TaxTMI 
TaxTMI 
2026 (6) TMI 415
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.... Whether, on the facts and circumstances of the case and in law, the Ld.CIT(Appeal) has rightly deleted the addition of Rs. 3,90,32,360/-made u/s 68 r.w.s 115BBE of the Act on the basis that the addition was merely made on surmises, conjectures, suspicion, presumptions and assumptions? 3) Whether, on the facts and circumstances of the case and in law, the Ld. CIT(Appeal) has rightly deleted the addition amounting to Rs. 3,90,32,360/- made u/s 68 r.w.s 115BBE of the Act on the basis that the cash receipts represent the sales which has been offered for taxation but ignoring the fact that there is a gap of period between cash sales and cash deposit. 4) Whether, on the facts and circumstances of the case and in law, the Ld. CIT(Appeal) has rightly deleted the addition of Rs. 3,90,32,360/- made u/s 68 r.w.s 115BBE of the Act on the basis that the assessee had sufficient stock to effect the sales but ignoring the fact that cash deposit include the cash receipts from the debtors ignoring the fact that section 40A(3) of the Income Act which restricts the limit of Rs. 20,000/-. Further no relevant documentary evidence for the same has been furnished by the assessee with re....
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....nse appellant submitted the requisite details. 3.2. The AO noticed that the appellant company had deposited a sum of Rs. 3,90,32,360/- in specified bank notes (SBN) in its bank accounts maintained with Bank of Baroda, HDFC bank and ICICI Bank during demonetization period (09/11/2016 to 30/12/2016). The AO also noticed that there was an abnormal increase in cash deposit during such period. The AO inter alia asked the appellant to explain the source of such cash deposit. The AO also asked the information on cash deposits in bank during AY 2016-17 and AY 2017-18; details of monthly cash sales and details of parties from whom cash was received from time to time. In response, the appellant submitted information and data in the tables as asked by the AO. From the information filed by the appellant the AO inferred that the appellant had included receipt from debtors to justify large cash receipts during AY 17-18. As per AO's payment in cash by debtors is not permissible beyond the prescribed limit u/s 40A(3). Therefore, including payments made by debtors in cash is not a valid explanation. The AO noticed that total cash sales including cash received from debtors during November a....
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....3/- was not supported by sales figure. ii. The appellant company had deposited large amount of cash totaling to Rs. 1,60,00,000/- in a short duration of 4 days which is abnormal. iii. The appellant has explained that the source of cash deposits was partly pertained to the payments received from debtors in cash. The AO is of the view that no debtor can make payment in cash more than prescribed limit of Rs. 20,000/- under the provision of section 40A(A) of the Act. iv. Since the appellant company had failed to explain source of SBNs amounting to Rs. 3,90,32,360/- the AO made addition u/s 68 read with section 115BBE of the Act. 4.3.4. During the assessment proceedings, being asked by the AO, the appellant had furnished comparative data of cash deposit in F.Y. 2015-16 and 2016-17 which shows that the appellant had deposited cash at Rs. 19.24 crores in the immediate proceedings assessment year (i.e. F.Y. 2015-16) whereas it has deposited cash in the financial year under reference (i.e. F.Y. 2016-17) at Rs. 20.54 crores. Similarly, during corresponding period of demonetization in the immediate proceeding year (from 09.11.2015 to 31.12.2015) the appella....
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....curving and discouraging the payment in cash against any purchases or expenditure against which deduction is claimed. In the instant cash, the appellant company has not made any payment in cash exceeding to Rs. 20,000/- a day to any party rather it has received payments in cash from its debtors. The appellant company is the receiver of cash income against the retail sales of uniforms across multiple outlets. The AO has not pointed out any payment made to any party by the appellant in cash exceeding to Rs. 20,000/- in a day. Therefore, there is no application of Section 40A(3) of the Act to the facts of the instant case. The AO has misplaced the provision of Section 40A(3) of the income tax Act. Hence, the contention and inference deduced by the AO is misplaced and incorrect. 4.3.7. Regarding gap of Rs. 3,17,10,183/- between the total cash sale during the months of November and December 2016 shown at Rs. 3,20,45,913/- and total cash deposits during these months at Rs. 6,03,35,730/-, the appellant has, at first, pointed the calculation mistake done by the AO showing that the said gap between the two figures is Rs. 2,82,89,817/- (i.e. Rs. 6,03,35,730 - 3,20,45,913) not Rs. 3,....
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....cords of purchases, sales and stocks. Purchases, sales and the Stock are interlinked with each other. Every purchase increases the stock, and every sale decreases the stock. Once there is no defect in the purchases and sales, there cannot be any doubt on the availability of stock. The assessing officer accepted the purchases and closing stock which has direct nexus with the sales. The movement of stock is directly linked to the purchase and the sales. The AO did not find any defects in the books of accounts such as trading account, P&L account and the financial statements. The relevant documents including cash books for A.Y. 2016-17, 2017-18 and 2018-19 were furnished by the appellant during the assessment proceedings. The appellant has furnished these documents during the appellate proceedings also. The AO has not pointed out any deficiency or inconsistency in the cash book filed by the appellant. A perusal of cash books of the appellant shows that the appellant had kept large amount of cash in hands in previous and subsequent financial years also. The AO did not question the veracity of the cash books and cash sales made by the appellant. He has not rejected books of account of t....
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.... allude that the cash deposits had a tainted source and that were not genuine business receipts. It was suggested that the Ld. CIT(A) has consequently given excessive and erroneous relief. The Ld. Sr. DR also submitted that principles of res judicata do not to direct tax stature and therefore each year has to dealt separately. 6. The ld. Counsel for the assessee reiterated the argument made before the Ld. First Appellate Authority by placing reliance upon judicial precedents covering the matter. The ld. Counsel submitted that the very fact that books of accounts have not been rejected makes the Impugned addition impermissible. The ld. Counsel argued that it is consistently doing the same line of business and since its sales are cyclical, it generates cash during this part of the year after Deewali, when schools are opening after vacation as well as stitching of new winter uniforms. He submitted that in earlier year also nearly identical amount of cash deposits were made in the bank account. 7. We have heard the rival submissions in the light of material placed in record. We have noted from the order of the ld. CIT(A) extracted hereinabove that the same is based upon correct u....
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....return of income for the assessment year 17-18 was electronically filed by the Assessee on 13-01-2018 declaring loss of Rs. 4,71,475/-. During the course of scrutiny assessment proceedings, the learned AO noted that Assessee had made cash deposits of Rs. 53,82,150/- in HDFC Bank Ltd, East Patel Nagar, Delhi during the demonetization period in specified bank notes. The Assessee submitted that the said cash deposits were made out of cash sales which are already disclosed in the books of accounts and in the income tax return. The assessee submitted that during the assessment year 2017-18, it had made cash sales of Rs. 53,50,422/- out of total sales of Rs. 58,37,645/-. The assessee also submitted that major part of cash sales had taken place in the months of October 2016 to 8-11-2016. The assessee explained the reason of huge sales made in cash during this period by attributing the same to various auspicious festival occasions including Diwali. Since the assessee was engaged in the business of selling of home decor items, it is the usual practice for the customers to make huge purchases of home decor items during the festive occasions including the period of Diwali. The assessee specif....