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TMI Blog2023 (10) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... not to sale of petrol, diesel by accepting Specified Bank Notes. Thus the invocation of Section 68 is invalid in law. Assessee filed complete details of Purchase register, Sales register, Cash Book, Bank statement, Month-wise details of purchase and sales, Copies of VAT returns etc. A.O. is not able to find any defect in the books of accounts, except general statements made in the assessment order. Though the A.O. has doubted the sales made during the year, he is not doubted the purchases made or stock maintained by the assessee during the year. Further the assessee also demonstrated the fluctuations in the sales during the entire period and there is no drastic increase in sales during the period of demonetization. It is further noticed that it is the month of May 2016 sales reported at 84.81 lacs. Similarly, in the month of November 2016 (demonetization period), the sales is reported at 1.04 crores which is not found to be drastic higher figure - Decided in favour of assessee. - Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Revenue : Shri Ashok Kumar Suthar, Sr.D.R. For the Assessee : Shri Sulabh, A.R. ORDER PER : T.R. SENTHIL KUMAR, J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant is technically correct as provisions u/s. 145(3) have not been specifically invoked in assessment order. However, the conclusions and the analysis of the A.O. cannot be ignored, hence, technical objection of appellant is over ruled. Another argument that the real income only to be assessed, is logical and reasonable in this case as the purchases have been found to be genuine as per details in assessment folder. Hon'ble Karnataka High Court in the case of Shankar Khandsari Sugar Mills Vs. CIT 193 ITR 669 (Kar.) has observed that In the absence of any prejudice to the revenue, and the basis of the tax under the Act being to levy tax, as far as possible, on the real income, the approach should be liberal in applying the procedural provisions of the Act. An appeal is but a continuation of the original proceeding and what the Income-tax Officer could have done, the appellate authority also could do. Therefore, the sales cannot be ignored as they are forming integral part of books of account. Similarly, the allowance for genuine purchases has to be granted. As per the ratio laid down in the case of CIT/vs. Bajaj Tempo Limited 196 ITR 188(SC), that the beneficial provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,59,500/- is unjustified, therefore, cannot be sustained as per provisions of IT Act, 1961. Hence, the additions of Rs. 1,24,59,500/- is hereby deleted. Ground no. 2 is allowed. 4. Aggrieved against the same, the Revenue is in appeal before us raising the following Grounds of Appeal: (1) The ld. CIT(A) has erred in law and facts in deleting the addition of Rs. 1,24,59,500/- u/s. 68 of the Act. (2) The ld. CIT(A) has erred in ignoring the Government notification dated 08.11.2016 which is applicable only for public sector oil marketing companies. (3) The ld. CIT(A) has erred in not appreciating the factual discrepancies and inconsistencies in the books of account as brought out by the AO and that SBNs were routed in the garb of sales. (4) The appellant craves, to leave, to amend and/or to alter any ground or add a new ground which may be necessary. 5. The Ld. Sr. D.R. Shri Ashok Kumar Suthar appearing for the Revenue supported the order passed by the Assessing Officer and argued that the assessment order being restored. The Ld. CIT(A) is not correct in deleting the addition made by the Assessing Officer and further Notification dated 08.11.2016 which is applicable only to Public Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TO - ITA Vs No.646/Bang/2021 (Order Dt. 18.02.2022) 7. We have given our thoughtful consideration and perused the materials available on record including the Paper Book filed by the assessee. The addition made by the Ld. Assessing Officer of Rs. 1,24,59,500/- u/s. 68 of the Act mainly on the ground that the assessee was not authorized to accept Specified Bank Notes during demonetization period as observed in the assessment order. Thus it is an admitted fact that the cash deposit is on account of sale of petrol, diesel and other petroleum products. These sales have been duly recorded in the books of accounts and appropriate VAT taxes also collected by the assessee. The Manager of the assessee company also filed a Notarized Affidavit dated 29-03-2017 accepting the above facts during the course of assessment proceedings. Thus it is clearly established that the Ld. A.O. on one side accepting the source of cash deposit and on the other side, he is making the cash deposit as unexplained cash credit which is self-contradictory. The Assessing Officer following the Circular dated 08-11-2016, which is not applicable since Para (e) of the Circular deals with the cases of purchase of petrol, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has not produced the prescriptions and the identity of the persons who bought the medicines with regard to the sales made. The ld. AR further submitted that the accounts of the assessee are audited and there is no discrepancy found during the audit. It is also contended by the ld. AR that the assessee has produced all the details with regard to the sales including the ledger accounts, cash book, VAT returns etc. during the course of assessment and the AO did not reject the books of accounts of the assessee. The ld. AR drew our attention to the relevant Notification wherein it is stated that for making payments in all Pharmacies on production of Doctor's prescription and proof of identity, however, there is no mandate given that the Doctor's prescription and identity of persons purchasing the medicines need to be kept for record. The ld. AR also placed reliance on the decision of Vishakapatnam Bench of the Tribunal in the case of Hirapanna Jewellers v. ACIT in ITA No.253/Viz/2020 dated 12.05.2021, where it is held that once the assessee admits the sales as revenue receipts, there is no case for making addition u/s. 68. Therefore, the ld. AR submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts out of unexplained cash u/s. 68 and tax rates applicable as per provisions of section 115BBE of the Act. Hence, I am satisfied that this is a fit case for initiation of penal proceedings u/s. 271AAC of the Act. 13. From the above it is clear that the AO is not questioning the source of the cash deposit since he has recorded a finding that cash sales during the demonetization period is brought to tax u/s. 68 which makes it clear that it is admitted fact that sales is the source for cash deposits. The revenue is contending that there is a requirement as per the Circular that the Doctors prescriptions and identity of the persons purchasing medicines needs to be kept in record to substantiate the cash sales during demonetization period. However, from the plain reading of the said Circular, there is no specific mention as contended by the department. Further, the AO did not reject the books of accounts of the assessee and has not brought anything contrary on record to show that cash sales is not the source for the cash deposited during demonetization period. We are therefore of the opinion that there is no case here for making the addition as unexplained u/s.68. In view of this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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