9911796707
TMI Blog2025 (5) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... nt's case. 2. The Appellant denies herself liable to be assessed on a total income of Rs. 12,66,88,152/-, as against the returned income of Rs. 11,35,81,251/-, under the facts and circumstances of the case. 3. Whether the learned Authorities below are justified in making of addition of an amount being Rs. 76,50,000/-as unexplained money under section 69A of the Act, under the facts and circumstance of case. 4. Whether the learned Authorities below are justified in disallowing the expenditure amounting being Rs. 17,90,629/-, on adhoc basis at 10%, under the facts and circumstances of the case. 5. Whether the learned Authorities below are not justified in disallowing sundry creditors of an amount being of Rs. 38,29,272/-, at 10%, under the facts and circumstances of the case. 6. The Appellant denies herself liable to be charged to interest under section 234B of the Income-Tax Act, 1961, under the facts and circumstances of the case." 2. Succinctly stated, the assessee had filed her return of income for A.Y. 2017-18 on 17-08-2017, declaring an income of Rs. 11,34,16,250/-. Subsequently, the case of the assessee was selected for scrutiny assessment under Computer Aided S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he source of cash deposits only to the extent of Rs. 19.50 lacs (supra) and held the balance amount of Rs. 76.50 lacs [Rs.96 lacs (-) Rs. 19.50 lacs] as having been sourced out of her unexplained money u/s 69A of the Act. 5. Also, the A.O. while framing the assessment called upon the assessee to provide the ledger extracts of the expenditure that were claimed to have been incurred by her aggregating to Rs. 1,79,26,292/- viz., (i) Employees cost: Rs. 1,33,33,281/-; (ii) Business promotion expenses: Rs. 11,77,811/-; and (iii) Travelling expenses: Rs. 34,15,200/-. Ostensibly, as the assessee failed to furnish the requisite details, therefore, the A.O. called upon her to explain that as to why 10% of the said expenditure may not be disallowed. However, as the assessee failed to come forth with any explanation, therefore, the A.O. worked out a disallowance of Rs. 17,92,629/- (10% of Rs. 1,79,26,292/-.) 6. Further, the A.O. while framing the assessment called upon the assessee to furnish the details of the "Sundry creditors" aggregating to Rs. 3,82,92,725/- i.e. names, addresses, PAN and their ledger confirmations. As the assessee failed to provide the confirmations of the aforemention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of cash and bank balances" forming part of the assessee's "balance sheet" on 31.03.2017, which revealed that the aforementioned bank accounts were duly accounted for in the books of accounts of the assessee for the subject year, Page 6 of the APB. The ld.AR submitted that now when the subject cash deposits of Rs. 96 lacs (supra) were beyond doubt sourced from the accumulated cash in hand available with the assessee on 08.11.2016, which in turn was sourced out of the cash withdrawals made from her aforesaid bank accounts, therefore, there was no justification for the A.O. to have held any part of the same as having been sourced out of the unexplained money of the assessee. 11. Apropos the disallowance of the assessee's claim of expenses aggregating to Rs. 1,79,26,292/- viz., (i) Employees cost: Rs. 1,33,33,281/-;(ii). Business promotion expenses: Rs. 11,77,811/-; and (iii) Travelling expenses: Rs. 34,15,200/-, the ld.AR submitted that the A.O. had wrongly observed that the assessee despite having been called upon to provide the ledger extracts of the above said expenses had failed to submit the same. Rebutting the aforesaid observation of the A.O., ld.AR submitted that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar. The ld.AR submitted that confirmation of M/s. DHR Holding India Pvt. Limited (supra) though could not be obtained and filed by the assessee in the course of the assessment proceedings but the needful was done by her during the course of the proceedings before the CIT(A) and was filed/uploaded with him on 01.09.2022, Page 96-97 of APB. The ld.AR submitted that now when the assessee had placed on record the confirmation of afore mentioned creditor viz., M/s. DHR Holding India Pvt. Limited (supra), therefore, there was no justification for the CIT(A) to have brushed aside the same and sustained the 10% disallowance of the said liability. Alternatively, the ld.AR submitted that the very basis for disallowance by the A.O of 10% of the aforementioned liabilities was beyond comprehension. 13. Per contra, the learned Departmental Representative (for short (ld. DR") relied on the orders of the lower authorities. It was submitted by him that in the totality of the facts and circumstances of the case, as there was no justification for the assessee to have made substantial cash withdrawal aggregating to Rs. 1,23,26,465/- (supra) and without any purpose retain the same with her as of 08-11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sits made in her bank account during the demonetization period were sourced from the cash balance of Rs. 1.23 crore (supra) that was available with her on the midnight of 08.11.2016 i.e., during the pre-demonetization period. The assessee had claimed that the cash balance of Rs. 1.23 crore (supra) was in turn sourced out of the cash withdrawals that were made by her during the pre-demonetization period i.e. 02.04.2016 to 02.11.2016 from her bank accounts, viz. (i). bank account No.064225600001820 maintained with HDFC Bank, Branch: Sanjeev Reddy Nagar; and (ii). bank account No. 56146000328 maintained with State Bank of India, Branch: Nampally. Apart from that, it was brought to the notice of the A.O. that out of the cash balance of Rs. 1.23 crores (supra) an amount aggregating to Rs. 81 lac was withdrawn by her in the immediately preceding period i.e. during the months of October, 2016 & November, 2016 from her bank account no. 06422560001820 with HDFC Bank Limited, Branch: Sanjeev Reddy Nagar, Hyderabad; and an amount of Rs. 21 lacs was withdrawn in the month of October, 2016 from her bank account no. 56146000328 with State Bank of India, Branch: Nampally. Accordingly, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned bank accounts to facilitate incurring of the expenditure towards traveling and stay of the staff members, other local purchases of consumables and other on-site expenses. 