TaxTMI 
TaxTMI 
2025 (12) TMI 588
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.... of Rs. 1,01,11,160/- and claimed refund of Rs. 6,19,665/-. Subsequently, case of the Assessee was taken up for scrutiny under CASS. As search and seizure operation u/s 132 of the Act was conducted on the Assessee on 29/03/2017. An assessment order came to be passed u/s 143(3) of the Act by making an addition of Rs. 12,20,50,000/- on account of cash deposited in (SBN) in the bank account of the Assessee during the demonization period considering the same as unexplained cash credit u/s 68 r.w. Section 115BBE of the Act. 4. Aggrieved by the assessment order dated 30/12/2018, Assessee preferred Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 15/12/2023, allowed the Appeal of the Assessee by deleting the addition made by the A.O. As against the order of the Ld. CIT(A), the Revenue preferred t he present Appeal on the grounds mentioned above. 5. The Ld. Departmental Representative submitted that Assessee used to deposit the cash gathered out of sales on the very next day of sales taking place, therefore, as on the date of the search i.e. 29/03/2017, physical cash in hand lying with the Assessee at its premises was Rs. 24,61,170/- and at other premises, no cash in han....
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....mely Tansen. Tansen was introduced in the market by us in the month of November and our sale of Tansen has increased during this period Further, it is evident that sale between 01/11/2016 to 08/11/2016 not only continues even after 08/11/2016. The appellant deposited Total Cash amounting 16 Rs. 85.61.00.000 レ in its bank account from the period 09.11.2016 to 31.12.2016 out of which only 14,33,00,000/-deposited in Specified banking Notes (SBN) and Balance of Rs 59,69,00,000/- is deposited in Legal tender. This also shows that the cash sales in the firm in eo only for the specified period only but ther same trends of cash sales continue later also in legal tender currency and that also over that period of time where there is huge crunch of cash in legal tender. Further, the cash deposited in the bank account is of the cash Sale including VAT that took place in the firm on 05/11/2016, 07/11/2016 and 08/11/2016. These sales are duly recorded in the books of accounts further on the above sale we had duly paid Vat which ranges from 12.50% to 20%. The shime tax was duly deposited with the State Government before the Due Date. Further I would like to submit that the Firm maintained ....
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.... was Rs. 14,61,68,135/-. Even the opening cash in hand of Rs. 5,15,15,711/- as on 01.11.2016 remained undisputed in the assessment order. These figures of total sales and closing cash in hand on 08.11.2016 remained unaltered in the assessment order. As per records before the Assessing Officer and before the undersigned the appellant had undisputed cash in hand as on 31.10.2016 amounting to Rs. 5,15,15,711/-, This figure has not been altered by the Assessing Officer and therefore it can he concluded that the opening cash in hand at the beginning of the month remained the same. There is no specific evidence pointing out that the 08.11.2016. If the sale remained unaltered and there is no specific anomaly in purchase and stocks, appellant could not or did not make sale amounting to Rs 28,11,34,999/- during 01.11.2016 to then it is undisputed that the appellant has a cash in hand amounting to Rs. 14,61,68,135/- as on 08.11.2016 for deposition in bank during demonetization. The appellant submitted reasons for higher sales in the month of November which have not been disputed by the AO in the assessment order. Moreover, higher sales or higher deposition of cash cannot be a justification t....
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.... never made any adverse observation about the availability of the books of account. The Assessing Officer only made a comment that the appellant had manipulated its books of accounts to justify the bogus sales / purchases, however, this comment was without pointing out any specific instances of manipulations in the books of accounts. Therefore, the Assessing Officer was in possession/knowledge of the books of accounts and other supporting vouchers etc. and they were not rejected by the Assessing Officer during the course of assessment proceedings. Therefore, it can be safely concluded that the books of accounts of the appellant have been considered by the Assessing Officer as complete and correct. 5. It is noteworthy to mention that the products sold by the appellant firm are not tas free. The VAT on the products ranges from 12.50% to 20%. The percentage of excise duty on assessee's product ranges from 38.64% to 67.69% Therefore, the indirect tax liability on the appellant's product is more than 50% 6. The books of accounts including the cashbook, bank book, purchase book, sales book, stock register, ledger, and parties accounts are duty audited and have b....
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....of cash of Rs. 18,60,00,000/-and Rs. 36,00,000/- during the month of November 2016, which is only slightly higher and largely similar to the cash deposited in banks during the earlier and subsequent months. The details of monthly cash deposited during the year is as under:- Month Cash deposited in Bank April 20,30,00,000/- May 31,80,00,000/- June 38,20,00,000/- July 31,45,00,000/- August 25,25,00,000/- September 19,50,00,000/- October 32,20,00,000/- November (Up to 8th Nov) 18,60,00,000/- November (After 8th Nov) 36,83,00,000/- December 48,78,00,000/- January 49,00,00,000/- February 46,85,00,000/- March 49,18,00,000/- Total 4,47,94,00,000/- 13. The Assessing Officer was satisfied with the correctness and completeness of the books of accounts of the appellant and therefore he chose not to reject the books of accounts. No specific anomaly or defect/s had been pointed out in the books of accounts. This would mean that the Assessing Officer found the purchase, sales, expenditure, opening and closing stock etc. to be correct. The Assessing Officer did not doubt the genuineness of the purch....
