TaxTMI 
TaxTMI 
2025 (9) TMI 792
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....s shown in the ITR is less than the duty paid as per export import data. 4. Notices under section 142 (1) of the Income-tax Act, 1961 (for short 'the Act') were served on the assessee. After issue of several notices u/s 142(1) of the Act, assessee filed part reply and the Assessing Officer observed that the assessee was provided enough opportunities but the assessee opted for non-compliance. Accordingly, Assessing Officer observed that he has no other alternative but to complete the assessment on best judgment u/s 144 of the Act. The Assessing Officer issued two show-cause notices dated 08.11.2019 and 12.12.2019 to the assessee. Even in response to these notices also, the assessee neither submitted any details nor filed any reason for not passing an ex-parte order as per the provisions of section 144 r.w.s. 145(3) of the Act. Accordingly, the Assessing Officer proceeded to assess the case of the assessee. Assessing Officer observed that during the period under consideration, as per information available, assessee deposited huge amounts of cash and on verification it has been noticed that maximum amount was deposited in the month of October and November. The assessee submitted mo....
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....lear that assessee's books are fabricated to hide true profit, hence, the turnover is estimated in the months of January, February and March on the monthly average of April to September. He calculated the same as under : Month Per month sale (Rs.) Per month average April 3042097 Per month average May 3738437 June 3789088 July 3440054 August 2144597 Septemebr 4958028 Total 21112301 3518717 6. Hence, he observed that for the months of January, February and March the estimated sale is taken as Rs. 35,18,717/- rounded off to Rs. 35,20,000/-. He observed that the assessee has declared GP @ 4.90 and NP of 0.83. Accordingly, he applied the rate of NP @ 5% at an estimated trading turnover of Rs. 35,20,000/- as the assessee has booked all the expenses, which comes to Rs. 1,75,100. Accordingly, he made an addition of Rs. 1,85,000/- in addition to GP as assessee has not provided the detail of cash receipt other than sales and this cash receipt was in the month of June, hence credit of GP and cash deposit is not given against Rs. 1,85,000/- and made total addition of Rs. 3,60,100/-. 7. Further, with regard to cash deposited, as per....
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....ssee, ld. CIT (A) allowed the grounds taken by the assessee and partly allowed the appeal. 9. Aggrieved, assessee is in appeal before us raising following grounds of appeal :- "1. Whether on the facts and circumstances as well as in law the Ld. CIT(A) is correct in law in holding that the action of the Assessing Office in rejecting the books of account is void-ab-initio without appreciating the facts that during the assessment proceeding the assessee either partly complied or did not comply with the statutory notices in the manner requested by AO? 2. Whether on the facts and circumstances as well as in law the Ld. CIT(A) İs correct. in deleting the additions of Rs. 1,75,100/- made on account of estimated Net profit @ 5% by taking estimated cash sale for the Jan, Feb and March Month after rejected books of accounts without appreciating the facts that the assessee tried to fabricate its books of account to hide true profit? 3. Whether on the facts and circumstances as well as in law the Ld. CIT(A) is correct in deleting the additions of Rs. 1,85,000/- made on account of cash received on sale of Vehicle without appreciating the facts that the assesse....
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....appellant had submitted the stock register, the assessing officer has invoked sub section 3 of section 145 of the Income Tax Act, 1961 for rejection of the books of accounts of the appellant by alleging that correct profits and gains cannot be deducted from the accounts which is in complete breach of the principles of natural justice, and therefore, the action of the assessing officer in rejecting the books of accounts is void-ab-initio, and I rule accordingly, and as a consequence all the grounds raised by the appellant in this regard are allowed in favour of the appellant, and hence this issue is decided in favour of the appellant." 14. Since revenue has not been able to establish any perversity or any factual/legal error in stated finding of ld. CIT (A), we hereby do not see any reason to disturb the same and dismiss Revenue's Ground No.1. 15. Once this ground of Revenue's appeal on issue of invalid rejection of books u/s 145 is decided against Revenue, then all other issues would itself become infructuous as, in our opinion, it is settled law by now that once assessee books are not doubted/rejected u/s 145 on tenable grounds, then no exception can be made to assessee's au....
