TaxTMI 
TaxTMI 
2025 (3) TMI 2318
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.... assigning proper reasons and justification. 3. The NFAC, Delhi to appreciate that provisions of Section 69A of the Act had no application to the present facts and in circumstances of the case, thereby vitiating the findings in relation thereto. 4. The NFAC, Delhi failed to appreciate that the pre-requisite conditions required for making an addition in terms of Section 69A of the Act were absent in the present case and in circumstances, thereby negating the findings in relation thereto. 5. The NFAC, Delhi failed to appreciate that having not examined the books of accounts, which were made available at every stage of proceedings, the presumption of unexplained money should be reckoned as wholly unjustified and not sustainable in law. 6. The NFAC, Delhi failed to appreciate that having not rejected the audited financial statements as faulty, the presumption of unexplained money within the scope of Section 69A from the disputed cash deposits was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 7. The NFAC, Delhi failed to appreciate that having impliedly accepted the explanation offered for the....
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....deriving income from business including rental income The assessee filed his return of income for the assessment year 2017-18 on 28.10.2017, admitting an income of Rs.10,91,350/- including rental income of Rs.3,00,000/-. The return was selected for scrutiny assessment under CASS to verify cash deposit during the year. Accordingly, notices u/s.143(2) and 142(1) of the Act were issued to the assessee calling for source for cash deposits for each bank account separately during the FY 2016-17 and copy of the challan for deposit of cash specifically mentioning the denomination of the notes during demonetization period. The AO stated in his order that in response to notices, the assessee had stated that the source for the cash deposits was from sale/service income earned by the assessee. Further, the assessee has stated that he has received SBN from the customers / clients during the demonetization period and the same had been deposited into the bank account. However, the AO was not satisfied with the explanation / documents furnished by the assessee for the reason that the assessee was not in the exempted category as notified by the RBI to collect the SBN after the announcement of demon....
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....e assessment year 2017-18 on 28.10.2017 declaring total income of Rs. 10,91,350/-. The appellant's case was selected for scrutiny for the reason "Cash Deposit during the Demonetization Period." Various notices were sent by the A.O to the appellant i.e. 143(2) on 03.09.2018 requisitioning the appellant of the details regarding the business and the cash deposited during demonetization period. The appellant complied to the notices issued and it was confirmed in the assessment order that the appellant was doing business of retail and trading of inverters, UPS batteries under PGBP and rental income under Income from house property. The appellant in the present case was in the possession of two bank accounts. The accounts i.e. 2782261000012 and 2782201001014 were held with Canara Bank, in both the bank accounts the amount deposited during demonetization period was held to be 35,32,500/-. The A.O controverted the explanation of the appellant that the amount deposited was the amount of cash sales during demonetization period through SBNs which were not a legal tender after 09.11.2016 and the sales through old notes of Rs. 500 and Rs. 1000 notes after the decl....
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.... though the assessee has maintained proper books of accounts like Cash book, bank book, sales register, purchase register, stock registers, monthly VAT returns, Audit report in Form 3CA and 3CD, Audited financials have been furnished during the assessment as well as appellate proceedings. The Assessee also furnished the month wise cash sales / collections from customers along with cash expenses and cash deposit for the months from Apr 2016 to Dec 2016. 5.2 The ld.AR also stated that the following documents were produced before the AO and that of ld.CIT(A) in support of the genuineness of the transactions carried out during the A.Y. 2017-18 including the demonetisation period in paper book Volume -I consisting of 1 to 64 pages: Sl.No. Date Particulars Page No. RETURN OF INCOME & FINANCIALS 1. 28.10.2017 Return of Income for Assessment year 2014-18 1 2. 23.10.20217 Tax audit report in Form No.3CB 2 3. 23.10.2017 Audited financials for Assessment year 2017-18 12 SCRUTINY ASSESSMENT PROCEEDINGS 4. 05.12.2019 Scrutiny assessment order passed under section 143(3) of the Act 17 FIRST APPELLATE PROCEEDINGS 5. 04.....
