TaxTMI 
TaxTMI 
2024 (12) TMI 1105
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....tion for the cash deposits in the bank accounts of the assessee. 2. Whether on facts and circumstances of the case and in law, the Ld. CIT(A)-3, Noida has erred by admitting additional evidence in contravention to Rule 46A of the Income-tax Rules, 1962 despite being apprised of the inadmissibility of the same vide the remand report dated 26.12.2023. 3. Whether on facts and circumstances of the case and in law, the Ld. CIT(A)-3, Noida has erred in ignoring the critical finding mentioned by the AO in the assessment order that no modes of payment, delivery address, delivery mode or terms of delivery details were mentioned on the invoices. Complete address of the buyer was also missing on substantial number of invoices. The vouchers submitted by the assessee were merely hand written and no caption of cash voucher was written on the same. 4. Whether on facts and circumstances of the case and in law, the Ld. CIT(A)-3, Noida has erred while accepting the explanation given by the assessee despite the fact that the assessee had failed to adduce sufficient evidence to substantiate its explanation. During the appellate stage, no documents to establish the creditwort....
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....ted into respective ledger accounts of the customers. The books of accounts of the assessee are subjected to various audits such as statutory audits, tax audits & GST audits. The corresponding sales made during the whole year is duly accounted for in the books of accounts and is also included in GST returns. The assessee also provided the information regarding cash sales including GST and the cash deposits in two AYs preceding to 2020-21 as well as succeeding AYs to demonstrate the pattern and the nature of business. It was pointed out that during AY 2021-22 in question, the total cash sales and corresponding cash received is less than 10% i.e. 9.91% to be précise. Various judgements were referred as delivered in the similar context to support the claim. In the course of appellate proceedings, the Ld. CIT(A) communicated the version of the assessee to the AO and the AO was directed to verify the confirmations obtained from parties to whom cash sales were made. In response the AO filed remand report and objected to the admission of the additional evidences by way of confirmatory ledger accounts. 7. Based on the factual matrix merging from records and documentary evidences,....
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....1% and receipt of cash is a normal feature in the trade of the assessee as can be seen from the returns filed for earlier and consequent years. 9. That the GST returns, sale & purchase bills all show the genuineness of the transactions of the assessee. 10. That the AO has accepted the purchases & creditors, then how can sales be questioned. 11. That the AO has not brought on record any evidence to show that the sales are not genuine. Analysis In this case, the AO has questioned the genuineness of sales made by the assessee concern by considering the cash sales to be unexplained money of the assessee. The AO has treated the whole of cash deposit of Rs. 1,46,84,779/- as unexplained income of the assessee u/s 68. Cash Sales vs Turnover A comparison of the percentage of cash sales viz a viz total turnover is Highlighted in table below: Assessment Year Total Sales Cash Sales including GST Cash Received from debtors Cash Deposited in Bank % of total cash sales & cash received to turnover 2022-23 27,78,50,164 13,96,989 1,63,78,924 1,39,14,666 6.40% 2021-22 16,95,04,795 19,37,648 ....
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....the e-mail sent to the AO dated 19.12.2023 where it has been clearly mentioned that the AR was directed during the appellate proceedings tor furnish confirmed copy of accounts of debtors to whom sales above Rs. 1 Lac were made in cash. Powers of CIT(A) The Hon'ble Supreme Court in the case of CIT vs Kanpur Coal Syndicate [1964] 53 ITR 225 (SC) has held as under:- "The AAC has plenary powers in disposing of an appeal. The scope of his power is co-terminus with that of the ITO. He can do what the ITO can do and also direct him to do what he has failed to do. If the ITO has the option to assess one or other of the entities in the alternative, the AAC can direct him to do what the ITO would have done in the circumstances of a case" Further the Hon'ble High Court of Karnataka in the case of CIT vs K.S. Dattatreya [2011]197 Taxman 151/9 taxmann.com 106 (Kar.) has held as under:- "As a revisional authority, Commissioner (Appeals) can revise not only ultimate computation arrived at by ITO but can revise every process which led to ultimate computation or assessment" Further the Hon'ble High Court of Kerala in the case of V. S....
