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TMI Blog2024 (5) TMI 1239X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that assessee did not have any cash sales in earlier and subsequent years. On the sole reason that there are no cash sales in the immediately preceding year and also subsequent year cannot be the basis for rejecting the explanation of the assessee that the cash deposits were made out of cash sales especially when the assessee produced cash book, sales, purchases, etc. to demonstrate that the cash deposited were made out of cash sales not rejected the books of account, not doubted the purchases, sales and further accepted the book results without rejecting the books of account. In the case of Anantpur Kalpana [ 2021 (12) TMI 599 - ITAT BANGALORE] held that where AO made addition u/s 68 of the Act on account of cash deposited by assessee in its bank account post demonetization, since such cash deposit was towards assessee sale proceeds which was already offered to tax by the assessee and admitted by Revenue as revenue receipt, impugned addition made u/s 68 would result in double taxation and, therefore, is liable to be deleted. In the case of Mukesh K. Waghasia [ 2022 (4) TMI 848 - ITAT SURAT] held that where assessee having explained that cash deposited in bank account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s called for by the AO which included cash book, bank statement, profit and loss account, balance sheet, sales account with both cash and credit sales. Ld. Counsel submits that it was explained that the payment for purchase was made through banking channels and similarly the credit sales were realized through bank only. The cash deposited in bank was out of cash accumulated through cash sales. Ld. Counsel submits that the AO, however, alleges non-compliance by the assessee. 5. The Ld. Counsel for the assessee submits that the cash transactions have been duly recorded in the books maintained by the assessee such as cash book, bank book, ledger account, etc. The cash was deposited out of sale proceeds of the fabrics in the normal course of business. Purchases are duly entered in the books of account and creditors have been paid through cheques. The sales are both in cash and on credit. Credit sales have been realized through regular banking channels. It is submitted that in the course of assessment proceedings the assessee has filed copies of cash book, sales and purchase account, bank book and bank statement. It is submitted that while trading results have been accepted by the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notices issued by the AO. Assessee also furnished copy of ITR, computation of income, cash transaction statement, bank account statement and explained that the cash deposits were made out of cash sales. However, the AO as well as the Ld.CIT(A) did not accept the explanation of the assessee that these cash deposits were made out of cash sales observing that the assessee did not file any explanation or evidences. 10. On perusal of the assessment order, it is observed that though the assessee has furnished cash book, bank book, balance sheet, profit and loss account, details of cash deposited, sales account, etc. the AO did not reject the information filed by the assessee. The AO did not reject the books of account of the assessee. It is observed that the trading results of the assessee were accepted and the purchases, sales were not doubted at all. The AO accepted the credit purchases and credit sales and the explanation of the assessee that the cash deposits were made out of cash sales was rejected on the ground that assessee did not have any cash sales in earlier and subsequent years. 11. In my opinion, on the sole reason that there are no cash sales in the immediately preced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the income of the assessee of that previous year: From the perusal of section 68, the sum found credited in the books of accounts for which the assessee offers no explanation, the said sum is deemed to be income of the assessee. In the instant case the assessee had explained the source as sales, produced the sale bills and admitted the same as revenue receipt. The assessee is engaged in the jewellery business and maintaining the regular stock registers. Both the DDIT (Inv.) and the AO have conducted the surveys on different dates, independently and no difference was found in the stock register or the stocks of the assessee. Purchases, sales and the Stock are interlinked and inseparable. Every purchase increases the stock and every sale decreases the stock. To disbelieve the sales either the assessee should not have the sufficient stocks in their possession or there must be defects in the stock regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 Assessing officer. If the entries in the books of accounts are genuine and the balance in cash is matching with the books, it can be said that the assessee has explained the nature and source of such deposit. 19. In the present case, the department has not rejected the books of accounts of the Assessee accepted in VAT. The regular books of accounts were maintained in the normal course of business in which no flaw, fallacy or deficiency was pointed out by the AO. It is well settled law that once the assessing officer accepts the books of accounts and the entries in the books of accounts are matched, there is no case for making the addition as unexplained. In the assessee case of R S Diamond India Pvt. ltd. Vs. ACIT, Fine Gujranwala Jewellers, I.T.A. No. 2017/Mum/2021 (A.Y. 2017-18) the Income Tax Tribunal Bench at Mumbai has held as under:- "4. I have heard the parties and perused the record. The facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Fine Gujranwala Jewellers, 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 case of Lakshmi Rice Mills v. CIT [1974] 97 ITR 258 (Pat.) Hon'ble Patna High court held as under: "It is, in my view, a fundamental principle governing the taxation of any undisclosed income or secreted profits that the income or the profits as such must find sufficient explanation at the hands of the assessee. If the balance at hand on the relevant date is sufficient to cover the value of the high denomination notes subsequently demonetized and even more, in the absence of any finding that the books of account of the assessee were not genuine, the source of income is well disclosed and it cannot amount to any secreted profits within the meaning of the law." Thus, considering the above ratio, when the Assessee's books of account were not rejected, the Lower authorities ought not to have made additions." 13. In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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