TMI Blog2023 (7) TMI 736X X X X Extracts X X X X X X X X Extracts X X X X ..... s demonstrated the factum of huge turnover prior to and post demonetization in the preceding year, and even in the succeeding year, and also factum of majority of the sales being in cash. There was no occasion at all for the AO to treat the entire cash deposited during the demonetization period, as unexplained credits. The facts on record could not have led to the inference that entire sales made by the assessee during the demonetization period were bogus. In fact, the inference drawn by the AO, that only a portion of it could be treated as bogus/unexplained, was not incorrect. Therefore, we hold that the ld.Pr.CIT s finding of error is based on incorrect appreciation of the facts before it, and his finding that the assessee had not been able to substantiate its explanation for cash sales completely is also not correct. Thus we hold, could not have been inferred from the facts on record, and there is no error as such in the order of the AO in this regard. The order passed by the ld.Pr.CIT u/s 263 of the Act holding the assessment order erroneous so as to cause prejudice to the Revenue is therefore not sustainable in law - Decided in favour of assessee. - ITA No.184/Ahd/2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred reply, the assessee has also sought for personal hearing. In this regard, it is pertinent to mention here that the assessee has furnished his reply in respect of all the issues mentioned in the show cause notice dated 16/02/2022 through electronically. In view of the same and also keeping in view of the faceless era, the present proceedings are finalized considering the reply furnished by the assessee through electronically and hence it is not considered necessary to provide opportunity of being heard personally in the instant case. In his reply, the assessee has contended that he had clearly substantiated with documentary evidences the particulars of cash deposited into bank during demonetization period, co-related with cash sales and there was no any failure on his part for this issue. This contention of the assessee is found to be not correct. On perusal of the case records, it is noticed that the assessee has not furnished any supporting evidences to substantiate thesales which were claimed to be the source of cash deposits made during the demonetization period. Further, on perusal of the assessment order, it was noticed that after verifying the details furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income tax as the income of the assessee of that previous year. Thus the action of the AO in limiting or estimating such addition to 20% of the sum credited is against the express provisions of Section 68 of the I.T. Act and accordingly, the assessment order for A.Y. 2017-18 dated 29/12/2019 passed by the Assessing Officer in the case of the assessee is erroneous in so far it is prejudicial to the interest of revenue within the meaning of Section 263 of the I.T. Act. Here it is pertinent to reproduce the relevant portion of the Section 263(1) of the I.T. Act as under: 263. (1) The Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order there on as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. 5. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh deposit during the demonetization was thoroughly inquired into by the AO and the assessee had repeatedly maintained that the cash deposited was on account of cash sales made by it. The assessment order reveals that the assessee had submitted comparative figures of sales made by it in the preceding and succeeding years and demonstrated huge turnover averaging Rs.20-30 crores. He had also submitted comparative details of cash component of total sales reflecting the fact that the cash component was approx. more than 90% of the turnover. The assessee had further demonstrated the fact of increase in sales in the impugned year by showing that its business had shown an increasing trend from year to year right from Asst.Year 2014-15 to Asst.Year 2018-19 including the year of demonetization i.e. financial year 2016-17. The assessee had shown its sales had continuously increased in the predemonetization period at the rate of 32.5% and 39.01% while during the demonetization period and post demonetization, the sales had shown a decline in the %ge of increase, increasing at the rate of 13.90% and 17.22% in the subsequent year i.e. FY 2017-18 and 2018-19. The assessee had al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etization period, but also prior and post demonetization also. His reply to this effect at page no.4 to 7 of the order is as under: 10. It is evident from the above that the assessee had clearly demonstrated that the entire cash deposited during demonetization could not be treated as unexplained; that its scale of business operations was huge and nature of business was such that 90% of its sales was done in cash, and even prior to demonetization, the assessee had made huge cash sales commensurate to the sale made during the demonetization period. All these explanation given by the assessee was rightly taken note of by the AO and finding anomaly to the extent of substantial increase in sales during the demonetization period, he considered it fit to treat 20% of the sales as unexplained credits. The ld.Pr.CIT s view that entire cash deposits during this period is to be treated as unexplained, is contrary to the facts on record, wherein the assessee has demonstrated the factum of huge turnover prior to and post demonetization in the preceding year, and even in the succeeding year, and also factum of majority of the sales being in cash. Therefore, there was no occas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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