Good Media News Pvt Ltd Vs ITO (ITAT Chandigarh)
The Chandigarh Bench of the Income Tax Appellate Tribunal considered an appeal by Good Media News Pvt Ltd against the order of the CIT(A) dated 23.12.2024 for AY 2017-18. The assessee, a private limited company engaged in providing Cable TV network services in Himachal Pradesh, deposited ₹3,72,79,775 in cash during the demonetisation period. It explained that the deposits represented business receipts from cable subscriptions, security deposits and installation charges, particularly arising from mandatory digitisation of cable television services and installation or replacement of digital set-top boxes.
The Assessing Officer accepted only ₹92,86,937 as reasonably available cash and treated ₹2,21,14,454 as unexplained cash credit under Section 68 of the Income-tax Act. The AO relied on the assessee’s normal cash generation and average cash balance and considered the claimed security deposits and installation charges disproportionate to the number of set-top boxes installed. The CIT(A) upheld the addition, while directing that the amount sustained under Section 68 be reduced from business turnover to avoid double taxation.
Before the Tribunal, the assessee submitted that the peculiar nature of its business and mandatory digitisation requirements resulted in substantial cash receipts. It also produced additional evidence, including subscriber agreements, details indicating increased subscriptions and documents concerning digital set-top box installations. The assessee sought another opportunity to establish the source of the deposits through subscriber-wise and other contemporaneous records.
The Departmental Representative opposed the remand, contending that sufficient opportunities had already been granted.
The Tribunal observed that the additional evidence had not been examined by the Assessing Officer. Considering the circumstances, it held that the interest of substantial justice required one effective opportunity for the assessee to substantiate its claim. It therefore set aside the impugned order on the issue and restored the matter to the Assessing Officer for de novo adjudication.
The AO was directed to examine the additional and further evidence, including subscriber details, subscriptions, digital set-top boxes installed or replaced, channels subscribed, amounts collected towards security deposits, installation charges and subscriptions, and the Central Government policy or regulatory framework concerning digitisation. The AO was also directed to provide adequate opportunity of hearing and pass a fresh speaking order. The Tribunal clarified that it had expressed no opinion on the merits and left all issues open. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
This is an appeal filed by the assessee feeling aggrieved by the order passed by the ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 23.12.2024 passed for assessment year 2017-18.
2. The brief facts of the case are that the assessee is a private limited company engaged in the business of providing Cable TV network services in the State of Himachal Pradesh. During the relevant assessment year, the assessee deposited cash amounting to ₹3,72,79,775/- during the demonetization period. The assessee explained that the deposits represented cash receipts from cable subscriptions, security deposits and installation charges received from customers, particularly on account of mandatory digitization of the cable television network requiring installation/replacement of digital set-top boxes.
3. The Assessing Officer, however, was not satisfied with the explanation and held that, considering the normal pattern of cash generation and the average cash balance maintained by the assessee, only cash of ₹92,86,937/- could reasonably have been available on the date of demonetization. The balance amount of ₹2,21,14,454/- deposited during the demonetization period was accordingly treated as unexplained cash credit under section 68 of the Income-tax Act.
4. The Assessing Officer observed that although the assessee claimed substantial receipts towards security deposits and installation charges for digital set-top boxes, the quantum claimed was disproportionate to the number of set-top boxes allegedly installed. He further observed that the assessee had shown an abnormal rise in cash balance immediately preceding demonetization which was not in consonance with its regular business pattern. After estimating the receipts relatable to cable subscriptions, installation charges and security deposits on the basis of the normal business turnover, the Assessing Officer concluded that only ₹92,86,937/- represented explained cash available for deposit and treated the balance amount of ₹2,21,14,454/- as unexplained cash credit under section 68 of the Act.
5. The ld. CIT(A) concurred with the reasoning of the Assessing Officer and held that the working adopted by the Assessing Officer regarding the availability of cash was scientific and reasonable. The appellate authority observed that the assessee had failed to satisfactorily establish the availability of such huge cash balance on the date of demonetization and accordingly upheld the addition made under section 68. However, accepting the alternate plea of the assessee against double taxation, the ld. CIT(A) directed the Assessing Officer to reduce the amount sustained under section 68 from the business turnover while recomputing the business income so that the same receipts were not taxed twice.
6. The ld. Authorised Representative submitted that the authorities below had failed to appreciate the peculiar nature of the assessee’s business and the statutory requirement imposed by the Central Government for digitization of the cable television network. It was submitted that during the relevant period, replacement and installation of digital set-top boxes had become mandatory under the Government policy governing cable television services, resulting in substantial cash receipts towards security deposits, installation charges and subscription charges.
7. The ld. AR further submitted that documentary evidences, including the agreements with subscribers, details evidencing increase in subscriptions, and supporting documents relating to installation of digital set-top boxes, have now been placed before the Tribunal. It was contended that these evidences clearly demonstrate that the cash deposits were generated from the regular business activity of the assessee.
8. The ld. AR fairly submitted that if one more opportunity is granted, the assessee is willing to produce complete documentary evidence before the Assessing Officer, including subscriber-wise details, names of subscribers, number of subscriptions, number of digital set-top boxes installed, details of channels subscribed, amount received towards installation charges and security deposits, and all other contemporaneous records establishing the source of cash deposited during the demonetization period. It was, therefore, prayed that the matter may be restored to the file of the Assessing Officer for fresh adjudication.
9. The ld. Departmental Representative strongly opposed the request for remand and submitted that adequate opportunities had already been granted during the assessment as well as the appellate proceedings. It was contended that the assessee had failed to substantiate its claim before the authorities below and, therefore, no further opportunity deserves to be granted.
10. We have heard the rival submissions and carefully perused the material available on record. The controversy involved in the present appeal revolves around the source and availability of cash deposited by the assessee during the demonetization period. The explanation of the assessee is that the deposits represented business receipts generated on account of mandatory digitization of cable television services, requiring installation and replacement of digital set-top boxes pursuant to the policy framed by the Central Government. The assessee has also placed before us certain additional evidences including agreements with subscribers and documents indicating increase in subscriptions, which, according to the assessee, support its explanation regarding the source of cash deposits. Since these documents were admittedly not examined by the Assessing Officer while framing the assessment, in our considered opinion, the interest of substantial justice would be served by providing one effective opportunity to the assessee to substantiate its claim before the Assessing Officer.
11. Accordingly, considering the totality of the facts and circumstances of the case, we deem it appropriate to set aside the impugned order on this issue and restore the matter to the file of the Assessing Officer for de novo adjudication.
12. The Assessing Officer shall examine afresh the evidences now produced before the Tribunal as well as such further documentary evidence as may be furnished by the assessee. The assessee shall fully cooperate with the assessment proceedings and furnish complete details, including:
- Subscriber-wise details and names of subscribers;
- Number of cable subscriptions;
- Number of digital set-top boxes installed/replaced;
- Details of channels subscribed by the customers;
- Amounts collected towards security deposits, installation charges and subscriptions;
- The policy, notification or regulatory framework issued by the Central Government mandating digitization/replacement of digital set-top boxes; and
- Any other contemporaneous documentary evidence necessary to establish the availability and source of cash deposited during the demonetization period.
13. The Assessing Officer shall examine the entire material objectively, afford adequate opportunity of hearing to the assessee, and thereafter pass a fresh speaking order in accordance with law. It is clarified that nothing stated herein shall be construed as an expression of opinion on the merits of the addition, and all the issues are left open for consideration by the Assessing Officer in accordance with law.
14. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on 23rd July,2026.
