TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1794
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....ased on the information available on record, the AO observed that assessee has deposited Rs. 43 lakhs from 09.11.2016 to 30.12.2016 i.e. during demonetization period. On enquiry, assessee submitted vide letter dated 07.02.2022 as under :- ".... During the period of demonetization (09.11.2016 to 30.12.2016) I have deposited Rs. 43,00,000.00 to my two current accounts. As regard to cash deposited into bank in above said period it is stated that our most of the sales to hawkers (Pheriwalas/Numaish Walas) who purchase the goods from us and sold the goods door to door or sold the goods at various weekly markets at various stations, After selling the goods the paid cash to our representative over there who deposited the cash so collected in the interval of 3-4 day into my current account. Further we use the bank balance for payment to our suppliers or small cash withdrawal for petty expenses. I am enclosing herewith detail of cash deposited into bank account and along the source of cash received further also enclosing herewith list of the persons (Pheriwalas) along with their address for your kind verification from whom my representative collected the cash deposit the same into my bank....
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.... laborer and used to deposit the cash sale which the employee of the assessee in an interval of 2.3 days. Whole of the above amounts have been deposited in towns of Kerala and Karnataka in cash in assessee's Bank account from sale proceeds of goods and the amount relates to the sale of goods only. If the assessee had unaccounted cash with him how he could have deposit the cash in towns of Kerala State and town of Karnataka State why not in Panipat or nearby town itself. Since he is resident of Panipat so it proves beyond doubt that the cash deposited is out of recoveries from State of Kerala and Karnataka State. The Sundry Creditors have no proper residing premises. Since the Hawkers, Feriwal (Debtors) are persons of very low means they are nor filling their returns nor they had been having PAN Numbers the assessee had filed the details during assessment proceeding of their names address available etc. and the details of collection of money by the employee of the assessee. The proceedings have been initiated u/s 147/148 on account of depositing of Rs. 43,00,000/- in Allahabad Bank account only by the assessee in old currency notes is incorrect as the assessee had deposite....
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..../s 147/144B without assuming jurisdiction as per law and without complying with mandatory conditions u/s 147 to 151 as envisaged under the Income Tax Act, 1961 and without obtaining valid approval/ sanction u/s 151 as per law. 2. That in any case and in any view of the matter, action of Ld. CIT (A) in not quashing the impugned reassessment order passed by Ld. AO u/s 147/144B, is bad in law and against the facts and circumstances of the case and no sustainable on various legal and factual grounds." 8. However, at the time of hearing, ld. AR of the assessee has not made submissions with regard to the additional grounds so taken. Therefore, the additional grounds taken by the assessee are not admitted. 9. At the time of hearing, ld. AR of the assessee submitted as under :- "1. Ld. AO in Para 4 at Page 2 of the impugned assessment order stated that sundry debtors are not having PAN and assessee has not filed any documentary evidences like PAN of the debtors, copies of sales bill, sale account, cash book, stock register etc. and no details of agent who collected cash from the clients of the assessee were filed by the assessee. 1.1 In reply it is submitted that the assessee vide ....
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....vided and addresses were not provided as these persons are not assessed to tax as such PAN details could not be provided by the assessee as these could not be obtained by the assessee from these persons. 3. In para 5 at Page 3 & 4 of the impugned assessment order, Ld. AO stated that assessee received cash from his debtors on 01.11.2016 to 02.12.2016 and deposited cash between 11.11.2016 to 03.12.2016 in his bank accounts during demonetization period. Ld. AO stated that if the government had banned old currency notes of Rs. 500/- and Rs. 1,000/- from 08.11.2016, why the assessee had received the old currency from the debtors during the demonetization period? 3.1 In reply, it is submitted that it is wrong to allege that staff of the assessee deposited Rs. 43,00,000/- in old currency (SBN) during the demonetization period in the bank account of the assessee. Infact, the details submitted of Rs. 43,00,000/- collected by the staff members of the assessee (PB 456-460) is details of total collection by the staff of the assessee during the demonetization period which also includes new currency or other than SBN Notes after demonetization period which is evident from the pay-in-slips pl....
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....Further, ld. AR submitted a chart depicting the cash collection pattern of the assessee in five assessment years :- 12. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities. 13. Considered the rival submissions and material placed on record. I observed that assessee is a wholesaler in handloom products and sells his goods to small dealers i.e. Pheriwalas, Numiaswalas and Hawkers who sells the material after purchasing the same from assessee by selling them on roads, streets, weekly bazaars and door to door. As per the submissions, I observed that assessee is doing its business from past several years and he sells his goods in Kerala and Karnataka cities. Habitually assessee sells the goods to the small traders by cash and collects the same in cash. Assessee has submitted a chart indicating the sales of various years from AYs 2015-16 to 2019-20 wherein the declared sales of the assessee was Rs. 1.02 crores to Rs. 4.77 crores. It is a fact on record that assessee's business is heavily dependent on cash transactions and collects the cash from the debtors. During the demonetization period, assessee has submitted a detailed chart indicating the coll....