DCIT Vs Roop Fashion (ITAT Chandigarh)
Books of accounts maintained by the assessee were audited and accepted by the AO. Cash sales and cash realized from debtors were also known to AO. Addition u/s 69A of cash deposited deleted.
Facts-
The group cases of M/s Roop Square Group of Companies to which the assessee belongs were searched under section 132(1) of the Act on 01/11/2017. Thereafter notice under section 153A of the Act requiring the assessee to file the return of income was issued on 14/02/2019. In response no return was filed by the assessee and nobody appeared on behalf of the assessee when the notice under section 142(1) was issued.
AO observed that the assessee had declared an income of Rs. 2,35,350/-under the head income from Business & Profession in its return of income filed on 31/10/2017 under section 139 of the Act. The AO during the course of assessment proceedings noticed that the assessee had deposited demonetized currency in its bank account amounting to Rs. 2,47,50,000/-.
Post working AO opined that assessee had deposited excess cash of Rs. 97,50,000/- from undisclosed sources during the demonetization period. AO invoked provision of section 69A. CIT(A) deleted the addition and being aggrieved the revenue is in appeal.
Conclusion-
In the present case it is not in dispute that the books of accounts maintained by the assessee in the regular course of its business were audited and accepted by the AO while framing the assessment through deep scrutiny under section 143(3) of the Act. It is also noticed that the assessee is having cash sales in all the years of the impugned order passed by the Ld. CIT(A). The assessee was also having cash realized from the debtors and it was not the case of the AO that the debtors of the assessee were bogus or those were not related to the business of the assesee. The cash deposited in the bank by the assessee during the demonetization period was out of the cash sales and the realization from the trade debtors duly shown in the book of accounts which were accepted by the A.O. In the present case, in the month of October 2016 and November 2016 the assessee was having cash sales of Rs. 1,04,97,098/- and Rs. 62,00,849/- which had not been doubted by the AO who had also not commented on the claim of the assessee that the balance of the amount which was deposited in the bank account was out of the realization of cash from the debtors which for the year under consideration was at Rs. 3,09,78,586/-. Therefore, the addition of Rs. 97,50,000/- made by the AO on the basis of surmises and conjectures was rightly deleted by the Ld. CIT(A).
FULL TEXT OF THE ORDER OF ITAT CHENNAI
The Appeal by the Department and the Cross Objection by the Assessee are directed against the order dt. 31/03/2021 of the Ld CIT(A)-5, Ludhiana.
2. In its appeal, the department has raised the following grounds:
1. Whether upon facts and circumstances of the case, the Ld. CIT(A) was justified in deleting the addition made on account of unexplained cash deposits during demonetization period u/s 69A of the Income Tax Act, 1961 amounting to Rs. 97,50,000/-?
2. Whether upon the facts and circumstances of the case, the Ld. CIT(A) was justified in accepting additional evidence without affording opportunity of being heard to the Assessing Officer contrary to Rule 46A of the I.T. Rules ?
3. The Appellant craves leave to add, amend, modify, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal.
3. The only grievance of the Department in this appeal relates to the deletion of addition of Rs. 97,50,000/- made by the AO on account of cash deposited during the demonetization period by invoking the provisions of Section 69 A of the Income Tax Act, 1961 (for short the ‘Act’).
4. The facts of the case in brief are that the group cases of M/s Roop Square Group of Companies to which the assessee belongs were searched under section 132(1) of the Act on 01/11/2017. Thereafter notice under section 153A of the Act requiring the assessee to file the return of income was issued on 14/02/2019. In response no return was filed by the assessee and nobody appeared on behalf of the assessee when the notice under section 142(1) was issued.
4.1 The AO observed that the assessee had declared an income of Rs. 2,35,350/-under the head income from Business & Profession in its return of income filed on 31/10/2017 under section 139 of the Act. The AO during the course of assessment proceedings noticed that the assessee had deposited demonetized currency in its bank account amounting to Rs. 2,47,50,000/-. He asked the assessee to furnish information with necessary documentary evidences and issued the questionnaire which read as under:
i. Please submit the detail of all the cash deposits made by you during the demonetization period from 09/11/2016 to 31/12/2016.
ii. Also submit the certified copies of the bank accounts from 01/04/2016 to 31/03/2017.
iii. Kindly provide following month-wise details of cash in hand in format as given below:
