TMI Blog2022 (11) TMI 1334X X X X Extracts X X X X X X X X Extracts X X X X ..... imit. The assessee further explained that in the preceding financial years, subsequent financial years and other periods of this same financial year, the same practice was being followed by the assessee where no details of name, address and PAN of customer was available with the assessee. We agree with the findings of ld. CIT(A) that the AO has not brought any material on record to establish that the sale bills are bogus nor any evidence indicating that such sales was bogus and merely having some doubt by twisting the data and giving some findings which are not alone sufficient to justify the addition the income so assessed in not tenable in the eye of law. In fact the AO neither found any concrete and conclusive evidence of back dating of the entries of sale, evidence of bogus sales, evidence of bogus purchases, and non-existing cash balance in the books of account. The AO did not even reject the books of accounts of the appellant under the provision of section 145(3) of the Act. Therefore, the contention of the revenue on the facts and circumstance of the case is not accepteda - Appeal of the revenue is dismissed. - ITA No. 165/JP/2022 - - - Dated:- 22-11-2022 - SHRI SAND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent appeal before us. 3. Before us, the ld D/R reiterated the findings of AO in the assessment order and supported the addition made in the assessment order. 4. On the other hand, the ld. A/R reiterated the same submissions as raised by him before the lower authorities and also filed the written submission as under to support the order of ld. CIT(A). a) The assessee relies upon the findings made by ld CIT(A). The findings of ld CIT(A) is in para 4.2 at page 20-26 of her order. The ld CIT(A) after analysing each fact and various judgments made detailed factual finding in her order and deleted the addition made by ld AO. The assessee relies the findings of ld CIT(A). b) Ld AO herself accepted the amount of Rs. 1,03,00,000/- deposited in bank as cash sales therefore addition u/s 68 cannot be made. i) Rs. 12,00,000/- was deposited in non-demonetized currency on 28.03.2017, which too offered for Income under Pradhanmantri Garib Kalyan Yojna-2016 At the outset we would like to submit that the entire finding and addition so made by ld. AO is regarding the cash deposited in demonetized currency. The addition was made without appreciating the fact an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence the sale was low in the year FY 2015-16 as compared to sales in 2016-17. (ii) Increase in turnover in period 09/11 to 30/12- Financial Year Period Total Turnover 2015-16 09/11/15 to 30/12/15 24,10,695 2016-17 09/11/16 to 30/12/16 29,93,487 In FY 2015-16, the turnover for the period 9-11 to 30-12 was Rs. 24,10,695 as against Rs. 29,93,487/-. At the outset, we submit that the turnover for the period 09/11 to 30/12 was not relevant for the issue of the deposit of demonetized currency. The assessee achieved major sale on, Dhanteras and Choti Diwali were on 28/10/2016 and 29/10/2016 which falls before 09/11 to 30/12. It is further relevant to brought in your kind notice that in the month of October-2016 the gold price was at lower side in comparison to previous three months and due to Diwali festival and marriage occasions the sale boosted in this month, therefore the sales of October-2016 and first few days of November-2016 was comparatively at higher side. Thus this is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount recorded by the assessee are correct. Therefore, the separate addition for the sales recorded in the books of account cannot be made by treating the same as undisclosed income. In view of above submission there cannot be any reason for disbelieving the genuineness of the sales of the assessee merely for the reasons that the cash so received immediately was not deposited in bank and the same only deposited after announcement of demonetization more so when the same is duly supported with sale bill, entries in genuinely accepted books of account and the assessee was having the sufficient stock for that much of sales. v) The source of cash deposited in demonetized currency was sales made in cash The source of cash deposited in demonetized currency was sales made in cash and such sales was part of total sales credited in trading a/c and the assessee has already offered income on such sales in Trading Account by reducing the cost of sales from sales. The ld. AO herself accepted the sales shown in trading a/c as genuine and has not disturbed the cash sales so declared by Assessee. Thus, eventually on the one hand the ld. AO accepted the sales declared by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceeding and the sale for the other periods was accepted by the department. Sales shown by the assessee are fully backed with the sales bills, duly recorded in books of accounts and also in the stock register while on the other hand the ld. AO has not brought any material on record to establish that cash so deposited in bank account is undisclosed income of the assessee. The source of cash deposited in demonetized currency was cash received against/for sales made and such sales was part of total sales credited in trading a/c and the ld. AO accepted to such sales as genuine and therefore, there remains no reasons to treat the corresponding cash generated from such sales and deposited in bank a/c as undisclosed income of the assessee. It is relevant to mention here that each deposit in bank comprise the source and once the source has been duly shown in trading a/c, which also accepted by ld. AO than there remains no reason to treat such deposit as undisclosed income of the assessee. On the one side the ld AO is accepting the cash sales as genuine being credited in trading account and on the other hand the same is treated as undisclosed income of the assessee. