TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 1340
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....ectures and ignoring the documents and details tax audit report submitted on record; 3. initiating proceedings u/s 271 AAC of the Act; 4. charging interest u/s 234B, C and D of the Act. 3. The facts of the case are that the assessee deals in wholesale trade of karyana goods and food items, mainly sugar and jaggery. The business is very old and as a trend of the trade, the assessee in routine and every year receives cash against cash sales. The same is deposited in current account with bank and the amount in bank is used for paying off the creditors. The assessee received cash against cash sales in the assessment year 2017-18 also and the same was deposited in the current account of the firm. 4. As per the Assessing Officer (in short 'the AO'), in response to all the notices issued u/s 142(1) assessee failed to file complete information. On 25.08.2019 and 22.11.2019, assessee filed part information but again did not file complete information. Considering the non compliance on the part of the assessee, a show cause notice was issued on 04.12.2019 for 09 12.2019, requiring the assessee to file the information already called and also requiring him to show cause as to why in case ....
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....ve anything and that the burden was entirely upon the department to prove that the amount received from the encashment of high denomination notes was income. The correct position is as follows. If there is an entry which shows the receipt of a sum or conversion of the notes by the assessee by himself, it is necessary for the assessee to establish, if asked, what the source of that money was and to prove that it did not bear the nature of income. The department is not at this stage required to prove anything. The fact that there was receipt of money or conversion of notes is itself prima facie evidence against the assessee on which the Department can proceed in absence of good explanation". 4.4 The AO held that the assessee, thus, had failed to give any explanation about the nature and source of deposits of Rs. 87,95,000/- in his bank account, which thus remained unexplained. Accordingly, the value of Rs. 87,95,000/- was deemed to be unexplained cash credit u/s 68 of the Income Tax Act, 1961 and added to the total Income of the assessee. This income assessed was taxed u/s 115 BBE of the Act. 5. By virtue of the impugned order, the ld. CIT (A) confirmed the assessment ord....
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....red in confirming the addition made by Assessing Officer u/s 68 of the Act alleging that the nature and source of cash of Rs. 87,95,000/- deposited in bank accounts during the demonetization period starting from 08th November 2016 till 31st December 2016 has remained unexplained and thereby taxing the same u/s 115BBE of the Act, which is arbitrary, unjustified, based mere conjectures and surmises, illegal, invalid and bad in law; that the Ld. CIT(Appeals) confirmed the addition made u/s 68 of the Act in an order passed u/s 144 without considering the replies submitted by the assessee during the course of hearing and without giving sufficient time in the Show Cause Notice before making the addition u/s 68 of the Income Tax Act, which is arbitrary, unjustified, illegal, invalid and bad in law; that the Ld. CIT(Appeals) has erred in confirming the addition of Rs. 87,95,000/- made by the Assessing Officer u/s 68 of the Act, deposited during the demonetization period alleging it to be unexplained cash credit, the nature and source of which remained unexplained and thereby taxing it u/s 115BBE of the Act, which is arbitrary, unjustified, invalid & void-ab- initio; that the Ld. ....
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....zed Currency from 9th November 2016 till 30th November 2016: Rs. 4,05,000/- December, 2016 35,70,000 Deposit of Non-Demonetized Currency January, 2017 36,84,000 Deposit of Non-Demonetized Currency February, 2017 21,80,777 Deposit of Non-Demonetized Currency March, 2017 22,24,355 Deposit of Non-Demonetized Currency 8.2 From the above, it can be seen that cash deposit in bank on account of cash sales and cash realizations from debtors was a normal feature of the assessee's business and that the cash deposit figures of October, 2016 & November, 2016 were a little higher due to cyclic variations, mainly on account of festivals and marriage season in Northern India during that time. 8.3 As a result of higher cash sales & higher realizations from trade debtors in October 2016, the opening cash in hand as on 1st November 2016 was Rs. 75,65,401 and as on the morning of 9th November 2016, the opening cash in hand was Rs. 75,44,135, out of which, the assessee deposited Rs. 56,55,000 in two current bank accounts from 9th November, 2016 till 25th November, 2016 - Rs. 52.50 Lakh in demonetized currency notes of Rs. 500 & 1000, and the balance Rs.&....
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....already recorded as part of sales or sales realizations and the same is not found to be incorrect, it is legally not permissible to add the same to the income of the assessee as unexplained cash credit u/s 68 for two reasons : firstly, it is not a credit, in the sense used in section 68, at all, what to talk of "unexplained credit", and, secondly, the action amounts to double addition (firstly as sales and secondly as unexplained cash credit) of the same amount in the hands of the assessee. 9. It is seen that though the assessee had made an application for additional evidence before the ld. CIT(A), the documents filed had, in fact, been already filed before the AO in the assessment proceedings and that as such, actually, no additional evidence whatsoever was filed. This is evident from the Remand Report furnished by the AO before the CIT(A), which Remand Report has been reproduced at pages 8 to 10 of the CIT(A)'s order, and the assessee's Rejoinder to the Remand Report, as reproduced at pages 10 to 17 of the impugned order. For convenience of ready reference, the said Remand Report dated 09.11.2023 of the AO and the Rejoinder of the assessee are being reproduced hereunder by s....
