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2024 (2) TMI 1224 - AT - Income TaxAdditions towards cash deposits u/s. 69A r.w.s. 115BBE in demonetized currency - Addition based on report received from the ADIT (Investigation), Trichy - HELD THAT - Since, the assessee could able to furnish necessary evidences, including cash book, sales bills and also explained source for cash deposits into bank account in new currency notes, in our considered view, AO is completely erred in making addition towards balance cash deposits u/s. 69A of the Act. Sole basis for the AO to reject cash book filed by the assessee during the course of assessment proceedings, is difference in opening cash in hand as on 27.11.2016 in the cash book maintained by the Cashier and cash book submitted by the assessee during the course of assessment proceedings - Assessee has explained difference in cash balance between two cash books and argued that cash book considered by the Survey Team on 27.11.2016, is a rough cash book maintained by the Cashier at Factory premise, whereas, the cash book submitted by the assessee, is a computer generated cash book which contain total transactions of the assessee. The explanation given by the assessee to explain difference in cash balance as per two cash books is reasonable and acceptable. Decided against revenue. Estimation of returned income - Since, the sales declared by the assessee to the tune of Rs. 1,10,30,000/- has been excluded and made additions under the head income from other sources as unexplained money u/s. 69A of the Act, in our considered view, the cost of purchase to said sales also needs to be excluded. If you exclude sales and corresponding cost of sales from the net profit declared by the assessee, the net profit computed by the CIT(A) by excluding a sum of Rs. 83,94,933/- from net profit declared by the assessee at Rs. 1,98,55,779/-, in our considered view, the net profit computed by the CIT(A) at Rs. 1,14,60,846/- is in accordance with accepted principles of accounting. Therefore, no error in the findings recorded by the CIT(A) to re-compute net profit from business and to be taxable under normal rate of tax, and thus, we are inclined to uphold the findings of the CIT(A) and reject the ground taken by the Revenue.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Addition of unexplained cash deposits during the demonetization period. 3. Deletion of addition by CIT(A) and recomputation of income. Summary: 1. Condonation of Delay: The Revenue's appeal was delayed by 15 days due to the Covid situation affecting the regular functioning of the office. Both parties agreed to condone the delay, and the Tribunal accepted the reasons provided, admitting the appeal for hearing. 2. Unexplained Cash Deposits: The assessee, a dairy business firm, deposited Rs. 6,65,24,690/- in cash during the demonetization period, including Rs. 1,51,35,500/- in old demonetized currency notes. The AO added the entire amount as unexplained money under Section 69A r.w.s. 115BBE of the Act, rejecting the cash book submitted by the assessee due to discrepancies in the opening cash balance. 3. Deletion of Addition by CIT(A): The CIT(A) sustained the addition of Rs. 1,10,30,000/- in old demonetized currency notes but deleted the addition of Rs. 5,54,94,690/- in new currency notes, accepting the assessee's explanation of cash sales. The CIT(A) recomputed the income by reducing the cost of goods sold from the declared income, resulting in a net profit of Rs. 1,14,60,846/-. 4. Tribunal's Decision: The Tribunal upheld the CIT(A)'s decision, agreeing that the assessee could not explain the source of Rs. 1,10,30,000/- in old currency notes, thus sustaining the addition. However, it found no error in the deletion of the Rs. 5,54,94,690/- addition, as the assessee provided sufficient evidence of cash sales and corresponding deposits in new currency notes. The Tribunal also upheld the recomputation of income by the CIT(A), concluding that the net profit of Rs. 1,14,60,846/- was correctly determined. Conclusion: The appeal filed by the Revenue was dismissed, with the Tribunal affirming the CIT(A)'s order in all respects.
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