2025 (12) TMI 150

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....ition of Rs. 1,70,52,504/- made u/s 68 of the Act by AO, on the basis of fresh/new evidences produced by the assessee during the appellate proceedings without appreciating the facts that the assessee has failed to produce the same before the AO during the assessment proceedings and Ld. CIT(A) should have called the report from the AO on the additional/fresh evidences. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in not appreciating the ratio of judgement of Hon'ble Allahabad High Court in the case of Bimal Kumar Anant Kumar vs. CIT, 288 ITR 278 wherein the Hon'ble Court has held that application under the rule 46A must be made for admission of additional evidences with reasons showing the purpose of the additional evidences and reasons for not producing it earlier." 2. Brief facts of the case are, assessee filed its return of income declaring total income at Rs. NIL after adjusting the brought forward unabsorbed depreciation. Based on the information available with the Assessing Officer that during the demonetization period, the assessee had deposited cash to the extent of Rs. 170,52,504/- in its various bank accounts. According....

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....ales 13,23,575 ix) Cash received from debtors in respect of sales made by the appellant and declared as income - x) Cash withdrawal 12,50,000 xi) Less : Cash Expenses (15,99,281) xii) Cash available for deposit 2,72,18,176 xiii) Cash deposit during 08.11.2016 to 30.12.2016 (1,66,68,410) xiv) Closing Balance as on 30.12.2016 1,05,49766 iv) The appellant further contended that the breakup of the cash sales to total sales made by the appellant during FY 2016-17 was inadvertently submitted wrong before the AO. The correct sales breakup (cash and total) made during FY 2016-17 based on the VAT/Service tax returns filed by the appellant is reproduced hereunder Sr. No. Observation of Assessing Officer Submission of the Appellant (Pages of Paper book) i) The cash sales constituted 87% of the total sales for the year under It is submitted that during the course of assessment proceedings appellant company inadvertently   consideration. The cash sales upto Oct'16 were Rs. 5,89,48,564/- and total sales upto Oct'2016 was Rs. 6,60,69,591/- and the cash sales constituted 89% of the sales. The ave....

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....ncial years and therefore no adverse inference on this count was warranted. (vi) The appellant has also relied on various judicial pronouncements to establish the following aspects with respect to addition made by the AO: a) That once cash deposits are duly explained by way of withdrawals made from the bank accounts, no adverse inference can be validly drawn; and addition made is illegal, invalid and unsustainable. b) That once cash sales has been offered as income, cash deposited in bank account out of such cash sales cannot be taxed u/s 68 of the Act as it tantamounts to double taxation. c) That once audited set of books of accounts are accepted by the AO it would be presumed that sales duly recorded in the books of accounts are also correct and therefore no adverse inference on account of cash deposits made arising out of such cash sales can be made. d) That section of 68 of the Act does not apply to a sum already disclosed as income. e) That section 68 of the Act does not apply to revenue transactions. f) Reliance was placed on the decision of Honorable ITAT Delhi in the case of AGSON GLOBAL PVT LTD. Vs. ACIT in ITA....

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....r its opening cash in hand, or its cash sales, or cash withdrawals made from its bank accounts. The said re-conciliation has also be reproduced above provide para no. 5.1.5(iii) of this order. iv) The AO has not rejected the books of accounts of the appellant by bringing out any defects therein so as to not accept the stock position, cash in hand position, cash sales made during the year and total sales made during the year. However, he has made addition solely based on his analyses which, in turn, was based on wrong factual figures which gave rise to a conclusion that there was an exponential increase during the year in cash sales of the appellant vis-à-vis its total sales as compared to preceding two financial years. v) When the cash deposits into the bank accounts are out of the cash sales made by the appellant made either during this year or during the preceding financial years, which accumulated in the hands of the appellant in the form of bank balance or cash in hand, and when the said cash sales have been duly offered for taxation by the appellant, the AO has not brought on record as to how taxing the same would not amount to double taxation. vi) It ....