TaxTMI 
TaxTMI 
2025 (8) TMI 1109
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....the case, the Ld. CIT(A) has erred in holding the sales of Rs. 6,76,59,000/- deposited in bank account in the demonetized currency as bogus sale and directed to reduce the same from total sales shown by the appellant and add the same under income from other sources by applying the provisions of section 68 and 69A of the Act and tax as per the provisions of section 115BBE of the Act. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in making the addition of Rs. 6,76,59,000/- on account of cash deposited in demonetized currency in bank by applying the provisions of section 68 and 69A of the Act more so when the books of account has been rejected and it is contended the entries of the rejected books of account cannot be considered for addition u/s 68 and 69A of the Act. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in applying Section 69A of the Income Tax Act, 1961. 5. The Appellate prays to leave, to add, to alter, amend, the aforesaid grounds of appeal at or before the time of hearing of appeal." 3. The assessee in Ground No. 1 to 4 challenged the holding of Ld CIT(A) that the sales of Rs. ....
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.... the assessee on 06.10.2017 and statement of the assessee was recorded u/s 133A copy of which placed by the assessee at PB page 382-387. No any incriminating material/document was found as the result of survey u/s 133A of the Act and assessment for survey year AY 2018-19 was completed at Returned Income. The assessee placed the copy of assessment order passed u/s 143(3) of the Act for Survey Year AY 2018-19 at PB page 301-302. The assessee also placed before us the copy of replies/explanation filed before the ld AO during the assessment proceedings of Survey Year AY 2018-19 at PB page 388-396. 5. In order to verify the source of cash deposit, the ld AO asked the assessee to explain source along with documentary evidences, and furnish various details and comparison of cash sales and cash deposit with previous year. The assessee filed various details and documents from time to time. The details, documents and explanation so furnished by the assessee were perused by the Ld. AO and the ld AO has observed that :- a) Assessee's cash sales increased abnormally and exceptionally in comparison to last year. Cash sales during F.Y. 2016-17 (A.Y. 2017-18) were of Rs 11,51,99,91....
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....p, in the bank accounts and no one deposits bank notes on several occasions. In the instant case, Rs 32,90,998/- is average cash balance during the first six months, in the year under consideration is normal and remaining cash deposits aggregating to Rs 6,76,59,000/- (7,09,50,000 - 32,91,000) are hereby treated as unexplained and proposed to be taxed u/s 68 of the Act as cash deposits amounting to Rs 7,09,50,000/- are accepted as explained looking to the view of principle of natural justice and human tendency. In view of the discussion in the previous paras, it is established and concrete evidence that the assessee completely failed to explain the source of cash deposited in his account. The "Human Probability Test" is one of the important tests laid down the Highest court of India in order to check the genuineness of the transactions entered assessee. The "Human Probability Test" were laid down for the first time in the case of CIT vs. Durga Prasad More (1971) 82 ITR (SC) and followed in the case of Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC). The "Human Probability Test" can only be applied when the assessee makes the officer to believe his/her story as a valid event. T....
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....76,59,000/- by applying the provisions of section 68 of the Act treating the part of the amount deposited in the bank in demonetized currency (SBNs) as income of assessee from undisclosed sources and accordingly the same was taxed as per the provisions of section 115BBE of the Act. 6. Aggrieved by the order of the Assessing Officer making the assessment based on the above stated facts, the assessee preferred an appeal at NFAC, which was transferred to CIT(A), Jaipur-4, Jaipur. The appeal filed by the assessee was partly allowed by the Ld. CIT(A) by giving findings in para 4.2 at page 42 to 71 of his order and the findings of the Ld. CIT(A) is summarised herein below:- (a) Ld. CIT(A) at page 44 of his order observed that cash sales of the assessee was abnormally increased and cash deposit in bank account from 09-11-2016 to 31-12-2016 increased abnormally. (b) Ld. CIT(A) at page 46 of his order observed that the assessee has not given PAN no. and address of the buyers of the goods and identity of the buyers of goods was disclosed. The Ld. CIT(A) observed that the assessee was making such high cash sales during the year and there is no genuine reason as to why the....
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....6 to 31-12-2016 was filed after the demonetization and much late on 28-August-2017 and is after thought. VAT return for the F.Y. 2016-17 has been filed with much delay on 27-03-2018 and VAT return for the first quarter has been filed in August 2017. He held that genuineness of the sales entry has not been examined by the VAT Department. All these facts shows that originally turnover of the assessee was below VAT limit thus, no VAT quarterly return was filed, and when the cash was deposited in demonetization and later on VAT returns were filed by showing increasing turnover in VAT return artificially to introduce the cash in books of account. (g) At page 52 of his order Ld. CIT(A) mentioned that the assessee has claimed that in the month of March 2016 and April 2016 there was strike of jewellers but the assessee has not filed any evidence to show how the strike affected the business of the assessee to increase the sales in subsequent months and also contradictory to the fact of the case as assessee himself has substantial sales during the period. The Ld. CIT(A) further mentioned that in Sales Register five entries Voucher No. 720 to 724 were found cancelled which shows tink....
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....hat extent Rs. 6,76,59,000 shall be reduced from the sales shown by the appellant for the year." 7. The Ld. AR of the assessee filed detailed written submissions and Paper Book containing Page 1-396 and Case Laws Paper containing Page 1-577 and disputed the findings of lower authorities. The bald allegation of ld. AO that the cash deposited in demonetized currency had arisen from some undisclosed source not reflected in the books of account as against the accounted cash sales in books of account and alsowhich is regular feature of the trade of assessee. The conclusion of lower authorities is dehors of any credible evidence/material on record is unsustainable both in law and on facts. Addition so made by the lower authorities by treating the impugned cash deposits (arising out of accounted cash sales) as unexplained cash credits/unexplained money merely on the basis surmises and conjectures. The cash so deposited was accumulated cash which was received against/for sales made by him over the period of the year prior to demonetization. As per audited books of account, the cash balance of Rs. 7,09,65,744/- was available with the assessee as on 08-11-2016 shown as under:- Particul....
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....ly cash balance could be filed easily if demanded by any lower authorities. The ld CIT(A) mentioned that 5 entries of Invoice No 720-724 found cancelled in sales register which shows tinkering in the sales register. In this regard we submit that the CIT(A) never asked the assessee to explain the reason of cancelled entries. This cancelled entries (PB page 260) are due to genuine human error but the fact remains that all the invoices are serially number and tinkering in sales register was not possible. Rather, the 5 cancelled entries show that the assessee is maintaining the books of account in regular course of the business. If the accounts were fabricated then no such cancelled entries would arise in sales register which were prepared on computer. As regard the stock register at PB page 123-242, these are maintained on daily basis and showing daily balance. All the inward entries in the stock register are supported by Invoices/bills and outward entries are supported by sales invoices. No any defect has been pointed out by lower authorities. The assessee has sufficient stock for sale the goods. Therefore, the sales cannot be bogus. If bogus sale is recorded then entry for outgoing ....
