TaxTMI 
TaxTMI 
2023 (6) TMI 477
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....he total turnover of the F. Ys. 2015-16 and 2016- 17 without appreciating the fact that the ratio of such cash sales is very abnormal when compared to similar sales claimed to have been made during the period of October 2015 to November 2015 to October 2016 to 8^th November 2016 (being the date of announcement of demonetization)?" iii "Whether on the facts and circumstances of the case and the law the Ld.CIT(A) has erred in considering the assessee's submission that no KYC is required for sales below the limit of Rs. 2 lakhs by referring the Rule 114B r.w.s .139A(5)(c) of the Act without appreciating the fact that the said rule is relating to quoting of PAN for carrying out specified transaction and not maintaining basic details i.e., name, address, contact details etc.?" 2. The brief facts of the case are that the assessee company is engaged in the business of wholesale and retail trade of all kind of gold, diamond jewellary, silver articles and other precious stones. The assessee has filed the return of income for the A.Y 2017-18 on 01.011.2017 disclosing a total income of Rs. 3,88,87,990/- under normal provisions of the Act and book profits u/s 115JB of the Act o....
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.... 8th November 2016 at 8.00 PM that the currency having denomination of Rs. 500 and Rs. 1000/- would cease to be legal tender after 12.00 pm due to which the customers have turned out in large. The AO was not satisfied with the explanations and observed that the assessee has neither furnished the details of parties / customers with names, address, party wise cash sales and the A.O. is of the opinion to treat the cash deposits as unexplained cash credits u/s 68 of the Act. Further the assessee has furnished the form -1 form of declaration u/s 199C of the Finance Act, 2016 in respect of taxation and investment regime for Pradhan Mantri Garib Kalyan yojana Rules, 2016 and on record no other facts were filed regarding the disclosure of income under the scheme and finally assessed the total income of Rs. 17,18,37,993/- and computed the book profit u/s 115JB of the Act of Rs. 3,78,90,828/- and passed the order u/s 143(3) of the Act on 23.12.2019. 4. Aggrieved by the order, the assessee has filed the appeal with the CIT(A). The CIT(A) considered the grounds of appeal submissions of the assessee, in the appellate proceedings and the assessee has filed the details substantiating the cl....
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....under CASS category for cash deposit during the Demonetisation Period and subsequently notices were received u/s 142(1) wherein appellant has made the required submissions on timely basis. Most important fact is that immediately on deposit of cash after demonetization, the email/notice was received from the income tax department and source was asked to which the appellant had replied that same is arising out of the cash sales and list of sales alongwith details of parties were given. Further during the course of assessment proceeding appellant had submitted the following documents: Appellant had uploaded following documents on 20,12,2019: 1. Cash Summary for FY 2015-16 2 Cash Summary for FY 2016-17 3 Branchwise Cashbook 4 VAT Tax Return 5 Pamplet of Promotion Scheme 6 Reply in response to Notice u/s 131 7 Reply in response to Notice u/s 133(6) 8 Quantity details of Stock 9 Bank account Statements 10 Form 1 (Pradhan MantriGaribKalyan Yojana), 2016 We are re-submitting the same in paper book format for your ready reference. In the above mentioned cash....
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....17 23,73,03,000 3 Cash deposited from April 1 to Nov 8, 2016 A.Y 2016-17 8,63,48,000 4 Cash deposited from November 9 to December 31 2016 (F.Y 2016-17) 13,27,50,000 5 Cash deposited from January 1 to March 31, 2017 (FY 2016- 17) 1,82,05,000 6 Cash deposited from April 17 to March 2018 (F.Y 2017-18) 13,52,95,500 7 Cash deposit from April 18 to March 2019 F.Y 2018-19 13,55,00,000+ Below mentioned table depicts the total turnover, cash received, cash deposit for financial year 2015-16 and financial year 2016-17: F.Y Total Turnover Cash sales % of total sales Cash deposited in bank 2015-16 59 Cr 18.55 31.44 17.35 2016-17 82 Cr 25.64 31.27 23.73 The above statistics clearly prove that in this country, the majority of the people prefer to purchase jewellery in cash. It is not the case that the appellant has the unaccounted cash which is deposited. The appellant has submitted all the details of cash receipt and party wise details of purchases above Rs. 2,00,000/-. The income Tax Rules per se requires de....