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...., as such, the addition of Rs. 1,46,84,779/- is devoid of any valid reason". The Hon'ble High Court of Delhi in the case of Principal CIT vs. Agson Global Pvt. Ltd. reported at [2022] 441 ITR 550 has held as under: "Assessee-company was engaged in business of selling dry fruits post- demonetization, assessee deposited cash amounting to Rs. 180.53 crore in its bank accounts - Assessing Officer held that cash deposits made by assessee represented unaccounted Income and accordingly, made additions Tribunal analyzed data pertaining to cash sales and cash deposits made in relevant assessment year as against two earlier assessment years and noted that in year of demonetization percentage increase in sales was less than earlier year He, thus, held that growth in sales compared to earller two years showed similar trend, and it could not be said that assessee had booked non-existing sales in its books post-demonetization Furthermore, revenue made no allegation that assessee had backdated its entries Whether since assessee placed material on record that cash deposits made with banks more or less corresponded with cash sales, it could only be concluded that there was gro....
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....amount which was accounted in the books as sales. In this regard, it is worthwhile to look into section 68 which reads as under: 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and he assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to Income-tax as the income of the assessee of that previous year: From the perusal of section 68, the sum found credited in the books of accounts for which the assessee offers no explanation, the said sum is deemed to be income of the assessee. In the instant case the assessee had explained the source as sales, produced the sale bills and admitted the same as revenue receipt. The assessee is engaged in the jewellery business and maintaining the regular stock registers. Both the DDIT (Inv.) and the AO have conducted the surveys on different dates, independently and no difference was found in the stock register or the stocks of the assessee. Purchases, sales and the Stock are interlinked and inseparable. Every purchase increases ....
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....The Hindu etc. It is observed from the newspaper clippings that there was undue rush in various jewellery shops immediately after announcement of demonetization through the country. 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 season in the month of October 2016 prior to the making of the cash deposit in the bank account out of the sales. So, respectfully following the aforesaid referred to orders by the various Hon'ble High Courts and the Coordinate Benches of the ITAT, we are of the view that the impugned addition made by the AO and sustained by the Ld. CIT(A) was not justified, accordingly the same is deleted." Also, the Ld. ITAT Bench Vishakhapatnam in the case of ACIT Central Cirlce-1, Vishakhapatnam vs. Hirapanna Jewellers in ITA No. 253/Viz/2020 in para 9 of its order, held as under: "9. In view of the foregoing discussion and taking into consideration of all the facts and the circumstances of the case,....
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.... demonetization period was out of the cash sales and the realization from the trade debtors duly shown in the book of accounts which were accepted by the A.O. The assessee had deposited Rs. 2,47,50,000/- during the demonetization period in the bank account, the AO accepted Rs. 1,50,00,000/- as cash sale on estimated basis but no basis or method was adopted for that estimation, in other words the AO considered the aforesaid estimated sales only on the basis of surmises & conjectures which is not tenable in the eyes of law. In the present case, in the month of October 2016 and November 2016 the assessee was having cash sales of Rs. 1,04,97,098/- and Rs. 62,00,849/- which had not been doubted by the AO who had also not commented on the claim of the assessee that the balance of the amount which was deposited in the bank account was out of the realization of cash from the debtors which for the year under consideration was at Rs. 3,09,78,586/-. In the present case the AO accepted the trading results and had not doubted opening stock purchase sales and closing stock as well as GP rate shown by the assessee. Therefore, the addition of Rs. 97,50,000/- made by the AO on the basis of surmises....
