TaxTMI 
TaxTMI 
2024 (11) TMI 872
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....ssessee that there is abnormal variation in cash deposited during the demonetization period and before the demonetization period and therefore, called upon the assessee to file necessary evidence including details of purchases, sales, cash deposited into bank account etc. In response, the assessee has submitted books of accounts along with comparative purchases, cash sales, and cash deposits into bank account for two financial years and more particularly during the demonetization period and also corresponding period in earlier financial year. The Assessing Officer, from the details filed by the assessee observed that the assessee has made negligible cash sales upto 31/10/2016 and suddenly cash sales has been increased substantially from 01/11/2016 to 08/11/2016. The Assessing Officer further noticed that the assessee has maintained closing cash in hand upto date of demonetization period which was in few lakhs, whereas from 01/11/2016 to 08/11/2016 maintained huge cash in hand of Rs. 16.7 crores. Therefore, taking note of abnormal deviation in cash sales during the demonetization period when compared to earlier period and also cash in hand maintained for the period prior to demoneti....
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....e before the date of demonetization. The assessee further submitted that the Assessing Officer compared the closing cash in hand maintained during the demonetization period and before demonetization period to draw an adverse inference against cash sales declared by the assessee, which is supported by valid sales bills and stock-in-trade maintained by the assessee. Further the adverse inference drawn by the Assessing Officer is purely suspicious and surmises without there being any evidence to allege that the sales declared by the assessee is not supported by any evidence and further ignoring the fact that there cannot be any uniform sales throughout the year and it depends purely on various factors including festival seasons etc. The assessee further submitted that there is no hard and fast rule for applying the decision of Hon'ble Supreme Court in the cases of CIT Vs. Durga Prasad More and Sumati Dayal Vs. CIT (supra) and it needs to be applied to the facts that are identical to the facts considered by the Hon'ble Supreme Court. Therefore, submitted that the additions made by the Assessing Officer towards cash deposited into bank account during the demonetization period sh....
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....rd to cash sales and cash deposit during the demonetization period and the corresponding period of earlier year, there are clear anomalies with regard to cash sales and cash deposited which is against not only human probability, but also shows an attempt of the assessee to explain cash deposited during the demonetization period. The Assessing Officer had also brought out clear facts to the effect that there was a uniform pattern in cash sales, which is almost below Rs. 2,00,000/- in all cases, which is against the theory of human probability. Further, the assessee has not maintained relevant details of names and addresses of the customers, their phone number and PAN. The Assessing Officer, after considering relevant facts and also by following the decisions of Hon'ble Supreme Court in the case of Sumati Dayal Vs. CIT and CIT Vs. Durga Prasad More (supra), held that even sales can be considered as unexplained cash credit under section 68 of the Act, if the assessee does not explain the credits with necessary evidence. Learned DR further referring to report of investigation carried out by the DDIT (Investigation) Wing-2, Hyderabad submitted that the report has brought out clear f....
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....nking channel. The assessee had also explained reasons for not obtaining phone number and PAN of the customers and submitted that in case of sales is less than Rs. 2 lakhs, there is no requirement of obtaining PAN of the buyer as per Rule 114B of IT Rules, 1962. Learned CIT(A) after considering the relevant facts had rightly deleted the additions made by the Assessing Officer, and therefore the order of the learned CIT(A) should be upheld. 8. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. We have also carefully considered relevant case laws cited by both the parties in support of their contentions. The facts borne out from records show that the assessee has made cash deposit of Rs. 16.24 crores into bank account held with State Bank of India during the demonetization period. The assessee has explained sources for cash deposit out of sales declared prior to the date of demonetization. In fact, the Assessing Officer never disputed the fact that the cash deposited into bank account during demonetization period is out of cash in hand available as on 08/11/2016 as per cash book maintained by the assessee. However, th....
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....cer made observation with regard to uniform cash sales, in our considered view, only on the basis of uniform pattern of sales, it cannot be held that the sales declared by the assessee is not genuine. Further in so far as the non-maintenance of phone number and PAN of the buyers, in our considered view, as per Rule 114B of IT Rules, 1962 there is no mandatory requirement of PAN of the buyers in case sales to single customer does not exceed Rs. 2 lakhs. Similarly, in respect of KYC compliances, the same is mandatory, in view of amendment to provisions of Money Laundering Act,2002 w.e.f. 04/05/2022 and the same is not applicable for the impugned assessment year. Therefore, in our considered view, the observation of the Assessing Officer on non-maintenance of phone and PAN number of the customer and adverse inference drawn against sales declared by the assessee is devoid of merit and cannot be accepted. 10. We, further noted that in the first available opportunity, the assessee has furnished all relevant details in respect of cash deposited during demonetization period into bank account when the DDIT(Investigation) Wing has carried out enquiries with regard to source for huge cash de....
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....ions / situations. No one was aware as to what was the right step to move. Further huge amounts cannot be sent at a time through any one employee to avoid the risk of employees running away, theft, snatching money from employees etc. Therefore, the adverse inference drawn by the Assessing Officer considering human probability that no prudent person would carry huge cash in hand is only on suspicion and surmises. Therefore, in our considered view, the Assessing Officer is not justified in giving more weightage to unnecessary factors even though the evidence filed by the assessee clearly shows that the cash deposited in the bank account during demonetization period is out of opening cash in hand available as on 08/11/2016, which is supported by sales declared with supporting evidence. 12. Coming back to various case laws relied upon by both the authorities. The Assessing Officer took support from the decision of Hon'ble Supreme Court in the case of Sumati Dayal Vs. CIT and CIT Vs. Durga Prasad More (supra). In our considered view, both the cases are on the theory of human probability and if we go by the facts of both the cases, the argument taken by the assessee before the autho....