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TMI Blog2024 (1) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... ot lead to any adverse inference. It is known fact that post demonetization, long queues were witnessed and there were security issues during those days. Under these circumstances not taking entire cash, in one go, for deposit in bank was a prudent decision. Once availability of cash by way of sale of goods is established in the cash book depositing the same in bank over a period, under the circumstances, cannot be doubted. Thus inclined to agree with the contentions made by the assessee appellant. The addition is without any basis and is solely based on surmises and conjectures and therefore the same is deleted. As decided in Shri Mahendra Kumar Agarwal [ 2022 (11) TMI 1333 - ITAT JAIPUR] we find the explanation of the assessee is genuine and the sales cannot be doubted merely on surmises and conjectures on the ground of non-furnishing of address and PAN of the customer. The AO did not make any enquiry on the material submitted by the appellant. She merely proceeded on statistical analysis to make the addition on account of cash deposits. We agree with the findings of ld. CIT(A) that the AO has not brought any material on record to establish that the sale bills are bogus no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he IT Act for the assessment year 2017-18. The assessee has raised the following grounds :- 1. Whether on the facts and circumstances of the case and in law, the ld. CIT (A) NFAC Delhi is justified ignoring the material evidences that the books of accounts were rejected by considering them non reliable, fabricated, manipulated and made to serve the sole purpose of explaining undisclosed income since the entire cash sales to the tune of Rs. 2,58,56,715/- found credited in the books of accounts were held to unexplained cash credits and an account u/s 68 was made by AO. 2. Whether on the facts and circumstances of the case and in law, the ld. CIT (A), NFAC Delhi is justified ignoring the facts the assessee was suppressed interest income by formulating colourable device by claiming abnormal and inflated expenses thereby generated business loss which was set off from interest income and thereby deleting the addition of Rs. 25,00,578/- made by the AO. 2. The brief facts of the case are that the assessee is engaged in the business of trading in precious and semi precious Gem Stones under the trade name of M/s. Sunrise Enterprises and besides that assessee is also engaged in build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and verified. The verification of the details furnished by the assessee revealed that the sole source of cash deposited into bank account to the tune of Rs. 2,45,38,000/- claimed to be out of cash sales made during the period beginning from 26.08.2016 and upto the eve of demonetization i.e. on 08.11.2016. The assessee admittedly did not maintain stock register, therefore, it was not possible to verify the movement of stock items vis- -vis sales and purchase bills. The entirety of information furnished by the assessee make it evident that the books of accounts were fabricated and manipulated to boost up cash availability by resorting to cash sales and therefore no reliance could be placed upon such books of accounts. Therefore, considering the severity of issue, non maintenance of stock register, non furnishing of cash book and bank book, meager gross profit margin and non reliability of books of accounts, show cause notice was issued to the assessee on 26.12.2019 asking the assessee as to why books of accounts should not be rejected by resorting to the provisions of section 145(3) of the IT Act, 1961, why fabricated cash sales to the tune of Rs. 2,45,38,000/- credited in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (1970) 75 ITR 33 (Bombay HC) (iv) Lalchand Bhagat Ambika Ram vs. CIT (1959) 37 ITR 288 (SC) The ld. A/R placed reliance on the decision of Co-ordinate Bench of the Jaipur Tribunal in the case of ACIT Central Circle-1, Jaipur vs. Shri Mahendra Kumar Agarwal in ITA No. 172/JP/2022 wherein the Coordinate Bench of the Jaipur Tribunal observed at pages 54-56 of its order as under :- Looking to the above facts and circumstances of the case the sales made by the assessee is genuine which is executed after giving the goods to the customer, duly reflected in the invoice issued, assessee having sufficient stock in the books, sales is duly reflected in the books of accounts supported by payment of VAT and the revenue has not brought any positive material to prove it as bogus sales. It is not the case of the A.O. that the assessee did not have the sufficient stock for making the sales. Thus, it cannot be said that the figures of sales and purchases are not supported by the quantity details. As regards not providing the name, address and PAN of the customers to whom cash sales was made, the assessee has explained that the sales were below the prescribed limit so it is not compulsor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment in its present appeal. The ld. A/R, therefore, prayed that the order of the ld. CIT (A) be upheld. 