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bogus. Merely having some doubt by twisting the data and giving some findings which are not alone sufficient to justify the addition the income so assessed in not tenable in the eye of law. It is further most importantly relevant to mention here that the Commercial Taxes Department had accepted the sales of the assessee declared in its VAT returns as genuine, therefore there remains no reason to doubt the genuineness of part of such sale by the ld. AO. It is admitted position of law that no addition can be made in the income of the assessee only on the basis of suspicion. Suspicion howsoever strong but cannot partake the character of evidence. The reliance is placed on following decisions: - i) Dhakeswari Cotton Mills Ltd vs. Commissioner of Income-tax [1954] 26 ITR 775 (SC) Case Law PB page 83-89 ii) Umacharan Shaw Bros vs. Commissioner of Income-tax [1959] 37 ITR 271 (SC) Case Law PB page 90-85 iii) CIT vs. Kapil Nagpal, DBITA 609/2014 (Delhi HC) Case Law PB page 96-104 iv) Goyal Gases (P.) Ltd vs. Commissioner of Income-tax [1997] 94 TAXMAN 57 (DELHI) Case Law PB page 105-106 It is admitted position of law the suspicion can be initiating poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the assessee that the provisions of section 68 are not applicable on the transaction which are already credited in the P L and the same can only made applicable on the cash credits such as loans, share application etc. It is an admitted fact that in the case of transactions of sales/purchases of goods/investments/assets the creditworthiness of the payee is not relevant for the receiver as the amount was received against the something sold to him, therefore such transactions cannot be examined with point of view of cash credits. Hon ble Rajasthan High Court in the case of Smt. Harshila Chordia vs Income-tax Officer APPEAL NO. 4 OF 2002 NOVEMBER 7, 2006 [2008] 298 ITR 349 (Rajasthan) Case law Paper Book page 147-152 held that no addition could be made in respect of the amount standing in the books of the assessee, which was found to be the cash receipts from the customers and against which delivery of vehicle was made to them. ii) It is pertinent to note that while the A.O. has accepted the cash deposited in the bank accounts in the previous financial years, cash deposited in banks during the impugned F.Y. 2016-17 in the Non-demonetized currency. The ld. AO did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) ii) Thus the assessee duly substantiated its claim from the documentary evidence and also with the facts. In letter dated 06.06.2019 (Copy at PB Page 46 to 47) the assessee submitted to ld. AO that There was increase of cash sale in month of Oct. and Nov.-2016 was due to Karva Chouth, Dhanteras and Diwali sales (Festival Season). That, the firm Dinanath Raj Kumar has been started in the year 2015 itself and hence the sale was low in the year F Y 2015-16 as compared to sale in 2016-17. That, During the F Y 2015-16 the mother of the assessee has expired and hence the assessee was not able to setup his business at Kanpur and hence the sale was low in the year FY 2015-16 as compared to sales in 2016-17. The assessee is engaged in the business of Jewellery and gold. In the trade of the assessee many of the customers usually pay in cash and as such, there is no unusual of having the cash sales in the trade of assessee. The cash received against such cash sales is subsequently deposited into the banks from time to time as per his convenience requirement of the assessee. The cash sale is general feature in the trade of the assessee and such sales is also appar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the customers the sale will obviously be down. The month to month and year to year sales varies due to demand in market because of sentiments of customers according to fluctuation in gold prices, festive seasons, design of Jewellery which is in stock with assessee etc. which is not in control of the assessee. v) During the course of assessment proceedings the assessee, filed the sufficient documents and submission to substantiate his claim of cash sales. On the other hand, the ld. AO could not point out any defects in such documents submission and also could not specify the nature of details, documents etc., which were legally supposed to submit by the assessee to substantiate his claim. Therefore, the addition made by ld. AO is not as per law but the