TaxTMI 
TaxTMI 
2026 (1) TMI 68
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....e had deposited cash of Rs. 1,29,47,000/- in HDFC Bank. The assessee was asked to furnish the source of cash deposits. Further assessee was asked to furnish comparison of cash deposits vis-à- vis cash sales made during the corresponding preceding year. In response, assessee submitted as under :- S.N. Particulars Cash in hand 1 31.03.2016 4,71,936.52 2 31.03.2017 75,589.10 Statement of cash deposit in HDFC bank S.N. Dated Particulars Deposit amount 1. 18.11.2016 Amount of cash deposit in bank Rs. 1,26,98,900.00 2. 29.11.2016 Minor daughter deposit cash Rs. 2,49,000.00 Rs. 1,29,47,000.00 Sources of cash deposit in HDFC bank Period Particulars Cash in hand 1.11.2016 Lahore Jewellers Rs. 4,56,221.95 1.11.2016 to 8.11.2016 Sales during the period Rs. 1,28,33,321.48 Rs. 1,32,89,543.43 3. After analysing the sales ledger of the assessee submitted before the Assessing Officer, the Assessing Officer prepared the chart as under :- Average monthly sale during F.Y. 2016-17 Rs. 18,49,871 Average daily sale during F....
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....eturns (original and revised). Subsequently, assessee furnished a reply on 20.12.2019 as under :- "Kindly refer to your notice under section 142(1) dated 11/12/2019, following further submission is made: It is submitted in this connection as under: (1) That the assessee is dealing in purchase/sales of jewellery at Kailash Colony Market, New Delhi-110048. It is retail market. The assessee is maintaining computerized books of accounts consisting of cash book, ledger, purchase & sale bills, vouchers, bank account and day to day stock book of each and every items of sales and purchase. All the purchases are on credit basis. The payment of purchases were made by either account payee cheque or RTGS. No cash purchases of gold or diamond was made. (2) That the books of accounts of the assessee is subjected to audit and was audited during the year. Audit report under section 44AB was filed. No discrepancy was recorded in the audit report. (3) Trading results of the assessee of last three years shows following results : Assessment Year Sales (Rs.) Gross Profit (Rs.) Rate (Rs) Net Profit Rate 2015-16 1,15,50,535 37,17,906....
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....and the closing balance of cash in hand as on 08/11/2016. From the chart it is evident that no cash was withdrawn by the assessee from bank during the 01/04/2016 to 08/11/2016 as the assessee had sufficient cash in hand built out of cash sales. It is further evident that cash deposit in bank is out of this cash in hand as on 08/11/2016. The cash deposit of old & new currency was made during the demonetization period in various bank account of the firm. The detail has already been filed. (8) The cash sales made by the assessee firm from 01/04/2016 to 08/11/2016 are duly verified from the regular books of accounts maintained in the course of day to day business which also includes stock records. All the sales made by the assessee firm are duly reflected in the stock records maintained by the firm. The assessee firm has already field a comparative chart for the last year showing the retail sales, etc. between the period 01/04/2015 to 08/11/2015 also and it is evident that the cash sales is a inherent feature in the trade of the assessee. It is also stated that the cash sales made during the year are all reflected in the stock records of the assessee as would be evident from t....
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..... At the time of hearing, ld. AR of the assessee submitted as under :- "4.1 Ground No. 1 is against the addition made in a sum of Rs. 1,26,98,000/- in respect of cash deposits into the bank by treating the same as 'unexplained income'. The AO has misread the facts in the table as extracted in the assessment order on page 3 and in the instant written submissions in para 3.1, it will be noticed that the sales during the period 03.11.2016 to 08.11.2016 are in the vicinity of Rs. 16 lacs to 29 lacs per day. On the day of demonetization i.e. on 08.11.2016 the sale was in a sum of Rs. 21,00,000/-+ which was marginally higher than the sale of Rs. 19,00,000/-+ the previous day and much lesser than the Rs. 29,00,000/-+ on 06.11.2016. In this way there was nothing extraordinary by way of sales on 08.11.2016. That being the case, the sales were as per the normal pattern of the business and so the AO was wrong in misreading the trend as one occasioned due to demonetisation. 4.2 The basic principle of law is that primary evidence would have precedence over secondary evidence. That fundamental principle has been given a go-by by the AO. The primary evidence in this case....
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....ation period have been lucidly and succinctly dealt with by the Vishakapatnam Bench of the Tribunal in ACIT vs. Hira Panna Jewellers (2021) 189 ITD 608. Being on similar facts this order is relied upon for relief in the subject case also. 4.7 According to the AO the deposits were to be added to the income of the Assessee u/s. 68 of the Act. The AO erred in failing to appreciate that Sec.68 of the Act applied to cash credits. It does not apply to sales receipts. Besides Sec.68 of the Act deems a certain cash credit as income. The need to deem income arises exclusively in a situation where the amount in question is not disclosed by the Assessee as his income. In the subject case the entirety of the sales have been declared as income. That fact is not denied by the AO. The AO has also accepted the books of accounts. The deeming of the amount as income by the AO of a sum already returned by the Assessee by way of sales is a mere duplication. Despite after accepting the books of accounts, to do so, would be compounding the error. The Gujarat High Court has ruled against such an act in CIT vs. Vishal Exports in TA Nos. 2471, 2473, 2475 & 2476/2009 dated 03.07.2012. That apart at....
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....e addition has to be in a sum of Rs. 1,28,93,388/-, the AO adopted the figure of Rs. 1,29,47,000/- for addition. Both the Authorities have treated this sum of Rs. 2,49,000/- taken as per Ground No.2 as part of the main addition of Rs. 1,29,47,000/-. In the circumstances the addition as proposed separately in a sum of Rs. 2,49,000/- emerges, as it apparently does, out of the deposit of sale consideration into the bank is required to be treated and dealt with in the same manner as the addition of Rs. 1,26,98,000/- is treated. Consequently, therefore, the same arguments as to the main amount of Rs. 1,26,98,000/- applying to the subject addition too and on the same grounds, it is prayed that this addition must also be quashed. 4.10 Grounds Nos. 3 and 4 are consequential." 10. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities and brought to our notice page 31 of the appellate order. 11. Considered the rival submissions and material available on record. We observe that the Assessing Officer made assumption that the sale pattern will remain same for whole of the year. Accordingly, he proceeded to determine the sale for the period based....