TMI Blog2022 (11) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... tion there in the preceding year. The assessee was also having cash realized from the debtors and it was not the case of the AO that the debtors of the assessee were bogus or those were not related to the business of the assesee. The cash deposited in the bank by the assessee during the demonetization period was out of the cash sales and the realization from the trade debtors duly shown in the book of accounts which were accepted by the A.O. In the present case, in the month of October 2016 and November 2016 the assessee was having cash sales of Rs. 1,04,97,098/- and Rs. 62,00,849/- which had not been doubted by the AO who had also not commented on the claim of the assessee that the balance of the amount which was deposited in the bank account was out of the realization of cash from the debtors which for the year under consideration was at Rs. 3,09,78,586/-. In the present case the AO accepted the trading results and had not doubted opening stock purchase sales and closing stock as well as GP rate shown by the assessee. Therefore, the additions made by the AO on the basis of surmises and conjectures was rightly deleted by the Ld. CIT(A). We do not see any valid ground to inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed demonetized currency in its bank account amounting to Rs. 2,47,50,000/-. He asked the assessee to furnish information with necessary documentary evidences and issued the questionnaire which read as under: i. Please submit the detail of all the cash deposits made by you during the demonetization period from 09/11/2016 to 31/12/2016. ii. Also submit the certified copies of the bank accounts from 01/04/2016 to 31/03/2017. iii. Kindly provide following month-wise details of cash in hand in format as given below: Month F.Y. 2014-15 F.Y. 20 15-16 F.Y. 2016-17 April May June ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bank deposit slips showing the currency withdrawals. 4.2 The assessee furnished the financial monthly data which has been reproduced at page no. 3 of the assessment order dated 28/12/2019. The AO also asked the assessee to explain the source of the deposit in its bank account. He further observed that the assessee had deposited Rs. 2,47,50,000/- during demonetization period and failed to submit any satisfactory reply with regard to cash deposited. He was of the view that the assessee had introduced its own unaccounted money in the disguise of sale in the wake of demonetization. The AO worked out the average sale from April 2016 to October 2016 at Rs. 1,00,27,807/- and considering this fact that due to festive season there was surge in October 2016. He estimated the sales of the assessee at Rs. 1,50,00,000/- considering the 50% surge in sale of October 2016. The AO opined that the assessee had deposited excess cash of Rs. 97,50,000/- (Rs. 2,47,50,000 Rs. 1,50,00,000 ) from undisclosed sources during the demonetization period. The AO invoked the provision of section 69A of the Act by observing that the assessee was found owner of the money but had not offered any acceptable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon here also. Similarly, by way of Ground No. 1 2, we have challenged the very validity of assessment as framed u/s 153A, as there has been only survey at the partnership concern and no search was conducted and for which, we have given our detailed submissions in our appeal for Asstt. Year 2012-13. Since the facts are identical, the same submissions may, please, be considered here also alongwith the evidences as furnished by us in the form of paper book for Asstt. Year 2012-13. 2. The only addition in this year has been of the amount deposited in the regular bank account, out of cash sale/realization from debtors from the accounted for parties, and the Ld. Assessing Officer out of the cash of Rs. 2,47,50,000/-, deposited on estimated basis during the demonetization period, has accepted the sales of the assessee at Rs. 1,50,00,000/- and for the balance, addition of Rs. 97,50,000/- has been made u/s 69A and applied the provisions of section 115BBE. 3. It is an accepted fact that the business of the assessee is of trading in ladies dress material/hosiery cloth and some of the sales are made in cash due to the nature of trade and this modus operandi has been accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31/- 8,08,69,295/- 2016-17 18,01,49,041/- 6,89,63,188/- 6,37,18,386/- 2017-18 13,82,27,373/- 4,12,59,227/- 3,09,78,586/- iii) Thus, there being no doubt in the modus operandi of the trade and it a case where the stock has been realized by way of cash sales and realization from debtors, its nature and source of amount stands established beyond any iota of doubt. Even most of the parties from whom the cash has been realized are identifiable parties as is evident from the copy of cash book submitted to the Investigation Wing. Thus, no doubt could have been raised for which, the ad-hoc addition has been made without any justification by the Assessing Officer. In short, your goodself shall observe that cash sales in the Financial Year 2015-16 are more by Rs. 2,77,03,961/- as compared to Asstt.Year 2017-18 and realization from debtors is more in the earlier year by Rs. 2,99,39,800/-. iv).It is also a fact that the assessee is a trader and running the business from the past many years in the same mode and manner and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee is found to be owner of money, bullion etc and the same is not recorded in books. The assessee is maintaining regular books of accounts and such amount of sales have been recorded in the books of accounts and there is no case of investment outside the books of accounts. Hence section 69A is not applicable. The books of accounts being maintained for any source of income The books of accounts have been maintained and duly audited in respect of trading of ladies dress material/hosiery cloth. No doubt has been raised by the Assessing Officer. The assessee offers no explanation about the nature and source of valuable articles with him. The assessee has offered explanation supported by documentary evidences of audited books of accounts, purchase and sale vouchers, past history of the case and even the reply was submitted immediately in the month of December 2016 to the Investigation Wing and no doubt was raised by the Investigation Wing. Or the explanation offered by him is not in the opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e treated as unexplained cash credit under section 69A of the Act merely on the ground that the assessee failed to furnish the details of the existence of the parties. ii). We also note that the provisions of section 69A cannot be applied in relation to the sales receipt shown by the assessee in its books of accounts. It is because the sales receipt has already been shown in the books of accounts as income at the time of sale only. viii). We are also aware of the fact that there is no iota of evidence having any adverse remark on the purchase shown by the assessee in the books of accounts. Once the purchases have been accepted, then the corresponding sales cannot be disturbed without giving any conclusive evidence/finding. In view of the above we are not convinced with the finding of the learned CIT(A) and accordingly we set aside the same with the direction to the AO to delete the addition made by him.''' 5. Without prejudice to above, now coming to the merits of the case, it is submitted that the assessee has deposited the amount of Rs. 2,47,50,000/- in its regular bank account during the demonetization period, out of the cash sales and realization from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks submitted to the Investigation Wing, it was very much clear that the cash sales were genuine and had majorly been accepted by the AO and then once the AO had accepted more than 50% of the cash sales which was the modus operandi of the business, stood proved beyond any iota of doubt. It was also submitted that the name of the parties were majorly there in the copy of the cash book and thus all the possible documents and information proved the genuineness of the sale, purchase, balances of debtors and creditor and the amounts received from the debtors, therefore the same could not be doubted or brushed aside lightly by the AO without establishing any defect or short coming or falsification in the same. 5.2 It was also submitted that it was very much clear that all the above informations were with the AO during the course of assessment proceedings and that the AO was free to verify the same as per his statutory powers. However, the AO did not look into the details filed by the assessee and made the addition for the sake of making the addition without any evidence on record to negate cash sales and realization from debtors of the assessee. 5.3 It was further submitted before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses debited in the books of accounts. No adverse remarks had been given against the documents filed by the assessee and moreover the books of accounts were not rejected. Thus making the addition on account of deposits of cash which was duly accounted for in the books of accounts, without rejecting the books of accounts was totally against the law. It was stated that on the one hand the AO had accepted the books results and on the other hand he had made the addition on account of cash deposited out of regular books of account which was totally baseless and was based on surmises and conjectures. It was further stated that once the books of accounts for the F.Y under consideration i.e; 2016-17, were accepted by the Department and the sales recorded therein were considered in arriving at the assessed income of the assessee, the cash deposited in banks against such sales could not be treated as undisclosed income of the assessee under section 69A of the Act without bringing on record any credible evidence / material in support of such allegation was merely on the basis of surmises and conjecture of the Revenue Authorities. Reliance was placed on the following case laws: * Lalchand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises was against the principles of natural justice. It was further submitted that the AO made the addition by treating the cash deposits out of regular books of accounts as undisclosed income of the assessee which was totally incorrect. Reliance was placed on the judgment of the Hon ble Gujrat High Court in the case of President Industries reported in 258 ITR 654. 