TaxTMI 
TaxTMI 
2026 (9) TMI 1950
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....B of the Act. The case of the assessee was selected for scrutiny under CASS for the reason of large cash deposited during demonetization period in Specified Bank Notes (SBN). Various notices were issued from time to time and assessee duly replied the same. The assessee has deposited cash of INR 9,54,33,500/- during demonetization period and the immediate source of the same was claimed as made out of sales made in cash during the month of October till 08.11.2016. The AO observed that out of the total cash sales of INR 13.12 crores made by the assessee in AY 2017-18, cash sales of INR 10,61,23,110/- was made during the period from 01.10.2016 to 08.11.2016 i.e. in a span of only 39 days which looking to the past history of the assessee where cash sales from 01.04.2016 till 30.09.2016 was of INR 1,03,92,684/- only, was very abnormal. The AO further observed that only Four employees were working during the year having salary ranging between INR 10,000/- to INR 20,000/- and it is not possible for them to manage sales of more than INR 10.00 crores in such a short period of time where each and every bill was less than INR 2.00 Lakhs. Accordingly, the AO allowed the credit of income declare....
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....t appreciating that once the books of accounts have been accepted, the cash deposits out of cash sales made could not be regarded as unexplained credits. 5. On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the aforesaid addition of cash deposits which has already declared in the return of income as part of total sales and that it amounts to double taxation of the same amount. 6. Without prejudice to the above and in the alternative, even assuming that the additions were warranted under section 68 of the Act, the CIT(A) has erred both on facts and in law in confirming the demand computed in accordance with rate specified in section 115BBE of the Act as amended by Taxation Laws (Second Amendment) Act, 2016. 7. That the appellant craves leave to add, alter OR amend any of the grounds of appeal." 5. Ground of appeal No.1 raised by the assessee is general in nature hence, not adjudicated. 6. Ground of appeal Nos. 2 to 5 of the assessee are with respect to the additions of INR 8,54,28,285/- made u/s 68 of the Act and further invoking the provisions of section 115BBE of the Act. 7. Before us, ld....
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.... manufactured/traded. For this, ld. DR drew our attention to the Tax Audit Report wherein though total quantitative details is placed at page 20 of PB and no item-wise stock register was maintained. Further at page 5 of PB, it is reported that the assessee has not maintained stock register nor they were examined by the auditor. He, therefore, submits that in absence of daily item-wise stock register, the claim of sales are not verifiable and thus the AO has rightly made the addition towards cash deposit during demonetization period u/s 68 of the Act. 9. Heard the contentions of both the parties at length and perused the material available on record. In the instant case, the assessee has made total cash deposits of INR 9,54,33,500/- in SBN during the demonetization period and had declared a sum of INR 60.00 Lakhs under PMGKY scheme announced by the Government during demonetization period. The AO further reduced a sum of INR 33,53,298/- by treating the same as cash sales of month of October, 2016 being the highest monthly cash balance at any time upto 30.09.2016. Besides this, deduction of INR 6,51,917/- was allowed for the sales during the period from 01.11.2016 to 08.11.2016 and....
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....4 to 20, it is observed that the assessee has not maintained any stock register nor the same was audited by the Auditors. The relevant extract of Form 3CD report is reproduced as under:- 10.2 It is further observed that at page 20 of the Paper Book, the assessee has filed the quantitative details however, these quantitative details are of total goods manufactured. It appears that the assessee has purchased gold bars which were used for manufacturing process however, from the said stock sheet, it is not clear how much quantity of jewellery manufactured and how much yield assessee got nor the quantity of other metal used for impurity in manufacturing of jewellery was reported. Since the assessee was also dealing in the diamond studded gold jewellery therefore the item-wise stock inventory has to be maintained which was not maintained on day-to-day basis. Further in absence of sale invoices with respect to the sales made during the period from 01.10.2016 to 09.11.2016, the claim of the assessee is that due to festive season, sales have been increased in festive season cannot be not accepted. 10.3 Next allegation was that very small amounts was deposited in the bank account howev....
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....rved that the AO has made incorrect findings whereas the assessee has made total sales of INR 204.09 crores in FY 2017-18 relevant to AY 2018-19 which includes cash sales of INR 36.71 crores. Here it is relevant to state that in subsequent AY, despite of festive season, cash sales in the entire month of October, 2017 was INR 6.23 crores and in the month of November, 2017 was INR 6.15 crores, as compared to which during the year under appeal, cash sales of INR 9.21 crores were claimed to have been made in the month of October, 2016 and of INR 1.41 crores in 08 days of the November, 2016. This disparity further strengthen the doubts raised that cash sales made by the assessee during the period between 01.10.2016 to 08.10.2016 was not comparables either with the preceding year or with the succeeding year and has supports the allegation that cash sales claimed was to cover up the total cash deposit in SBN during the period of demonetization. 11. The assessee has placed reliance on many judicial pronouncements of the hon'ble jurisdictional high court and of the coordinate benches of Tribunal however, it is a pure question of fact and every case has different facts and thus the ratio ....
