AI Drafter 
TaxTMI 
TaxTMI 
2025 (7) TMI 1300
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.... its return of income on 27.10.2017 declaring an income of Rs. 9,65,820/-. The case was selected for complete scrutiny through CASS. Based on the information available with the Revenue that assessee has deposited cash of substantial amount as compared to returned income during demonetization period. Accordingly, notices under section 143(2) and 142(1) of the Income-tax Act, 1961 along with questionnaire were issued to explain the source of cash deposit made during demonetization period. In response, ld. AR of the assessee submitted through ITBA portal. During assessment proceedings, it was observed that assessee had deposited cash in his accounts maintained with Kotak Bank Limited to the extent of Rs. 34,80,000/- and cash deposited in India....
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....ant that cash deposit is made from cash sales. However, no where in the assessment order, the AO has doubted purchases or opening stock shown by the appellant. Also the AO has not pointed out any defect of inconsistency in the cash account of the appellant. Neither the books of accounts had been rejected by the AO. The AO at page 3 of the assessment order has stated that the appellant has introduced unexplained cash into business in the form fabricated cash sales. As per settled law, if the AO was of this view then he should have rejected the book result of the appellant u/s 145(3) of the Act. However, the AO has not done so. 6.1.2 Further, it is also noticed that the appellant during the course of assessment proceedings has submit....
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.... no difference in the quantum figures of the stock at the time of search on April 12, 2017, therefore, the sales made by the assessee out of the existing stock were sufficient to explain the deposit of cash (obtained from realization of the sales) in the bank account and cannot be treated as undisclosed income of the assessee." Further, in case of Abhishek Prakashchand Chajkjed Vs ITO, Hon'ble ITAT Ahmedabad (ITA No.113/AHD/2023) has held that the cash generated from sales and duly recorded in the books of account cannot be treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961. The relevant para of the order is as below: "9.7 In the light of the detailed discussions and finding that has been r....
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....saction. Once the primary evidence in relation to the identity, genuineness and creditworthiness is furnished by the assessee, the burden shifts on the AO to bring credible material before rejecting the primary document furnished by the assessee. Hon'ble Delhi High Court in the case of Kamdhenu Steel and alloys vs CIT [2012] 19 taxmann.com 26 (Delhi) has held that once the assessee has discharged its initial onus of proving the genuineness of the transaction, addition u/s 68 cannot be made without any additional material to support such a move. However, in the present case, no additional finding has been done by AO which can prove that sales are not genuine especially when the opening stock and purchases made by the ap....
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....ated the reason for steep increase in cash sales during current assessment year when compared to previous assessment year. He objected to the relief granted by the ld. CIT(A). He heavily relied on the findings of the Assessing Officer. 6. On the other hand, ld. AR of the assessee submitted that Assessing Officer has not rejected the books of account maintained by the assessee u/s 145(3) of the Act. Further he submitted that the Assessing Officer has not brought any contrary evidence to prove that the cash deposit was unexplained, has not provided any contradiction in sales invoices, stock registers and books of account. The cash deposit represented genuine business transactions and corresponding sales proceeds were recorded in the books.....
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....hat the assessee has already brought on record the relevant stock registers maintained for the year under consideration and the Assessing Officer has not raised any doubt with regard to stock maintained by the assessee for opening as well as closing stock and accepted the purchase and closing stock declared by the assessee. He has proceeded to make the addition merely on the basis that assessee has declared cash sales based on the comparative data with the previous year. We observe that the Assessing Officer has not rejected the books of account and has not raised any discrepancies relating to the books of account and relevant documents maintained and submitted by the assessee. Merely on the basis of increased cash sales, he has proceeded t....