2018 (3) TMI 1094

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....ion of trade creditors u/s 68 of the Income-tax Act, 1961 (hereinafter 'the Act') as unexplained cash credits and also in making additions of gross profit after rejecting the book results u/s 145(3) of the Act. For this, assessee has raised following ground Nos.1 to 3 :- "1. That the learned CIT(A) has committed gross mistake in sustaining the order of Assessing Officer, thereby confirming the addition made by the Assessing Officer wherein the Assessing Officer has rejected cash sales made by the assessee and treated the same as unexplained cash credit in books of account. The addition made by Assessing Officer and confirmed by CIT(A) needs to be deleted. 2. That the learned CIT(A) has committed gross mistake in sustaining....

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....,569/-. Consequently, the Assessing Officer also noted that cash sales made by the assessee are not proved and hence, he treated the cash deposited in the bank account as undisclosed sales and consequently, the same as unexplained cash credits amounting to Rs. 43,84,895/-. Aggrieved, assessee preferred appeal before the CIT(A) against both the additions and learned CIT(A) confirmed the addition without considering the submissions of the assessee. Aggrieved, now the assessee is in second appeal before the Tribunal on both the issues. 4. We have heard rival contentions and gone through the facts and circumstances of the case. We have gone through the bare finding of the Assessing Officer who has recorded the fact for rejecting the books of....

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.... been filed on 13.10.2008, which suggests that the sales are manipulated. (g) The increased position of closing stock is the indicator for introducing cash through bogus cash sales. (h) Inability of the assessee to explain the stock position or not maintaining the stock position is also an indicator to doubt the transaction." 5. We find from the above reasons of the Assessing Officer that the Assessing Officer admits these cash sales as unexplained in the absence of confirmation by the parties. Admittedly, these are trade creditors and not cash creditors because the assessee has deposited the cash in its trading bank account out of the proceeds of sales, although those are not verified. It means that these have relation....