TaxTMI 
TaxTMI 
2025 (2) TMI 1865
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....nce the assessee did not furnish the required documents to prove the cash credits, the AO assessed the above said amount as unexplained cash credit u/s 68 of the Act. 2.1. The AO noticed that the assessee has made cash deposits to the tune of Rs. 5,95,65,000/- in three of its bank accounts during demonetization period using SBNs. When enquired about the same, the assessee furnished the details of cash sales and also the cash deposits made into the bank accounts. The assessee also uploaded the details of stock statement and VAT statements to the AO. It also furnished the details of purchases of gold along with the details of suppliers. In this regard, the AO issued notices u/s 133(6) of the Act to nine suppliers. In response thereto, the AO received replies from five suppliers only and the remaining notices issued to four suppliers were returned unserved. Accordingly, the AO took the view that the purchases made from four suppliers remained unverified. Accordingly, he took the view that the assessee has deposited its own unaccounted money into the bank accounts on compulsion due to demonetization. The AO further noticed that the assessee has made cash sales in retail showing each....
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.... were made could not be identified. In our view, both the reasons cited by the AO for finding fault with the books of accounts do not justify rejection of books, i..e, they cannot be considered as defects in the books of accounts. The AO has only expressed doubts about the supporting evidences relating to purchases and sales. However, a perusal of the details furnished by the assessee before the AO would show that the assessee has given all the evidences that were available with it to prove both purchases and sales. They are listed out below:- a. Copy of partywise Purchase summary b. Copy of partywise Sales summary c. Copy of partywise confirmation of sales and purchases (credit) d. Copy of purchase invoices e. Copy of all sales invoices f. Copy of Stock summary g. Copy of bank statements h. Copy of VAT returns. Besides the above, the books of accounts of the assessee have been audited and the auditor did not find fault with them. We notice that the AO also did not find fault with any of the documents furnished by the assessee. 6.1. The AO took the view that the purchases made from some of the parties are....
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....not find fault with the stock summary furnished by the assessee. When the transactions of purchases and sales have duly been recorded in the stock register, it would show that there was physical movement of corresponding goods. In that case, it may not be proper to suspect the corresponding purchases and sales. 6.4. Accordingly, we are of the view that the rejection of books of accounts by the tax authorities was not justified. Accordingly, we reverse the decision so taken by them. 7. The first issue on merits relates to the addition of Rs. 30,34,000/- relating to unsecured loans made u/s 68 of the Act. The AO noticed that the following unsecured loans were outstanding as on 31-03-2017:- Rameshchandra Shah 20,00,000 Jyoti Granite and Marble 10,00,000 Hanumant Sales Corporation 34,500 30,34,500 Before the AO, the assessee furnished a computerized confirmation letters obtained from the above said three parties, but they did not have PAN, address and signature of the concerned parties. Hence the AO added the above said loans as unexplained cash credits u/s 68 of the Act. 7.1. The Ld CIT(A) granted partial relief in respect of this issue. Howe....
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.... ACIT vs. Ramlal Jewellers (P.) Ltd. [2023] 154 taxmann.com 584 (Mumbai - Trib.) 7 Smt. Charu Agarwal vs. DCIT [2022] 140 taxmann.com 588 (Chandigarh - Trib.) 8 ACIT, Central Circle - 1, Viskhapatnam vs. Hirapanna Jewellers [2021] 128 taxmann.com 291 (Visakhapatnam - Trib.) 9 Fine Gujaranwala Jewellers vs. ITO [2023] 151 taxmann.com 340 (Delhi - Trib.) 10 R. S. Diamonds India (P.) Ltd. vs. ACHT [2022] 145 taxmann.com 545 (Mumbai - Trib.) 11 DCIT Circle - 2(1)(1) vs. M/s Kundan Jewellers Pvt. Ltd. ITA No. 1035/Mum/2022 (Mum-Trib.) 12 ITO 4(3)(1) vs. Zee Bangles Pvt. Ltd. ITA No. 815/Mum/2022 (Mum-Trib.) 13 DCIT - 6(1)(2) vs. Bandari Gold and Jewellers Pvt. Ltd. ITA No. 1564/Mum/2022 (Mum-Trib.) 14 Bandari Gold and Jewellers Pvt. Ltd. vs. CIT(A) ITA No. 1619/Mum/2022 (Mum-Trib.) 8.1. We may gainfully take support of the decision rendered by the Co-ordinate Bench in the case of Ramlal Jewellers P Ltd (supra), wherein identical issue has been decided in favour of the assessee. The relevant observations made by the Co-ordinate Bench are extracted below:- "12. We find that the only reason given by the ld. AO for treating the ....
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.... cash in the bank account which is tallying with the entries in regular cash book, cannot be treated as deposits made out of any undisclosed income. 14. Addition u/s.68 on account of cash deposits cannot be made simply on the reason that during the demonetization period, cash deposits vis-a-vis cash sales ratio is higher. If the Shri Ramlal Jewellers Pvt. Ltd parties during the period of demonetization has purchased huge quantity of jewellery on cash which has been duly recorded in the books of accounts of the assessee and also tallying with the quantity of stock, then simply because there was a huge cash sales in that particular month cannot be the reason for treating it as undisclosed income from undisclosed sources. Here in this case the parties to whom notices u/s. 133(6) were issued have confirmed the purchases but also filed the purchase bills. The ld. AO cannot disbelieve the purchases made from the assessee simply on the ground that those parties could not submit the source of their funds which is not the requirement of the assessee to prove specifically when assessee is a retail seller of jewellery and even law does not prohibit any cash sales or there is any requ....