2024 (3) TMI 475 - AT - Income Tax

Addition as suppressed income on cash sales - unexplained cash deposit which is brought into the assessee s books in guise of sales before demonetization period u/s. 68 r.w.s. 115BBE - AO made addition on protective basis in respect of the cash given to cash handlers during demonetization period which was deposited in the bank account - A.R. submitted that the cash deposits in respect of sale of bullions were accepted in the preceding years by the Revenue, in fact, during demonetization period, the assessee has not sold gold but it was buyer to the demonetization period specially in the period of festivities that of Dussehra and Diwali has sold the bullions. HELD THAT - As the assessee has given required PAN details of the customers from the stock register entry, these details were as per the guideless of the Revenue in cases of the transactions related to the bullion where the mandatory form has been filed stating therein that the assessee is not required to prove the identity and creditworthiness of purchasers who have purchased the goods below 2 lakhs. Thus, the ground of the Revenue is dismissed but through this observation the ground contested by the assessee in assessee s appeal that of ground nos. 1 to 5 is allowed. As regards assessee s ground related to confirmation of addition on protective basis from the perusal of the records, it appears that the Assessing Officer has taken cognizance of the submission recorded by Tejus Desai is not co-related the same with the assessee s transaction as from the records it can be seen that the assessee has not dealt with these parties i.e. M/s. Tejus Enterprises and that of M/s. Shy Bullion. Thus, the addition does not sustain. Assessee appeal allowed.

Summary

Issues Involved:
The issues involved in the judgment are the addition of suppressed income on cash sales, addition of unexplained cash deposit, and the confirmation of protective basis addition.

Addition of Suppressed Income on Cash Sales:
The appeal filed by the assessee contested the addition of Rs. 10,00,000 as suppressed income on cash sales. The CIT(A) was criticized for finding a new source of income not considered by the Assessing Officer, and for making the addition without sufficient basis or comparable cases. The appellant argued that the addition was excessive and lacked proper evidence. However, the CIT(A) confirmed the addition, leading to the appeal. The Tribunal dismissed the Revenue's appeal, stating that the cash sales were proven through identified persons and maintained records, thus justifying the acceptance of the cash deposits.

Addition of Unexplained Cash Deposit:
Regarding the addition of unexplained cash deposit, the Assessing Officer added Rs. 1,14,00,000 as unexplained cash deposit under section 68 r.w.s. 115BBE of the Act. The cash deposits were linked to sales before demonetization, and the Assessing Officer also made a protective basis addition of Rs. 50,00,000. The CIT(A) partially allowed the appeal, leading to further arguments by both parties. The Tribunal upheld the CIT(A)'s decision, emphasizing that the cash sales were properly recorded and justified, dismissing the Revenue's appeal and allowing the assessee's appeal related to the protective basis addition.

Confirmation of Protective Basis Addition:
The final issue revolved around the confirmation of the protective basis addition of Rs. 50,00,000. The Assessing Officer's decision was challenged by the assessee, highlighting the lack of connection with the parties involved in the addition. The Tribunal agreed with the assessee, concluding that the addition was not sustainable due to the absence of transactions with the relevant parties. As a result, the Tribunal allowed the assessee's appeal on this ground.