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....y the department must had found major discrepancies in to physical stock & cash but which was not found. This also shows that the cash deposited in bank in demonetized currency is actually accumulated with assessee from the sales of previous period and the same was duly recorded in his books of accounts. The allegation that that the assessee maintained parallel unaccounted cash sales or any other business, which is running out of the books and regularly not offered the same for taxation is without any basis and in hypothetical manner. In the assessee order/CIT(A) order the AO/CIT(A) could not adduced any single evidence or even a single instance to prove this allegation to be correct. It is worth to point out that the assessment proceeding was made after being carrying out the survey proceeding at the business premises of the assessee and despite of not finding any evidence this hypothetical allegation is posed. All the allegation such as unaccounted cash, bogus recording of sales, unaccounted sales from parallel business, back dating of sales, fabrication of books of account etc proved to be fallacious on physical verification of business place of the assessee by conducting sur....
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....s three months and due to Diwali festival and marriage occasions the sale again boosted in this month, therefore the sales of October-2016 was comparatively at higher side. Thus, this is the basic reason of sudden increase in the sales of this month in comparison to sales of same month in previous year. As in the month of October-2016 the price of gold decreased in comparison to previous few months and in the same month the sales of festive season and marriage occasions started, therefore this resulted the dual benefit to the assessee and resulted the huge increase in sale. Therefore, persons who want to purchase gold coins and Jewellery for their marriage ceremonies also purchased the Jewellery in the October month looking to the lower prices of gold. The assessee maintains regular books of account, which are audited by independent and reputed Auditor. The cash sales and the corresponding cash deposits in banks are duly reflected in books of the assessee in the respective years. The assessee maintains the stock register and the sales of the assessee is duly supported by sufficient quantity of stock in hands. All the purchases of the assessee are genuine and verifiable. The asse....
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....nk in demonetize currency is merely on assumption, presumption and without any material and all the allegations were proved fallacious from physical verification of business of the assessee by department by conducting survey u/s 133A on 06-10-2017. Therefore, the suspicion however strong cannot take place of proof. The Ld. AO has no material against the contention of the assessee except presumption and assumption. The human probability cannot supersede the evidence found as the result of survey. The Ld. CIT (A) rejected the books of accounts by ignoring the fact that there is no finding in the assessment order rejecting the books of accounts. The Ld. CIT (A) held that the formal decision of rejecting the books of accounts has not been mentioned in the assessment order but it has also not been mentioned anywhere that books of account of appellant has been accepted. In case the books of account are rejected than the assessment order has to be passed u/s 144 of the Act but in the case of the assessee assessment order was passed u/s 143(3) of the Act. The CIT(A) rejected the books of accounts on the ground that unreliable and unexplained very high cash holdings immediately before de....
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....ssessee. Books of account defined in section 2(12A) of I.Tax Act. According to Section 2(12A) of the Income Tax Act, 1961, books or books of account, include ledgers, day-books, cash books, account-books and other books, whether kept in the written form or as electronic data. Section 145 does not specify any set of accounts to be maintained by an assessee. Also, Rule 6F of Income Tax Rules, 1962 prescribes certain set of books only for professionals and not for other assessee or businesses or traders. The assessee maintains proper books of account on mercantile basis. The books of account are audited by Chartered Accountants under Income Tax Act. The copy of tax audit report is at PB page 5-21. The auditors have certified that proper books of account as required by law have been kept by the company and books of account give a true and fair view of profit. Therefore, the books of account regularly maintained by the assessee in ordinary course of business are acceptable evidence u/s 34 of Evidence Act (Bhartiya Saksya Adhiniyam 2023). The Ld. CIT(A) rejected the books of account by holding that the assessee has not produced credible evidence in support of cash sales. The lower ....
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....y the AO and they have not found the records defective. Merely the AO and the ld. CIT(A) made suspicions on the records of sales of stone that too on account of rocky land excavated and thereby sold stone so excavated. Relevant receipt is reflected in the books of accounts. Out of the sum of received part of the amount considered as explained and part of the same as not genuine for the same set of records. We note that the CIT(A) has not advanced single a reason or basis of rejection of the book results which are otherwise verified, and no defects were found by the ld. AO and ld. CIT(A) and that when ld. AO and CIT(A) has already considered the part of the amount deposited into the bank account as business receipt and the part of the same was not considered. CIT(A) has not satisfied the condition as required as per provision of section 145(3) of the Act and that too without pointing out any defects in the books of accounts. The ld. CIT(A) merely rejected the book results because the assessee deposited cash in demonetized currency, and that was the reasons to reject the book results which is not a valid reason to invoke the provision of 145(3). Se....
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.... not justified and books of account deserves to be accepted. Before invoking the provisions of Section 145(3) of the Act, the AO has to bring on record material on the basis of which he has arrived at the conclusion with regard to correctness or completeness of the accounts of the assessee or the method of accounting employed by it. In the instant case, it was not the case that the assessee had not followed either cash or mercantile system of accounting. It was also not the case that the Central Government had notified any particular accounting standard not followed by assessee. Further the assessee maintains proper books of account audited by Chartered Accountant and the profit may be derived from the audited books of account therefore there is no justification in estimation of income by applying NP rate and accordingly the lower authorities are directed to delete the addition of Rs. 47,72,297/- sustained by ld CIT(A)." (iii) M. DURAI RAJ vs. COMMISSIONER OF INCOME TAX HIGH COURT OF KERALA (1972) 83 ITR 484 (KER):- (Copy at Case laws PB Page No 81-87) Held That What is relevant to consider in such cases is whether the assessee's accounts are maintained accord....
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....ading Account 25,57,89,698.86 25,57,89,698.86 Gross Profit 1,37,53,760.12 -5,39,05,239.88 GP Rate 6.34% -36.10% As per findings of CIT(A), the trading results of the assessee shows GP rate of -36.10% which was not possible in the trade of the assessee. The cash deposited in the demonetized currency added as income of the assessee by applying the provisions of section 68 of the Act while the provisions of 68 as such are not applicable on the sale transactions recorded in the books of accounts because the sale transaction are already part of the income which is already credited in P&L account, therefore there is no occasion to again consider the same as income of the assessee by applying the provisions of section 68 of the Act. It is further relevant to mention here that if the intention of the legislature would be to apply the provisions of section 68 of the Act on the sale transactions also than it such case as per law it would be mandatory to have the identity, genuineness and creditworthiness of each buyer. But the law is not so and in case of sale below to certain limit the assessee was not required to prove all these i....
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....ly the sales made and utilized for depositing the demonetized currency cannot be doubted for this reason. Section 69A was not applied by AO, therefore, the CIT(A) cannot apply it even on alternative basis. It is relevant to mention here that as per section 251 (1)(a) of Income Tax Act, 1961 the CIT (A) shall have the power "in an appeal against an order of assessment he may confirm, reduce, enhance or annual the assessment". As regard applicability of section 69A of I. Tax Act by CIT(A) we submit that the ld AO has made addition u/s 68 of the Income Tax Act, 1961. The assessee has also submitted his submission for Section 68 of the Act. The ld AO being not satisfied with the submission of assessee on section 68, has applied section 68 of Income Tax Act for the addition. The provisions of section 69A specify the authority mentioned as "Assessing Officer". For the sake of clarity, we are reproducing the provisions of section 69A of I.Tax Act as stood for AY 2017-18 as under:- "69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not ....
