The Income Tax Appellate Tribunal (ITAT), Mumbai Bench has upheld the deletion of the income tax addition of Rs. 1.68 Crores which was made merely based on the statement of the employees of the assessee company.
The ITAT observed that the AO has fell into error in relying upon the statements given by the employees of the assessee and the employee of another concern, who were not aware of the entire business activities of the assessee and the said fact has been clearly expressed by them in their respective statements. The CIT(A) was justified in deleting the addition of Rs.1.68 crores.
The tribunal noted that the revenue could not controvert the findings of the Ld CIT(A) that the impugned cash has been deposited into the bank account of the assessee out of the cash balance available in the books of account and further, these cash balance was generated from out of cash sales effected by the assessee to its members. Another important aspect is that the books of accounts have not been rejected by the assessing officer. In that case, there is no reason to reject the explanations so given by the assessee. When the evidence in the form of books of accounts are available, it is necessary for the AO to address the same and prove that the books of accounts are not reliable. The AO did not do the same.
Facts
The assessee is running a recreation club, which consists of a bar, restaurant, banquet hall etc. It admits members on payment of membership fees, renewal fees, maintenance charges etc. It also charges members for the services utilised in bar, restaurant, banquet hall etc.
The assessee is a part of JMJ group. The group was subjected to search operations u/s 132 of the Act on 08-02-2021. Consequent thereto, a survey operation was conducted u/s 133A in one of the group companies named M/s Bhishma Agro Food Products P Ltd, Gurugram. During the course of survey operations, it was noticed from some documents that a sum of Rs.1.68 crores was found deposited by way of cash in the bank accounts of the assessee. In connection with, a statement was recorded from a person named Shri Mahesh Kumar, who is the H R Manager of M/s Bhishma Agro Food Products P Ltd. In that statement, he mentioned that the cash belong to the assessee herein and it was deposited into the bank account of the assessee.
However, he could not give complete details of the same. Subsequently, statements were taken from the employees of the assessee, who also could not give replies to the satisfaction of tax authorities.
Before the AO, the assessee submitted that the impugned cash is generated out of cash sales made by the club and the deposit of cash has been duly accounted for in the books of accounts. However, the AO placed reliance on the statements taken from Mahesh Kumar and other employees and accordingly concluded that the assessee has not properly explained the sources of cash of Rs.1.68 crores deposited into the bank account of the assessee.
The CIT(A) deleted the addition and hence the revenue has filed the appeal.
Case Name : DCIT Versus M/s. Planet Hollywood India Private Limited
Judicial Level & Location : ITAT Mumbai
Case Number : ITA No.2717/Mum/2023
Date Of Ruling : 29-07-2024
Ruling In Favour Of: Assessee
Coram: Sunil Kumar Singh (Judicial Member), B.R. Baskaran (Accountant Member)
Petitioner Advocate: Rajiv Khandelwal
Respondent Advocate: H.M. Bhatt
