TMI Blog2024 (2) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AO has accepted the sales of the assessee. The natural corollary would be that AO accepted the sales made in cash also. Hence, the source of cash deposits ought to have been treated as explained. AO has not commented on purchases. Undisputedly manufacturing and trading activity would be based on sale and purchase. If the purchases are treated as genuine and stock is also accepted then treating the sales as bogus is not logical. CIT(A) did not advert to submission that no error was found in the stock of the assessee. Once the assessee has recorded the sales in its books and there is no adverse finding qua stock and purchases are made. In my considered view, invoking the provision of section 68 would not be justified. It is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and deserves to be quashed as such. 3. That the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) has erred both in law and on facts in upholding an addition made of Rs. 39,27,414/- representing alleged unexplained cash deposits in the bank account of the appellant during the period of demonetization and brought to tax under section 68 of the Act read with section 115BBE of the Act. 3.1. That, the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that the learned Assessing Officer having accepted the cash sales and taxed income thereon could not by any stretch of imagination either legally or logically hold that cash deposited is unexplained and taxable as income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in law and therefore, addition so sustained is absolutely unwarranted. 4. That without prejudice to the above and in the alternative, even otherwise, the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in holding that amount deposited in the bank by the appellant is taxable as income under section 68 of the Act and thereafter computed the demand in accordance with the rates specified in section 115BBE of the Act as amended by Taxation Laws (Second Amendment) Act, 2016. 2. The only effective ground raised by the assessee in this appeal is against the sustaining of addition of INR 39,27,414/- made by the Assessing Officer ( AO ) u/s 68 of the Income Tax Act, 1961 ( the Act ) r.w. section 115BBE of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance for the month of October, 2016. He contended that the cash sales have been made subsequently as well. He drew my attention to the pages 85 to 86 of the Paper Book wherein as per page 85 of the Paper Book, the assessee had deposited cash amount of INR 1,16,00,000/- in the month of May, 2015; INR 36,50,000/- in the month of June, 2015; and INR 7,00,000/- in the month of August, 2015; as per page 86 of the Paper Book, the assessee had also deposited cash amount of INR 40,00,000/-; INR 55,00,000/-; and INR 14,00,000/- in the months of April, May and June, 2016 respectively. Further, the assessee has deposited cash of INR 32,00,000/-in the month of July, 2016; INR 95,50,000/- in the month of August, 2016; and INR 42,00,000/- in the month o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant. Ground no.1 3 are relating to addition of cash credit of Rs. 39,27,414/- u/s. 68 of the Act. As seen from the details furnished by the appellant and the assessment order, the appellant is engaged in business of manufacturing and trading of Guar, Saron, Rui, Khal Binola etc. The contention of the AO in taxing the cash deposited by the appellant during the demonetisation period is that the appellant historically did not have voluminous cash sales and they were merely in the range of Rs. 800 to Rs. 80,000/- per month in aggregate. Therefore, the astronomically high figure of cash sales of Rs. 14,00,000/- in October, 2016 and Rs. 27,00,000/- in November, 2016 was not acceptable. The appellant did not furnish any evidence supporting su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of these categories notified by the RBI to accept the demonetised notes. The appellant could not accept the demonetised notes from the sundry debtors after the date of demonetisation. Therefore, the deposit made by the appellant of demonetised notes over and above the cash balance as on 01.10.2016 has to be treated as unexplained money/cash credit and therefore, the same has been rightly brought to tax by the AO. The addition made by the AO of Rs. 39,27,414/- is sustained. Ground no.1 3 are dismissed. 8. Ground No.2 is relating to initiation of penalty u/s 270A of the Act. As the penalty is merely initiated and not levied, this ground is premature. Hence, ground No.2 is dismissed. 9. From the above, it is clear that the Ld.CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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