Arun Garg Vs ITO (ITAT Chandigarh)
Held that addition u/s. 68 and 69A unsustainable as evidences relating to cash deposited submitted and not doubted by AO and also books of account of the assessee are also not rejected u/s 145(3).
Facts-
As per the Annual Information Report (AIR), it was observed that the assessee had deposited cash in two bank accounts (both with Union Bank of India) to the tune of Rs. 82,50,000/- between the period 09.11.2016 and 30.12.2016.
After considering the submissions of the assessee, the assessment was completed at an income of Rs. 1,05,50,120/- after making addition on account of cash credits u/s 68 and 69A read with section 115BBE of the Income Tax Act, 1961 to the tune of Rs. 77,70,000/-.
Aggrieved, the assessee preferred to appeal before the NFAC which was dismissed. Now, the assessee has approached the Tribunal challenging the dismissal of the appeal.
Conclusion-
All the parties from whom the advance of different amount is received have filed confirmed copies of account mentioning their PAN, address, affidavits duly attested and evidence of filing their Tax Returns along with cash summary for the Financial Year 2016-17 which confirms the transactions of the assessee, both with regard to the advance amount paid by each of the related concerns which was subsequently adjusted against the sales made to these four parties and also, on account of the deposit of cash by each one of them on various dates towards the Housing Loan of the assessee to the tune of Rs. 48.50 lacs. Such evidences, as furnished, have not been doubted by the Assessing Officer and even the sales as made by the assessee to the four relates parties against the advance of Rs. 28 lacs received earlier, have not been doubted, nor purchases in the hands of such related parties have been doubted in their hands.
Held that the opening stock, purchases, sales and closing stock in the hands of the assessee have been accepted by the Assessing Officer and the books of accounts of the assessee have also not been rejected u/s 145(3) of the Act and as such the entries relating to the related parties in effect stand accepted and, as such, the confirmation of the two additions i.e. both in regard to the amount of Rs. 28 lacs and Rs. 48.50 lacs are not justified.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
This is an appeal filed by the assessee against the order of the National Faceless Appeal Centre (NFAC) Delhi vide order dated 06.12.2021 and pertains to Assessment Year (AY) 2017- 18.
2.0 The brief facts of the case are that the assessee is engaged in the business of manufacturing steel. The Return of income for the year under consideration was filed declaring income of Rs. 27,80,120/-. The case was selected for scrutiny under CASS for the following reason:
“Abnormal increase in cash deposits during demonetization period as compared to pre-demonetization period.”
2.1 As per the Annual Information Report (AIR), the assessee had deposited cash in two bank accounts (both with Union Bank of India) to the tune of Rs. 82,50,000/-between the period 09.11.2016 and 30.12.2016 and the assessee was required by the Assessing Officer (AO) to explain the same. Thereafter, after considering the submissions of the assessee in this regard, the assessment was completed at an income of Rs. 1,05,50,120/- after making addition on account of cash credits u/s 68 and 69A read with section 115BBE of the Income Tax Act, 1961 (hereinafter called ‘the Act’) to the tune of Rs. 77,70,000/-
2.2 Aggrieved, the assessee preferred appeal before the NFAC which was dismissed and now the assessee has approached this Tribunal challenging the dismissal of his appeal be the NFAC by raising the following grounds of appeal:
1. That the Ld. CIT(A) has erred in confirming the order of the Assessing Officer in assessing the income at Rs. 1,05,50,120/- against the returned income of Rs. 27,80,120/- and, thereby, upholding the invoking of the provision of Section 115BBE on account of the alleged cash credits u/s 68a 69A of the Income Tax Act, 1961.
2.(a) That the Ld. CIT(A) has erred in confirming the addition of Rs. 1,20,000/- on account of the amount received from Sh. Deepak Sharma and Sh. Suresh Kumar u/s 68 of the Income Tax Act, 1961 to the taxable income of the assessee.