17. However, the aforesaid explanation of the assessee did not find favor with the A.O. The A.O., observed that both the purchases and sales were exclusively carried out by the assessee through banking channels. Also, the A.O taking note of the fact that the assessee had during the subject year incurred other expenses aggregating to Rs. 2.34 crore (approx.), therefore, observed that on average, she would have incurred an expenditure of Rs. 19.50 lacs every month. It was observed by him that even if it was to be presumed that the assessee would have incurred the aforesaid other expenditure in cash, then, to meet out the same she would have remained in possession of cash in hand of only Rs. 19.50 lacs every month. Accordingly, the A.O. based on his aforesaid deliberations accepted the assessee's claim regarding the availability of cash in hand to source the cash deposits only to the extent of Rs. 19.50 lacs on 08.11.2016 i.e. during the pre-demonetization period. 18. We have thoughtfully considered the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count during the demonetization period. 19. Apart from that, we find that though the CIT(A) had observed that there was no purpose or justification for the assessee to have carried out substantial cash withdrawals of Rs. 1.23 crores (supra) during the pre-demonetization period from her bank accounts, but while arriving at such adverse inferences he had most casually brushed aside the explanation of the assessee regarding the reason as to why the said amounts were so withdrawn by her bank accounts. As is discernible from the record, the assessee had claimed that she had in the month of November, 2016 in anticipation of a contract to supply HbA1c analyzer and reagents, equipment and kits in 112 Government hospitals in Tamil Nadu, had made cash withdrawals from her bank accounts as the said amount would be required for incurring expenses towards traveling, stay, other local purchases of consumables and other on-site expenses for installing testing kits in various places located in Tamil Nadu, being well aware of the fact that she would not get credit for services taken or goods purchased in the aforesaid area which was a new place. 20. Apart from that, we find that the "books of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of Rs. 1.23 crore (supra) available with her on the midnight of 08.11.2016, which in turn was sourced from the cash withdrawals made by her during the pre-demonetization period i.e 02.04.2016 to 02.11.2016. As observed hereinabove, the A.O. had failed to place on record any material that would prove that the cash withdrawals to the tune of Rs. 1.23 crores (supra) made by the assessee from her bank accounts during the pre-demonetization period, had either been utilized or invested by her somewhere else and thus, was not available to source the cash deposits made in her bank account during the demonetization period. Rather, the only reason given by the A.O. for rejecting the assessee's explanation was that her claim of having cash in hand of Rs. 1.23 crores (supra) on 08.11.2016, was as per him not as per her past cash-holding pattern and nature of business. 21. We thus, in terms of our aforesaid observations are of a firm conviction that as the A.O. had failed to lead any evidence that would reveal beyond doubt that the cash balance of Rs. 1.23 crore (supra), which in turn was sourced out of the cash withdrawals made by her in tranches during the subject year i.e, from 02.04.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by her in Tamil Nadu. The Ld. D.R on being confronted by the aforesaid infirmity in the observation of the CIT(A), failed to rebut the same. We thus, vacate the adverse inference drawn by the CIT(A) based on the aforesaid misconceive facts. Accordingly, in terms of our observations we vacate the addition of Rs. 76.50 lacs (supra) that had been sustained by the CIT(A). The Ground of appeal No.3 is allowed in terms of our aforesaid observations. 23. Apropos the disallowance of the assessee's claim for deduction of certain expenditure aggregating to Rs. 1,79,26,292/- viz., (i) Employees cost: Rs. 1,33,33,281/-; (ii) Business promotion expenses: Rs. 11,77,811/-; and (iii) Travelling expenses: Rs. 34,15,200/-, we find that the same was primarily based for the reason that the assessee had failed to submit any material to substantiate her said claim of deduction. As observed by us hereinabove, the ld.AR had rebutted the aforesaid observation of the A.O., on the ground, that she had in the course of the assessment proceedings, vide her reply dated 11.10.2019 furnished the requisite details supporting her aforesaid claim of expenditure, Page 360 of APB. The ld.AR based on his aforesaid c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as before us that the subject expenses were incurred wholly and exclusively in the course of her business, therefore, the A.O. is directed to verify the same in the backdrop of the mandate of Section 37(1) of the Act. Needless to say, the A.O. shall in the course of the set-aside proceedings while considering the assessee's claim for deduction of the subject expenditure afford a reasonable opportunity of being heard to the assessee. The Ground of appeal No.4 is allowed for statistical purposes in terms of our aforesaid observations. 25. Apropos the disallowance of 10% of sundry creditors/outstanding liabilities of Rs. 38,29,272/-, we find that the same comprises of two parts viz., (i) Sundry creditors: Rs. 3,58,79,288/-; and (ii) Other liabilities: Rs. 24,13,437/-, Page 7 of APB. 26. Ostensibly, in so far the "Other liabilities" of Rs. 24,13,437/- are concerned, we are of the view that as the same pertains to amounts which were payable by the assessee to the Government Authorities/Expenses viz. VAT payable, CST payable, TDS payable, Audit Fee payable etc., therefore, there was no justification for the A.O to have disallowed on an ad hoc basis i.e. 10% of the abovementioned a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