same is her sheer presumption and assumption. e) Assessment was made on surmises, conjectures and with bias pre-set mind (i) At the outset we would like to submit that from perusal of the assessment order it is apparent that impugned addition u/s 68 was made by the AO in the wake of demonetization and cash deposited in demonetized currency. Though the ld. AO was duty bound to examine the genuineness of sales and so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuine for wants of the details which are not required to obtain and keep as per the law. The reliance is placed on the following decisions: - i) Hon ble High Court of Bombay in the case of R.B. Jessaram Fatehchand (Sugar Dept.)v/s Commissioner of Income Tax [1970] 75 ITR 33 (Bombay) Case law Paper Book Page 153-156 held that :- Section 145 of the Income-tax Act, 1961 [Corresponding to section 13 of the Indian Income-Tax Act, 1922] - Method of accounting - Rejection of accounts - On assessee's inability to supply addresses of purchasers who purchased goods on cash, ITO rejected assessee's books of account showing result in respect of cash sale transactions, and made addition - AAC deleted additions but Tribunal restored ITO's orders - Whether there was no necessity whatsoever for assessee to maintain addresses of cash customers - Held, yes - Whether, therefore, rejection of book results of assessee was unjustified - Held, yes - Whether, consequently, additions made to assessee's income were liable to be deleted - Held, yes ii) Hon ble ITAT Jaipur Bench in the case of ACIT Circle-1 Jaipur Vs M/s Uttam Chand Deshraj (ITAT Jaipur Bench ITA No 419/JP/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is to somehow trigger the provisions of section 115BBE read with section 68 of the Act to the income already offered for tax by the assessee (as cash sales) at a higher rate of tax of 77.25% (i.e. flat rate of 60% plus surcharge @ 25% on such tax and cess as applicable) on gross basis (without any deduction/allowance). Section 115BBE of the Act is a machinery provision to levy tax on income and it should not enlarge the ambit of section 68 of the Act to create a deeming fiction to tax any sum already credited/offered to tax as income. Section 68 of the Act traditionally applies to unexplained cash credit like loans, deposits, advances, share capital, etc. and not to sums already offered to tax as income by the assessee in its return of income at the highest slab rate. Such recourse is unwarranted keeping in mind the objective to introduce section 115BBE of the Act was only to curb the practice of laundering of unaccounted money by taking advantage of the basic exemption limit. (iii) The intention of the Legislature behind introduction of section 115BBE was not to bring to tax genuine receipts already offered to tax as income by the Assessee at higher tax rates. Such an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reason of increase was the opening of new show room in Kanpur in FY 2015-16 and it took some time to gain reputation and name. In 2016- 17, at the time of Diwali, the assessee achieved good name in Kanpur and achieved good sales on the occasion of festivals, and marriages coming in next month. Para 2 page 2 The assessee did not file evidence to substantiate its sales. The ld AO made wrong and perverse findings. The assessee has filed ample documents to substantiate the sales. Particulars Copy at PB page Copy of Bank statement 30-38 Copy of Cash book 39-45 Summary of closing stock of FY 2016-17 49 Copy of Stock register of FY 2015-16 50-59 Copy of Stock register of FY 2016-17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lained above M/s Dinanath rajkumar was new showroom opened by the assessee in 2015-16 which gained good name and reputation by Diwali 2016. Dahnteras was on 28-10-2016 which is considered as very auspicious in purchase of jewellery. This is not happened in the case of assessee only but all the jewelers witness huge sales on Dhanteras, Further the marriages were falling in next month and due to that there was huge sales. Para 5 (2) page 2-3 The assessee has not submitted party wise details such as Pan address of cash sales It is not compulsory or mandatory under the I. Tax Act, 1961 to collect the information related to full name, address or/and PAN of the customer to whom goods were sold in cash during the course of business below to the prescribed limit. Detailed explanation and supporting case laws has been submitted in para (f) above. Para viii at Page 3 The assessee has not offered any acceptable and cogent explanation regarding of source of cash deposit of Rs. 1,03,00,000/- in demonetize money. Wrong and perverse findings made by ld AO. