TaxTMI 
TaxTMI 
2025 (6) TMI 45
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....of INR 8,03,85,580/-. The case of the assessee was selected for scrutiny under CASS by way of issuance of notice dated 21.09.2018 under section 143(2) of the Act. During the course of assessment proceedings, various notices were issued which were complied with by the assessee. The AO after making comparison of the cash sales and average cash collection has made the addition of INR 50 Lakhs being the amount deposited in specified Bank Notes (SBN) during the period of demonetization. The AO has invoked the provision of section 69A & 115BBE of the Act for charging the tax. In first appeal, the Ld.CIT(A) has confirmed the additions and dismissed the appeal of the assessee. 3. Aggrieved by the order of Ld.CIT(A), the assessee is in appeal before us by taking following grounds of appeal:- 1. "That the Ld. CIT(A), Gurgaon has erred in upholding the assessment order for the AY 2017-18 against the appellant, contrary to the factual matrix wherein the Assessee has duly disclosed and offered its actual income to tax considering all of its credits. 2. a). That the Ld. CIT(A) has totally erred by making additions of Rs. 50,00,000/- u/s 69A and taxing the same under the provisions of secti....
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....e books of accounts of the assessee were duly audited and neither adverse comments were made by the Auditor nor by the AO. He further submits that the assessee has already included INR 50 Lakhs in its turnover and paid taxes on the profits earned thereon. Thus, further addition of INR 50 Lakhs is an attempt to tax an income twice. He further submits that once the said cash is duly recorded in the books of accounts, provision of section 69A could not be invoked. He therefore, prayed for the deletion of the additions made and uphold by the lower authorities. 5. On the other hand, Ld. Sr. DR for the Revenue vehemently supported the orders of the lower authorities and submitted that the assessee has failed to prove the source of cash deposited during demonetization period. Therefore, the lower authorities has rightly made the additions which deserves to be uphold. 6. We have heard both the parties and perused the material available on record. In the instant case, the books of accounts of the assessee are subject to audit and from the perusal of the assessment order, it is seen that except non production of sales bills, there was no major allegation of the AO with regard to the mode a....
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....s of account, if any, maintained by him for any source of income; (ii) No explanation is offered about the nature and source of the same; (iii) Explanation offered by Appellant is not upto the satisfaction of Ld. AO. 10. Thus the primary condition for invoking the provisions of section 69A is that there must be existence of books of accounts and such money, bullion, jewellery or valuable article was recorded in the same, than the question of the explanation by the assessee arose. If the assessee provides the explanation with regard to the sources thereof, before rejecting the same, ld. AO, has to express his opinion as to why the explanation furnished by Appellant is not acceptable. 11. In the instant case, it is not the allegation of the AO that the assessee has not maintained any books of account or the cash deposited in SBN in bank was not recorded in the books of account maintained. He rather accepted the turnover declared by the assessee which is inclusive of the amount of cash sales which was made in SBN and deposited into bank. Further it is seen that the assessee not only offered explanation regarding nature and source of deposits but also substantiated the same wi....
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....oks on account of cash sales and was considered in the Profit and Loss Account. The Assessing Officer had verified the stock and cash position as per books and had accepted the same. Complete books of account and cash book was submitted to the Assessing Officer and no discrepancy was pointed out. On this basis CIT(A) deleted the addition. Tribunal also observed that it is not in dispute that sum of Rs. 24,58,400/- was credited in the sale account and had been duly included in the profit disclosed by the assessee in its return. Therefore, cash sales could not be treated as undisclosed income and no addition could be made once again in respect of the same. The Hon'ble High Court dismissed the appeal filed by the Department." 14. The Co-ordinate Bench of ITAT, Delhi in the case of S. Balaji Mech- Tech Private Ltd Vs. ITO in ITA No. 556/Del/2024 vide order dt. 25.09.2024 has observed as under: 18. Coming to the issue of stock movement and excess sales, we observed that the assessee has submitted relevant stock reconciliation and auditors report of stock movements and there is no negative stock movement which will indicate that the assessee has booked excess sales without there bein....
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....ced, which sufficiently explains the source of deposit of Rs. 52.60 lakhs in specified bank notes. Apart from this, the assessee had duly furnished the month wise details of sales, month wise details of purchase, corresponding freight charges incurred month wise, month wise power and fuel expenses and month wise selling expenses in the form of rebate and discount. The assessee also furnished the quantitative details of goods month wise for rice, sugar, chana dal and wheat flour before the Assessing Officer. All these facts clearly go to prove the genuineness claim made by the assessee that cash deposits of Rs. 52.60 lakhs has been made out of cash balance available with the assessee and, hence, there is absolutely no case made out by the revenue for making addition under section 68." 15. Further, in the case of Fine Gujaranwala Jewellers Vs. ITO (ITA No. 1540/Del/2022 dated 27.03.2023, wherein it was held as under: 22. "In the case in hand the reason for disbelieving the cash deposit is that the assessee has been deposited below Rs. 2 lakh in every transactions that lead to the conclusion of the Assessing Officer that the same has been done to avoid the application of provision....
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.... The assessment should have been made based on the adequate material and it should stand on its own leg. The Assessing Officer without examining any parties to whom the goods are sold by the assessee, came to conclusion that the sales are not genuine, without even rejecting the books of account which is in our opinion is erroneous. 23. Respectfully, following the above decisions, we are inclined to allow the grounds raised by the assessee with the observation that the AO/CIT(A) cannot invoke the provisions of section 68 or 69A when the assessee is already declared the source for cash deposits in the books of accounts and the lower authorities without their being any material to support on their contrary view, the provisions of section 68 or 69A cannot be invoked. 24. In the result, appeal filed by the assessee is allowed." 16. The Co-ordinate Benches of ITAT, in the following case laws has held as under: [i] M/S Godwin Tourism Pvt. Ltd. V. DCIT 2024 (8) TMI 1173 (ITAT, Delhi), dated- August 21, 2024, held that- 19. "Considered the rival submissions and material placed on record, we observed that the assessee has submitted cash book in the Paper Book wherein assessee ha....