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TMI Blog2023 (8) TMI 1484X X X X Extracts X X X X X X X X Extracts X X X X ..... not entertained receipt of cash in specified bank notes from 9th November 2016 onwards from any customers due to the ban announced by the Government. This fact has not been controverted by the revenue. Effectively, the assessee had only recorded huge cash sales and cash advance received from customers on 8th November 2016 in demonetized currency (as the said currency was valid upto 12 AM of 8th November 2016) and had merely deposited the same thereafter. For the cash sales made by the assessee on 8th November 2016, the assessee had sufficient stocks of gold and diamond with it and had duly reduced the stocks in the stock register to the extent of sales made. There is nothing wrong on the business behaviour of the assessee trying to seize the business opportunity of making huge cash sales on 8th November 2016. What is required and relevant is that assessee should have sufficient stocks in its kitty to effectuate the sales - As long as existence of stocks with the assessee is not doubted by the ld. AO and cash sales made by the assessee is accepted by the ld. AO, in our considered opinion, the entire cash deposits made during the period 09.11.2016 to 31.12.2016 in the sum of Rs 3,43, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding, that he purchases of old gold was adjusted against sales made to the very same person, when neither the name and address of the parties from whom old gold was purchased was produced nor any evidence to show how the same was set off against any disclosed sales. 5. Whether the Ld. CIT (A) erred in accepting the genuineness of the purchases of old gold when neither the identity of the parties was established nor any stock records were maintained wrt the old gold purchases. 6. That the appellant craves leave to add, alter, amend or vary any of the ground either at or before the hearing 4. We have heard the rival submissions and perused the materials available on record. The assessee is a private limited company engaged in retail trading of gold and diamond jewellery operating from a rented premises at Sarojini Nagar Market, New Delhi during the year under consideration. The modus operandi adopted by the assessee in its business is that it used to buy stock for trading from registered dealers and make payments through account payee cheques. It also used to buy used old jewellery from its customers mostly as exchange against sale and also against outright payment. The return of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers had bought items with sale value less than Rs 1.20 lacs per bill which also included 11 customers whose average billing was less than Rs 50,000/- b) 121 customers bought items with sale value less than Rs 1.70 lacs per bill but above Rs 1.20 lacs per bill c) remaining 23 sale bills had sale value less than Rs 2 lacs per bill but above Rs 1.70 lacs per bill. 6. Pursuant to the aforesaid sales made on 08.11.2016, significant amount of cash was generated from sales which were in turn deposited in bank commencing from 09.11.2016 to 31.12.2016. The ld. AO called for stock details vide point no. 19 in the questionnaire dated 21.11.2019 as under:- The details of opening stock as on 7th November , 2016, sales made on 8th November, 2016, 9th November , 2016 and onwards may be filed separately. 7. This query was duly replied by the assessee vide point no. 10 in the submission dated 06.12.2019 by furnishing the details of availability of stock as on 8th November 2016 as well as item wise recording of each of the sales in the stock register. 8. The ld. AO observed that it is highly improbable for any assessee to make sales to 211 customers within the small gap of 4 hours on 8th November 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeded to treat the cash deposits of Rs 3,43,50,000/- as unexplained cash credit u/s 68 read with section 115BBE of the Act. 9. The assessee met each and every averment of the ld. AO before the ld. CIT (A) with regard to disallowance of purchases made u/s 40A(3) of the Act as well as for cash deposits u/s 68 read with section 115BBE of the Act. With regard to cash purchases disallowance made by the ld. AO u/s 40A(3) of the Act, the assessee pointed out before the ld. CIT (A) that the ld. AO selected 428 entries from the ledger account of purchases old gold and without raising any questions on the assessee regarding the mode of payment thereon, assumed that all those 428 entries were payments in cash, whereas factually the cash payments in excess of Rs 20,000/- was only Rs 1,01,057/-. The assessee provided the details for the same before the ld. CIT(A). The ld. CIT (A) examined the same and deleted the disallowance u/s 40A(3) of the Act. Against this deletion, the revenue is not in appeal before us. 10. With regard to the addition made in the sum of Rs 3,43,50,000/- u/s 68 read with section 115BBE of the Act, the ld. CIT (A) granted relief to the assessee by observing as under:- 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a pre-determined destination. Moreover, we find that the assessee had made a categorical submission that it had not entertained receipt of cash in specified bank notes from 9th November 2016 onwards from any customers due to the ban announced by the Government. This fact has not been controverted by the revenue. Effectively, the assessee had only recorded huge cash sales and cash advance received from customers on 8th November 2016 in demonetized currency (as the said currency was valid upto 12 AM of 8th November 2016) and had merely deposited the same thereafter. For the cash sales made by the assessee on 8th November 2016, the assessee had sufficient stocks of gold and diamond with it and had duly reduced the stocks in the stock register to the extent of sales made. There is nothing wrong on the business behaviour of the assessee trying to seize the business opportunity of making huge cash sales on 8th November 2016. What is required and relevant is that assessee should have sufficient stocks in its kitty to effectuate the sales. As long as existence of stocks with the assessee is not doubted by the ld. AO and cash sales made by the assessee is accepted by the ld. AO, in our con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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