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of this relied upon case in entirely different from the case of assessee. b) The case of K Kailash Swaroop Agarwaal vs CIT, Ajmer, Hon ble Rajasthan High Court in ITA No. 175 of 2012 was decided in the factual background of proving the ingredients of section 68 of the Act regarding the loans accepted by assessee in cash. The case of the assessee in not so, therefore the facts of this relied upon case in entirely different from the case of assessee i) In support of our submission reliance is placed on following judgements: - 1) 2021 (5) TMI 447 - ITAT Visakhapatnam Asst. Commissioner of Income Tax, Central Circle-1 Visakhapatnam Versus M/S Hirapanna Jewellers And (Vice-Versa) Case Law Paper Book 181-184 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 ₹ 500 notes on 08.11.2016. As cash receipts represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition cannot be made without making further enquiry and conclusively proving that assessee did not have that kind of cash available with it. Even otherwise, if the assessee had to introduce his unaccounted money he would have deposited it at the first instance. 4. ITAT observed that assessee also filed its VAT returns, which are not found to be in variance with the accounting and tax records. Therefore, it cannot be substantiated that the assessee has backdated the transactions of the sale. 5. ITAT further observed that CBDT had issued various standard operating procedures under 'Operation Clean money'. ITAT opined that it is very important to note that whether the case of the assessee falls into statistical analysis, which suggests that there is a booking of sales, which is non-existent and thereby unaccounted money of the assessee in old currency notes (SBN) have been pumped into as unaccounted money. 6. In the result the addition of Rs. 73.13 crore sustained by Ld CIT(A) on account of deposit of demonized currency was deleted by Hon ble ITAT. In appeal by the Revenue, the Hon'ble High Court Pr. CIT (Central)-3 V/s M/s Agson Global Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/-accepted by AO] cannot be said to be as result of non-genuine business receipt or a case of black money and therefore, in the peculiar facts narrated above, including the past history taken note of and the pattern of money deposited predemonetization and post that event as discussed, addition was not warranted and it is directed to be deleted; and further, profit embedded in ₹ 8,75,500/- need to be taxed @ 8% and it is ordered accordingly. Appeal of the assessee is partly allowed. 5) 2021 (12) TMI 599 - ITAT Bangalore Anantpur Kalpana Versus Ito, Ward 1, Koppal. Unexplained cash deposits in two bank accounts - Legal tender money in demonetization of currency - AO culled out, the deposits that was made of bank notes that were declared as not legal tender owing to demonetization of currency - HELD THAT:- Both AO and CIT(A) accepted the fact that the cash receipts are nothing but sale proceeds in the business of the assessee. Addition has been made only on the basis that after demonetization, the demonetized notes could not have been accepted as valid tender. Since the sale proceeds for which cash was received from the customers was already admitted as income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is making a guess about the source of demonetized currency. And the assessee is assailing the guess work with an explanation which should be tested; and if the explanation given by the assessee is a plausible/probable from a traders/business man s/prudent man s angle/view, then that cannot be brushed aside by the AO, without disproving the explanation / facts or by giving cogent reasons. Statement of bank accounts of assessee (3 bank accounts) it is noted that assessee has deposited in his three bank account (predemonetization) an amount to the tune of ₹ 2,38,94,037/- and during (Post-demonetization period) the assessee had deposited to the tune of ₹ 2,38,94,037/- and it is found that the total bank deposit tallys with the figure shown in trading account i.e., ₹ 4,76,78,990/- (₹ 4.76 crores). So taking into account all these facts and circumstances and demonetization being declared on the night of 8/9th November, 2016, it is noted that AO has accepted the invalid currencies to the tune of ₹ 11,08,796/- because it was shown by the assessee in his regular books maintained as on 08.11.2016. The assessee s explanation in respect of ₹ 12,41 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were received in high denomination notes had been noted. Portions of these entries to the effect that moneys had been received in high denomination notes were found by the ITO to be subsequent interpolations made by the appellant with a view to advance its case that the cash balances contained the high denomination notes encashed by it. The ITO rejected the appellant's explanation that the high denomination notes formed part of its cash balances and treated the sum of ₹ 2,91,000 as the appellant's secreted profits from business and included it in its total income and assessed the appellant. Before the Tribunal, the appellant stated that the said entries were made in sheer nervousness after the coming into force of the High Denomination Bank Notes (Demonetization) Ordinance, 1946, on 12th Jan., 1946, as the appellant did not know that it had specific proof in its possession of having the high denomination notes as part of its cash balances. The Tribunal held that there was no other reason to suspect the genuineness of the account books in which these interpolations were made. If the entire account books were fabricated to serve its purpose, there would be