5.8 It was submitted before the Ld. CIT(A) that the books of accounts of the assessee were duly audited under section 44AB of the Act and the auditor had not pointed out any discrepancy in the books of accounts which had not been rejected by invoking the provisions of Section 145(3) of the Act. The stock position depicted in the books of accounts had been accepted by the AO and the cash in hand / cash sales were made out of the accounted stock and that the cash sales as well as realization from debtors were duly supported by the relevant vouchers which were produced before the AO in the course of assessment proceedings and nothing adverse in connection there with was noted by the AO. 5.9 It was further stated that the figures of cash sales offered by the assessee for F.Y. 2016-17 were accepted as such by the AO, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to double addition :- ❖ The assessee maintains proper books of accounts that are regularly being audited ❖ by the Chartered Accountant u/s 44AB of the Act. ❖ All the sales, purchases, stock are recorded in the books of accounts and the 2012-13 to Asstt. Year 2018-19. same have not been doubted by the AO. ❖ Sales year after year having been accepted and, thus, opening stock, purchases, Sales and closing stock, no doubt has been made and the same Assessing Officer has accepted our books of accounts during the earlier assessments starting from Asstt. Years ❖ The books of accounts maintained by assessee and book results arriving out of otherwise it would amount to double taxation. ❖ The cash sales made by the assessee have been credited in the books of accounts duly accepted by the AO and therefore, once the book results are accepted by the AO, the sales out of which those book results have been arrived cannot be doubted, them have also been accepted by the AO without pin pointing any specific defect. ❖ ❖ As already stated that majorly the parties to whom the sales are made to identifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from debtors are far more in immediate preceding year comparing to the year under consideration. e). The sales as recorded in the books of accounts and realization from the debtors are from identifiable parties and no doubt has been raised therein. f). The Assessing Officer has given no basis that why the nature and source of the amount deposit is not to be accepted and why the provisions of section 69A has been invoked .The Assessing Officer has not substantiated about 60% of the amount deposited in the bank as the cash has been deposited from such modus operandi and why for the balance has not been accepted is not substantiated. g). Sales have been accepted as per the trading account filed by the assessee and there is no new unexplained credit/investment since there is available stock with the assessee and the opening stock, purchases, sales, closing sock have been accepted and assessed from ay 2012-13 to AY 2018-19 , thus, on account of the reduction of stocks, the sale proceeds have been recorded in the regular books of accounts and the profit embedded in such sale proceeds have also been offered to tax and taxed accordingly, by the Assessing Officer and, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DIT (Inv.), Ludhiana on 01.11.2017. During the course of search, the premises where books of account/document of M/s. Roop Fashion were suspected to be found were searched as per the above Warrant. At the premises (i.e. H. No. B-XX-3190/C, Gurdev Nagar, Opp. Thapar Bhawan, Ludhiana), the partner of the firm is residing. Copy of Warrant of Authorization duly served upon Sh. Ramesh Kumar partner of the M/s. Roop Fashion is enclosed herewith for kind reference. 3. M/s. Roop Fashion was mainly covered u/s 132(1) and the business premise of M/s. Roop Fashion at Dr. Gujjar Mall Road, Ludhiana was covered u/s 133A of the Act. Copy of the Authorization u/s 133A is also enclosed herewith. 4. It is further submitted that M/s. Roop Fashion is a partnership concern having two partners namely: (i) Sh. Ramesh Kumar Sachdeva (ii) Smt. Sarita Sachdeva As per partnership deed name/address of the partnership firm is mentioned as M/s. Roop Fashion, Ludhiana. Copy of the partnership deed is enclosed herewith. 5. It is further submitted that the Warrant of Authorization issued by the Pr. DIT (Inv.), Ludhiana for the premises at the address. H. No. B-XX-3190/C, Gurdev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered and the addition as made on account of adhoc basis may, please, be deleted and oblige. 5.16 The Ld. CIT(A) after considering the submissions of the assessee observed that the assessee had submitted a Chart which revealed that in October 2015 the assessee deposited in the bank an amount of Rs. 2.74 crores, in November 2015 an amount of Rs. 3.61 crores, in October 2016 Rs. 62 lacs and in November 2016 Rs. 2.44 crores. Therefore the cash deposited in this year was far less than the cash deposited in the preceding years when there was no demonetization. He also observed that out of the cash deposits of Rs. 2,47,50,000/- the AO on estimate basis had accepted the sales to the tune of Rs. 1,50,00,000/- and the balance amount of Rs. 97,50,000/- had been added. The Ld. CIT(A) observed that the assessee had given figures of total sales, cash sales and cash realization from debtors for the A.Y. 2015-16, 2016-17 and 2017-18 which were at Rs. 17,81,85,280/-, Rs. 18,01,49,041/- and Rs. 13,82,27,373/- respectively out of which the cash sales were of Rs. 2,47,74,931/-, Rs. 6,89,63,188/- and Rs. 4,12,59,227/- and the cash realization from the debtors were at Rs. 8,08,69,295/-, Rs. 6, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which two conditions were required to satisfy namely investment /expenditure were not recorded in the books of accounts of the assessee and that the nature and the source of acquisition of the asset or expenditure were not explained or not explained satisfactorily, however, in the present case the cash deposited was duly recorded in the books of account of the assessee who offered the explanation regarding the nature and source being the cash sales and realization of debtors out of earlier sales and that the money was duly recorded and accounted for in the books of account. The Ld. CIT(A) pointed out that the AO mentioned that the assessee had failed to prove the cash deposited during the demonetization was normal business receipts, however he himself accepted Rs. 1.5 crore as normal business receipt out of total cash deposit of Rs. 2,47,50,000/-therefore, it could not be said that the assessee failed to give substantial explanation about nature and source of cash deposit and that once, the explanation of the assessee was partially accepted by the AO for Rs. 1.50 crores without pin pointing the basis as to why the same explanation was not acceptable in respect of balance Rs. