2023 (3) TMI 505 - AT - Income Tax

Unexplained cash deposits during the demonetization period - HELD THAT - The availability of cash and receivables with the assessee over a period of time is a fact not in dispute - As relying on the case of Ashish Plastic Industries 2015 (4) TMI 16 - SUPREME COURT facts are identical as the issue for consideration is that it would amount to double taxation as the assessee herein has already paid due taxes on it. We find that the position of fact as appreciated in as much as that the receivables have already been subjected to tax is not in dispute. Accordingly, in these peculiar facts, we find no good reason to interfere with the impugned order. We further find support from the decision of the Apex Court wherein in the case of Ashish Plastic Industries (supra), the issue was remanded back to consider whether the assessee was able to prove that tax on the income generated from the sale of material had been paid to that extent, the Court held that the benefit should be extended to the assessee. - Decided against revenue.

Summary

Issues Involved:
1. Whether the CIT(A) erred in deleting the addition without considering the facts that the assessee did not submit confirmations of persons from whom cash was received nor produced them during the assessment proceeding.
2. Whether the cash deposits during the demonetization period were adequately explained by the assessee.

Issue-wise Detailed Analysis:

1. Non-submission of Confirmations:
The Revenue contended that the CIT(A) erred in deleting the addition as the assessee neither submitted confirmations from the persons from whom cash was received nor produced them during the assessment proceedings, despite multiple opportunities. The assessee was required to explain the cash deposits during the demonetization period, and the replies provided were deemed contradictory and unacceptable by the AO. Consequently, an addition of Rs. 80,94,250/- was made in the hands of the assessee.

2. Explanation of Cash Deposits During Demonetization:
The assessee argued that the cash deposits were from receivables on which tax had already been paid in previous years. The assessee relied on various documents, including past income tax returns, assessment orders, and statements of affairs, to support their claim. The CIT(A) accepted the assessee's explanation, noting that the cash deposits were from old receivables already subjected to tax, and thus, taxing them again would amount to double taxation.

Tribunal's Findings:
The Tribunal reviewed the factual matrix and the legal position. It noted that the receivables had already been subjected to tax in earlier years and were reflected in the balance sheets. The Tribunal emphasized that taxing the same amount again would result in double taxation. The Tribunal also referenced the Supreme Court's decision in Ashish Plastic Industries vs. ACIT, which held that if tax on income generated from sales had already been paid, the benefit should be extended to the assessee to avoid double taxation.

Conclusion:
The Tribunal found no reason to interfere with the CIT(A)'s order, as the facts indicated that the cash deposits were from receivables already taxed in previous years. The appeal of the Revenue was dismissed, and the addition of Rs. 80,94,250/- was deleted.

Order Pronouncement:
The order was pronounced in the Open Court on 11th January, 2022, dismissing the Revenue's appeal.