TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 288
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....s office vide letter dt. 03.07.20247 2 Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made on account of unexplained cash credits u/s 68 of the Act amounting to Rs. 3,09,91,233/- without appreciating the facts brought out by the Assessing Officer that the assessee failed to explain the identity, genuineness and creditworthiness of the customers/depositors? 3. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the Assessing Officer be restored. 2. Brief facts of the case are that assessee is engaged in the business of retailer of jewellery through chain of stores/retail outlets with over 33 locations all over India. Assessee has several marketing schemes, out of these, two scheme are popular and in place for past several years: i. Advance Jewellery Purchase Scheme (10+1) - Under this scheme, the customer pays 10 monthly instalments and the 11th instalment is borne by assessee at the time of redemption towards purchase of jewellery where the customer would be entitled to redeem his right after the 10th month (Sample Scheme Passbooks at Page 126-153 of the Paper bo....
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....against Sales Made during the FY 2016-17 (F) Advance forfeited during the FY 2016-17 (G) Advance as on 31.03.2017 (H = E-F-G) 1 Customers opted under Scheme 24,63,81,734 26,95,32,309 1,80,08,100 15,88,37,844 69,27,59,987 34,43,80,107 30,000 34,83,49,880 2 Customers not opted under Scheme 3,62,96,170 29,86,09,501 4,54,82,909 12,73,20,520 50,77,09,100 45,77,41,689 1,237 4,99,66,174 TOTAL 28,26,77,904 56,81,41,810 6,34,91,009 28,61,58,364 1,20,04,69,087 80,21,21,796 31,237 39,83,16,054 ORRA FINE JEWELLERY PRIVATE LIMITED ACCOUNTING YEAR ENDED 31ST MARCH 2017 ASSESSMENT YEAR 2017-18 STATEMENT GIVING BIFURCATION OF ADVANCES RECEIVED IN CASH AND OTHER MODES S No. Particulars Advance Received during 01.04.2016 to 24.10.2016 Percentage (%) Advance Received during 25.10.2016 to 08.11.2016 Percentage (%) 1 Advances Received in Cash - Customers not opted under Scheme 14,98,89,008 26.38% 2,08,30,684 32.81% - Customers Opted under Scheme 13,49,60,929 23.75% 1,01,60,550 16.00% SUB TOTAL (A) 28,48,49,937 50.14% 3,09,91,234 48.81% 2 Advances Received in other Modes &....
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....ntry, advances received in cash could not be deposited in the bank account, and was thus carried as cash in hand in the books of accounts. Immediately after the Diwali period, demonetisation was announced on 08.11.2016. Assessee had accounted for the cash received in its books of accounts prior to demonetisation and was deposited subsequently during the period of demonetisation i.e., between 08.11.2016 to 30.12.2016. 3.3. Assessee has strongly contented that advances received from customers are ultimately liquidated against sale of jewellery which forms part of the sales turnover, duly accounted and reported in the profit and loss account. The sales so made are offered and assessed to tax in the year of sales, after liquidation of the advances received from the customer. In this respect, assessee furnished a summary of advance which got converted into sales in the year under conisation as well as in the subsequent years, which is tabulated as below: Nature of Advance Advance received during 25.10.2016 to 08.11.2016 Advance Converted to Sales in AY 2017-18 AY 2018-19 Subsequent years Advance Jewellery Purchase Scheme 2,08,30,684 1,99,50,368 6,86,030 1,94,286 Booking amo....
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....he period under consideration, no discrepancies were found which has been elaborately analysed in para 7.3 of his order. Based on the analysis, it is observed by ld., CIT(A) that advances from customers are part of routine business operations which are subsequently converted into sales, either in the year under consideration or in subsequent years. Furthermore, ld. Assessing Officer has made the addition in respect of advances during the demonetisation period and not otherwise which is received by the assessee through out the year. Thus, ld. CIT(A) having satisfied with the genuineness of the transaction, deleted the addition so made. 5. We have heard both the parties and perused the material placed on record and have given thoughtful consideration to the observations made by ld. CIT(A), while granting relief to the assessee. On the issues raised by the Revenue in its appeal, we find that ld. CIT(A) has adequately dealt with them by taking into account the factual matrix corroborated by documentary evidences which we have also captured in the above paragraphs. The observations and findings arrived at by ld. CIT(A) in para - 7.2 and 7.3 are extracted below for ready reference:- "....
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....ed confirming the gold prices prevailing on the day. This is a regular phenomena accepted by the Department in earlier as well as subsequent years. The sale of jewellery is invariably in cash. Details of advances received are duly recorded in the books of account. Subsequently, advances were converted into sales resulting into reduction in stock, complete details of which were submitted during remand proceedings. Receiving advance from customers is a regular phenomena accepted in scrutiny assessments by the Department in earlier and subsequent years. PAN of all customers in respect of advances above Rs. 2 Lakhs are on record. There is no negative inference from these details. Subsequent sales arising from these advances has been recorded in the books of account and duly offered to tax. It is a settled principle that addition that results in double taxation of income is not permissible. In the present case, the Appellant has substantiated its contention that the advances received were subsequently converted to sales during the year under consideration as well as in subsequent years. Thus, the addition of advances received to total income cannot be made when the sales in ....