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....produced - Whether on facts, if Assessing Officer was not still satisfied, it was always open for him to call for further details or even for valid reason to discard assessee's reply and reopen assessment recording reasons Held, yes Whether, however, under no circumstances, Assessing Officer could have simply Ignored assessee's reply and proceeded to form a belief that income chargeable to tax had escaped assessment on premise that his queries had remained unreplied Held, yes Whether in view of aforesaid, it could be concluded that reasons recorded by Assessing Officer proceeded on wrong facts and, thus, impugned reassessment proceedings deserved to be quashed Held, yes [Para 10] [In favour of assessee) Further, in the judgment of Ld. ITAT Mumbai Bench D in the case of ACIT vs, Ramlal Jewellers (P.) Ltd. reported at [2023] 154 taxmann.com 584 (Mumbai - Trib.), has held as under: Section 68 of the Income-tax Act, 1961 Cash credit (Cash deposit in bank) Assessment year 2016-17 Assessee-company was engaged in jewellery business During assessment proceedings, Assessing Officer noted that immediately after demonetization assessee had shown inflated cash sales a....
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.... 89A against alleged cash deposits in bank Held, yes [Para 12] [In favour of assessee] Further, in the judgment of Ld. IN THE ITAT JAIPUR BENCH 'B' in the case of Mahesh Kumar Gupta s. ACIT reported at [2023] 151 taxmann.com 339 (Jaipur - Trib.) has held as under: Section 68, read with sections 115BBE and 145, of the Income-tax Act, 1961- Cash credit (Demonetization deposits) - Assessment year 2017-18 - Assessee was engaged in business of wholesale and retail business of gold and silver ornaments Assessee's case was selected for scrutiny to examine issue of abnormal increase in cash deposits during demonetization period as compared to average rate of cash deposited during pre-demonetization period - Assessee claimed that deposits made in bank account was with respect to cash sales made during period of 1-1-2016 to 8-11-2016-Assessing Officer verified bills submitted by assessee and observed that all bills were of value less than Rs. 2 lakhs wherein details of purchasers was not provided He, thus, invoked section 68 on ground that genuineness of sale bills could not be verified and held that huge cash deposited in bank was from undisclosed sources - It ....
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.... Accordingly, these grounds of appeal are allowed." 8. Aggrieved by the relief granted by the Ld. CIT(A) and consequent reversal the additions towards cash deposits, the Revenue preferred appeal before the Tribunal. 9. The Ld. Sr. DR for the Revenue mainly relied upon the assessment order and also pointed out that the Ld.CIT(A) was not justified in admitting the additional evidences in contravention of Rule 46A of the Income Tax Rules, 1962. The Ld. Sr. DR also pointed out that modes of payment, delivery address, delivery mode for terms of delivery details were not made available to the Revenue. Besides, the creditworthiness of the debtors have not been submitted at any stage. The Ld. Sr. DR also pointed out that pattern of cash collection appears unusual and the quantitative details of items traded by the assessee are also not available. The Ld. Sr. DR accordingly urged for setting aside the first appellate order and restoration of the assessment order. 10. The Ld. Counsel for the assessee on the other hand, strongly relied upon the submissions made before the Ld.CIT(A) and the documentary evidences referred to and relied upon in the course of hearing. Ld. Counsel fo....
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....phenomena. Having regard to the nature of business, the cash deposits are regularly made year after year as demonstrated before the Revenue authorities. Besides, the action of the AO tantamounts to double taxation of the same cash firstly, by way of cash sales and secondly, by way of cash deposits resulting in double jeopardy. The confirmatory letters from the customers before the Ld.CIT(A) have been filed as a measure of abundant caution and without such confirmation also, the conclusion can be no different. The Revenue authorities have not rejected the books and therefore when the sales have been accepted, a part of which is by way of cash sales, the corresponding cash deposits cannot be seen in isolation as wrongly done by the AO. The Ld. Counsel for the assessee contended that despite cogent evidences to support the source of cash deposits, the Revenue has indulged in protracted litigation in mechanical manner. The Ld. Counsel for the assessee submitted that the reasons and findings of the Ld.CIT(A) cannot be displaced in the facts of the present case and hence no inference is called for. 12. We have carefully considered the rival submissions and perused the first appellate ....