Jet Freight Logistics Limited Vs CIT Appeal (NFAC) (ITAT Mumbai)
It is evident that assessee is in continuous need for payment of cash at various point of time and hence, assessee had to withdraw cash in order to satisfy its business requirements. Moreover, the assessee has got 9 branches all over India and such cash requirement would have to be met for meeting day to day expenditure. We find from the perusal of the bank statements for the whole year and the cash book for the whole year which is already forming part of records, the assessee has regularly withdrawn cash from its bank account throughout the year and has been making deposits in bank throughout the year in the bank account. Since remaining balance of the amounts withdrawn from bank after meeting its business expenses that were lying with the assessee had lost its validity of being classified as a legal tender pursuant to announcement of demonetisation policy by the Government of India, the assessee had no choice but to deposit the cash available with it both in the form of cash surplus withdrawals and also the cash received from customers in the designated bank account in Specified Bank Notes during the period 09/11/2016 to 31/12/2016. All cash that has been deposited in Specified Bank Notes during the demonetisation period i.e.09/11/2016 to 31/12/2016 cannot be classified as unexplained income of the assessee. What is to be seen is as to whether the assessee had sufficient cash balance in its books for making the said deposits in the bank account. In the instant case, we find that assessee had sufficient cash balance in its books which is evident from the cash book filed by the ld. AR before us. From the perusal of the said cash book, we find that there is no negative cash balance on any day during previous year much less prior to the demonetisation period.
We further find that assessee had furnished the entire details of cash received from customers containing the name and address of the customers, PAN, invoice amount, invoice details, ledger confirmation etc., before the lower authorities and further had submitted that the cash has been received from 20 parties by the assessee during the year. Out of these parties, 11 parties were selected by the ld. AO for verifying the genuineness of the transaction. Three parties directly appeared before the ld. AO and filed the replies. Eight parties furnished the replies to the assessee and those replies were also submitted by the assessee before the ld. AO. These facts were not controverted by the Revenue before us by bringing any contrary evidences. The ld. AO had not brought any cogent evidence on record to disbelieve the details furnished by the parties and the assessee. Moreover, the banks had fixed the maximum limit of making deposit in cash up to Rs.5,00,000/- in a day during the demonetization period commencing from 09/11/2016 to 31/12/2016. This had mandated the assessee to make frequent cash deposits less than Rs. 5,00,000/- during the period 09/11/2016 to 31/12/2016. Accordingly, we hold that the entire cash deposits made by the assessee during the period 09/11/2016 to 31/12/2016 in Specified Bank Notes in the sum of Rs. 2,48,87,000 stood properly explained by the availability of cash balance in its books and hence, no addition thereon could be made u/s.68 of the Act. We direct the ld. AO to delete the said addition.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal in ITA No.683/Mum/2022 for A.Y. 2017-18 arises out of the order by the ld. Commissioner of Income Tax (Appeals) NFAC in appeal No.CIT(A) 17, Mumbai/10357/2019-20 dated 24/11/2021 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 29/12/2019 by the ld. Asst. Commissioner of Income Tax, Circle 10(2)(1), Mumbai (hereinafter referred to as ld. AO).
2. At the outset, we find that there is a delay in filing of appeal by 85 days by assessee before us. We find that the order is passed by the ld. CIT(A) during the Covid Pandemic period and accordingly, in view of the relaxation granted by the Hon’ble Supreme Court, we are inclined to condone the delay of 85 days in filing of appeal by the assessee. Accordingly, the appeal of the assessee is admitted for adjudication.
3. The ground No. 1 & 5 raised by the assessee are general in nature and does not require any specific adjudication.
4. The ground No. 2 raised by the assessee is challenging the action of the ld. CIT(A) in confirming the addition made in the sum of Rs.2,48,87,000/- being Specified Bank Notes deposited in the bank account of the assessee, in the facts and circumstance of the case.
4.1 We have heard rival submissions and perused the materials available on record. We find that the assessee is engaged in the business of freight forwarding for handling perishable, general and time sensitive cargo and handling general and other kinds of cargo. The ld. AO observed that the assessee had credited to the profit and loss account revenue from operations of Rs.216,71,91,519/- and other income of Rs.5,57,018/-, after debiting various expenses, total income of Rs.5,86,67,830/- is declared in the revised return of income filed on 04/11/2017. The ld. AO observed that assessee had deposited a sum of Rs.2,48,87,000/- in Specified Bank Notes (SBN in short) during the period of demonetisation. The ld. AO directed the assessee to respond as to why the cash deposits made in Specified Bank Notes in the bank account of the assessee be brought to tax as unexplained cash credit u/s.68 of the Act and in connection therewith sought copy of cash account with narration of entries, copy of confirmation of parties, who had advanced monies to the assessee in connection together with their name, address and PAN. The ld. AO also asked the assessee to produce the details in a prescribed tabular form. The details called for by the ld. AO were submitted vide letter dated 25/11/2019 by the assessee together with cash book in the whole year. The assessee primafacie submitted that the entire source of cash deposits of Rs.2,48,87,000/- were met out of cash withdrawals made by the assessee from 01/10/2016 to 08/11/2016 in the sum of Rs.62,49,000/- and cash received from various customers in the sum of Rs.1,86,38,000/-. The assessee also furnished the list of customers from whom cash has been received by it together with their name, address, ledger account, PAN, invoice amount of cash sales, ledger confirmation etc., The assessee also explained in detail the complete modus operandi of its operations and the business model adopted by it before the lower authorities. In respect of cash received from customers, the ld. AO also issued notice u/s.133(6) of the Act to seven customers for independent verification. Out of seven parties, three parties confirmed the payment of cash to the assessee amounting to Rs.79,46,904/- as under:-
