9911796707
TMI Blog2023 (12) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... d the detailed submissions made. The impugned addition so made being contrary to the provisions of law and facts of the case and contrary hence, the same kindly be deleted in full. 3.1 Rs. 80,85,610/-: the ld. CIT(A) erred in law as well as on the facts of the case in setting aside the issue in hand to the file of the AO for reconciliation of the receipts based on the receipts shown in the books of accounts and those shown in the TDS form 26AS in as much as the ld. First appellate authority was having no jurisdiction to set aside an issue and was supposed to have finally adjudicated upon the issue in hand after obtaining remand report before passing the final appellate order. Thus, the due and prescribed process of law has not been followed. Hence, the impugned order to this extent deserves to be quashed. The impugned addition of Rs. 80 85,610- deserves to be completely deleted on this ground alone. 3.2 The Id. CIT(A) erred in law as well as on the facts of the case in considering that the difference shown in the regularly maintained books of accounts which were not even rejected and those shown in TDS form 26AS could not be taken in cognizance by considering such difference as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The P&L Account and other supporting evidences were available on the record of the CIT(A) The very invoking of s.43B of the Act must have been deleted here by itself." 2.2. To this effect, the ld. AR took support of Hon'ble Supreme Court decision in the case of NTPC Ltd. VS. CIT 229 ITR 383 (SC) to admit the above ground purely as legal ground and it does not require any investigation for which the Bench consider it as being purely a legal ground in the interest of equity and justice. 3. At the time of hearing of the appeal, the Bench observed that Ground No. 1 raised by the ld.AR of the assessee appears to be a general nature which does not require any adjudication and the same is disposed off without any adjudication in the absence of the specific arguments. 4. Apropos Ground No. 2 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:- 5.2.1 Ground No. 2: Addition on account of cash deposit during demonetization period: The appellant had deposited cash of Rs. 24 lakh in Punjab National Bank, Beawar Branch in specified Bank Notes during the demonetization period. The AO noted that the appellant had been withdrawing cash on daily basis from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 11,67,820.96. Thus, it is not that immediately after cash deposit, the cash balance went down. 1.2.1 Regular Accounts-Binding Evidence: The Assessee is a Pvt. Ltd. Company and hence has been maintaining regular books of accounts including both financial and quantitative records, (wherever required), under the provisions of the Companies Act ,2013. The same were subject to the statutory audit under the Companies Act, 2013. Notably, there is no adverse remark made by the statutory auditors (PB 3-15). Moreover, the accounts of the Assessee was also audited under sec. 44AB of the Act and in the Tax Audit Report (TAR)(PB16), no adverse remark was made by the ld. Tax Auditor. Closing cash in hand of Rs. 11,67,820.96 is duly reflected in the audited Balance Sheet (PB 3-15), as on 31.03.2017. These audited financial statement and also the Tax Audit Report, were duly uploaded along with the Income Tax Return and were available before the AO. The cashbook so maintained, was also admittedly produced before the ld. AO as stated by him at pg. 3 para 5.1 of the Assessment Order. 1.2.2 It is now well settled that the regularly maintained books of accounts, is an admissible evidence u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f common knowledge that in comparatively big cities like Kota it was quite difficult to make deposits or withdraw cash from bank branch due to heavy rush and chaos. Accordingly, the Assessee decided to take cash available at Kota Head Office and part of the cash from Ras Babra site. Thus, taking together the total amount of Rs. 24 lakhs was deposited at PNB, Beawar. In his view this was the best decision by a businessman in those circumstances. The AO can't interfere. 2.3 He could not be expected to establish the fact of physical movement of cash from Kota to Beawar, in a microscopic manner showing the exact date, time and place as to when it was done. Otherwise also it was not practically possible to prove. 3. Onus on the AO- not discharged: 3.1. Unless the availability of the cash is proved to have been utilized elsewhere or is proved to be non-existent prior to the deposits in bank, the AO was not legally justified to suspect and make addition. Pertinently, the AO, in this case, did not deny the availability of cash (at least at Kota). 3.2 What is apparent is Real - Onus not discharged: It is a settled law that what is apparent is real unless controverted. The onus lay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lead anywhere since the Service Tax could not have been paid through the currency declared as illegal tender and therefore the assessee was bound to have deposited the cash in bank account and after withdrawing the same in the permissible currency note / legal tender, the same was deposited with the Central Excise Department. 5. Further S. 69/ 69A requires an explanation from the assessee and once given, it has to be objectively tested. A good proof cannot be converted into no proof. Moreover, discretion conferred upon the AO has to be exercised judiciously as held in CIT vs Smt. P.K. Noorjahan (1999) 237 ITR 0570 (SC): "As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in Parliament, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clearly indicates that the intention of Parliament in enacting s. 