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.... held that loans are taxable u/s 69A of the Act and provisions of section 115BBE are applicable over the addition so made by the ld AO. However, the ld CIT(A) has not brought on record any inquiry made by him to support his findings. For the sake of clarity, we are reproducing the provisions of section 69A of I. Tax Act as under: "69A Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year." As per the provisions of section 69A the addition under section 69A of I. Tax Act can be made only if the explanation of the assessee is not satisfactory in the opinion of "Assessing....
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.... alone who should do that action. We draw support from various decision of Honourable High courts in Ghanshyam K. Khabrani v. ACIT [2012] 346 ITR 443 (Bom), CIT v. SPL'S Siddhartha Ltd. [2012] 345 ITR 223 (delhi )and also of the Honourable supreme court Anirudhsinhji Karansinhji Jadeja v. State of Gujarat [1995] 5 SCC 302 where in hon. Supreme court held as under :- --13. It has been stated by Wade and Forsyth in 'Administrative Law', 7th Edition at pages 358 and 359 under the heading 'SURRENDER, ABDICATION, DICTATION' and subheading "Power in the wrong hands" as below:" Closely akin to delegation, and scarcely distinguishable from it in some cases, is any arrangement by which a power conferred upon one authority is in substance exercised by another. The proper authority may share its power with someone else, or may allow someone else to dictate to it by declining to act without their consent or by submitting to their wishes or instructions. The effect then is that the discretion conferred by parliament is exercised, at least in part, by the wrong authority, and the resulting decision is ultra vires and void. So strict are the courts in applying this pr....
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....s no such power provided by the law that ld. CIT(A) could change the provision of law qua the item of which assessment was made. Therefore, in the absence of such power, learned CIT(Appeals) could not have treated the addition made under section 69A of the Act. Therefore, the addition made by the ld. CIT(A) under section 69A of the Act is liable to be deleted." It is pertinent to mention here that the similar issue has been dealt with and decided by this Bench of ITAT in the case of Motisons Buildtech Pvt. Ltd vs ACIT, Central Circle2, Jaipur vide its order dated 30-10-2017 in ITA No.385/JP/2017 (Assessee's appeal) for the Assessment Year 2012-13 by observing as under:- ''8.4 We have heard the rival contentions and perused the materials available on record. In this ground, it is noted that the AO made the addition of Rs. 3,68,27,500/out of which the ld CIT(A) deleted the addition of Rs. 2,86,27,500/and sustained the addition of Rs. 82.00 lacs as mentioned at para 3.2.2. and 2.1.4.6 & 2.1.4.7 of the ld. CIT(A)'s order (supra). The question arises as to whether the ld CIT(A) can make the addition u/s 68 of the Act or not. For this purpose, the definition of Sect....
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....finding given by Ld. CIT (A) in this regard. No show cause notice was given by AO/Ld. CIT(A) for applying provision of section 69A r.w.s 115BBE The applicability of section 115BBE is not automatic. It is also pertinent to mention here before applying the provisions of section 115BBE of the Act the specific show caused notice did not give to the assessee and in absence of specific show cause notice the provisions of this section cannot be applied mechanically. Reliance is placed on the decision of (i) Hon'ble Jodhpur bench of ITAT in the case of Suraj Kanwar Devra v/s ITO 2(2), Udaipur in ITA No. 50/Jodh/2021 dated 23.11.2021 and (ii) Hon'ble ITAT Jaipur Bench in the case of Kamal Dewan v/s ITO, Ward 2(3), Jaipur vide 22/04/2024 in ITA No 135/JP/2024. (Copy at Case laws PB Page No 329-340) In view of the details and submission filed during assessment proceeding and also hereinabove it is well proved that the amount deposited in cash in demonetized currency was accumulated cash with assessee from the sales made up to 07.11.2016. The corresponding sales, from which the cash generated with assessee, which deposited in bank a/c in demonetized currency, was part o....
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....s 197, Johari Bazar, Jaipur. In the assessment of father of assessee, made for AY 2017-18, the cash deposited in bank account in demonetized currency, which accumulated with him from sales of goods, was added in his income by considering the same as earned from undisclosed source. The copy of assessment order is at PB Page 303 to 309. The CIT (A)-4, Jaipur, after considering the sales made by him as genuine, deleted the entire addition and on further appeal by department Hon'ble ITAT, Jaipur Bench, Jaipur confirmed the finding of Ld CIT (A) and sustained the deletion of addition. The copy of order of CIT (A) (PB page 310-324) and ITAT are at PB Page 325 to 358. The ld AR of the assessee relied several case laws in support of his contention. He filed case law paper book citing the cases relied upon by him, the index of which is as below:- S. No. Particulars Page No. Hon'ble Supreme Court 1. Dhakeswari Cotton Mills Ltd vs. Commissioner of Income-tax [1954] 26 ITR 775 (SC) 1-7 2. Umacharan Shaw & Bros vs. Commissioner of Income-tax [1959] 37 ITR 271 (SC) 8-13 3. CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC) 14-....
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....p; 23. Suwalka And Suwalka Properties and Builders Pvt. Ltd. Versus Asst. Commissioner of Income Tax, Central Circle, Kota 2024 (10) TMI 425 - ITAT JAIPUR In ITA No. 302/JP/2024 Dated: October 3, 2024 264-328 24. Hon'ble ITAT Jaipur Bench in The Case of Kamal Dewan V/S ITO, Ward 2(3), Jaipur Vide 22/04/2024 In ITA No 135/JP/2024. 329-340 Other Hon'ble ITAT Bench 25. Kishore Jeram Bhai Khaniya, Proprietor, M/S Poonam Enterprises V. ITO ITA No. 1220/Del/2011 ITAT Delhi Dated 13.05.2014 341-345 26. 2021 (5) TMI 447 - ITAT Visakhapatnam Asst. Commissioner of Income Tax, Central Circle-1 Visakhapatnam Versus M/S Hirapanna Jewellers And (Vice-Versa) 346-351 27. 2021 (1) TMI 837 - ITAT Gauhati Nurul Islam Versus Ito, Ward-2, Nagaon 352-354 28. 2021 (12) TMI 599 - ITAT Bangalore Anantpur Kalpana Versus Ito, Ward - 1, Koppal 355-360 29. 2021 (2) TMI 737 - ITAT Gauhati Nilkantha Saha Versus Ito, Ward-Morigaon 361-368 30. 2021 (9) TMI 1192 - ITAT Visakhapatnam Dy. Commissioner of Income Tax Circle-3 (1) Visakhapatnam Versus Sri Jaya Prakash Babu Valluri....
