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TMI Blog2022 (12) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... re auditor. Any stock register whatsoever was not furnished during the course of assessment proceedings to verify the quantitative sale made during the year whether the item shown by the assessee as sold was actually in stock of the assessee or not and quantity and value of the sale shown remains unverified. 3. The ld. CIT(A) has erred in law and on facts by ignoring the vital fact. 2.1 Brief facts of the case are that the assessee e-filed his return of income for the assessment year 2017-18 on 26-10-2017 declaring an income of Rs.47,52,660/- .The case of the assessee was taken up for ''complete scrutiny'' u/s 143(3) of the Act on the basis of CASS and statutory notice u/s 143(2) of the Act dated 21-09- 2018 was issued through ITBA and duly served upon the assessee. Information u/s 142(1) of the Act was called for vide questionnaire through ITBA. In compliance thereof, the assessee submitted details/information through e-proceedings which were examined by the AO and the AO thus noted that the assessee has declared income from business and other sources i.e. to say that the assessee is engaged in the business of sale of gold jewellery and ornaments having two sales outlets one at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )) (Copy at Case Law PB Page No. 181-184) held that:- Addition u/s 68 r.w.s 115BBE - Assessee had deposited the sum in high denominations of specified bank notes (SBNS) post demonetization CIT-A deleted the addition HELD THAT:- The assessee produced the newspaper clippings of The Hindu, The Tribune and demonstrated that there was huge rush of buying the jewellery in the cities consequent to declaration of demonetization of 1000 and Rs. 500 notes on 08.11.2016. As 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 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 [2010 (4) TMI 1070 Delhi High Court] and Vishal Exports Overseas Ltd. [2012 (7) TMI 1110- Ahmedabad High Court] (iv) The case of CIT v/s. Kailash Jewellery House ITA No. 613/2010 was decided by the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red profits as well. The amount of cash sales is being reflected in its trading and profit and loss account. Thus the contention of the appellant that assessing the said cash sales as unexplained cash credit u/s 68 means that the impugned sales had been taxed twice, firstly the same was treated as sales and secondly the same was treated as unexplained cash credit/money under section 68 of the Act appears to be correct and therefore this would tantamount to double taxation of income, which is impermissible in law. Accordingly, the action of the AO in holding that the appellant could not substantiate the increase in sales with documentary evidences is not based on correct appreciation of the facts. Therefore, I find that the A.O. was not justified in making an addition of Rs.2,90,93,500/- under section 68 of the Act and consequently the aforesaid addition is directed to be deleted. The Ground of Appeal no. 2 & 4 are treated as allowed.'' 2.3 During the course of hearing, the ld. DR relied on the order of the AO and prayed that the ld. CIT(A) is not justified in deleting the addition of Rs.2,90,93,500/-. To this effect, the ld.DR relied upon the following decisions. 1. CIT vs McMil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus the authenticity of making the cash deposits out of such cash sales cannot be disregarded and rejected merely on account of variation or deviation of cash sales, cash deposits of earlier year or the ratio of cash sales in the current period with that of an earlier period. The Hon'ble Delhi Tribunal in the case of AGSONS GLOBAL P LTDvs. ACIT (Appeal Nos. 3741 to 3746/Del/2019) have held that the addition being made on the sole ground of deviation in ratio of cash sales and cash deposits during the demonetization period with that of earlier period, is not proper and lawful. 1.3 It is submitted that demonetization was announced in the evening of 8th November, 2016 viz. Indian Currencies of the denomination of Rs. 500 and of Rs. 1000 were withdrawn vide the Hon'ble Prime Minister announcement through television channels effective after midnight i.e. from 9" November, 2016 and vide Gazette Notification 2653 dated 8th November, 2016 declared that from 9th November, 2016 Rs. 500 and Rs. 1000 (specified Bank Notes) ceased to be legal tender. The persons were advised to deposit the demonetized currencies (called as SBNs) into their bank account without any limit or exchange ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the news of demonetization on television channels flooded to the shops of jewellers for the purpose of buying jewellery and bullions and dispensing with such SBN's. There was certain euphoria immediately after the announcement as the people having sums of money rushed to the jewellers to buy gold and other precious items. During such period gold worth crores of rupees was sold in few hours across the country and the jewellers have to do their business until midnight. This issue was also widely circulated in print media. Similarly, the comparative sales of other products across the country in various business segments also increased during such period. The effect of the same was that the sale figures of the demonetization period of the jewellery businesses was