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....amendment is expressly made retrospective. (iii) The amendment to Section 115BBE came into force on 01.04.2017 i.e. the first day of financial year 2017-18. For FY 2016-17, the law in force on 01.04.2016, prescribing a rate of 30%, must govern. The enhanced rate of tax @60% came into force on 01.04.2017 and can apply only from that date, i.e. for financial year 2017-18 onwards. (iv) The Taxation Laws (Second Amendment) Act, 2016 contains no express language for it's retrospective effect of section 115BBE. 18. We thus hold that the Taxation Laws (Second Amendment) Act, 2016 is prospective in effect as specified therein (from 15.12.2016 except the amendment of Section 115BBE, which is effective from 01.04.2017). The question framed in para 8.1, in the preceding part, is answered accordingly. 14. Thus, by following the aforesaid judgments of Hon'ble Madras High Court and of Hon'ble Rajasthan High Court, we hold that provisions of section 115BBE of the Act are not applicable in AY 2017-18 and are applicable from AY 2018-19 and onwards. Therefore, we direct the AO to charge the tax at normal rate of tax. Accordingly, Ground of appeal No.6 of the assesse....
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....e to the commencing of business at the new showroom at Karol Bagh, Delhi. Further, the AO has made a comparison of the cash sales of current year with that of previous year for the period from 01.10.2016 to 08.11.2016 stating that the festival of Diwali and dhanteras were falling in the very same period. It is submitted that the festive season of Diwali and dhanteras was from 09.11.2015 to 11.11.2015 during the FY 2015-16, which is falling outside the period compared by the AO. Hence, this comparison made by the AO is not correct. The assessee has duly explained that the significant cash sales made during the last week of October is due to the festive season of Diwali and Dhanteras. These festivals are traditionally considered the most auspicious period for purchase of gold jewellery. People majorly use cash to make purchases of jewellery. Further, the assessee has submitted ample of documentary evidences to substantiate the sales made by the assessee. Hence, the cash sales made by the assessee during this period is completely justified. ili. The AO has alleged that during the period from 28.10.2016 to 08.11.2016, the assessee has made petty cash deposits despite making huge ....
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....re directly involved in handling customer interactions and sales activities. The assessee also had supporting staff including cashier, field workers and other operational staff who facilitated business activities. Further, in jewellery business, customer footfall increases significantly during the Diwali and Dhanteras season and it is common for a single salesperson to attend multiple customers in a day. Moreover, the business of assessee company is a high value transaction business where a single customer purchase goods worth of lakhs of rupees. Hence, the allegation of the AO that the assessee does not possess sufficient employee capacity is not tenable. vi. The AO has made a comparison of stock available on 08.11.2016 with the opening and closing stock and doubted the genuineness of the sales made by the assessee This comparison made by the AO is completely unjustified as the stock position of a concern engaged in the trading and manufacturing of jewellery cannot remain constant throughout the year. The stock level fluctuates due to various reasons such as market demand, festive season sales and manufacturing cycles. Further, the period immediately preceding to 08.11.2016 ....
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...., SEC-7, ROHINI, DELHI-110085 3 Permanent Account Number (PAN) AAACO-9145-K 4 Whether the assessee is liable to pay indirect tax like excise duty, service tax, sales tax. customs duty.etc. if yes, please furnish the registration number or any other identification number allotted for the same TIN: 07020244901 IEC: 0510044484 Excise : AAACO9145KEM001 5 Status Company Previous year 01.04.2016 10 31.03.2017 Assessment year 2017-18 cora H Indicate the relevant clause of section 44AB under which the audit has been conducted Clause (n) PART - B 9 (n) If firm or association of persons, indicate names of partners/members and their profit sharing ratios. Not Applicable (b) If there is any change in the partners or members or in their profit sharing ratio since the last date of the preceding year, the particulars of such change Not Applicable 10 (A) Nature of business or profession (if more than one business or profession Is carried on during the previous year, nature of every business or profession) |Deals in Diamond, Jewellery etc. (b) If there is any change in the nature of business or profession, the particulars of such change. No (a) Whether books of account are pres....