AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1489
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.... 2. CIT(A) has erred in deleting the disallowance of salary expense made of Rs. 7.20,000/- without appreciating the findings brought out by the assessing officer in the assessment order." 3. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary". 4. "is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored". 3. Ground No.1 pertains to the addition made to the income of the assessee on account of cash deposited in the bank account of the assessee during demonetization period amounting to Rs. 9,60,00,000/-, which was deleted by the Ld. CIT(A). The assessee had attributed the source of cash deposited as out of cash sales made by it in the course of its business which was not accepted by the AO. The Ld.CIT(A) however found merit in the contention of the assessee. 4. The Ld. CIT(A) has dealt with the facts of the case and has given his findings on the issue at para 5.3 to 5.3.7 of his order as under: "5.3 Decision on ground no.1, 2, 3 and 4 I have considered the facts of the case, submissions of the appellant, the observations of the AO contain....
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...., 17. Further, it was submitted that it was brought to the noticed of the assessing officer that in the preceding financial years assessment proceedings were completed under section 143(3) and after considering the nature of business and evidences submitted in support of cash sales no additions were made on that ground and cash deposits in the bank accounts were accepted. 5.3.2 It has been submitted that assessing officer had issued notices under section 133(6) of the Act to the suppliers of goods to the appellant. All the parties had confirmed the purchases of the appellant and submitted contra accounts of the appellant's proprietary concern. Further, it has been submitted that appellant had made payment to suppliers through banking channels out of its current bank account in which sales realized in cash were deposited. Further, it has been claimed that the appellant had duly submitted the details of customers above Rs. 2,00,000/- on 02.12.2019 to the assessing officer alongwith quantitative details of the closing stock valuation. Further, the details of suppliers as well as the VAT returns were submitted during the assessment proceedings vide reply dated 04.12.2019. The ....
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....h of Rs. 22,00,000/- was in the cash counter of the shop which was deposited. Balance cash was in the "Safe" of the appellant and its key was with the appellant. As appellant was out of station on 08.11.2016, his staff was instructed to deposit Rs. 22,00,000/-, available in the cash counter, in the bank. Balance cash was deposited after 08.11.2016 when appellant resumed the office as he was having the Key of the Safe in which balance cash was kept. 5.3.6 The assessing officer at page-26 of the assessment order has noted that the appellant had shown stock balance of 19105.64 gms after invoice no-45 but it increased to 23585.51 gms after invoice-46 and again raised to 23907.54 gms after invoice-47 without any corresponding purchase. The appellant has submitted that on 26.10.2016 sale of 4857.72 grams of 22ct Gold ornament was made through invoice no-26 to 119. On 27.10.2016, opening stock was 19105.64 grams out which 912.52 grams was sold through invoice no 120 to 151. The appellant has further given the stock position on 26.10.2016 and 27.10.2016 as under:- Date Opening Stock (Grams) Sale (Grams) Closing Stock (Grams) 26.10.16 23963.360 4857.72 ....
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.... in the case of ACIT, Central Circle-2, Jaipur Vs. Motisons Jewellers Ltd. 6. ITAT, Chandigarh in the case of Charu Aggarwal Vs. Deputy Commissioner of Income Tax ITA No.310/Chd/2021, 311/Chd/2021. 7. ITAT Amritsar in the case of Balwinder Kumar Vs. ITO, Ward-3(1), Jalandhar, ITA No.256/Asr/2022. 8. ITAT Delhi Bench in the case of Fine Gujaranwala Jewellers Vs. ITO, ITA no.1540/DEL/2022 (SA No.244/Del/2022). 9. ITAT Jaipur Bench in the case of Nawal Kishore Soni Vs. ACIT, Central Circle3, Jaipur, ITA No. 1256,1257 & 1258/JP/2019. 10. ITAT Jaipur in the case of Assistant Commissioner of Income Tax Vs. Shri Chandra Surana, ITA No.166/JP/2022. 5.3.10 I have considered the submissions of the appellant. The appellant has made total sales of Rs. 149,71,22,327 cash sales was Rs. 16,78,65,257/- which was 11.21% of total sales. In fact the cash sales have drastically reduced by 87% during the relevant year as compared to early years. The AO has not considered this aspect by holding the cash deposit during demonetization period as unexplained cash credit in the books of the appellant. It is the fact that the appellant is in the jewellery/....
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....tant case, there is no such finding regarding any evidence about bogus sales or bogus purchase by the appellant. The AO has made the addition by treating the cash deposited out of regular books of accounts. Thus making an addition on account of deposit of cash which is duly accounted for in the books of accounts without rejecting the books of accounts, is totally unwarranted. In the instant case, the cash deposited was duly recorded in the books of accounts of the appellant and the appellant offered an explanation regarding the nature & source being the cash sales. In the present case, the money was duly recorded and accounted in the books of accounts and the source was also explained as cash sale. It cannot be said that the appellant failed to give satisfactory explanation about the nature & source of cash deposit. The fact that the appellant deposited many times more cash in the bank account in the earlier years, shows that it was a regular feature of its business to deposit the cash in the bank even during the period prior to the announcement of demonetization on 08.11.2016 and these facts have not been negated by the AO. It is also a fact that the appellant's business is of jew....
