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2022 (6) TMI 598

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..... , 2015 to Nov.2015 and thereafter is also commensurate with the regular trend. It is not a case where the assessee in this particular period has made substantial cash deposits in the Bank A/c. Therefore, the lower authorities, in my opinion, have erred in disbelieving the submissions made by the assessee, An identical issue came in the case of Pr. CIT vs. Agson Global (P) Ltd [ 2022 (1) TMI 848 - DELHI HIGH COURT] wherein Tribunal deleted the additions sustained by the CIT (A) of Rs.73.13 crores in respect of cash deposits made with the Bank during demonetization period. Thus NFAC was not justified in sustaining the addition of Rs.30.00 lakhs made by the Assessing Officer in the Bank A/c during the demonetization period in old currency notes of Rs.1000. Accordingly, the order of the NFAC on this issue is set aside and the grounds raised on this issue are allowed. Addition on account of low withdrawals - Addition made by the Assessing Officer and sustained by the NFAC is concerned, the same, in my opinion, is purely based on presumptions and surmises without bringing any material on record to suggest that the assessee has incurred more expenditure than what has been shown in the cap .....

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..... ) 1 11.11.2016 1000 - 10,00,000 2 15.11.2016 1000 - 10,00,000 3 23.11.2016 1000 - 10,00,000 T O T A L 30,00,000 4. Rejecting the various explanations given by the assessee, the Assessing Officer held that there was no sale to the extent of Rs.30.00 lakhs which the assessee explained to be the source of deposit made in the Bank A/c. The Assessing Officer therefore, rejected the book result and computed the net profit at Rs.12,27,647/-the details of which are as under: Sales/Gross receipts of business as per R.O.I filed for the A.Y 2017-18 Rs.11,06,88,297 Less: Sale Proceeds in old denomination Rs.30,00,000 Assessed sales/gross receipts of business as per RETURN OF INCOME filed for the A.Y 2017-18 Rs.10,76,88,297 Net profit calculated at 1.14% (on pro rata basis) Rs.12,27,647/- 5. The Assessing Officer further noted from the capital a/c filed by the assessee that the assessee has shown withdrawals to the tune of Rs.7,40,508/-. According to the Assessing Officer, the drawings shown by the assessee is very low as compared to the expenditure claimed at Rs.24,96,743/- in the P&L A/c. He, therefore, made an addition of Rs.2,40,000/- to the total .....

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..... erefore, in the absence of any concrete details regarding the source of cash deposit of Rs. 30,00,000/- is remains as unexplained u/s 69A of the Income tax Act, 1961. So far as added income of the appellant Rs. 2,40,000/- on account of low drawing. Appellant has to stated that "An amount Rs. 7,40,508/- i drawn for personal expenses". Appellant has not given any proof of his claim about his business expenditure and personal expenditure like bill/vouchers and certificate etc. In the absence of documentary evidence the contention of the assessee cannot be accepted. Assessee has failed to correlate it. Hence, the addition of the Assessing Officer is confirmed and the appeal of the assessee is dismissed." 7. Aggrieved with such order of the CIT (A), the assessee is in appeal before the Tribunal. 8. The learned Counsel for the assessee strongly challenged the order of the CIT (A) in sustaining the addition of Rs.30.00 lakhs and Rs.2.40 lakhs respectively. 9. Referring to page 173 of the Paper Book, the learned Counsel for the assessee drew the attention of the Bench to the details of month-wise cash sales for the financial year 2015-16 which are as under: Month & Ye .....

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..... 6,49,257 8,59,884 17,99,830 - 3,03,862 47,18,650 3,19,98,486 3,51,07,890 - 45,98,567 14. Referring to page 178 of the Paper Book, he drew the attention of the Bench to the details of month-wise cash sales and cash deposits from 1.4.2016 to 8.11.2016: Month & Year Opening cash in hand Cash sales Cash deposited in Bank IOB Cash deposited in Bank SBI Cash withdrawal from Bank Closing cash on hand April, 2016 8,61,689 42,35,445.00 - 77,02,600 - 10,60,184 May 2016 10,60,184 48,42,932.60 - 66,85,136 - 10,79,493 June 2016 10,79,493 75,97,847 - 81,06,640 - 14,43,356 July 2016 14,43,356 48,30,725 - 81,88,120 - 21,11,977 Aug. 2016 21,11,977 54,99,673 65,10,800 13,40,000 - 25,10,451 Sept.2016 25,10,451 84,46,503 89,60,000 5,73,988 - 30,60,469 Oct.2016 30,60,469 73,09,041 92,00,000 4,01,430 - 15,95,325 Nov.16 till 8.11.2016 15,95,325 26,05,083 14,00,000 72,000 - 28,60,665 1,37,22,944 4,53,67,249.60 2,60,70,800 3,30,78,914 - 1,57,21,920 15. He accordingly submitted that the cash deposits made by the assessee in the Bank A/c during the period from 1 .....

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..... NFAC on this issue deserves to be upheld. 19. I have heard the rival arguments made by both sides perused the orders of the Assessing Officer and the NFAC and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find the Assessing Officer in the instant case made an addition of Rs.30.00 lakhs being the cash deposits made by the assessee in old denomination of Rs.1000 currency notes during the demonetization period in his bank a/c maintained with Indian Overseas Bank. Similarly, the Assessing Officer made addition of Rs.2,40,000 on account of low withdrawals. I find the NFAC sustained both the additions, reasons of which are already reproduced in the preceding paragraphs. It is the submission of the learned Counsel for the assessee that the deposit of old currency notes in the Bank A/c is out of the sale proceeds effected prior to the ban of currency notes i.e. from the midnight of 8/11/2016. It is his submission that a perusal of the month-wise cash deposits made by the assessee during the financial year 2015-16 and 2016-17 would show that such cash deposits made in the Bank A/c is commensurate with the sales made by the a .....

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..... ble Delhi High Court cited (Supra), therefore, I am of the opinion that the learned NFAC was not justified in sustaining the addition of Rs.30.00 lakhs made by the Assessing Officer in the Bank A/c during the demonetization period in old currency notes of Rs.1000. Accordingly, the order of the NFAC on this issue is set aside and the grounds raised on this issue are allowed. 23. So far as the addition of Rs.2,40,000/- made by the Assessing Officer and sustained by the NFAC is concerned, the same, in my opinion, is purely based on presumptions and surmises without bringing any material on record to suggest that the assessee has incurred more expenditure than what has been shown in the capital a/c towards withdrawals. There is noting on record to suggest that the assessee has purchased any movable or immovable properties, incurred any expenditure for marriage, or any other function or is leading a lavish lifestyle. Since the addition is based purely on presumption and surmises therefore, without bringing any material on record, such an addition, in my opinion, cannot be sustained. I therefore, set aside the order of the NFAC on this issue and direct the Assessing Officer to delete th .....

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