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2023 (12) TMI 761 - AT - Income TaxAddition on account of cash deposit during demonetization period - AO made an addition because there was no sufficient evidence whatsoever on record which according to him proves that the assessee was having cash in hand at Beawar as against at Kota Head Office. - HELD THAT - The assessee was not maintaining any separate set of books account at different locations and the argument made by the assessee that the cash in hand was available at Beawar was not accepted by the AO being no evidence on record. AO in the absence of required details and documents that the cash was deposited out of the cash in hand available with the assessee was not accepted for want of proper supporting documents/proof. AO on verification of bank statement of Beawar PNB Branch, submitted by the assessee, noted that there is no cash transaction in the said bank account which is further evidence that the assessee was not having any cash in hand in Beawar PNB Branch. Thus the AO in totality noted that the cash deposit (SBN Notes) during demonetization period cannot be from the explained and disclosed sources and the same is required to be treated as deposited of undisclosed income of the assessee. Thus the assessee glumly failed to justify the genuineness of the cash on hand viz a viz its use for payment of service tax, if the assessee was having the cash why the government dues are not discharged and kept the cash on hand and not only that the filmy reasons provided by the assessee of shifting the cash on hand from one place to another is also not justified with the corroborative evidence. Thus, we are not inclined to interfere in the order of the ld. CIT(A). Thus Ground No. 2 of the assessee is dismissed. Addition on account of difference in turnover as per financials and Form 26AS - HELD THAT - Assessee had claimed TDS on basis of Form 26 AS and at the same time has shown less receipt from M/s Sanghi Industries. Hence, there is a substantial difference in the receipts shown as per Form 26AS. Decided against assessee. Disallowance of temporary labour charges - disallowance u/s 37(1) - HELD THAT - Assessee as show caused on 01-12-2019 for which the assessee did not comply with this show cause. Since the assessee did not any reply on this issue which shows that the assessee has nothing to say on payment of wages made and according to the AO, the expenses appeared relating to previous year and the same could not be allowed in the year under assessment. AO made disallowance u/s 37(1) and added to the total income of the assessee and the ld. CIT(A) has confirmed the action of the AO holding that the AO had sought certain specific details pertaining to temporary labour wages and the details were not supplied by the assessee which were disallowed. The Bench feels that in the interest of equity and justice, the Ground No. 4 of the assessee is restored to the file of the AO to decide it afresh for which the assessee will produce the documents relating to labour payments (supra) and if it is found correct then the relief may be granted to the assessee. The assessee is also directed to produce the relevant bills, vouchers, and other concerning papers in order to settle the issue in question. Thus Ground No. 4 of the assessee is allowed for statistical purposes. Addition u/s 43B - Payments in respect of taxes and Government dues - HELD THAT - As per the provisions of section 43B. Payments in respect of taxes and Government dues can be claimed as expenditure only on actual payment on or before the due date of return. This section has been enacted to enforce that taxes and Government dues are actually paid when the same is claimed as expenditure, including in respect of Assessee who maintain accounts on mercantile basis. The AO has disallowed the amount by noting that Government dues have remained unpaid hence the same was disallowed. On the other hand, the appellant has applied for Dispute Resolution Scheme under Sabka Vishwas Scheme of CBIC. In these circumstance, what is pertinent is how much expenditure has been debited in the account of the appellant. If it has debited and claimed Service Tax payment as expenditure, then the same would be allowed only if paid before the due date of filing of return. However, if the same has not been claimed in the P L account/return, then no such disallowance is required to be made. The AO may call for a reconciliation statement from the appellant and restrict the disallowance to the amount of Service Tax showed as expenditure in the P L Account, which remained unpaid before the due date of return . Bench does feel to interfere in the order of the ld. CIT(A) above as the decision of the ld. CIT(A) is based on the fact that the assessee has not placed the relevant details on record and he has already directed the ld. AO to call for the details and considered the addition accordingly. Hence, this additional ground of the assessee is dismissed.
Issues Involved:
1. Jurisdiction of the order under section 143(3). 2. Addition on account of cash deposits during demonetization. 3. Addition due to discrepancy between receipts in financials and Form 26AS. 4. Disallowance of temporary labor expenses. 5. Charging of interest under sections 234B and 234D. 6. Additional ground regarding disallowance under section 43B. Summary of Judgment: 1. Jurisdiction of the Order under Section 143(3): The Bench observed that Ground No. 1 raised by the assessee was of a general nature and did not require adjudication in the absence of specific arguments. Therefore, it was disposed of without any adjudication. 2. Addition on Account of Cash Deposits During Demonetization: The assessee had deposited Rs. 24 lakh in specified bank notes during the demonetization period. The AO did not accept the explanation that the cash was out of cash-in-hand and added this amount to the income. The assessee argued that the cash was withdrawn for daily requirements and deposited due to heavy rush at another branch. However, the Bench did not find the explanation convincing and upheld the addition, noting that the assessee failed to justify the genuineness of the cash on hand and its use for payment of service tax. Thus, Ground No. 2 was dismissed. 3. Addition Due to Discrepancy Between Receipts in Financials and Form 26AS: The AO added Rs. 80,85,610/- due to differences between receipts shown in financials and Form 26AS. The CIT(A) allowed one opportunity to the assessee to reconcile the receipts. The Bench agreed with the CIT(A) and dismissed Ground Nos. 3.1 and 3.2, finding no infirmity in the CIT(A)'s order. 4. Disallowance of Temporary Labor Expenses: The AO disallowed Rs. 26,35,358/- due to non-furnishing of specific details. The assessee claimed that sample vouchers were produced, but the CIT(A) confirmed the disallowance. The Bench restored the issue to the AO to decide afresh, directing the assessee to produce relevant documents. Thus, Ground No. 4 was allowed for statistical purposes. 5. Charging of Interest Under Sections 234B and 234D: The issue of charging interest under sections 234B and 234D was found to be mandatory and consequential in nature. 6. Additional Ground Regarding Disallowance Under Section 43B: The AO disallowed Rs. 80,20,090/- under section 43B for unpaid service tax. The CIT(A) directed the AO to call for a reconciliation statement and restrict the disallowance to the amount shown as expenditure in the P&L account. The Bench upheld the CIT(A)'s decision, noting that the assessee did not place relevant details on record. Thus, the additional ground was dismissed. Conclusion: The appeal of the assessee was partly allowed, with specific grounds dismissed or allowed for statistical purposes as indicated. The order was pronounced in the open court on 11/10/2023.
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