TaxTMI 
TaxTMI 
2023 (6) TMI 1432
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....ding source of such cash deposits? 3. "Whether on points of law and on facts & circumstances of the case, the Id. CIT(A) was justified by ignoring that the government has brought amendment in the section 68 of the Act by introducing two provisos that the source of source of share capital may be verified. An additional onus needs to be placed on such companies to also prove the source of money in the hands of such shareholder or persons making payment towards issue of shares before such sum is accepted as genuine credit. If the company fails to discharge the additional onus, the sum shall be treated as income of the company and added to its income which in this case is completely unverified. 4. "Whether on points of law and on facts & circumstances of the case, the Id. CIT(A) erred in ignoring the Hon'ble Supreme Courts recent judgement in an identical case of NRA Iron & Steel Pvt. Ltd. vs. Principal Commissioner of Income Tax (Central) 1 (SLP (Civil) No. 29855 of 2018), dated 5th March, 2019 that the assessee is under a legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO. 5. "The Ld.CIT(A) has failed to appreci....
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....the assessee. The relevant finding of the ld. CIT(A) are as under:- "2.3 I have gone through the submission of the appellant and also perused the assessment order. As per the above facts, the first issue agitated by ground I is regarding fresh credits of Rs 39,09,000/- obtained by the assessee during the year. The AO became suspicious as the assessee has received the loans in November 2016 i.e. during demonetisation period. Loan taken from each varies from 2 lakh to 7.5 lakh. Sushila Devi has advanced Rs 2.4 lakh by RTGS. As per her ROI for AY 17-18 is 2,06,398/-. Sohan Kanwar has advanced Rs 2.4 lakh by RTGS. His ROI shows income of Rs 2,47,840/-. Abhishek Jain has advanced loan) of Rs 10 lakhs. His income is Rs 323287. Facts are similar in other cases. Loan confirmations were furnished before the AO in respect of all cases. The confirmations carry PAN and address of creditors. AO has not caused any inquiry to be made directly from the creditor. The addition has been made on suspicion. It is fact that the creditors have deposited cash in their bank accounts. However during the period of de-notifaction of currency of Rs 500/- and 1000/- by the government, it compulsion for....
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....39,09,000/- is hereby deleted. Next issue agitated by ground 2 is regarding addition of Rs 2,90,00,000/- deposited by the assessee in bank. AO has presumed that sale of Rs 2.9 cr is bogus and therefore cash deposit of Rs 2.9 cr is unexplained. Assessee has stated that he had made cash sale of Rs 92.62 cr in FY 2015-16 and Rs 18.29 in FY 2016-17. No questions were asked regarding cash sales of Rs 92.62 er in FY 2015-16. The cash sale made in this year is much less that cash sale in last year. Total cash deposit in FY 2016-17 was Rs 19.22 cr which was part of cash sales of Rs 19.13 cr. Therefore there is no reason to hold that cash sale made during this year was bogus. No facts have been brought on record in this regard to conclude that the cash sale made by the assessee was bogus. He has given too much credence to the observation that there was little cash sale between 1.4.2016 to 4.11.2016. Assessee trades in bullions and customers buying the bullion pay in cheque as well as in cash. Total turnover of assessee is Rs 105.18 cr. On a turnover of 105.18 cr a sale of Rs 18.29 cr in cash can not be said to be unusual looking to the fact that in last year, out of turnov....
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....addition of Rs. 39,09,000/- made by the AO as unexplained cash credit u/s 68 of the Act has submitted that the ld. CIT(A) was in error while allowing the appeal of the assessee without appreciating the facts of the case that the amount received by the assessee in the garb of unsecured loan from 9 parties wherein the AO has investigated and has produced the details of all 9 loan creditors who have extended the loan to the assessee after depositing cash during the period of demoralization and such lenders, who have extended the loan were not having substantial worth or substantial balance in their bank account before the said cash deposit. Therefore, the deposited amount as unsecured loan were considered as unexplained, not allowed by the AO and added back to the income of the assessee, treating the same has bogus unsecured loan in the nature of cash credit covered under the provisions of section 68 of the Act. It was therefore the prayer of ld. CIT-DR that the findings of the observations of ld. CIT(A) deleting the addition was bad , erroneous, against the facts and needs to be reversed and the findings of the ld. AO deserves to be restored. 7. In defence, ld. AR of the assessee ....
