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TMI Blog2022 (12) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... tion made by the AO by applying the provisions of Section 68 it is noted that provisions of Section 68 are not applicable on the sale transactions recorded in the books of accounts as sales are already part of the income which is already credited in P L account. There is no occasion to consider the same as income of the assessee by invoking the provisions of Section 68 of the Act. In view of the above deliberations and case laws relied upon by both the parties, we find that the AO was not justified in making an addition u/s 68 of the Act which has rightly been deleted the ld. CIT(A) and we concur with his findings. Thus the appeal of the Revenue is dismissed. - ITA No. 166/JP/2022 - - - Dated:- 15-12-2022 - Shri Sandeep Gosain, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Shri S.R. Sharma, CA And Shri R.K. Bhathara, CA For the Revenue : Shri Chanchal Meena, JCIT-DR ORDER PER SANDEEP GOSAIN, JM The Revenue has filed an appeal against the order of the ld. CIT(A)-4, Jaipur dated 25-02-2022 for the assessment year 2017-18 raising therein following grounds of appeal. 1. Whether on the facts and in the circumstances of the case and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- (i) I have perused the facts of the case and it is observed that the A.O. has added an amount of Rs.2,90,93,500/- deposited by the appellant in cash in the bank account considering that these were Specified Bank Notes. However, out of the aforesaid amount, an amount of Rs.3,23,500/- deposited in the bank account were not specified bank notes. The entire amount of Rs. 2,90,93,500/- was added by the AO as income of the appellant by applying the provisions of section 68 of the Act while the provisions of 68 as such are not applicable on the sale transactions recorded in the books of accounts because the sale transactions are already part of the income which is already credited in P L account, therefore there is no occasion to again consider the same as income of the assessee by applying the provisions of section 68 of the Act. (ii) The Hon'ble Supreme Court in the case of CIT vs Devi Prasad Vishwanath Prasad (1969) 721TR194 (SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) deleted the addition. Tribunal also observed that it is not in dispute that sum of Rs.24,58,400/- was credited in the sale account and had been duly included in the profit disclosed by the assessee in its return. Therefore, cash sales could not be treated as undisclosed income and no addition could be made once again in respect of the same. The Hon'ble High Court dismissed the appeal filed by the Department (v) The case of CIT v. Vishal Exports Overseas Ltd., Tax Appeal No. 2471 of 2009 was decided by the Hon'ble Gujarat High Court on 03.07.2012(Copy at Case Law PB Page No. 238) wherein it was held that In the facts of above case the assessee was an exporter. The issue was regarding sale of Rs.70 lacs included in turn-over which was more than 500 crores. The assessee had claimed deduction u/s 80HHC of the Act. On the basis of information received by the Assessing Officer from investigation he considered the entry for export of 70 lacs as bogus. He denied benefit u/s 80HHC of the Act. Further, he made addition of Rs. 70 lacs in the income u/s 68 of the Act. It was held that once the assessee has already included the amount of sale of Rs. 70 lacs in Profit and Loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive details have been maintained by assessee. The said books of accounts are audited. A copy of audited statement of accounts alongwith complete quantitative details have been submitted alongwith the return of income. The assessee maintained manual item wise Stock - Register. The said Stock Register was bulky and so could not be produced in e-proceedings but was produced before A.O. in course of hearing as is evident from submission dated 27-09-2019. The fact of maintenance of stock register manually is stated in Tax Audit Report also. Thus, the cash sales transaction is recorded in regular books of accounts, sales are made out of stock-in- trade. The assessee also filed copies of sales invoice No. 82 to 158 of Bangaluru and 110 to 216 of Kolkata outlets before A.O, which were of 28-10- 2016 and these were earlier produced before Investigation Wing in F.Y. 2016-17 i.e. after the sales were made and same were verified by the Investigation Wing also. 1.2 Further just before the demonetization on 28th day of October, 2016 there was 'Dhanteras' and after that Diwali Festival was there. These are very auspicious day for Hindus, and they prefer to buy gold/silver and other ite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person shall, knowingly or voluntarily hold, transfer or receive any specified bank note. (b) Section 2 (1) (a) in Specified Bank Notes (Cessation of Liabilities) Act, 2017 provides that appointed day means the 31 day of December, 2016. (c) Further Section 3 of Specified Bank Notes (Cessation of Liabilities) Act, 2017 states that On and from the appointed day, notwithstanding anything contained in the Reserve Bank of India Act, 1934 or any other law for the time being in force, the specified bank notes which have ceased to be legal tender, in view of the notification of the Government of India in the Ministry of Finance, number S.O 3407 (E), dated the 8th November, 2016, issued under sub-section (2) of section 