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....nk as mentioned in the said assessment order. During the assessment proceedings, the assessee was given plenty of opportunities to explain the source of cash deposit in the bank but he was failed to do so and could not furnished the requisite evidences/documents/explanation accordingly. Comments of the A.O.I have gone through the written submission filed by the counsel of the assessee before your Honour during the course of appellate proceedings and forwarded to this office for submissions of comments on the same. The comments on the submissions are as per following discussion:- 1. The assessee was failed to file complete information in response of notice u/s 142(1) of I.T. Act. Further, on 25.08.2019,22.11.2019, the assessee was filed part information vide which he could not establish the source of cash credit amounting to Rs. 87,95,000/- as evident in para no. 2 of the assessment order passed u/s 144 of the Act. 2. The assessee has accepted that cash credit was made in HDFC bank during the assessment year but failed to supply its source in details even though he was given various opportunities. 3. During the assessment proceedings, a show cause notice was also issued o....
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....023, which is again without any basis, made on presumptions, without considering the records available on file and without considering the submissions in appeal and made in a blind fashion. Foremost, the Id. Assessing Officer has pointed out for producing additional evidence u/r 46A. Just like the assessment order was Non-speaking and baseless, again the Id. ^Assessing Officer has not mentioned in his remand report as to which details or documents he is considering as additional evidence, because, there might be difference in presentation but all the details and documents submitted in appeal were already submitted during assessment proceeding. The assessee submitted his response and details on the online portal 6-7 times during assessment proceedings, which included his complete business details, cash book, purchase book, sales book, bank statements, expense accounts, unsecured loan accounts, debtors-creditors accounts, GP rate comparative data, written submissions and other details. The copy of relevant screenshots from the online portal evincing the above stated submissions were duly annexed while filing the appeal for your kind perusal. The Id. assessing officer during assessm....
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....nished detailed report and nature of the cash deposits during the assessment proceedings. He submitted that the assessment proceedings covered the period of the whole financial year and the AO had failed to establish as to how the cash deposits pertaining to the demonetization period only were in-genuine and without any source; that the AO had not pointed out any defect in the cash deposits of the remaining part of the year and thus, the AO had accepted that it was owing to the trend of the trade that cash sales and deposits were an inseparable part of the assessee's business; that the AO had not pointed out any defect in the nature and source of the cash deposit during the demonetization period; that the cash sales and deposits are a regular trend of the assessee's trade and have always been accepted in the earlier assessments; that as such, the AO had accepted the assessee' s details regarding cash deposits and their source for the whole year, but had ignored the cash deposits during the demonetization period only on the basis of presumptions, without recording any concrete evidence or facts; that vide notice dated 04.12.2019, the AO had enquired the source of the cas....
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.... even a single fact in support of his observations that it was "reasonably possible" that the assessee had been left with no other option and he had deposited his unaccounted money in his bank account during the demonetization period. 11. It is seen that the ld. CIT (A) has not entered any comment on the above elaborate submissions made by the assessee in his Rejoinder to the Remand Report submitted by the AO. Thus, as rightly contended, the Remand Report was on the same lines as those on which the assessment order was passed, the observations/findings of the AO remaining totally unsubstantiated. The observations of the AO have not at all rebutted the submissions made by the assessee. No fresh evidence is shown to have been filed by the assessee by way of additional evidence in the appellate proceedings. All the relevant details and documents were duly submitted by the assessee in the assessment proceedings before the AO and these submissions and details were furnished by the assessee by way of his 6/7 replies filed before the AO, which details/documents have remained entirely unrebutted at the hands of the AO, either in the assessment proceedings, or in the Remand Proceedings. In....
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.... of Rs. 73.13 crores, under Section 68 of the Act." 13.1 Similarly, the ITAT Visakhapatnam in "ACIT Vs. Hirapanna Jewellers", ITA No. 253(Viz) of 2020 [ 2021] 128 taxmann.com 291, in para 9 on page 17 of the judgement held as under : "Para 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 sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. This view is also supported by the decision of Hon'ble Delhi High Court in the case of Kailash Jewellery House (Supra) and the Hon'ble Gujarat High Court in the case of Vishal Exports Overseas Ltd. (supra), Hence, we do not see any reason to interfere with the order of the Ld. CIT (A) and the same is upheld. 13.2 The ITAT Ahmedabad in "ITO v. Rajeshkumar Chhanalal Pate....
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....s from 9th of November 2016 to 25th November 2016. From the extracts of the Cash Book, as at pages 12 to 19 of the paper book, it can be seen that the cash deposits in November 2016 mainly come from the opening cash in hand of Rs. 77,94,958 as on 01.11.2016, which is duly supported by the fact that the assessee throughout the year maintained corresponding cash in hand balances on every first day of the preceding months of the financial year. 14.4 Moreover, the cash deposit of Rs. 44.67 lakh in the two current bank accounts in the immediately preceding month, i.e., October 2016, also establishes that the cash deposit of Rs. 52.50 lakh in demonetized currency in November 2016 was in accordance with the trend of cash sales/ realizations from trade debtors in view of the festive and marriage seasons in North India in the months of October and November 2016. Therefore, the addition of the balance of Rs. 52.50 lakh under section 68 is not supported by any historical trend clearly discernible from the Cash Book of assessee. 14.5 Hence, the addition of Rs. 87.95 lakh made under section 68 is found to be illegal, invalid and void-ab-initio, as the cash deposits ma....