TaxTMI 
TaxTMI 
2025 (1) TMI 1272
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....er valuable article and such money, bullion, jewellery or other valuable article is not recorded in books of accounts whereas cash deposited in the bank account stood duly recorded in books of accounts. Addition confirmed is illegal and bad in law. 2. That on the facts & circumstances of the case, Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, has grossly erred in confirming addition of Rs. 57,32,048/- u/s 69A of the Act in respect of cash deposited in bank account out of sale proceeds which stood recorded in books of accounts and credited to profit and loss account. 3. That addition of Rs. 57,32,048/- u/s 69A of the Act made by the Assessing Officer by holding that sales are bogus and represented unaccounted income is illegal and bad in law since neither purchases made nor owning of stocks at the time of sales have been disputed by the Assessing Officer. 4. That on the facts & circumstances of the case, conclusion drawn by the Assessing Officer that out of total turnover of Rs. 85,98,563/-, turnover of Rs. 57,32,048/- is on account of unaccounted income brought in the shape of sales is illegal and bad in law since neither details of sale bill....
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.... during the demonetization period u/s 69A r.w.s 115BBE of the IT Act, 1961. Other grounds are therefore being dealt in hereunder together to decide the main issue involved 6.2.1 During the course of assessment proceedings, the Assessing Officer in his assessment order dated 30/12/2019 has stated that:- "3.2 In the present case, it has been found that the assessee has made total cash deposits of Rs. 67,60,200/- in various bank accounts during the period of demonetization i.e. from 09.11.2016 to 30.12.2016 as under: Bank Account No. Cash Deposits Kotak Mahindra Bank 9411734238 67,60,000 Oriental Bank of Commerce 308861010000220 2,000 Total 67,62,000 Vide notice u/s 142(1) dated 12.09.2019 and 21.12.2019, the assessee was asked to furnish the detail of the source of this cash deposit in the bank with other details. The assessee vide reply dated 24.12.2019 explained that the cash deposit has been made out of books of accounts. The assessee also furnished comparative chart of monthly sales made in cash out of total sales for F. Y. 2015- 16 and 2016-17, comparative chart of date wise sales made in the month of November....
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....bank deposits made revealed that in the F.Y. 2015-16, cash deposits of Rs. 22,000/- has been made between 01.04.2015 and 08.11.2015 and whereas in the F. Y.17, cash deposit of Rs. 5,49,221/- has been made in pre-demonetisation period and Rs. 67,62,000/- has been deposited in the demonetisation period. Apart from the above facts, it is also submitted that: • The purchase in the month of October, 2016 has been made from the sister concern M/s R. M. Exports. • The assessee claimed to have sold such huge stocks in retail in Oct. and November, 2016 but no corresponding expenses such as freight, carriage, labour etc. has been shown in the P&L account. Even no salary has been claimed in the P&L account. • There is no proof of movement of stocks involved in purchase and sale of the stocks. • There is a clear deviation from the normal course of business as far as the cash sales are concerned which is clear from the comparative data of cash sales for last years for which no valid reason has been given by the assessee. • The details submitted by the assessee shows that there has never been any history of cash sales. â€....
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....ssion is given by the RBI is only concerned with the foreign exchange and therefore, would look into the matter from the point of view. The RBI at the time of giving such permission would not keep mind the provisions of the Income Tax Act and that is the function of the Income-tax authorities and, therefore, they can validly go into such an issue. '' The reliance is also placed on Gem Granites vs. CIT [2004] ITR 322(SC). 3.6 The above findings are supported by the following factual position and judicial pronouncements: (i) Section 69A gives a statutory recognition to the principle that the unexplained money which are not satisfactorily explained may be assessed as income. Reliance is placed on 140-ITR- 151, 155(AII) reported in the case of Nanak Chand Laxman Dass V/s CIT. (ii) It was held in the decision of Hon'ble Supreme Court in the case of Roshan Di Hatti relevant para of the judgment is reproduced as under:- "The law is well-settled, that the onus of proving the source of a sum of money found to have been received by an assessee is on him. If he disputes the liability for tax, it is for him to show either that the receipt was not in....
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....ile looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents." (vi) Hon'ble Apex Court in the case of McDowell & Co Ltd. v CTO (1985) 154 ITR 148 (Supreme Court) has held that:- "Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid payment of tax by resorting to dubious methods''. Tax planning should not be done with an intent to defraud the revenue; though all transactions entered into by an assessee taken individually could be legally correct, yet on the whole these transactions may be devised to defraud the revenue. Thus, planning for tax should be correct both in form and substance. All such methods which are resorted to deceive and impairing the true construction of the statute, resulting in availing non-sacrosanct advantage of law would be termed as colourable devices. Those devices where statue is followed in strict words but actually spirit behind the statue is marred would be termed as colourable devices." 3.7 The above judicial pronouncements ....
