TaxTMI 
TaxTMI 
2024 (4) TMI 1240
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.... law, the Ld. CIT (A) was right in accepting the assessee's comparison on the average sales for the entire year of current and previous years? 3. Whether on the facts and the circumstances of the case and in law, the Ld. CIT (A) was right in accepting the contention of the assessee by stating that the firm had submitted all the details of cash receipts party wise while the fact is that the assessee, in the response sheet on cash deposit submitted with the Department, it was stated that the entire amount is received from "Un-identifiable persons (Without PAN)". No details of the names and address or identity of the buyers were furnished by the assessee during the course of assessment proceedings, in support of its claim for the huge cash sales. 4. Whether on the facts and the circumstances of the case and in law, the Ld. CIT (A) was right in considering the fact that the assessee had made huge cash deposits during the period from 10.11.2016 to 12.11.2016 with its six bank accounts, out of which five accounts are almost dormant with minimum deposits for the rest of the period? 5. Whether on the facts and the circumstances of the case and in law, the Ld.....
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.... before the CIT(A), it is to state that the same did not affect the cash deposits in the earlier months. 12. For these and other grounds that may be urged at the time of hearing, the appellant prays that this Hon'ble ITAT may be pleased to set aside the order of the Tribunal and allow the appeal." 3. At the time of hearing, we find that there is a delay of 33 days in appeal filed by the revenue for which a petition for condonation of delay, along with affidavit explaining reasons for delay has been filed. The ld. DR, Shri. D. Hema Bhupal, JCIT, referring to affidavit filed by the Assessing Officer submitted that, the delay in filing of appeal is due to the fact that the data involved in this case is voluminous and verification of the data with respect to the claim of the assessee before the ld. CIT (A) for preparation of grounds of appeal was time consuming. The delay in filing of appeal before the Tribunal is neither willful nor wanton of any undue benefit. Therefore, the delay of 33 days in filing of appeal may be condoned. 4. The Ld. Counsel for the assessee, on the other hand fairly agreed that the delay may be condoned. 5. We have heard both the parties a....
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....(hereinafter referred to as "the Act") and brought to tax u/s. 115BBE of the Act. 7. Being aggrieved by the assessment order, the assessee preferred an appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee has filed detailed written submissions on the issue, which has been extracted at Para 4 of Pages 2 to 4 of ld. CIT (A) order. The sum and substance of arguments of the assessee before the ld. CIT (A) are that, the Assessing Officer never disputed availability of opening cash in hand as per books of accounts maintained for the relevant assessment year as on 08.11.2016, which is over and above the cash deposits during demonetization period. Although, the Assessing Officer has made a comment on sale declared by the assessee, but the observations of the Assessing Officer is on the basis of surmises and suspicion, without there being any evidence with the Assessing Officer to allege that sales declared by the assessee prior to date of demonetization period is bogus in nature. The assessee has produced all evidences including books of accounts, corresponding sale bills and purchase bills and stock register to prove genuineness of sales declared for the relevant period. ....
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....vember, 2015. The closing cash balance as per cash book maintained by the assessee for both assessment years is compared and as per said cash balance, the cash balance for the financial year 2016-17 is abnormally high when compare to closing cash balance for the financial year 2015-16. The Assessing Officer, on the basis of analysis of comparative cash sales, cash deposits and closing cash in hand of every month for two financial years, has come to the conclusion that the assessee has booked bogus sales prior to the date of demonetization to cover up cash deposits in specified bank notes to bank accounts. But, the ld. CIT (A) simply accepted explanation furnished by the assessee and deleted additions made towards cash deposits u/s. 69A r.w.s. 115BBE of the Act. 10. The Ld. Counsel for the assessee, on the other hand submitted that there is no dispute with regard to the fact that the assessee has maintained books of accounts and also submitted necessary sales bills in support of cash in hand available as on 08.11.2016. The Assessing Officer, has not made any observation with regard to the incorrectness in books of accounts maintained by the assessee. In fact, the assessee has fur....
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....ailable with the assessee. Further, the Assessing Officer has made a simple observation with regard to sales declared by the assessee as bogus sales, without there being any supporting evidences with the Assessing Officer to prove its allegation that the sales declared by the appellant for the month of September to November, 2016 is bogus in nature. On the other hand, the appellant has filed all details including sales bills, corresponding purchase bills and stock register to prove that sale declared for the above period is supported by necessary invoices and also there is no discrepancy in quantitative details of stock in trade maintained by the assessee. Further, it is not a case of the Assessing Officer that, the assessee has booked cash sales without corresponding purchases or stock in trade. But, the Assessing Officer has failed to make out any observation with regard to books of accounts maintained by the assessee, sales bills, purchase bills and stock details submitted in support of their arguments. Therefore, we are of the considered view that the Assessing Officer is erred in making additions towards cash deposits into bank account of Rs. 4,99,50,000/- during demoneti....