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....ns ground no. 2 raised by the assessee is allowed. (ii) 2022 (10) TMI 116 - ITAT JAIPUR ACIT, CENTRAL CIRCLE-2, JAIPUR VERSUS M/S MOTISONS JEWELLERS LTD. AND (VICE-VERSA) (Copy at Case laws PB Page No 121-173) Estimation of income - Addition u/s 68 - bogus and false entries or undisclosed income of the assessee which was induced in the books under the garb of cash sales and advance from customer and receipt from debtors - addition considering the same as part of turnover and applying same rate of G.P. @ 2.59 % of cash sales which was added by AO u/s. 68 of the disbelieving the cash sales recorded by the assessee on the day of demonetization - CIT-A deleted the addition - HELD THAT:- As revenue not prove the sale made by the assessee which is executed after giving the goods to the customer, duly reflected in the invoice issued, assessee having sufficient stock in the books, sales is duly reflected in the books of accounts supported by payment of VAT. Therefore, the contention of the revenue based on the facts and circumstance of the case is not accepted and we see no reason to find any fault in the detailed reasoned finding in the order of the ld. CIT(A). Thus, we ....
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....he appeal of the assessee. The revenue did not pin point which of the findings of the ld. CIT(A) is incorrect or against the facts placed on record by the assessee. We noticed that the AO has given details of cash deposited in bank at Page 3 of the assessment order. We found that the cash amounting to Rs, 91,00,000/- was only deposited in demonetization currency and cash Rs. 12,00,000/- was deposited in non-demonetized currency on 28.03.2017, and this amount Rs. 12,00,000/- was offered for Income under "Pradhanmantri Garib Kalyan Yojna 2016". The assessee has filed copy of Form 1 and Form 2 at APB Page 91 to 93 to support his contention. Therefore, the addition of Rs. 12,00,000/- in patiently wrong, tantamount to double taxation and deserves to be deleted. We noticed that during the course of assessment proceedings, the AO examined the books of account and she has not rejected the books of account of the assessee and provisions of section 145(3) were not applied. During the year under consideration the assessee deposited Rs. 91,00,000/- in demonetized currency. The cash so deposited was accumulated cash which was received against/for sales made in the proprietorship concerns of ass....
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....he above facts and circumstances of the case the sale made by the assessee is genuine which is executed after giving the goods to the customer, duly reflected in the invoice issued, assessee having sufficient stock in the books, sales is duly reflected in the books of accounts supported by payment of VAT and the revenue has not brought any positive material to prove it as bogus sales. It is not the case of the A.O. that the assessee did not have the sufficient stock for making the sales. Thus, it cannot be said that the figures of sales and purchases are not supported by the quantity details. As regard to not providing the name, address and PAN of the customers to whom cash sales was made the assessee explained that the sales were below the prescribed limit so it is not compulsory or mandatory under the I. Tax Act, 1961 to collect the information related to full name, address and PAN of the customer to whom goods were sold in cash during the course of business below to the prescribed limit. The assessee further explained that in the preceding financial years, subsequent financial years and other periods of this same financial year, the same practice was being followed by the assess....
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....nd, it proved that the sales made by the assessee are genuine sales duly recorded in the books of account. All the details required to prove the sales made by the assessee were provided in the assessment proceedings. The assessee has filed sufficient evidence to substantiate his sales. He has filed (1) Copy Cash book (Copy at APB Page 93 to 107) and sales Register APB at page 47-69 comprising the date wise transaction of sales and cash receipts (2) Monthly summary of stock register (Copy of the same is at APB Page 108 to 120 which shows that before making the sale the sufficient stock was available with assessee (3) Copy of Assessment Order of VAT APB Page 121 to 127. The VAT department accepted the sales of the assessee. Thus the assessee substantiated his cash receipts from sales from the documentary evidence and also with the facts. The assessee explained the AO that the assessee's contention of cash sales is duly supported with own previous history and trend that cash sales & corresponding cash in hand have been a regular feature of the assessee's business since the past several years. The cash receipts against sales in FY 2015-16 was of Rs. 2,45,73,510/while in the FY 2016-17 ....
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....the sales were below the prescribed limit so it is not compulsory or mandatory under the Income Tax Act, 1961 to collect the information related to full name, address and PAN of the customer to whom goods were sold in cash during the course of business below to the prescribed limit. The assessee further explained that in the preceding financial years, subsequent financial years and other periods of this same financial year, the same practice was being followed by the assessee where no details of name, address and PAN of customer was available with the assessee and such practice was accepted by the AO. We find the explanation of the assessee is genuine and the sales cannot be doubted merely on surmises and conjectures on the ground of non furnishing of address and PAN of the customer. The AO did not make any enquiry on the material submitted by the appellant. She merely proceeded on statistical analysis to make the addition on account of cash deposits. We agree with the findings of ld. CIT(A) that the AO has not brought any material on record to establish that the sale bills are bogus nor any evidence indicating that such sales was bogus and merely having some doubt by twisting the ....
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....When cash receipts represent the sales which the assessee has offered for taxation and when trading account shows sufficient stock to effect the sales and when no defects are pointed out in the books of account, it was held that when Assessee already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE - See M/S HIRAPANNA JEWELLERS AND (VICE-VERSA) [2021 (5) TMI 447 - ITAT VISAKHAPATNAM] - thus the addition made is not sustainable and the same is directed to be deleted. Appeal of the assessee is allowed. (vi) 2021 (5) TMI 447 - ITAT Visakhapatnam Asst. Commissioner of Income Tax, Central Circle-1 Visakhapatnam Versus M/S Hirapanna Jewellers And (Vice-Versa) (Copy at Case laws PB Page No 346-351) Addition u/s 68 r.w.s 115BBE - assessee had deposited the sum in high denominations of specified bank notes (SBNs) post demonetization - CIT-A deleted the addition - HELD THAT:- The assessee produced the newspaper clippings of The Hindu, The Tribune and demonstrated that there was huge rush of buying the jewellery in the cities consequent to declaration of demonetization of Rs. 1000 and Rs. 500 notes on 08.11.2016. ....
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....uspicion but based on this addition cannot be made without making further enquiry and conclusively proving that assessee did not have that kind of cash available with it. Even otherwise, if the assessee had to introduce his unaccounted money he would have deposited it at the first instance. 4. ITAT observed that assessee also filed its VAT returns, which are not found to be in variance with the accounting and tax records. Therefore, it cannot be substantiated that the assessee has backdated the transactions of the sale. 5. ITAT further observed that CBDT had issued various standard operating procedures under 'Operation Clean money'. ITAT opined that "...it is very important to note that whether the case of the assessee falls into statistical analysis, which suggests that there is a booking of sales, which is non-existent and thereby unaccounted money of the assessee in old currency notes (SBN) have been pumped into as unaccounted money." 6. In the result the addition of Rs. 73.13 crore sustained by Ld CIT(A) on account of deposit of demonized currency was deleted by Hon'ble ITAT. In appeal by the Revenue, the Hon'ble High Court Pr.....