2. (b) That the Ld. CIT(A) has erred in not considering that the amount as received from the above two parties had been returned within a short period of time and, as such, the addition as confirmed by the worthy CIT(A) deserves to be deleted.
3. (a) That the Ld. CIT(A) has erred in confirming the addition of Rs. 28,00,000/- in respect of identifiable parties, who had made advance payments to the assessee, against the sales of bolts, made by the assessee to the same parties during the year under consideration.
3. (b) That the Ld. CIT (A) has erred in not considering the fact that such salesas made to the parties are subjected to VAT and such sales to the parties have been credited in the sale account and such sales, have been accepted by the Assessing Officer and, thus, the addition of Rs. 28,00,000/- as confirmed by the CIT(A) deserved to be deleted.
4. (a) That the Ld. CIT(A) has erred in confirming the addition of Rs. 48,50,000/- on account of repayment of ‘Housing Loan’for which the sources have been established and the identity, creditworthiness of the persons had also been established and, thus, the addition as sustained to the tune of Rs. 48,50,0007-deserves to be deleted.
(b) That the Ld. CIT(A) has failed to appreciate that the financial help was taken from the family members, like father’s real brother, assessee’s real brother and, thus, the identity and creditworthiness of the parties have been proved beyond any iota of doubt, for which, the necessary confirmations had been filed.
5. That the confirmation of all the additions are against the facts & circumstances of the case and on surmises and the submission of the applicant along with the evidences furnished before the CIT(A) have been ignored summarily.
6. That the Ld. CIT (A) has erred in confirming the action of the Assessing Officer in invoking the provision of Section 115BBE of the Income Tax Act, 1961 on account of the additions has made by the Assessing Officer.
7. That the Ld. CIT (A) has ignored the detailed written submission along with the other evidences as furnished in the form of Paper Book and the judgments relied upon and, thus, the confirmation of all the additions is bad in law.
8. That the appellant craves leave to add, amend, or alter any of the above ground or grounds of appeal during the course of appellate proceedings.
3.0 It was contended by the Ld. Authorised Representative (AR) that the assessee has been maintaining regular books of accounts and which are subject to audit and that the Return was filed based on such audited books of account only. At the very outset, it was brought to the notice of the Bench, that though the Assessing Officer had made certain additions to the returned income on account of the amount received from certain related parties, sales had been made subsequently against the amounts so received during the very same year and thus the sales had been adjusted against the advances received from them. It was submitted that no adverse view had been drawn by the authorities below in this regard and the books of accounts had also not been rejected u/s 145(3) of the Act.
3.1 The Ld. AR submitted that regarding the addition of Rs. 1,20,000/- on account of amount received from one Sh. Deepak Sharma and Sh. Suresh Kumar added u/s 68 of the Act, the Assessing Officer has discussed this issue in Para 7 of the order and referred to cash receipts of Rs. 20,000/- per day from Sh. Deepak Sharma and from Sh. Suresh Kumar. It was submitted that this amount had been returned during the same year by way of cash in installments but before the Assessing Officer, no confirmations, no copy of accounts, no PAN Nos./ITRs detail were furnished leading to addition of Rs. 1,20,000/-. It was further submitted by the Ld. AR that the Ld. CIT (A) had upheld the addition because no confirmations had been filed from either of the parties. The Ld. AR further submitted that that since the assessee does not have any link/connection with these parties, who had advanced the amount for sales to be made to them, therefore, the particulars of such parties were not available and it was stressed that the entries were genuine amount and the same deserved to be accepted.
3.2.0 With respect to Ground Nos. 3(a) and 3 (b), it was submitted that these grounds relate to confirmation of addition of Rs. 28 lacs in respect of advances received from related/identifiable and assessed parties, who had made certain advance payments on different dates from 1.4.2016 to 18.10.2016 in small installments and, later on, sales were made to such parties and the advances so received were adjusted against the sales to such parties and for that, the Ld. AR relied upon the following documents as provided to the Assessing Officer/NFAC, Delhi:
