TaxTMI 
TaxTMI 
2025 (3) TMI 1571
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....ut at the business premises of the appellant on 27/02/2017. The AO observed that during the course of survey statement of the assessee were recorded and some incriminating material was also impounded. Thereafter the case was selected under compulsory scrutiny and assessment was completed u/s 143(3) of the Act assessing the income of the assessee at Rs. 77,04,417/- by making addition of Rs. 73,48,597/- u/s 68 of the Act by holding the part of the cash deposit during demonetization as undisclosed income. 3. Against such order assessee preferred an appeal before the ld. CIT(A) who vide order dt. 25/08/2023 has summarily dismissed the appeal of the assessee by relying upon the observations made by the AO. Aggrieved by the said order, assessee is in appeal before the Tribunal. 4. The assessee has taken following grounds of appeal:- "1 That the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred both in law and on facts in upholding an addition made of Rs.73,48,597/- representing alleged unexplained cash deposits in the bank account of the appellant during the period of demonetization and brought to tax under section 68 of ....
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....ncome Tax (Appeals) has erred both in law and on facts in holding that amount deposited in the bank by the appellant is taxable as income under section 68 of the Act and thereafter computed the demand in accordance with the rates specified in section 115BBE of the Act as amended by Taxation Laws (Second Amendment) Act, 2016. 3. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the levy of interest u/s 234B of the Act which is not leviable on the facts and circumstances of the case of the appellant. Prayer-It is therefore, prayed that, that addition made and sustained by the learned Commissioner of Income Tax (Appeals) alongwith interest levied may kindly be deleted and, appeal of the appellant be allowed." 5. Since the grounds of appeal No. 1 to 2 are in relation to the addition of Rs. 73,48,597/- made u/s 68 by holding the cash deposit during the demonetization as unexplained and undisclosed in come of the assessee thus the same are canvassed together for sake of convenience. 6. In the instant case, during the period of demonetization assessee has made cash deposit in SBN on various dates totalling....
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....details so submitted nor has doubted the genuineness of books of account submitted. The trading results declared by the assessee were accepted. Ld. AR further submitted that when books of accounts have been accepted and the sales have not been doubted, the cash deposit out of the said sales could not be held as unexplained. Ld. AR further argued that when sales have already been offered for tax, the cash generated out of such sales could not be doubted and if the such cash deposits out of such cash sales is taxed it would tantamount to double taxation. 8. With regard to the AO's allegation about the purchases and sale of Khal and Binola and further about the purchases from M/s Laxmi Gamra Khal Bhandar made on credit basis, it was submitted by the ld. AR that the Khal and Binola were not produced during the period from May to September thus there was no purchases during this period. With regard to the purchases on credit basis from M/s Laxmi Gamra Khal Bhandar, it is explained by the ld. AR that assessee has filed the confirmation of the said party, duly confirming the transaction which have not been doubted by AO. He drew our attention to the paper book pages 273 to 277 which is....
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....TA No. 489/Chny/2022 dt. 31.5.2023. 11. On the other hand, the Ld. Sr. DR vehemently supported the orders of the lower authorities and stated that the AO has supported his findings on the basis of details found during the course of survey. He further submitted that the assessee deposited SBN into bank on various dates in short sum which also lead to the conclusion that there was undisclosed cash with the assessee which was deposited at later days with bank as he has deposited substantial cash in SBN immediately after the announcement of demonetiztion. He further argued that AO has already allowed credit towards bank withdrawals claimed by the assessee and further allowed credit on account of SBN deposited just after the announcement of demonetization. According to ld. Sr. DR assessee failed to give any plausible explanation as to why the payments for the purchases made during the period from 26.11.2016 to 4.12 2016 from M/s Laxmi Gamra Khan Bhandar was not made though for the purchases for the remaining year were cleared immediately through RTGS. Further assessee has failed to give any reasonable explanation for depositing the cash in SBN on various dates that too in small sum. ....
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.... prefer the payment in cash, therefore, in the interest of business sufficient cash balance has to be maintained. The AO is also required to consider the record maintained by assessee such as cash book, day to day stock register, monthly sales before making any allegation about the genuineness of the cash deposited in SBN during the demonetization period. No adverse observations were made by the AO or by ld. CIT(A) that records submitted are not in conformity with the accepted accounting principles and also no doubts were raised about the availability of stock prior to cash sales. When the assessee has submitted complete details and thus discharges its onus, whereas on the other hand, no contrary material was brought on record by the AO to disprove the details filed by the assessee. As observed above, assessee has already included the entire cash sales in the total sales and the profits derived therefrom were offered for tax, thus taxing such entire cash receipts as income is double taxation of an income, first as the sales declared by assessee itself and secondly by holding the cash deposit out of such sales as unexplained u/s 68 of the Act. 14. At this juncture provisions as c....
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....unal also observed that it is not in dispute that sum of Rs.24,58,400/- was credited in the sale account and had been duly included in the profit disclosed by the assessee in its return. Therefore, cash sales could not be treated as undisclosed income and no addition could be made once again in respect of the same. The Hon'ble High Court dismissed the appeal filed by the Department." 17. The Coordinate Bench of ITAT Mumbai in the case of [2023] 154 taxmann.com 584 (Mumbai - Trib.) ACIT v. Ramlal Jewellers (P.) Ltd. under similar circumstances while deleting the addition made towards cash deposit has held as under: "Section 68 of the Income-tax Act, 1961- Cash credit(Cash deposit in bank)- Assessment year 2016-17- Assessee company was engaged in jewellery business - During assessment proceedings, Assessing Officer noted that immediately after demonetization assessee had shown inflated cash sales and also made deposits in bank account which was completely abnormal as compared to earlier year and also subsequent year - He, therefore, taxed cash deposits under section 68 - It was seen that assessee had maintained regular books of account which was subject to audit ....