no need for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [para 14] The Tribunal, however, appears to have been influenced by the suspicions, conjectures and surmises which were freely indulged in by the ITO and the AAC and arrived at its own conclusion, as it were, by a rule of thumb holding without any proper materials before it that the appellant might be expected to have possessed as part of its business, cash balance of at least ₹ 1,50,000 in the shape of high denomination notes on 12th Jan., 1946,-a mere conjecture or surmise for which there was no basis in the materials on record before it. [para 15] Unless the Tribunal had at the back of its mind the various probabilities which had been referred to by the ITO it could not have come to the conclusion it did that the balance of ₹ 1,41,000 comprising of the remaining 141 high denomination notes of ₹ 1,000 each was not satisfactorily explained by the appellant. [para 18] If the entries in the books of account were genuine and the balance in Rokar and the balance in Almirah on 12th Jan., 1946, aggregated to ₹ 3,10,681-13-9 and if it was not improbable that a fairly good portion of the very large sums received by the appellant from time to time, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, having regard to the cash balance shown therein, that notes in question could not have been included therein. The Tribunal observes that it is unlikely that so many high denomination notes would have been held as part of the cash on hand for a such a large number of days. That, no doubt, is highly suspicious; but the decision of the Tribunal must rest not on suspicion but on legal testimony. 9) Lakhmi chand Baijnath V. CIT [1959] 35 ITR 416 (SC).) Case Law paper Book page 208-211 Amount credited in business books can normally be presumed as business receipt. When an amount is credited in business books, it is not an unreasonable inference to draw that it is a receipt from business 10) Hon ble Allahabad High Court in the case of Sri Ram Tandon Vs. CIT (1961) 42 ITR 689 ordained as under: Case Law paper Book page 212-216 It appears extremely difficult to appreciate how the Tribunal thought it necessary or proper to make an estimate of 35 notes at ₹ 1,000 each to have been contained in the cash balance. The Tribunal has given no reason whatever for its finding that the assessee possessed 35 notes of ₹ 1,000 each on the day the Ordinance was pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r which there was no basis and which had no support from any material on the record. In these circumstances, it must be held that there was no material for holding that the sum of ₹ 25,000 being the value of high denomination currency notes exchanged in pursuance of the High Denomination Bank Notes (Demonetisation) Ordinance, 1946, represented income of the assessee company from some undisclosed sources. 12) Madhuri Das Narain Das Vs. CIT (1968) 67 ITR 368 (All) Case Law paper Book page 220-221 Section 4 of the Income-tax Act, 1961 [Corresponding to section 3 of the Indian Income-tax Act, 1922] Income Chargeable as Assessment year 1947-48 Assessee encashed 28 high denomination notes of Rs. 1,000 each after issuance of High Denomination Bank Notes (Demonetisation) Ordinance, 1946 When asked to explain source of said notes, assessee submitted that same had come out of closing cash balance of its business ITO disbelieved explanation and treated entire amount as assessee s income from an undisclosed source Tribunal accepted that 22 notes could have come out of cash balance of Rs. 38,000 and odd, and remaining 6 notes could not have formed such balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at even if the cash credit represents income, it is income from a source, which has already been taxed . The assessee has already offered the sales for taxation hence the onus has been discharged by it and the same income cannot be taxed again. 15) Hon ble High Court of Allahabad in the case of Gur Prasad Hari Das vs Commissioner of Income Tax [1963] 47 ITR 634 (Allahabad) Case Law paper Book page 229-231 Section 143 of the Income-tax Act, 1961 [Corresponding to section 23(3) of the Indian Income-tax Act, 1922] - Assessment Addition to income - Assessment year 1947-48 On demonetisation of high denomination notes assessee encashed 21 such notes, part of which were held, by Tribunal as his income from undisclosed sources on ground that same could not be satisfactorily explained by assessee Whether, prima facie value represented by high denomination notes in possession of assessee must be presumed to be part of his cash balance and if department wanted to treat such value as his concealed income from some undisclosed sources, it was for department to establish that fact on basis of material in their possession Held, yes Whether in view of fact that Tribunal accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be made u/s 68 of the Act as it would tantamount to double taxation of same income. The Assessing Officer could only reject claim u/s 80HHC of the Act. 18) CIT v/s. Kailash Jewellery House ITA No. 613/2010 decided by Delhi High Court on 09.04.2010 Case Law paper Book page 239 In the facts of above