TaxTMI 
TaxTMI 
2026 (4) TMI 328
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....gly the Assessing Officer issued mandatory notices under the Act calling assessee to respond to the deposit of Rs. 3,58,29,000/- in its bank account in old currency notes. As a matter of fact, the assessee had 7 accounts in Bank of Maharashtra. The Assessment Order shows that Deputy Director Income Tax (Investigation Wing-8) New Delhi had issued summons and assessee had provided sales data of Financial Year 2016-17, 2015-16 & 2014-15 to investigation wing. Assessee had furnished that the cash deposited is out of cash sales and furnished cash books and sales and purchase invoices. It was observed from the submissions of the assessee that assessee has made only 9 sales in the month of October, 2016 only and 4 sales in the month of December, 2016. However, in the month of November, 2016 assessee has made 226 sales out of which 223 are cash sales and that too in just 8 days from 01.11.2016 to 08.11.2016 and not even single sale is made from 09.11.2016 to 30.11.2016. The sales data of assessee for Financial Year 2015-16, 2014-15 was also analyzed and from it also was found that not more than 30 bills have been raised in any particular month. It was further found that sales invoices in t....
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....1,401 January 2017 1,401 0 0 3,80,000 0 2,38,000 1,43,401 February 2017 1,43,401 0 759 2,00,000 0 2,05,802 1,38,358 March 2017 1,38,358 0 0 4,75.000 0 1,75,955 4,37,403 6.2 By booking cash sales of Rs. 3,51,94,491 between 01.11.2016 and 08.11.2016, the appellant could explain the cash deposit of Rs. 3,58,29,000 in bank account between 10.11.2016 and 13.12.2016 as shown below: Sr. No. Date of deposit Amount deposited (Rs.) Amount deposited (Rs.) i) Bank of Maharastra CC Account No. 60126341827 10.11.2016 40,00,000 15,11.2016 1,08,000 15.11.2016 95,00,000 19,11.2016 60,00,000 29.11.2016 19,00,000 30.11.2016 36,00,000 13.12.2016 29,000 Total(A) 3,58,29,000 6.3 However it appears strange that the appellant who did not record any cash sales before 1st November and after 8th November managed to make cash sales of Rs. 3,51,94,491 between 01.11.2016 and 08.11.2016. Almost 30% of the entire turnover for the year was booked in one week. The explanation of the appellant is not credible. This appears to be a case of introducing unaccounted mon....
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.... only 1-2 customers could be accommodated at a time. 6.7 The AO has also pointed out that the closing cash in financial years 2016-17, 2015-16 and 2014-15 was much lower than cash in hand as on 08.11.2016. This is shown below. It can be seen that the cash balance shown by the appellant as on 08.11.2016 has no relation to the usual pattern of cash holding in the business. FY 2014-15 8,55,818 2015-16 3,245 2016-17 43,404 08.11.2016 3,57,36,271 6.8 The AO treated the cash deposited during demonetisation in bank account (Rs. 3,58,29,000) as unexplained credit u/s 68. The appellant argues that the cash deposits in bank account are explainable from the cash generated in the business. The appellant also argues that what has already been offered as sales cannot be again taxed under section 68. 6.9 In my view the AO made an error in taxing cash deposits in bank account under section 68. It is trite law that bank account does not form part of the books of the appellant and hence section 68 does not apply to deposits in bank account. However this is only a venial mistake. The foregoing discussion shows that the amount shown as ca....
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.... Section 115BBE was inserted by Finance Act 2012 with effect from 1-4-2013. As on 1-4-2016 the financial year in which the subject seizures occurred section 155BBE provided for 30 percent tax on income referred to in sections 68, 69, 69A, 69B, 69C and 69D. The same was amended by the 2nd Amendment Act; with effect from 1-4-2017, enhancing the rate to 60 per cent. Hence there was no new liability created and the rate of tax merely stood enhanced which is applicable to the assessments carried on in that year. The enhanced rate applies from the commencement of the assessment year, which relates to the previous financial year. [Para 13] Likewise it was by Chapter II, heading 'Rates of Income Tax', as provided in the Finance Act 2016, that a surcharge was introduced by way of the 3rd proviso of section 2(9) of that Finance Act. This comes into effect from the Financial Year 2016-2017; which is the year in which the subject seizures were occasioned The proviso refers to various provisions where the advanced tax computed under the first proviso stands increased by a surcharge for the purpose of the Union. Section 115BBE is one of the provisions referred to in the 3r....
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....king rejection of books and accepting the profits declared, the cash sales could not have been doubted. 4. On the contrary ld. DR has submitted that Assessing Officer and ld. CIT(A) have both examined the issue on the basis of relevant figures and the facts of sales during demonetization period being of not properly documented established that the invoicing is not genuine. 5. We have given a thoughtful consideration the facts and circumstances and the first thing that we intend to observe is that appellant has placed following evidences on record, during the course of assessment proceedings in support of cash sales made by appellant from 1st to 8th of November' 2016: i. Copy of the cash book of KP Diamonds for the period 1.4.2016 to 31.3.2016 (pages 352-389 of Paper Book) ii. Details of cash deposits (92) iii. Details of purchases made during the financial year 2016-17 (60-62) iv. Details of party transactions covered u/s 40(A)(2)(b) made during the financial year 2016-17 (63) v. Copy of sales register (344-351) vi. Copy of the VAT return (275-343) vii. Copy of stock audit report (212-221) viii. Copy ....
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....is a jeweller and October, November is festive season and the cash has been deposited out of cash sales to the customers which is recorded in the books of accounts. 7.3 Once the sales made by appellant are supported by stock register, sale bills, and sale duly disclosed in vat returns which is verified and accepted by vat department no addition can be made. Reliance is rightly placed by ld. Counsel on the following judicial pronouncements: i. 441 ITR 550 (Del) (HC) PCIT Vs. Agson Global (P) Ltd. (extracted at pages 406- 408 of Paper Book) ii. 277 Taxman 423 (Del) Pr. CIT v. Akshit Kumar (extracted at pages 408-409 of Paper Book iii. 424 ITR 195 (Bom) Pr CIT vs Sunshine Import & Export Pvt Ltd.(extracted at pages 409-410 of Paper Book) iv. 224 TTJ 705 (Del) DCIT vs. BawaJewellers Pvt. Ltd. (extracted at pages 410-411 of Paper Book) (i) 189 ITD 608 ACIT vs. Hirapanna Jewellers (extracted at page 411 of Paper Book) (ii) 140 taxmann.com 588 Smt. Charu Aggarwal vs. CIT (extracted at pages 411-412 of Paper Book) (iii) 30 taxmann.com 141 (ITAT - Banglore) Anantpur Kalpana vs. ITO (extracted at page 412 of Paper Book) ....