26 of the Reserve Bank of India Act, 1934, shall cease to be liabilities of the Reserve Bank under section 34 and shall cease to have the guarantee of the Central Government under sub-section (1) of section 26 of the said Act. From the above, it is clear that use of Specified Bank Notes (SBN) pursuant to 8 November, 2016 upto 31 December, 2016 was always allowed. It was never the intention of the Law to prohibit their use for transactions upto 31 December, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces and also do not have I.T. PA No. and the complete addresses of the buyers/customers as the same is not required in law. The allegation made by A.O. regarding fabrication of cash sales transactions on the assessee is thus completely without any basis, documents or any supporting legal evidence in the eyes of law. Thus the finding of Ld. A.O. that assessee could not substantiate increase in cash sales with documentary evidence is based only on suspicion, guess work and surmises which cannot be sustained in law. 2.1 The Ld. A.O. in assessment has accepted the cash sales as he accepted the declared profit, declared sales declared purchases and declared opening closing stock and declared profits. It is, therefore, submitted that the amount of cash sales as claimed by the assessee was offered to tax by the assessee by reflecting the same in its trading and profit and loss account. The action of Ld. A.O. in again assessing the said cash sales as unexplained cash credit u/s 68 means that the impugned sales had been taxed twice, firstly the same was treated as sales and secondly the same was treated as unexplained cash credit/money under section 68 of the Act. This clearly tanta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same price ultimately credited to profit loss account) and on the other hand amounts received from above parties has also been added u/s 68 of the Act. This view has been held by the Hon'ble Supreme Court in the case of CIT v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 that It is for the assessee to prove that even if the cash credit represents income, it is income from a source, which has already been taxed. The assessee has already offered the sales for taxation hence the onus has been discharged by it and the same income cannot be taxed again . Thus the ratio decidendi of the aforesaid case laws is that when the assessee has already shown the amount under the sales, meaning thereby, the amount generated in cash has already been offered for taxation, the same cannot be again taxed as unexplained cash credit us 68 and provisions of section 11SBE (1) (a) cannot be invoked . 3. It is evident from assessment order that L.d. A.O. in assessment did not invoke provisions of section 145 (3) of the Act. In law it means that Assessing Officer was satisfied about the correctness or completeness of books of accounts and method of accounting employed by assessee. Thus the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. The said books of accounts are audited. It is, therefore, prayed that order of Ld. CIT(A) may kindly be upheld and addition of Rs.2,90,93,500/- made in the income of appellant deserves to be deleted. 2.5 Further, the ld. AR of the assessee submitted that the judgements relied upon by the ld. DR are quite different from the facts of the case which has been distinguished by the ld. AR of the assessee as under:- In the matter of above appeal, the office of Ld. DR has supplied copies of four judgment's. It is submitted that facts of the said judgements are quite different from the facts of this case. However brief facts of said cases and how they are distinguish from this case are elaborated as follows:- 1. [19581 33 ITR 82 (SC) CIT Vs Mcmillan Co In this case Appellate Assistant Commissioner (AAC) reject the books of accounts of assessee which have been accepted by ITO. It is submitted that in appellant's case the Ld. CIT(A) allowed the appeal of assessee and also not rejected the books of accounts of assessee. Further Hon'ble ITAT is the fact finding authority having no such power of enhancement of assessment order passed by Ld. AO. Also the case per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,90,93,500/- in declared income by holding that said amount of cash deposited by the assessee in his bank account during the demonetization period is nothing but the undisclosed income of assessee which was shown under the garb of cash sales and thus it is liable to be added u/s 68 of the Act and taxable @ 60% under the provision of Section 115BE of the Act. It is also noted from the order of the ld. CIT(A) at para 4.1 wherein the ld. CIT(A) has described para 1.4 of assessee written submission that complete regular books of accounts, bill, vouchers and day to day stock register having complete quantitative details have been maintained by the assessee. The said books of accounts are audited. A copy of audited statement of account alongwith complete quantitative details have been submitted alongwith the return of income. The assessee maintained manual itemwise stock register. The said stock register was bulky and so could not be produced in e-proceedings but was produced before the AO in course of hearing as is evident from submission dated 27-09-2019. The fact of maintenance of stock register manually is stated in Tax Audit Report also. Thus the cash sales transaction is recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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