AI Structured Summary
Not yet generated for this judgment
Judgment
ORDER
PER SUDHIR KUMAR, JUDICIAL MEMBER: This appeal by the assessee is directed against the order of the Commissioner of Income Tax Appeal Addl/ JCIT(A)-1, Chennai [hereinafter referred to as “Ld.CIT(A)”] vide order dated 25.11.2025 arising out of the order of the Assessing Officer vide order 23-12-2019 for A.Y. 2017-18.
The assessee has raised the following grounds in appeal:-
1.On the facts and in the circumstances of the case and in law the order passed by the learned Assessing Officer and the addition made therein is bad -in -law and CIT(A) erred in not holding so.
2.On the facts and in the circumstances of the case and in law the order passed by the CIT(A) erred in confirming the addition made by the Ld. Assessing Officer of Rs.29,50,000/- on account of alleged unexplained cash deposits in bank u/s 68 of the Act.
3.On the facts and in the circumstances of the case and in law the order passed by the CIT(A) erred in confirming the addition made by the Ld. Assessing Officer of Rs.2,96,650/- on account of disallowance of ESI/PF expenses.
4.On the facts and in the circumstances of the case and in law the order passed by the CIT(A) erred in confirming the addition made by the Ld. Assessing Officer of Rs.39,660/- on account of alleged penalty paid.
5.On the facts and in the circumstances of the case and in law the assessment order passed by Assessing Officer is contrary to the provisions of section 115BBE of the Income Tax Act,1961 and CIT(A) erred in not holding so.
The brief facts of the case are that assessee company was engaged in business of highway maintenance specialty contractor. The assessee filed return of income declaring of Rs.3,16,05,800/-. The case was selected for scrutiny under CASS and notice dated 21-09-2028 u/s 143(2) of the Income Tax Act, 1961(in short “the Act”) for A.Y. 2017-2018 was issued. Thereafter, notices under section 142(1) of the Act along with questionnaire were issued and served upon the assessee. The assessee- company has deposited the amount of Rs.54,00,000/-in cash in its bank account during the demonetization period. The Assessing officer completed the assessment proceedings after making the additions on various heads. According to AO the assessee failed to explain the cash deposit in the bank account during the demonetization period. The assessee-company also deposited the amount of Rs.2,96,670/-of employees’ contribution towards ESI Fund /PF after the due date. The Assessing Officer also made the addition of Rs.39.660/- under section 37 of the Act. Penalty proceedings were also initiated against the assessee. Aggrieved the order the assessee preferred the appeal before the Ld. CIT(A), who vide his order dated 25-11-2025 dismissed the appeal of the assessee.
The Assessing Officer completed the penalty proceedings and levied the penalty of Rs.6,23,520/-. Aggrieved the order of the Assessing Officer the Assessee filed the before the Ld. CIT(A), who dismissed the appeal of the assessee. Being aggrieved the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal.
Ground No.-1 Is general in nature.
Ground No.-2, 4 & 5
Ld. AR of the assessee submitted that Assessing Officer has erred making the additions. He also submitted that the assessee has submitted the complete details of cash deposits along with documentary evidences before the AO. The AO has not pointed out any discrepancy and the documents filed by assessee. The assessee deposited the cash out of balance of cash in hand as per cash book and not received cash credit viz i.e loan , share application/ share capital. He further submitted that the cash deposited cannot be treated unexplained cash credit under section 68 r.w.s. 115BBE of the Act. During the assessment proceedings the assessee filed the duly audited financial statements, which was not rejected by the AO. Reliance is placed on the following judgements: (i) CIT v Paradise Holidays (2010) 325 ITR 13(Delhi) (ii) Umacharan Shaw & Bros v CIT [1953] 37 ITR 271 Dhakeshwari Cotton Mills Ltd. v CIT 26 ITR 775 (SC) (iii) DCIT v Smt. Veena Awasthi (ITA No. 215/LKW/2016) (iv) Jaya Aggarwal v Income Tax Officer (2018) 92 taxmann 108(Del) (v) CIT v Kulwant Rai 291ITR 36(Del) (vi) S.R. Venkata Ratnam v CIT(1981) 807 (Kar) (vii) ITO v Deepali Sehgal ITA No. 5660/Del/2012 (viii) Nand Kumar Teneja v. ITO (ITA No. 4958/Del/2018 (ix) Gordhan vs. DCIT (ITA No. 811/Del/ 2015) (x) Moongipa Investment Ltd. V. ITO (ITA No. 2605/Del/2007 (xi) Neeta Breja v ITO (ITA No. 524/Del/2017
The Ld. DR relied upon the orders of the lower authorities and submitted that the assessee has failed to explain the cash deposit so the appeal was rightly dismissed by the Ld. CIT(A).
We have the parties and perused the materials available on record. According to AO the assessee company deposited cash of Rs.54,00,000/- in the bank account number 50200009113155 maintained with the HDFC Bank. After the analysis the cash deposit trend of the assessee in various year the AO observed that there is abnormal increase in cash deposit during the F.Y.2016-17 and made the addition on the basis of cash deposit pattern. The assessee has not made any cash sales and cash deposited out of cash balance in hand. The Assessing Officer has not pointed out any specific defect or discrepancy in the Account Books maintained by the assessee. The assessee filed the audited books of accounts by an independent Chartered Accountant which was accepted by the AO. The entire transaction of withdrawals and deposits are duly reflected in the bank account of the assessee and verifiable from relevant records. We find that the assessee has succeed to explain the cash deposit before the AO because assessee deposited amount of Rs. 26,50,000/- withdrawn from the bank during the period from 01-10-2016 to 08-11-2016 and rest was explained. The Ld. AR submitted that the AO has made wrong addition of Rs.29,50,000/- on account of alleged unexplained credit u/s 68 of the Act and applied section 115BBE of the Act and charged tac @60% + surcharge. In the case of S.M.I.L.E. Microfinance Ltd. V. Assistant Commissioner of Income Tax [2025] 179 taxmann.com 65 Madras the Hon’ble Madras High Court held that the higher tax rate of 60% + surcharge is not applicable for A.Y. 2017-18. In the view of above facts, the, additions in dispute is deleted and ground no.2, 4 & 5 raised by the assessee are allowed.
Ground No.3
This ground is not pressed by the Ld. AR, hence decided against the assessee.
In the result, the appeal of the assessee is partly allowed.