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....y allow the grounds of appeal raised by the appellant in this regard in favour of the appellant, and hence this issue is decided in favour of the appellant." "5.5.5. For the reasons enumerated above, I am of the considered opinion that the addition made by the assessing officer based on assumptions that there might have been cash sales is illogical and is therefore, liable to be deleted. Further, when there was no evidence of cash sales, the assessing officer was not justified in making an estimated addition on the basis of notional cash sales. Accordingly, I, hereby, direct the assessing officer to delete the addition of Rs. 1,75,100/- made on the basis of estimated notional cash sales since the same is found to be unreasonable and unjustified in the absence of any evidence in support of this notional estimate, and consequently allow the grounds of appeal raised by the appellant in this regard in favour of the appellant, and hence this issue is decided in favour of the appellant" "5.6.5. It is seen from the ledger account and cash sheet pertaining to sale of vehicle, the appellant had considered the said receipt from sale of Vehicle in the books of accounts of th....
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....d the closing stock, but proceeded to make addition of the cash sales embedded in the books u/s 68. This treatment of the assessing officer has been rightly objected by the appellant when the appellant contends that assessing officer cannot be permitted to approbate and reprobate and blow hot and cold at the same instance. In this context, the appellant's claims/contentions that on the one hand, the assessing officer had accepted total turnover, closing stock and purchases in the appellant's books, and on other hand, had added the recorded cash sales in books under section 68, which the appellant claims is grossly unjustified deserves merit. 5.7.17. Furthermore, the cash sales is already reduced from inventory of company which has been purchased through registered dealers by banking channel which is never in dispute in the assessment proceedings. Therefore, the addition u/s 68 made on the basis of assumptions, premises, and conjectures alone {assumption that there cannot prevail over established evidence as contended by the appellant. The appellant's observations in this regard that this reasoning smells foul of absurdity and irrationality of pre-tense only which can never....
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....al years, stock register showing purchase and sale entries, sale and purchase ledger, GP ratio, cash to total sale ratio reflecting the trend of the cash sales is not unusual, VAT return along with reconciliation with books of accounts and audited balance sheet. Therefore, the addition made by the assessing officer u/s 68is not supported by facts and is also not sustainable in law. 5.7.34. From the discussion and findings in the foregoing paragraphs, it is clearly evident that the addition made by the assessing officer is devoid of merit and bad in law and is liable to be deleted, and accordingly, I, hereby, direct the assessing officer to delete the addition of Rs. 7,04,64,500/- made u/s 68, and consequently, allow all the grounds of appeal raised by the appellant in this regard in favour of the appellant, and hence this issue is decided in favour of the appellant" 19. We find that above findings of ld. CIT(A) are as per factual position of the case and is legally correct. Ld. AR of assessee has rightly drawn our attention to our decision in case of S. Balaji Multitech Private Ltd vs ITO Ward 22(1) New Delhi dated 25.09.2024 (ITA 556/DEL/2024) relevant extract of same ....
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....e, sugar, chana dal and wheat flour before the Assessing Officer. All these facts clearly go to prove the genuineness claim made by the assessee that cash deposits of Rs. 52.60 lakhs has been made out of cash balance available with the assessee and, hence, there is absolutely no case made out by the revenue for making addition under section 68." 21. Respectfully, following the above decisions, we are inclined to allow the grounds raised by the assessee with the observation that the AO/CIT(A) cannot invoke the provisions of section 68 or 69A when the assessee is already declared the source for cash deposits in the books of accounts and the lower authorities without their being any material to support on their contrary view, the provisions of section 68 or 69A cannot be invoked" 20. We further finding force from the decision of coordinate bench in case of Delhi H bench ITAT in case of Vijay Kumar Jain ITA No.1730/Del/2024 (31.07.2024) AY 2017-2018 wherein it is held as under :- "10.1 Needless to say, sale of goods has corresponding effect on the closing stock as well as the profitability. These aspects have not been questioned. The Assessing Officer has picked up....
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....ash deposits, accordingly, we dismiss Revenue's Ground No.5. Even otherwise, we are in complete agreement with the view of ld. CIT(A) at paras 5.8 to 5.8.7 of the impugned order, gist of same is reproduced below for the sake of brevity:- "5.8.6. From the facts of the case at hand, and from the foregoing discussions while adjudicating on the issue of addition made u/s 68 it has been already held by the undersigned that the assessing officer was not justified in rejecting the genuine explanations offered by the appellant in respect of the cash deposits that they were generated out of genuine and regular business sales receipts as unsatisfactory based on surmises and conjectures, and with the aim of fastening exorbitant tax liability on the appellant-firm under the garb of unexplained cash credit u/s 68 of the Act, and since the additions so made are unsustainable in the eyes of law, they deserve to be quashed and it has already been held that addition u/s 68 is clearly unwarranted in the case of the appellant, and has also been accordingly directed to be deleted. Therefore, as a natural corollary, the provisions of sec. 115BBE of the Act are also wholly inapplicable to the f....