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....ash from them. Out the above 50, summons issued to 40 persons returned by the Postal Authorities citing 'addressee cannot be located' or 'no such person' or 'no such address' or 'insufficient address' or 'no such address at the above place'. In response to summons, three persons were responded and out of three, two persons namely, Shri N. Armugam and Smt. B. Deepa denied having any kind of transactions with the assessee. Further, one person namely Shri A.M. Vargies confirmed having paid advance to the assessee company and also purchased jewellery from them. The Assessing Officer, on the basis of enquiry conducted u/s. 131(1) of the Act, came to the conclusion that the assessee could not substantiate cash receipts received from various persons towards sale of jewellery before the date of demonetization. Therefore, vide letter dated 24.12.2019 called upon the assessee to file confirmation from all the parties and also called upon the assessee to show cause 'as to why' the credits should not be considered as unexplained cash credit u/s. 68 of the Act. In response, the assessee submitted that as per law, it is not required to collect complete address and PAN from the persons to whom it....
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....ally, the assessee claims to have explained cash deposits out of cash receipts from various persons towards sale of jewellery and subsequently changed its stand and argued that source for cash deposits is out of cash withdrawals from very same bank account. In so far as the first and foremost reason given by the AO to assess cash receipts u/s. 68 of the Act, we find that there is a distinction between cash credits and cash receipts towards sales. If assessee claims certain cash credits in his books of accounts and not able to explain credits to the satisfaction of the AO, then, such cash credits need to be examined in light of provisions of Sec. 68 of the Act. In case, the assessee claims that it has received trade advances in cash and the same has been subsequently converted into sales by issuing sale bills, then, said trade advance cannot be examined in light of provisions of Sec. 68 of the Act, because, trade advances have been subsequently converted into sales and sales has been accounted in the books of accounts of the assessee. Therefore, in our considered view, the AO has committed a fundamental mistake in examining the cash receipts claimed to have been received by the asse....
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.... 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. 16. Coming back to second ob....
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....his stage, it is necessary to consider certain judicial precedents on this issue. The assessee has relied upon the decision of the Hon'ble Delhi High Court in the case of PCIT v. Agson Global (P) Ltd., reported in [2022] 441 ITR 550 (Delhi) (19-01-2022). The Hon'ble Delhi High Court under identical set of facts, has deleted the additions made by the AO towards cash deposits during demonetization u/s. 68 of the Act. The relevant findings of the Hon'ble Delhi High Court are as under: * A careful perusal of the extract of the statement made by managing director of the assessee (as recorded in " the assessment orders in-issue) would show that all that he had stated was that it was the assessee's own money, given in the form of loan and/or bogus sales or purchases, that had been routed back to the assessee in the form of share capital/share premium, albeit, through banking channels. [Para 10.3] * The Tribunal, in this context, records a finding of fact that "no unaccounted income of the assessee" had been introduced in its books of account in the form of share capital. Based on this, the Tribunal concluded that there was 'no confession' made by the managing....
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....lar banking channels; the purchase and sales were duly supported by quantitative details; copies of bank statements showing sales and purchases were placed before the Assessing Officer, and no incriminating documents concerning sales and purchases were found in the course of search and seizure actions. [Para 15.1] * Tribunal also found that in respect of assessment years 2012-13, 2013-14 and 2014-15, sale and purchase transactions were verified and assessment orders were framed under section 143(3). The books of account were duly audited, both, under the Companies Act, 2013 and the Income-tax Act; no defects concerning books were found either by the Assessing Officer or the Commissioner (Appeals). Thus, according to it, no incriminating evidence was found. [Para 15.1] * Insofar as the abated assessment years were concerned i.e., assessment years 2015-16, 2016-17 and 2017-18, it was, apparent that the assessee had purchased goods, which were in value less than the sum for which they were sold. Therefore, as held by the Assessing Officer, in the deviation report, if the purported bogus purchases were to be disallowed then necessarily the sales shown in the assessee&....
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....ner (Appeals) in applying the gross profit ratio concerning non-related parties to purported bogus transactions i.e., those involving related parties, resulting in unsustainable conclusions. [Para 15.7] * Accordingly, the observations made by the Tribunal are pure findings of fact, which cannot be interdicted by the Court in appeal. The inconsistency in the approach adopted by the Assessing Officer, while preparing the deviation report and framing the assessment order with regard to purported bogus purchases is an aspect, which cannot be ignored and has been correctly highlighted by the Tribunal. [Para 15.8] * If the revenue chooses to disallow bogus purchases, it would necessarily have to ignore the corresponding sales recorded against the very same parties. As pointed out by the Tribunal, the Commissioner (Appeals) could have rejected the books of account only, after it had examined and come to the conclusion that he was not satisfied as regards their correctness or completeness. The finding of fact returned by the Tribunal is that books of account were not examined by the Commissioner (Appeals). If that be so. then, section 145(3) could not have been triggered ....
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....ing cash deposited by the assessee with earlier years, it is opined that there was nothing placed on record-which could have persuaded the Tribunal to conclude that the assessee had, in fact, earned unaccounted income i.e., made cash deposits which were not represented by cash sales. Therefore, in the Tribunal correctly found in favour of the assessee and deleted the addition made under section 68. [Para 17.6] 18. The assessee had also relied upon the decision of the ITAT Visakhapatnam Bench in the case of M/s. Hirapanna Jewellers, Visakhapatnam, in ITA No. 253A/Viz/2020 and CO No. 02/Viz/2021, AY2017-18, wherein, the ITAT Visakhapatnam Bench, under identical set of facts has held as under: " We have heard both the parties and perused the material placed on record. In the instant case, the assessee has admitted the receipts as sales and offered for taxation. The assessing officer made the addition u/s 68 as unexplained cash credit of the same 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 fo....