9911796707
TMI Blog2024 (2) TMI 1224X X X X Extracts X X X X X X X X Extracts X X X X ..... ry premise, whereas, the cash book submitted by the assessee, is a computer generated cash book which contain total transactions of the assessee. The explanation given by the assessee to explain difference in cash balance as per two cash books is reasonable and acceptable. Decided against revenue. Estimation of returned income - Since, the sales declared by the assessee to the tune of Rs. 1,10,30,000/- has been excluded and made additions under the head income from other sources as unexplained money u/s. 69A of the Act, in our considered view, the cost of purchase to said sales also needs to be excluded. If you exclude sales and corresponding cost of sales from the net profit declared by the assessee, the net profit computed by the CIT(A) by excluding a sum of Rs. 83,94,933/- from net profit declared by the assessee at Rs. 1,98,55,779/-, in our considered view, the net profit computed by the CIT(A) at Rs. 1,14,60,846/- is in accordance with accepted principles of accounting. Therefore, no error in the findings recorded by the CIT(A) to re-compute net profit from business and to be taxable under normal rate of tax, and thus, we are inclined to uphold the findings of the CIT(A) and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idavit filed for condonation of delay, we are of the considered view that the reasons given by the Revenue for not filing the appeal within the time allowed under the Act comes under reasonable cause, and thus, the delay in filing of the appeal is condoned and appeal filed by the Revenue is admitted for hearing. 4. The brief facts of the case are that the assessee is a firm doing diary business dealing in purchase and sale of milk. The assessee's firm filed its return of income for AY 2017-18 on 06.11.2017 declaring total income of Rs. 1,98,55,779/-. The case was selected for scrutiny under CASS to verify large value of cash deposits during demonetization period. It was seen from the records that information was received from the ADIT (Investigation), Trichy, pertaining to cash deposits made during demonetization period in the name of the assessee's firm. Further, bank account statements in the name of the assessee were obtained from the bank and noticed that the assessee has made cash deposits into bank account between 08.11.2016 and 31.12.2016, amounting to Rs. 6,65,24,690/- which includes a sum of Rs. 1,51,35,500/- in old demonetized currency notes. Sworn statement from the Cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unted in the books of accounts, and thus, the same cannot be treated as unexplained money. The assessee further contended that the AO even cannot make additions towards demonetized currency deposited into bank account u/s. 69A r.w.s. 115BBE of the Act, because, the product transacted by the assessee is highly perishable in nature and further, the assessee was allowed to collect cash up to 23.11.2016. 7. The Ld.CIT(A) after considering relevant submissions of the assessee and also taken note of relevant reasons given by the AO to make additions towards cash deposits u/s. 69A r.w.s. 115BBE of the Act, sustained additions made by the AO to the tune of Rs. 1,10,30,000/- being cash deposits into bank account in demonetized currency notes from 09.11.2016 to 23.11.2016 u/s. 69A r.w.s. 115BBE of the Act. In so far as balance cash deposits of Rs. 5,54,94,960/-, the Ld.CIT(A) deleted the additions made by the AO on the ground that there is no reason for the AO to add back said cash deposits, because, the assessee has explained source for cash deposits and also declared sales in the books of accounts for relevant assessment year. Further, the Ld.CIT(A) has computed income declared by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act to accept cash against sales and deposit into back account. The Ld.Counsel for the assessee further submitted that the assessee has submitted all evidences including cash book, sales bill and other evidences to prove sales affected in cash during the period of demonetization. The assessee had also declared sales in the books of accounts and paid necessary taxes. Therefore, the question of making addition towards cash deposits merely on the basis of statement of Cashier, is not correct. The Ld.Counsel for the assessee further referring to petition filed by the assessee under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963, submitted that the Ld.CIT(A) erred in sustaining addition to the extent of Rs. 1,10,30,000/- u/s. 69A r.w.s. 115BBE of the Act, without appreciating the fact that when the source for cash deposits has been explained out of known source of income, then, the question of making additions towards cash deposits u/s. 69A of the Act, does not arise. Therefore, he submitted that additions sustained by the Ld.CIT(A) to the tune of Rs. 1,10,30,000/- u/s. 69A r.w.s. 115BBE of the Act, should be deleted. 10. We have heard both the parties, perused the materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has filed petition under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963, in light of certain judicial precedents and sought for deletion of additions sustained by the Assessing Officer, in our considered view, when the assessee is not able to establish availability of cash in hand in old currency notes as on 08.11.2016, then the question of treating said cash deposits as normal business receipts is incorrect. Therefore, we are inclined to uphold the findings of the Ld.CIT(A) and reject petition filed by the assessee under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963. 12. Coming to deletion of balance cash deposits of Rs. 5,54,94,690/- and re-computation of income declared by the assessee in the return of income filed for the impugned assessment year. The Ld.CIT(A) has deleted the balance cash deposits Rs. 5,54,94,690/- on the ground that the source for cash deposits between 08.11.2016 and 31.12.2016 is out of sale proceeds in cash and further, said cash deposits was made in new currency notes. Further, when the assessee's nature of business is dealing in milk and further, the major portion of sales and purchase of the assessee is in cash, in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esponding purchases cost of sales in respect of said sales needs to be excluded from the net profit declared by the assessee. The Ld.CIT(A) has worked out cost of sales in respect of sales declared by the assessee to the tune of Rs. 1,10,30,000/- by taking into account gross profit shown by the assessee at 23.89% and worked out cost of sales at Rs. 83,94,833/- in respect of sales accounted to the tune of Rs. 1,10,30,000/-. Since, the sales declared by the assessee to the tune of Rs. 1,10,30,000/- has been excluded and made additions under the head 'income from other sources' as unexplained money u/s. 69A of the Act, in our considered view, the cost of purchase to said sales also needs to be excluded. If you exclude sales and corresponding cost of sales from the net profit declared by the assessee, the net profit computed by the Ld.CIT(A) by excluding a sum of Rs. 83,94,933/- from net profit declared by the assessee at Rs. 1,98,55,779/-, in our considered view, the net profit computed by the Ld.CIT(A) at Rs. 1,14,60,846/- is in accordance with accepted principles of accounting. Therefore, we are of the considered view that there is no error in the findings recorded by the Ld.CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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