TaxTMI 
TaxTMI 
2025 (3) TMI 2202
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....atna and Katni. Cash is withdrawn at Indore as centralized purchases are made at Indore. Sales are effected at branches at Satna and Katni. Such cash is retained at these places and deposited in bank at these places. Thus, cash was not available at Indore but was available at Satna and Katni. Cash was withdrawn from bank account at Indore for purchase of goods. Such explanation is not an after thought as cash at branches has been deposited in bank at Satna and Katni regularly. 3. That rejection of cash book and application of section 68 is unjustified and improper. Section 68 has no application when cash is received on account sales consideration. If trading results have been accepted, then purchases/sales can not be added u/s 68 as held in case of CIT vs. Pancham Dass Jain (2006) 205 CTR 0444 and other cases. 4. That cash balance of the assessee shown in its books was sufficient to cover the value of SBN notes and trading results have been accepted as genuine. High denomination notes could not be treated as income from undisclosed sources and assessee could not be required to prove the source of receipt of high denomination notes. Burden of proof that the high de....
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....ver Bars and Stock register for Silver Ornaments. However, the Id. CIT(A) verified stock register for Gold Ornaments only and did not verify Stock register for Gold Bars, Stock register for Silver Bars and Stock register for Silver Ornaments. The movement of gold was clearly reflected in Gold Bar stock register, which was not verified by the Id. CIT(A). 8. That purchases and sales were not inflated. Such purchases and sales were accepted by sales tax department. The sales have declined as compared to AY 2016-17. The appellant has maintained quantitative record of purchases and sales and copy thereof was also filed during assessment proceedings. It was also explained that the rates of gold as on 08-11- 2016 were lowest in the month of November 2016 and therefore sale s increased on 08-11-2016. The appellant is not a retailer but a wholesale dealer in gold and silver ornaments and bullion. 9. That the appellant further carves leave to add, to alter and/or to amend any of the foregoing grounds of appeal as and when necessary." 3. The brief facts of the case are that the appellant is trading in gold and silver ornaments and bullion on wholesale basis under the trad....
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.... and applied tax rates as prescribed u/s 115BBE of the Act, 1961. 4. The matter was carried in appeal before the first appellate authority and the le. CIT(A) has sustained the additions dismissing the appeal by observing in para no. 6.2 of the appellate order as follows: "6.2 Ground no. 1, 2, 3, 4 and 5 are regarding addition of Rs. 70,00,000/- u/s. 68 of the Act. The appellant stated before the AO that the remittances in SBNs were sourced from sales affected at Satna and Katni in cash and this cash is deposited in various bank accounts at Indore, Satna and Katni. It is also submitted that all transactions are duly recorded in the books of accounts. The sales are also duly reflected in the VAT monthly returns and the sales were done in the normal course of business. The said Sales Tax returns have been accepted by the tax authorities is also submitted. The AO did not accept the explanation that cash deposits in SBNs emanated from sale transactions. During the appeal proceedings, the appellant has furnished the same details which were also furnished to the AO. As noted by the AO also, cash book produced is only of the head office at Indore. Huge inflows are reflected in ....
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....4-07-2016 2,29,721/- Cash of Rs. 1,00,000/- was deposited at Satna as cash balance was available at Satna and Katni but not at Indore 12-08- 2016 10,80,697 10,30,000 0 Cash was withdrawn from bank at Indore for making purchases. The assessee purchased goods as under :- On 12-08-2016 2,30,500/- On 13-08-2016 2,92,004/- On 16-08-2016 2,30,741/- Cash was not available at Indore but was available at Satna and Katni as sales were effected at these places. 22-08- 2016 26,04,908 9,99,500 0 Purchases of Rs. 10,97,483/- were made at Indore on 22-08-2016. Cash of Rs. 25,00,000/- was deposited with Indian Bank at Satna on 23-08-2016. Cash was not available at Indore but was available at Satna and Katni as sales were effected at these places. Such cash was deposited in bank on 23-08-2016. 02-09- 2016 8,19,031 13,75,000 7,00,000 Cash was withdrawn from bank at Indore for making purchases. The assessee purchased goods as under :- On 02-09-2016 8,70,708/- On 03-09-2016 7,51,769/- Cash of Rs. 7,00,000/- was deposited with bank at Satna. Cash was not ....
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....date-wise chart of cash deposit from 1st Nov. to 8th, Nov., 2016 are reproduced for read reference: Date Opening Cash Balance Cash Sales Cash deposited in bank Closing Cash Balance 01-11-2016 5,62,700 17,04,264 17,50,000 5,16,964 02-11-2016 5,16,964 61,68,975 60,00,000 6,85,939 03-11-2016 6,85,939 29,51,009 30,50,000 5,86,948 04-11-2016 5,86,948 31,16,936 31,60,000 5,13,884 05-11-2016 5,13,884 16,85,625 15,20,000 7,09,509 06-11-2016 7,09,509 Sunday closed Sunday closed 7,09,509 07-11-2016 7,09,509 53,00,117 15,51,350 44,58,276 08-11-2016 44,58,276 77,82,132 51,80,000 70,60,408 7. He further submitted that the purchases of goods made by him has been accepted and there is no dispute regarding the said purchases and he refers to the bills and invoices issued in course of his sales to prove that his sales to the customers are all genuine and are open for verification, and there is no single instances of any bogus purchase or bogus sales which are brought on record by the Assessing Officer and as such, he says that in the instant case, there is no gro....
