2025 (10) TMI 355

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....Assessing Officer collected the information from the bank by issue of notice u/s 133(6) of the Act. Based on the information, Assessing Officer observed that the assessee has deposited cash to the extent of Rs. 3,57,60,000/- in Canara Bank having two accounts during demonetization period i.e. 09.11.2016 to 31.12.2016. Based on the information available with the Assessing Officer, the Assessing Officer observed that assessee has declared substantial sales during the month of October 2016 i.e. 11 times more than the cash sales declared by the assessee in the previous year. He observed that assessee has deposited cash from 10.11.2016 to 24.11.2016 of Rs. 3,57,50,000/-. Since the assessee has deposited substantial amount during the demonetization period, assessee was asked to substantiate the same. In response, assessee has submitted as under :- "..it is submitted that the comparative figures given in your show cause notice that the cash sales in the preceding years are not equivalent to the year under assessment, are not justifiable an reasonable. It is indeed correct that in some months/period in the preceding year the cash sale were more in some period and less in Some peri....

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.... Particulars Amount (in Rs. ) Total cash deposited during demonetization period 3,57,60,000/- Less : Regular sales of 39 days (from 01.10.2016 to 08.11.2016) on the basis of average per day sale based on above table. (50,116 x 39) - Highest of the above 3 considered 19,54,524/- Less : Cash in hand as on 30.09.2016 20,66,511/- Remaining sales is on account of issue of bogus sale invoices 3,17,38,965/- 4. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT(A)-24, Delhi and filed several grounds of appeal and also filed detailed submissions vide letters dated 30.09.2021, 12,11.2021, 18.11.2021, 02.12.2021, 15.12.2021, 25.07.2022 and 03.11.2022 which are reproduced by the ld. CIT (A) in his order from pages 3 to 50 of the order. After considering the detailed submissions of the assessee, ld. CIT (A) adjudicated ground no.6 which is on merit in detail after considering the substantial details of comparative data of turnover and gross profit of last two years and also data of cash and total sales, after analyzing comparative data of credit and cash sales for the last two years and also analysed quantity details submitted by the ....

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....ales either the assessee should not have the sufficient stocks in their possession or there must be defects in the stock registers/ stocks. Once there is no defect in the purchases and sales and the same are matching with inflow and the outflow of stock. There is no reason to disbelieve the sales. The appellant has included the sale of October 2016 in the gross sales made by him in the Profit & Loss accounts and the Assessing Officer did not reduce this amount from the sales while making an addition u/s 68 of Income Tax Act. Presumption that the amount deposited in bank in SBNs is not sale proceed should have resulted in reduction of sales figure and also increase in closing stock, while computing business income. Any addition u/s 68 without corresponding reduction in the sales figure and increase in closing stock figure would result into a double addition which can never be considered as appropriate. Therefore, this is a case where books of accounts have been considered as correct and complete, adequate paid stock was available to be sold during the festival season prior to demonetization and no specific anomalies in purchase sales and stock have been pointed out the Assessing Off....

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....he credits and (ii) The genuineness of the transaction. 3. That the Ld. CIT (A) failed to appreciate that the AO in para 5.5 of the assessment order u/s 143 (3) of the Act, 1961 dated 26.12.2019 discussed how the assessee failed to prove genuineness, creditworthiness and identity of the buyers. The copy of the sales bills/vouchers furnished by the assessee reveal that in most of the bills absolutely no identifiers of the purported buyer are mentioned. Accordingly, the genuineness, creditworthiness and identity of the buyers remain unverified. 4. That the Ld. CIT (A) did not appreciate that the entries made in the books of account to the extent of cash sales made just before demonetization period i.e. from 01.10.2016 to 08.11.2016 and cash sales shown just before demonetization period are bogus/non-genuine cash sales and were used as a device to introduce unaccounted money lying with the assessee before demonetization in its books of account. 5. That the Ld. CIT (A) has erred in law and on facts by accepting the claims of the assessee without appreciating that the assessee had not furnished proper explanation in order to prove genuineness of sales and cash....