TMI Blog2024 (2) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... ils. AO has not pointed out any defect in the books of accounts. Therefore, AO cannot treat the cash generated from sales duly recorded in books of account from unexplained/unaccounted sources unless books of account rejected based on valid reasons. Thus set aside the finding of the CIT(A) and direct the AO to delete the addition made by him Decided in favour of assessee. Addition u/s. 68 being unsecured loans - onus to prove - order of the AO was confirmed by the Ld. CIT(A) by observing that the credit of unsecured loan from the parties cannot be treated as explained merely by providing PAN and bank statement until the proof of identity and credit worthiness of the parties are established - HELD THAT:- The provision of section 68 cast primary onus on the assessee to explain the nature and source of the sum credited in the books of account. This primary onus can be discharged by establishing/furnishing the proof of the identity of the creditor, their creditworthiness and genuineness of transaction. Once the primary evidence in relation to the identity, genuineness and creditworthiness is furnished by the assessee, the burden shifts on the revenue to bring credible material b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) of the Income Tax Act, 1961 (here-in-after referred to as the Act ) relevant to the Assessment Year 2017-2018. 2. The assessee has raised following grounds of appeal: 1. Ld.CIT(A) erred in law as well as on fact in upholding addition of Rs. 50,00,000 u/s. 68 being sales credited to profit and loss account and declared as income. 2. Ld.CIT(A), erred in law as well as on fact in upholding addition of Rs. 4,65,000/- u/s. 68 being unsecured loans. 3. The first issue raised by the assessee is that the learned CIT(A) erred in confirming the addition of cash deposit of Rs. 50 Lakh as unexplained cash credit under section 68 of the Act. 4. The facts in brief are that the assessee is an individual who claimed to be engaged in the business of trading of gold and silver items under the name and style of M/s Adheshwer Jewelers. The assessee during the demonetization period (08th November 2016 to 31st December 2016) deposited cash amounting to Rs. 50 Lakh in the bank account held with Yes Bank and UCO Bank. The details of the same stand as under: Sr.No. Name of Bank Name of the Bank Account No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O found certain deficiencies in the claim made by the assessee detailed as under: - Evidence of purchases of gold or silver such as bills/voucher/weighing slip etc. was not provided. - Stock registered was not maintained even though the books of accounts were audited. - The assessee got AMC permission for business on 29th March 2016 and as per bank account several transactions were made during the year. However, entire sales were made during 21st to 31st October 2016 only and that too in cash only which was only deposited during the demonetization period. - As per the cash book submitted by the assessee, no expenditure was incurred out of cash till the date of demonetization. - The details of supplier of gold/silver were not provided. Further, sales bill issued to customers do not contain full name address of customers, description of goods and weight of goods. - The assessee took VAT registration and filed VAT return only after scrutiny notice under the Act issued to him. 4.3 In view of the above finding, the AO held that the entire submission of the assessee showing cash deposits out of trading of gold and silver is camouflaged and afterthought. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt supported by sales bill and stock details. The AO has not pointed out any defect in the books of accounts. Therefore, in our considered the opinion, the AO cannot treat the cash generated from sales duly recorded in books of account from unexplained/unaccounted sources unless books of account rejected based on valid reasons. 9.1 We also note that the coordinate bench of Jaipur Tribunal in case of Mahesh Kumar Gupta vs. ACIT in ITA NO. 149/JP/2022 vide order dated 23-03- 2023 in the similar facts and circumstances deleted the addition made by the AO by observing as under: None of these records were disputed by the ld. AO. We have also seen that even the ld. AO has not dealt with the specific submission of the assessee and he has merely written one paragraph confirming the view of the ld. AO without dealing with the various contentions raised and judicial decision cited by the assessee even the ld. CIT(A) has not dealt with any of the judgement relied upon the ld. AR of the assessee while dealing with the appeal of the assessee. 9.2 The ld. AR of the assessee vehemently submitted that law nowhere prohibits cash sales to the assessee. Assessee by selling the goods in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit u/s. 68. The Delhi High Court held that section 68 did not apply, as the assessee had disclosed such donations as its income. 9.5 The bench has also noted that the ld. AO accepted the opening stock, purchase, as well as the closing stock at the yearend to be genuine and correct. It is also worthwhile to mention that the ld. AO has not rejected the books of accounts of the assessee by invoking the provisions of Section 145(3) and even there is no whisper in the order about any defects in the books of account. The ld. AO has not brought any material on record to establish that the sale bills were bogus or any evidences indicating that sales were bogus. The ld. AO is wrong in not accepting the declared cash sales as not verifiable which are recorded in books of accounts which were found to be correct and complete. We have also noted that the assessee has undertaken cash sales of Rs. 1,86,45,067. Out of the total cash sales, cash sales amounting to Rs. 80,00,000 has been found to be nongenuine and added under section 68 of the Act. Explanation offered to substantiate the cash sales has been arbitrarily rejected without holding that the sales is duly recorded in the books and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted books were considered and accepted while finalizing the assessment. Similar view has been taken by this coordinate bench of Jaipur in the case of Chandra Surana in ITA No. 166/JP/2022 wherein the similar view has been taken. The relevant finding is reproduced here in below; *****. 9.8 Respectfully following the consistent view and after considering the factual matrix of the cash on hand in our considered view the addition made cannot sustain and therefore, we vacate the addition of Rs. 80,00,000/- made under section 68 of the Act as the same cannot be made without rejecting the books of account of the assessee regularly maintained by the assessee and the said cash deposited is duly supported by the entries passed in the books of account and part of the sale accepted by the AO. 9.2 In view of the above and after considering the facts in totality, we hereby set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence, the ground of appeal raised by the assessee is hereby allowed. 10 The second issue raised by the assessee is that the Ld. CIT(A) erred in confirming the addition made by the AO for Rs. 4,65,000/- only on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely by providing PAN and bank statement until the proof of identity and credit worthiness of the parties are established. The relevant finding of the Ld. CIT(A) is extracted as under: And it is held that genuineness of unsecured loan amounting of Rs. 4,65,000/- transaction could not be proved merely by providing PAN and bank statement of the lender, thus it is evident that the assessee has failed to prove identity, creditworthiness of the depositor and genuineness of transaction and same is treated as his unexplained cash credits u/s. 68 of the Income Tax Act. 13.1 The provision of section 68 of the Act cast primary onus on the assessee to explain the nature and source of the sum credited in the books of account. This primary onus can be discharged by establishing/furnishing the proof of the identity of the creditor, their creditworthiness and genuineness of transaction. Once the primary evidence in relation to the identity, genuineness and creditworthiness is furnished by the assessee, the burden shifts on the revenue to bring credible material before rejecting the primary document furnished by the assessee. From the above extracted finding of the Ld. CIT(A) and materials ..... X X X X Extracts X X X X X X X X Extracts X X X X
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