TaxTMI 
TaxTMI 
2025 (6) TMI 465
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....ew currency was available in the market and old currency is no more remained illegal tender. The AO also observed that the assessee has not properly explained the cash available with it for depositing in the bank account and accordingly addition of Rs. 4,58,00,000/- was made u/s 68 of the Act. On appeal the Ld. CIT(Appeals) deleted the addition. 3. Before us the Ld. Counsel for the assessee strongly supported the order of the Ld. CIT(Appeals). The Ld. Counsel for the assessee further submitted that during the assessment year under consideration in fact the cash deposits in bank account which were all out of sale proceeds were in fact stood at 6.58 crores and the cash deposits into bank account during the immediately preceding assessment year i.e. 2016-17 stood at 7.09 crores. Ld. Counsel submits that all these cash deposits were out of regular sale proceeds of Marbel blacks. Ld. Counsel also submitted that the observation of the AO that there were no cash expenses by the assessee is also incorrect since the assessee had shown cash expenses during April to November in FY 2015-16 and 2016-17 at Rs. 31.39 lakhs and 66.80 lakhs respectively. He strongly supported the orders of the L....
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.... July-15 3,26,540.00 August-16 7,13,726.00 August-15 4,55,210.00 September-16 11,12,795.00 September-15 4,10,250.00 October-16 15,40,828.00 October-15 9,55,112.00 66,80,582.26 31,39,023.00 From the above table, it can be observed that cash expenses are more than double vis-a-vis previous. Therefore, observation of the Id. AO that there were no cash expenses during pre-demonetization period is not found to be correct. 5.3.3 Further it is observed that the i. Sale turnover of the assessee during the year under consideration is 46.48 crores and in immediately preceding year i.e., A.Y. 2016-17 the turnover was 60.32 crores. ii. Sales made by the assessee are including VAT and VAT returns are also submitted by the assessee within due time. iii. The accounts of the assessee are liable for audit under Section 44 AB of the Act and from year to year these audited reports have been obtained and submitted to the department along with return of income filed for respective years. iv. During A.Y. 2017-18 cash sales of the assessee have decreased to Rs. 4,90,69,680/- as compared ....
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....Officer had doubted the aforesaid sales as bogus and had made the aforesaid addition. However, the Commissioner of Income- tax (Appeals) as well as the Income- tax Appellate Tribunal returned findings of fact to the contrary. 4. The Tribunal also noted that the departmental representative could not challenge the factual finding recorded by the Commissioner of Income-tax (Appeals), nor could he advance any substantive argument in support of his appeal. The Tribunal also observed that it is not in dispute that the 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. It is in these circumstances that, the Tribunal observed that the cash sales could not be treated as undisclosed income and no addition could be made once again in respect of the same. 5. The-findings of the Commissioner of Income-tax (Appeals) and the Tribunal, which are purely in the nature of the factual findings, do not require any interference and, in any event, no substantial question of law arises for our consideration. The appeal is dismissed." 5.4.2 The above decision of Delhi High Court has also been r....
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....e-tax as the income of the assessee of that previous year. From the perusal of section 68, the sum found credited in the books of accounts for which tl assessee offers no explanation, the said sum is deemed to be income of the assessee. In tl instant case the assessee had explained the source as sales, produced the sale bills ar. admitted the same as revenue receipt. The assessee is engaged in the jewellery business and maintaining the regular stock registers. Both the DDIT (Inv.) and the AO have conducted the surveys on different dates, independently and no difference was found in the stock register or the stocks of the assessee. Purchases, sales and the Stock are interlinked and inseparable. Every purchase increases the stock and every sale decreases the stock. To disbelieve the sales either the assessee should not have the sufficient stocks in their possession or there must I defects in the stock registers/ stocks. Once there is no defect in the purchases and salt and the same are matching with inflow and the outflow of stock, there is no reason I disbelieve the sales. The assessing officer accepted the sales and the stocks. He has m disturbed the closing stock....
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....re duly accounted for in the books of accounts and there were no abnormal profits. In spite of conducting the survey the AO did not find any defects in sales and the stock. Therefore, we do not find any reason to suspect the sales merely because of some routine observation of suspicious nature such as making sales of 270 bills in the span of 4 hours, non availability of KYC documents for sales, non writing of tag of the jewellery to the sale bills, non-availability of CCTV footage for huge rush of public etc. The contention of the assessee that due to demonetization, the public became panic and the cash available with them in old denomination notes becomes illegal from 09.11.2016 and made the investment in jewellery, thereby thronged the jewellery shops appear to be reasonable and supported by the newspaper clippings such as The Tribune, The Hindu etc. It is observed from the newspaper clippings that there was undue rush in various jewellery shops immediately after announcement of demonetization through the country. 9. In view of the foregoing discussion and taking into consideration of all the facts and the circumstances of the case, we have no hesitation to hold that the....
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...., 94% in June 2015, 93% in July 2015, 92% in July 2016. So it is not a case that in the month of October 2016 only the cash sales were more. It is also noticed that the cash sales in October 2016 was the same as was in July 2016, therefore, it cannot be said that the assessee made more sales in cash during the period just before demonetization in the month October 2016, rather the cash sales were more in different months of the preceding year where there was no demonetization. It is also noticed that the GP rate shown by the assessee for the year under consideration was 12.21% 'which was comparable 'with the preceding year 2016-17 at 12.72% which shows that there was a small decline in the GP rate for the year under consideration in comparison to the earlier year, however in the assessment year 2014-15 and 2015-16 the G.P. rate was at 16.62% and 13.47% respectively which shows that there was a consistent declining trend in the G.P. rate which occurred due to increase in the sales which were at Rs. 3.04 crores Rs. 9.46 crores Rs. 10.68 crores and Rs. 12.83 crores for the A.Y. 2014-15, 2015-16, 2016-17 and 2017-18 respectively which also shows that due to increase in turnover....
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....period. The said explanation cannot be brushed aside considering the trend of the society in India wherein people make the purchases of jewellery during the festive season. 10.5 In the present case also the assessee was maintaining complete stock tally, the sales were recorded in the regular books of accounts and the amount was deposited in the bank account out of the sale proceeds, therefore, the addition made by the AO and sustained by the Ld. CIT(A) was not justified. 10.8 Similarly the Hon'ble Patna High Court in the case of Lakshmi Rice Mills (supra) held as under: - "It is a fundamental principle governing the taxation of any undisclosed income or secreted profits that the income or the profits as such must find sufficient explanation at the hands of the assessee. If the balance at hand on the relevant date is sufficient to cover the value of the high denomination notes subsequently demonetized and even more, in the absence of any finding that the books of account of the assessee were not genuine, the source of income is well disclosed and it cannot amount to any secreted profits within the meaning of the law. What has to be disclosed and establishe....