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....r bank deposits of cash and payment to the creditors (tea vendors) - HELD THAT:- As explained, the deposit of Rs. 8,75,000/- [Rs. 2,00,000/-accepted by AO] cannot be said to be as result of nongenuine business receipt or a case of black money and therefore, in the peculiar facts narrated above, including the past history taken note of and the pattern of money deposited pre-demonetization and post that event as discussed, addition was not warranted and it is directed to be deleted; and further, profit embedded in Rs. 8,75,500/- need to be taxed @ 8% and it is ordered accordingly. Appeal of the assessee is partly allowed. (x) 2021 (2) TMI 737 - ITAT Gauhati Nilkantha Saha Versus ITO, Ward- Morigaon (Copy at Case laws PB Page No 361-368) Unexplained cash credit u/s 68 - cash deposited during the demonetization period - AO acknowledges that the assessee has filed audited accounts and produced copy of the ledger of the sales and purchases along with copy of the books related to the purchase and sales made by the assessee without supporting bills and invoices - HELD THAT:-As brought to notice by the Ld. A.R that assessee is into dry fish business and his accounts are au....
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....ition of Rs. 12,41,704/- cannot be countenanced. So on this factual finding the assessee's explanation regarding Rs. 12,41,704/- is plausible. And it is noted that the AO / Ld. CIT(A) / Ld. D.R could not disprove or controvert this fact and so it is accepted. In the aforesaid facts and circumstances, the assessee depositing invalid notes to the tune of Rs. 12,41,704/- cannot be disbelieved as from any tainted source or termed as black money. So taking into consideration the peculiar over all facts and circumstances discussed supra, it is directed that the addition of Rs. 12,41,704/- be deleted - Appeal of the assessee is allowed. (xi) 2021 (9) TMI 1192 - ITAT VISAKHAPATNAM DY. Commissioner Of Income Tax Circle-3 (1) Visakhapatnam Versus Sri Jaya Prakash Babu Valluri And (Vice-Versa) (Copy at Case laws PB Page No 369-375) Cash deposits made during demonetization period, which was added back to income u/s 69A - HELD THAT:- CIT(A) observed that the assessee is maintaining regular books of accounts and the deposits were made out of the book balances and therefore, following the decision of Karthik Constructions [2018 (3) TMI 39 - ITAT MUMBAI] the Ld. CIT(A) held that ....
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..... ACIT in WP(MD) no. 2078 of 2020 & 1742 of 2020 dated 19.11.2024 (Mad.) has already settled the issue against the department that the law applies to the transaction on or after 01.04.2017 only. Ordered accordingly. Ld. AO made addition u/s 68 just to levy huge tax by applying the provisions of section 115BBE. As stated in the forgoing paras the whole purpose of the lower authorities to tax the cash deposited in demonetized currency at higher tax rate 77.25% by applying the provisions of section 115BBE read with section 68/69A of the Act to the income already offered for tax by the assessee (as cash sales). Section 115BBE of the Act is a machinery provision to levy tax on income and it should not enlarge the ambit of section 68/69A of the Act to create a deeming fiction to tax any sum already credited/offered to tax as income. Such recourse is unwarranted keeping in mind the objective to introduce section 115BBE of the Act was only to curb the practice of laundering of unaccounted money by taking advantage of the basic exemption limit. The reason and purpose of the provision was explained by the explanatory memorandum to the Finance Bill 2012 as under:- 1) "Under the ex....
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....sfactory solely with the aim of fastening exorbitant tax liability on the assessee under the garb of section 68/69A of the Act. Such recourse primarily hedged on surmises, conjecture, assumptions, presumptions and whims of the lower authorities is clearly unwarranted and the additions so made is unsustainable in the eyes of law and thus deserves to be quashed. The humble submissions of the assessee highlighting the glaring internal inconsistencies in the orders of the ld. AO/CIT(A) the repeated violations of the provisions of law by them are as under:- i) The AO has treated the cash deposited in the banks during the demonetization period in demonetized currency as unexplained cash credits u/s 68 of the Act although the nature and source of the cash deposits being proceeds arising out of cash sales etc. is patently evident from the entries in the audited books of account of the Assessee. Even, in the assessment order the ld. AO himself alleged that the assessee maintained parallel unaccounted cash sales or any other business and once the cash received are held to be from business, then no matter it is unaccounted or unaccounted, the provision of section 115BBE cann....
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....e. 18. The Surcharge Act having come into force on September 1, 1957, and the said Act not being retrospective in operation, it could not be regarded as law in force at the commencement of the year of assessment 1957-58. Since the Surcharge Act was not the law in force on April 1, 1957, no surcharge could be levied under the said Act against the appellant in the assessment year 1957-58. The case laws cited by ld CIT(A) are on different facts and ratio laid down in these cases are not applicable for the assessee. None of the case is in relation to the fact that the assessee deposited cash in demonetised currency out of cash in hand in audited books of account which arises from cash sales for which the assessee holds sufficient stock. 8. On the other hand, the ld. CIT- DR vehemently argued and supported the order of the ld. CIT(A). She submitted that the assessee has not submitted all the details and evidences to justify the genuineness of cash sales. The assessee has not revealed the identity of buyers, their PAN and address and therefore, the same has been considered as unexplained credit. The sales pattern as observed by the AO is very much abnormal in the year unde....
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....r scrutiny u/s 143(3) of the Income Tax Act 1961 based on computer assisted selection for scrutiny (CASS) and accordingly notice U/s 143(2) dated 13.08.2018 was issued through ITBA to the appellant (Copy at PB page 35-38). Thereafter, the Notice u/s 142(1) dated 28-08-2019 with query letter was issued (Copy at PB page 39-43). In compliance with the said notice the assessee submitted all the required details/Information through e-proceeding vide letter dated 18-10-2019 (Copy at PB page 52-54). A further notice u/s 142(1) dated was issued on 14-11-2019 with a letter seeking comparative chart of cash deposit, month wise chart of cash sales and cash deposits and other details prescribed in the letter (Copy at PB page 44-48). In compliance with the said notice the assessee submitted all the required details/Information through e-proceeding vide letter dated 18-10-2019 (Copy at PB page 55-59). A further notice dated 07-12-2019 u/s 142(1) was issued with an Annexure seeking month wise details of sales and purchases (Copy at PB page 49- 51). In compliance with the said notice the assessee submitted details vide letter dated 10-12-2019. (Copy placed at PB page 60). The assessee made further....
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....artment did not find any major discrepancy in the books of account of the assessee. Further during the course of survey no material/evidence was found to prove that the cash deposited in demonetized currency was not from sales of goods but the same was from some other source. In view of above submission this is to submit that the sales as well as trading results of the assessee are completely verifiable from the books of accounts. No specific defects have been pointed out by your honour in the books of accounts so maintained by the assessee or details so submitted by the assessee. The purchases and sales are complete verifiable from books of accounts and as on the date of sale the assessee was having sufficient stock which is also verifiable from stock register of the assessee. Such deposits are duly verifiable from books of accounts of the assessee and the source of the same is sales made by the assessee." The assessee further filed a letter before the ld AO dated 28-12-2019 (Copy placed at PB page 63-64) explaining the reasons of high sales. Thus, in compliance to notices and query letters issued by the ld AO, the assessee filed all the details/ information from time ....