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not oblig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner taking a view that cash deposits not being satisfactorily explained, passed a revisional order setting aside assessment - Tribunal, however, set aside revisional order so passed - It was noted that order passed by Assessing Officer that deposits stood reconciled was preceded by a proper inquiry - It was also found that assessee had produced statement of bank account, copies of bills issued to purchasers of tractors as also books of account showing entries of deposits made in bank - Moreover, Assessing Officer had recorded a categorical finding that entries in bank account were verifiable from cash book and also bills produced by assessee - Whether in view of aforesaid, Tribunal was justified in setting aside revisional order passed by Commissioner - Held, yes". The principal propounded in the above case directly applies in the present case. 6.2. Apex court decision in the case of Mehta Parikh & Co. vs. CIT [1956] 30ITR 181 (SC) (DPB 1-10) also directly support the facts of the present case in as much as in that case also, the assessee was in possession of 61 high denomination currency notes on 12.01.1946, when such currency notes were demonetized. The assessee at the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that so many high denomination notes would have been held as part of the cash on hand for a such a large number of days. That, no doubt, is highly suspicious; but the decision of the Tribunal must rest not on suspicion but on legal testimony". In the present case also, the AO has raised a similar allegation in Para.4.3 V 6.3. Kindly refer CIT v/s P.V. Bhoopathy (2006) 205 CTR 495 (Mad) (DPB 11-13) held: "Appeal (High Court)-Substantial question of law-Income from undisclosed sources-AO did not accept various sources of income explained by the assessee and made additions under ss. 68 and 69 in respect of difference between the investments and the sources accepted by him-Tribunal accepted the explanation of the assessee vis-a-vis availability of funds with the assessee from the sale proceeds of jewellery belonging to his mother- in-law, receipt from a party and also the amount of opening balance and savings from earlier years and deleted all the additions-Findings recorded by the Tribunal are purely findings of fact-There is no reason to interfere with the same-No substantial question of law arises-CIT vs. Pradeep Shantaram Padgaonkar (1983) 143 ITR 785 (MP) relied on" 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as against at Kota Head Office. 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. The ld. 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. The 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 considering the facts and circumstances of the case, 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. The ld. CIT(A) had confirmed the action of the AO with the narration as under:- ''5.2.3 The explanation that cash in old currency remained with the appellant till one month after sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his amount. On the other hand, the appellant has claimed that the difference was due to calculation method in the financials, the appellant had taken the receipts on the basis of bills raised, whereas in Form 26 AS the receipt is on the basis of TDS deducted. Further, it has been claimed that in Form 26 AS, TDS is deducted on Gross amount inclusive of Service Tax @ 15% whereas in the books net turnover is taken, The appellant has given a chart showing figures of 3 years to show that actually the amount of receipt shown in financials is higher than that in Form 26 AS. 5.3.2 I have considered the facts of the case. The appellant has claimed TDS on the basis of Form 26 AS and at the same time has shown less receipt from M/s Sanghi Industries. The appellant should be given one opportunity to reconcile the receipts as per Form 26 AS and the financials and particularly to show that the receipts as well as TDS credit from this party have been duly considered in a different year. This ground is considered allowed for statistical purpose. 5.1 During the course of hearing, the ld. AR of the assessee filed following detailed written submission praying therein to delete the impugned additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the action of a third party. The third party follows its own accounting system by which the assessee is not bound. The assessee has been constantly following accrual system of accounting wherein the income is recognized only when invoice is raised. It is not disputed in this case that the assessee raised the invoices in the next financial year on 1.04.2017 & 7.04.2017(PB 36-37) falling in A.Y. 2018-19 and not in the subjected year 2017-18. Accordingly, the assessee has credited the income in A.Y. 2018-19 and debited the account of M/s Sanghi Industries Ltd in the next year as shown in ledger account (PB 38) whereas, no such amount was debited in the account of that party in the current year as per ledger account (PB 45). The other reason of difference was the difference in the calculation method in as much as in form 26AS, the payer has deducted the tax on the gross amount inclusive of service tax @ 15% whereas the assessee in its account has booked net turnover only (i.e. exclusive of services). 3.2. No suppression of receipts/income: It isn't denied that the assessee has accounted for the entire income received/ receivable as per its own consistent method of accounting either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that only because there is a mismatch between TDS certificate (26AS) and turnover shown by the assessee in its P& L account cannot be the sole basis on which the entire addition of the difference could have been brought to tax. Therefore, on the facts and circumstances discussed above we find the view of the Ld. CIT(A) to be a plausible view and accordingly his action of deleting Rs. 2,14,35,593/- is confirmed and therefore, the appeal of the revenue stands dismissed. 