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.... as income of taxpayer during such financial year if the following conditions are satisfied: Taxpayer offers no explanation about the nature and source of such credit; or Explanation offered by taxpayer about the nature and source of such credit is not satisfactory in the opinion of assessing officer. Such credit is referred to as unexplained cash credit. 1. CIT v. KAILASH JEWELLERY HOUSE in Appeal No. ITA 613/2010 (Delhi High Court) The Commissioner of Income-tax (Appeals) had returned a finding that the stock and cash found at the time of search had been examined by the Assessing Officer and was compared with the stock and cash position as per books. The stock and cash position as per the books had been arrived at after the effect of the aforesaid cash sales. The stock position as well as the cash position as per the said books had been accepted by the Assessing Officer, The Commissioner of Income-tax (Appeals) also noted that the appellant had furnished the complete set of books of accounts and the cash books and no discrepancy had been pointed out. The Assessing Officer had doubled the aforesaid sales as bogus and had made the aforesaid addit....
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....as unexplained income to be taxed as Income from other sources'- Held, yes [Para 11] [In favour of assessee) 3. J.M. Wire Inds v, CIT (High Court Of Delhi) Income Tax Reference No. 96 of 1989 In this case the assessee had made sales of Rs. 3.00 Lakh to one M/s Sandeep Wire Industries and the same was included in sales. On making enquiries it was gathered that no such entity M/s Sandeep Wire Industries existed hence sale was not accepted as genuine and the said amount was treated as undisclosed income. On appeal before CIT(A) it was demonstrated that even if the said sale was treated as undisclosed income there can't be any addition in undisclosed income, since the said amount has already been included in sales and hence in total Income. The honorable Delhi High Court accepted the contention if assessee. 4.Salem Sreeramavilas Chit Company (P.) Ltd. v. Deputy Commissioner of Income Tax, Circle 1(1) HIGH COURT OF MADRAS [2020] 114 taxmann.com 492 (Madras) Section 69A, read with section 153, of the Income-tax Act, 1961 Unexplained moneys (Demonitization Cash deposits) - Assessment year 2017-18- Government of India demonetized Rs. 500 and Rs. ....
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....emises of assessee by Deputy Director (Investigation) in which he found that assessee deposited huge sum in high denominations of specified bank notes post demonetization - Assessee had explained source of cash deposits as cash sales and advances received against sales - However, Assessing Officer held that said amount was unexplained cash credits representing unaccounted money brought in to business in guise of jewellery sales, and, accordingly, made addition under section 68 on account of said cash deposit - It was noted that assessee had explained source of said amount in question as sales, produced sale bills and admitted same as revenue receipt as well as offered it to There was no defect in purchases and sales and same were matching with Inflow and outflow of stock - Audit report under section 44AB and financial statements clearly showed reduction of stock position matching with sales which clearly showed that cash generated represented sales Assessing officer accepted sales and stocks He had not disturbed closing stock which had direct nexus with sales Both Assessing Officer and DDIT (Inv.) did not find any defects in books of account, trading account, P&L account and financ....
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.... 59 Cr in F.Y. 2015-16 therefore there is increase in total turnover by Rs. 23.04 Cr (increased by 39%) and out of the total turnover of Rs. 82 Cr in F.Y. 2016-17 there was cash sales of Rs. 25.64 Cr (31.27% cash sales out of total sales) and out of the total sales of 59 Cr in F.Y. 2015-16 cash sales was Rs. 18.55 Cr (31.44% cash sales out of total sales) therefore on proportionate basis compared to the total sales there is no increase in the cash sales as compared to the previous financial year. The percentage of cash sales to total sales is 31.44% in FY 2015-16 when there was no demonetization. The percentage of cash sales to total sales is 31.27% in FY 2016-17 when there was demonetization. Considering the above facts and figures we also submit the following reasons for increase in turnover of Cash sales and Cash deposited during the F.Y: 2016-17 (A.Y: 2017-18) as compared to P.Y 2015-16 (AY 2016-17). 1. Turnover of sales during F.Y. 2016-17 of the first 3 month was decreased due to strike by Jewellers association to protest against levy of excise duty on Jewellery therefore the customers could not buy Jewellery and they had bought Jewellery d....
