TaxTMI 
TaxTMI 
2025 (3) TMI 296
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....ing to present appeal are such that the assessee-individual filed his return of income of AY 2017-18 declaring a total income of Rs. 3,70,300/-. The case was selected for scrutiny and the AO issued notices u/s 143(2)/142(1). Ultimately, the AO completed assessment vide order dated 17.12.2019 u/s 143(3) determining total income at Rs. 89,30,429/- after making two additions, namely (i) addition of Rs. 59,86,000/- u/s 69A on account of unexplained deposit in Bank A/c during demonetization period, and (ii) addition of Rs. 25,74,129/- on account of difference in value of opening stock as on 01.04.2016. Aggrieved, the assessee carried matter in first-appeal but did not get any success. Now, the assessee has come before ITAT in next appeal contesting both additions made by AO. Addition of Rs. 59,86,000/- on account of unexplained deposit in Bank A/c during demonetization period: 4. Ld. AR carried us to following paras of assessment-order where the AO has made this addition as under: "6. Again show cause notice with notice u/s 142(1) dated 23/11/2019, the assessee was asked to explain as to why the unexplained cash deposit, closing stock, loan and advances, unsecured loans, ....
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....Rs 59,86,000/- is remained un-verified and added to the income of the assessee u/s 69 of the act. Since the assessee has failed to furnish explanation and supporting documents regarding cash deposits in his bank account during the demonetization period. Consequently, the unexplained. cash deposits is treated as income of the assessee and added to the total Income. Therefore, I am satisfied that it has committed default within the meaning of section 271AAC of the I.T. Act, 1961. Penalty proceeding u/s 271AAC is being Initiated separately." 5. Ld. AR then carried us to Page 4 of Paper-Book to show that the assessee made deposits during demonetization period in three tranches, viz. (i) Rs. 57,90,000/- was deposited on 16.11.2016 in Specified/demonetized Bank Notes (SBNs) out of opening balance of Rs. 58,04,128/- held by assessee at the time of declaration of demonetisation, (ii) Rs. 1,80,000/- was deposited on 03.12.2016 in operative currency out of cash balance held by assessee on that day, and (iii) Rs. 16,000/- was also deposited on 20.12.2016 in operative currency out of cash balance held by assessee on that day. Ld. AR submitted that AO has noted in Para 5 of assessment-order ....
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....stomers and not the purchase, sales, etc. He submitted that the AO has also issued notices u/s 133(6) to customers to verify the factum of cash-receipts but the customers have not responded to AO's notices, therefore the AO was justified in rejecting assessee's claim and making addition. 7. We have considered rival submissions of both sides and perused the case record. The controversy here relates to the source of cash deposit made by assessee in bank a/c during demonetization period. The assessee claimed before AO that the sales of business was the source for accumulation of cash which was deposited in bank a/c. The assessee has filed contemporary details/documents of purchases, sales, cash-book, VAT return and the AO has examined those details/documents as is clearly acknowledged by him in Para 5 of assessment-order. Nowhere in the assessment-order, the AO has pointed out any fallacy or flaw in the books of account of assessee or the transactions of purchases and sales made by assessee. The sole reason of taking adverse view against assessee is the non-response of notices sent by AO u/s 133(6) to customers. This, in our considered view, is not a valid reason to make addition. ....
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....les without purchases. In fact, a sale declared by the assessee is backed by corresponding purchases, and is supported by necessary purchase bills. The AO could not point out any discrepancy in stock register maintained by the assessee nor made out a case that the assessee has declared sales without there being any stock in hand. Therefore, in absence of any contrary findings to the effect that the sales declared by the assessee is not backed by any corresponding purchase or supported by stock in hand, in our considered view, simply sales cannot be rejected on the ground that sale for the particular month or period is higher when compared to corresponding previous period. In our considered view, there cannot be any reason for uniform sales in all days or month or year. There may be various reasons for increase or decrease in sales which depends upon various factors, including festival sales, clearing sales, yearend sales, etc. Therefore, in our considered view, the explanation of the assessee that it has received cash from various customers towards sale of jewellery and subsequently the advances have been converted into sales, appears to be bona fide and reasonable." 8. Thus, co....