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TMI Blog2024 (7) TMI 1127X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income so filed has been accepted which includes the gross receipts from sale of medicines. At the same time, only thing which has to be satisfied by the assessee is that cash so deposited in the bank account has the necessary nexus with the sales and gross receipts so disclosed by the assessee. We find that the assessee has shown cash sales in the month of October 2016 and cash sales of Rs 19,46,845/- in the month of November 2016 and cash of Rs 33,00,000/- has been deposited in the month of November 2016 and the fact that the source of cash so deposited is out of the sales made has been duly reported by the assessee to the Revenue authorities as mandated in terms of filings relating to acceptance of SBN Notes during the demonization period and thereafter, during the course of assessment proceedings, the assessee has also filed sales vouchers of cash sales along with copy of cash book for necessary verification of the AO. The fact that the cash receipts for the month of October have been deposited in the very next month in November cannot be a reason to dispute rather it supports the case of the assessee by satisfying the proximity test and the nexus which the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal is being challenged facts law for invoking the provision of section 68 while the deposits of Rs 23,00,000/- are completely accounted, recorded, disclosed and declared having complete explanation being out of only and sole resource of business income meeting the test of nexus, character, purpose thus an unreasonable action prayed to be deleted. 3. Because the action of dismissing the appeal is being challenged facts law for invoking the excessive rate of taxation than prescribed on dated 01.04.2017 through Finance Act 2016 on the additional income and the surrender has been obtained/procured on the assurance of no penalty, no prosecution on payment of tax which having been done by the assessee, then subsequently charging taxation under section 115BBE is an unreasonable action at the hands of department. 4. Because the action of dismissing the appeal is being challenged facts law since the source of the income is from the business and for the business as substantiated through the returns/ orders under HVAT,2003 and which pleading of the assessee is an accepted fact as per material on record resultingly the chargeability being made under section 115BBE is unwarranted. 5. Becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Rs. 33,00,000/-. The AO asked the assessee to explain and disclose with documentary evidence the source of such deposits made. The assessee in his submission contended that he was trading in medicine and also having agricultural income. For AYs 2017-18 and 2016-17, the assessee had not prepared any books of accounts and returns were filed u/s. 44AD of the Act, which did not prescribe maintaining of books of accounts. From 01/04/2016 to 31/03/2017, in the business current account maintained in the name of the M/s Sanserwal Pharmaceuticals deposits were made and total sales from 01/04/2016 to 31/03/2017 were made of Rs. 72,01,093/- and income was declared in the return of income being 8.35% of such sales at Rs. 6,01,291/-. It was also submitted by the assessee before the AO that he had agricultural income of Rs. 15,50,360/- during the year. 3.2 The AO, after carefully considering the contention of the assessee stated that the assessee had accepted cash deposits in Specified Bank Notes (SBNs) of Rs. 33,00,000/- during demonetization period from 09/11/2016 to 31/12/2016, that the assessee had not maintained any books of accounts claiming the return filed u/s. 44AD which did not requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from agricultural income in cash and the same was not used for depositing during demonetization period in the bank. The AO, however, did not accept the contention of the assessee. The AO stated that the assessee had not submitted copies of sale bills in support of cash sales made during the month of October and November, 2017. The AO also stated that the pattern of cash sales clearly indicated that there was sudden spurt in cash sales on daily basis during 01/10/2016 till 30/1/2016. The assessee's claim that there was fever / epidemic spread and there is dairies during October and November and the cattle had suffered the epidemic and hence sale had increased then besides having sufficient stock with the assessee, was found to have no force since the corresponding sale during 01/04/2016 to 30/09/2016 was reported at Rs. 18,33,842/- being the monthly average of Rs. 3,00,000/- only against average sale in October and November, 2016 for 2 months of Rs. 19,00,000/- only. The AO also stated that no such evidence regarding epidemic in cattle during October and November, 2016 could be furnished by the assessee and therefore the AO contended that the assessee had manipulated cash sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g epidemic (foot and mouth disease in cattle) and also similar certificate from milk dairy union in support of appellant's claim that regular sales made during the demonetization period had increased and therefore he had deposited the sale proceeds in cash to the bank account and such sales were made by him and accounted for on which tax was paid by filing return of income u/s. 44AD of the Act. It was contended that the appellant was not required to maintain the books of account under the said section and further detailing the prevailing circumstances of announcement of banning the SBNs of Rs. 500 and Rs. 1000, it was contended that the appellant being a retail seller in medicines was permitted to sell the medicine in cash and as there was pandemic in cattle for which necessary evidences had been furnished, more medicines were sold and such sale proceeds had been deposited in the bank account. The appellant further referred to Article 14 and Article 19(1)(g) of the Constitution of India and the provisions of section 68 r.w.s. 115BBE of the Act and notes on Clause 45 of the bill, development occurring with effect from 08/11/2016, the extract of the Finance Act, 2018 relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 of the Constitution of India and also various CBDT's Circulars as stated above pertaining to the amendment made referring to the Finance Bill etc. I d o not find that the said submissions made by the appellant had explained the nature of cash sales and cash deposits made by the appellant in the above mentioned bank during the demonetization period in totality. The facts were the appellant made cash deposits on 12/11/2016 of Rs. 10,00,000/-, on 13/11/2016 of Rs. 10,00,000/-, on 15/11/2016 of Rs. 10,00,000/- and on 17/11/2016 of Rs. 3,00,000/-, totalling to Rs. 33,00,000/-. It is not at all legible as to why the sales made during the month of October totalling to Rs. 18,50,659/- in cash had been deposited in the month of November, 2016 and only an amount of Rs. 2,71,206/- was deposited in bank in the said month. This very fact itself indicates that the sales invoices etc. if any had been prepared later on to substantiate the appellant's claim that there was genuine cash sales during the months of October and November, which was rightly held by the AO as manipulation of accounts and bogus sales only to justify the source of cash deposits. Further, when such sales were made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reased as in this relevant assessment year. Instead of factually furnishing the relevant details with documentary evidences for explaining the source of such cash deposits, I find that the appellant made an exaggerated irrelevant submissions during the appellate proceedings as quoted above to substantiate the unexplained cash deposited by him in the impugned bank account as mentioned above. The said detailed submission, in my opinion, does not explain the source of cash deposits in the bank account of the appellant, which was the issue of dispute in this appeal. I also find that the appellant had cited a number of decisions in the submission as quoted above, which, in my considered opinion, are not applicable on the facts of the case of the appellant. 5.3.1 I further find that the AO after analysing the details of cash deposits made had given an edge to the appellant by considering the reasonable cash sales during October and November, 2016 at Rs. 10,00,000/- (Rs. 5 lakhs each). Considering all the facts as above, I hold that the AO had correctly treated the amount of Rs. 23,00,000/- as appellant's unexplained cash and had added the same to the total income. Having said so, I h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs 33,00,000-10,00,000) as cash credit u/s 68 and added back to the income of the assessee, however the resource for aforesaid deposits of Rs 23,00,000/- are having complete explanation. It was submitted that additionally, computation of income was too furnished and these material facts containing material particulars are a matter of fact and the sale substantiated through the HVAT 2003 records supports the pleading of the assessee which is under the independent Act, wherein all the sales made by the assessee are accepted which is a fact on record, as is evident that out of total sale of Rs 72,01,093/-, the sales of Rs 50,01,481/- being the tax paid sales @ 5.25%. Further it is submitted that the certificate dt 25.11.2016 reveals in itself that there was an FMD (foot and mouth diseases) prevalent within the District of Yamuna Nagar and additionally the certificate of Milk Dairy Union dt 06.12.2019 even certifies this fact of FMD diseases and these different certificate from different resources uphold the contention of the assessee. The FMD diseases with the Distt. of Yamuna Nagar is matter of common knowledge as revealed from the media reports in the news paper too. Even further it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d profit @ 8% on the turnover of Rs. 72,01,093/- and it was submitted that where the cash so deposited is out of the declared sales and which has not been disputed and where the assessee was not required to maintain the books of account, the assessee was not under any obligation to explain nature of individual cash deposits as the necessary nexus with sales has been duly established and in this regard, our reference was drawn to the findings of the Hon ble Jurisdictional High Court in case of CIT Vs. Surinder Pal Anand (2010) 192 Taxman 0264 wherein the Hon ble High Court has held as under: 7. Sec. 44AD of the Act was inserted by Finance Act, 1994 w.e.f. 1st April, 1994. Sub-s. (1) of s. 44AD clearly provides that where an assessee is engaged in the business of civil construction or supply of labour for civil construction, income shall be estimated at 8 per cent of the gross receipts paid or payable to the assessee in the previous year on account of such business or a sum higher than the aforesaid sum as may be declared by the assessee in his return of income notwithstanding anything to the contrary contained in ss. 28 to 43C of the Act. This income is to be deemed to be the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veterinary medicines and has filed his return of income declaring gross receipts of Rs 72,01,093/- u/s 44AD of the Act. The return of income so filed by the assessee has been accepted by the AO meaning thereby that both the applicability of section 44AD and non-maintenance of books of accounts as well as particulars in the return of income so filed has been accepted which includes the gross receipts from sale of medicines amounting to Rs 72,01,093/-. At the same time, only thing which has to be satisfied by the assessee is that cash so deposited in the bank account has the necessary nexus with the sales and gross receipts so disclosed by the assessee. 11. In this regard, we find that the assessee has shown cash sales of Rs 18,50,659/- in the month of October 2016 and cash sales of Rs 19,46,845/- in the month of November 2016 and cash of Rs 33,00,000/- has been deposited in the month of November 2016 and the fact that the source of cash so deposited is out of the sales made has been duly reported by the assessee to the Revenue authorities as mandated in terms of filings relating to acceptance of SBN Notes during the demonization period and thereafter, during the course of assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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