TaxTMI 
TaxTMI 
2025 (4) TMI 2000
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....making an addition of Rs. 48,80,064/- by adopting an arbitrary G. P. rate of 13.06% as against 12.56% on the declared turnover of the appellant. 3. That Learned CIT(A) was further not justified to arbitrarily uphold the action of the Learned Assessing Officer in making an addition of Rs. 41,00,000/- on account of cash deposited during demonetization period u/s 69A of the Income Tax Act, 1961 without appreciating the fact that the entire cash deposited was out of withdrawals made from the bank account of the appellant firm in the earlier periods. 3. Briefly, the facts of the case are that the assessee is a partnership firm engaged in the manufacturing and trading of yarn and cloth, which filed its return on 27/10/2017 for A.Y. 2017-18, declaring an income of Rs. 16,27,100/-. The case was selected for scrutiny under CASS due to abnormal cash deposits during the demonetization period. As per AO, the facts and circumstances of the case lead to only one conclusion: there is only trading of bills with no actual purchase/sale transactions between the M/s. B.S. Traders and M/s. Kaur Sain Spinning Mills, therefore, the nature of the transaction with M/s B.S. Traders are bogus pu....
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....ailed to identify or point out any specific defects in the books of accounts, thereby undermining the justification for any adverse inference. 6.1 Ld. AR submitted that the assessee challenged the arbitrary enhancement of the Gross Profit (GP) rate to 13.06%, arguing that this increase ignored the consistent upward trend in the GP declared in earlier years. Despite the AO accepting the sales figures declared in the books, the GP was manipulated without any concrete evidence indicating suppression of income. This selective treatment, according to the assessee, lacked any rational basis and was not supported by material evidence. 6.2 Ld. AR submitted that regarding the cash deposits, the assessee clarified that these were sourced from earlier cash withdrawals made before the demonetization period. These cash movements were duly recorded in the cash book, and the AO failed to establish a direct nexus between the deposits and any alleged bogus transactions. Hence, the assumption of unexplained or suspicious cash deposits was unfounded. 6.3 The Ld. AR submitted that regarding the of M/s B.S. Traders' existence, the assessee submitted documentary proof, including the VAT registr....
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....urav Yarns vi. J. Arim Fabrics Pvt. Ltd. vii. Jain Yarns viii. Kaur Sain Exports Ltd. ix. Moti Knit Fab x. Nishu Enterprises xi. OM Yarn Plus Pvt. Ltd. xii. Prem Fabrics xiii. Rajeev Textiles xiv. Rex Global Ltd. xv. Rex Sewing Machine Co. Ltd. xvi. Ridhi Sidhi Enterprises xvii. RY Enterprises xviii. S.J. Fabrics xix. Square Corporation xx. Tanishq Fibres xxi. Vista Knitberry Fashions Pvt. Ltd. xxii. Wool Way Exports 6(f) Copy of Account Sundry Creditors: i. A.B. Gupta Knitwears ii. D.D. Enterprises iii. Garg Acrylics Ltd. iv. Glaze Garments India Ltd. v. Indiana Acids & Chemicals Pvt. Ltd. vi. R.K. Dyes Pvt. Ltd. vii. R.K. Oswal Hosiery Factory viii. R.K. Satyam Dyes & Chemicals ix. SEL Mfg. Co. Ltd. x. SEL Textiles Ltd. xi. Venus Cotsyn India Ltd. xii. Vishal Traders 6(g) Confirmed Copy of Account Sundry Creditors: i. Kaur Sain Exports Ltd. ii. Venus Garments (India) Ltd. iii. Ridhi Sidhi Enterprises 6(h) Stock-Tally 6(i) Gross Profit Chart 8.1 Despite filing the a....
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....identified by the Assessing Officer. There was no finding that the method of accounting was incorrect or that entries were fabricated or unsubstantiated. It is settled law that the mere absence of a third-party response or reliance on an inspector's report-without verification of the extensive documentary evidence placed on record-cannot form the sole basis for invoking Section 145(3). 8.4 Moreover, it is a matter of record that the assessment of M/s B.S. Traders was independently completed by the jurisdictional Assessing Officer, who, after examining the same transactions, accepted the sales and assessed only a nominal addition of Rs. 2,50,000, determining the total income at Rs. 5,43,000. This effectively establishes that the Revenue has accepted the genuineness of M/s B.S. Traders' business operations and transactions. Consequently, once the same Revenue authority has accepted the sales in the hands of the supplier, it is incongruous to characterize the corresponding purchases in the hands of the assessee as bogus. The principle of consistency and mutuality in taxation requires that the treatment of a transaction must be uniform across assessments unless there is cogent and c....