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....fied bank notes during demonetization period to the bank account. It is admitted from the records that the assessee is engaged in the trading business inverters, UPS and stabilizers. The case was selected for scrutiny to verify the source for cash deposited and called for certain details. The assessee has deposited cash in SBN of Rs.25,47,500/- only, after announcement of demonetization by Government of India on 08.11.2016. In response to notice u/s.142(1) of the Act, the assessee stated that he has maintained the proper books of accounts maintained which are subjected to tax audit u/s. 44AB of the Act and furnished the cash book, Audited financials, Tax audit report for the relevant period. These books of accounts, statements and other documents furnished by the assessee before the lower authorities, which have not been disputed nor rejected. The books of accounts of the assessee have been accepted by the lower authorities while framing the assessment and not rejected by pointing out any defects. 7.1 On perusal of the records and facts and circumstances of the case, we are of the considered opinion that when the sale has been reflected in the books of accounts and offered to ta....
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....alls and sells to unregistered dealers in cash. The assessee has filed comparative cash sales and cash deposits into bank account for FY 2015-16 & FY 2016-17 and also cash sales and cash deposits for the month of October & November, 2015 and October & November, 2016. On perusal of details filed by the assessee, which has been reproduced by the AO in the assessment order, we find that there is no abnormal variation in cash sales and cash deposits into bank account for FY 2015-16 & FY 2016-17. Further, the cash sales achieved by the assessee for FY 2015-16 is higher than the cash sales reported for FY 2016-17. From the details filed by the assessee, it is abundantly clear that there is no sudden increase in cash sales during demonetization period when compared to earlier Financial Years. Further, the assessee has filed cash book and other details to prove availability of cash in hand as on 08.11.2016 at Rs.71,76,208/-. In fact, the AO is not disputed the fact that the assessee has filed cash book and as per said cash book, cash in hand as on 08.11.2016 was at Rs.71,76,208/-. If you go by the nature of business of the assessee and sales trend, it is undoubtedly clear that the assessee....
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....has filed necessary details including PAN nos. and confirmation letters from the group concerns to prove receipt of trade advance. The Assessing Officer has not disputed these facts, however made additions only on the ground that the assessee should not have accepted cash in specified bank notes after 08.11.2016. We find that this issue is covered in favour of the assessee by the decision of ITAT, Chennai Benches in the case of M/s. Micky Fireworks Industries vs ACIT in ITA No. 264/Chny/2023, dated 26.07.2023, where the Tribunal under identical set of facts deleted additions made by the Assessing Officer, and the findings of the Tribunal is reproduced as under: "4. From the facts, the undisputed position that emerges is that the assessee has made sale of fireworks during festival season. The sales are duly accounted for by the assessee in the books of accounts. The accounts have duly been audited. The assessee has realized debtors out of such sale in SBN which have been deposited in the bank account of the assessee. The cash deposited by the assessee has duly been accounted for in the books of accounts. The Ld. AO has not alleged any bogus sales or back dated sales made by....
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....ri Vs. ITO (supra), on identical facts, deleted similar additions on the ground that the assessee had duly evidenced the source of cash deposit and therefore, addition could not be made u/s 68. Similar is another decision of SMC Raipur Bench in Rahul Cold Storage Vs. ITO (supra) wherein it has similarly been held that when the deposits were sourced out of business receipts duly recorded in the books of accounts, no such addition could be made u/s 68. The other cited decision of Bangalore Tribunal is also on similar lines. 8. Considering the facts and circumstances of the case, we find force in assessee's case and therefore, delete the impugned addition as made u/s 68. We order so. The Ld. AO is directed to re-compute the income of the assessee." 8. In this view of the matter and by following the decision of ITAT, Chennai Benches, we direct the AO to delete additions made towards source for cash deposits at Rs. 20,40,000/- u/s. 69A of the Act. 11. In the given facts of the present case, there is no dispute with regard to the fact that the assessee's sales predominantly in cash. It is also an undisputed fact that there is no abnormal variation in to....