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....zation period by stating that it is an undisclosed income of the assessee and to evade the tax liability on this unexplained cash deposit and tried to explain it under the garb of cash sales. Thus, cash deposited during demonetization was considered liable to be added to the total income of the assessee appellant, u/s 68 r.w.s 115BBE and taxable at the rate of 60% as per the provisions of the Act. When the matter carried to ld. CIT(A) who held that the sales through which cash of Rs. 6,76,59,000 was introduced in the books of accounts are unexplained and there is back-dated sales billing. The cash credit in the books of accounts in the form of sales is unexplained and taxable u/s 68 of the Act. The cash deposits being SBNs in bank accounts of the assessee during demonetization period amounting to Rs. 6,76,59,000 are unexplained and alternatively taxable under section 69A of the Act. At the same time, since the sales are found to be bogus to that extent Rs. 6,76,59,000 shall be reduced from the sales shown by the appellant for the year. As part of the business practice, appellant does both cash sales and sale through account payee cheque/online transfer. However, dealing in chequ....
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.... in hand 1 kg. If fictitious sale of 1 kg is recorded in stock register by making entry of 1 kg in outward side of stock register, the stock register would show NIL Balance. Since the sales recorded is fictitious, the physical stock of 1 kg gold would be lying in the business place of the assessee against NIL stock in stock register,and if physical verification of the stock is made an excess stock by 1 kg would be found. In the assessment order of AY 2018-19 (i.e. survey year) no addition was made and returned income was accepted passed u/s 143(3) of the Act. Had the source of cash deposit in demonetized currency would be the undisclosed income of the assessee and not the sales made by assessee, then obviously during the course of survey the department must had found major discrepancies in to physical stock, cash and documents but the same was not found. This also shows that the cash deposited in bank in demonetized currency is actually accumulated Cash with assessee from the sales of previous period and the same was duly recorded in his books of accounts. The allegation that that the assessee maintained parallel unaccounted cash sales or any other business, bogus sales, back-datin....
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....ctness of the books of account. The cash balance of Rs. 7,09,65,744/- as on 08-11-2016 was available in the audited books of account. The assessee has produced Copy of the cash book before the AO and CIT(A) for the period 01-04-2016 to 31-03-2017. The lower authorities have not pointed out any defect in the cash book except observing by ld CIT(A) that cash book showing daily balance was not produced but the fact remains that lower authorities never demanded to furnish the copy of the cash book showing daily cash balance. We noted from the copy of the cash books produced before the lower authorities that it is computer generated and if asked to produce the cash book showing daily cash balance, the same could be easily submitted to Ld AO/Ld CIT(A). The assessee submitted the copy of sales register for the period 01-04-2016 to 31-03-2017. The CIT(A) on the basis of 5 cancelled entries on 08-11-2016 against Invoice No 720 to 724 concluded that the assessee was tinkering the sales register. The A/R of the assessee has explained that the ld CIT(A) drawn the adverse conclusion without providing opportunity to explain the matter. The ld CIT(A) never raised any query to the assessee in this....
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.... few cases that too for minor amount. We notice that the lower authorities have not pointed out any defect in the purchase register and has not doubted on the genuineness of the purchases recorded in the books of account. We further note that once the purchases declared in the books of account were duly accepted then no subjective assumption and presumption could be made a basis to assume, allege and conclude that sales made out of such purchases were unexplained cash credit under section 68 of the Act. We further notice that the assessee has filed copy of Vat Assessment Order (PB page 267-272), Annual Vat returns for the period 01-04-2016-31-03-2017 (PB page 273-276) and quarterly return from 01-04-2016 to 30-06-2016 (PB page 277- 282), from 01-07-2016 to 30-09-2016 (PB page 283-288), from 01-10-2016 to 31- 12-2016 (PB page 289-294) and 01-01-2017 to 31-03-2017 (PB page 295 to 300). Lower authorities have not disputed the turnover declared in the Quarterly and Annual Vat Returns. However, the ld CIT(A) held that Vat Return for Oct 2016 to Dec 2016 (3rd Quarter) was filed after demonetization and was filed on 28/08/2017, Vat Return of Ist Quarter 01-04-2016 to 30-06-2016 was filed ....
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....income of the assessee has to be computed by the AO based on available material on record and it is very important to have direct evidence to make an addition rather than circumstantial evidence, probabilities or possibilities. It is duty of the AO to examine the same in the light of the available evidence. In the instant case, the AO and the ld. CIT(A) concluded the findings based on conjectures and surmises even ignored the outcome of survey conducted by the department u/s 133A on 06-10-2017. There cannot be better evidence more than the outcome/result of physical verification of business premises by the department. The AO has to establish the link between the evidence collected by him and the addition to be made. The entire case has to be depend on the rule of evidence, the assessee in this case explained the source of bank deposits is from cash sales and the same cannot be added u/s. 68 as held in the case of Smt. Harshila Chordia v. ITO (Supra). The allegation made by Ld. CIT (A) and Ld. AO regarding the fabrication of cash sales transactions on the assessee is without any basis, documents or any supporting evidence. The finding of A.O. that assessee could not substantiate an ....
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....e Income-tax Act, 1961 and Ld. CIT (A) has not mentioned any provisions of the Act/Rules which having been violated by the assessee while undertaking such cash sales without PAN and address. Moreover, cash sales made by the Appellant were duly supported by valid invoices, out of the genuine purchases and stock available and the books of accounts were duly audited by the Chartered Accountant. Therefore, due to non-furnishing of address and PAN of the customer, the sale made by the assessee cannot be doubted. The cash sales of the previous months, previous years and next month or years was also made on the same set of particulars, documents and records. The lower authorities have doubted only the sales made and utilized for depositing the demonetized currency (SBNs). We noted that during the FY 2016-17, the total cash sales of the assessee were Rs. 11,51,99,917/- and total cash deposits in bank were Rs. 11,67,95,000/-. The lower authorities treated the cash deposit in bank account to the extent Rs. 4,91,36,000/- as explained and Rs. 6,76,59,000/- as unexplained. The assessee is maintaining same set of records on entire cash sales. On the same set of documents, on the same facts an....
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.... the business and planning of the assessee. Therefore, the assessee deposited the cash in bank account as and when he required in the bank account for getting clear the cheques issued or to be issued towards purchases of Gold, Gold Jewellery and expenses. This fact is well apparent from the books of accounts of the assessee on examination of which its reveals that mostly cash deposited in the bank account was utilized for making the payment towards purchases of Gold & Gold Jewellery and some minor towards payment of expenses etc. This was also a reason of cash withdrawal by the assessee from bank Rs 3,00,000/- on 06-08-2016 and Rs 5,00,000/- on 08-09-2016 as he do not want to maintain balance in bank account. We find that the reasons advanced by the ld AR is a plausible explanation and decision to keep the cash in hand or to deposit on bank is decision of the person who is dealing to such affairs and the department cannot put its step into the decision of businessman and each transaction should be analysed with the point of view of the businessman, generally prevailing practice in the trade and its acceptability in the eye of law. A transaction cannot be treated as non-genuine for ....
