AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (11) TMI 1334
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the assessment proceedings? 2. Brief facts of the case are that the assessee is an Individual and deriving income from business of jewellery in his proprietorship concern M/s D.N Diamonds and Dinanath Raj Kumar and interest income from saving bank account, FDR and parties. The assessee's books of account are audited by Chartered Accountant. The assessee filed his Income Tax Return on 16.10.2017 declaring total income of Rs. 40,11,520/-. The case of the assessee was taken up for scrutiny u/s 143(3) of the Income Tax Act, 1961 vide notice dated 25.09.2018. The assessee deposited Rs. 91,00,000/- in demonetized currency during the demonetization period 09.11.2016 to 31.12.2016 and cash Rs. 12,00,000/- in non-demonetized currency on 28.03.2017, and this Rs. 12,00,000/- was already offered for Income under "Pradhanmantri Garib Kalyan Yojna-2016". However, the AO made the addition of Rs. 91,00,000+12,00,000 totaling to Rs. 1,03,00,000/- and the assessment of the assessee was completed by AO vide her order dated 30.12.2019 at total income of Rs.1,43,11,520/- as against returned income of Rs. 40,11,520/-by giving reasons mentioned at pages 2-4 of her assessment order. Being aggrieved....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... major most during the period from 28.10.16 and 29.10.16. a) Dinanath Raj Kumar, Kanpur Sales of Dinanath Raj Kumar, Kanpur was of Rs. 73,06,624/- during the period from 22.10.2016 to 08.11.2016. b) M/s D. N. Diamonds, Jaipur Sales of M/s D. N. Diamonds, Jaipur was of Rs. 21,10,692/- during the period from 22.10.2016 to 08.11.2016. Out of this the assessee was having cash amounting of Rs. 91,00,000/- in demonetization currency which was deposited in bank. The cash accumulated from the sales, which was deposited in bank in demonetized currency, was treated by ld AO as undisclosed income of the assessee without any cogent reason and treated the corresponding sales as non-genuine solely for the reason that ld. AO was bent to add such cash deposited as income of the assessee. (iii) Reason of increase in sales (i) Increase in overall turnover:- Financial Year Total Turnover 2015-16 1,15,92,702 2016-17 2,77,05,253 The main reason of increase in sales during the FY 2016-17 was that:- a) the firm Dinanath Raj Kumar has been started in the year 2015 itself and hence the sale was low i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ence the assessee was not able to setup his business at Kanpur Hence the sale was low during the period 01/04/15 to 08/11/15 in the year FY 2015-16 as compared to sales in 2016-17 for the same period. (iv) Increase in cash sales during the FY 2016-17. The cash sales during the FY 2015-16 was Rs. 17,72,830/- as against Rs. 1,17,87,255/- (PB page 14) during the FY 2016-17. We have already submitted that the assessee started new showroom in Kanpur during 2015 which could be properly established in 2016. So the cash sales of the FY 2015-16 cannot be compared with FY 2016-17. However, the department has no any material to show that the assessee has booked bogus sales or fabricated the invoices to book back dated sales. (iv) Sales of assessee supported by Bills/Invoices:- The sales of assessee duly supported by the sale bill and invoice and duly verifiable form books of accounts including stock register, therefore, cannot be treated as abnormal and non-genuine. The ld. AO has not rejected the books of account of the assessee meaning thereby all the entries in the books of account recorded by the assessee are correct. Therefore, the se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sales as genuine:- The assessee maintains regular books of account, which are audited by independent and reputed Auditor. The cash sales & receipts are duly supported by relevant bills, which were produced before the AO in course of the assessment proceedings, and nothing adverse in connection therewith was noted by the A.O. The cash sales and the corresponding cash deposits in banks are duly reflected in books of the assessee in the respective years. The books of account and the entries pertaining to cash sales and cash deposits have been accepted by the Department in the assessments framed in the past years and also during this year. The audited financial statements form part of the regular returns filed by the assessee. The cash sales and cash deposits existed in the past years as well as in the months prior & subsequent to the demonetization period. The entries pertaining to cash sales and corresponding cash deposits in banks were duly reflected in the books of account of the assessee. The audited books of account and the tax audit report for the impugned F.Y. 2016- 17 (PB page 3-11) were also filed before the AO in course of the assessment proceeding and the sale for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....les bills had already been issued. Therefore, it cannot be alleged that the assessee has booked the sales in backdate to generate the cash in hand because of the reason that the assessee could not change the sale bills issued prior to the date when the demonetization