9911796707
TMI Blog2024 (8) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... sit of Rs. 36.50 lacs, the assessee has shown Rs. 9,72,482/- as cash in hand, which is also not disputed by the Assessing Officer as well as by the ld. CIT(A) - action of AO is based on mere suspicion and guess work, therefore, when the assessee has proved the source of cash withdrawals, no addition on account of deposit during demonetization period is justified when the assessee has no option except to deposit the high denomination notes in bank. Decided in favour of assessee. - Shri Pawan Singh, Judicial Member For the Assessee : Ms. Chaitali Shah, C.A. For the Department : Shri Vinod Kumar, Sr. DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi (NFAC/learned Commissioner of Income Tax (Appeals) [in short, the ld. CIT(A)] dated 10/11/2023 for the Assessment Year (AY) 2017-18, wherein the assessee has raised following grounds of appeal: 1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in making an addition of Rs. 36,50,000/- on account of allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace of business. Their main place of business is at Navsari. The assessee is required to keep good amount of cash in hand. Due to festive season of Diwali, sufficient amount of cash was required for payment to labour expenses. Surplus was deposited in bank account from time to time. Submission of assessee was not accepted by Assessing Officer. The Assessing Officer held that the assessee has reported cash balance of Rs. 16,03,619/- against the cash expenses of Rs. 38,49,628/- claimed in the last year. There is no change in the business activities. The cash expenses pattern should be on similar line. Cash is generally withdrawn as per requirement of cash expenses. The cash withdrawal shown by the assessee in F.Y. 2015-16 has been incurred in the same month or in the next month. In cash withdrawal and cash expenses for F.Y. 2016-17, there is no much correlation between the cash withdrawal and cash deposit. The assessee artificially reported lower cash expenses comparative to previous years. The practice shown by the assessee is nothing but only to show higher cash in hand so that it may be explained to be a source of cash deposit during demonetization period. The Assessing Officer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A). The assessee reiterated its contention about the cash balance and the details of expenses incurred. The assessee also explained the total turnover of assessee in F.Y. 2015-16 of Rs. 4.50 crores and in F.Y. 2016-17 at Rs. 3.34 crores and explained that when total turnover was reduced, the expenditure was also on lower side, such explanation was given against the conclusion drawn by the Assessing Officer, about the lower expenses during this financial year. The assessee also furnished comparative turnover from A.Y. 2014-15 to A.Y. 2017-18, gross profit (GP) ratio and net profit (NP) ratio for all assessment years. The assessee submitted that the Assessing Officer acted on presumption and guess work in making addition. To support its contention, the assessee relied upon various case laws. Against taxing the addition at the enhanced rate of tax, the assessee submitted that taxation law (second amendment) at 2016 received the assent of Hon'ble President of India on 15/12/2016 as published in Gazette. It is settled law that the Income Tax Act as it stands as on 1st day of April of any financial year must be applied for assessment of that year. To support such view, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year, the turnover of assessee was lower than the turnover of earlier year. The book result of assessee was not rejected. Opening cash balance and closing balance of assessee is not disputed by the lower authorities. The Assessing Officer made addition and the ld. CIT(A) confirmed the addition merely on suspicion and guess work. The assessee furnished complete evidence showing month wise cash withdrawal, cash deposit and the expenses. None of the item of expenses is doubted or disputed except making presumption by referring decision of Hon'ble Supreme Court. The ratio of such case law are not at all applicable on the facts of the assessee s case. The ld. AR of the assessee submits that the Assessing Officer taxed the addition at the enhanced rate. The cash deposit is a part and parcel of business receipt and cannot be taxed at the enhanced rate. The ld. AR of the assessee relied on various case laws on her contention that the addition cannot be made on the basis of surmises, conjectures and presumption, as follows: Umacharan Shaw Bros Vs CIT 37 ITR 271 (SC) Lalchand Bhagat Ambica Ram Vs CIT 37 ITR 288 (SC) Dhakeswari Cotton Mills Ltd. Vs CIT 26 ITR 775 (SC) Smt. Sre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.00 lacs in June, 2016, Rs. 13.25 lacs in July, 2016, Rs. 6.00 lacs in August October, 2016 each and Rs. 5.50 lacs in September, 2016 and Rs. 2.50 lacs in November, 2016 itself, from its bank account. Thus, the assessee has made withdrawals of about Rs. 58.00 lacs. Such huge amount of withdrawals are generally paid in high value of currency notes. The assessee deposited SBN in the form of Rs. 500 and 1000 notes during demonetization period. The assessee has also shown opening cash in hand, such cash in hand is not disputed either by the Assessing Officer or by the ld. CIT(A). Rather the ld. CIT(A) accepted that as on April, 2016, the assessee was having opening cash in hand of Rs. 9,25,837/-. The withdrawals of each and every month is not at all in dispute. I also find that the assessee has given details of cash expenses, none of the figures of cash expenses are disputed by the lower authorities. Once, neither the withdrawal is disputed nor opening cash balance is disputed nor expenses is disputed, thus, disputing the availability of cash in hand is not justified. I find that even after deposit of Rs. 36.50 lacs, the assessee has shown Rs. 9,72,482/- as cash in hand, which is also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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