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TMI Blog2023 (3) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... quashed with directions for appropriate relief." 3. Brief facts of the case are that, the assessee filed declaring NIL income for the Assessment Year 2017-18, the case of the assessee was selected for scrutiny through CASS. The assessment order came to be passed on 29/12/2019 by making an addition of Rs. 1,37,95,042/- u/s 68 of the Income Tax Act 1961 (Act for short) as unexplained cash credit. 4. As against the assessment order dated 29/12/2019, the assessee preferred an appeal before the CIT(A) and the CIT(A) vide order dated 21/06/2022 dismissed the appeal filed by the assessee, thereby upheld the addition of Rs. 1,37,95,042/- made by the A.O. u/s 68 of the Act in following manner: - "10. I have considered the order of AO, written submission of the appellant and the material available on record in detail. In order to avoid the provision of Section 285BA read with Rule 114E, which casts a responsibility on the person covered under the rule to furnish such records within the time specified, the appellant has shown invoicing below the limit of Rs.2,00,000/- each in most of the cash sale invoices for diamond items from 01.10.2016 to 31.12.2016. Further, the cash sales during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Bank of India account during the demonetization period. Thus, appellant's contention that section 68 does not apply in its case, does not stand, as cash sales is not proved." 5. Aggrieved by the order of the CIT (A) dated 21/06/2022, the assessee has preferred the present appeal on the ground mentioned above. 6. The Ld. Counsel for the assessee vehemently submitted that the NFAC, CIT(A)-Delhi erred in confirming the addition of Rs. 1,37,95,042/- made by the A.O. on account of cash deposited in bank by wrongly invoking Section 68 read with Section 115BBE of the Act, to buttering the submissions, the Ld. Counsel for the assessee taken us through the various documents produced in the paper books and argued that the lower authorities have committed error in making/sustaining the addition. 7. On the other hand, the Ld. DR submitted that it is the duty of the assessee to discharge its onus for providing item wise sale for each invoice specially for the month of November, 2016, but the assessee failed to do so, therefore the Assessee cannot find fault with the authorities. The Ld. DR relied on the order of the CIT(A) and submitted that the appeal filed by the Assessee deserves to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de along with address and amount. i. Details of top ten parties to whom sales are made along with address and amount j. Detail of month wise Ornament Stock k. Copy of Income Tax Return and Computation of Partners l. Detail of TDS for the period 01-04-2016 to 31-03-2017 m. Copy of the response sheet for cash deposit during demonetisation period, showing that the same was from the cash sales of the assessee n. Copy of Fixed Assets Bill o. Copy of Ledger of ICICI Credit Card for the period 01-04-2016 to 31-03-2017 p. Copy of Receipts of TDS Returns 11. Further, another more notice u/s 142(1) of the Act has been issued by the Assessing Officer to the assessee on 14.11.2019. In reply the assessee furnished details and documents on 20.11.2019 and 21.11.2019 which are as under:- a. Copy of Purchases Ledger for the period 01-04-2016 to 31-03- 2017 b. Copy of Sales Ledger for the period 01-04-2016 to 31-03-2017 c. Copy of Interest on Loan Ledger for the period 01-04-2016 to 31- 03-2017 d. Detail explaining reasons for non-deduction of TDs on salaries paid during the year under consideration. e. Copy of Purchase Bills for the period 01-04-2016 to 31-03-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that variance in sales between Nov 2016 and Nov 2017 leads to suspicion that the assessee has infused his unaccounted cash in the business by way of sales is based on assumptions without any basis, facts and evidence. e. That your honours observation that no satisfactory explanation In this regard has been made available before the undersigned, we wish to draw your honours kind attention to various letters/ requirements/ notices received by us. It can be observed that your honours never raised this issue earlier and this is the first time this issue has been raised in the show cause notice dates 18/12/2019. The assessee was not in a position to submit any explanation without being asked. 14. The AO after verifying the details, was of the opinion that the assessee had failed to provide item-wise stock statement for FY 2016-17 to show item-wise quantities as well as their corresponding amount in month-wise format as desired in the notice. Thus, the AO observed that the claim of the assessee with regard to cash in hand arising out of cash sales made during the year under consideration was remained unexplained. 