TaxTMI 
TaxTMI 
2022 (8) TMI 79
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....6 being treated as unexplained money u/s. 69A of the Income Tax Act, 1961." 3. Brief facts of the case are that assessee is a partnership firm engaged in the business of manufacture and retail trading of jewellery items. It filed its return of income on 14.09.2017 reporting total income of Rs.19,17,667/-. The case was selected for scrutiny through CASS for which statutory notices were issued. It is noted by the Ld. AO in first paragraph that in response to notices, assessee had furnished the details of P&L Account, Balance Sheet, stock register, list of customers who purchased the jewellery on 08.11.2016, VAT returns, cash book, details of cash deposited during the demonetization and other related documents. In the course of assessment, from perusal of these documents, Ld. AO noted certain discrepancies and issued a show cause notice dated 21.12.2019 which was replied by the assessee vide its submission dated 26.12.2019, both reproduced in the impugned order. 3.1 Crux of the contention of the Ld. AO are that assessee had sold ornaments of Rs.3,33,28,234/- on 08.11.2016 and it also sold 24 ct. standard bar/fine gold of Rs.42,40,042/-. Ld. AO noted that assessee had deposited o....
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....isfactory explanation regarding the nature and source of cash deposit was furnished by the assessee. 3.3 In the course of assessment proceedings, Ld. AO also show caused the assessee for rejecting the books of account by applying the provisions of section 145(3) of the Act. Assessee submitted its explanation but all in vain. Books of account were rejected u/s. 145(3) of the Act. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). 4. Before the ld. CIT(A), each of the issues raised by the Ld. AO were addressed by the assessee which is evident from the perusal of the impugned order wherein AO's comment and the submission of the assessee are reproduced and each ground of appeal has been dealt meritoriously by the ld. CIT(A). On the moot point of explanation relating to deposit of cash of Rs.3,87,69,800/- in the bank accounts during the demonetization period to explain its nature and source, the assessee had submitted its break up wherein opening cash in hand on 08.11.2016 was Rs.5,29,815/- and Rs.3,86,27,800/- was generated by the cash sales recorded in the cash book vide sales made during the time window of 8.30PM to 12 midnight on the same day. Also, there were ....
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....sions and marked B1, as under- "Opening cash-in-hand on 08.11.2016 was Rs. 5,29,815/-. Further, as per list of customers purchasing gold ornaments mostly on 8.11.2016 and thereafter within 30.12.2016, total cash sales recorded in cash book as per memo/bill was Rs. 3,86,27,800/- and total customer advance was Rs. 4,58,576/- out of which during the said specified period total amount of cash deposits into bank was 3,87,69,800/-" Thus, the total availability of funds for the aforesaid deposit of Rs. 3,87,69,800/- in various bank accounts was explained as under- Rs. 5,29,815/- + Rs. 3,86,27,800/- + Rs. 4,58,576/- = Rs. 3,96,16,191/-. 5.2.2 It is observed that the source of deposits in the bank accounts was explained by the appellant by submitting various details alongwith books of accounts/records vide letters dated 14.05.2019; 19.11.2019 and 26.12.2019, copies of which has been submitted before me and marked as Annexure: B1, B2 and B3. But the A.O. was not fully satisfied with the explanations submitted by the appellant. He estimated probable sales that could be made on 08.11.2016, the day of announcement of demonetization, between 8 pm to 12.00 midn....
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.... has risen from 9.86 crore in the preceding year to Rs. 11.89 crore in the instant year as is evident from the extract of TAR (form 3CD) placed in the paper-book. The rise in turnover of 20% is quite a modest rise and not an unreasonable growth, and therefore, does not sound abnormal. 5.2.5 It is observed the appellant has also demonstrated before the A.O. that it was not the solitary year when the appellant had resorted to huge cash sales. It was demonstrated that total cash of Rs. 93,94,000/- was deposited during the same period last year. This fact coupled with the fact that there was rise in the turnover and that there is natural tendency of people to utilize their cash holdings in purchasing gold due to such unusual and sudden phenomenon like demonetization leading to sudden surge in sales, total cash sales reported in the instant year of Rs. 3,86,27,800/- cannot be said be unreasonable. 5.2.6 The appellant had submitted in the course of the assessment proceedings a Statement showing the details of sales made on Dhanteras day i.e., on 28.10.2016, a copy of which is annexed and marked as Annexure: 'F' to the submissions made before me. It is observed t....
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.... sufficient quantity of stock was not available at the time of sale. It is observed that the availability of stock is determined on the basis of purchases, which has not been disputed by the A.O. 4.1 Aggrieved, the department is in appeal before the Tribunal by raising the sole ground in respect of deposit of cash during the demonetization period amounting to Rs.1,95,03,291/- by treating it as unexplained money u/s. 69A of the Act. 5. Ld. Sr. DR Smt. Ranu Biswas argued the matter and supported the theory of human probability relied on by the Ld. AO in arriving at the estimation of probable sales value during the time window available on the date of commencement of demonetization. She supported the order of Ld. AO and stated that all the aspects for the purpose of making the additions have been dealt by the Ld. AO including the rejection of books of accounts, credibility of sale with respect to list of bills of 275 customers, abnormality of sale and manipulation of accounts. 6. Ld. Counsel Shri Subhas Agarwal, appeared on behalf of the assessee who strongly supported the well reasoned meritorious findings given by the Ld. CIT(A) on each aspect of the addition made by the Ld....
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....essee had stock in hand to meet the sales demand, all of which is duly recorded in the stock register furnished before the authorities below. It is also noted that there is no specific discrepancy pointed out in respect of the books of account, more particularly when the purchases have not been doubted in the assessment. Ld. AO has noted that details of customers on the invoices raised during the time window on the date of announcement of demonetization were not recorded on the invoices for some of the instances wherein the details were recorded, summons were issued to those customers, most of which remained unreplied. We note that all the sales were cash sales and in case of cash transactions of sale, delivery of goods is taken against the cash payment and it is hardly necessary for the seller to bother about the name and address of the purchaser. 7.2 We further observe that the assertion of the ld. AO on the mere possibility of assessee earning considerable amount out of cash sales on the date of announcement of demonetization is a pure conjecture on the part of the AO and is based on surmises, speculating on the approach adopted by the assessee. Rather, the estimation approac....