TaxTMI 
TaxTMI 
2026 (5) TMI 1252
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.... the period of demonetization, the assessee has made cash deposits in SBN of Rs. 97 lacs in the bank accounts. Regarding the immediate source of the said cash, it was explained by the assessee that the same was deposited out of accumulation of cash sales as well as bank withdrawal made from time to time and in support, assessee has filed copy of cash book and other details as called for from time to time. However, the AO has not accepted the claim of the assessee and made the addition by observing that the assessee has failed to establish the nexus between cash withdrawals and cash deposited and major cash sales shown in the month of October, 2016 was an afterthought to establish the source of cash deposit in SBN, and therefore, AO invoked the provisions of section 68 r.w.s 115BBE made the addition for the cash deposited in SBN during the same demonetization period of Rs. 97.00 lacs. 3. Against the said order, assessee filed an appeal before the Ld. CIT(A) who dismissed the appeal of the assessee, therefore, the assessee is in appeal before the Tribunal. All the grounds of appeal taken by the assessee are with respect to the confirmation of the addition of Rs. 97,00,000/- made u....
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....icient stock available with the assessee of raw materials as well as finished goods out of which the sales were made. The AO has not doubted the stock details so filed nor has doubted the trading results declared. Further the turnover was declared before the VAT authorities have been accepted. Under these circumstances, the cash representing such sales is again added it could be in double addition, first by making entire cash sales as unexplained credits. 7. The realization of cash sales is duly recorded in the cash book maintained on day to day basis which is evident from the perusal of the cash book submitted before the lower authorities and are available in paper book. Assessee has deposited SBN during the demonetization on various dates out of the cash available as on date with assessee as on the closing hours of 08.11.2016 i.e. the date when the demonetization was announced by the hon'ble prime minister and was the last day upto which the SBN could be accepted as valid currency. The AO is required to consider the records of the assessee such as stock register, bank statement, monthly sales summary, possibility of back-dating of cash sales or fictitious sales etc. before mak....
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....es and sales made by the assessee. Therefore, addition so made u/s. 68 of the Act without finding out any specific defects in books of account and also without rebutting the evidences produced is unjustified. 11. The hon'ble Delhi High court in the case of CIT v. Kailash Jewellery House in ITA No. 613/2010 (Delhi High Court) has held as under: "In the facts of above case cash of Rs. 24,58,400/- was deposited in bank account. The Assessing Officer made the addition on the ground that nexus of such deposit was not establish with any source of income. The assessee claimed that it was duly recorded in the books on account of cash sales and was considered in the Profit and Loss Account. The Assessing Officer had verified the stock and cash position as per books and had accepted the same. Complete books of account and cash book was submitted to the Assessing Officer and no discrepancy was pointed out. On this basis CIT(A) deleted the addition. Tribunal also observed that it is not in dispute that sum of Rs. 24,58,400/- was credited in the sale account and had been duly included in the profit disclosed by the assessee in its return. Therefore, cash sales could not be treated a....
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....are not recorded in the books of account. In this case, the above expression has no relevance since the assessee had already declared the cash sales in its books. In the similar situation, the coordinate bench has held in the case of J.R. Rice India (P) Ltd as under: "At the cost of repetition, to the extent of sales made, the stock position is also correspondingly reduced by the assessee which goes to prove the genuineness of the claim of the assessee. On examination of the cash book of the assessee, it is found that the assessee had cash balance of Rs. 55.94 lakhs as on 8-11-2016, i.e., the date on which demonetization was announced, which sufficiently explains the source of deposit of Rs. 52.60 lakhs in specified bank notes. Apart from this, the assessee had duly furnished the month wise details of sales, month wise details of purchase, corresponding freight charges incurred month wise, month wise power and fuel expenses and month wise selling expenses in the form of rebate and discount. The assessee also furnished the quantitative details of goods month wise for rice, sugar, chana dal and wheat flour before the Assessing Officer. All these facts clearly go to prove the....