announced as the same had already been issued to the customers in the regular course of business in relation to sale made and without changing the sale bills of the previous dates the manipulation in sale is not possible. Therefore, suspicion on the source of corresponding cash in hand available with assessee, which deposited in bank in demonetize currency is merely on assumption, presumption and without any material. Therefore, the suspicion on the submission and explanation given by assessee, which is supported by evidences is not correct because it is not possible for the assessee to make any adjustment in the sales in back date because the sale bill could not be changed in the back date as the same has already been issued to the customers. Thus ld. AO has not brought any material on record to establish that the sale bills are bogus nor any evidence indicating that such sales was bogus. Merely having some d....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 68 of the I.Tax Act, and CIT(A) has rightly deleted it. i) Provisions of section 68 are not applicable for sales:- The cash deposited in the demonetized currency added as income of the assessee by applying the provisions of section 68 of the Act while the provisions of 68 as such are not applicable on the sale transactions recorded in the books of accounts because the sale transaction are already part of the income which is already credited in P&L account, therefore there is no occasion to again consider the same as income of the assessee by applying the provisions of section 68 of the Act. It is further relevant to mention here that if the intention of the legislature would be to apply the provisions of section 68 of the Act on the sale transactions also than it such case as per law it would be mandatory to have the identity, genuineness and creditworthiness of each buyer. But the law is not so and in case of sale below to certain limit the assessee was not required to prove all these ingredients of section 68 of the Act and even also in case of sale exceeding to certain limit the assessee is not required to prove the creditworthiness of buyer. Thus this also st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee has not filed any evidence to substantiate its sales. i) As apparent above the assessee was having sufficient source of cash in hand out of amount received against/for sales made and the same is duly evident from the Audited books of accounts. During the course of assessment proceedings, the assessee submitted the following documents to substantiate its claim: - a) Cash book (Copy at PB Page 39 to 45) and sales bills along with submission dated 10.12.2017 comprising the detail of sales made. From perusal of these documents the cash sales and cash balance with assessee is duly apparent. b) Copy of stock register for the FY 2015-16 and 2016-17 (Copy of the same is at PB Page 50 to 72). From perusal of stock register, it is apparent that before making the sale the sufficient stock was available with assessee and genuineness of the same also not doubted by ld. AO. c) Copy of return of VAT (Copy of the same is at PB Page 80 to 85) and VAT assessment order of proprietorship concern M/s Dinannath Raj Kumar, Jaipur (Copy at PB Page 88 to 90). The VAT department accepted the sale of the assessee. d) Copy of audit report and audited Profit an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessment was supposed to be completed solely on relying on audit report than there would be no occasion of added the sales of the assessee which accepted by the auditor. iv) Thus from record of the assessee and also the nature of trade of the assessee it is well evident that the cash sales & corresponding cash in hand have been a regular feature of the trade of the assessee and the same cannot be treated as unusual. The assessee also having the cash sales throughout the year, therefore the cash sales, proceed of which was subsequently deposited in bank cannot be treated as unique source of cash which never happened in past or future. Admittedly, the cash sales of previous periods were not commensurate to the cash sales of current year, which deposited in bank in demonetized currency, but the same cannot be sole ground to treating the sales as non-genuine. It is an admitted fact that the Jewellery market is customer oriented market and the demand in the trade of the assessee depends on the sentiments and liking & disliking's of the customers. If something had in stock with the assessee and design etc. of the same is liked to customers, then the sale of the same obviously ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ull name, address or/and PAN of the customer to whom goods were sold in cash during the course of business below to the prescribed limit. It is voluntary to the customer to provide their personal information to the assessee while goods being sold. The assessee cannot enforce or compel to their customer to give their personal information and if the assessee would do it ruined to the business of the assessee. ii) Further in the preceding financial year, subsequent financial years and other periods of this same financial year the same practice was being followed by the