2024 (4) TMI 1235 - AT - Income Tax

Addition of unexplained money u/s 69A - cash deposits made during the demonetization period - AO doubted the cash sales by comparing with the cash sale in the preceding as well as succeeding year for relevant month the cash sale made during the month of October and the first week of November 2016 being substantially high for the reason that the assessee has not furnished the details of the names and address PAN or identity of the buyers in support of its claim. HELD THAT - The assessee has furnished the trading account P L account and reduction of stock is matching with the corresponding sales. AO did not find any defects in the books of accounts and trading account P L account and the financial statements and failed to disprove the condition of the assessee. CIT (A) has observed that the AO has not been able to find any fictitious purchases that could have been the root cause of unaccounted money being deposited in the Banks under the garb of sales Once the purchases are genuine the sales could not have been doubted. An abnormal increase in cash sales cannot alone be the ground to out rightly reject them. Case of AO is that no details of the names and address PAN or identity of the buyers were furnished by the assessee in support of its claim - CIT(A) has opined that the limit of transaction beyond which PAN is mandatory is 2 lakhs. Hence the seller is not required to obtain PAN from purchaser till this limit. The assessee has not made any sales above 2 Lakhs hence merely on suspicion it cannot be inferred that the sale is bogus. Hence rejecting the cash sales bills on this count cannot be done. It is a true fact that the books of the assessee have been audited and no fault has been found. Assessee has not submitted purchase ledger sales ledger cash book for the year under consideration and for the previous year even though called for during scrutiny proceedings - The above submissions are not found to be correct for the reason that in response to the notice issued u/s 142(1) of the Act dated 30.10.2019 the assessee has submitted complete details as was required by the AO through his notice un/s 142(1) of the Act as could be evidently admitted by the AO in the assessment order at para 3.0. Assessee has also furnished copy of screenshot of reply filed by the assessee on 19.11.2019 and on 26.12.2019 in reply to the notice issued under section 142(1) of the Act dated 30.10.2019 wherein the assessee has uploaded the details of TDS expenses financial statement purchases sales etc. which are sufficient to prove the genuineness of the purchases and also the cash sales. AO has erroneously made addition under section 69A - Decided in favour of assessee.

Summary

The appeal in this case revolves around the addition of unexplained money by the Assessing Officer under section 69A of the Income Tax Act, 1961, based on cash deposits made during the demonetization period. The core issue is whether the addition made by the Assessing Officer was justified or not.**Issues Presented and Considered:**1. Whether the addition of unexplained money under section 69A of the Income Tax Act was justified.2. Whether the ld. CIT (A) was correct in allowing the appeal of the assessee.3. Whether the ld. CIT (A) considered all relevant facts in accepting the contentions of the assessee.4. Whether the Assessing Officer's doubts on the cash sales were valid.5. Whether the ld. CIT (A) appropriately assessed the evidence presented by the assessee.6. Whether the Assessing Officer's rejection of cash sales was justified.7. Whether the assessee's submissions of financial details were sufficient to prove the genuineness of purchases and cash sales.**Issue-Wise Detailed Analysis:**The Assessing Officer added 1,53,84,000 as unexplained money under section 69A due to substantial cash deposits during demonetization. The ld. CIT (A) disagreed, stating that the Assessing Officer solely relied on a comparison basis without doubting purchases or finding discrepancies in books of accounts. The ld. CIT (A) emphasized that once audited books are accepted, the results must be upheld, and sales cannot be disallowed while purchases and stock are accepted.The Revenue raised various grounds challenging the ld. CIT (A)'s decision. The ld. DR argued that the assessee failed to submit necessary ledgers during scrutiny. However, the ld. counsel for the assessee presented evidence showing compliance with the Assessing Officer's requests for financial details. The Tribunal examined the submissions, finding the Assessing Officer's addition erroneous. The ld. CIT (A)'s decision to delete the addition was upheld, dismissing the Revenue's appeal.**Significant Holdings:**The Tribunal concluded that the Assessing Officer's addition under section 69A was unjustified. The ld. CIT (A)'s decision to delete the addition was upheld based on the acceptance of audited books and lack of discrepancies found. The Tribunal dismissed the Revenue's appeal, affirming the deletion of the addition made by the Assessing Officer.In summary, the Tribunal found in favor of the assessee, holding that the addition of unexplained money was unwarranted due to the lack of discrepancies in the books of accounts and the acceptance of audited results. The ld. CIT (A)'s decision to delete the addition was deemed appropriate, leading to the dismissal of the Revenue's appeal.