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....e of the assessee assessment order was passed u/s 143(3) of the Act. The ld CIT(A) so far has not been able to give any reasons why the entries in the books of account should be disbelieved. The assessee maintains proper books of account on mercantile basis. The books of account are audited by Chartered Accountants under Income Tax Act. The auditors have certified that proper books of account as required by law have been kept by the assessee and books of account give a true and fair view of profit. Therefore, the rejection of the books of account by ld CIT(A) cannot be upheld. Verification of cash sale cannot be a valid ground to reject the books of account. We find supports from the following decisions:- i) Hon'ble High Court of Bombay in the case of R.B. Jessaram Fatehchand (Sugar Dept.)v/s Commissioner of Income Tax [1970] 75 ITR 33 (Bombay) held that (Copy at Case laws PB Page No 75-78) :- Section 145 of the Income-tax Act, 1961 [Corresponding to section 13 of the Indian Income-Tax Act, 1922] Method of accounting Rejection of accounts On assessee's inability to supply addresses of purchasers who purchased goods on cash, ITO rejected assessee's books of....
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....f rejection of the book results which are otherwise verified, and no defects were found by the ld. AO and ld. CIT(A) and that when ld. AO and CIT(A) has already considered the part of the amount deposited into the bank account as business receipt and the part of the same was not considered. CIT(A) has not satisfied the condition as required as per provision of section 145(3) of the Act and that too without pointing out any defects in the books of accounts. The ld. CIT(A) merely rejected the book results because the assessee deposited cash in demonetized currency, and that was the reasons to reject the book results which is not a valid reason to invoke the provision of 145(3). Section 145(3) can be invoked when the AO is not satisfied about the correctness or completeness of the accounts of the assessee, when the method of accounting provided in Section 145 (1) has not been regularly followed by the assessee and when the accounting standards notified u/s 145 (2) have not been regularly followed by the assessee. From the observations recorded in the order of the lower authority none of the conditions are satisfied and thus same is not evident from the findi....
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....tral Government had notified any particular accounting standard not followed by assessee. Further the assessee maintains proper books of account audited by Chartered Accountant and the profit may be derived from the audited books of account therefore there is no justification in estimation of income by applying NP rate and accordingly the lower authorities are directed to delete the addition of Rs. 47,72,297/sustained by ld CIT(A)." We noticed that the ld CIT(A) has held that the assessee has recorded bogus sales to the extent Rs. 6,76,59,000/- which shall be reduced from sales shown by the appellant for the year. At the same time, he has accepted all the other entries of books of account such as purchases, expenses, stock etc. We agree with the contention of ld AR that if on the basis of this finding, the trading account of the assessee is re-casted, it will result trading loss of Rs. (-) 5,39,05,239.88 which will give GP rate of (-) 36.10%. Considering the facts and circumstances of the case and trade practice, we hold that the recalculated trading result on the basis of findings of ld CIT(A) will give impractical, unreasonable and unfeasible trading result. The genuineness....
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....g of the case it was given by keeping in mind the applicability of provisions of section 68 of the Act on the loan transaction. In this case the impugned transaction is regarding the sale. Thus, the nature of transaction is all together, therefore finding given in the case dealing with the loan transaction cannot be made applicable in this case because the nature of both the transaction is entirely different. Further, the provisions of section 68 are not applicable on sales transaction. CIT v. Precision Finance (P.) Ltd. [1995] 82 Taxman 31 (Calcutta)/[1994] 208 ITR 465 (Calcutta)/[1994] 121 CTR 20 (Calcutta)[1406-1993] In this case the assessee took the unsecured loans and the additions has been made u/s 68 of the Act. Thus, the entire finding of the case it was given by keeping in mind the applicability of provisions of section 68 of the Act on the loan transaction. In this case the impugned transaction is regarding the sale. Thus, the nature of transaction is all together, therefore finding given in the case dealing with the loan transaction cannot be made applicable in this case because the nature of both the transaction is entirely different. Further, the provision....
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.... In this case the assessee was having an overseas bank a/c and she did not submit any explanation regarding the source of deposit in such bank a/c and the entire finding was given by the Tribunal on this background. In the case of assessee, the complete books of accounts and documents were produced before Ld. A.O., wherein no defect has been pointed out and solely on the basis of presumption and assumption, unreasonably the genuine sales of the assessee were treated as bogus. Durai Murugan Kathir Anand v. Additional Commissioner of Income-tax [2022] 136 taxmann.com 70 (Madras)/[2022] 443 ITR 423 Madras)[25-02-2022] In this case, a third person made a sworn statement and owned up the cash found in the premises of petitioner. Such third person also filed an application before the Settlement Commission. However, such sworn statement was rejected by the Hon'ble High Court as per Preponderance of Probability and for the reason that such person was not a person of sufficient mean and also produced any records to substantiate that cash belonged to him. Moreover, documents pertaining to college/trust of assessee found along with seized cash indicated that cash belonged to assess....
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..../10/2017 This case relates to acceptance of loan in cash and the entire finding has been given in such background. The case of the assessee is related to cash sales from the stock in hand, which has not been proved as bogus and also such sale is declared in the trading a/c. CIT v. Devi Prasad Vishwanath [1969] 72 ITR 194 (SC)[01-08-1968, The case law was decided in the light of unexplained cash credit, which was not part of the trading results declared by the assessee. The case of the assessee is related to cash sales from the stock in hand, which has not been proved as bogus and also such sale is declared in the trading a/c. Roshan Di Hatti v. Commissioner of Income-tax [1977] 107 ITR 938 (SC)[08-03- 1977] In this case the question was with court to decide whether stock in trade etc. introduced in the books of account of its business, the assessee was still required to "to prove satisfactorily the nature and source of these assets" and in the event of failure to prove these, the revenue could legitimately hold that these assets represented the undisclosed income of the assessee The case of the assessee is related to genuineness of the cash sales from the st....
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....d the assessee was under the position to make such sales. We also find support from the several case laws cited by ld AR of the assessee (supra) wherein it has been held that the addition on account of cash deposition in bank account in demonetized currency (SBNs) after the demonetarization of currency cannot be made where cash sales of goods are out of the genuine stock available with the assessee. The father of assessee Shri Mahendra Kumar Agarwal is also engaged in the same trade from same place of business. In the assessment of father of assessee for AY 2017-18, the AO made addition on account of cash deposited in bank account in demonetized currency (SBNs), which accumulated with him from sales of goods by holding that the same as earned from undisclosed source. The CIT (A)-4, Jaipur, after considering the sales made by him as genuine, deleted the entire addition and on further appeal by department Hon'ble ITAT, Jaipur Bench, Jaipur confirmed the order of CIT (A) and sustained the deletion of addition. Jaipur Bench of ITAT in the case of ACIT V/s Mahendra Kumar Agarwal (ITA No. 172/JP/2022) dated 22.11.2022 held that: - "4. We have heard the rival contentions and p....
