Raj Kumar Vs ITO (ITAT Amritsar)
ITAT Amritsar held that addition under section 68 of the Income Tax Act is beyond jurisdiction as the amount is already declared as turnover and the said turnover is reflected in the books of account.
Facts- AO completed the assessment of the assessee u/s. 143(3) making addition of Rs 2,74,000,00/- out of total cash deposited during demonetization period at Rs 4,09,50,000/-.The addition has been made by AO alleging that the appellant had inflated the sales to cover unaccounted money and assessed the total income at Rs. 2,82,17,200/-. As per assessee the amount deposited in bank on account out of his turnover which was declared in the P & L a/c during filing of the return. So, the same amount will be doubled tax. Aggrieved assessee filed an appeal before CIT(A). CIT(A) passed an order in ex parte and upheld the decision of AO. Being aggrieved assessee filed an appeal before us.
Conclusion- Held that AO has no right to calculate sales on hypothetical basis ignoring the evidence submitted during the course of assessment proceedings in the form of VAT return, purchase bills and quantitative details.
Once the amount is declared as turn over cannot be called concealed income and be taxed doubly on same amount. The addition U/s 68 is beyond jurisdiction of the ld. AO as the turnover is already reflected in the books of the assessee. So, the addition amount of Rs 2,74,00,000/-is quashed.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
The instant appeal of the assessee was filed against the order of the ld. Commissioner of Income Tax (Appeals) NFAC, Delhi, [in brevity the ‘CIT (A)’] order passed u/s 250 of the Income Tax Act 1961, for A.Y. 2017-18.The impugned order was emanated from the order of the Income Tax Officer, Ward 3(3), Amritsar order dated 31.12.2019.
The assessee has taken the following grounds:
“1. The CIT(A) NFAC has erred in law and in facts in confirming the assessment order passed by the AO assessing the total income at Rs. 2,82,17,200/- as against returned income of Rs. 8,17,200.
2. That the CIT(A) NFAC has erred in deciding the appeal without considering the request for adjournment filed by the appellant on 11.08.2022.
3. That the CIT(A) NFAC has erred in deciding the appeal without calling/ downloading the replies submitted by the appellant during assessment proceedings and thus ignoring the vital documents such as, cash book, purchase bills, ledger and VAT returns and thus the order of CIT(A) NFAC is against the principles of natural justice.
4. That the CIT(A) NFAC has erred in passing a non-speaking order which is against the law even if the assessee was not represented before it.
5. That the CIT(A) NFAC has erred in confirming the action of the AO in rejecting the books of accounts by invoking the provisions of sec. 145(3) without even looking at the documents on record and without appreciating that no specific defect in the books of account was pointed out by the AO which is not even part of the assessment order.
6. That the CIT(A) NFAC erred in confirming the action of the AO based upon surmises and conjecture without there being any evidence contrary to the contention of the assessee which is duly supported by documents.
7. That the CIT(A) NFAC has erred in confirming the addition of Rs. 28217200/- being cash deposited in bank accounts without appreciating that the said cash was part of the cash account submitted with the submissions made and was sourced from sales duly accepted by VAT department, out of cash withdrawals, etc.
8. That the CIT(A) NFAC has erred in ignoring the past history of the appellant since, the cash deposit was not against the past history of the appellant.
9. That the CIT(A) NFAC has erred in confirming the order of the AO ignoring the position of law that provisions of section 68 cannot be applied in respect of income from a source which has already been taxed which would amount to double taxation.
10. That the CIT(A) NFAS has erred in confirming the order of the AO ignoring the position of law that no addition u/s 68 can be made where books of account had been rejected by the AO u/s 145(3) and again relying upon the same books of accounts for the purpose of section 68.
11. That the learned assessing Officer has erred in rejecting the books of accounts u/s145(3), without serving the show cause notice as embedded in Sec 144 read with Sec145(3).
12. That the appellant craves leave to add, amend any ground of appeal.”
2. Brief facts of the case are that the assessee deposited cash in bank account amount to Rs 4,09,50,000/- during demonetization. The assessee is a proprietor of M/s Radhika Sales Corporation, Dhab Wasti Ram, Amritsar and is engaged in the business of the business of wholesale/retail of sugar, refined oil, ghee and other allied karyana items. The assessee is registered under Punjab VAT Act in 2005. During the assessment year the assessee’s turnover Rs.10,38,81,637/-. The ld. AO completed the assessment under section 143(3) making addition of Rs 2,74,000,00/- out of total cash deposited during demonetization period at Rs 4,09,50,000/-.The addition has been made by the ld. AO alleging that the appellant had inflated the sales to cover unaccounted money and assessed the total income at Rs. 2,82,17,200/-. As per assessee the amount deposited in bank on account out of his turnover which was declared in the P & L a/c during filing of the return. So, the same amount will be doubled tax. Aggrieved assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) passed an order in ex parte and upheld the decision of the ld. AO. Being aggrieved assessee filed an appeal before us.
3. During hearing, the ld. Counsel for the assessee filed written submissions which are kept in the record. In the argument assessee has placed that:
The book of accounts of the assessee is subject to audit on year to year basis and is maintaining proper quantitative records. That the assessee had filed the return of income for the year under consideration amount to Rs 967203/-and had declared total turnover of Rs 10,38,81,637/-. The Copy of audited balance sheet, trading and profit and loss account is enclosed at page no 15-28 of APB.
3.1. The ld. Counsel argued that the case of the appellant was selected for scrutiny under CASS by issuing jurisdiction notice u/s 143(2) dated 09.08.2018. The copy of same is enclosed at page no 1-4 of APB. The case was selected for scrutiny for the primary reason of large cash deposit during demonetization. Pursuant to the same, the appellant was issued various notices u/s 142(1) requiring the appellant to provide necessary information and documents in respect of source of such cash deposit amounting to Rs 4,09,50,000/- during demonetization. The appellant during the course of assessment proceedings explained that he was in the business of sale / purchase of sugar, refined oil and other allied items and the said cash was deposited out of sale proceeds, cash withdrawal and out amount realized from debtors during the year consideration.
3.2. In argument the ld. Counsel placed that the appellant was also asked to submit the month wise total sales and purchases and corresponding cash sales made in every month for the year under consideration and for the last year. It was also explained that the total cash deposit during FY 2015-16 is to the tune of Rs 4,31,25,914 against the cash deposit in FY 2016-17 of Rs 5,98,60,500/-. The assessee vide reply dated 20.11.2019 submitted the desired information and the copy of the same is enclosed at page no 45& 61 of APB. Furthermore the Ld. AO also requested to segregate the cash deposit between the period 01.04.2015 to 08.11.2015 vis-a-visa cash deposit between the period 01.04.2016 to 08.11.2016. The appellant vide reply dated 20.11.2019 submitted the same and the summary of same is tabulated form which is placed before the bench and reproduced as under:-
