9911796707
TMI Blog2024 (6) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO are that the assessee is a partnership firm, which has been engaged in the business of retailing gold and other precious jewellery since November 2014. The AO has noted that there were no sales in the year ended 31st March 2015 and that the assessee firm had filed its Profit and Loss Account and Balance Sheet and submitted the return of income for the year ended 31st March 2016. The AO observed that during the relevant year, the assessee had deposited Specified Bank Notes ('SBN') to the tune of Rs. 5,72,90,000/- post demonetization between 09.11.2016 to 30.12.2016. Upon enquiry from the assessee firm, the AO gathered that according to the assessee the source of cash deposits were the proceeds received from cash sales of gold and prec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which he proportionately reduced the net profit attributable to the cash sales of Rs. 5,72,90,000/-, which proceeds were deposited during the demonetization period and accordingly, computed net taxable business income at Rs. 10,85,638/-. The AO thereafter separately added the cash deposits of Rs. 5,72,90,000/- u/s 68 of the Act and thereby assessed the total income of assessee-firm at Rs. 5,83,75,640/-. Aggrieved by this order of the AO, the assessee preferred an appeal before the Ld. CIT(A) who confirmed the action of the AO. Now the assessee is in appeal before us. 4. We have heard both the parties and perused the material placed before us. The admitted and uncontroverted facts before us is that the assessee firm is engaged in the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the sales made during the month of October 2016 was not genuine. Before us, the Ld. AR pointed out that the AO himself had taken note of the fact that, the sales for FY 2014-15 was NIL and that there was a substantial increase in turnover compared to FY 2014-15 in the next FY 2015-16, in which the assessee reported turnover of Rs. 1035.30 lacs. According to the Ld. AR therefore, the increase in turnover to Rs. 1334.63 lacs in FY 2016-17 cannot be doubted and that this particular reason was only a surmise of the AO. The Ld. AR pointed out that, the AO had neither made out a case that the stock which was sold in the month of October 2016 was actually not available with the assessee nor that the stock movement as per the books of accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by its very nature of retail trade, the sales were made to flying customers over the counter for which cash memos/sale bills were issued, for which complete details of customers were not required to be taken, as none of these over-the-counter sales were on credit. He further brought to our notice that, Rule 114B of the Income Tax Rules, 1962 also required obtaining the PAN of only those customers to whom sales per transaction exceeded Rs. 2,00,000/-. It is noted that similar limit had been set out in Rule 114E of the Income Tax Rules, 1962. The Ld. AR showed us that, the sale made by the assessee firm did not exceed Rs. 2,00,000/- per customer and therefore it was not required to maintain the relevant KYC details of such customers to whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hours, non availability of KYC documents for sales, non writing of tag of the jewellery to the sale bills, non- availability of CCTV footage for huge rush of public etc. The contention of the assessee that due to demonetization, the public became panic and the cash available with them in old denomination notes becomes illegal from 9-11-2016 and made the investment in jewellery, thereby thronged the jewellery shops appear to be reasonable and supported by the newspaper clippings such as The Tribune, The Hindu etc. It is observed from the newspaper clippings that there was undue rush in various jewellery shops immediately after announcement of demonetization through the country." 7. The next reason given by the AO to disbelief the sales and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cashbook. The Ld. AR submitted that, the survey authorities had not pointed out any defect or infirmity in the cash sales made during October 2016, stock movement as well as the cashbook etc. According to him, if the cash deposited during the demonetization period was not out of the cash sales, then the survey authorities ought to have found equivalent value of physical stock, which was shown to have been sold by the assessee. However, according to him, the fact remained that there was no discrepancy found in the physical stock and the stock as per books of accounts by the survey authorities, nor was any discrepancy found in the sales as well as the purchases of the assessee firm. The Ld. DR was also unable to bring anything contrary on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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