TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 1028
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.... scrutiny assessment. 2.1. During demonetization period i.e. 09.11.2016 to 31.12.2016, the assessee deposited Specified Bank Notes (SBN) of (Denomination of Rs. 500 & Rs. 1000) in the Co-operative Bank of Rajkot Ltd. of Rs. 1,24,59,500/-. The Assessing Officer issued notice u/s. 133(6) to the Co-operative Bank of Rajkot Ltd. and collected the cash deposits in SBN details during the demonetization period. Manager of the assessee company was summoned and in his Affidavit stating that the cash deposit as SNB to the tune of Rs. 1.24 crores was against cash sales made during the period. The A.O. noticed that the cash deposit made during the demonetization period was much higher than during the normal period. Therefore the A.O. relied on Notification dated 08.11.2016 issued by Department of Economic Affairs, Ministry of Finance, Government of India that the petrol pump was operated by the assessee (namely Reliance Industries Ltd.) was not an authorized Public Sector Oil Marketing Company. During the demonetization period, the assessee ought not to have collected Specified Bank Notes, therefore the same was added as unexplained cash credit u/s. 68 of the Act and also initiated Penalty pr....
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.... old currency notes for petrol and diesel and was allowed and would have created law of order situation at any petrol pump such as appellant's it was a volatile situation at many petrol pumps with long queue of customers requiring additional police force at many petrol pumps), the operations would have resulted in Business losses which would have to be allowed to be carried forward for set off against taxable income in subsequent years. Generally, the petro companies do supply the petrol and diesel against advance payment or credit facility allowed by the bank to the retailer against stock. That is the reason that such possibility of losses has been conceived by the appellant and taken in ground no. 3 on this appeal. It would create uncanny situation with no benefit to any of the stakeholders. The real income is to be taxed. The apex Court in the case of CIT vs. British Paints India Ltd. has held, " is duty of A.O, to correctly deduce the income, no principle of estoppels, AO is not bound by the method followed in earlier years." In such circumstances, and as per ratio laid down at 187 ITR 688 (SC) in the case of Jute Corporation of India Ltd, I am constrained to deicide to iss....
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.... Para (e), it is clearly mentioned will be applicable to whom, making purchase of petrol and diesel etc. In the present case, the assessee was selling petrol and collected the SBN from its retail customers. Thus the provisions of section 68 cannot be invoked, since the source of cash deposit is undisputed by the Assessing Officer. The assessee relied on the decision of the ITAT Bangalore in case of Sri Bhageeratha Pattina Sahakara Sangha Niyamitha Vs. ITO in ITA No. 646/Bang/2021 dated 18.02.2022, wherein it is held that the contraventions of the notification issued by RBI would not attract the provisions of section 68 of the Act. The Ld. Counsel further demonstrated before us, there is variation in sales from April to October also. In the month of May, sale was reported at 84.81 lacs , whereas in the Month of August and September, the sales are reported at 53.75 lacs and 59.77 lacs respectively. Thus it is not the case of the assessee, there is sudden increase in the sales during the demonetization period. Thus the assessee counsel relied upon various case laws as follows: A. CIT Vs. Vishal Export Overseas Ltd Tax Appeal No 2471 of 2009 (Gul HC) ( Order Dt 03.07.2012) B. Shree....
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.... during the entire period and there is no drastic increase in sales during the period of demonetization. It is further noticed that it is the month of May 2016 sales reported at 84.81 lacs. Similarly, in the month of November 2016 (demonetization period), the sales is reported at 1.04 crores which is not found to be drastic higher figure. Thus the deletion made by the Ld. CIT(A) does not require any interference. 8. The Co-ordinate Bench of this Tribunal in the case of Shree Sanand Textiles Industries Ltd. (cited supra) held as follows: "....9.6. We also note that the provisions of section 68 cannot be applied in relation to the sales receipt shown by the assessee in its books of accounts. It is because the sales receipt has already been shown in the books of accounts as income at the time of sale only. 9.7. We are also aware of the fact that there is no iota of evidence having any adverse remark on the purchase shown by the assessee in the books of accounts. Once the purchases have been accepted, then the corresponding sales cannot be disturbed without giving any conclusive evidence/finding. In view of the above we are not convinced with the finding of the learned CIT(A) and ....
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....e e-filed cash book it is seen that cash balance as on 08/11/2016 is Rs. 6,32,731/-. From this it is clear that the assessee has made cash deposit of Rs. 2,18,38,160/-, out of opening cash balance as on 08/11/2016 of Rs. 6,32,731/- & cash sales from 09/11/2016 to 31/12/2016 of Rs. 2,12,05,429/-. 3.8 As per RBI notification vide no. SO 3416(E) dated 09/11/2016 and subsequent SOS it is clearly mentioned that "For making payments in all Pharmacies on production of doctor's prescription and proof of identity",.. However, the assessee in the reply has stated that they are not required by law to keep the copy of the prescription for record; hence, they have not maintained it. From this it is very clear that the assessee firm has violated the RBI guidelines and accepted SBN (old notes) during demonetization by doing cash sales. Further, the assessee firm has not been authorized to accept SBN's for cash sales during demonetization period. Furthermore, the assessee has failed to furnish the details of sales made in SBN's (old notes) & Non- SBN." 3.9 In view of the above, it is concluded that the assessee has violated RBI guidelines and accepted the cash sales during demoneti....