TMI Blog2023 (7) TMI 1280X X X X Extracts X X X X X X X X Extracts X X X X ..... year were supported by bills and challans. We find merit in the contention of assessee that in the course of assessment proceedings, the assessee filed sales register for financial year 2014-15, copies of bills and ledger accounts of the parties. Assessee also filed cash book of current year where sale proceeds were received from debtors and creditors. No defects were found by AO in such cash book. AO made addition u/s 68, which is not justifiable as the impugned amount was brought to tax twice, firstly on account of sales and secondly by treating it as unexplained. We find merit in the alternative plea of the ld AR for the assessee that if the receipts from the debtors are not accepted as genuine, the deduction should be given for trading loss as in case of such hypothesis amount of cash on hand added by Assessing Officer is not existent and therefore, deduction of trading loss/bad debts is required to be given against deemed income. Thus, in view of the afforesaid factual and legal position, the grounds of appeal raised by the assessee are allowed. - ITA No. 240/Srt/2021 - - - Dated:- 28-7-2023 - Shri Pawan Singh, Judicial Member For the Assessee : Miss Chaitali S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 1961 (in short, the Act) at the address of the parties. The Assessing Officer recorded that all notices were returned back with comments incomplete/address not known . The Assessing Officer deputed Inspector of Income Tax to verify the existence and the capacity of creditors. The Assessing Officer recorded that the Inspector furnished adverse report from whom the cash was received. The Inspector reported that no such parties are available at the address filed by the assessee. The Assessing Officer issued notice dated 30/08/2018 asked the assessee to file confirmation, return of income and proper address of all the parties to prove the genuineness of transaction. The Assessing Officer further recorded that no response was received from the assessee. The Assessing Officer issued a final show cause notice dated 27/09/2018. Contents of show cause notice is recorded in para 5 of assessment order. In the show cause notice, the Assessing Officer asked as to why the cash in hand of Rs. 24,91,375/- as on 31/03/2016 should not be added for A.Y. 2016-17 as unexplained cash credit. The Assessing Officer recorded that assessee filed reply to show cause notice. The contents of reply is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -. Books of assessee was duly audited. Copy of sale register of entire year wherein the parties remain as sundry creditors were furnished alongwith sales bills. The assessee furnished details of sundry debtors realized in cash and the same was credited in the cash book. The assessee again furnished details of cash flow for the year. The assessee submitted that the Assessing Officer made addition on the ground that the assessee failed to establish the identity of creditor, capacity to advance money and genuineness of transaction. The cash book submitted by assessee is rejected and addition under Section 68 of unexplained cash credit was made. The case book i.e. books of account was rejected without invoking Section 145 of the Act. For making addition under Section 68, maintenance of books of account is compulsory and any sum found to be credited and the name of creditors which remained outstanding is treated as cash credit. In case of assessee, there was no outstanding entries at the end of year. There was no loan provider or creditor but it was realisation of sales recorded in earlier year. The sale and debtors were shown in the return of income. The realization of said parties are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n source of cash deposit during demonetization period. Copy of TDS form was furnished. On the basis of aforesaid submission, the assessee requested to delete the addition under Section 68 of the Act of Rs. 24,91,375/-. 4. The ld. CIT(A) after considering the submission of assessee held that the assessee claimed that he has received cash from various parties, however, no documentary evidence was furnished before the Assessing Officer to prove the identity, creditworthiness of the parties and genuineness of transaction. The Assessing Officer issued notice under Section 133(6) of the Act to all the sundry creditors which was returned unserved. The assessee filed similar submission during appellate proceedings mainly as given before the Assessing Officer that he received cash from various persons which was not accepted by ld. CIT(A). The ld. CIT(A) relied upon the decision of Hon'ble Punjab Haryana High Court in Anil Goel Vs CIT (2008) 306 ITR 212 (P H), in the said case, it was held that when the assessee was given ample opportunity to make submission by appearing in person or through authorised person, no one had put in appearance nor justifiable reason for adjournment was g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has made declaration in IDS-2016 of Rs. 50.00 lacs for A.Y. 2015-16 and therefore, the defects, omission if any, is covered by declaration made by assessee. The reliance placed by ld. CIT(A) in Unit Construction Co. Ltd. Vs JCIT 260 ITR 189 (Cal.) is misplaced. In the said case, it was held that it was not necessary to reject the books of account to make addition under Section 69 r.w.s. 69B. It was submitted that even without rejecting books of account, addition cannot be made. The ld. AR of the assessee submits that the Assessing Officer in the assessment order, referred the guidelines of CBDT issued on 24/11/2017. Such guidelines were issued as standard operating procedure (SOP) for verification of issues arising out of cash deposit due to demonetization where the return of income is revised or filed belatedly. In such guidelines, it was laid down that verification should be made where significant higher cash in hand is disclosed as on 31/03/2016 or on 31/03/2015 compared to preceding year in the belated return. The guidelines are in respect of cash deposits of high denomination notes falling in the assessment year 2017-18. The assessee has shown cash balance of Rs. 24,91,375/- a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. 6. In alternative and without prejudice submission, the ld. AR of the assessee submits that if the receipts from the debtors are not accepted, the deduction should be given for trading loss as in case of such hypothesis amount of cash on hand added by Assessing Officer is not existent and therefore, deduction of trading loss/bad debts is required to be given against deemed income. So in effect, the action of Assessing Officer results into addition. In A.Y. 2016-17, the set off trading loss is allowable against the deemed income assessed under Section 115BBE of the Act as per Circular of CBDT No. 11 of 2019. 7. On the other, the ld. Sr.DR for the revenue supported the orders of lower authorities. The ld. Sr.DR for the revenue submits that the addition was made by Assessing Officer on account of unexplained credit. No source of credit was explained. The assessee took a plea of sundry creditors, the assessee failed to substantiate the plea of sundry creditors. No such creditor was found at the address given by assessee. The Assessing Officer has not rejected the books of account and simply made addition on account of unexplained credit. 8. I have considered the submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merit in the contention of ld AR for the assessee that in the course of assessment proceedings, the assessee filed sales register for financial year 2014-15, copies of bills and ledger accounts of the parties. The assessee also filed cash book of current year where sale proceeds were received from debtors and creditors. No defects were found by Assessing Officer in such cash book. The assessing officer made addition under section 68, which is not justifiable as the impugned amount was brought to tax twice, firstly on account of sales and secondly by treating it as unexplained. Similar view was taken by division bench of Tribunal in Shree Sanand Textile Industries Limited Vs DCIT (supra) and SMS bench of Tribunal in Anantpur Kalpana Vs ITO (supra). 10. I also find merit in the alternative plea of the ld AR for the assessee that if the receipts from the debtors are not accepted as genuine, the deduction should be given for trading loss as in case of such hypothesis amount of cash on hand added by Assessing Officer is not existent and therefore, deduction of trading loss/bad debts is required to be given against deemed income. Thus, in view of the afforesaid factual and legal posi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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