TaxTMI 
TaxTMI 
2023 (9) TMI 1528
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....rutiny assessment and accordingly statutory notices were issued and served upon the assessee. 4.1 During the course of scrutiny assessment proceedings, the AO noticed that there were cash deposits during the demonetization period. After analyzing the cash deposits during the demonetization period vis-à-vis during the same period in the immediately preceding year, the AO came to his own conclusion that there was an increase of 643% and came to the conclusion that the excess amount of cash deposit during the demonetization period totaling to Rs. 3,41,86,500/- is the income of the assessee U/s 68 of the Act and added the same to the returned income / loss of the assessee. 5. The assessee challenged the assessment before the CIT(A). It was contended by the assessee that it has furnished complete details of sales / receipts and justification of cash generated and deposited during the relevant years with comparative details of purchases, sales and stock position. The assessee also submitted a copy of VAT returns. After considering the facts and the submissions, the CIT(A) deleted the impugned additions. The relevant finding reads as under: 7.2 The appellant is engag....
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....ities. 6. We have given a thoughtful consideration to the orders of the authorities below. It would be pertinent to understand the cash deposited by the assessee during the FYs 2015-16 and 2016-17 and the same can be understood from the following: (v) A chart detailing the cash sales executed as well as cash deposited by the Appellant during the financial year 2015-16 vis-à-vis 2016-17 is provided hereunder: Particulars AY 2016-17 AY 2017-18 Increase Total Sales 47,54,72,571/- 55,86,27,006/- 8,31,54,435.00 Cash Sales 3,02,37,771/- 5,97,25,252/- 2,94,87,481.00 Cash Sales during the Period 1st April to 8th November 29,69,415/- 5,82,65,102 Cash sales During the Period 9th November to 31st December 48,73,805/- 5,61,560/- Period 1st January to 31st March 2,23,94,551/- 8,98,590/- Total Cash Deposited 1,65,95,500/- 4,98,64,500/- Period 1st April to 8th November 9,98,500/- 1,56,78,000/- Period 9th November to 31st December 46,00,000/- 3,41,86,500/- Period 1st January to 31st March 1,09,97,000/- Nil 6.1....
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....ing stock which has direct nexus with the sales. The movement of stock is directly linked to the purchase and the sales. Audit report u/s 44AB, the financial statements furnished in paper book clearly shows the reduction of stock position and matching with the sales which goes to say that the cash generated represent the sales. The assessee has furnished the trading account, P& L account in page No. 7 of paper book and we observe that the reduction of stock is matching with the corresponding sales and the assessee has not declared the exorbitant profits. Though certain suspicious features were noticed by the AO as well as the DDIT (Inv.), both the authorities did not find any defects in the books of accounts and trading account, P&L account and the financial statements and failed to disprove the condition of the assessee. Suspicion however strong it may be, it should not be decided against the assessee without disproving the sales with tangible evidence, (para 7) In the instant case the assessee has established the sales with the bills and representing outgo of stocks. The sales were duly accounted for in the books of accounts and there were no abnormal profits. In spite o....
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....ssee were in the same line as had been accepted by the Department in the preceding years, the cash sales made by the assessee had been credited in the books of account and reduction in the stock has not been doubted, even during the course of search just after the dosing of the year under consideration, neither excess nor shortage of stock was found in the stock register maintained by the assessee, the identity of the purchasers to whom cash sales had been made was disclosed in the sale bills where the name, address and PAN was mentioned. It is also not a case that there was sudden spurt in the sale only in the month of October 2016 as the chart furnished by the assessee before the Ld. CIT(A) clearly revealed that the cash sales were on higher side in another months of different preceding years. The AO made the addition on the basis of difference in the cash sales from 0110-2016 to 29-10-2016, only on this basis that the said difference was there in the computer and the pen-drive found from the residential premises of the part time accountant of the assessee but no opportunity to cross examine the said accountant was given to the assessee and moreover, no specific defect was pointe....
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....e of the cash deposited i.e; the sales from the existing stock available with the assessee and was well explained, therefore, the addition made by the AO and sustained by the Ld. CIT(A) was not justified. 10.11 In the present case also the opening stock, purchases & sales and dosing stock, declared by the assessee has not been doubted, the sales were made by the assessee out of the opening stock and purchases and the resultant dosing stock has been accepted, the safes had not been disturbed either by the AO or by the sales tax/VA T Department and even there was no difference in the quantum figures of the stock at the time of search on 12/04/2017, therefore, the sales made by the assessee out of the existing stock were sufficient to explain the deposit of cash (obtained from realization of the sales) in the bank account and cannot be treated as undisclosed income of the assessee. 10.13 In the present case also the cash deposited post demonetization by the assessee was out of the cash sales which had been accepted by the Sales Tax/VAT Department and not doubted by the AO, there was sufficient stock available with the assessee to make cash sales and there was festive....