TaxTMI 
TaxTMI 
2026 (4) TMI 1177
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.... 2. The brief facts of the case are that the assessee had filed its return of income for the A.Y. 2017-18 on 15.08.2017 declaring total income of Rs. 7,88,810/-. The case of the assessee was selected for scrutiny under CASS. The AO noticed that the assessee had made cash deposits of Rs. 63,00,000/- in his bank account during the demonetisation period from 09.11.2016 to 13.12.2016. The AO was not satisfied with the explanation of the assessee regarding the source of cash deposits. Therefore, the entire cash deposit of Rs. 63,00,000/- made in the bank account during demonetization period was treated as unexplained and added to income. Further, the AO had also made addition of Rs. 14,96,530/- u/s. 40A(3) of the Act as well as certain other ad....
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....he bank account. Shri Parin Shah, the Ld. AR of the assessee explained that the assessee is engaged in business of manufacturing and trading of gold, silver and other precious ornaments and that the cash sales is a regular feature of the business of the assessee. He explained that the cash sales were made in all the months not only in the current year but also in the preceding financial year and that the entire cash deposit of Rs. 63,00,000/- made in the bank account during the demonetisation period represented the cash balance of the assessee. The Ld. AR submitted that the cash sales made in the current year was substantially lower than the cash sales in the preceding financial year. Under the circumstances, the AO was not correct in holdi....
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....76 0 0 Total 99,25,617 4,92,09,552/- 8. The AO had rejected the explanation of the assessee for the reason that the cash sales in the month of October' 16 was much higher compared to the cash sales of earlier months. On this basis he had concluded that the cash sales figure was manipulated to explain the cash deposits in the bank accounts. Merely because the cash sales in the month of October' 16 was higher, the authenticity of the sales cannot be doubted. As per normal trend in the jewellery business, the sales are higher during the festive months of October and November. In fact, the cash sales of Rs. 35,91,476/- in the month of October 2016 was correspondingly lower than the cash sales of Rs. 42,11,955/- made ....
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....ct. In the course of assessment, the AO found from the cash book that the assessee had made certain cash payments exceeding Rs. 20,000/-. Further the AO was also not satisfied with authenticity of cash vouchers, as signature of the recipient was not appearing in many of the vouchers. Therefore, after excluding the salary payments made in cash, the balance cash expense of Rs. 14,96,530/- was disallowed u/s. 40A(3) of the Act. Shri Parin Shah, the Ld. AR of the assessee explained that as per the software utilized by the assessee, all the cash payments made on a particular day were clubbed together and entered in the accounts under voucher. Thus, the amount of cash payment of a particular date as per voucher was found in excess of Rs. 20,000/-....
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....ns is below Rs. 20,000/-. For example, the voucher No. CP/340 dated 10.09.2026 is found to be as under: 12. The above voucher for Rs. 47,500/- was in respect of payment made to four different persons for amounts below the limit of Rs. 20,000/-. Thus the contention of the assessee that the individual payment made to different persons in the voucher for a particular date was below Rs. 20,000/-, is apparently found to be correct. However, the complete address of the parties and the purpose of payment is not found appearing in the vouchers. Since the AO had also doubted the authenticity of the expenses, we deem it proper to set aside the matter to the file of AO with a direction to allow another opportunity to the assessee to produce evidenc....