case cash of Rs.24,58,400/- was deposited in bank account. The Assessing Officer made the addition on the ground that nexus of such deposit was not establish with any source of income. The assessee claimed that it was duly recorded in the books on account of cash sales and was considered in the Profit and Loss Account. The Assessing Officer had verified the stock and cash position as per books and had accepted the same. Complete books of account and cash book was submitted to the Assessing Officer and no discrepancy was pointed out. On this basis CIT(A) deleted the addition. Tribunal also observed that it is not in dispute that sum of Rs.24,58,400/- was credited in the sale account and had been duly included in the profit disclosed by the assessee in its return. Therefore, cash sales could not be treated as undisclosed income and no addition could be made once again in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufficient cash in hand, the assessee withdraw the amount. It is correct that the assessee has withdrawn higher amounts than the immediate preceding years but that cannot be sole reason for making addition purely on the basis of suspicion. We failed to understand the reasoning of the Assessing Officer that the amount was withdrawn to justify the cash deposits during demonetization period i.e. between 09.11.2016 to 30.12.2016. It is also seen that the cash was withdrawn much prior to such event. So far observation regarding sharp increase in payable expenses is concerned, there is no finding by the Assessing Officer that such expenses are bogus - addition has been made purely on the basis of suspicion. Such action of authorities below cannot be affirmed - Decided in favour of assessee. j) Drawing inference from the above cited cases, in the instant case, the assessee furnished a reasonable explanation with regard to the nature and source of the cash deposited in banks in demonetized currency which was not found to be false by the Department. The explanation offered by the assessee was in line with the trend of cash deposits in the past years which was accepted by the Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retrospective in operation, it could not be regarded as law in force at the commencement of the year of assessment 1957-58. Since the Surcharge Act was not the law in force on April 1, 1957, no surcharge could be levied under the said Act against the appellant in the assessment year 1957-58. i) In view of above submission it is submitted that entire sales of the assessee are supported by the bills, duly verifiable from books of accounts records and the same is completely genuine. The ld. AO did not specify any defects in the sale and the sale is in line of its own previous history of the assessee. The ld. AO could not brought any single evidences on record to prove his allegation to be correct. Further all the surrounding circumstances and human probability of this much cash sale are also in favour of the assessee. The assessee submitted the best possible details/information/documents/explanation to present its case before ld. AO and as explained in forgoing paras no specific defects had been pointed out by ld. AO therein. The entire assessment order is based on presumption and assumption by twisting the data and drawn the conclusion therefore as per his own whims just to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales as unexplained cash credit of the assessee u/s 68 of the Act and added the same to the income of the assessee and thus taxed it as per the provisions of Section 115BBE of the Act and vide her order dated 30-12-2019 assessed the income of the assessee at Rs.1,43,11,520/- as against return income of Rs.40,11,520/-. The CIT(A) has deleted the addition on the basis of her findings in para 4.2 at pages 20-26 of her order as under:- 4.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- (i) Brief facts related to the issue are that AO noticed that the appellant has deposited cash of Rs. 1,03,00,000/- in its bank account during demonetization period viz. between 09.11.2016 to 30.12.2016 out of which cash of Rs. 91,00,000/- was in the demonetized currency notes (SBN i.e. Old Rs. 500 and Rs. 1000 notes). The appellant has explained it to be out of cash sales made by the appellant. AO tried to analyze the cash sale vis- -vis cash sales in the earlier years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore the initial burden cast on the appellant is discharged and therefore it cannot be disputed that the appellant does not have all the necessary documents to prove the genuineness of sales. (iv) The AO has treated the cash deposited in the banks during the demonetization period in demonetized currency as unexplained cash credits u/s 68 of the Act although the nature and source of the cash deposits being proceeds arising out of cash sales etc. is patently evident from the entries in the audited books of account of the Assessee. It is not the case of the A.O. that the cash deposited in the bank during the demonetization period was in excess of what was available in the cashbooks. The fact that the cash deposits in banks were sourced out of cash sales is evident from the entries in the cashbooks. The books of account of the appellant have been audited by an independent reputed auditor. The cash sales receipts are duly supported by relevant bills, which were produced before the AO in the course of assessment proceedings, and nothing adverse in connection therewith was noted by the AO. (v) As regard the fact that the majority sales of Dinanath Rajkumar was made on 28.