AI Drafter 
TaxTMI 
TaxTMI 
2018 (9) TMI 1992
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.... Income Tax -24 erred in not appreciating the following facts (which were already explained to the Deputy Commissioner of Income Tax during the Assessment Proceedings ) in the case of Your Appellant which were submitted before him during the course of Appellate Proceedings "Quote a) That there was no negative cash balance during the financial year 2007-08 b) During the financial year 2007-08, there was cash sales of Fabrics amounting to Rs. 69,29,954/- for which separate cash memos in separate bill books were maintained. c) Originally, the Accountant of the Company at Corporate Office passed a consolidated entry of cash sales of Rs. 69,29,954/- as on 31 March, 2008. d) Due to this consolidated entry intermittently the cash balance was negative. e) During the course of survey the CD of old data was copied other than the new data Wherein separate entries for individual cash memos have been made. f) The account of your appellant are statutorily audited not only under the Companies Act, 1956 but also under Sec. 44AB of the Income Tax Act, 1961 and no discrepancy therein has been observed or reported by the Auditors. ....
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....on account of unexplained cash credit being peak negative cash balance found during the course of survey. 4. The facts in brief are that the assessee filed the return of income on 29.09.2008 declaring income of Rs. 1,96,33,826/- which was processed under section 143(1) of the Act accepting the income returned. A survey was conducted under section 133A of the Act on 10.01.2012 at the premises of the assessee and on the basis of some informations/materials impounded during the course of survey the case of the assessee was reopened for A.Y. 2008-09 by issuing notice under section 148 of the Act dated 25.03.2013. The case was reopened on the ground that in the paper impounded and soft copy of the accounts of the books showed negative cash balance from April 2007 to November 2007, the peak of which was Rs. 56,19,155/-. According to the AO, the source of the said amount is not disclosed and thus the facts noticed at the time of survey constituted sufficient material to form a belief that the assessee has not disclosed fully and truly all material facts as to the assessment of income and therefore Rs. 56,19,155/- has escaped assessment. The assessee is engaged in the business of manufa....
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....nd sale of fabrics in cash Rs. 69,29,954/- were not doubted by the AO whereas the total sales including export were Rs. 32,56,64,199/-. According to the Ld. CIT(A) the entire cash sales was accounted for on the last day of the accounting year and he came to the conclusion that there was negative cash balance on the date of survey from April 2007 and March 2008. Finally, the Ld. CIT(A) upheld the order of AO on the ground that even if the alleged cash sales are taken into account on the respective dates there still remains some negative cash balance which has not been explained by the assessee was converted even before the Ld. CIT(A) and thus AO rightly did the addition on account of negative cash balance remaining unexplained. 6. The Ld. A.R. vehemently submitted before us that authorities below have not properly appreciated the facts of the case that assessee's cash sales to the tune of Rs. 69,29,954/- made from April 2007 to March 2008 were duly recorded in the books of accounts and accounted for on the respective dates in the final books of accounts of the assessee which were duly audited by the company auditors and tax auditors and were found in order by the AO and there was....
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....ed that these discrepancies were noticed in the documents seized at the time of survey. 8. We have heard the rival submissions of both the parties and perused the material on record including the impugned order. The undisputed facts are that the books of accounts of the assessee were audited by the tax auditor and company law auditor and were found to be in order with no adverse reporting on the maintenance of accounts or defects in the books of accounts. We, further, note that these books of accounts were also place before the authorities during the course of assessment proceedings and there was no defect found or pointed out by the AO in the said books of accounts. Moreover, the books of accounts were not rejected by the AO at the time of making this addition of Rs. 56,19,155/- on account of peak negative balance which according to the AO remained unexplained. A survey team found some documents in the form of computer prints out/soft copy and found that assessee has negative cash balances during the months commencing from April 2007 to November 2007 the peak whereof was Rs. 56,19,155/- in the month of September 2007. The authorities below has not considered the cash sales of t....