TMI Blog2023 (2) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... tive documentary evidence to disprove disputed cash sales as bogus sales cannot be approved. There is no bar in making cash sales by the manufacturer. AO has also admitted that there was cash sale of Rs. 560204/- in Financial Year 2015-16. Thus, the AO wrongly held that no goods in cash was sold during the earlier Financial Year 2015-16. The AO failed to appreciate that there was no excess sale of 546 kgs of shoddy yarn in the range of Rs. 105/- to Rs. 145/-. AR explained that the goods were sold out of balance stock of shoddy yarn and even at the year end, the unsold stocks of shoddy yarn was 2960 kgs with the support of Paper book placed on record. In the case of Principal Commissioner of Income Tax, 20, Delhi v. Akshit Kumar , [ 2020 (11) TMI 873 - DELHI HIGH COURT] held that the quantum figure and the closing stock which stood accepted in the earlier years had to be taken as actual stock available with the Respondent-Assessee. In view of these facts, the sales made by the Respondent-Assessee out of its opening stock were not treated as unexplained income, to be taxed as income from other sources. In another case of Anantpur Kalpana v. Income-tax Officer , [ 2021 (12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- and purchases made during the year. 4. That the Worthy CIT (A) has failed to appreciate that the VAT was duly paid on cash sales and cash sales were included in the VAT returns of the period. 5. That Worthy CIT (A) erred in confirming the addition of Rs. 27,00,000/= on the basis of comparison of cash sales of current year with the previous year cash sales and ignoring the fact that each year is an independent year . 6. That the worthy CIT (A) has erred in confirming the addition made by the Assessing Officer U/s 68 of the Income Tax Act, 1961 at Rs. 27,00,000/- which is void ab initio as the AO rejected the sales made by the assessee without rejecting the Books of Account of the assessee. 7. That the Worthy CIT (A) has erred in confirming the levy of tax as per the amended provisions of Section 115BBE when the same was amended on 15th December, 2016 for application prospectively. 8. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 3. The A.O was being not satisfied with the reply of the assessee, made an addition of Rs. 27,00,000/- u/s 68 by rejecting the Cash Sales being clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year (F.Y 2015-16) and in the next year (F.Y 2017-18). Under these circumstances it is the responsibility of the assessee to prove the genuineness of the huge cash sales of Rs. 27,30,095/- claimed during 1/4/2016 to 8/11/2016 which in turn was claimed as the source for the cash deposited in Bank Account during 9/11/2016 to 31/12/2016. A.O asked the assessee to provide the names and addresses of the parties to whom the cash sale were made. However the assessee failed to provide the names and addresses of the parties to whom the cash sale were made. During the appeal proceedings also, the assessee did not provide the names and addresses of the parties to whom the cash sale were made and did not bring any material on record to establish the genuineness of the cash sales. Hence the same cannot be accepted as the source for the cash deposited in the bank account totaling to Rs. 27,00,000/- during the demonetization period. For the above stated reasons, the addition of Rs. 27,00,000/- u/s 68 r.w.s. 115BBE is upheld. 5. The ld. Counsel for the appellant submitted that the Worthy CIT (A) erred in rejecting the cash sales, made out of Opening Stocks of Rs. 44,61,330 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made The appellant provided stock detail/tally during the course of assessment proceedings. The appellant was asked to provide name of the parties to whom cash sale was made. The assessee provided name of two parties along with their complete details. The details of rest of parties to whom cash sale was made was not maintained by the party and there is no provision in the Income Tax Act which mandates the recording of names of the party to whom cash sale was made. 3.5 The assessee firm also failed to submit any documentary evidence regarding mode of conveyance in which the goods sold were went outside the factory premise and nor any gate register in which entries were made for incoming/outgoing material. Thus, it clearly proves that no material was gone outside the factory building. Moreover the comparison data revealed that during the F.Y. 2015-16, the total cash sale was Rs. 5,60,204/- and out of this only cash sale for Rs. 1,30,000/- was made during the period 01.04.2015 to 31.12.2015 and remaining cash sale of Rs. 4,30,204/- was during the period 