AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 1196
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....BBE of the Act. Such actions being arbitrary, fallacious, unwarranted and illegal must be quashed with directions for appropriate relief." 3. Brief facts of the case are that, the assessee filed declaring NIL income for the Assessment Year 2017-18, the case of the assessee was selected for scrutiny through CASS. The assessment order came to be passed on 29/12/2019 by making an addition of Rs. 1,37,95,042/- u/s 68 of the Income Tax Act 1961 (Act for short) as unexplained cash credit. 4. As against the assessment order dated 29/12/2019, the assessee preferred an appeal before the CIT(A) and the CIT(A) vide order dated 21/06/2022 dismissed the appeal filed by the assessee, thereby upheld the addition of Rs. 1,37,95,042/- made by the A.O. u/s 68 of the Act in following manner: - "10. I have considered the order of AO, written submission of the appellant and the material available on record in detail. In order to avoid the provision of Section 285BA read with Rule 114E, which casts a responsibility on the person covered under the rule to furnish such records within the time specified, the appellant has shown invoicing below the limit of Rs.2,00,000/- each in most of the c....
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.....53,514/- only in F.Y. 2017-18 points to the fact that claim of cash sales is an afterthought to justify huge cash deposits in Bank of India account during the demonetization period. Thus, appellant's contention that section 68 does not apply in its case, does not stand, as cash sales is not proved." 5. Aggrieved by the order of the CIT (A) dated 21/06/2022, the assessee has preferred the present appeal on the ground mentioned above. 6. The Ld. Counsel for the assessee vehemently submitted that the NFAC, CIT(A)-Delhi erred in confirming the addition of Rs. 1,37,95,042/- made by the A.O. on account of cash deposited in bank by wrongly invoking Section 68 read with Section 115BBE of the Act, to buttering the submissions, the Ld. Counsel for the assessee taken us through the various documents produced in the paper books and argued that the lower authorities have committed error in making/sustaining the addition. 7. On the other hand, the Ld. DR submitted that it is the duty of the assessee to discharge its onus for providing item wise sale for each invoice specially for the month of November, 2016, but the assessee failed to do so, therefore the Assessee cannot find fault wit....
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....f ledger and complete address with area pin code and email id of below mentioned entities i. Bhansali and Co ii. Sagrika Kapur iii. Evolve Unlimited iv. M.A. Motiwala & Sons h. Details of top ten parties from whom purchase are made along with address and amount. i. Details of top ten parties to whom sales are made along with address and amount j. Detail of month wise Ornament Stock k. Copy of Income Tax Return and Computation of Partners l. Detail of TDS for the period 01-04-2016 to 31-03-2017 m. Copy of the response sheet for cash deposit during demonetisation period, showing that the same was from the cash sales of the assessee n. Copy of Fixed Assets Bill o. Copy of Ledger of ICICI Credit Card for the period 01-04-2016 to 31-03-2017 p. Copy of Receipts of TDS Returns 11. Further, another more notice u/s 142(1) of the Act has been issued by the Assessing Officer to the assessee on 14.11.2019. In reply the assessee furnished details and documents on 20.11.2019 and 21.11.2019 which are as under:- a. Copy of Purchases Ledger for the period 01-04-2016 to 31....
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....in the morning till late in the evening and not after the announcement of demonetization as stated by your honours in the show cause notice b. That there was an exceptional rush on that day, rush of such magnitude was never seen by us before, It appeared as if people were aware of the demonetization in advance. c. Cash sales were in normal course of business duly supported by underlying stock available. The assessee had a stock of Rs. 10.40 Crores as on 01/10/2016 and 10.89 Crores as on 30/11/2016 d. That your honours observation that variance in sales between Nov 2016 and Nov 2017 leads to suspicion that the assessee has infused his unaccounted cash in the business by way of sales is based on assumptions without any basis, facts and evidence. e. That your honours observation that no satisfactory explanation In this regard has been made available before the undersigned, we wish to draw your honours kind attention to various letters/ requirements/ notices received by us. It can be observed that your honours never raised this issue earlier and this is the first time this issue has been raised in the show cause notice dates 18/12/2019. The assessee ....
