2023 (5) TMI 470 - AT - Income Tax

Unexplained money u/s 69A - cash deposited in the bank account of the assessee unexplained - CIT-A admitted additional evidences of the revised balance sheet submitted by the assessee - HELD THAT - No infirmity in the order of the CIT(A) admitting the additional evidence filed by the assessee of its revised financial statements incorporating the Jalgaon Bank account. The assesses explanation that the cash deposited in the Jalgaon bank account was transferred to the Axis Bank account of the assessee in Ahmedabad, which was duly accounted for in the Books of the assessee as Sales, was verified by the AO in remand proceedings and found to be correct. Even if additional evidence in the form of revised balance sheet incorporating the Jalgoan Bank account were not admitted for adjudication, as per the AO s case also, it would not have any material difference to the factum of the cash deposits being explained or not. AO in the remand report has categorically admitted that all the cash deposited in the Jalgaon bank are reflected in the AXIS Bank account, and that they stand explained and no adverse view be taken. Therefore, CIT(A) has rightly admitted additional evidences of the revised balance sheet submitted by the assessee, and even if it was not admitted by him, it would not have made any material difference to the adjudication of the issue at hand regarding source of cash deposited in the bank account at Jalgoan bank account. CIT(A) has based his decision on certain factual finding being; that the AO himself had verified that cash deposited by the assessee in his bank account at Jalgoan was transferred to the assessee s bank account in Ahmedabad in AXIS bank and accounted for as sales in its books. AO had verified all entries in remand proceedings and had given a finding that it completely tallied and also stated that no adverse view be taken. This factual finding of the CIT(A), we find, is derived from remand report of the AO, contents of which have been reproduced above. DR has been unable to controvert the same before us. In view of the same, we see no reason to interfere in the order of the CIT(A) deleting entire addition of Rs.86.75 crores, noting that the AO himself was satisfied that the cash deposited in the bank account at Jalgoan was reflected as sales in the books of the assessee. Even otherwise we find that the AO in his remand report had accepted the assesses explanation for the entire cash deposits of Rs.86.75 Crs except that relating to cash deposits of Rs. 9.73 Crs. Therefore to the extent cash deposits were accepted by the AO as explained, of Rs.77.02(86.75 9.73),there can be no grievance of the Revenue now before us. As for the cash deposits not accepted as explained by the AO, his contention we find is that the invoices of the sales made in Jalgaon produced by the assessee did not corroborate the explanation of the assessee that the sales were made outside the Gujarat, since the invoices to the extent of Rs.9.73 crores were raised for clients in Gujarat. We agree with the ld.CIT(A)that this argument merits no consideration. The case of the Revenue is that the cash deposit of Rs.9.73 Crs in Jalgaon bank account, which apparently does not conform to the assesses explanation of being cash sales outside Gujarat, is unaccounted income of the assessee. But the fact of the matter is that all cash deposit in Jalgaon bank account was already accounted for as income by the assessee by way of sales in its Books of accounts and the sales and purchases made by the assessee was shown to tally quantitatively to the Revenue authorities. The AO found no infirmity in the quantitative tally. In the light of the same, with all the cash deposits in the Jalgaon Bank account of the assessee admittedly treated as sales by the assessee and the sales and purchases found to tally quantitatively also, there cannot be any case for treating any portion of the cash deposits as unexplained income of the assessee. Appeal of the Revenue is dismissed.

Summary

Issues Involved:
1. Deletion of addition of Rs. 86.75 crores under Section 69A of the Income Tax Act.
2. Admission of additional grounds under Rule 46(A) of the I.T. Rules, 1962.
3. Acceptance of the Revised Audit Report dated 21-06-2016.

Summary:

Issue 1: Deletion of Addition under Section 69A
The Revenue appealed against the deletion of Rs. 86.75 crores added by the Assessing Officer (AO) as unexplained money under Section 69A. The assessee, engaged in trading gold and silver, deposited this amount in a bank account at Jalgaon, which was not disclosed in its balance sheet. The AO found discrepancies between the invoices and the locations of the customers. The assessee explained that the cash deposits were from sales and were transferred to an AXIS Bank account in Ahmedabad, duly reflected as sales in its books. The CIT(A) accepted this explanation after verifying the transactions and deleted the addition. The Tribunal upheld the CIT(A)'s decision, noting that the AO's remand report confirmed the cash deposits were accounted for as sales.

Issue 2: Admission of Additional Grounds under Rule 46(A)
The Revenue contended that the CIT(A) erred in admitting additional evidence, specifically a revised balance sheet incorporating the Jalgaon bank account. The CIT(A) admitted the evidence, citing an inadvertent error by the assessee in not including the bank account initially. The Tribunal found no infirmity in this decision, as the AO had verified the transactions and found them to tally with the books of the assessee. The Tribunal held that the CIT(A) rightly admitted the additional evidence, noting that even without it, the cash deposits were explained.

Issue 3: Acceptance of Revised Audit Report
The Revenue objected to the CIT(A) accepting the Revised Audit Report. The CIT(A) noted that the revised balance sheet showed no significant differences except for a minor interest amount. The Tribunal agreed with the CIT(A) that the revised financial statements were correctly admitted, as they provided a reasonable explanation for the cash deposits.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the addition of Rs. 86.75 crores, admit additional evidence, and accept the Revised Audit Report. The Tribunal found that the cash deposits were duly accounted for as sales in the assessee's books, and there was no material impact from the initial omission of the Jalgaon bank account.