TMI Blog2023 (10) TMI 1366X X X X Extracts X X X X X X X X Extracts X X X X ..... pt non-maintenance of stock register in the desired format. Therefore, without bringing any corroborative material on record suggesting specific defect in the books of account the book result cannot be rejected merely for not providing certain detail which the AO requires to verify. See AWADHESH PRATAP SINGH ABDUL REHMAN AND BROTHERS [ 1993 (12) TMI 28 - ALLAHABAD HIGH COURT] AO after rejecting the books accounts has proceeded to treat the cash sales as unexplained cash credit u/s 68 of the Act on various grounds. AO has relied upon the same set of data/figures as shown by the assessee for treating the cash deposit as unexplained cash credit u/s 68 of the Act. There was no iota of doubt on the genuineness of the other income and the expenses was brought on record by the assessee. To our mind, once the books of accounts have been rejected, the AO has to estimate the profit and he has no right to make any individual addition or deletion to the total income of the assessee . However, in the case on hand, the AO has not done so. See HYNOUP FOOD OIL INDUSTRIES (P.) LTD. [ 1992 (2) TMI 111 - ITAT AHMEDABAD-A] Therefore, we hold that the book result shown by the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash sales as inflated sales inasmuch as that the same is duly proved from the purchases made by the assessee and accepted by the A.O. 9) He has erred in law and on facts in not appreciating the facts that for cash sale below Rs.2 lakh, there is no requirement for Address and PAN as per the Income- Tax Act itself. 10) On the facts of the assessee, there was no justification for the A.O. to estimate Gross Profit and to tax as sales/cash deposit in the bank as cash credits u/s.68 of the I.T. Act, 1961 and the returned income ought to have been accepted. 11) On the facts of the assessee interest u/s. 234B of Rs.15,43,707/- and u/s. 234C of Rs.1575/-, totaling Rs.15,45,282/- ought not to have been levied. 12) The appellant craves leave to add, to alter and/or to modify any grounds of appeal. 3. The interconnected issue raised by the assessee is that the learned CIT(A) erred in confirming the order of the AO by rejecting the book of accounts and making addition of Rs. 59.95 Lakh under section 68 of the Act representing cash deposit in the bank account and further addition of Rs. 75,375/- on account of GP estimation. 4. The facts in brief are that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld jewelry in cash for the amount ranging between Rs. 1 Lakh to 2 Lakh. (vi) The assessee was specifically asked to furnish day to day stock register in the form of quality wise quantitative details of gold whereas the assessee simply furnished quantity wise stock details. The quality wise quantitative detail of gold/gold ornament is of very importance because the purchase or sale price and value of opening and closing stock of gold depend or varies upon the basis of quality . The AO, based on the above finding concluded that the cash sales shown by the assessee were camouflaged to show cash balance in the books before depositing in the demonetization period. The bills, vouchers etc. are made up documents only. The AO also found that the assessment proceedings under the Act are civil proceedings and therefore the degree of proof can be determined based on principle of preponderance of probability. Accordingly, the test of probabilities, consideration of entire sequence of events and circumstances are to be considered before arriving conclusion. Hence, the explanation furnished by the assessee that cash deposits were made from cash sale is not acceptable based on the prepon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th November and thereafter and found that there was sharp increase of 989% in cash sales booked in the period from 1st Apr to 8th November. On comparing the cash deposit of the relevant FY2016-17 with previous years it was found that the assessee bas deposited total cash of Rs. 15,56,550/- in FY 2015-16 where the cash deposited in the FY 2016-17 was Rs.62,42,400/-. Thus there was a huge increase in cash deposit it was also found that the assessee deposited cash of Rs 2,47,400/- in the period from 01.04.2016 to 08.11.2016 whereas a disproportionately big amount of Rs.59,95,000/- was deposited during the period of demonetization from 09.11.2016 to 31 12 2016. The assessee could not submit any proper explanation regarding this huge increase of the cash deposited in the relevant year from the previous year. The cash sale bills submitted by the assessee in support to prove the cash sales was not found genuine and verifiable by the AO as all these bills was written without complete address of the purchasers and all the sales were kept intentionally below Rs. 2,00,000/- to avoid writing particulars of customers and any further verification in this regard. It is difficult to accept as to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned CIT(A) the assessee is in appeal before us. 8. The learned AR before us has filed a paper book running from pages 1 to 90 and the compilation of the case laws. It was submitted by the learned AR that all the requisite details were furnished by the assessee during the assessment proceedings and therefore the book results shown by the assessee should have been accepted in toto. However, the AO merely on account of non-furnishing the stock statement in the desired format rejected the books of accounts and treated the cash sales made during the period as unexplained cash credit under section 68 of the Act. As per the learned AR, the cash sale in the book is possible only against the purchases which have been duly accepted by the revenue during the assessment proceedings. All the necessary details regarding the purchase parties were duly furnished and no doubt whatsoever was raised by the AO. Hence, it was contended by the learned AR that the book results shown by the assessee should be accepted. On the other hand, the learned DR before us vehemently supported the order of the authorities below. 9. We have heard the rival contentions and gone through the facts and circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t providing certain detail which the AO requires to verify. In holding so we draw support and guidance from the judgment of Hon ble Allahabad High Court in case of Awadhesh Pratap Singh Adbul Rehman Bros v/s. CIT 201 ITR 404(All) which reads as under: It is difficult to catalogue the various types of defects in the account books of an assessee which may render rejection of account books on the ground that the accounts are not complete or correct from which the correct profit cannot be deduced. Whether presence or absence of stock register is material or not, would depend upon the type of the business. It is true that absence of stock register or cash memos in a given situation may not per se lead to an inference that accounts are false or incomplete. However, where a stock register, cash memos, etc., coupled with other factors like vouchers in support of the expenses and purchases made are not forthcoming and the profits are low, it may give rise to a legitimate inference that all is not well with the books and the same cannot be relied upon to assess the income, profits or gains of an assessee. In such a situation the authorities would be justified to reject the account boo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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