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.... sale for the period 01.11.2016 to 08.11.2016 was Rs. 28,11,34,999/- and the closing cash in hand was Rs. 14,61,68,135/- as on 08.11.2016. This figures of total sales and closing cash in hand remained unaltered in the assessment order. As per records before the Assessing Officer and before the undersigned the appellant had undisputed cash in hand as on 31.10.2016 amounting to Rs. 5,15,15,711/-. This figure has not been altered by the Assessing Officer and can be concluded that the opening cash in hand at the beginning of the month remained the same. There is no specific evidence pointing out that the appellant could not or did not make sale amounting to Rs. 28,11,34,999/- during 01.11.2016 to 08.11.2016. If the sale remained unaltered and there is no specific anomaly in purchase and stocks, then it cannot be disputed that the appellant did not have a cash in hand amounting to Rs. 14,61,68,135/- as on 08.11.2016 for deposition in bank during demonetization. The appellant submitted reasons for higher sales in the month of November, which have not been disputed by the Assessing Officer. Moreover, mere higher sales or higher deposition of cash cannot be a justification to challenge the....
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....findings of survey conclusively established the fact that there is no identifiable discrepancy in purchase/sale/stock. The Assessing Officer's opinion is not substantiated by any documentary evidence and the contention of the appellant is therefore cannot be disputed. 4.1.24 This is a case of a firm engaged in trading of Paan masala and other related tobacco products. The appellant deposited sizeable amount of cash in SBNs in his bank account subsequent to the demonetization. Demonetization has been an extra ordinary event which never happened in the recent past. The sales figures for the month of November 2016 prior to demonetisation have been high and the cash deposited during the month of November/December in SBNs is higher than the average cash deposits in the Bank. This can be at best a reason for suspicion for further investigation but cannot be alone considered as sufficient evidence for making addition. The Assessing Officer could have examined and verified the sales made and pointed out specific anomalies in the sales records. He could have verified purchases to prove that adequate stock was not available with the appellant to be sold during demonetization. Bu....
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....would result into a double addition, which can never be considered as appropriate. Therefore, this is a addition u/s 68 without corresponding reduction in the sales figure and increase in closing stock figure case where books of accounts have been considered and complete, adequate stock available to be sold prior to demonetization and no specific aromalies in purchase sales undertaking been pointed out the Assessing Officer. The Assessing officer did not dispute that the sales during November 2016 prior to demonetisation were credited in the ale account and had been duly included in the profit disclosed by the assessee in its return. Therefore in these circumstances, the cash sales could not be treated as undisclosed income and no addition could be made once again in respect of the same, Moreover, this is a case where a search and survey was carried out during the year books 29.03.2017. As a result of search/survey, several documentary including the bills/invoices and books pertaining to purchase/sales/stock were found and impounded seized. The details of impounded documents are already mentioned above. On the date of search, there was no anomaly in the stock of the appellant. The ....
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....t as a result of survey. Therefore, any such presumption of undisclosed cash would be devoid of merit as the same is not based by any evidence. Further, the Assessing Officer had not disputed the sales made by the appellant during the year. This is a case where the search and survey were carried out on the appellant during the year and no anomaly/discrepancy about the stock/purchase/sales had been pointed out by the Assessing Officer. Since the department had verified the correctness of accounts and supporting vouchers during the course of search and survey; it will not be appropriate for the Assessing Officer to consider the opening cash balance as on 01.11.2016, the sale of the month of November before demonetization and cash in hand as on 08.11.2016 as incorrect while carrying out the assessment. In view of the above, I am of the considered opinion that the Assessing Officer did not bring out any specific facts and evidence to negate the genuineness of the figure of purchase, sales and stock. If the figure of sales has been considered as correct then there is no justification for making an addition of the same sales as unexplained cash credit u/s 68 of Income Tax Act. In view of....
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....ooks of accounts have not been rejected by the A.O. No discrepancy in the book of accounts have been pointed out by A.O. Further, the Ld. CIT(A) observed that the assessee has furnished complete details of purchases along with the confirmation of purchase parties and the A.O has accepted the purchases. Therefore, once the A.O has accepted the purchases, there was no justification for A.O. not accept the sales, particularly in view of the fact that had the sales not taken place, excess stock would have been found available with the assessee at the time of search at the premises of the assessee by income tax department. The fact that no discrepancy in stock was found at the time of search clearly establishes the factum of sales. The assessee has also filed the VAT returns with the VAT/Sales Tax Department and paid the taxes thereon in time. All the sales are duly reflected in these returns, therefore, there was no reason for the A.O. to doubt or have suspicion in respect of sales. 11. It is noteworthy to observe that the assessing officer has failed to appreciate that during the demonetization period (9/11/2016 to 31/12/2016) the total cash deposits by the assessee in the Bank wer....
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....there is no applicability of provisions of section 68 of the Act. Therefore, the addition made by the A.O. results in double addition as the consolidated effect of amount of Rs 12,20,50,000/- added by the A.O. was already appearing in the books of accounts/on the audited financial statements. 16. In the case of CIT v. KailashJewellery House ITA No. 613/2010 decided by Jurisdictional Delhi High Court on 09.04.2010 it was held as under:- "3. The Commissioner of Income-tax (Appeals) had returned a finding that the stock and cash found at the time of search had been examined by the Assessing Officer and was compared with the stock and cash position as per books. The stock and cash position as per the books had been arrived at after the effect of the aforesaid cash sales. The stock position as well as the cash position as per the said books had been accepted by the Assessing Officer. The Commissioner of Income-tax (Appeals) also noted that the appellant had furnished the complete set of books of accounts and the cash books and no discrepancy had been pointed out. The Assessing Officer had doubted the aforesaid sales as bogus and had made the aforesaid addition. However, the ....