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2023 (3) TMI 851 - AT - Income TaxUndisclosed sales - unexplained cash sales - whether those were the cash sales as claimed? - HELD THAT:- We find that firstly, the assessee during the course of the survey, brought to the notice of the income tax authorities, the figures of the profit worked out were on higher side. During the course of the survey proceedings, the accountant of the assessee was not available, and the director of the company cannot be expected to explain each and every entry of sales to the Income tax authorities, without specifically pointed out to him, particularly, about the monthly sales recorded in the name of XYZ. Secondly, the series of bills recorded in respect of the XYZ is different from the series in respect of the undisputed sales, which also indicate that those are not part of regular sales. Thirdly, when the assessee himself is submitting that those sales are fictitious sales, then onus is on the AO to establish whether those are cash sales. The income tax authorities have carried out survey at the premises of the assessee and no evidence suggesting cash sales by the assessee has been found. The assessee cannot substantiate more than that that no such party in the name of XYZ Private Limited exist in the registrar of companies. Allegation of the revenue, that non-existence of XYZ Private Limited in the ROC does not support the case of the assessee, are rejected. In the preceding assessment year the turnover of the assessee was of Rs.4.43 crore, and in the year under consideration turnover was only of ₹2.5 Crores, therefore any such attempt for increasing the turnover for the purpose of availing bank loan by an accountant or other person cannot be ruled out, though it is an illegal act and Bank Authorities should take note of this. Thus it is the AO, who was required to establish whether those were the cash sales as claimed by him and not the fictitious sales as claimed by the assessee. In absence of any such evidence of the cash sales, the addition confirmed by the Ld. CIT(A) is not justified and accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute. Appeal of the assessee is allowed.
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