TaxTMI 
TaxTMI 
2023 (8) TMI 1711
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....llion on 13.11.2016, in the course of which cash of Rs. 2.50 crores was seized which inter alia comprised of cash of Rs.98 Lakhs found in the hands of Shri Dungersing Parmar, an employee of M/s. Swarnsarita Jewellers (Assessee). The AO noted that, according to DDIT(Inv.)-5(1), Mumbai, this cash of Rs.98 lacs belonged to the assessee which was corroborated by the statement of assessee's employee, Mr. Parmar, recorded in the course of search u/s 132(4) of the Act. In this background facts, the AO, in the course of assessment, required the assessee to furnish details of the source and cash of Rs. 98 Lakhs along with supporting evidence. Before the AO, the assessee is noted to have furnished the cash register, sales register, stock register, books of accounts, sale bills etc. The assessee explained that the source of cash found from the possession of his employee represented realization from sale of bullion/jewellery in cash. Upon perusal of the books furnished by the assessee, the AO noted that the majority of the sales reported by the assessee was claimed to have been made on the day of demonetization i.e. 08.11.2016. The assessee had explained that, upon the announcement of demoneti....
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....sh out of cash sales made by appellant. Copy of cash Book and Bank Book was maintained and Audited. To substantiate the appellant's claim that cash of Rs. 98,00,000/- is out of cash sales appellant has submitted following documents during the course of assessment proceedings: a. Cash Sale Register along with all the cash sale bills b. Copy of Purchase bills along with bank statement duly marked c. Jewellery Stock Register d. Balance Sheet and P & L account. Appellant has discharged its onus by submitting documentary evidence in regards to cash sales of Rs.98,00,000/-. Sales and purchases are duly recorded in books of accounts. Copy of sales register and purchase register were produced before AO. All transactions of purchases/ sales are recorded in stock register. There is no discrepancy in quantity. Copy of stock register was available with appellant. Once there is no defect in the purchases and sales and the same are matching with inflow and the outflow of stock, there is no reason to disbelieve the sales. The AO has not disturbed the closing stock which has direct nexus with the sales The movemen....
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....d for taxation under the 'Business Income'. Perusal of the stock register along with sales register shows that the movement of stock fully reconciles with the reported sale proceeds on the day of demonetization. The Ld. DR was also unable to controvert the fact that the AO had accepted the sales and the stocks in as much as he had not invoked provisions of Section 145(3) of the Act and rejected the book results. The AO is also noted to have the assessed the profits derived from these sales which inter alia included the sale proceeds of Rs.98 received on the day of demonetization. The Ld. DR although emphasized on the suspicious features which were noticed by the AO casting aspersions on the sales made on the day of demonetization and stock movement etc., but the fact remains that the AO ultimately did not reject in the books of accounts and trading account, P&L account and the financial statements and also assessed the business profits derived from such sales to tax. We therefore agree with the Ld. AR that, once the book results and inter alia the sale proceeds of Rs.98 lacs had been accepted by the AO as assessee's business income, it was unjustified on AO's part to again assess t....
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....s undue rush in various jewellery shops immediately after announcement of demonetization through the country." 9. The Ld. AR also showed us that the assessee had achieved higher gross profit & net profit margin in comparison to preceding year which supported the assessee's case that the sales made on the night of demonetization was in pursuance of the excellent opportunity presented to them. 10. In view of the above facts therefore, according to us, the Ld. CIT(A) had rightly held that, when the sale proceeds of Rs.98 lacs had been supported with book results & primary evidences, which were not disproved by the AO, and that the same had already been assessed by the AO as revenue receipts from 'Business', then it was wholly improper for the AO to again tax these sale proceeds as unexplained cash credit u/s 68 of the Act, as it would amount double taxation of the same sum. The reliance placed by the Ld. AR in support thereof on the following decisions are found to be relevant. a. CIT Vs Vishal Export Overseas Ltd [TA No. 2471 of 2009] (Guj HC) "5. ...... The Tribunal however, upheld the deletion of Rs.70 lakhs under section 68 of the Act observing that when th....