comparatively more than that of previous years. In case of assessee also the sales figures of November, 2016 increased as compared to November, 2015 as that of other jewellers in the country. The assessee otherwise cannot put a condition that no cash sales shall be made to it's customer as there is no provision in I. T. Act, 1961 which restricts in making cash sales by any business man. It is also a practice that on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. Tax Appeal No. 2471 (Guj) of 2009, wherein the Hon'ble High Court has observed as under: - "Revenue carried the matter in appeal before the Tribunal. The Tribunal did not address the question of correctness of the CIT (Appeal)'s conclusion that amount of Rs. 70 lakhs represented the genuine export sale of assessee. The Tribunal however, upheld the deletion of Rs. 70 lakhs under section 68 of the Act observing that when the assessee had already offered sales realisation and such income is accepted by the Assessing Officer to be the income of the assessee, addition of the same amount once again under section 68 of the Act would tantamount to double taxation of the same income. In view of the above situation, we do not find any reason to interfere with the Tribunal's order". Smt. Harshil Chordia v. ITO [2008] 298 ITR 349 (Raj.) wherein the Hon'ble High Court has observed as under:: ''23. So for as question No. 2 is concerned, apparently when the Tribunal has found as a fact that the assessee was receiving money from the customers in hands against the payment on delivery of the vehicles on receipt from the dealer the question of such amount standing in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee during the course of assessment proceedings produced the stock register in physical and said facts is also mentioned in the reply filed by assessee vide letter dated 28-11-2019 in which it is specifically mentioned that stock register was also produced before Ld. AO. A copy of said letter filed attached with this submission.. The Ld. CIT(A) also given her findings on this issue in para no. 4.2 (vii) at page no. 7 of appeal order. For ready reference the finding of Ld. CIT(A) are reproduced herein below:- ''Though Ld. AO has stated that the stock register was not subject to audit and that the appellant has not shown the relevant stock register before the assessing officer, however on perusal of the details filed by the appellant before the A.O. as well as on perusal of the assessment record called for during the appellant proceedings, it is observed that all the books of accounts were produced by the appellant before the Ld. AO. It is not the case of the Ld AO that the appellant did not have the sufficient stock for making the sales. Thus, it cannot be said that the figures of sales and purchases are not supported by the quantitative details. The Ld. AO did not make any e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Court to decide in which hand the income from property be taxed whether in individual assessee's hand or as trust property. Here the facts of the case are altogether and not at all relevant in present appellant's case. 4. [1995] 80 Taxmann 89 (SC) Sumati Dayal vs CIT: In this case assessee shown certain amounts in capital accounts in books claiming same to be winning from horse races. - For this contention she filed sworn statement. Assessing officer disbelieved her version and Settlement Commission upheld the assessment order holding that it was reasonable to infer, on facts that assessee did not participate in races but purchased winning tickets after events with unaccounted money. It is submitted that in the above case assessee only filed sworn statement to justify the amount shown credited in capital account however in the appellant's case the sales made during the demonetization period are evidenced with GST invoices, stock register etc. The complete regular books of accounts, bills, vouchers and a day-to-day manual stock register having complete quantitative details have been maintained by assessee. The said books of accounts are audited and accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. The assessee vide submission dated 27-09-2019 had produced stock record during the course of hearing. The cash sales transactions are recorded in regular books of accounts and the sale are made out of stock in trade for which no adverse finding had been observed by the AO except for the change in the methodology in issuing bills as mentioned at page 7 to 8 of the assessment order. Further the ld. CIT(A) observed that the AO had treated the cash deposited in the bank during the demonetization period in demonetized currency as unexplained cash credit u/s 68 of the Act although the nature and source of the cash deposits being proceeds arising out of cash sales etc. was evident from the entries in the audited books of accounts of the assessee. In this case, the books of account of the assessee had been audited by an independent auditor. The cash sales and receipts are duly supported by relevant bills which were produced in the course of assessment proceedings before the AO and it is not the case of the AO that the assessee did not have sufficient stock for making the sales. Hence, it cannot be said that the figures of sales and purchases are not supported by the quantitative detai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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