TaxTMI 
TaxTMI 
2025 (12) TMI 1754
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....O. called upon the assessee to file relevant evidences in support of books of account and also a month-wise summary of cash book, purchases and sales, details of stock summary for diamonds, gold ornaments, and silver, supporting evidences for expenditure, etc. In response, the assessee has furnished books of account, bank statements, VAT returns, stock register, and also details of cash deposits into the bank account during the demonetization period. The A.O., after considering the submissions of the assessee and also taking note of various facts, completed the assessment under Section 143(3) of the Income-tax Act, 1961 (for short "the Act") on 23.12.2019 and determined the total income at Rs. 87,76,417/- by making various additions including addition towards loan creditors of Rs. 36,37,100/- under Section 68 of the Act, cash advances received from customers for Rs. 64,223/- under Section 68 of the Act, cash deposits of Rs. 38,42,000/- under Section 69A of the Act towards cash deposited into the bank during the demonetization period, and addition of Rs. 6,92,285/- under Section 68 of the Income-tax Act, 1961 towards amount received from M/s. Om Santhosh Ranga Jewellers. 3. Aggri....
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....d that, the assessee is in the business of retail trading of gold jewellery and received advances from various customers for sale of jewellery and the said advances have been received mostly by cheque except in two cases where the assessee has received the cash for which the assessee has issued sales bills in the same financial year or in the subsequent financial year. Although evidences have been furnished before the A.O. including relevant sales bills to prove the genuineness of the transactions, but the A.O. has made additions towards advances from customers as loan creditors only on the ground that, the creditworthiness of the parties are not proved, ignoring the fact that, in respect of sale advances, the question of proving the creditworthiness does not arise. Therefore, he submitted that, the additions made by the A.O. should be deleted. In this regard, he relied upon certain judicial precedents, including the decision of Hon'ble Delhi High Court in the case of Pr. CIT Vs. Montes Enterprises Pvt. Ltd., (2018) 100 taxmann.com 99, and also the decision of the Hon'ble Bombay High Court in the case of Pr. CIT Vs. SB Investment and Trading Company (2008) 306 ITR 31. 7.....
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....advances from customers for sale of gold jewellery, and the same has been adjusted against the sales recorded in the books of account. Since the assessee has filed relevant evidences to prove the sales advances received from customers and also made sales in subsequent periods, in our considered view, the A.O. has erred in making additions towards sale advances from customers as loan creditors under Section 68 of the Act, on the ground that, the creditworthiness of the parties is not proved. In our considered view, once it is proved that, the credits relates to trade advances, then the question of examination of creditworthiness of the advance received from customers does not arise, and also additions cannot be made towards sale advances under Section 68 of the Act, as unexplained cash credit, as held by the Hon'ble Delhi High Court in the case of Pr. CIT Vs. Montes Enterprises Pvt. Ltd., (supra) and the decision of Hon'ble Bombay High Court in the case of CIT Vs. SB Investment and Trading Company (supra). A similar view has been taken by the Hon'ble Rajasthan High Court in the case of Smt. Harshila Chordia Vs. ITO (2008) 298 ITR 349 and also the Hon'ble Kerala High ....
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....or the simple reason that the assessee has maintained regular books of account for her business. In the books of account, the advances paid to Mr. Noor Ahmed Sheikh have been recorded against the bill submitted by the party for making charges of gold jewellery and the excess amount paid to the party has been received in cash. The details submitted by the assessee clearly show that, it is a trade advance given to the goldsmith for making gold jewellery and the same has been received in cash. Therefore, in our considered view, the reasons given by the A.O. to make addition towards refund of advance of Rs. 57,439/- under Section 68 as unexplained cash credit are not in accordance with law, going by the trade practice and the evidence furnished by the assessee. Therefore, we direct the A.O. to delete the addition of Rs. 57,439/- made towards refund of advance from Mr. Noor Ahmed Sheikh under Section 68 of the Income Tax Act, 1961. 12. The next issue that came up for our consideration from Ground No. 5 of the assessee's appeal is addition of Rs. 6,92,285/- made by the A.O. under Section 68 of the Act, towards cash received against credit sale of goods as unexplained cash credit. The ....
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....ne through the orders of the authorities below. We have also carefully considered the relevant reasons given by the A.O. to make addition of Rs. 6,92,285/- being cash received from M/s. Om Santosh Ranga Jewellers against sale of goods to Sri T. Ramakrishna Reddy. There is no dispute with regard to the fact that, the assessee has sold 349.740 grams of gold on 01.12.2016 to one Sri T. Ramakrishna Reddy and in lieu of the sale, the amount of Rs. 6,92,285/- was received in cash on 31.03.2017. The A.O. never disbelieved the documents submitted by the assessee, however, made additions only on the ground that the assessee has not collected TCS under Section 206C(1D) of the Income-tax Act, 1961 from the buyer of the gold jewellery. In our considered view, going by the facts of the present case, the provisions of Section 206C(1D) of the Income-tax Act, 1961 are not applicable for the year under consideration, because the turnover of the assessee from her business for the preceding financial year 2015-16 relevant to assessment year 2016-17 is less than the turnover limit fixed for getting accounts audited under Section 44AB of the Act, and once the turnover is less than the monetary limit as....
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....see has furnished the relevant details, including the cash book to show that, sufficient cash balance was available as on 08.11.2016 to explain the cash deposited into the bank account during the demonetization period. The learned counsel for the assessee further referring to various evidences, including the books of account maintained by the assessee, sales bills issued to the customers, submitted that, the A.O. disbelieved the sales made during the demonetization period and more particularly, from 01.11.2016 to 08.11.2016, and claimed that, the assessee has reported abnormal sales during the above period when compared to the earlier months and subsequent months to disbelieve the explanation of the assessee, but fact remains that, it was an established fact during the demonetization period that, there was a mad rush for buying gold jewellery out of demonetized currency. Therefore, the allegation of the A.O. that, the sales declared by the assessee are not genuine is incorrect going by the evidence available on record. Although the A.O. has discussed the issue in light of VAT returns submitted by the assessee and claimed that, the assessee has submitted VAT returns for particular m....
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....oks of account to explain cash deposits into the bank account. Therefore, he disbelieved the evidences filed by the assessee and assessed the cash deposits as unexplained money under Section 69A of the Income-tax Act, 1961. 20. There is no dispute with regard to the fact that, the cash balance shown in the books of account as on 08.11.2016 is supported by necessary sales bills issued towards sale of jewellery from 01.11.2016 to 07.11.2016. It is also not in dispute that, the assessee was having sufficient stock in hand to explain the sale bills issued to the customers between 01.11.2016 to 08.11.2016. The sales declared by the assessee are recorded in the books of account and also part of the turnover declared for the year under consideration which suffered taxation. Once the assessee has recorded sales in the books of account, which is supported by necessary sales bills with a corresponding stock-in-hand, in our considered view, the A.O. ought not to have made additions towards cash deposits as unexplained money only on the ground that, there is abnormal variation in cash sales during the demonetization period when compared to earlier or subsequent periods. In our considered vi....