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales was noticed by the AO, he therefore deleted the addition of Rs. 97,50,000/- made by the AO. 6. Now the Department is in appeal. 7. The Ld. CIT DR reiterated the observation made by the Ld. CIT(A) at page no. 35 onwards of the impugned order and supported the assessment order passed by the AO particularly para 3.15 of the assessment order dt. 28/12/2019. 8. In his rival submissions the Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee filed the return of income on the basis of audited books of account which had been accepted by the AO while passing the order under section 143(3) of the Act and no defect had been pointed out in day to day maintenance of such books of accounts neither any evidence of purchases or sales outside the books of accounts had been found. 8.1 The Ld. Counsel for the assessee referred to page no. 74 of the assessee s compilation and submitted that specific queries were raised by the Deputy Director of Investigation Wing, the assessee replied and submitted details of bank account, copy of the ITR s alongwith computation chart and audited balance sheet for the A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained money' in the books of accounts of the assessee, because on one hand, there is decrease of stocks and in lieu of that, the cash has been received from the customers and which have duly been recorded in the regular books of accounts of the assessee. v). We also invite your goodself's attention to the chart at page 4 of the order of CIT(A), which is being relied upon. vi). We also rely on the submissions at page 7 of the order of CIT(A) and from page 6 , 7 8 of the order of CIT(A), the cash sales in the month of October are there and both the cash sales and recovery from debtors as compared to last year, are less and the cash deposited in November 2016 is to the tune of Rs. 2,44,80,000/- as compared to 3,61,64,350/- in November 2015. Thus, the same itself demonstrates the genuineness of our books of accounts. vii). We had also submitted that it is only an exchange of assets from stock to cash by way of cash sales and realization from debtors, to whom the sale is made in the earlier period and no doubt have been made in earlier period and, no doubt, have been raised by the Assessing Officer about the availability of stock and the gross profit has been ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave already been accounted for in the trading account, no addition could be sustained, even if, the said deposit could be treated as bogus sales as complete stock tally is there. xii). We rely on the judgment placed at Serial No. 10 of Paper Book of Delhi High Court in the case of 'Sh. Akshit Kumar' and judgement of Hon'ble Punjab Haryana High Court in the case of Sh. K.C. Malhotra. xiii). We also rely on the latest judgment of Jurisdictional ITAT, Chandigarh Bench, Chandigarh in the case of Kalaneedhi Jewellers LLP in ITA No. 311/Chd/201 vide order dated 25.03.2022, (Copy of the judgment is placed in the Paper Book-Ill, at pages 462 to 531), wherein the Hon'ble Bench after discussing the similar judgment and by relying upon on number of judgments had deleted the addition as sustained by the Ld.CIT(A) on the context that if opening stock, purchases, sales and closing stock have been accepted, proper books of accounts have been maintained and after relying upon similar judgements as being relied upon here, the addition as sustained by the CIT(A) has been deleted. xiv). Compared the above said facts with our case, the facts in our case are more strong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee that the balance of the amount which was deposited in the bank account was out of the realization of cash from the debtors which for the year under consideration was at Rs. 3,09,78,586/-. In the present case the AO accepted the trading results and had not doubted opening stock purchase sales and closing stock as well as GP rate shown by the assessee. Therefore, the addition of Rs. 97,50,000/- made by the AO on the basis of surmises and conjectures was rightly deleted by the Ld. CIT(A). We do not see any valid ground to interfere with the detailed and logical findings given by the Ld. CIT(A) in the impugned order. 10. In Cross Objection the assessee had raised the following grounds: 1. That the Ld. CIT(A) has rightly deleted the addition of Rs. 97,50,000 on account of alleged unexplained cash deposits u/s 69A. in the regular bank account of assessee. 2.a) That the Ld. CIT(A)-5, Ludhiana has erred in confirming the action of the Assessing Officer for assumption of jurisdiction u/s 153A for the year under consideration, as there was no Panchnama draw in the case of the assessee b) That even in the remand report of the Assessing Officer, it could not prove that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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