01.01.2016 to 31.03.2016. During the financial year 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of 546 kgs of shoddy yarn in the range of Rs. 105/= to Rs. 145/=The goods were sold out of balance stock of shoddy yarn. Even at the year end, the unsold stocks of shoddy yarn of 2960 kgs was lying. The appellant sold the shoddy yarn at lesser rate as the rate at which the goods sold was the transaction price/bargained price /market value at the time of sale of goods. The selling price of the goods is driven by many factors at the time of sale including the age of goods. The goods sold was unsold for long period. The GP rate of the firm did not go up as the same get compensated when the majority of the goods were sold at lesser margin as observed by AO. 6.4 A.O further observed that the total cash sales during the F.Y 2015-16 was Rs. 5,60,204/- and cash sales during the F.Y 2017-18 was also negligible. Thus the assessee had not sold his goods in cash in earlier year (F.Y 2015-16) and in the next year (F.Y 2017-18). The findings of CIT (A) is contradictory as at one para he observed that there was cash sale of Rs. 560204/- in FY 2015-16 in other para he observed that there was no cash sale in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rb such returned income. In these circumstances, it was held that the quantum figure and the opening stock which stood accepted in the earlier years had to be taken as actual stock available with the Respondent-Assessee. In view of these facts, the sales made by the Respondent-Assessee out of its opening stock were not treated as unexplained income, to be taxed as income from other sources. It thus manifests that the learned ITAT has taken into consideration the entire material placed on record including the report of the AO. The learned ITAT has applied the rule of consistency and rejected the enquiry made by the AO in the relevant assessment year. No doubt principles of res judicata are not applicable to the Income-Tax proceedings however, it is equally well settled law that rule of consistency is a well-established and recognised principle applicable to the Income-Tax proceedings. Pertinently, the Respondent-Assessee had closed his business in July, 2015 after selling all the stocks and the survey carried out at a later stage would not have strong evidentiary value. Besides, all these aspects are completely factual in nature and we are unable to find any perversity in the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when trading account shows sufficient stock to effect the sales and when no defects are pointed out in the books of account, it was held that when Assessee already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. I am of the view that in the light of the facts and circumstances of the present case, the addition made is not sustainable and the same is directed to be deleted. (2021) 128 taxmann.com 291 Assistant Commissioner of Income Tax, Central Circle - 1, Visakhapatnam v. HirapannaJewellers (ITAT VISAKHAPATNAM BENCH ) ( Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again) 9. In view of the foregoing discussion and taking into consideration of all the facts and the circumstances of the case, we have no hesitation to hold that the cash receipts represent the sales which the assessee has rightly offered for taxation. We have gone through the trading account and find that there was sufficient stock to effect the sales and we do not find any defect in the stock as well as the sales. Since, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as unexplained income, to be taxed as income from other sources. 10. In another case of Anantpur Kalpana v. Income-tax Officer , (Supra) the ITAT Bangalore Bench observed that since the sale proceeds for which cash was received from the customers was already admitted as income and if the cash deposits are added under section 68 of the Act that will amount to double taxation once as sales and again as unexplained cash credit which is against the principles of taxation. 11. On similar fact, in the case of Assistant Commissioner of Income Tax, Central Circle - 1, Visakhapatnam v. HirapannaJewellers , the ITAT VISAKHAPATNAM BENCH has observed that since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. This view is also supported by the decision of Hon'ble Delhi High Court in the case of Kailash Jewellery House and the Hon'ble Gujarat High Court in the case of Vishal Exports Overseas Ltd. 12. Considering the factual matrix of the present case and the judicial precedent as above, we hold that the disputed cash sales of Rs. 27,00,000/- by the appellant assessee wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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