TaxTMI 
TaxTMI 
2026 (9) TMI 1632
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....(A)"] erred on facts as also in law in confirming addition of Rs. 2,65,59,500/- u/s 69A of the Act on the alleged ground that assessee failed to explained source of the cash deposit of Rs. 2,65,59,500/- during the demonetization period. The addition confirmed is totally unjustified and uncalled for and deserves to be deleted and may kindly be deleted. 3. Your Honour's assessee craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal. 3. Succinctly, the factual panorama of the case is that assessee before us is a partnership- firm. The assessee has filed its return of income on 17.10.2017 showing therein income of Rs. 3,33,800/-. The assessee's case was selected for Complete Scrutiny through Computer Aided Scrutiny Selection. Therefore, a digitally signed notice u/s 143(2) was issued on 25.9.2018 which was duly served upon the assessee through e-assessment system on e-mail. Thereafter, a fresh notice u/s 142(1) of the I.T. Act was issued on 20.08.2019, 17.09.2019, 27.11.2018. Finally a show cause notice was issued on 09.12.2019. 4. During the assessment proceedings, the assessing officer, on perusal of the ....
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....4 (1) dated 27/11/2019. (i) In compliance to Point No. 2, of notice of assessing officer, the purchase register with details are submitted before the assessing officer. (ii) In compliance to Point No. 3, of notice of assessing officer, the sales register with details are submitted before the assessing officer. (iii) In compliance to Point No. 4, the job work income with details are submitted before the assessing officer. (iv) In compliance to Point No. 5, the details of job work expenditure are submitted before the assessing officer. (v) In compliance to Point No. 6, the details of interest expenditure, though submitted earlier also, and interest income are attached. The various amounts as per details are obtained for the requirement of working capital for easy running of the business of the firm, submitted before the assessing officer. (vi) In compliance to Point No. 5, assessee submitted, that they have not admitted any income under PMGKY. Hence, it is not applicable to the assessee. 6. However, assessing officer rejected the above reply of the assessee and observed that the assessee was having unaccounted cash, which has b....
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....of the previous year job work income with current year sales is not required, as it will not give any meaningful result. There should be Apple to Apple comparison, however, the assessing officer has failed to do so. 10. The Learned Counsel for the assessee, further submitted that during the assessment proceedings, the assessee submitted bank statement, cash book, purchase book, Sales book, details of closing stock, details of opening stock, and complete audited books of accounts, before the assessing officer. The assessing officer did not find any mistake in these documents and evidences. Besides, the books of accounts of the assessee were not rejected by the assessing officer. That is, invocation of section 145(3) is a sine qua non for making an addition under section 69A of the Act, however, assessing officer has failed to do so. The assessing officer has himself observed that during the immediately preceding assessment year, the assessee had declared turnover of 2.22 crores with a gross profit rate of 25.62%, predominantly from job work. In the year under appeal, the turnover increased to 11.54 crores while the gross profit rate fell sharply to 6.94%, with a substantial shift....
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....ious year. During the assessment proceedings, the assessee submitted bank statement, cash book, purchase book, Sales book, details of closing stock, details of opening stock, sales bills and VAT returns and complete audited books of accounts, before the assessing officer. We note that assessing officer has not refuted or discredited these evidences and documents. The assessing officer does not mention why he is not accepting these evidences. On the contrary, the assessing officer has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. 14. We note that the books of accounts of the assessee were not rejected by the assessing officer, and the assessing officer has himself observed that during the immediately preceding assessment year, the assessee had declared turnover of 2.22 crores with a gross profit rate of 25.62%, predominantly from job work. In the year under appeal, the turnover increased to 11.54 crores while the gross profit rate fell sharply to 6.94%, with a substantial shift from job work ....
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....ification (section 133(6)/131 of the Act to purchasers, physical stock verification, or reference to VAT authorities) the entire addition rests on statistical comparison and subjective assessment of "probability", without any positive finding that a specific sale or purchase was bogus. 17. We note that Section 69A of the Act, inapplicable where cash is duly recorded in the books of accounts. Section 69A applies only to money not recorded in the books and unsatisfactorily explained. Here, the cash stood recorded in the cash book, generated from entries in the sales register, with the resultant profit already offered to tax. This is, at worst, a dispute about the genuineness of a book entry governed by section 145(3), not section 69A of the Act, and the jurisdictional pre-condition for section 69A of the Act that the money is unrecorded, is not satisfied. Where the assessing officer does not reject the books u/s 145(3) or pointed out to any specific defect, he cannot selectively disbelieve the cash-sales entries while accepting the rest of the same books that is, profit, stock, purchases, sales, as correct. In this connection reliance is placed on decisions of Hon'ble Supreme ....
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....he assessee have been audited and tax audit report has been filed with the Income Tax department. The Sales made by the assessee have been declared in VAT returns with payment of VAT, where the sales declared have been accepted by the Sales Tax Department. Further inference u/s 69A of the Act was unwarranted based on assumptions and presumptions, surmises and conjectures by the authorities below to treat the cash sales as unaccounted income." (iv) Hon'ble ITAT Chennai Bench has in case of DCIT v. Viswa and Devji Diamonds (P.) Ltd. [2025] 171 taxmann.com 474, A.Y. 2017-18, held that: "When the sale has been reflected in the books of accounts and offered to tax, adding the same again would amount to double taxation, which is impermissible in law. The allegations/statistics relied upon by the Assessing Officer to take an adverse view is not backed up by relevant evidence/material. It is trite law that no addition could be made merely on the basis of suspicion, conjectures and surmises." (v) Hon'ble ITAT Chandigarh Bench has in case of Smt. Charu Aggarwal v. DCIT [2022] 140 taxmann.com 588, A.Y. 2017-18, held that: "There was a consistent dec....