TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 1923
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....(A) may be set aside and that of the Assessing Officer be restored." 3. The brief facts of the case are that the assessee is engaged in the business of manufacturing, retail, and wholesale of gold jewellery. During the assessment proceedings, the Assessing Officer noted that during the demonetization period, from 09.11.2016 to 30.12.2016, the assessee deposited a sum of Rs. 3,02,62,000/- in cash, which as per the assessee had come from cash sales duly recorded in the books of account. The assessee submitted that the sales were supported by proper documentation, including audited books, purchase and stock registers, cash and bank books, bills, and vouchers. However, the Assessing Officer was not satisfied with the explanation and treated the cash deposits as unexplained income under section 68 of the Act. The AO observed several discrepancies and inconsistencies in the assessee's submissions. Firstly, the sales invoices did not contain complete names, addresses, or PANs of customers, and many sales were shown in cash in amounts just below Rs. 2 lakhs, which as per the AO was a deliberate attempt to avoid reporting requirements. Secondly, the assessee failed to provide jewellery-wis....
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....addresses, and PANs of customers, the assessee submitted that under the law, such details are not required for sales below Rs. 2 lakhs, which covered the majority of their transactions. Reliance was placed on judicial precedents, including the Ahmedabad ITAT decision in Nitisha Silk Mills Pvt. Ltd. and the Bombay High Court ruling in R.B. Jessaram Fatehchand v. ACIT, to substantiate that the absence of these customer details does not invalidate the sales. In response to the allegation that sales ranged between Rs. 50,000/- and Rs. 1,99,000/- which indicated manipulation, the assessee submitted that there is no evidence to show that the assessee intentionally split invoices or structured sales to avoid reporting thresholds. Regarding the lack of jewellery-wise stock details for the period October to December 2016, the assessee submitted that it had adequate inventory to meet the sales demand and that sales were made from it's existing stock. The mere absence of item-wise details did not imply that sales were fictitious, particularly when purchases and stock positions were duly supported by records. On the issue of increased jewellery production and the alleged absence of labour char....
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....e explanation of the assessee that the cash sales were made from existing stock, no material defect was found in the stock records, and noted that sales were consistent with normal business trends during the festive season. Further, the rejection of books by the AO was held by CIT(Appeals) to be unwarranted, especially since net profit was accepted and no discrepancy was found in purchases or stock of the assessee. CIT(Appeals) relied on judicial precedents which have held that once books are rejected, the AO cannot separately invoke section 68 to treat declared sales as unexplained income. Accordingly, the appeal of the assessee was allowed and the addition of Rs.3,02,51,598/- under section 68 was directed to be deleted. While passing the order CIT(Appeals) made the following observations: "5.1.2.1 I have perused the arguments of the Assessing officer and the submissions made before me, by the appellant. I have also perused the paper book containing the copy of audited annual account, copy of VAT annual return, month wise stock details, copy of stock register, copy of purchase register, copy of purchase bills, party wise purchase statement and the ledger confirmation from M.S. J....
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.... were not out of purchases from the said party, and the subsequent sales have anyways been accepted during the assessment proceedings. On the sales side, the AO has doubted the cash sale as the bills do not contain the complete name, address and PAN of the customers and also majority of the sales are below 2 lacs to deliberately escape producing the requisite details. The appellant on the other hand has taken recourse to the plethora of judgements on this issue. Specific reference has been drawn to the Jurisdictional ITAT decision in the case of Nitisha Silk Mills Pvt. Ltd. Vs. ITO (ITA No. 896/Ahd/2011). In view of the various judicial pronouncement on this issue (as per the appellant's submission and compilation of case laws) mere non maintenance and/or non-submission of such data cannot be held against the appellant. Finally, coming to the compelling argument advanced by the Assessing officer with regard to comparative patterns of cash sales, cash deposits and closing balance of cash in hand with earlier years. ..... 5.1.2.2 It is also seen that no specific defect has been found out in the stock details nor has it been changed/altered by the Assessing officer. The appellan....
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.... the business of manufacturing, retail, and wholesale of gold jewellery. During the Assessment Year 2017-18, the assessee made cash sales of gold ornaments amounting to Rs.3,02,51,598/-, which formed part of the total turnover. These transactions were recorded in the books of accounts, and the profit element arising from them was duly offered for taxation, which is not in dispute. The Assessing Officer framed the assessment under section 143(3) and treated the said cash sales as non-genuine. The Assessing Officer rejected the books of accounts under section 145(3) of the Act and made an addition under section 68 of the Act, alleging that the sales were unsubstantiated and lacking in verifiable details. However, in appeal, the Commissioner (Appeals) found the action of the AO to be unjustified both in fact and in law. The Commissioner (Appeals), in our considered view has rightly noted that the amount in question was already recorded as sales in the books and that such sales were supported by supporting documentation. Once the sales realization has been duly taxed, making an addition of the same amount under section 68 of the Act would result in double taxation, which is impermissib....