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....ght to tax again. We are attaching herewith Form 1 generated under the said scheme which mentions the amount paid and amount deposited as The scheme clearly stated that appellant will be granted immunity from assessment and will be not harassed by the department, Ground of Appeal 4 On the facts and under the circumstances of the case and in law, the Learned Assessing Officer erred in charging interest u/s 234B & 234C." Finally the CIT(A) has considered the facts, submissions and the judicial decisions and found that the assessee has substantiated the claim with the details in the assessment and appellate proceedings and deleted the addition and allowed the appeal for statistical purposes. Aggrieved by the CIT(A)order, the revenue has filed the appeal with the Hon'ble Tribunal. 5. At the time of hearing, the Ld. DR submitted that the CIT(A) erred in deleting the addition overlooking various facts, evidences and findings of the AO, where the assessee could not explained completely the cash deposits during the demonetization period and were not substantiated and the assessee has not maintained the proper books of accounts books and The Ld.DR prayed for....
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....ice issued under 142(1) of the Act. 8. The Ld.AR emphasized that the detailed explanations with the evidences filed in lieu of notice issued u/s 142(1) of the Act dated 01.02.2019 & 04.10.2019 and the submissions were filed on 04.12.2019 placed at 245 to 251 of the paper book. Further in response to the show cause notice dated 09.11.2019 u/s 142(1) of the Act, the assessee has filed the additional voluminous details on 20.12.2019 placed at page 272 to 433 of the paper book and the audited financial statements for the F.Y 2015-16 and F.Y. 2016-17. The A.O has sought more clarifications through notice dated 18-12-2019 and the assessee has filed the explanations on 20-12-2019 & 23-12-2019 placed at page 436 to 444 of the paper book. The Ld.AR emphasized that substantial details were filed on record and the AO has not considered these facts and made unilateral addition overlooking these material evidences. At this juncture, we considered it appropriate to refer to the observations of the CIT(A) in granting the relief dealt at Para 5 of the order, read as under: 5.0 Decision on Grounds of appeal and reasons thereof:- In this appeal, as many as 5 Grounds were raised. Ground n....
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....sited during demonetization period in SBNs amounting to Rs. 13,29,50,000 should not be treated as unexplained cash receipts and be added u/s 68 of the Income Tax Act, 1961. 5.5 In response, the assessee vide letter dtd. 20.12.2019 submitted its content; the gist of the same is as under: 1. Turnover of sales during F.Y. 2016-17 of the first three month was decreased due to strike by jewellers association to protest against levy of excise duty on jeweller. 2. The company had also celebrated the 78 years of establishment and on this occasion the company had given free gifts. 3. Demonetization period immediately preceded by diwali sales on 30th October 2016 which is the main season of sales for all kinds of jewellery. 4. The Hon. Prime Minister of India announced on 8th November 2016 at 8:00PM that the currency having denomination of Rs. 500 and Rs. 1000 would cease to be legal tender after 12:00 PM due to which the customers have turned out in large. 5.6 The assessee's submission is carefully perused but the same is not found tenable. During demonetization period the assessee has deposited amount of Rs. 13,29,50,000 in SBNs. In....
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....In this regard, out of submission of the appellant company, reproduced entirely in para no. 4 supra ,following points being relevant for adjudication of the impugned addition of Rs. 13, 29,50,000 are as under: 1. That, turnover of sales of the first three months during F.Y. 2016-17 (pertaining to A.Y. 2017-18 i.e. A.Y. under consideration)were decreased due to strike by jewellers association to protest against levy of excise duty on jewellers. 2. That, the appellant company had celebrated its 78 years of establishment during the year under consideration and on this occasion the company had given free gifts. 3. That, demonetization period was immediately preceded by Diwali sales on 30th October 2016 which is the main season of sales for all kinds of jewellery. 4. That, it was further submitted that due to declaration of demonetization by Hon. Prime Minister of India announced on 8th November 2016 at 8:00 PM, customers turned out in large number to jewellery shops for purchasing jewellery items and other related items. The shop of the appellant company was also no exception to this general rule. It was furthermore submitted that this was one of the....