7. ....... the Ld. CIT(A) should have first of all rejected the audited books of account produced by the assessee in accordance to Section 145 of the Income Tax Act, 1961 (hereinafter referred to as the Act) which the Ld. CIT(A) has not admittedly done. So the estimation of Ld. CIT(A) fails being bad in law. Therefore, we direct the deletion of estimated amount." 3.4. The CIT(A) agreed in principle but sent for verification. This order attained finality as no appeal by the AO. Hence, the impugned addition deserves to be completely deleted.'' 5.2 On the other hand, the ld. DR supported the order of the ld. CIT(A). 5.3 We have heard both the parties and perused the materials available on record. During the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght certain specific details pertaining to temporary labour wages. However, as the details were not furnished, the expenses were disallowed. The appellant claims that sample vouchers demanded by the AO had been produced. The claim of the appellant does not seem to be correct in the facts. The disallowance is confirmed.'' 6.1 During the course of hearing, the ld. AR of the assessee submitted that entire disallowance of Rs. 26,35,358/- should be deleted for which the ld. AR of the assessee put forth the following submissions. ''The AO wrongly made the disallowance out of temporary expenses of Rs. 26,35,358/-alleging no reply was filed but ignoring that the assessee did file a reply vide letter dated 11.12.2019 pr.7(PB 23) and even produced sample vouchers. The audited accounts containing these comparative details (PB13), was also filed with ROI. The CIT(A) don't dispute these facts yet confirmed the disallowance without any application of mind. He even ignored that such expenses came down sharply to Rs. 2.27 Cr only. This year against Rs. 5.42 Cr last year. There is no valid basis at all and authorities below proceeded on mere suspicion, the entire disallowance allowed in full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in detail in below para ii. For above payable dues Assessee stated that these outstanding dues are of two years which are pending due to some disputes. The reply of Assessee is not correct and acceptable because as per documents provided by Assessee shows that for F.Y. 2015-16 opening balance of Service Tax was Rs. 06,10,570/-, out of which during the year Assessee deposited Rs. 68,90,000/- on various dates and only amount of Rs. 17.20,570/- remains payable. Which clearly tells that there was no dispute and Assessee deposited Service Tax on regular interval during the year Assessee also not produced any documentary evidence of dispute, therefore, the reply of Assessee is not tenable. Similarly, for financial year 2016-17 (A.Y. 2017-18) Assessee shown liability of Rs. 68,90,191/- which after reducing input credit of Rs. 5,90,671/- remains payable of Rs. 62.99520/- From above, it clear that at the end of the Financial Year Total Service Tax amount remains payable of Rs. 80,20,090/- (1720570+ 6299520) which the Assessee has not deposited. (By typographical mistake amount of Govt. Dues was taken Rs. 82,89,602/- instead of Rs 80,20,090/-) iii In the absence of the required detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax @14.5% (7,10,085.34/-) (PB II-48) and Service Tax @15% (61,80,106.15/-) (PB II-49) and thereafter the balances were transferred to Service Tax Payable Account for the different years like service tax payable (2016-17) and service tax payable (2015-16). Accordingly, the Assessee credited service tax payable account (FY 2015-16) (PB II-46) which is related to AY 2016-17 wherein Rs. 17,20,570/- was credited. Similarly, the service tax payable (FY 2016-17) of Rs. 62,99,520/-(Net of Input Adjustment) (PB II-47) relating to AY 2017-18, under consideration was credited as payable. In other words, the amount of service tax collected/credited was directly taken to the service tax payable account in the balance sheet, however, there was no occasion for the Assessee nor the Assessee ever taken such item to the Profit & Loss Account (PB 1 - 4). In other words, the Assessee made no claim at all in the P&L Account of the service tax payable, if any, during the year. Once admittedly no claim was made, there can't be any question of allowance or disallowance and consequently Sec.43B could not have been invoked. 1.2. Interestingly, the AO himself has accepted this contention in principle when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Service Tax in the P&L account is incorrect. However, the facts admitted by the AO shows that in the P&L account the Assessee had shown the turnover of Rs. 4.59 cr. only. It is not the case that the amount of Rs 5.28 cr. was credited first and thereafter the amount of Service Tax Rs. 68,90,191/- was reduced. In fact, a perusal of the sales account ledger 15%(4,11,00,807/-) (PB II- 51 to 54) and 14.5% (48,97,140/-) (PB II -55) do not at all show the total amount of turnover as wrongly stated by the AO. Thus, the jurisdictional fact as claimed by the Assessee that it never debited the amount of Service Tax payable of (Rs. 80,20,090/-and now Rs. 62,99,520/-) is duly and fully established on record, there is no contrary material brought or record by the AO. These facts or circumstances shows that the Sec.43B was wrongly invoked hence the entire disallowance deserves to be deleted. 3. Supporting Case laws: 3.1 CIT v. Noble & Hewitt (I) (P.) Ltd. (2008) 305 ITR 324 (Delhi HC) (DPB 48-49) held that, "In our opinion since the assessee did not debit the amount to the Profit & Loss Account as an expenditure nor did the assessee claim any deduction in respect of the amount and con ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