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs Association mentioned that Jewellers had sold as much as 15 ton of gold ornaments and bars worth around Rs. 5000 crores on the intervening night of November 8 and 9, 2016 after the announcement of demonetization. Naturally after the spread of the news of demonetization, the general public had purchased the jewellery not only for the wedding in the immediate vicinity but also for wedding and functions in late November or December and also even otherwise for future use in functions. And due to this there was heavy cash purchase in November for the purpose of utilizing the demonetized notes whereas the purchases in the month of December, 2016 has been very low. However, the purchase for both the months taken together is not exceptionally high and the increase is mainly due to total increase in turnover and the specific reason of demonetization. Infact though there is rise in the cash sales during the demonetization period, however, there has been substantial decrease in sales for the entire year. It was further submitted that sales made by the appellant was fully vouched and verified and are duly recorded in the books of accounts, which were also audited. Further the sales are duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed again. (xii) 2021 (5) TMI 447 The Hon ble ITAT Visakhapatnam in the case of Asst. Commissioner of Income Tax, Central Circle-1 Visakhapatnam versus M/s Hirapanna Jewellers and (viceversa)) (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 ₹ 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 Jewe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has duly substantiated its claim from the documentary evidences and also with the facts which duly supported with his own previous history and trend. Further the books of accounts have not been rejected as no discrepancy was found therein and the fact remains that the AO has accepted the cash sales as he accepted the declared sales, declared purchases, declared opening and closing stock and declared 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 u/s 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 AO was not justified in making an addition of Rs. 1,03,00,000/- under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO herself accepted the sales shown in trading a/c and has not disturbed the cash sales so declared by Assessee and the sales of assessee duly supported by the sale bill and invoice and duly verifiable form books of accounts including stock register and considering availability of stock on hand, it proved that the sales made by the assessee are genuine sales recorded in the books of account. All the details required to prove the sales made by the assessee were provided in the assessment proceedings. The assessee has filed sufficient evidence to substantiate his sales. He has filed (1) Copy Cash book (Copy at APB Page 39 to 45) and sales bills along with submission dated 10.12.2017 (2)Copy of stock register for the FY 2015-16 and 2016-17 (Copy of the same is at APB Page 50 to 72 which shows that before making the sale the sufficient stock was available with assessee (3) Copy of VAT Returns APB Page 80 to 85 and VAT assessment order of proprietorship concern M/s Dinannath Raj Kumar, Jaipur at APB Page 88 to 90. The VAT department accepted the sale of the assessee. Thus the assessee substantiated its claim from the documentary evidence and also with the facts. In letter dated 06. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded on statistical analysis to make the addition on account of cash deposits. We agree with the findings of ld. CIT(A) that the AO has not brought any material on record to establish that the sale bills are bogus nor any evidence indicating that such sales was bogus and merely having some doubt by twisting the data and giving some findings which are not alone sufficient to justify the addition the income so assessed in not tenable in the eye of law. In fact the AO neither found any concrete and conclusive evidence of back dating of the entries of sale, evidence of bogus sales, evidence of bogus purchases, and non-existing cash balance in the books of account. The AO did not even reject the books of accounts of the appellant under the provision of section 145(3) of the Act. Therefore, the contention of the revenue on the facts and circumstance of the case is not accepted and we see no reason to find any fault in the detailed reasoned finding in the order of the ld. CIT(A). Thus, we sustain the order of the ld. CIT(A) and based on these observations the appeal of the revenue in ITA NO. 165/JPR/2022 stands dismissed. 6. In the result, this appeal of the revenue is dismissed. Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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