TaxTMI 
TaxTMI 
2026 (4) TMI 334
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....he bank during the demonetization period U/s 68 treating the same as unexplained income and added the same to the income of the assessee inspite of the fact that the assessee company has explained the nature and source of cash so deposited. 2. On the facts and in the circumstances of the case as well in law, the NFAC has erred in law and in facts by considering entire cash of Rs. 30,84,500/- deposited during the demonetization period as unexplained and adding the same to the total income of the assessee company U/s 68 whereas the fact is that the assessee company has made cash withdrawal of Rs. 11,25,000/- from the bank accounts of the company in the month of October, 2016 and the same was remaining in hand on the date of announcement of demonetization. 3. On the facts and in the circumstances of the case as well in law, the NFAC has erred in law and in facts by rejecting the books of accounts of the assessee by invoking provisions of section 145. However, the fact is that the Ld.AO as well as the NFAC has failed to point the defect in the books which leads to the rejection of books of accounts. 4. On the facts and in the circumstances of the case as well....
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....sited during demonetization period of Rs. 30,84,500/- to the income returned by the assessee as unexplained credit u/s 68 of the Act, subjecting it to tax at the special rate prescribed under Section 115BBE of the Act. 5. The Ld. CIT(A) found merit in the order passed by Assessing Officer including the rejection of books of accounts and the addition made on account of unexplained cash deposited during demonetization period. However, he noted that the cash deposits relating to cash sales made by the assessee were duly considered while computing the income returned by the assessee to tax. He therefore reduced the amount of cash deposits from the profits returned by the assessee and subjected the same to tax separately at the special rate prescribed under Section 115BBE of the Act. 6. Aggrieved by the same, the assessee has come up in appeal before us challenging: (i) The rejection of books of accounts of the assessee. (ii) The addition made under Section 68 of the Act on account of unexplained cash deposited during the demonetization period of Rs. 30.84 lakhs. (iii) Levying tax on the addition so made of unexplained cash deposit in bank account, at th....
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....carried out evenly throughout the year. It is from this perspective that the AO concluded that cash sales have been inflated to cover up for the unaccounted money deposited during demonetization. The reason behind invoking provisions of section 145(3) was that the books of accounts did not portray a true and correct picture of the business of the appellant. The appellant on the other hand contented that its accounts were audited and the cash deposits have been reflected in the cash book and deposit into bank account during demonetization was out of the available cash in hand as on 08.11.2016." 9. A perusal of the above would reveal that he noted sharp increase in cash sales in the pre-demonetization period i.e. between 01.04.2016 to 08.11.2016. The Assessing Officer has noted the facts relating to the same at the Para 8.1 (i) of his order as under: (i) Sharp increase in cash sales in pre-demonetization compared to previous year in same reporting period and compared to post-demonetization period, as under: Month A.Y. 2016-17 A.Y. 2017-18 % increase From 01st April to 8th November 1.90 lakhs 27.93 lakhs 928% 9.1 An abnormal increase of ....
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....vidences, bills, invoices, copies of ITR, bank statement of the parties with whom the cash sale was done during the relevant period. The Ld. CIT(A) has confirmed the rejection of books of accounts noting the above discrepancies and holding so at page 57 of his order as under: "I have considered the submission of the appellant and the findings of the A.O. I find "that the issue of phenomenal rise in cash sales only during the month of October 2016 could not be properly explained by the appellant. The nature of business remained the same as in earlier years. It is not the fact that there were some exceptional occurrences which multiplied the quantum of cash sales only prior to the period of demonetization. The appellant has brought this money by preparing invoices which do not contain full particulars of the job undertaken by the appellant. Entries in the cash book have been made for cash sales with some make belief invoices and on the basis of that cash book, the P&L account and balance sheet has been prepared and eventually audited by an auditor. The point raised by the appellant is that no specific defect in the books of accounts has been pointed out and, as such, rejecti....
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....icable for the assessment year i.e. A.Y. 2017-18. The relevant findings of the Hon'ble High court at para 11-13 of its order is as under: "11. Before we look at the amendments carried out, on facts, there were two seizures of cash made on 02.08.2016 and 03.11.2016 respectively of Rs. 1,05,03,500/- and Rs. 1,24,68,750/- both in the F.Y 2016-2017. The persons from whom the cash was seized as also the appellant herein admitted that it belonged to the appellant who carries on trading in gold bullion. The appellant not having produced any books of accounts or cash flow statements failed to establish the source of the money seized; which was included in the total income under Section 69A of the IT Act. The writ petition or the appeal does not challenge such inclusion. On the said amounts tax was imposed @60% under Section 115BBE and surcharge @25%. The amendments to the Finance Act were by the 2nd Amendment Act dated 15.12.2016. The enhancement of tax under Section 115BBE was made effective only from 01.04.2017; the commencement of the assessment year 2017-2018, in which the assessments of the previous year are carried out. 12. The assessee contends that the seizures we....