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....ome Tax Act, 1961. 3.10. Therefore, in view of the discussion made above, the cash deposit of Rs. 57,32,048/- made in the bank account during demonetization period is held to be the unexplained income of the assessee as per section 69A of the Income Tax Act, 1961 to be taxed as per provisions of section 115BBE of the Income Tax Act, 1961. The assessee has unexplained income to the tune of Rs. 57,32,048/- to be assessed as per provisions of section 69A of the Income Tax Act, 1961." 6.22 I have carefully considered the AO's viewpoint contained in the Assessment Order and the submission made by the appellant including relevant judicial decisions in the matter. 6.23 It is noticed from the assessment order that the assessee has made total cash deposits of Rs. 67,60,200/- in various bank accounts during the period of demonetization. During the course of assessment proceedings, the assessee was asked to furnish the details of the source of cash deposit in the bank with other details. In this regard, the assessee has explained that the cash deposit has been made out of books and furnished comparative chart of monthly sales made in cash out of total sales for FY 2....
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....ts submitted as evidences to prove the genuineness of transaction are themselves found to serve as smoke screen to cover up the true nature of the transactions. 6.2.8 Keeping in view of the above and on the basis of the detailed findings and reasons given by the AO in his assessment order, the addition made by the Assessing Officer amounting to Rs 57,32,048/- u/s 69A r.w.s.155BBE of the IT Act is hereby confirmed and grounds of appeal raised by the appellant in this regard are hereby dismissed." 5. The ld. counsel for the submitted that the ld. CIT(A) has grossly erred in confirming the addition of Rs. 57,32,048/- u/s 69A of the Act in respect of cash deposits made in bank a/c during demonetization period, being out of sale proceeds which stood recorded in the books of account and credited to profit & loss account. He argued that the Ld. CIT(A) has treated the disputed cash deposits as bogus sales representing unaccounted income without either disputing the purchases made or the stock owned by the appellant assessee out of which the alleged sales claimed by the assessee. In support, he has filed a written synopsis which reads as under: "1. That Assessing Office....
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....sment proceedings otherwise assessee could have comfortably explained that during this year only assessee purchased export surplus of M/s RM Exports and the same was sold to retail customers on cash basis. 5. That as regards allegation of the Assessing Officer that cash sales have been introduced in books of accounts is an attempt on the part of the assessee to have cash in hand just before demonetization to cover cash deposited in bank during demonetization and further allegation of the Assessing Officer that purchases and sales have been affected in books of accounts in the month October 2016 upto 08.11.2016only because there was scope to manipulate books of accounts of October 2016 and upto 08.11.2016 because last date for filing VAT return for the month of September had passed at the time of announcement of demonetization of currency, it is submitted that both these allegations are based on assumptions and presumptions far away from the facts of the case. There is no material in possession of the Assessing Officer to justify allegations except assumptions only. 6. That in support of allegations, reliance of the Assessing Officer on judgments reported in 140 IT....
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....d that Rs. 57,32,048/- represented bogus sales Para 3.9 page 6 of the assessment order) Case of the Ld. CIT(A) That Ld. CIT(A) has confirmed the addition with his observation in para 6.2.8 page 28 of the appellate order. Our Submissions 1. That during the year under consideration total sales of the assessee amounted to Rs. 85,98,563/- (page 34 of paper book) as detailed below: Sr. No. Period Sales VAT charged on sales VAT input VAT paid Paper Book page 1. 01.04.2016 to 30.06.2016 NIL NIL NIL NIL 47-49 2. 01.07.2016 to 30.09.2016 NIL NIL NIL NIL 50-53 3. 01.10.2016 to 31.12.2016 5912010 357677 270950 86727 54-57 4. 01.01.2017 to 31.03.2017 2686553 13613 11798 1815 58-61 Total 8598563 371290 282748 88542 2. That Assessing Officer has not provided bill wise details of sales alleged to be bogus. Total sales upto 31.12.2016 amounted to Rs. 59,12,010/- out of which Assessing Officer has alleged bogus sales amounting to Rs 57,32,048/- of which neither bill wise details nor material wise details ....
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....ve been audited and tax audit report has been filed with the Income Tax department. The Ld. AR contended that Cash deposited in the bank account stands explained as being made out of cash available in the books of accounts on account of cash sales and realization of debtors. He further argued that the purchases recorded in books of accounts have been accepted by the Assessing Officer and Profit on sales declared by the assessee was ar normal profit and not exorbitant profit. Again, the Sales made by the assessee have been declared in VAT returns with payment VAT amounting to Rs. 3,25,178/- to State Govt. where the sales declared in the VAT returns have been accepted by Punjab State Sales Tax Department. In our view, since the cash sales during the demonetization period constitute the basic foundation of the cash deposit in bank credited as per profit and loss account and hence such cash sales have already been offered to tax as income of the assessee and therefore, further no inference u/s 69A of the Act was unwarranted based on assumptions and presumptions, surmises and conjectures by the authorities below to treat the cash sales as unaccounted income amounting to Rs. 57,32,048/-.....