9911796707
TMI Blog2024 (9) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... s processed u/s. 143(1) of the Act on 21.04.2018; and later, the case was selected for complete scrutiny. The AO noted that during the year assessee had deposited SBNs of Rs. 31,47,900/- in his two bank accounts (Canara Bank - Rs. 3,34,000/- & Lakshmi Vilas Bank - Rs. 28,13,900/-, totaling Rs. Rs. 31,47,900/-). The AO further noted that Lakshmi Vilas Bank informed the AO that out of the aforesaid cash deposit of Rs. 28,13,900/-, Rs. 6,01,610/- was not SBNs but valid currency. Therefore, the AO asked the assessee to prove the nature and source of balance amount of Rs. 25,46,290/-. The assessee replied that the nature of the deposits/SBNs was trade receipts i.e. sale consideration of milk & milk products, and source of the same was from customers to whom milk/milk products were sold and expressed his willingness to furnish the names of his distributors/customers. However, the AO was of the opinion that after 8th November, 2016, assessee ought not to have received the SBNs and therefore, he was pleased to add Rs. 25,46,290/- u/s. 69 of the Act. 4. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) and filed detailed Written Submissions, wherein, he reiterated that he wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.CDPL supplied milk products of value of Rs. 90,969.25; and on next date i.e. 02.04.2016 supplied milk valued Rs. 88,285.50 and the assessee deposited dues on 02.04.2016 of Rs. 73,750/- and on 03.04.2016 deposited Rs. 90,620/- and M/s.CDPL supplied products worth Rs. 88,152/- and also Rs. 1,755/- and assessee deposited Rs. 90,620/- on 03.04.2016, likewise, every day from 01.04.2016, it is seen that regular transaction were taking place between the assessee and M/s.CDPL, wherein, M/s.CDPL used to give milk products to the assessee on credit and the assessee in turn used to collect it and distribute the same to his customers, and the dues were collected and deposited regularly in the bank account of the M/s.CDPL. Thus, assessee followed modus operandi throughout till 15.11.2016. [Please note that demonetization was ordered on 08.11.2016]. It was also brought to our notice that from 08.11.2016 to 15.11.2016, M/s.CDPL accepted the cash deposits in their bank account (of M/s.CDPL) by the assessee; however, from 15.11.2016, they refused to accept the cash to be deposited in their bank account, instead, asked the assessee to deposit it in his own bank-account and issue cheques to M/s.CDP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year". 9. A plain reading of sec.69 indicate that where in the Financial Year, the assessee has made investments which are not recorded in the books of accounts of the assessee, and the assessee offers no explanation about nature and source of investments or the explanation offered by him is not in the opinion of the AO satisfactory, the value of the investment may be deemed to be income of the assessee. Keeping the definition of unexplained investment in mind, in order to make an addition under this section i.e. sec.69, the AO has to first make a finding of fact that this investment of Rs. 25,46,290/- has not been recorded in the books of the assessee; and when asked by the AO (about the investment), the assessee failed to explain the nature and source of such investment or his explanation offered (by assessee) is not to the satisfaction of the AO, then only the value of such investment may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipts from trade of milk & milk products, therefore, the explanation/evidences could not have been brushed aside by the AO on conjectures, surmises and assumptions. 11. As noted, the assessee has not only explained the source of SBNs to the tune of Rs. 25,46,290/- as cash sales of milk & milk products along with the relevant evidences which shows that average sales of the assessee in a month comes to Rs. 26 lakhs; and it is noted that during demonetization period, assessee has deposited Rs. 31,47,900/- and also deposits made between 08.11.2016 to 15.11.2016 which also comes to around Rs. 6 lakhs. In this case, we have asked for the sales during the earlier years and have gone through the analysis furnished by the assessee in respect of total sales, cash sales realization from debtors and cash deposits during Financial Years 2015-16 & 2016-17, and find that there is no significant change in cash deposits during demonetization period. Thus, we find that there is no much variation in the cash deposits during the demonetization period. We also noted that the modus operandi of the assessee (sale of milk & milk products which are normal in cash and that the CBDT notification dated 08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k & milk products sold by person like him and thus, believed that he was exempt from collecting sale consideration in SBNs. Moreover, according to the Ld.AR, when the co-operative stores of Central State Government are allowed to receive SBNs on sale of milk, then, assessee can't be prohibited from receiving the sale consideration from sale of milk in SBNs, which would violate Article 14 of the Constitution of India. According to the Ld.AR, when the Central/State Government indulges in business/trade of milk, then both assessee & the government agency stand on same pedestal and can't be discriminated. We find considerable force in the submission of the assessee that when Central/State Government Stores were allowed to receive SBNs on sale of milk, then assessee could not have been discriminated from receiving the same, which will offend Article 14 & 19 of the Constitution of India. 13. Further, according to the Ld.AR, there was no ordinance/law which prohibited transacting in SBNs from 08.11.2016 to 31.12.2016. And the only reason given by the AO to make addition u/s. 69 of the Act was that assessee could not have transacted/received SBNs during demonetization period and relies on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished by the assessee in respect of total sales, cash sales realization from debtors and cash deposits during Financial Years 2015-16 & 2016-17, there is no significant change in cash deposits during demonetization period. Therefore, we are of the considered view that when there is no significant change in cash deposits during demonetization period, then, merely for the reason that the assessee has accepted Specified Bank Notes in violation of Circular/Notification issued by Government of India and RBI, the source explained for cash deposits can't be countenanced. 15. Thus, we note that the assessee had filed the books of accounts and relevant documents to prove the nature and source of cash/SBNs deposited during demonetization; and asserted that it was trade receipt and had been part of the turnover, which has been offered to tax. However, the AO without finding any infirmity in the books regularly maintained by the assessee and which has been audited, has added Rs. 25,46,290/- u/s 69 without rejecting the books cannot be countenced. And we find that amount of Rs. 25,46,290/- deposited in bank-account was part of the total turnover of the assessee and has been offered for tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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