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....under: (i) Brief facts related to the issue are that the AO noticed that the appellant has deposited cash of Rs. 1,41,32,000/in its bank account during demonetization period viz. between 09.11.2016 to 30.12.2016 whereas a cash of Rs. 87,29,000/was deposited during the period 01.04.2016 to 07.11.2016 i.e. during pre-demonetized period. Further during the months of November and December 2016, the sales were 1.5 times more than the remaining part of the year. The appellant has explained it to be out of cash sales made by him. However, the AO tried to analyze the cash deposit in the previous year vis-à-vis the current year and has observed that the cash deposited during the demonetization period is high vis-à-vis cash deposited in the same period in the FY 201516, however the AO also observed that the total cash deposited for the entire year has decreased substantially in the current FY when compared with the previous year. Further, the AO observed that the sales were high during Diwali than corresponding cash deposit should have also been available in bank account which was on the contrary deposited much after Diwali. Accordingly, the AO observed that there is n....
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.... previous F Yr. 2015-16 was at Rs. 2,45,73,510/- while in the year under consideration the same was at Rs. 2,57,31,459/- which is more or less similar to the previous year cash sales. I find that huge cash in hand was available with the appellant in the previous year at the end of October 2015 and November 2015. There was cash balance of Rs. 1.35 Crores and Rs. 1.08 Crores available respectively with the appellant. Also the fact remains that during the previous F Yr. 2015-16, the appellant has deposited a total cash of Rs. 1,23,00,000/- in his bank accounts during the period 09.11.2015 to 31.12.2015 whereas during the year under consideration, in the same period, the appellant has deposited a total cash of Rs. 1,41,32,000/- which is marginally more than the previous year. It is brought to my notice that the overall sales of the appellant in comparison to the previous year has increased by Rs. 6,63,12,037/- which is 59%. (v) It is also brought to my notice that survey proceedings u/s 133A of the Act were also conducted on the business premises of the appellant on 06.10.2017 wherein nothing incriminating was found which could prove any source of undisclosed income or sales o....
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....refore there cannot be any reason for disbelieving the genuineness of the sales of the appellant merely for the reasons that the same is of abnormal amount more so when the same is duly supported with sale bills and the appellant was having the sufficient stock for that much of sales and the sales have been duly incorporated in the VAT Returns. (ix) The fact also remains that the demonetization of Rs. 500/- and 1000/- note was declared by the Hon'ble Prime Minister at 8:00 PM on 08.11.2016 and it is an open fact that immediately after the announcement, all the various persons having soon to be demonetized notes almost flocked to the jewellers to purchase the jewellery in exchange of these notes. There was an article in the Economics Times wherein the secretary of Indian Bullion and Jewellers Association mentioned that Jewellers had sold as much as 15 ton of gold ornaments and bars worth around Rs. 5000 crores on the intervening night of November 8 and 9, 2016 after the announcement of demonetization. Naturally after the spread of the news of demonetization, the general public had purchased the jewellery not only for the wedding in the immediate vicinity but also for weddin....
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....eversa)) (Copy at Case Law PB Page No. 181184 ) held that Addition u/s 68 r.w.s 115BBE Assessee had deposited the sum in high denominations of specified bank notes (SBNs) post demonetization CITA deleted the addition HELD THAT:The assessee produced the newspaper clippings of The Hindu, The Tribune and demonstrated that there was huge rush of buying the jewellery in the cities consequent to declaration of demonetization of Rs. 1000 and Rs. 500 notes on 08.11.2016. As cash receipts represent the sales which the assessee has rightly offered for taxation. We have gone through the trading account and find that there was sufficient stock to effect the sales and we do not find any defect in the stock as well as the sales. Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. This view is also supported by the decision of Hon'ble Delhi High Court in the case of Kailash Jewellery House [2010 (4) TMI 1070 Delhi High Court] and Vishal Exports Overseas Ltd. [2012 (7) TMI 1110 Ahmedabad High Court] (xiv) The case of CIT v/s. Kailash Jewellery House ITA No. 613/2010 was decided by the Hon'....
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....cy was found therein and the fact remains that the AO has accepted the cash sales as he accepted the declared sales, declared purchase, declared opening and closing stock and declared profits as well. The amount of cash sales is being reflected in its trading and profit and loss account. Thus the contention of the appellant that assessing the said cash sales as unexplained cash credit u/s 68 means that the impugned sales had been taxed twice, firstly the same was treated as sales and secondly the same was treated as unexplained cash credit/money u/s 68 of the Act appears to be correct and therefore this would tantamount to double taxation of income, which is impermissible in law. Accordingly, the action of the AO in holding that the appellant could not substantiate the increase in sales with documentary evidences is not based on correct appreciation of the facts. Therefore, I find that the AO was not justified in making an addition of Rs. 1,41,32,000/under section 68 of the Act and consequently the aforesaid addition is directed to be deleted. As regards applying the provisions of section 115BBE of the Act on the additions made u/s 68, it is held that since the addition on account ....
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....ummary, it is apparent that the assessee had cash balance of Rs. 1,41,70,921.45 as on 08112016 which was generated from cash sales and such sales was part of total sales credited in trading a/c and the assessee has already offered income on such sales in Trading Account by reducing the cost of sales from sales. The AO has not pointed out any defect in the cash books and other books of account produced before her. The AO herself accepted the sales shown in trading a/c and has not disturbed the cash sales so declared by assessee and the sales of assessee duly supported by the sale bills and invoices and duly verifiable from books of accounts including stock register and considering availability of stock in hand, it proved that the sales made by the assessee are genuine sales duly recorded in the books of account. All the details required to prove the sales made by the assessee were provided in the assessment proceedings. The assessee has filed sufficient evidence to substantiate his sales. He has filed (1) Copy Cash book (Copy at APB Page 93 to 107) and sales Register APB at page 4769 comprising the date wise transaction of sales and cash receipts (2) Monthly summary of stock registe....
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....mstances of the case the sales made by the assessee is genuine which is executed after giving the goods to the customer, duly reflected in the invoice issued, assessee having sufficient stock in the books, sales is duly reflected in the books of accounts supported by payment of VAT and the revenue has not brought any positive material to prove it as bogus sales. It is not the case of the A.O. that the assessee did not have the sufficient stock for making the sales. Thus, it cannot be said that the figures of sales and purchases are not supported by the quantity details. As regards not providing the name, address and PAN of the customers to whom cash sales was made, the assessee has explained that the sales were below the prescribed limit so it is not compulsory or mandatory under the Income Tax Act, 1961 to collect the information related to full name, address and PAN of the customer to whom goods were sold in cash during the course of business below to the prescribed limit. The assessee further explained that in the preceding financial years, subsequent financial years and other periods of this same financial year, the same practice was being followed by the assessee where no deta....