TaxTMI 
TaxTMI 
2025 (1) TMI 321
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....iness as an authorized dealer of TVS Motor Co. Ltd. under the sole proprietorship concern Mr. Durga Distributors. Income of Rs. 44,47,190/- declared in the e-return for A.Y. 2017-18 filed on 7th November, 2017. Case selected for scrutiny through Computer Assisted Scrutiny Selection (CASS) followed by validly serving statutory notices. The ld. AO on the basis of details available on record, noticed that during A.Y. 2017-18, demonetization scheme was announced on 8th November, 2016, and taking into consideration the report of the Income Tax Investigation Wing, Kolkata, stating that there is huge cash deposit from 9th November, 2016 to 31st March, 2017 in the bank account held by assessee, ld. AO asked the assessee to explain the source of alleged cash deposited in the bank accounts held in the name of assessee as well as in the name of sole proprietary concern of the assessee namely, M/s Durga Distributors. Ld. AO also asked the assessee to explain the source of investment for purchasing two immovable properties during demonetization period. In reply, Ld. Authorised Representative of the assessee submitted that the cash deposits are from regular cash sales of the TVS Vehicles. He als....
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.... Page 9 of the assessment order). Using this as the basis he found an unusual spurt in cash deposit during the demonetisation period compared to the corresponding period in 2015-16. Percentage increase between Total cash deposit in Bank from (09/11/2016 to 31/12/2016) and (9/11/2015 to 31/12/2015) is 96.79 and between (01/04/2015 to 08/11/2015) and (01/04/2016 to 08/11/2016) is 22.29. 1.2 Even if there is an unusual spurt in cash deposit the entire amount cannot be treated as unexplained. The appellant was in business even during the period of demonetization. Therefore it would be wrong to assume that cash deposited before and after demonetization in FY 2016-17 was proper and during demonetization the cash deposited was unexplained. 1.3 The AO is directed to assume that there was an increase of 22.29% in cash deposit during the demonetisation period compared to the same period in FY 2015-16. This amount should be treated as coming from business. The balance should be treated as unexplained. 2 Ground No.2: The appellant prays for relief and seeks permission to adduce fresh grounds of appeal and/or modify the same before or at the stage of hearing of the ap....
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....here has been abnormal increase in cash deposits during the said period as compared to the deposit in similar period during preceding financial year and that, the assessee has utilized the cash deposited in the bank account during this period for purchases of immovable properties. Now, during demonetization period, one property was purchased for consideration of Rs. 5,35,63,536/- for which housing loan of Rs. 4 crore was taken and the remaining amount has been paid from the personal bank account of the assessee as well as his wife. Another immovable property was purchased for a consideration of Rs. 3 crores and for making the said purchase, assessee took loan of Rs. 2.09 cr. from Punjab National Bank and the remaining amount has been given from the bank account of the assessee. So far as the source of investment for purchase of property is concerned, major portion is from the bank loan and remaining amount is from the personal account of assessee and his wife to this extent the details have been filed. But the ld. AO noted that there has been cash deposits in the sole proprietary concern i.e. M/s Durga Distributors and the cheques has been issued from there to the assessee which ha....
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....rther, we observe that during the period 9th November, 2015 to 31st December, 2015, the cash sales were Rs. 1,38,75,500/- but the figure for the period of 9th November 2016 to 31st December, 2016, is Rs. 2,73,06,000/-. Now, the ld. AO has made the addition for total cash deposits of Rs. 2,73,06,000/- without taking into consideration the actual cash sales for the very same period in the preceding year and also not considering the increase in the sales during the period. Ld. AO even not considered that cash sales declared by the assessee are subjected to VAT and are forming part of the books of accounts and shown in the VAT returns. Ld. AO without placing any evidence on record to prove that the alleged cash deposits are not recorded in the books has moved ahead to make the impugned addition and even included the cash received in new denomination notes. The ld. AO also erred in making the addition for the total cash deposits, even when it has been judicially settled from time to time that only profit element in the unrecorded sales is only to be added as income. Further, the finding of the ld. CIT (A) is also cryptic and he has merely disposed off the appeal by observing that 96.79%....