assessee where no details of name, address and PAN of customer was available with the assessee. Therefore, due to non-furnishing of address and PAN of the customer, the sale made by the assessee cannot be doubted. The cash sales of the previous months, previous years and next month or years was also made on the same trend with same set of particulars. Therefore, only the sales made and utilized for depositing the demonetized currency cannot be doubted for this reason. It is admitted fact that each transaction should be analyzed with the point of view of the businessman, generally prevailing practice in the trad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the light of assessee's total turn- over of Rs.10.29 crores. It is but natural that if a customer makes cash purchase and lifts the goods, there is no duty cast upon the seller to insist for the address of the purchaser. In the light of the fact that stock record was available with the assessee, which evidenced the making of sale, we fail to appreciate as to how any addition can be made by treating cash sales as bogus........................................We are dealing with a situation in which the assessee has himself offered the amount of cash sales as his income by duly including it in his total sales. Once a particular amount is already offered for taxation, the same cannot be again considered u/s 68 of the Act. In fact, such addition has resulted into double addition." g) The ld AO has wrongly applied the provisions of section 115BBE with a motive to levy the tax on the higher slab rate. (i) The addition so made taxed as per the provisions of section 115BBE of the Act while no show cause notice was given to assessee for applying this section. (ii) As stated in the forgoing paras the whole purpose of the ld. AO in singling out the cash deposited i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ptions and whims of the ld. AO is clearly unwarranted and the additions so made is unsustainable in the eyes of law and thus deserves to be quashed. (iv) It is also pertinent to mention here before applying the provisions of section 115BBE of the Act the specific show caused notice did not give to the assessee and in absence of specific show cause notice the provisions of this section cannot be applied mechanically. Reliance is placed on the decision of Hon'ble Jodhpur bench of ITAT in the case of Suraj Kanwar Devra v/s ITO 2(2), Udaipur in ITA No. 50/Jodh/2021 dated 23.11.2021 h) The submission on the findings/observations of ld. AO, is as under:- Para No of AO's Order Observations/findings of AO Explanation of Assessee Para 1 page 2 On perusal of details of cash sales during demonetization and same period in preceding year there is exceptional rise in sales of around 955.78% however the total sale for the entire year has decreased by 138.98% The ld AO wrongly held that total sales of the current year has decreased by 138.98%. She failed to appreciate the data tabulated by her in chart at page 2 of her order. In fact the total sales during....
X X X X Extracts X X X X
X X X X Extracts X X X X
....k Rs. 75,13,415/- has not been shown in the audit report. However, the copy of stock register was filed before ld AO and no defect has been pointed out by her. Para 5 (1) page 2-3 Majority of sales of Dinanath Rajkumar falls on 28/10/2016 As explained above M/s Dinanath rajkumar was new showroom opened by the assessee in 2015-16 which gained good name and reputation by Diwali 2016. Dahnteras was on 28-10-2016 which is considered as very auspicious in purchase of jewellery. This is not happened in the case of assessee only but all the jewelers witness huge sales on Dhanteras, Further the marriages were falling in next month and due to that there was huge sales. Para 5 (2) page 2-3 The assessee has not submitted party wise details such as Pan address of cash sales It is not compulsory or mandatory under the I. Tax Act, 1961 to collect the information related to full name, address or/and PAN of the customer to whom goods were sold in cash during the course of business below to the prescribed limit. Detailed explanation and supporting case laws has been submitted in para (f) above. Para viii at Page 3 The assessee has not offered any acceptable and cogent explan....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... AO did not pointed out any defect. Thus, the facts of this relied upon case in entirely different from the case of assessee. b) The case of K Kailash Swaroop Agarwaal vs CIT, Ajmer, Hon'ble Rajasthan High Court in ITA No. 175 of 2012 was decided in the factual background of proving the ingredients of section 68 of the Act regarding the loans accepted by assessee in cash. The case of the assessee in not so, therefore the facts of this relied upon case in entirely different from the case of assessee i) In support of our submission reliance is placed on following judgements: - 1) 2021 (5) TMI 447 - ITAT Visakhapatnam Asst. Commissioner of Income Tax, Central Circle-1 Visakhapatnam Versus M/S Hirapanna Jewellers And (Vice-Versa) Case Law Paper Book 181-184 Addition u/s 68 r.w.s 115BBE - assessee had deposited the sum in high denominations of specified bank notes (SBNs) post demonetization - CIT-A deleted the addition - HELD THAT:- The assessee produced the newspaper clippings of The Hindu, The Tribune and demonstrated that there was huge rush of buying the jewellery in the cities consequent to declaration of demonetization of Rs. 1000 and Rs. 500 no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ave that cash. It can merely lead to a suspicion but based on this addition cannot be made without making further enquiry and conclusively proving that assessee did not have that kind of cash available with it. Even otherwise, if the assessee had to introduce his unaccounted money he would have deposited it at the first instance. 