made a huge addition merely on the basis of conjectures and surmises. (iii....
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....k account were nothing but the cash sales which have already been accounted for in the books of accounts of the assessee and profits thereon have already been reported in the profits and loss account and brought to tax. The Ld. Departmental Representative for Revenue supported the impugned appellate order of the Ld. CIT(A) and the assessment order, the relevant portions of which have already been referred to in foregoing paragraphs (B) and (B.1) of this order. (E) We have heard both the sides. We have perused the material on record. We find that the return income of the assessee was already accepted after scrutiny of the assessee's case in the aforesaid assessment order dated 30.03.2022 passed u/s 143(3) of the Act. Copy of this order is included at pages 448 to 452 of the aforesaid paper book. In the aforesaid assessment order, the Assessing Officer has recorded that authorized representative of the assessee appeared from time to time, filed reply and details. The Assessing Officer has further recorded that the authorized representative of the assessee had produced relevant documents like ledger, cash book, bank statement, books of accounts and other details during the cour....