Salem Sree Ramavilas Chit Company v. Dy. CIT

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The Tax Publishers2020 TaxPub(DT) 0818 (Mad-HC) : (2020) 423 ITR 0525 : (2020) 313 CTR 0473 : (2020) 273 TAXMAN 0068 IN THE MADRAS HIGH COURT C. SARAVANAN, J. Salem Sree Ramavilas Chit Company v. Dy. CIT W.P. No. 1732 of 2020 & W.M.P. Nos. 2006 & 2007 of 2020 4 February, 2020 Petitioner by: G. Baskar Respondent by: A.P. Srinivas Standing Counsel ORDER In the Writ Petition, the petitioner has challenged the impugned order passed by the respondent on 27-12-2019 in respect of the amount received by the petitioner post demonetization, i.e., between 9-11-2016 and 31-12-2016. 2. The learned counsel for the petitioner submits that regular returns were filed for the assessment year 2017-18 on 7-11-2017. After the returns were filed, proceedings were taken up and notice for completing the assessment was issued under section 143(2) of the Act on 9-8-2018 followed by notices under section 142(1) of the Income Tax Act on 20-6-2019 and 29-10-2019 to which the petitioner responded on 22-11-2019, 26-11-2019 and 16-12-2019, respectively pursuant to which the impugned assessment order has been passed. 3. It is the contention of the petitioner that in the impugned order, the respondent Deputy Commissioner has erroneously came to a conclusion that the petitioner has not properly explained the deposit of cash amounting Rs. 67,37,500 collected during the demonetization into their account and that the petitioner has claimed the source of cash deposit during demonetization as the accumulated cash balance as on 8-11-2016 wrongly. In the impugned order, it has been concluded that the petitioner has not properly explained the source and the purpose of huge cash along with party wise break up as was requested vide Notice, dated 20-6-2019 and 29-10-2019 under section 142(1) of the Income Tax Act, 1961. 4. The learned counsel for the petitioner submits that the informations were furnished as early as on 17-2-2017 and thereafter as per the formats requested by the respondent. He further submits that the petitioner had closing balance of cash on hand as on 31-10-2016 for a sum Rs. 38,72,374 which would consist of both demonetized and non-demonetized cash until then and thereafter, the petitioner received further cash deposit from the various subscribers amounting to Rs. 57,85,655 out of which a sum of Rs. 26,77,716 had already been deposited before the demonetization. 5. It is therefore contented that the amount which was not deposited before the demonetization amounting to Rs. 67,37,500 was explained in terms of the details furnished on 17-2-2017 in compliance with the requirements of the Reserve Bank of India, pursuant to demonetization of ue curency on 8-11-2016. 6. The learned counsel for the petitioner further submits that the collection of amount by the petitioner during the period proceedings eight months was also not in variance with the amounts collected by the petitioner. The petitioner had collected approximately a sum of Rs. 57,85,655 during the first week of November 2016, which is in the case of chit business is as usual the collection was made during the aforesaid period. In any event, according to the petitioner, details which were called for by the respondent were furnished. He therefore submits that the observation made in the impugned order that the petitioner has not properly explained cannot be countenanced. He further submits that the petitioner is governed by the Provisions of Chit Fund Act, 1982 and Tamil Nadu Chit Funds Rules, 1984, as per which the petitioner required to maintain the ledger details for each of the subscribers and the amount deposited by the petitioner is only out of the amounts collected which are reflected in the register under the Act and the rules made therein. He therefore submits that the amount of Rs. 67,37,500, which is sought to be treated as unexplained income in the impugned order is nothing but the collection made from regular chit fund business of the petitioner. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2020 TaxPub(DT) 0818 (Mad-HC) : (2020) 423 ITR 0525 : (2020) 313 CTR 0473 : (2020) 273 TAXMAN 0068

IN THE MADRAS HIGH COURT

C. SARAVANAN, J.

Salem Sree Ramavilas Chit Company v. Dy. CIT

W.P. No. 1732 of 2020 & W.M.P. Nos. 2006 & 2007 of 2020

4 February, 2020

Petitioner by: G. Baskar

Respondent by: A.P. Srinivas Standing Counsel

ORDER

In the Writ Petition, the petitioner has challenged the impugned order passed by the respondent on 27-12-2019 in respect of the amount received by the petitioner post demonetization, i.e., between 9-11-2016 and 31-12-2016.

2. The learned counsel for the petitioner submits that regular returns were filed for the assessment year 2017-18 on 7-11-2017.

After the returns were filed, proceedings were taken up and notice for completing the assessment was issued under section 143(2) of the Act on 9-8-2018 followed by notices under section 142(1) of the Income Tax Act on 20-6-2019 and 29-10-2019 to which the petitioner responded on 22-11-2019, 26-11-2019 and 16-12-2019, respectively pursuant to which the impugned assessment order has been passed.

3. It is the contention of the petitioner that in the impugned order, the respondent Deputy Commissioner has erroneously came to a conclusion that the petitioner has not properly explained the deposit of cash amounting Rs. 67,37,500 collected during the demonetization into their account and that the petitioner has claimed the source of cash deposit during demonetization as the accumulated cash balance as on 8-11-2016 wrongly. In the impugned order, it has been concluded that the petitioner has not properly explained the source and the purpose of huge cash along with party wise break up as was requested vide Notice, dated 20-6-2019 and 29-10-2019 under section 142(1) of the Income Tax Act, 1961.

4. The learned counsel for the petitioner submits that the informations were furnished as early as on 17-2-2017 and thereafter as per the formats requested by the respondent. He further submits that the petitioner had closing balance of cash on hand as on 31-10-2016 for a sum Rs. 38,72,374 which would consist of both demonetized and non-demonetized cash until then and thereafter, the petitioner received further cash deposit from the various subscribers amounting to Rs. 57,85,655 out of which a sum of Rs. 26,77,716 had already been deposited before the demonetization.

5. It is therefore contented that the amount which was not deposited before the demonetization amounting to Rs. 67,37,500 was explained in terms of the details furnished on 17-2-2017 in compliance with the requirements of the Reserve Bank of India, pursuant to demonetization of ue curency on 8-11-2016.

6. The learned counsel for the petitioner further submits that the collection of amount by the petitioner during the period proceedings eight months was also not in variance with the amounts collected by the petitioner. The petitioner had collected approximately a sum of Rs. 57,85,655 during the first week of November 2016, which is in the case of chit business is as usual the collection was made during the aforesaid period. In any event, according to the petitioner, details which were called for by the respondent were furnished. He therefore submits that the observation made in the impugned order that the petitioner has not properly explained cannot be countenanced. He further submits that the petitioner is governed by the Provisions of Chit Fund Act, 1982 and Tamil Nadu Chit Funds Rules, 1984, as per which the petitioner required to maintain the ledger details for each of the subscribers and the amount deposited by the petitioner is only out of the amounts collected which are reflected in the register under the Act and the rules made therein. He therefore submits that the amount of Rs. 67,37,500, which is sought to be treated as unexplained income in the impugned order is nothing but the collection made from regular chit fund business of the petitioner.