15. During the appellate proceedings, the Ld.CIT(A) was of the opini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 cannot be comparable with the fact of Financial Year 2017-18 or any other year because the extraordinary incident of demonization was unique to Financial Year 2016-17, the abnormal increase in the cash sale and their deposit in the bank account consequent to demonization could not be basis for the rejection of account and addition u/s 68 of the Act. The Tribunal Bench at Vishakhapatnam in the case of ACIT Vs. Hirapanna Jewellers (2021) 189 ITD 608 (Visaks) held as under:- "7. We have heard both the parties and perused the material placed on record. In the instant case, the assessee has admitted the receipts as sales and offered for taxation. The assessing officer made the addition u/s 68 as , unexplained cash credit of the same amount which was accounted in the books as sales. In this regard, it is worthwhile to look into section 68 which reads as under: "68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to treat this amount as income from undisclosed sources and it was not a fit case for treating the said amount as concealed income of the assessee. The revenue moved to Calcutta High Court against the order of the tribunal and the Hon'ble High Court has confirmed the order of the Tribunal while deleting the penalty, Hon'ble Calcutta high court held as under: "8. The Tribunal was of the view that the assessee had sufficient cash in hand. In the books of account of the assessee, cash balance was usually more than Rs. 81,000. There is no reason to treat this amount as income from undisclosed sources. It is not a fit case for treating the amount of Rs. 81,000 as concealed income of the assessee and consequently imposition of penalty was also not justified in this case." In the case of Lal chand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288 ISC), the Hon'ble Apex Court decided the matter in favour of assessee of the ground that it was clear on the record that the assessee maintained the books of accounts according to the mercantile system and there was sufficient cash balance in its cash books and the books of account of the assessee were not challenged by the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that, when books of account of the assessee were 3 R. S. Diamonds India Private Limited accepted by the revenue as genuine and cash balance shown therein was sufficient to cover high denomination notes held by the assessee, then the assessee was not required to prove source of receipt of said high denomination notes which were legal tender at that time. In the case of M/s. Hirapanna Jewellers (ITA No. 253/Viz/2020 dated 12.5.2021), it was held that when the cash receipts represented the sales which has been duly offered for taxation, there is no scope for making any addition under section 68 of the Act in respect of deposits made into the bank account. 6. I notice that the decision rendered in both the above said cases support the case of the assessee. Accordingly, in the facts and circumstances of the case, I am of the view that the addition of Rs. 45 lakhs made in the hands of the assessee is not justified, since the said deposits have been made from the cash balance available in the books of account. Accordingly, I set aside the order passed by learned CIT(A) on this issue and direct the Assessing Officer to delete the addition of Rs. 45 lakhs." 20. Further, in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same has been done to avoid the application of provision of section 285BA read with Rule 114E of the Act. The said observation made by the Assessing Officer without any material in his hand. There is no prohibition under law to make sale transaction below Rs. 2 lakhs as such the assessee had at liberty to manage his own affairs. From the action of the assessee in raising the sales bill below Rs. 2 lakhs the Assessing Officer cannot interpret as the sale are bogus only to give color to non-genuine transaction as genuine transaction. 5The evidence brought on record by the Assessing Officer are not enough to hold that sales were not genuine. More so, the other wing of the Govt has already accepted the sale transaction under VAT, hence, the Assessing Officer is precluded from making contrary findings on the issue when the sales are not doubted. The other contention of the ld DR is that the assessee has not maintaining stock register properly and date wise stock position are not given. The Assessing Officer made the said observation without rejecting the books of account form which true profit and loss accounts could be ascertained and there is no quarrel on this issue. The lower autho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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