4. ITAT observed that assessee also filed its VAT returns, which are not found to be in variance with the accounting and tax records. Therefore, it cannot be substantiated that the assessee has backdated the transactions of the sale. 5. ITAT further observed that CBDT had issued various standard operating procedures under 'Operation Clean money'. ITAT opined that "...it is very important to note that whether the case of the assessee falls into statistical analysis, which suggests that there is a booking of sales, which is non-existent and thereby unaccounted money of the assessee in old currency notes (SBN) have been pumped into as unaccounted money." 6. In the result the addition of Rs. 73.13 crore sustained by Ld CIT(A) on account of deposit of demonized currency was deleted by Hon'ble ITAT. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the creditors (tea vendors) - HELD THAT:- As explained, the deposit of Rs. 8,75,000/- [Rs. 2,00,000/-accepted by AO] cannot be said to be as result of non-genuine business receipt or a case of black money and therefore, in the peculiar facts narrated above, including the past history taken note of and the pattern of money deposited predemonetization and post that event as discussed, addition was not warranted and it is directed to be deleted; and further, profit embedded in Rs. 8,75,500/- need to be taxed @ 8% and it is ordered accordingly. Appeal of the assessee is partly allowed. 5) 2021 (12) TMI 599 - ITAT Bangalore Anantpur Kalpana Versus Ito, Ward - 1, Koppal. Unexplained cash deposits in two bank accounts - Legal tender money in demonetization of currency - AO culled out, the deposits that was made of bank notes that were declared as not legal tender owing to demonetization of currency - HELD THAT:- Both AO and CIT(A) accepted the fact that the cash receipts are nothing but sale proceeds in the business of the assessee. Addition has been made only on the basis that after demonetization, the demonetized notes could not have been accepted as valid tender. S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ouble addition. When the justifiability of separate addition is to be examined, it should be borne in mind that the AO is making a 'guess' about the source of demonetized currency. And the assessee is assailing the 'guess work' with an explanation which should be tested; and if the explanation given by the assessee is a plausible/probable from a traders/business man's/prudent man's angle/view, then that cannot be brushed aside by the AO, without disproving the explanation / facts or by giving cogent reasons. Statement of bank accounts of assessee (3 bank accounts) it is noted that assessee has deposited in his three bank account (predemonetization) an amount to the tune of Rs. 2,38,94,037/- and during (Post-demonetization period) the assessee had deposited to the tune of Rs. 2,38,94,037/- and it is found that the total bank deposit tallys with the figure shown in trading account i.e., Rs. 4,76,78,990/- (Rs. 4.76 crores). So taking into account all these facts and circumstances and demonetization being declared on the night of 8/9th November, 2016, it is noted that AO has accepted the invalid currencies to the tune of Rs. 11,08,796/- because it was shown by the assessee in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nces from certain entries in its accounts wherein the fact that moneys were received in high denomination notes had been noted. Portions of these entries to the effect that moneys had been received in high denomination notes were found by the ITO to be subsequent interpolations made by the appellant with a view to advance its case that the cash balances contained the high denomination notes encashed by it. The ITO rejected the appellant's explanation that the high denomination notes formed part of its cash balances and treated the sum of Rs. 2,91,000 as the appellant's secreted profits from business and included it in its total income and assessed the appellant. Before the Tribunal, the appellant stated that the said entries were made in sheer nervousness after the coming into force of the High Denomination Bank Notes (Demonetization) Ordinance, 1946, on 12th Jan., 1946, as the appellant did not know that it had specific proof in its possession of having the high denomination notes as part of its cash balances. The Tribunal held that there was no other reason to suspect the genuineness of the account books in which these interpolations were made. If the entire account books....