TaxTMI 
TaxTMI 
2024 (5) TMI 1638
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....wn by the assessee are nothing but a bogus source to justify the cash deposited in bank account during demonetization period. 3. Whether on the facts & under the circumstances of the case, the Ld. CIT (A) is justified in holding that the AO has not rejected the books of accounts without appreciating that the rejection can be apparent or it can be implied and the order of AO clearly suggests that the book results were impliedly not accepted by the AO." 3. Brief facts of the case are that the assessee is a partnership firm engaged in the business of manufacturing and trading in jewellery. The return of income for the year under consideration was filed on 31.10.2017 declaring income of Rs. 19,30,260/-. The case was selected for regular scrutiny assessment vide notice u/s 143(2) of the Income-tax Act, 1961 (for short 'the Act') dated 30.09.2018 and the assessment was completed vide order u/s 143(3) of the Act dated 31.12.2019 after making addition to the extent of Rs. 2,74,01,660/- u/s 68 of the Act on the alleged ground of bogus cash sales booked during the period 01.10.2016 to 08.11.2016 i.e. period immediately before announcement of demonetization. 3.1 The d....
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....emonetisation announced by the Government of India. (ii) It is also seen that the assessee is not in the habit of maintaining huge cash in hand in any of the months during previous and also subsequent years. While the maximum cash in hand during F.Y. 2015-16 is Rs. 31,38,083/- during the month of August 2015, the same is Rs. 38,55,128 during the month of March 2018 in F.Y. 2017-18. The cash in hand that too more than Rs. 3,00,00,0001- is seen only during the year under consideration which shows that the cash book has been manipulated to accommodate the unaccounted cash available with the assessee. (iii) It is seen that the assessee during the year has maintained books and the same has also been audited. Notice u/s 143(2) for AY 2017- 18 was issued to the assessee during the month of September 2018 and after that the notices are being issued from this office since 19.06.2019. It has nowhere been brought on record by the assessee as to what prevented it to submit the complete details of sales and purchases which were being sought to examine the veracity of submissions made. Non furnishing of complete details is clearly an attempt to stall the imminent veri....
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....n." 3.2 The crux of the AO's finding in this regard read as under :- (i) that comparative analysis figures of sales in the year under consideration with FY 2015-16 and FY 2017-18 reveals that there is huge increase in the figure of cash sales in the FY 2016- 17; (ii) that except VAT return of first quarter, all the VAT returns have been submitted after demonetization; (iii) that assessee is not maintaining huge cash in hand in FY 2015- 16 and FY 2017-18, however, in the year under consideration, the assessee had cash in hand of more than Rs. 3 cr which shows manipulation of cash book; (iv) that complete details of sales and purchases were not furnished. Non furnishing of complete details is clearly an attempt to stall verification. Only details of sale and purchase above Rs. 5 lacs were furnished. Total sales and purchases were not reconciled with corresponding figures in ITR; and (v) ultimately, the assessing officer based on average cash sales figures of FY 2015-16 and FY 2017-18, reworked average cash sales for the period of 39 days between 01/10/2016 to 08/11/2016 and considered addition in respect of balance cash sales u/s 6....
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....ross sales and cash deposit; Cash book. Therefore, from the above, it is noted that neither the A.O pointed out any shortage in the closing stock vis-a- vis the sales effected, nor any discrepancy in the information submitted before the income tax and the VAT authorities. Similarly from the analysis of GP ratio, nothing adverse is inferred. In fact, it is also not in dispute that the A.O also has accepted sales figures and the extrapolation by AO is based on the sales recorded by the appellant in its books. What has been estimated is the quantum of cash transaction which has been effected vis-a-vis the total turnover of the appellant between two corresponding periods. In the present case the assessee was maintaining complete stock tally, the sales were recorded in the regular books of accounts which has not been disputed by the AO and the amount was deposited in the bank account out of the sale proceeds, therefore, the addition made by the AO is not justified. In the context of the above facts, it would be instructive to analyze various judicial pronouncements on the subject, having a bearing on the facts of the case." 4.1 Ld. CIT (A) referred to certain case laws as under :- ....