TaxTMI 
TaxTMI 
2023 (4) TMI 1340
X X X X Extracts X X X X
X X X X Extracts X X X X
.... invoking section 68 r.w.s. 115BBE of the Act on surmises and conjectures 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 th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0/- was assessable income of the assessee from some undisclosed source. It was not correct that the assessee was not required to prove 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. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9th November 2016, which is arbitrary, illegal, invalid & void-ab-initio and against the principles of natural justice; that the Ld. CIT(Appeals) has erred 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 sou....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... November, 2016 66,90,738 (i) Cash deposit from 1.11.2016 to 08.11.2016: Rs. 10,35,738/- (ii) Deposit of Demonetized Currency 09.11.2016 to 25.11.2016 Rs. 52,50,000/- (iii) Deposit of Non- Demonetized 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.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessment order, is possible in respect of the figures of purchases, sales, quantitative tally of stock and cash deposits in the bank which were brought before the Assessing Officer and ld. CIT(A). Therefore, when the cash deposited in the bank is 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 as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....observed that the assessee's proprietorship concern is engaged in the business of " wholesale trading in karyana goods, specifically sugar, khandsari, jiggery, cereals etc" but did not file his ITR in provision of section 139(1) of the Income Tax Act, 1961. Further, the assessee failed to prove the source of cash deposit in bank 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s in sales and books of accounts of the assessee, without considering assessee's submissions & evidence on record, without providing any proper opportunity to the assessee, and made in a hurried fashion on presumptive basis with preoccupied notions by abuse of powers and wrong interpretation of provisions of law. Further, the Id. Assessing officer has submitted his remand report in this appeal dated 09-11-2023, 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... had not been able to establish as to in what manner, these details contributed as additional evidence. The assessee stated that the submissions made by the assessee during the appeal were based on Financial Statements, Bank Statements and Cash Book, etc., which had already been submitted during the assessment proceedings, and that thus, there was no additional evidence submitted by the assessee. The assessee submitted that he had already furnished 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 regul....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... further stated that the AO had observed that it was reasonably possible that left with no other option, the assessee had deposited his unaccounted money in his bank account during the demonetization period; that while observing so, the AO had clearly failed to distinguish the cash deposits made during the demonetization period from similar cash deposits during other periods, running across several financial years; that the AO had not pointed out 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....particular, the trend of cash sales and corresponding cash deposited by the assessee with earlier years, we are of the view that there was nothing placed on record-which could have persuaded the Tribunal to conclude that the assessee had, in fact, earned unaccounted income i.e., made cash deposits which were not represented by cash sales. Therefore, in our opinion, the Tribunal correctly found in favour of the assessee and deleted the addition made by CIT (A) 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cash of Rs. 35,70,000/- deposited during the month of December 2016 is to be excluded from the addition of Rs. 87,95,000/- made by the Assessing Officer for the alleged unexplained cash deposited during the demonetization period from 9th November till 31st December 2016. 14.3 Further, the assessee's cash in hand and cash balances also support the cash deposit in the banks and justifies the amount of Rs. 52,50,000/- deposited in the two current bank accounts 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he could not establish the source of cash credit amounting to Rs. 87,95,000/- as evident no. 2 of the order passed in para assessment u/s 144 of the Act. The SUBMISSIONS BY ASSESSEE submitted details during assessment proceedings comprised of complete business details, cash book, purchase book, sales book, bank statements, accounts, to expense accounts, very during very GP rate assessment first unsecured loan accounts, debtors- creditors comparative data, written submissions and other details. The evidence regarding their submission during assessment proceedings is already annexed to first written submissions in appeal at page no. 14- 22. The assessee had duly submitted detailed response and nature of cash deposits proceedings and the same is already annexed written submissions in appeal at page no. 22. As such, the contention by the Id. Assessing Officer that source of cash deposits amounting to Rs.87,95,000/- was not established is baseless, presumptive and by overlooking the facts on file, and clearly indicate that the assessmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The assessee submitted his reply, complete cash book and many other details in submission on date 09-12- 2019. The cash book contained details u/s 68 of I.T.Act, 1961 but of all the cash deposits and they were was again failed to file made against receipts from debtors information and against cash sales. complete called vide notice u/s However, the ld. Assessing Officer 142(1) dated 19.11.2018, without pointing any defect or concrete 09.07.2019 28.09.2019. and facts on record, accepted a part of the explanation and presumptively made addition of remaining Rs.87,95,000/- deposited during demonetisation period. The hurriedness of Id. Assessing Officer for completing the assessment proceedings is evincible from the fact that the notice dated 04-12-2019 enquires cash deposit in HDFC bank account no. 50200021780231 for cash deposits during whole financial year for Rs. 5.06 crores including Rs.77.25 lakhs deposited from 09/11/2016 to 31/12/2016 i.e. demonetisation period. Whereas the assessment order dated 6 days after i.e. 10-12-2019 states cash deposits in same bank account no. 50200021780231....