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 19th Jan., 1946. [para 14] The Tribunal, however, appears to have been influenced by the suspicions, conjectures and surmises which were freely indulged in by the ITO and the AAC and arrived at its own conclusion, as it were, by a rule of thumb holding without any proper materials before it that the appellant might be expected to have possessed as part of its business, cash balance of at least Rs. 1,50,000 in the shape of high denomination notes on 12th Jan., 1946,-a mere conjecture or surmise for which there was no basis in the materials on record before it. [para 15] Unless the Tribunal had at the back of its mind the various probabilities which had been referred to by the ITO it could not have come to the conclusion it did that the balance of Rs. 1,41,000 comprising of the remaining 141 high denomination notes of Rs. 1,000 each was not satisfactorily explained by the appellant. [para 18] If the entries in the books of account were genuine and the balance in Rokar and the balance in Almirah on 12th Jan., 1946, aggregated to Rs. 3,10,681-13-9 and if it was not improbable that a fairly good portion of the very large sums received by the appellant from ti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ving regard to the cash balance shown therein, that notes in question could not have been included therein. The Tribunal observes that it is unlikely that so many high denomination notes would have been held as part of the cash on hand for a such a large number of days. That, no doubt, is highly suspicious; but the decision of the Tribunal must rest not on suspicion but on legal testimony." 9) Lakhmi chand Baijnath V. CIT [1959] 35 ITR 416 (SC).) Case Law paper Book page 208-211 Amount credited in business books can normally be presumed as business receipt. When an amount is credited in business books, it is not an unreasonable inference to draw that it is a receipt from business 10) Hon'ble Allahabad High Court in the case of Sri Ram Tandon Vs. CIT (1961) 42 ITR 689 ordained as under: Case Law paper Book page 212-216 "It appears extremely difficult to appreciate how the Tribunal thought it necessary or proper to make an estimate of 35 notes at Rs. 1,000 each to have been contained in the cash balance. The Tribunal has given no reason whatever for its finding that the assessee possessed 35 notes of Rs. 1,000 each on the day the Ordinance was prom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich there was no basis and which had no support from any material on the record. In these circumstances, it must be held that there was no material for holding that the sum of Rs. 25,000 being the value of high denomination currency notes exchanged in pursuance of the High Denomination Bank Notes (Demonetisation) Ordinance, 1946, represented income of the assessee company from some undisclosed sources." 12) Madhuri Das Narain Das Vs. CIT (1968) 67 ITR 368 (All) Case Law paper Book page 220-221 Section 4 of the Income-tax Act, 1961 [Corresponding to section 3 of the Indian Income-tax Act, 1922] - Income - Chargeable as - Assessment year 1947-48 - Assessee encashed 28 high denomination notes of Rs. 1,000 each after issuance of High Denomination Bank Notes (Demonetisation) Ordinance, 1946 - When asked to explain source of said notes, assessee submitted that same had come out of closing cash balance of its business - ITO disbelieved explanation and treated entire amount as assessee's income from an undisclosed source - Tribunal accepted that 22 notes could have come out of cash balance of Rs. 38,000 and odd, and remaining 6 notes could not have formed such balance - ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....prove that even if the cash credit represents income, it is income from a source, which has already been taxed". The assessee has already offered the sales for taxation hence the onus has been discharged by it and the same income cannot be taxed again. 15) Hon'ble High Court of Allahabad in the case of Gur Prasad Hari Das vs Commissioner of Income Tax [1963] 47 ITR 634 (Allahabad) Case Law paper Book page 229-231 Section 143 of the Income-tax Act, 1961 [Corresponding to section 23(3) of the Indian Income-tax Act, 1922] - Assessment - Addition to income - Assessment year 1947-48 - On demonetisation of high denomination notes assessee encashed 21 such notes, part of which were held, by Tribunal as his income from undisclosed sources on ground that same could not be satisfactorily explained by assessee - Whether, prima facie value represented by high denomination notes in possession of assessee must be presumed to be part of his cash balance and if department wanted to treat such value as his concealed income from some undisclosed sources, it was for department to establish that fact on basis of material in their possession - Held, yes - Whether in view of fact that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... basis no further addition could be made u/s 68 of the Act as it would tantamount to double taxation of same income. The Assessing Officer could only reject claim u/s 80HHC of the Act. 18) CIT v/s. Kailash Jewellery House ITA No. 613/2010 decided by Delhi High Court on 09.04.2010 Case Law paper Book page 239 