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.... on facts and law, in favour of the Assessee. The Appellate Tribunal, in the Appeal at the instance of the Revenue, has not rendered the decision holding the finding of the First Appellant Authority regarding applicability of Sections 131 and 133(6) of the Act, as the case may be, is erroneous in law. So much so, the Impugned decision of the Tribunal stands faulted on a substantial question of law referable to the contents of Section 68 of the Act and the failure of the Revenue to take recourse to Sections 131 and 133(6) of the Act, In the case of the Assessee, where the primary onus under Section 68 of the Act stood discharged by the Assessee." 8. It was also submission of the ld. AR that as per the Instruction No. 3/2017 of CBDT regarding SOP for verification of cash transactions relating to demoralization. It was the instruction to department that if the amount deposited by the assessee is less than 2,50,000/- then no verification is required. Referring to the present case, the ld. AR of the assessee that since there were 7 out of 9 renders have given the loan for less than Rs. 2,50,000/- also the amount in different demoralization currency deposited by them in their account ....
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....erever readily available, no substantial question of law arise. 12. In back drop of the aforesaid facts, observations, circumstances and judicial pronouncements. We are of the considered opinion that since the assessee has discharged the primary onus cast upon it under the provisions of section 68 of the Act, whereas, no further inquiry based on the information or documents submitted by the assessee were conducted by the ld. AO, to arrive at a conclusion that unsecured loan received by the assessee during the year were bogus and are subject to addition by invoking the provisions of section 68 of the Act was bad in law, based on presumptions, suspect and therefore, the additions u/s 68 of the Act is liable to be deleted. The ld. CIT(A) has discussed the issue and decided the same lawfully. We, therefore, are in agreement with the decisions of the ld. CIT(A) on this issue and do not have any different view on the same. Thus, we refrain ourselves to interfere with the findings recorded by the ld. CIT(A) and, thus uphold the same. Accordingly, Ground number 1 of the appeal of the revenue is dismissed. Ground no 2 to 7 : Regarding deletion of addition of Rs. 2,90,00,000/- on accou....
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....stated that the AO has correctly identified the misuse of demonetization circumstances by the assessee as a tax evasion tool, has rightly pointed out the unexplained income of the assessee, which the assessee was failed to substantiate with the material evidence. The ld. CIT-DR placed reliance on recent case decided in favour of the revenue by the Co-ordinate Bench by this Tribunal, Hyderabad reported in TS-914-ITAT-2022 (Hyderabad) in the case of Vaishnavi Bullion Private Ltd. wherein it has been held as under:- "Conclusion Hyderabad ITAT upholds the addition of about Rs.100 Cr. as unexplained credit in the batch of appeals involving two jewellery and bullion dealers in the context of post-demonetisation cash deposits; Rejects Assessee's submission of receiving cash from thousands of customers immediately after announcement of demonetisation based on the report furnished by Central Forensic Science Laboratory (CFSL) on Assessee's computer system; ITAT remarks, "The assessee either deposited its undisclosed amount or otherwise helped undisclosed, unanimous and unidentifiable persons to convert their undisclosed prohibited currency into bullion after notifi....
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....le, in the bank accounts. The same trend is continued even after demonetisation. c. Assessee has maintained regular books of accounts, all the quantitative details of his stock and entries in the cash book relating to cash sales have been accepted by the dept. d. AO has rejected the explanation given by the assessee that cash deposits are out of opening cash balance and cash sales. The assessee has explained the nature and source of the credits. But AO has rejected it on presumption and assumptions only, without bringing any material on record. e. It is not a case of the department that the cash deposited in the bank account during demonetization period was in excess of what was available in the cash book. f. The allegation of the AO that the assessee is NOT having sufficient gold stock as on 01/04/2016 which stood at 1468.981 gms. Submitted that the assessee has not only sold stock of opening balance but he has made purchases also during the year. Entire purchases have been accepted by the dept. g. There is sheer contradiction in order passed by the AO. Assessee has affected cash sales even after demonetization. page no. 70-71 of PB and....
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....e., previous assessment year to the A.Y 2017-18 the year under consideration. The contention of the ld. AR of the assessee by showing this abstract of cash sales was that the assessee is regular in making cash sales in the previous year also and also subsequent years and therefore, doubt of the ld. AO that the cash sales was for adjustment of the demonetized notes under the modus operandi by the assessee was just an assumption and baseless. The ld. AR of the assessee also drew our attention to page No. 5 of the paper book wherein at point No. 2. It was mentioned that all the bank accounts statement for the F.Ys 2014-15, 2015-16 & 2016-17 were produced before ld. AO. The next information brought to our attention by the ld. AR of the assessee was details regarding turnover gross profit etc. in the previous year and preceding previous years for the present case which was available at page No. 171 of paper book. 16 The ld. AR of the assessee drew our attention to page No. 86 of paper book and have shown the details of gold fine purchase during the year under consideration and has also shown us the details of gold fine stock showing inward, outward, and closing balance during A.Y 201....
