TaxTMI 
TaxTMI 
2026 (3) TMI 677
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.... by CIT(A). The following legal and factual arguments are made issue-wise, based on the assessment proceedings, orders of lower authorities, survey findings, and statutory provisions including sections 68, 115BBE, and 145(3) of the Income Tax Act, 1961. I. Addition Under Section 68 Unexplained Cash Credits (Rs. 14,52,23,691) Para 1: The AO made addition under section 68 on account of abnormally high cash deposits during the demonetisation period, which stand at 18.13 crore, and substantial cash sales, disproportionate to historical trade patterns (AO order, pp. 4-10, 38-41, para 4.1-4.9; CIT(A) order para 6.1.1-6.1.3). Para 2: Section 68 squarely applies where assessee fails to satisfactorily explain the nature and source of any sum credited in its books. The onus is always on the assessee to establish identity of creditor, capacity, and genuineness (Kale Khan Mohammad Hanif v CIT 50 ITR 1 SC; Roshan Di Hatti v CIT 107 ITR 938 SC; Kamal Motors v CIT 131 Taxman 155 Raj; CIT v Oasis Hospitalities 333 ITR 119 Delhi). Assessee in the present case did not provide complete customer details or evidence of the purported sales' bona fides most cash sales were ....
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....ing deposits is itself an indication of accommodation, rather than genuine trade (AO order, para 4.5). The AO's reliance on bank data, compared to original books and VAT returns, identified material mismatches in sales figures. Para 9: In Dewas Soya Ltd vs ITD, and CIT v Vishal Exports Overseas Ltd (Gujarat HC), courts have supported additions when cash deposit patterns do not correspond to normal business trends, and post-facto revisions are used to accommodate unexplained credits (see Dewas Soya Ltd- "Addition resulting in double taxation is permitted only if deposits are not linked to genuine sales found in books"). IV. Survey Findings and Revenue Evidence Para 10: AO and department survey teams found incongruities in sales figures reported to HDFC Bank vs Kotak Mahindra. During survey on 23.03.2017, sales for November 2016 matched books but not the higher deposits. This demonstrates that the cash deposits made during demonetisation could not plausibly arise from sales, but from unaccounted cash sources. Para 11: It is a settled principle that department's own evidence, especially contemporaneous records and survey findings, outweigh s....
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....Opportunity Para 16: AO issued several notices under section 143(2) and 142(1), and meaningful opportunities were given. While CIT(A) makes allegations regarding short notice at the end of proceedings, jurisprudence holds that the adequacy of time must be seen in the context of overall proceedings. The record shows repeated opportunities and the final show cause was only a supplementary opportunity. There is no breach of natural justice (see ITAT Blog s.148A, Umanath Pandey v State of UP, BieccoLawrie Ltd v State of West Bengal, Taxmann/PIB/LiveLaw publications, CavinayMittal). X. Distinguishing Case Laws Relied Upon by Assessee (and CIT Appeals Para 17: All case laws cited by the assessee (Agson Global, ACIT vs Hirapanna Jewellers, Rampur Engg. Co Ltd, Vishal Exports, Dewas Soya, Kaippallil Jewellers, Ramlal Jewellers, Sadaram Puranchand, Sandeep Chandok, Laxmipat Singhania etc.) involve facts where books of account were found to be free of material defects, entries were backed by evidence and reasonably explained, and there was no circumstantial evidence of cash being introduced from undisclosed sources or manipulation of statutory records. In the prese....
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....was more than Rs. 58 crores. The assessee filed its return of income for AY 2017- 18 declaring total income of Rs. 3,75,49,174/-. During assessment proceedings, the Assessing Officer (AO) enquired about cash deposits in the bank account. The assessee explained that the cash deposits of Rs. 18,13,00,000/- during demonetization period represents cash sales which are dully accounted in the books and have been offered to tax. The assessee furnished details of month wise cash sales during FY 2015-16 and 2016-17. Further, the assessee furnished details of cash deposited in the bank account during FY 2015-16 and 2016-17, as well as, break-up of cash deposits prior to demonetization and post demonetization. The assessee also furnished comparative analyses of cash sales during FY 2015-16 and 2016-17. The AO cherrypicked the amounts to make analyses so as to make addition. There were multiple flaws in the analyses made by the AO which were highlighted by the assessee before the CIT(A). The CIT(A) after examining books of the assessee, stock register and bank statement deleted the addition. The ld. AR of the assessee has placed reliance on various decisions to buttress his arguments that wher....
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....accounting or the books of account maintained by the appellant. In the absence of such a finding, the books of account, which are duly audited and supported by primary records, must be presumed to be reliable unless disproved. The reliance by the AO on generalised assumptions, without rebutting the specific explanation and documentary evidence furnished by the assessee, cannot form the basis for a valid addition under section 68. The failure of the Assessing Officer to conduct any independent inquiry, seek third-party confirmations, or otherwise verify the genuineness of the transactions, coupled with the acceptance of material parts of the books of account undermines the basis of the addition. 6.1.6. After a comprehensive examination of the issues outlined in the preceding paragraphs, the allegations set forth by the Assessing Officer in the assessment order dated 29.12.2019 and the explanations provided by the appellant have been meticulously reviewed and evaluated. Both the allegations and the appellant's submissions were scrutinized in light of the provisions of the Income Tax Act, 1961, as well as relevant judicial precedents from various forums. The sales re....
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....sh deposits in the bank account and total cash receipts during FY 2015-16 and 2016- 17 prior to demonetization and post demonetization during FY 2016-17 are given below: MONTH FY 2015-16 CASH SALES SALES WITH RECEIPT TROUGH BANKING CHANNELS EXCHANGE OLD GOLD TOTAL SALES APR 3,83,54,429 65,41,450 14,31,670 4,63,27,549 MAY 2,41,03,567 39,11,832 18,55,120 2,98,70,519 JUN 1,82,19,965 38,10,372 6,75,521 2,27,05,858 JUL 2,48,82,609 42,62,647 6,88,089 2,98,33,345 AUG 3,01,30,598 85,38,040 9,18,388 3,95,87,026 SEP 3,04,32,797 32,63,320 7,52,642 3,44,18,750 OCT 3,15,88,025 69,13,434 11,04,229 3,96,05,687 NOV 5,20,60,021 85,31,617 16,29,098 6,22,20,735 DEC 2,53,83,614 99,67,853 7,48,685 3,61,00,152 JAN 2,95,54,316 58,74,207 10,20,664 3,64,49,187 FEB 3,90,39,342 2,59,44,273 14,77,261 6,64,60,876 MAR 20,21,682 4,62,406 0 24,84,088 MONTH FY 2016-17 CASH SALES SALES WITH RECEIPT TROUGH BANKING CHANNELS EXCHANGE OLD GOLD TOTAL SALES APR 2,19,56,304 35.02.300 5.47....