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.... point of time books of accounts of the assessee was rejected and the same has been accepted in VAT. It is not the case of the Revenue authorities that the invoice are more than 2,00,000/- but it is the specific case of the Department that all the invoices are Rs. 2,00,000/- or below Rs. 2,00,000/- but total cash sale invoices for diamond items during 01/10/2016 to 08/11/2016 was Rs. 20.87 lakh compare to Rs. 53,514/- only in the Financial Year 2017-18, which ultimately resulted in making the addition. 18. We should keep in mind that the fact for Assessment Year 2016-17 cannot be comparable with the fact of Financial Year 2017-18 or any other year because the extraordinary incident of demonization was unique to Financial Year 2016-17, the abnormal increase in the cash sale and their deposit in the bank account consequent to demonization could not be basis for the rejection of account and addition u/s 68 of the Act. The Tribunal Bench at Vishakhapatnam in the case of ACIT Vs. Hirapanna Jewellers (2021) 189 ITD 608 (Visaks) held as under:- "7. We have heard both the parties and perused the material placed on record. In the instant case, the assessee has admitted the recei....
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....he AO as well as the DDIT (Inv.), both the authorities did not find any defects in the books of accounts and trading account, P&L account and the financial statements and failed to disprove the condition of the assessee. Suspicion however strong it may be, it should not be decided against the assessee without disproving the sales with tangible evidence. 7.1. In the case of CIT Vs. Assolciated Transport (P.) Ltd. 1996] 84 Taxman 146/[1995] 212 ITR 417 (Cal). The Tribunal found that the assessee had sufficient cash in hand in the books of account of the assessee, therefore, held that there was no reason to treat this amount as income from undisclosed sources and it was not a fit case for treating the said amount as concealed income of the assessee. The revenue moved to Calcutta High Court against the order of the tribunal and the Hon'ble High Court has confirmed the order of the Tribunal while deleting the penalty, Hon'ble Calcutta high court held as under: "8. The Tribunal was of the view that the assessee had sufficient cash in hand. In the books of account of the assessee, cash balance was usually more than Rs. 81,000. There is no reason to treat this amo....
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....ll raised against them etc., have been duly recorded in the books of account. The impugned deposits have been made from cash balance available with books of account. I also notice that the Assessing Officer has not rejected the books of account. When cash deposits have been made from the cash balance available in the books of account, in my view, there is no question of treating the said deposits as unexplained cash deposit as opined by the Assessing Officer. 5. The Ld A.R relied on certain case laws which are relevant to the issue under consideration. In the case of Lakshmi Rice Mills (1974) 97 ITR 258 (Patna), it has been held that, when books of account of the assessee were 3 R. S. Diamonds India Private Limited accepted by the revenue as genuine and cash balance shown therein was sufficient to cover high denomination notes held by the assessee, then the assessee was not required to prove source of receipt of said high denomination notes which were legal tender at that time. In the case of M/s. Hirapanna Jewellers (ITA No. 253/Viz/2020 dated 12.5.2021), it was held that when the cash receipts represented the sales which has been duly offered for taxation, there is no sc....
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.... was maintained. In the case relied by the ld DR i.e. Rajiv Jain Vs. ITO (2013) 410 ITR 179 (Del), there was no evidence to show that cash collection through sale of wearing apparels and the inherited silver utensils. In the instant case, the facts clearly support that the assessee has made the sales and there were sufficient stocks to meet the sales. Thus, the facts of the Assessee's case are clearly distinguishable from the above case laws. 22. In the case in hand the reason for disbelieving the cash deposit is that the assessee has been deposited below Rs. 2 lakh in every transactions that lead to the conclusion of the Assessing Officer that the same has been done to avoid the application of provision of section 285BA read with Rule 114E of the Act. The said observation made by the Assessing Officer without any material in his hand. There is no prohibition under law to make sale transaction below Rs. 2 lakhs as such the assessee had at liberty to manage his own affairs. From the action of the assessee in raising the sales bill below Rs. 2 lakhs the Assessing Officer cannot interpret as the sale are bogus only to give color to non-genuine transaction as genuine transaction. 5T....