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2023 (3) TMI 1148 - AT - Income TaxAddition u/s 68 - cash deposits in bank account - non rejection of books of accounts - HELD THAT - opinion of the assessing officer is required to be formed objectively with reference to the material available on record. Hence, application of mind is sine qua non for forming the opinion. The only reason placed by the ld. AO in his order that the full name, address or/and PAN of the customer to whom goods were sold in cash during the course of business below to the prescribed limit has not been given. It is voluntary to the customer to provide their personal information to the assessee while goods being sold and even the law does not mandate to the assessee up to an amount of Rs. 2 lac. The action of the ld. AO making an addition u/s 68 as unexplained cash deposit without rejecting the books of account is unwarranted. Even the ld.AO has not find any defects in the details submitted by the assessee and audited books were considered and accepted while finalizing the assessment. As relying on SHRI CHANDRA SURANA 2022 (12) TMI 750 - ITAT JAIPUR case we vacate the addition made under section 68 of the Act as the same cannot be made without rejecting the books of account of the assessee regularly maintained by the assessee and the said cash deposited is duly supported by the entries passed in the books of account and part of the sale accepted by the AO. Appeal of the assessee is allowed.
Issues Involved:
1. Addition of Rs. 80,00,000 under Section 68 of the Income Tax Act, 1961. 2. Invocation of provisions of Section 115BBE of the Income Tax Act, 1961. Summary: Issue 1: Addition of Rs. 80,00,000 under Section 68 of the Income Tax Act, 1961 The assessee, engaged in the wholesale and retail business of gold and silver ornaments, filed a return of income declaring Rs. 45,83,340 for the assessment year 2017-18. The case was selected for scrutiny to examine abnormal cash deposits during the demonetization period. The assessee deposited Rs. 84,00,000 in cash during this period, which was scrutinized by the AO. The AO found discrepancies in the cash deposits and issued a show cause notice. The assessee explained that the cash was from retail sales during the festive and wedding season. However, the AO found the explanation unsatisfactory and added Rs. 80,00,000 under Section 68, treating it as income from undisclosed sources. The CIT(A) upheld the AO's decision, agreeing that the cash deposits were unlikely to be from sales proceeds. The assessee appealed to the ITAT, arguing that the sales were genuine and supported by regular books of accounts, stock records, and VAT returns. The ITAT noted that the AO had not rejected the books of accounts or found any defects in them. The ITAT also considered various judicial precedents and found that the addition under Section 68 was unwarranted without rejecting the books of accounts. The ITAT vacated the addition of Rs. 80,00,000, stating that the cash deposits were duly supported by entries in the books of accounts. Issue 2: Invocation of provisions of Section 115BBE of the Income Tax Act, 1961 Since the ITAT decided the first issue in favor of the assessee, the second issue regarding the invocation of Section 115BBE became redundant. The ITAT noted that the amended provisions of Section 115BBE, which increased the tax rate, were not applicable to the transactions in question as they occurred before the amendment was enacted. Conclusion: The ITAT allowed the appeal of the assessee, vacating the addition of Rs. 80,00,000 under Section 68 and rendering the invocation of Section 115BBE redundant. The ITAT emphasized that the addition could not be made without rejecting the books of accounts, which were found to be correct and complete.
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