TaxTMI 
TaxTMI 
2025 (6) TMI 564
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....he return was taken for scrutiny assessment on account of abnormal increase in cash deposits during demonetization period. The assessee explained that it is engaged in retail trade business of bullion and ornaments. Cash deposited in the bank accounts, during the demonetization period were from Cash sales during pre-demonetization period. In support, the assessee submitted substantial evidences of sales, purchases, stock and cash deposits in the bank accounts. The assessee also demonstrated the cash sales during the year under consideration was substantially lower, compared with the earlier years. The assessing Officer issued notices u/s. 133(6) of the Act to the suppliers of goods to the assessee. All the parties had confirmed the purchases by the assessee and submitted contra accounts. The Assessing Officer however was not satisfied with the above reply and added the cash sales aggregating to Rs. 3,39,72,416/- as unexplained cash credit u/s. 68 of the Act. The Assessing Officer also made disallowance of Salary expenses of Rs. 10,80,000/- paid to three employees without making any TDS. 3. Aggrieved Against the assessment order, assessee filed an appeal before Ld. CIT(A) deleted t....
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.... credit worthiness of the said parties namely M/s Oasis Jewellers & M/s DJ Jewellers were proved beyond any doubt by the appellant. Hence, the onus is on the part of the AO to disprove the facts submitted by the appellant i.e. identity, genuineness and credit worthiness of the said parties namely M/s Oasis Jewellers & M/s DJ Jewellers were fake and bogus which the AO failed to do so though he alleges that those purchases were not genuine. It amounts to only assumption by the AO against the facts on records gathered based on his own enquiries during the assessment proceedings. So, it is evident that purchase has happened during the period as mentioned by the AO and it is beyond any doubt. Now, coming to the cash sales recorded during the month of October and November 2016, The AO has pointed out that cash sales were made exactly during the month of October 2016 and November till 08.11.2016 amounting to Rs. 3,39,68,416/-(Rs.3,02,76,768+ Rs. 36,95,648/-). The contention of AO is that it is impossible to sell gold ornaments amounting to Rs. 3,39,68,416/-i.e. Rs. 3,02,76,768 on 28.10.2016 and Rs. 36,95,648/- on 01.11.2016 in a single day and that too all the invoices were between 1 la....
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.... cash is admitted that it was part of the cash sale receipt and books of accounts are accepted and the income arrived at as per the ITR is accepted there is no question adding further on the count of unexplained credit u/s 68. The entire addition is based in the assumptions of the AO based on certain abnormalities noticed by him during the assessment proceedings in the submissions made by the appellant. However those abnormalities cannot discredit the fact that the books of accounts are maintained by the appellant, audited by the appellant and all the necessary books / registers are maintained and entered with each and every entry regarding the purchase, stock, sale, etc and finally the cash deposits in question are from the cash sale done by the appellant in the routine course of business. Though filed belatedly the VAT returns confirms the purchase and sale are part of the business transaction which included the purchase transactions and the cash deposited by the sale transactions. With the identical set of facts, the Honourable ITAT Vishakhapattanam in the case of Assistant Commissioner of Income Tax, Central Circle 1 Vs. M/s. Hirapanna Jewellers (189 ITD 0608), held that on....
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.... of appeal: 5.1 Revenue's Grounds of Appeal in ITA No. 1618/Ahd/2024: 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of unexplained cash credit of Rs. 3,39,73,500/- u/s. 68 of the Act, without appreciating the facts of the case. 2. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. 3. It is therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored. 5.2. Assessee's Grounds of Appeal in ITA No. 1665/Ahd/2024: 1. The Ld. CIT(A) erred in law and in the facts of the case in confirming the order of the A.O. in making disallowance of Rs. 10,80,000/- being salary expenses u/s. 37 of the Act. 6. Heard rival submissions and perused the materials available on record including the Paper Book and case laws filed by the assessee. The assessee claims that the cash deposit is on account of demonetization and in fact cash sales was essentially generated on retail sales to various customers which is duly reflected in the cash book maintained by the assessee. The A.O. pointed out that the cash sales were made e....
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....ontention of the assessee that due to demonetization, the public became panic and the cash available with them in old denomination notes becomes illegal from 9-11-2016 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." 8. In view of the above facts, in our considered view, when the sale proceeds of Rs. 3.39 crores had been supported with book results & primary evidences, which were not disproved by the AO, and that the same had already been assessed by the AO as revenue receipts from 'Business', then it was wholly improper for the AO to again tax these sale proceeds as unexplained income u/s 68 of the Act, as it would amount double taxation of the same sum. The reliance placed by the Ld. AR in support thereof on the following decisions are found to be relevant. 8.1. CIT Vs Vishal Export Overseas Ltd [TA No. 2471 of 2009] (Guj HC) "5. ...... The Tribunal however, upheld the deletion of Rs. 7....
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....nd the assessee has been consistently maintaining the stock of Rs. 68.07 crs for the F.Y 2015-16 and for F.Y 2016-17 it was maintained at Rs. 65.38crs and the cash sales are part of the stocks maintained which is not disputed. Further the addition has been made only on the basis that after demonetization, the demonetized notes could not have been accepted as valid tender. Since the cash sales proceeds/receipts received from the customers are reflected in the Audited Profit & Loss account as income and if the cash deposits are added under section 68 of the Act that will amount to double taxation once as sales and again as unexplained cash credit which is against the principles of taxation. The AO has not pointed out any specific adversity but made a generalize addition without considering the factual aspects and primary evidences. The A.O has failed to make further enquiries on the information filed and the assessee has discharged the initial burden placed by submitting the information and details. We find the CIT(A) has dealt on the facts, provisions of law, notes and judicial decisions. The Ld. DR could not controvert the findings of the CIT(A) with any new cogent material or info....