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....omers making purchases of Rs. 2,00,000 and more than that amount each Further, all the cash sales were accounted for and profit thereon was also shown in the final results of the appellant company. It is also notable that the appellant had shown Total Income of approx. Rs. 3.78 cr. during the year. 5.1.5 Besides the above discussion of fact, it is also found that one of the many case laws quoted by the Ld. A/R in the Written Submission, can be gainfully relied on to adjudicate the issue and to do the required justice. In this case of ACIT Central Circle- Visakhapatnam vs. Heera Panna Jewellers decided by Ld. ITAT, Bench Visakhapatnam it was held "......that assessee had explained source of said amount in question as sales, produced sale bills and admitted same as revenue receipt as well as offered it to - There was no defect in purchases and sakes and same were matching with inflow and outflow of stock - Audit report under section 44AB and financial statements clearly showed reduction of stock position matching with sakes which clearly showed that cash generated represented sakes - Assessee officer accepted sakes and stocks - He had not disturbed closing stock whi....
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....eceded by the Diwali sales on 30th October 2016 and increase in sale of jewellary. The assessee had filed the details of quantum of sales below Rs. 2 Lacs in the F.Y. 2015-16 and A.Y.2016-17 as under: F.Y 2016-17 (A.Y 2017-18) Sales below2L Sales more than / Equalto 2L Total 01.04.2016 to 08.11.2016 26,27,11,937 14,48,42,106 40,75,54,043 09.11.2016 to 31.12.2016 3,72,64,816 8,33,39,251 12,06,04,067 01.01.2017 to 31.03.2017 6,67,80,805 22,50,32,881 29,18,13,686 Sub total 36,67,57,558 45,32,14,237 81,99,71,796 F.Y 2015-16 (A.Y 2016-17) Sales below2L Sales more than / Equalto 2L Total 01.04.2015 to 08.11.2015 12,97,99,252 22,00,69,894 34,98,69,146 09.11.2015 to 31.12.2015 4,98,70,422 4,51,46,540 9,50,16,962 01.01.2016 to 31.03.2016 4,10,04,143 10,36,74,751 14,46,78,894 Sub total 22,06,73,817 36,88,91,184 58,95,65,001 10. The Ld. AR relied on the following judicial decisions i. Pr. CIT Vs Akshit Kumar, [2021] 124 taxmann.com 123 (Del) held as under: Section 56, read with sections 68 and 133, of the Income-tax Act, 1961 - Income from other sources ....
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....te about the opening balance and closing balance, there is no further evidence which could be produced by the assessee. This is more so, when it is the Assessing Officer who disbelieved the version of the assessee, though the assessee was maintaining that it had actually made the sales. Moreover, the Assessing Officer did not deal with the issue from this angle at all and such a reasoning adopted by the Commissioner (Appeals) and Tribunal was based on surmises and imagination. [Para 4] In the result, order passed by the authorities below was to be set aside and ground raised by assessee was to be allowed. iii. Salem Sree Ramavilas Chit Company (P.) Ltd., Vs. DCIT, [2020] 114 taxmann.com 492 (Madras) After the returns were filed by the assessee-chit fund company, proceedings were taken up and notice for completing the assessment was issued under section 143(2) followed by notices under section 142(1) to which the assessee responded, pursuant to which the impugned assessment order was passed. The assessee submitted that in the impugned order, the respondent Deputy Commissioner had erroneously come to a conclusion that the assessee had not properly ....
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....me, the assessee had shown commission income and also claimed certain expenses. During the assessment, the Assessing Officer asked the assessee to file details regarding commission income. The assessee submitted that he was maintaining all regular books of account and other books for commission income and the various expenses incurred and to substantiate his commission income, he furnished ledger accounts of commission income showing therein party-wise purchaser and seller with their available address and the amount of commission. However, the Assessing Officer noted that assessee failed to submit details regarding commission income and that assessee failed to prove with supporting evidences from whom the commission was received and concluded that assessee received commission income from unknown source and treated the same as cash credit under section 68. On appeal before the Commissioner (Appeals), the action of the Assessing Officer was upheld. On appeal: 11. The Hon'ble Tribunal in the case of Anantpur Kalpana Vs. ITO, [2022] 138 taxmann.com 141 (Bangalore Trib), dated 13-12-2021 has observed at Para 6 of the order read as under: 6. I have heard the rival su....