In the facts of above case cash of Rs.24,58,400/- was deposited in bank account. The Assessing Officer made the addition on the ground that nexus of such deposit was not establish with any source of income. The assessee claimed that it was duly recorded in the books on account of cash sales and was considered in the Profit and Loss Account. The Assessing Officer had verified the stock and cash position as per books and had accepted the same. Complete books of account and cash book was submitted to the Assessing Officer and no discrepancy was pointed out. On this basis CIT(A) deleted the addition. Tribunal also observed that it is not in dispute that sum of Rs.24,58,400/- was credited in the sale account and had been duly included in the profit disclosed by the assessee in its return. Therefore, cash sales could not be treated as undisclosed income and no addit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....poses - CIT(A) observed that despite having sufficient cash in hand, the assessee withdraw the amount. It is correct that the assessee has withdrawn higher amounts than the immediate preceding years but that cannot be sole reason for making addition purely on the basis of suspicion. We failed to understand the reasoning of the Assessing Officer that the amount was withdrawn to justify the cash deposits during demonetization period i.e. between 09.11.2016 to 30.12.2016. It is also seen that the cash was withdrawn much prior to such event. So far observation regarding sharp increase in payable expenses is concerned, there is no finding by the Assessing Officer that such expenses are bogus - addition has been made purely on the basis of suspicion. Such action of authorities below cannot be affirmed - Decided in favour of assessee. j) Drawing inference from the above cited cases, in the instant case, the assessee furnished a reasonable explanation with regard to the nature and source of the cash deposited in banks in demonetized currency which was not found to be false by the Department. The explanation offered by the assessee was in line with the trend of cash deposi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....into force on September 1, 1957, and the said Act not being retrospective in operation, it could not be regarded as law in force at the commencement of the year of assessment 1957-58. Since the Surcharge Act was not the law in force on April 1, 1957, no surcharge could be levied under the said Act against the appellant in the assessment year 1957-58. i) In view of above submission it is submitted that entire sales of the assessee are supported by the bills, duly verifiable from books of accounts & records and the same is completely genuine. The ld. AO did not specify any defects in the sale and the sale is in line of its own previous history of the assessee. The ld. AO could not brought any single evidences on record to prove his allegation to be correct. Further all the surrounding circumstances and human probability of this much cash sale are also in favour of the assessee. The assessee submitted the best possible details/information/documents/explanation to present its case before ld. AO and as explained in forgoing paras no specific defects had been pointed out by ld. AO therein. The entire assessment order is based on presumption and assumption by twisting the data an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....000+12,00,000 totaling to Rs. 1,03,00,000/- and the AO treated the sales as unexplained cash credit of the assessee u/s 68 of the Act and added the same to the income of the assessee and thus taxed it as per the provisions of Section 115BBE of the Act and vide her order dated 30-12-2019 assessed the income of the assessee at Rs.1,43,11,520/- as against return income of Rs.40,11,520/-. The CIT(A) has deleted the addition on the basis of her findings in para 4.2 at pages 20-26 of her order as under:- "4.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- (i) Brief facts related to the issue are that AO noticed that the appellant has deposited cash of Rs. 1,03,00,000/- in its bank account during demonetization period viz. between 09.11.2016 to 30.12.2016 out of which cash of Rs. 91,00,000/- was in the demonetized currency notes (SBN i.e. Old Rs. 500 and Rs. 1000 notes). The appellant has explained it to be out of cash sales made by the appellant. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mar, Jaipur wherein the VAT Department has accepted the sales declared by the appellant and therefore the initial burden cast on the appellant is discharged and therefore it cannot be disputed that the appellant does not have all the necessary documents to prove the genuineness of sales. (iv) The AO has treated the cash deposited in the banks during the demonetization period in demonetized currency as unexplained cash credits u/s 68 of the Act although the nature and source of the cash deposits being proceeds arising out of cash sales etc. is patently evident from the entries in the audited books of account of the Assessee. It is not the case of the A.O. that the cash deposited in the bank during the demonetization period was in excess of what was available in the cashbooks. The fact that the