TaxTMI 
TaxTMI 
2025 (5) TMI 1849
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....he Act. For this, the Revenue has raised the following grounds nos. 1 and 3, which read as under: "1. That the Ld. CIT(A), NFAC erred in law, in deleting addition of Rs. 5,07,54,538/- made by the Assessing Officer in respect of cash deposit as the assessee made cash sale through bill book of a new series which started in month of August, 2016 and ended in November, 2016 that have not been reported in the VAT return for the quarter ending September, 2016. 3. That the Ld. CIT(A), NFAC failed to appreciate the findings of the assessing officer w.r.t no reasoning provided by the assessee w.r.t introduction of a new bill series in the middle of the year and then abrupt stopping of issuing bill from the new series. The assessee also failed to substantiate name and address of the customers to whom such a huge cash sale was made from August, 2016 to November, 2016." 3. Brief facts are that the assessee is engaged in the business of manufacturing and trading of wool top, woollen fabric etc. The assessee filed its return of income on 26.10.2017 for the Assessment Year 2017-18. The assessee's case was selected for complete scrutiny under CASS. The assessee was required to produce cash bo....
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....ery was done from the sales office only. The office is handled mainly by officials under the supervision of management along with other small workers whose main functions are of packing and weight checking and the management itself is heavily involved in the final sales activity. It was contended that when the demonetization took place the whole country got panicked and there were long queues outside the bank branches. The management felt that the environment is not conducive to deposit the cash in one go and its prudent to be on safe side and deposit the same in instalments so that avert thing can be done in a smooth manner after taking into account the safety of the cash and of the officials that had gone to deposit the same. Before demonetization bulk of our wages and salaries were paid in cash. It was contended that the assessee was running two industrial units where a significant number of employees are marginalized workers and labourers whose take-home pay is around Rs. 10 to 20 thousand per month. These workers do not accept big notes and always take a salary in the denomination of Rs. 100, 50, 20 and 10 Rupees. During the month of October 2016, the company had no lower deno....
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.... return with full cash in hand amount of 5 cr+. As the Q2 return was filed before the demonetization announcement so the assessee company was unable to change the data filed earlier and introduce the data of the backdated newly introduced series in the Q2 return. 1. The facts of the case have been analysed and keeping in view of above observation, source of cash deposited as explained by the assessee from cash sales cannot be accepted in this case. In the light of the above view, it is gathered that assessee made cash sale of Rs. 5,42,54,538/- through a new series bill which started in the month of August 2016. The New series bill introduced by backdating of bills that have not been reported in the VAT return for the quarter ending Sep. 2016. Hence assessee company cash sale of Rs. 5,42,54,538/- is found ingenuine and needs to be taxed as income U/s 68 of the income tax Act. The assessee submitted that assessee already declared an amount of Rs. 35,00,000/- under PMGKY, 2016. Hence, addition of Rs. 5,07,54,538/- is made u/s 68 and taxed as per section 115 BBE and penalty u/s 271AAC of the Income Tax Act, 1961 initiated. (Addition of Rs. 5,07,54,538/-)" Aggrieved, the Assessee pre....
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....arket and partly, along with wool top purchased from the market, which is again used for further processing i.e. spinning out of yarn is manufactured. The assessee sales this yarn partly in the open market and other part of the said yarn is further processed into woollen woven fabric, which is the final output sold in the open market. The Assessing Officer has no doubt the purchases made by the assessee, manufacturing done by assessee and not rejected the books of account. We noted that the assessee has made sales both cash and through banking channels of wool and woollen woven fabric to the customers/buyers which is a general practice of the business of the assessee. The assessee during the year under consideration has made total sales of Rs. 176,92,56,036/- out of which cash sales is of the magnitude of Rs. 5,42,54,538/- i.e. constitutes 3.06% of the total sales. The sales made by the assessee have been duly recorded in the books of account and the complete cash book was produced before the AO. The AO could not point out any defect in the assessee's records and accordingly entire cash deposit is properly explained by the assessee. We also further noted that even the yield pointed....