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....had specific proof in its possession of having high denomination notes as part of its cash balances - Tribunal accepted assessee's explanation in respect of said interpolations and held that there was no other reason to suspect genuineness of account books - It was also found that as per book entries cash balance on 12-1-1946 aggregated to more than Rs. 3.1 lakh - However, examining cash book and taking into account all circumstances adverted to by ITO, Tribunal held that assessee might be expected to have possessed as part of its business cash balance of at least Rs. 1.5 lakhs in shape of high denomination notes on date when said ordinance was promulgated but nature of source from which it derived remaining high denomination notes remained unexplained - Accordingly, Tribunal reduced addition - Whether when entries in books of account in regard to cash balances were held to be genuine, there was no escape from conclusion that assessee had offered reasonable explanation as to source of all high denomination notes which it encased on 19-1-1946 and it was not open to Tribunal to accept genuineness of those books and accept assessee's explanation in part and reject same in rega....
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....ed to detailed scrutiny under s. 143(3). In the said year, the AO had rejected the trading result and even enhanced the GP rate and made an addition in the trading account. The Tribunal thus held that in respect of asst. yr. 2012-13 the opening and closing stock and trading accounts including sales has not been disturbed. In these circumstances, the Tribunal observed that in the impugned asst. yr. 2014-15, the audited balance sheet reflected an opening stock of Rs. 19,53,29,660 which stood accepted by the Department either under the scrutiny proceedings or by not selecting the return for scrutiny or by not taking any action to disturb such returned income. In these circumstances, it was held that the quantum figure and the opening stock which stood accepted in the earlier years had to be taken as actual stock available with the assessee. In view of these facts, the sales made by the assessee out of its opening stock were not treated as unexplained income, to be taxed as income from other sources. It thus manifests that the Tribunal has taken into consideration the entire material placed on record including the report of the AO." Then again in para 14 & 15 of the order had ....
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....ios vis-a-vis turnover and stock positions and based on his detailed reasoning, AO had rejected the trading result and has even enhanced the GP rate and thereby making an addition at Rs. 42,51,463 in the trading account. Thus, in this manner the entire trading activity of the assessee stood accepted and only addition made was on account of higher profit rate. but the sales made during that year; trading/business carried out by the assessee was duly accepted. including opening and closing stock. Again in the asst. yr. 2012-13 the opening and closing stock and trading account including sales has not been disturbed. now in the impugned asst. yr. 2014-15, the audited balance sheet reflected an opening stock of Rs. 19,53,29,660 which opening stock stood accepted by the Department either under the scrutiny proceedings or by not selecting the return for scrutiny proceedings or taking any action to disturb such returned income. Hence the quantity and valuation of stock stood accepted which had attained finality. Thus. the quantum and figure of the opening stock which stood accepted in the earlier ears has to be taken as an actual stock available with the assessee. Out of the said stock pur....
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....16 as under:- "Not only that, in the subsequent years also once the assessee's stock which has been sold and said sale and income derived there from has not been disturbed then it quite difficult proposition to hold that the sales made by the assessee out of its opening stock should be treated as income from unexplained sources." Then in Para 17 & 18, it has been held as under:- "17. Thus. in our opinion the sale made by the assessee out of his opening stock cannot be treated as unexplained income to be taxed as 'income from other sources'; firstly. the stock was available with the assessee in his books of account and trading in such stock including purchase, sale, opening and closing stock (quantity wise and value wise) has been accepted the Department year after year and in some years under scrutiny proceedings. therefore, non existence of stock or business cannot be held; secondly, the sale of stock in the earlier years and the sale of balance left out stock in subsequent years has been accepted or has not been disturbed. then to hold that no stock was sold in this year and remained with the assessee will be difficult proposition; thirdly. ....
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.... the source of cash deposit in the bank account of the assessee during demonetization period stood duly explained. The pertinent finding in this regard are with respect to the fact that the assessee had furnished all evidences proving the genuineness of sales made during this period duly supported with purchases made which were further evidenced by the copy of VAT returns filed by the assessee and also the stock records of the assessee. The Ld. CIT(A) has noted that notices issued by the AO to all parties from whom purchases were made by the assessee u/s. 133(6) of the Act were duly responded and the parties confirmed the sales made to the assessee. The Ld. CIT(A) has further noted that there is no abnormality in the quantum of sales made by the assessee in the impugned year as compared to the preceding year noting the fact that the component of cash sales had decreased by almost 87.96% in the entire year; in the period preceding demonetization it was noted to have decreased by 88.54% and during the demonetization period to have decreased by 65.56%. The Ld. CIT(A) has noted that neither the Auditor has pointed out any discrepancy in the accounts of the assessee nor has the AO rejec....