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2022 (2) TMI 684 - AT - Income TaxAddition of cash outgo u/s 69 - on-money receipts - whether there is any negative cash balance in the parallel books of accounts maintained by the assessee? - HELD THAT - We find that the assessee had submitted that the excess on-money reversals were made out of cash loans taken by Shri Jagdish Ahuja. We also find that assessee had duly explained that the said cash loans had been independently added on peak basis in the hands of Shri Jagdish Ahuja by the order of Hon ble Income Tax Settlement Commission. The purpose of refund of on-money receipts to the customers has been duly explained by the assessee together with its modus-operandi as detailed hereinabove. This is also further confirmed by Shri Jagdish Ahuja in his statement recorded u/s.132(4) of the Act on 28/06/2015. We find that the ld.AO had merely considered on-money receipts portion alone on the receipts side to arrive at the availability of cash with the assessee for making on-money reversal payments. If the cash loans of ₹ 26 Crores which has been independently added in the hands of Shri Jagdish Ahuja is considered on the receipt side, there would be no negative cash balance at all in the parallel books of accounts maintained for the whole group. Assessee submitted various details of additions made on account of net on-money in the case of various group entities of the Ahuja group for A.Y.2014-15 and also on account of inflation of expenses and other income. These facts clearly go to prove that there is lot of force in the submission of the ld. AR that there was absolutely no negative cash balance in the parallel books of accounts maintained in the Tally package. Hence, we hold that there is absolutely no infirmity in the order of order of the ld. CIT(A) granting relief to the assessee as there is no negative cash balance in the parallel books of accounts maintained for the whole Ahuja group which is the primary basis for making an addition per se. Grounds raised by the Revenue are dismissed.
Issues:
1. Justification of deleting the addition made on account of cash outgo under section 69 of the Income Tax Act. Detailed Analysis: The appeal in ITA No.976/Mum/2020 for A.Y.2014-15 dealt with the deletion of an addition made on account of cash outgo of ?5,69,93,024 under section 69 of the Income Tax Act. The only issue to be decided was whether the Commissioner of Income Tax (Appeals) was justified in deleting this addition. The assessee, engaged in construction business, was part of the Ahuja Group where a search and seizure action was conducted under section 132 of the Act. Various incriminating materials were found, leading to the issuance of a notice under section 153C to the assessee based on the data discovered during the search. The Assessing Officer (AO) observed that during the assessment year 2014-15, there was a negative cash balance of ?5,69,93,024, treated as unexplained income under section 69. However, the assessee contended that the negative balance was due to on-money reversals made out of cash loans taken, which were properly explained. The parallel books of accounts maintained in Tally software reflected on-money receipts, reversals, cash loans, and expenses incurred, showing no negative cash balance for the entire Ahuja group. The Commissioner of Income Tax (Appeals) examined the details and deleted the addition of ?5,69,93,024, which the Revenue appealed against. The Tribunal found that there was no negative cash balance in the parallel books of accounts for the whole group, as the excess on-money reversals were made from cash loans taken by Shri Jagdish Ahuja, which were separately assessed. The purpose of refunding on-money receipts was explained, supported by the modus operandi and statements of Shri Jagdish Ahuja. The AO had only considered on-money receipts without accounting for the cash loans, leading to the misconception of negative cash balance. The Tribunal upheld the Commissioner's decision, as there was no infirmity in granting relief to the assessee due to the absence of a negative cash balance in the parallel books of accounts. Therefore, the Tribunal dismissed the Revenue's appeal, affirming the Commissioner's order and holding that there was no interference warranted. The detailed analysis and submissions provided by the assessee supported the conclusion that the addition on account of cash outgo was unjustified, given the proper explanation and absence of negative cash balance in the group's accounts.
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