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....assessee as shown in the books of account was sufficient to cover the value of SBN notes deposited in bank and trading results have been accepted as genuine. As such he prays before the Bench that the addition made by the AO u/s 68 of the Act and sustained by the first appellate authority amounting to Rs. 70 lakhs on account of cash deposited in Bank post demonetization may please be deleted. 9. In support of his argument, the assessee relied upon various judicial precedents as follows; "9. In Shree Sanand Textiles vs. DCIT ITA no. 1166/AHD/2014, it was held that provisions of section 68 cannot be applied in relation to sales receipts shown by the assessee in its books of account. It is because the sales receipts have already been shown in the books of account as income at the time of sales only. It was also accepted that there is not even an iota of evidence having any adverse remark on the purchases shown by the assessee in the books of account. Once the purchases have bene accepted, then the corresponding sales cannot be disturbed without giving any conclusive finding/evidence. In view of the above, the order of CIT(A) was set aside and AO was asked to delete the add....
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....e names of the persons to whom the cash sales of the bullion were made." 12. It is true that there are some sale bills where no name of buyer is mentioned. In this regard, kind attention is invited to decision of Honourable Bombay High Court in case of R.B. Jessaram Fatehchand (Sugar Deptt.) v. CIT [1970] 75 ITR 33 wherein, it was observed that in the case of a cash transaction where delivery of goods is taken against cash payment, it is hardly necessary for the seller to bother about the name and address of the purchaser. The honourable Court further held that there was no necessity whatsoever for the assessee to have maintained the addresses of cash customers, the failure to maintain the same or to supply them as and when called for cannot be regarded as a circumstance giving rise to a suspicion with regard to the genuineness of the transactions. 13. It was held by the ITAT Visakhapatnam in case of ACIT vs. Hirapanna Jewellers reported in [2021] 128 taxmann.com 291 that impugned addition be deleted where AO made addition under section 68 on account of huge cash amount deposited by assessee -jeweller in its bank account since assessee had explained source of said....
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....sessment order came to be passed by making an addition u/s 68 as unexplained cash credit. CIT(A) dismissed appeal filed by assessee. It was held that specific case of assessee is that sale proceeds of jewellery were source of cash deposited in bank and of entries are supported by books of accounts, purchase vouchers, sales invoice, stock register, VAT records, bank statement etc. at no point of time books of accounts of assessee was rejected and same has been accepted in VAT. In present case, department has not rejected books of accounts of Assessee accepted in VAT. Regular books of accounts were maintained in normal course of business irtwhich no flaw, fallacy or deficiency was pointed out by AO. It is well settled law that once assessing officer accepts books of accounts and entries in books of accounts are matched, there is no case for making addition as unexplained. The reason for disbelieving cash deposit is that assessee has been deposited below Rs. 2 lakh in every transactions that lead to conclusion of Assessing Officer that same has been done to avoid application of provision of section 285BA read with Rule 114E. Said observation made by Assessing Officer is without any ma....
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.... its books of accounts, a day prior to date when vehicle was intercepted and cash was found and seized belonging to assessee company. Assessing officer has partly accepted assessee's contention regarding sum of Rs 57,25,000/- and has not accepted assessee's contention regarding sum of Rs 18,75,000/ -. Cash so found and seized amounting to Rs 57,25,000/- has been duly recorded in its books of accounts in its cash book. Where a substantial part of cash seized representing non-operational receipts has been accepted as cash in hand prior to date of seizure, when it comes to remaining cash representing operational receipts, reasoning adopted by Assessing officer that keeping such huge cash of Rs 18,75,000/- is not normal where bank is locally available cannot be accepted. There is no finding recorded by Assessing officer regarding any fictitious sale entries recorded by assessee in its books of accounts. Therefore, findings recorded by Assessing officer that documents so produced in support of sale receipts from tickets sales are not reliable cannot be accepted in absence of any findings recorded either by Investigation wing or any independent findings recorded by Assessing offi....
