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2023 (7) TMI 742 - AT - Income TaxUnexplained cash credit - Addition u/s 68 - failure of the assessee to satisfactorily explain the cash sales - HELD THAT - We find that assessee has reasonably explained the nature and source of cash sales credited in his books of account. Allegation of the AO that those parties to whom assessee has sold gold and Jewellery in cash was neither the customer of the assessee prior nor post demonetization. Arguably this answer could have been obtained by the AO had he examined any of the customers whose permanent account no. and address are provided to him. The issue would have been different had AO made inquiry by issue of summons u/s 131 or inquiry u/s 133(6) which would not have been responded or satisfactory explanation was not available. Such is not the case before us. Identical issue has been dealt with by the coordinate bench in Heera panna Jewellers 2021 (5) TMI 447 - ITAT VISAKHAPATNAM and M/S Mangal Jewels Pvt. Ltd 2022 (10) TMI 1187 - ITAT MUMBAI - Therefore, this issue is clearly covered in favour of the assessee by these judgments also. It is not the case that bills of sales of Jewellery doesn t contend the complete address of the parties. Giving the complete address in cash memo/cash sales above Rs. 50 mandatory requirement of GST ACT. In this case such facts do not exist. Further cash transfer from Surat to Mumbai has been recorded in both branches cash book. Addition cannot be made in the hands of assessee merely for the reason that those customers have not transacted with the assessee post or pre demonetization. This could be the trigger point for investigation, but LD AO , despite having complete address and PAN of customers did not make any such inquiry. We confirm the order of CIT(A) to the extent addition deleted by him and reverse the order of the CIT(A) to the extent, he confirmed the addition. Therefore we direct the ld AO to delete the addition. Decided in favour of assessee.
Issues Involved:
1. Deletion of addition as unexplained cash credit. 2. Partial deletion of addition despite implausible sales. 3. Lack of past and post-demonetization cash sales history. 4. Addition under sections 68 and 69A as unexplained cash credit and money. 5. Alleged violation of natural justice. Summary: Issue 1: Deletion of Addition as Unexplained Cash Credit The Assessing Officer (AO) raised the issue of unexplained cash credit amounting to Rs. 1,76,35,114/-. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted this addition, citing that the assessee had established sales with bills and stock outgo, and no defects were found in the books of account. The Tribunal upheld the CIT(A)'s decision, confirming that the sales were accounted for and supported by necessary documentation, including PAN details of customers. Issue 2: Partial Deletion of Addition Despite Implausible Sales The AO contended that the CIT(A) erred in partially deleting the addition while finding Rs. 33,29,886/- of sales implausible. The Tribunal noted that the CIT(A) had confirmed the addition of Rs. 33,29,886/- based on specific findings but deleted the rest, relying on judicial precedents. The Tribunal upheld the CIT(A)'s decision, confirming the deletion of Rs. 1,76,35,114/- and directing the deletion of the remaining Rs. 33,29,886/-. Issue 3: Lack of Past and Post-Demonetization Cash Sales History The AO argued that the assessee had no history of cash sales before or after the demonetization period, making the sudden increase in cash sales suspicious. The Tribunal found that the AO did not conduct inquiries with the customers whose PAN and addresses were provided. The Tribunal held that the assessee had reasonably explained the nature and source of cash sales, and the AO's failure to investigate further weakened the case. Issue 4: Addition under Sections 68 and 69A as Unexplained Cash Credit and Money The assessee challenged the addition of Rs. 33,29,886/- under sections 68 and 69A as unexplained cash credit and money. The Tribunal found that the assessee had provided sufficient documentation, including PAN details and stock registers, to explain the cash sales. The Tribunal directed the deletion of the addition, citing the lack of investigation by the AO and supporting judicial precedents. Issue 5: Alleged Violation of Natural Justice The assessee claimed that the CIT(A) passed the order without providing a proper opportunity for a hearing. However, this ground was not pressed during the proceedings and was dismissed by the Tribunal. Conclusion: The Tribunal dismissed the appeal of the AO and partly allowed the appeal of the assessee, confirming the deletion of Rs. 1,76,35,114/- and directing the deletion of Rs. 33,29,886/-. The decision was pronounced in the open court on 14.07.2023.
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