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2024 (6) TMI 95 - AT - Income TaxAddition u/s 68 - unexplained money being cash deposited in the form of demonetized currency - cash sales running into crores of rupees has been shown by the assessee in the book of accounts - Acceptance of Sales and Stock Records by the AO - as per CIT(A) appellant had been making regular huge cash sales in proceeding as well as succeeding assessment years and as cash sales made during these periods were bonafide and has a nexus with sales effected by the assessee - as per assessee Cash sales are supported by the audited books of account, invoices, suffered from VAT, VAT returns, Quantitative Stock tally and therefore, cannot be disregarded. HELD THAT - CIT(A) has duly analyzed the sales purchases, stock, cash and compared it with F.Y. 2014-15, F.Y. 2015-16 and also F.Y. 2016-17. The day wise cash book has been examined, the same have been incorporated in this order. The comparative data of purchase and stock for four years to determine the regularity of the cash sales has been examined. No defects have been pointed in purchase, sale and stock. There have been substantial cash sales in all the four years and the AO has accepted sales in cash for all the years except for the period between 11.11.2016 to 15.11.2016. In the other years, about 88% of the stock has been sold in cash and the same cash has been deposited in the bank for which the revenue has no objection. No discrepancy in the VAT return has been found out. No specific defects in the books of accounts of the assessee have been found out and there was no negative stock on any of the dates which only goes to prove that the cash sales have been made against the available stock. AO has accepted the sales and hence the proceeds of the sales cannot be considered u/s 68 of the Income Tax Act, 1961. CIT(A) has rightly placed reliance in the comparable judgments of the Tribunal in the case of Agson Global Pvt. Ltd. 2019 (11) TMI 148 - ITAT DELHI and Hirapanna Jewellers, Vishakhapatnam 2021 (5) TMI 447 - ITAT VISAKHAPATNAM Having gone through the entire record viz., Assessment Order, submissions of the assessee before the AO, submissions of the assessee before the CIT(A), arguments of the ld. DR, arguments of the ld. AR and the order of the ld. CIT(A), we find no reason to interfere with the analysis, logic, ratio and reasonableness of the order of the ld. CIT(A). Double taxation of the same income - As assessee has himself offered the amount of cash sales as his income by duty including it in his total sales. Once a particular amount is already offered for taxation, the same cannot be again considered u/s 68 of the Act. In fact, such addition has resulted into double addition - Appeal of the Revenue is dismissed.
Issues Involved:
1. Deletion of addition of Rs. 2,43,37,500/- on account of unexplained money deposited during demonetization. 2. Validity of cash sales during October and November 2016. 3. Modus operandi of the assessee in allegedly managing artificial entries of cash sales. Issue 1: Deletion of Addition of Rs. 2,43,37,500/- on Account of Unexplained Money Deposited During Demonetization The Revenue challenged the deletion of the addition of Rs. 2,43,37,500/- made by the AO, arguing that the assessee failed to offer any valid explanation with supporting documentary evidence about the nature and source of cash deposits. The Tribunal noted that the assessee had made cash deposits amounting to Rs. 2,43,37,500/- in its bank accounts between 9.11.2016 to 30.12.2016, claiming the deposits were from the opening cash balance as on 09.11.2016. The ld. CIT(A) deleted the addition after verifying the availability of cash and the cash balance at hand, concluding that the cash deposits were satisfactorily explained by the assessee's regular business cash sales. Issue 2: Validity of Cash Sales During October and November 2016 The AO observed that there were no cash sales from April to September 2016, but significant cash sales were reported in October and November 2016. The Tribunal examined the comparative details of sales, purchases, stock, and cash deposits over the financial years and found no abnormalities in the cash sales for October and November 2016. The ld. CIT(A) noted that the cash sales were consistent with the appellant's regular business pattern and that the VAT returns for the relevant periods were filed and not revised. The Tribunal upheld that the cash sales during these periods were bona fide and had a nexus with the sales effected by the assessee. Issue 3: Modus Operandi of the Assessee in Allegedly Managing Artificial Entries of Cash Sales The AO alleged that the assessee adopted a colorable device to manage artificial entries of cash sales to bring unaccounted cash into the books of account. The Tribunal found no specific defects in the audited books of accounts, purchases, sales, and stock of the assessee. The Tribunal also noted that the assessee had regularly made substantial cash sales in previous and subsequent years, and the cash sales during the demonetization period were not abnormal. The Tribunal concluded that the AO's suspicion was not backed by any concrete evidence or data and that the cash deposits made by the assessee were out of regular cash in hand from its business activities. Conclusion The Tribunal upheld the ld. CIT(A)'s decision to delete the addition of Rs. 2,43,37,500/- made by the AO u/s 68 r.w.s. 115BBE, finding that the cash deposits during the demonetization period were satisfactorily explained by the assessee's regular business cash sales. The appeal of the Revenue was dismissed.
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