cash deposits in banks were sourced out of cash sales is evident from the entries in the cashbooks. The books of account of the appellant have been audited by an independent reputed auditor. The cash sales & receipts are duly supported by relevant bills, which were produced before the AO in the course of assessment proceedings, and nothing adverse in connection therewith was noted by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f these notes. There was an article in the Economics Times wherein the secretary of Indian Bullion and Jewellers Association mentioned that Jewellers had sold as much as 15 ton of gold ornaments and bars worth around Rs. 5000 crores on the intervening night of November 8 and 9, 2016 after the announcement of demonetization. Naturally after the spread of the news of demonetization, the general public had purchased the jewellery not only for the wedding in the immediate vicinity but also for wedding and functions in late November or December and also even otherwise for future use in functions. And due to this there was heavy cash purchase in November for the purpose of utilizing the demonetized notes whereas the purchases in the month of December, 2016 has been very low. However, the purchase for both the months taken together is not exceptionally high and the increase is mainly due to total increase in turnover and the specific reason of demonetization. Infact though there is rise in the cash sales during the demonetization period, however, there has been substantial decrease in sales for the entire year. It was further submitted that sales made by the appellant was fully vouched an....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee has already offered the sales for taxation hence the onus has been discharged by it and the same income cannot be taxed again. (xii) 2021 (5) TMI 447 - The Hon'ble ITAT Visakhapatnam in the case of Asst. Commissioner of Income Tax, Central Circle-1 Visakhapatnam versus M/s Hirapanna Jewellers and (viceversa)) (Copy at Case Law PB Page No. 181-184 ) held that- Addition u/s 68 r.w.s 115BBE - Assessee had deposited the sum in high denominations of specified bank notes (SBNs) post demonetization - CIT-A deleted the addition - HELD THAT:- The assessee produced the newspaper clippings of The Hindu, The Tribune and demonstrated that there was huge rush of buying the jewellery in the cities consequent to declaration of demonetization of Rs. 1000 and Rs. 500 notes on 08.11.2016. As cash receipts represent the sales which the assessee has rightly offered for taxation. We have gone through the trading account and find that there was sufficient stock to effect the sales and we do not find any defect in the stock as well as the sales. Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng Officer could only reject claim u/s 80HHC of the Act". (xv) In view of the facts of the case, it is evident that the appellant has duly substantiated its claim from the documentary evidences and also with the facts which duly supported with his own previous history and trend. Further the books of accounts have not been rejected as no discrepancy was found therein and the fact remains that the AO has accepted the cash sales as he accepted the declared sales, declared purchases, declared opening and closing stock and declared profits as well. The amount of cash sales is being reflected in its trading and profit and loss account. Thus the contention of the appellant that assessing the said cash sales as unexplained cash credit u/s 68 means that the impugned sales had been taxed twice, firstly the same was treated as sales and secondly the same was treated as unexplained cash credit/money u/s 68 of the Act appears to be correct and therefore this would tantamount to double taxation of income, which is impermissible in law. Accordingly, the action of the AO in holding that the appellant could not substantiate the increase in sales with documentary evidences is not based on c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in trading a/c and the assessee has already offered income on such sales in Trading Account by reducing the cost of sales from sales. The AO herself accepted the sales shown in trading a/c and has not disturbed the cash sales so declared by Assessee and the sales of assessee duly supported by the sale bill and invoice and duly verifiable form books of accounts including stock register and considering availability of stock on hand, it proved that the sales made by the assessee are genuine sales recorded in the books of account. All the details required to prove the sales made by the assessee were provided in the assessment proceedings. The assessee has filed sufficient evidence to substantiate his sales. He has filed (1) Copy Cash book (Copy at APB Page 39 to 45) and sales bills along with submission dated 10.12.2017 (2)Copy of stock register for the FY 2015-16 and 2016-17 (Copy of the same is at APB Page 50 to 72 which shows that before making the sale the sufficient stock was available with assessee (3) Copy of VAT Returns APB Page 80 to 85 and VAT assessment order of proprietorship concern M/s Dinannath Raj Kumar, Jaipur at APB Page 88 to 90. The VAT department accepted the sale....