5. We have heard the rival contentions, perused the material on record and gone through the orders of the revenue authorities. The assessee deals in precious and semi precious gem stones under the name and style of M/s. Sunrise Enterprises. For the year under consideration the assessee deposited cash, during demonetization period, amounting to Rs. 2,45,38,000/- in his bank account. The entire cash deposited was out of cash sales amounting to Rs. 2,58,56,715/-. The cash sales were duly recorded in the cash book and available cash balance on different dates was deposited in bank account. The AO doubted the cash sales for the reason that the buyers were not identified and each sale was below Rs. 2,00,000/-. In respect of no details of buyers, each being below Rs. 2,00,000/- the ld. A/R contended before us that the law nowhere mandates to obtain, maintain/retain identification details of the buyers when each sale below Rs. 2,00,000/-. For this proposition, ld. A/R has relied upon the judgment of Hon ble Jurisdictional High Court in the case of Smt. Harshila Chordia vs. AITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchases by making enquiries from the said supplier under section 133(6). The said supplier has responded to the queries issued by the Learned Assessing Officer. The purchases having been made before the announcement of demonetization, the payments having been made through banking channel, therefore, the purchases stand duly substantiated. Assessing Officer has doubted the sales. The sole reason for doubting the sales is that the entire transaction is in cash with no KYC details of the buyers. The assessee has stated that the retail business of gemstone is mainly done through cash. There is no restriction under the law for selling the goods in cash nor there is any legal requirement for obtaining KYC for the transactions entered into in cash by the assessee. In the case of R.B. Jessaram Fatehchand v. CIT (1970) 75 ITR 33 [PB 266-273], wherein the Hon'ble High Court at Para 2 of the order held as under: In these circumstances, the reason given by the Income-tax Officer for rejecting the book results shown by the assessee's accounts or for not accepting the cash transactions as genuine cannot be accepted as good and sufficient unless there was an obligation on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is executed after giving the goods to the customer, duly reflected in the invoice issued, assessee having sufficient stock in the books, sales is duly reflected in the books of accounts supported by payment of VAT and the revenue has not brought any positive material to prove it as bogus sales. It is not the case of the A.O. that the assessee did not have the sufficient stock for making the sales. Thus, it cannot be said that the figures of sales and purchases are not supported by the quantity details. As regards not providing the name, address and PAN of the customers to whom cash sales was made, the assessee has explained that the sales were below the prescribed limit so it is not compulsory or mandatory under the Income Tax Act, 1961 to collect the information related to full name, address and PAN of the customer to whom goods were sold in cash during the course of business below to the prescribed limit. The assessee further explained that in the preceding financial years, subsequent financial years and other periods of this same financial year, the same practice was being followed by the assessee where no details of name, address and PAN of customer was available with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bardiya 7,28,000 Kanak Prabha Soni 3,71,000 Manoj Moondhra 7,42,000 Pankaj Somani 3,60,000 Pinkcity Infracon Pvt. Ltd 1,20,000 Piyush Kothari 7,36,000 PrateekKothari 7,42,000 Pushp Enterprises 10,000 RajendraKumar Bardiya 6,000 Suresh Kumar Sawalka 14,84,000 Vankatesh Impex 7,42,000 Total 69,80,400 The assessee borrowed money from the following two sources : (1) Cash credit limit (2) Personal borrowings The assessee during the year paid interest amounting to Rs. 20,68,145/- on cc limit and further, paid interest to private parties amounting to Rs. 2,45,124/-. Another important fact which the ld. AO has totally missed is that the interest activity in itself was a business activity for the assessee. The assessee broadly utilized the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (69,80,400) Add : Interest on cc limit 20,68,145 Add : Interest on loan 2,45,124 Net loss from business and profession 25,00,578 Ld. AO has carved out the above line items of profit and loss and taxed the same under the head income from other sources but has failed to allow the infra head set off of losses as per the provisions of section 71 of Income Tax Act, 1961. Why set off of such loss is not allowed has not been discussed by ld. AO. The action of ld. AO is not justified. 6. We have heard the rival contentions, perused the material on record and gone through the orders of the revenue authorities. At the outset, we find that the ld. CIT (A) has decided the issue by observing in para 3.3 of his order as under :- 3.3 Assessee appellant has earned total interest income of Rs. 69,80,400/- from different parties. The assessee has also paid interest amounting to Rs. 20,68,145/- on CC limit and interest amounting to Rs. 2,45,124/- to different private parties. Since the amount of CC limit as well as private borrowings are used for a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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