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TMI Blog2023 (8) TMI 1491X X X X Extracts X X X X X X X X Extracts X X X X ..... le disallowance would meet the end of justice. Considering all the facts and circumstances of the case, in our considered view 10% cash generated on alleged cash sales is reasonable to avoid the possibility of revenue leakage. Decided in favour of assessee partly. - SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER For the Assessee : Shri Suchek Anchaliya, CA For the Department : Shri Vinod Kumar, Sr. DR Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned National Faceless Appeal Centre, Delhi (NFAC)/Commissioner of Income Tax (Appeals) (in short, the ld. CIT(A)) dated 01/02/2023 for the Assessment Year (AY) 2017-18. The assessee has raised following grounds of appeal: 1. On the facts and circumstances of the case and in law, the ld. NFAC erred in confirming the addition of Rs. 53,21,482/- towards cash deposits made during demonetization period by the appellant, as unexplained/unaccounted income without considering the fact that the appellant has received the cash against the sales made on or before 08th November, 2016. 2. On the facts and circumstances o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled his submission through e-proceedings. The contents of reply of assessee is recorded in para 5 of assessment order. The assessee in sum and substance submitted that they are in the business of diamonds and filing their regular return of income. The cash deposit in bank was generated from cash sales and bills for such sales were furnished. There is no reason that cash deposit was other than genuine sale. Sales during the year is similar to the earlier years. The sale of assessee is not doubted. The assessee promotes cashless transactions which is very much in line with the Central Government cashless policy. The assessee is in wholesale business of diamond i.e. B to B (business to business) and import of diamond from foreign and also purchase from local market. The assessee started B to C trading to increase the sales. The assessee-company done well in October, 2016. The assessee specifically stated that the sales in Diwali period is not against the market tradition. The assessee also stated that sales were before demonetization period and no sales was made during the demonetization period and the cash was deposited before deadline. The cash deposit is Rs. 56,35,000/-only, again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cash book. The assessee submitted that the Assessing Officer has not doubted the balance sheet and the sales. The assessee has total turnover of Rs. 257.87 crores including cash turnover which is approximately 0.2% only. The cash generated in the cash sales has been accounted in the books of account. Such books of account was furnished before the Assessing Officer. The Assessing Officer made addition under Section 68 of the Act by taking a view that three parameters for tests of Section 68 i.e. identity, creditworthiness and genuineness of transactions have not been established. The Assessing Officer failed to appreciate that the assesse has submitted all the required documents to prove each and every parameter of transactions. All quantitative details of stock during the assessment period is perfectly tallied with the closing stock. The assessee also relied on certain case laws. In without prejudice submission, the assessee also submitted that all sales made in cash or credit were duly accounted and recorded in the books of account and therefore, income generated through cash credits automatically offered for taxation. Any further ad hoc addition on account of cash deposit will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s total turnover and offered the same for taxation. The ld. AR of the assessee submits that once the books of assessee was not rejected and the Assessing Officer made addition without bringing any adverse evidence against the assessee. To support his submission, the ld. AR of the assessee has relied on the following decisions: (i) CIT Vs Vishal Overseas Exports Limited Tax Appeal No. 2471 of 2009 (Gujarat High Court) (ii) ACIT Vs Hirapanna Jewellers (2021) 128 taxmann.com 291 (Vishakhapatnam Tribunal) (iii) R.B. Jessaram Fatehchand (Sugar Dept.) Vs CIT (1970) 75 ITR 33 (Bombay High Court) (iv) M/s Nitisha silk Mills Pvt. Ltd. Vs ITO ITA No. 896/Ahd/2011 (Ahmedabad Tribunal) (v) Mahesh Kumar Gupta Vs ACIT (2023) 151 taxmann.com 339 (Jaipur Tribunal). 8. On the other hand, the ld. Sr. DR for the revenue supported the orders of lower authorities. The ld.Sr.DR for the revenue submits that all the submissions of assessee was considered by the lower authorities. The ld. Sr. DR for the revenue submits that the details of sales made in cash as shown by assessee on page No. 52 to 68 of paper book clearly indicates that all the impugned sales are below Rs. 20,000/- and such entry is nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) further held that the claim of assessee about the sale of its stock in cash from September, 2016 to November, 2016 is improbable and is not acceptable and upheld the addition made by Assessing Officer as well as taxing the addition under Section 115BBE. 10. Before us, the ld AR for the assessee besides other contentions, vehemently urged that the sales of the assessee was more than Rs. 257 Crores and cash sales of the assessee was merely about Rs. 55.00 lacks, which cannot be doubted, which is less than 0.5%. Further the purchases of the assessee is not doubted, complete details were furnished by the assessee and such details were not doubted by the assessing officer. Though, we find merit in the submissions of the ld AR for the assessee, however, the stand taken by the assessee about the cash sales in the month of October 2016, itself creates doubt. We are conscious of the facts that however, strong suspicious may be, it cannot replace the evidence. Further on going through the evidence, which is filed by assessee to substantiate the cash sales, is the copy of sales register. Surprisingly, all cash sales below the amount of Rs. 20,000/- is shown from 01.09.2016 to 07.11.2016, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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