TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 318
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....o reach well within the limitation of 60 days, however, unfortunately, due to some postal delay, not in the hands of the Assessee, the concerned documents reached two days late. In these facts and circumstances, the delay of two days has been sought to be condoned. 3. Considering the contents of the application for condonation of delay, finding that the Assessee was prevented by sufficient cause from filing the appeal in time, the delay of two days in filing the appeal is condoned. 4. The AO found that the Assessee had made large cash deposits in bank accounts with Axis Bank and IOB, amounting to Rs. 73,15,000/-. It was found that these cash deposits were in excess of Rs. 20,000/-. The Assessee produced a cashbook and stated that the money in question was cash balance as per cash book, deposited in the bank account on different dates. On examination of the books, the AO found that the cash book contained entries of cash of Rs. 20,000/- or just below, credited against the names of a number of parties. The AO asked the Assessee to justify the credits by producing the identity of the creditors, genuineness of the transaction and creditworthiness of the parties. The Assessee could es....
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.... had failed to furnish; that the accounts had been fabricated to manage cash in hand for depositing it in the bank accounts; that the Assessee's contention that the amounts were in the nature of trade advances and that sales had been booked, which would result in double taxation, was not acceptable, as the advances had been received up to December 2012 and the sales had been made in February 2012; and that the Assessee had failed to produce sale bills in respect of these sales. Relying on various decisions to establish that the advances fell within the ambit of section 68 of the I.T. Act, the AO added the amount of Rs. 46,97,859/- as unexplained cash credits u/s 68 of the I.T. Act. 6. By virtue of the impugned order, the ld. CIT(A) rejected the Assessee's appeal on this issue. It was observed that the AO had found the Assessee to have introduced unaccounted cash in the business and when asked to explain the same, it tried to explain the same in the guise of trade advances where there was no actual trade and where bogus trade creditors were created, most of which were squared off during the previous year relevant to the assessment year under consideration, whereas in some cases, so....
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.... 20,000/- and under; and that the Assessee had not been able to furnish a valid confirmation of sale bill / receipt, which went to belie the Assessee's arguments; that the Assessee's arguments regarding the volatility of RC Doc Tax free, the item whose sale had purportedly been booked, were also not supported by any proof / rates, which would explain the behavior of the stated buyers paying small advances before December, 2011 and any cancellation thereafter; that though the Assessee may not be required to remember all the trade buyers, some documentation, with regard to the cash receipts, bills of sales, and methodology for claiming refund, etc., would need to be maintained to manage such large cash advances; and that the Assessee's transactions fell within the rubric of dubious transactions. The ld. CIT(A) concluded by holding that the deposits in question were not trade advances and that the entire edifice created by the Assessee was an elaborate charade to establish the transactions as trade advances, where the provenance of trade was not established. In this manner, the ld. CIT(A) confirmed the addition of Rs. 46,97,859/- made by the AO. 8. Challenging the impugned order, the....
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.... parties in the guise of advances from customers; that as a matter of fact, the rates of the goods dealt in by the Assessee were fluctuating rates and the customers wanted to be secure to get the supply of the goods at the prevailing rate on a particular date, so as to avoid the risk of loss on account of increase in the rates of the goods booked for; that though for reasons best known to him, the AO did not take any cognizance thereof, it is a fact that some of the persons / parties had furnished their confirmations, admitting to have advanced money to the Assessee for supply of goods and that their accounts had been settled by supplying the goods to them, or otherwise; that complete ledger containing the accounts of all the persons / parties who had advanced money to the Assessee for supply of goods, had been produced and copies of some accounts of the requisite depositors had also been supplied; that as required in the questionnaire issued, in Question No.22 thereof, the complete books of account, bills and vouchers, etc., were produced before the AO and the same were test checked by him; that it does not stand disputed that the accounts of the Assessee were audited accounts and....
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.... photocopies were filed; that even no valid confirmations have been filed; and that therefore, there being no force therein, the appeal of the Assessee be dismissed and the well versed order of the ld. CIT(A) be upheld. 10. It is seen that it remains undisputed that the Assessee had made deposits of Rs. 73,15,000/ - in its bank accounts with Axis Bank and IOB. A total of Rs. 46,97,859/- has been shown as received in cash from various persons / parties, as detailed in the assessment order. Such receipt of cash stands reflected in the cash book which was produced by the Assessee before the AO. This fact stands accepted by the AO in the assessment order. Extract of the relevant entries of cash received in the cash book from various persons has been reproduced at pages 7 to 12 of the assessment order, to explain the receipt of cash in the cash book. Though the receipt of cash stand at Rs. 46,97,850/-, the AO observed that the Assessee had no justifiable sources of cash in hand to enable it to deposit the amounts in its bank accounts. No source of cash has been shown so as to enable the Assessee to introduce the same in the cash book, other than the credits in question and a few bank w....
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..... No defect therein has been pointed out by the Auditors. And not only this, the AO has also admitted that the goods were supplied to the customers, against which, the advances were received, and there was only a small amount of advances which remained outstanding and adjusted at the end of the year. At page 13 of the assessment order, the AO has stated that the Assessee supplied goods, adjusted accounts and returned the money in a few cases and a few advances remained with it, for the supply of goods, or repayment, as on 31.3.2012. Therefore, even the AO himself has not doubted that the Assessee had conducted its business in a regular manner, from day to day, as described by the Assessee. The AO has, thus, made the addition in question on the basis of mutually intrinsically contradictory observations made in the assessment order, which observations are not at all sustainable in the eye of law. The ld. CIT(A) too has not considered the controversy in its proper perspective in the light of the afore-discussed facts and circumstances. 13. The contradiction in the assessment order is also clear from the fact that whereas on the one hand, the AO observed that the Assessee had no money....