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....he same income cannot 'be taxed again 18. It was held in case of Kishore Jeram Bhai Khaniya Vs Income Tax Officer (ITAT Delhi) (ITA No. 1220/Del/2011) that once the amounts have been credited in the sales account and have been duly included while computing the profit, the same cannot be added under section 68 of the Income Tax Act, 1961. The aforesaid principle has been upheld in the following decisions: Delhi High Court - CIT vs Kailash Jewellery House (ITA613/2010) ITAT Delhi - Kishore Jeram Bhai Khaniya Vs ITO (ITA No. 1220/Del/2011) Gujarat High Court - CIT vs Vishal Exports Overseas Limited (fax Appeal No. 2471 of 2009) ITAT Kolkata - New Pooja Jewelers vs ITO [ITA NO. 1329/Kol/2018] Madhya Pradesh High Court - CIT vs Jaora Flour and Foods (P) Ltd., [2012] 344 ITR 294 19. It was observed in case of CIT vs. Vishal Exports Overseas I imited, (Guj HC) rendered in Tax Appeal No.2471 of 2009 and allied matters wherein this court agreed with the view adopted by the Income Tax Appellate Tribunal that when the assessee had already offered sales realisation and such income is accepted by the Assessing Officer to be the income of the assessee, addition of ....
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....ales invoice No. 82 to 158 of Bangaluru and 110 to 216 of Kolkata outlets before AO which were of 28-10-2016 and these were earlier produced before Investigation Wing in F.Y. 2016-17 i.e. after the sales were made and same were verified by the Investigation Wing also. This view of the Id. CIT(A) indicates that the assessee has maintained regular books of accounts, bills, vouchers and day to day stock register having complete quantitative details and said books of accounts are audited. The assessee vide submission dated 27-09-2019 had produced stock record during the course of hearing. The cash sales transactions are recorded in regular books of accounts and the sale are made out of stock in trade for which no adverse finding had been observed by the AO except for the change in the methodology in issuing bills as mentioned at page 7 to 8 of the assessment order. Further the Id. CIT(A) observed that the AO had treated the cash deposited in the bank during the demonetization period in demonetized currency as unexplained cash credit u/s 68 of the Act although the nature and source of the cash deposits being proceeds arising out of cash sales etc. was evident from the entries in the aud....
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....d duly recorded in the books of account cannot be treated as unexplained cash credit under Section 68 of the Income Tax Act, 1961. The Bench held that the assessee has duly shown the cash receipt from the sale of gold/gold ornaments duly recorded in audited books of the account supported by sales bill and stock details. The Assessing Officer has not pointed out any defect in the books of accounts. Therefore, the Assessing Officer cannot treat the cash generated from sales duly recorded in books of account from unexplained/unaccounted sources unless books of account are rejected based on valid reasons. The order of the Commissioner of Income Tax (Appeal) [CIT(A)] was set aside and the Assessing Officer was directed to delete the addition made by him. Thus, the appeal of the assessee was allowed." 10. Per contra, the ld. DR relied upon the order of the ld. CIT(A) and submitted that the assessee has failed to explain the source of the cash deposited during the demonetization period more so due to reasons that the withdrawals and deposits of cash as reflected in the cash book only relates to the Head office at Indore and there are huge inflow of cash on 7th & 8th Nov., 2016 which ac....
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....rom the summary of sales and cash deposits that is submitted for the period of 1st Nov., 2016 to 8th Nov., 2016. It is seen that the total opening cash balance as on 08.11.2016 was 44.58 lakhs and the total sales of the said date was 77.82 lakhs out of which Rs.51,80,000/- has been deposited in the bank on the same date, leaving a closing balance of Rs.70,60,408/- as on 8th Nov., 2016 at the end of the business hours out of which Rs. 70 lakhs has been deposited in bank on 10.11.2016 (that is next day of demonetization, 9th Nov. being bank holidays). We find that the cash balance as per the books was sufficient to cover the value of SBN Notes deposited in bank on the 10th Nov. Moreover, the trading results have been accepted as genuine and there is no adverse finding on record as far as the sales and purchase, shown by the assessee is concerned. 14. Regarding the observation of the ld. CIT(A) in paragraph 6.2 of the appellate order, with reference to the daily inward and outward quantity and value of Gold ornaments, it is seen that his observation is in respect of gold ornaments only, and it seems that the inward and outward summary of Gold Bars (contained in PB page 50) has been....
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....es in the books of account or in the stock register that has been produced before him for examination. 17. In absence of any gross alimony in the books of account and the supporting documents, the books of account cannot be arbitrarily rejected and we find that in the instant case, the AO has not made out a case for rejection of books of account u/s 145(3) of the Act and we hold that the rejection of regular books of account are not as per the provisions of law. As such, we also find that there is sufficient cash balance available at the close of business hours as on 8th Nov., 2016 good enough to cover the cash deposit of Rs.70 lakhs on 10th November, 2016 and as such, the addition u/s 68 is not legally justified and hence the same is deleted. 18. In the result, the appeal filed by the assessee is allowed. Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 as on 07.03.2025. ============= Document 1 RAJSHREE ENTERPRISES (INDORE HEAD OFFICE) Geld Bar Daily Summary : 1-Apr-16 to 31-Mar-17 Page Particulars Inwards Outwarus Closing Balance Quantity Value Quantity Value Quantity Value Brought Forward 37,091.397 GR 10,9....