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....nd the inflow/receipts have been recorded in the books of account as income, Assessing Officer cannot treat it as unexplained credits. From the records, the CIT(A) has noted that the assessee has shown the receipts as being payment received from the debtors an also these debtors were all emanating from the sales made and recorded in the books and these facts were not disputed by the Revenue. When the demonetization was announced by the Government, there was heavy tension among the public for depositing the SBN. Therefore, cannot be question as to why the deposits were not made in single day. From the point of Revenue, if the assessee has to make deposit on single day, why the Assessing Officer has allowed the deposits made on 10.11.2016 & 12.11.2016 to the extent of f.53,40,000/-. In fact, it was announced that the Reserve Bank of India would allow all the banks to receive old currency from 08.11.2016 to 31.12.2016 and the assessee made deposit before the end date announced by the Government. Under these facts and circumstances and once the cash in hand was not disputed, CIT(A) has considered all aspects and rightly allowed the appeal of the assessee. There is no reason to interfer....
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....rvation had at the same time accepted its book results, which, in fact, supports the assessee's claim. On the basis of the aforesaid facts, I am unable to comprehend that now when the assessee's explanation that the cash deposits of Rs.46.55 lac (supra) were sourced out of its duly accounted cold storage rent receipts was not accepted by the A.O, then, on what basis he had accepted its book results and framed the assessment. In case, the view taken by the A.O is approved, then the same would lead to an incongruous situation, wherein the A.O while framing assessment had rejected the assessee's claim that the cash deposits of Rs.46.55 lacs (supra) in its duly accounted bank accounts was made out of the cash in hand as was available with it out of the cold storage rent receipts, but to the contrary, while framing the assessment had simultaneously subscribed to its claim by accepting the disclosed cold storage rent receipts out of which the cash deposits in question were claimed by the assessee to have been sourced. The A.O could not be allowed to blow hot and cold at the same time. If the assessee's claim that the cash deposits in question were made out of its duly disclosed cold stor....
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....acterizing the corresponding sales as the latters unaccounted money u/s.69A of the Act, which, I find, had not been so done. I, say so, for the reason that while for the A.O had observed that the assessee in the guise of sales had deposited her unaccounted money in the bank account, but despite so observing he had while framing the assessment vide his order passed u/s.143(3), dated 30.11.2019 accepted the sales as were disclosed by the assessee in his books of account. Accordingly, the very first basis for treating the amount of Rs.6.86 lacs (supra) as the unexplained money of the assessee u/s.69A of the Act fails. Adverting to the observation of the A.O that the assessee might have received the sales proceeds in the demonetized currency even after the specified time period allowed by the Central Government, the same in my considered view would by no means justify the treating of the amount in question as the assessee's unexplained money u/s.69A of the Act. Assuming that the assessee had continued with receiving of the sale proceeds in the form of demonetized currency even after lapse of the specified time period as provided by the Central Government, i.e., 24.11.2016 (for Rs.1000/....
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....of stock register manually is stated in Tax Audit Report also. Thus the cash sales transaction is recorded in regular books of accounts, sales are made out of stock-in-trade. The assessee also filed copies of sales invoice No. 82 to 158 of Bangaluru and 110 to 216 of Koklata outlets before AO which were of 28-10-2016 and these were earlier produced before Investigation Wingh in F.Y. 2016-17 i.e. after the sales were made and same were verified by the Investigation Wing also. This view of the ld. CIT(A) indicates that the assessee has maintained regular books of accounts, bills, vouchers and day to day stock register having complete quantitative details and said books of accounts are audited. The assessee vide submission dated 27-09-2019 had produced stock record during the course of hearing. The cash sales transactions are recorded in regular books of accounts and the sale are made out of stock in trade for which no adverse finding had been observed by the AO except for the change in the methodology in issuing bills as mentioned at page 7 to 8 of the assessment order. Further the ld. CIT(A) observed that the AO had treated the cash deposited in the bank during the demonetization pe....
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.... on assumption without bringing our on any opposing material against the assessee and therefore, the same needs to be reversed which has rightly deleted by the ld. CIT(A) and therefore, the order of the ld. CIT(A) on the issue is worth upholding. 19. With respect to in the case of Vaishnavi Bullion Private Limited (supra) relied upon by the Ld CITDR which has decided by the Hyderabad ITAT against the assessee, the ld. AR of the assessee rebutted that the circumstances and facts of the issue in the case of Vaishnavi Bullion Private Limited are different than the circumstances of the present case. In the case of Vaishnavi Bullion Private Limited(supra), there was a report furnished by Central Forensic Science Laboratory (CFSL) and in that case, it was held that demonetized currency was received by the assessee and was wrongly deposited with the Bank. The assessee mischievously and unscrupulously brought the demonetized currency into the network. No such facts or observations were found in the case of the assessee and therefore, the ratio decided in the case law relied upon by the department in the case of Vaishnavi Bullion Private Limited (supra) has no bearing on the present case....