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TMI Blog2023 (3) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... of the cash from various parties and deposit of cash to bank account. AO misunderstood the issue without considering cash book maintained by the assessee and come to the conclusion that cash received from M/s.Sri Baba Trading Co., cannot be source for cash deposits found in bank account maintained with M/s.KVB. Therefore, we are of the considered view that the AO is completely erred in rejecting source for cash deposits from M/s.Sri Baba Trading Co - we are of the considered view that the assessee is able to explain source for cash deposits found in bank account maintained with M/s.KVB. CIT(A) after considering relevant facts has rightly deleted the additions made by the AO towards cash deposits u/s.68 and thus, we are inclined to uphold the findings of Ld.CIT(A) and dismiss the appeal filed by the Revenue. - ITA No. 1514/Chny/2018 - - - Dated:- 8-3-2023 - SHRI V. DURGA RAO, HON BLE JUDICIAL MEMBER AND SHRI MANJUNATHA. G, HON BLE ACCOUNTANT MEMBER For the Department : Mr. AR.V.Sreenivasan, Addl.CIT For the Assessee : Mr.K. Subramanian, CA ORDER PER MANJUNATHA.G, AM: This appeal filed by the Revenue is directed against the order of the Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee submitted that out of receipts from trade receivables, the assessee has deposited a sum of Rs.5,14,32,192/-. The assessee further contended that it has received a sum of Rs.2.20 Crs. from M/s.Sri Baba Trading Co. The AO on the basis of details filed by the assessee analyzed trade receivables of current year previous year and opined that the claim of the assessee that a sum of Rs.5,14,32,192/- cash received from trade receivables is unsubstantiated. The AO was also analyzed ledger extract of certain parties, including M/s.Kanishk Steels, M/s.Dharmah Steel M/s.Meenakshi Industries and opined that the assessee has received money from these three parties in cheque. Therefore, the claim of the assessee that it has received cash from certain parties is not supported with necessary evidences. The AO had also rejected the claim of the assessee that it has received a sum of Rs.2.20 Crs. from M/s.Sri Baba Trading Co., as advance for purchase of materials in cash, because, cash receipts from said entity on various dates is not matching with cash deposits appearing in the bank statement. Therefore, rejected explanation of the assessee and made addition of Rs.7,26,80,135/- as unexpl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions of debit and credit through cheque were also seen from the same bank account. After verification, AO has decided to consider entire cash credits of Rs.7,26,80,135/- as unexplained cash credit and taxed accordingly. 4.2. Before me, Ld.AR has filed written submissions which have been reproduced at supra. However, the relevant submissions on the issue is considered hereunder. Ld.AR has filed following reconciliation statement of trade receivables which is the main borne of contentions between the appellant and the AO; For your honor s ready reference, the reconciliation is reproduced herewith: Final Cash Credit to be arrived Particulars Rs. Rs. Opening Balance of Debtors as per Balance sheet 01.04.2012 - 10,07,97,897 Sales as per Profit Loss A/c 2013 - 9,77,30,840 Total 19,85,28,737 Less: Collection - Cheques and Cash (A) Cash fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own trade receivables as on 31.03.2014 at Rs.4,93,65,705/-. As per the AO, the closing balance of trade receivables as on 31.03.2014 should be at Rs.12,50,96,454/- but appellant has accounted for only Rs.4,93,65,705/-. Thus, he has held that there is a huge difference of Rs.7,57,30,749/- which indicates appellant's books of accounts have not been maintained properly and not reliable. In the circumstances, AO has considered entire cash deposits of Rs.7,26,80,135/- u/s.68 of the IT Act. 4.4. On the other hand, Ld.AR has vehemently contended that appellant had produced sales register, trade receivables on 27.12.2016, bank book, trade ledger, etc. It is further contended that AO has not rejected books of accounts, but only made passing reference on the basis of which huge addition has been made. It is stated that books of accounts have been produced before the AO and AO had also issued notice u/s. 133(6) to various parties who had confirmed the transactions with the appellant company. It is also stated that AO has verified the transaction held between appellant company and M/s.Baba Trading Company of Coimbatore and same is found in order insofar as cash received by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. Opening Balance of Debtors as per Balance sheet 01.04.2012 - 10,07,97,897 Sales as per Profit Loss A/c 2013 - 9,77,30,840 Total 19,85,28,737 Less: Collection - Cheques and Cash (A) Cash from Debtors as per Assessment order 5,14,32,192 - (B) Advance taken from Baba Trading Company as per order and Cash receipts statement 2,20,00,000 - (C) Cheque from 3 Debtors as per order not taken by AO 4,73,31,108 - Collections from Debtors (Working =Annexure I) 2,63,88,180 - 14,71,51,480 Closing balance that should be 5,13,77,257 Less: Closing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Co. The assessee had also explained how the AO fundamentally went wrong in arriving at closing balance of trade receivables and as per which, the AO had considered only opening balance of trade receivables as on 01.04.2012 and closing balance of trade receivables as on 31.03.2013 by taking figures from the balance sheet without going into the individual ledger account copies in respect of parties which resulted in arriving at wrong conclusion that there is a difference between trade receivables. But, fact remains that while arriving at closing balance of trade receivables, the AO had omitted to consider sales made for FY 2013-14. The assessee has reconciled the figures and explained before the Ld.CIT(A). The Ld.CIT(A) after considering relevant facts has rightly deleted additions made by the AO and their orders should be upheld. 7. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The sole basis for the AO to make additions towards cash deposits to bank account maintained with M/s.KVB u/s.68 of the Act, is self-reconciliation made by the AO towards trade receivables appeared in the financial statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/- from trade receivables. 9. As regards advance received from M/s.Sri Baba Trading Co., the AO is not in dispute with regard to the fact that the assessee has filed confirmation from the parties to substantiate its claim. In fact, the AO never disputed the fact that the assessee has filed ledger extract along with confirmation to prove claim of advance received from M/s.Sri Baba Trading Co. However, the AO has rejected the explanation of the assessee only on the ground that cash received on various dates, is not matching with cash deposits into bank account. In our considered view, the AO failed to understand the issue because, it is not necessary to match dates of cash receipts from party to date of cash deposit into bank account when the assessee has furnished cash books to explain the receipt of the cash from various parties and deposit of cash to bank account. In this case, the AO misunderstood the issue without considering cash book maintained by the assessee and come to the conclusion that cash received from M/s.Sri Baba Trading Co., cannot be source for cash deposits found in bank account maintained with M/s.KVB. Therefore, we are of the considered view that the AO is c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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