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TMI Blog2025 (2) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... y AO on account of unexplained cash credit u/s 68 r.w.s 115BBE of the Income Tax Act, 1961. 3. That on the facts and circumstances of the case, Ld. CIT(A) has erred in allowing appeal of the assessee relying on decision of the ITAT, Vishakhapatnam in the case of Hirapanna Jewellers (128 Taxmann.com 291) without appreciating that relied case is distinguishable from the case of the present assessee as in that case, the revenue had not disputed the disclosed cash sale and added the sale proceeds as unexplained cash credit besides taxing the cash sales recorded, whereas in this case the AO has not accepted the transaction of cash sale and has in fact not taxed any profit on sale. 4. That on the facts and circumstances of the case, Ld. CIT (A) has erred in deleting addition when the CIT(A) himself observed that customer came to shop with a mindset to buy jewellery or gold and to get rid of SBNs which will become illegal after midnight and the assessee failed to provide complete details of customers who bought the jewellery during the assessment proceedings. 5. That on the facts and circumstances of the case, Ld. CIT(A) has erred in deleting the addition holding that no mistakes in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o provide details including PAN of the customers whom so called cash sales were made on the 8th Nov. The AO also pointed out that stock register was not maintained by the appellant and therefore sales shown by the appellant could be manipulated as well. 5. The assessee had submitted to the CIT(A) that there was a huge rush on 08.11.2016 for purchase of jewellery throughout the country, since people were in hurry to dispose off SBN s in view of the announcement of demonetisation of these notes after the midnight of 08.11.2016 i.e. 09.11.2016. The assessee further submitted that he had grabbed the opportunity as a businessman and made cash sales to the willing customers. The sales so made have been offered as revenue receipt and the taxes were duly paid. The assessee emphasized that since, the sale proceeds were offered and admitted as income hence AO is legally not correct to add same amount u/s 68 of the Act, resulting into double addition once as sales and secondly as unexplained credit. Assessee relied on the decision of Hon'ble High Court of Delhi in the case of Kailash Jewellery House on this issue. The assessee has argued that as he is in the jewellery business and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant in the light of observations of AO on maintenance of stock register in the Assessment Order. I also perused the attachments 4 and 5A mentioned (supra). To reject the cash sales, some mistakes in the sales invoices, stock movement or purchases should have been identified. As no mistakes in the stock ledger or stock movement were pointed out by the AO, it cannot be held that the cash sales made by the appellant were manipulated/or bogus. 9.6 The appellant relied on the decision of Hon'ble High Court of Delhi in the case of CIT vs Kailash Jewellery House [09.04.2012] in which it was held that cash sales cannot be treated as undisclosed income and no addition could be made once again in respect of the same. The appellant also relied on the decision of Hon'ble ITAT (Visakhapatnam) in the case of Hirapanna Jewellers [128 taxmann.com 291]. It has also been observed by Hon'ble Tribunal in the said case that there was huge rush on jewellery shops in the night of 8th November to buy jewellery using specified bank notes as they were becoming illegal from the midnight. In these circumstances it cannot be held that the appellant cannot make cash sales more than its routi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that no stock register was maintained. It will be beneficial to reproduce the relevant part of the order of AO in para 4.8, which runs as follows:- "4.8 The figures claimed by the assessee becomes even more suspicious due to the following qualification of the Auditor in the Form No.3CB "We have not been in a position to ascertain the quantitative movement of inventory and hence relevant data in 3CD could not be provided. Closing stock is recognised in the Financials on the basis of physical stock taking done by the management and we were not involved in physical stock taking" This qualification shows that the auditor was not in position to track the movement of stock. No stock register was maintained. Even the quantitative figures were not furnished in Form 3CD. Closing stock was accepted based on the data provided by management. The Auditor has not verified the actual stock on 31.03.2017. This shows that the claim of assessee regarding purchase register, sales register and stock register are not at all reliable. Had there been any authenticity in these registers, auditor would have easily tracked the movement of inventory. Further the column no 11(b) of the Form 3CD re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble evidence. 12. In the case of CIT v. Associated Transport (P.) Ltd. [1996] 84 Taxman 146 (Cal.) the Tribunal found that the assessee had sufficient cash in hand in the books of account of the assessee, therefore, held that there was no reason to treat this amount as income from undisclosed sources and it was not a fit case for treating the said amount as concealed income of the assessee. The revenue moved to Calcutta High Court against the order of the tribunal and the Hon'ble High Court has confirmed the order of the Tribunal while deleting the penalty, Hon'ble Calcutta high court held as under: "8. The Tribunal was of the view that the assessee had sufficient cash in hand. In the books of account of the assessee, cash balance was usually more than Rs. 81,000. There is no reason to treat this amount as income from undisclosed sources. It is not a fit case for treating the amount of Rs. 81,000 as concealed income of the assessee and consequently imposition of penalty was also not justified in this case." 13. In the case of Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288 (SC), the Hon'ble Apex Court decided the matter in favour of assessee of the ground that it was clear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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