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....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 amount as income from undisclosed sources. It is not a fit case for treating the amount of Rs. 81,000/- as concealed income of the assessee and consequently imposition of penalty was also not justified in this case." Further reliance is placed on the decision of the Hon'ble Vishakapatnam Tribunal in the case of Asstt. Asstt. CIT v. Hirapanna Jewellers [2021] 128 taxmann.com 291/189 ITD 608 wherein, the Hon'ble Tribunal while considering the issue of implication of sec. 68 of the Act during demonetization held as under : "9. In view of the foregoing discussion and taking into consideration of all the facts and the circumstances of the case, we have no hesitation to hold that the 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 sa....
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....ffect the sales and when no defects are pointed out in the books of account, it was held that when Assessee already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. I am of the view that in the light of the facts and circumstances of the present case, the addition made is not sustainable and the same is directed to be deleted. 10. In the result, appeal of the assessee is allowed, 12. Similarly the Hon'ble High Court of Delhi in the case of Pr.CIT Vs. Agson Global P Ltd., 134 taxmann.com 256 (Delhi) 19 January 2022 has observed as under: Section 68, read with section 69C, of the Income-tax Act, 1961 - Cash credits (Share capital money) years 2012-13 to 2017-18 - - Assessment Assessee-company received share capital and share premium money from several investors - Assessing Officer made addition in respect of same on account of unaccounted income under section 68 on basis of recorded statement of managing director of assessee-company Whether since placed sufficient documentary evidence to establish that money which assessee had paid to investors was routed back to it in form of share capital/s....
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.... year 2017-18 - Assessee- company was engaged in business of selling dry fruits Post-demonetization, assessee deposited cash amounting to Rs. 180.53 crore in its bank accounts - Assessing Officer held that cash deposits made by assessee represented unaccounted income and accordingly, made additions Tribunal analysed data pertaining to cash sales and cash deposits made in relevant assessment year as against two earlier assessment years and noted that in year of demonetization percentage increase in sales was less than earlier year - He, thus, held that growth in sales compared to earlier two years showed similar trend, and it could not be said that assessee had booked non-existing sales in its books post-demonetization - Furthermore, revenue made no allegation that assessee had backdated its entries Whether since assessee placed material on record that cash deposits made with banks more or less corresponded with cash sales, it could only be concluded that there was growth in assessee's business and impugned addition was to be deleted - Held, yes [Paras 16.9 and 17.6] [In favour of assessee] 13. We find the coordinate bench of Hon'ble Tribunal on the similar/identical issue in....
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....osits made into the bank account. 14. The CIT(A) has considered the details of sales, the stock register and the turnover is consistently maintained. The assessee has submitted the details of cash sales/receipts and party wise details of sales above Rs. 2 lakhs and when a query was raised to Ld.AR on submissions of details were the cash sales are below Rs. 2 Lakhs. The Ld.AR mentioned that the assessee has submitted details of sales below Rs. 2 lakhs and highlighted rule 114B of the I T Rules r.w.s 139(a)(5)(c) of the Act and there was no KYC required. Further the Ld.AR demonstrated the sample Tax Invoice below Rs. 2 lakhs in the demonetization period and the invoice contains, name and address etc. Further there is no significant increase in the cash sales out of total sales, whereas for F.Y. 2016-17 it is @ 31.27% and in comparison to F.Y. 2015-16 @ 31.44%, the Ld.AR referred to the cash flow statement, cash book and demonstrated the details of deposits made out of the cash sales and the assessee has been consistently maintaining the stock of Rs. 68.07 crs for the F.Y 2015-16 and for F.Y 2016-17 it was maintained at Rs. 65.38crs and the cash sales are part of the stocks maintai....