TaxTMI 
TaxTMI 
2026 (6) TMI 535
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....d CIT(A) erred in not considering the replies filed by the appellant in proper perspective. 4. The learned CIT(A) failed to appreciate the fact that the cash deposits into the bank, made by the appellant after 08/11/2016 were out of the sale proceeds of fireworks and the appellant submitted list of all persons from whom cash received along with PAN i.e all are identifiable persons (for sales to them) and there is no unidentifiable persons and all were duly accounted in the books of accounts. Hence, the AO's conclusion the of not accepting the cash deposits in assessee's account by the customers is wrong. 5. The learned CIT(A) failed to appreciate the fact that the A.O. did not follow the standard operation procedure instruction. 6. The learned CIT(A) erred in not considering the fact that the Assessing Officer erred in making an addition of Rs. 2,79,71,000/- treating it as unexplained money u/s.68 without any basis. 7. The learned CIT(A) erred in not considering the scope and effect of the specified bank" Notes (cessation of liabilities) Act dated 28/02/2017 properly. 8. The Appellant relies on the decisions in the following case....
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....ppeal before us. 6. The ld.AR for the assessee assailing the action of the ld.CIT(A) submitted that the assessee has maintained regular books of account, duly audited by a Chartered Accountant as per section 44AB of the Act. During the assessment and first appellate proceedings the assessee had submitted the details of cash balances and source for the same as business collections. Further, the assessee had also submitted the details of the customers along with their PAN (in most of the cases) in support of the collections of cash or cash deposited directly to the account of the assessee on account of the sales proceeds. The ld.AR also submitted that the AO has not followed the standard operating procedure as specified vide circular dated 09.09.2019 in F.No.225/145/2019- ITA-II, wherein AO was specifically instructed to make comparative analysis of cash sales, cash deposited. The guidelines also suggested observance of special indicators for bogus sales or backdated sales. However, the ld.AR contended that the AO has made any such findings nor rejected the audited books of accounts for any defects / errors. The ld.AR also took us through the details of the parties list from wh....
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....s during Dasara and Deepavali. The assessee maintains regular books of account which are duly audited u/s.44AB of the Act. The books of account have not been rejected by the Assessing Officer u/s.145(3) of the Act. The cash deposits impugned in the present appeal are admittedly recorded in the regular cash book maintained by the assessee. The sole basis for the addition made by the Assessing Officer is that the assessee had deposited a sum of Rs. 2,79,71,000/- during the demonetisation period and that, according to the Assessing Officer, the assessee was not an entity authorized under Notification S.O. No.3407(E) dated 08.11.2016 to receive Specified Bank Notes (SBNs). On this premise, the Assessing Officer treated the deposits as unexplained cash credits u/s.68 of the Act. The ld.CIT(A), sustained the entire addition Rs. 2,79,71,000/- u/s.68 of the Act on the ground that the assessee failed to satisfactorily explain the source of cash deposits. In this context, it is essential to examine whether the statutory conditions of sections 68 are attracted. Section 68 applies where any sum is found credited in the books of an assessee and the assessee fails to offer a satisfactory e....
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....nce of such analytical exercise, the addition appears to be founded on presumption rather than evidence. The coordinate benches of this Tribunal have had occasion to consider identical issues arising out of demonetisation deposits in the case of fireworks manufacturers and other business assessees (Supra) and held as follows : - where cash deposits during demonetisation were duly recorded in books and supported by sales invoices, and where the Assessing Officer had not rejected the books nor found any defect in stock or sales records, addition u/s.68 of the Act was unsustainable. - the fireworks industry, peak cash collections during festival season are normal business phenomena and, in the absence of evidence of bogus sales or inflation of turnover, deposits cannot be treated as unexplained merely because they were made during demonetisation. - when books of account are not rejected and sales are accepted, corresponding cash receipts cannot be taxed under section 68 or 69. The Tribunal emphasized that suspicion, however strong, cannot take the place of proof. - violation, if any, of the demonetisation notification may have consequences under ....
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....onfirmation letter stating that she had paid consideration in cash. Therefore, once the AO is accepted the fact that the assessee has received consideration in cash, then the source for cash deposits during demonetization period should have been accepted out of sale consideration received for property. In my considered view, the Assessing Officer grossly erred in not accepting the source for balance cash deposits of Rs. 7,67,500/-, even though, the assessee has filed necessary evidences to prove the availability of source for cash deposits. The Ld.CIT(A) without appreciating the fact simply confirmed the additions made by the AO. Hence, I set aside the order of the Ld.CIT(A) and direct the AO to delete the addition made towards cash deposits of Rs. 7,67,500/- u/s.69A of the Act. 8. In the result, appeal filed by the assessee is allowed." 11. The facts of the present case are materially similar and assuming that the cash has been collected in SBNs after 08.11.2016 is not prohibited and hence such transactions cannot be treated as unexplained once the source is established. In the present case, the Revenue has not demonstrated that the assessee introduced unaccounted mone....