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TMI Blog2024 (8) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, conjecture and surmises. Sale of goods has corresponding effect on the closing stock as well as the profitability. These aspects have not been questioned. The Assessing Officer has picked up the amount declared by way of cash sales and treated that as non-existent to hold the corresponding cash deposits as unexplained. The assessee, on the other hand, has demonstrated the factum of cash sales to be genuine by the direct and circumstantial evidences as noted above. The Revenue, in our view, has based itself findings on suspicion and conjectures and on improper rejection of tangible material. The assessee on the other hand has successfully demonstrated the propriety of cash sales by corresponding purchases, reduction in stock and declaration of profits on sales. The Revenue, in our view, has based itself findings on suspicion and conjectures and on improper rejection of tangible material. The assessee on the other hand has successfully demonstrated the propriety of cash sales by corresponding purchases, reduction in stock and declaration of profits on sales. Having assessed a credit of revenue character as income, it is outside the remit of the AO to subject the same credit unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n support of the admission for additional ground, the learned Counsel for assessee contended that it is well settled that a question of law can be raised at any stage of the proceedings as held by the Hon ble Supreme Court in the case of Chitturi Subbanna v. Kudapa Subbanna Others [1965 AIR 1325]. A reference was also made to the judgment rendered by the Hon ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. Commissioner of Income-tax [1998] 229 ITR 383 (SC) for admission of additional ground. 3.2 The prayer for admission of additional ground noted above, which is not set forth in memorandum of appeal is being admitted for adjudication in terms of Rule 11 of Income Tax (Appellate Tribunal) Rules, 1963 owing to the fact that objection raised in the additional ground is legal in nature for which relevant facts are stated to be emanating from existing records. 4. Turning to the facts as emanating from record, the assessee is an individual engaged in the business of trading of fabrics since last many years under the name and style of M/s. Akash International with its principal place of business at Golden Park, Rampura, Rohtak Road Delhi and branch office at Gurgaon. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd vouched by VAT returns. (c) the cash sales have been duly offered to tax by reflecting the same in the statement of trading and Profit and Loss and thus impugned addition has the effect of double additions; one on account of cash sales through trading in Profit and Loss account and two, additions on account of unexplained sources. 7.1 Elaborating further, the learned Counsel submitted that the total purchases of Goods (fabric) during the F.Y. 2016-17 stands at ₹ 18.10 crore majority of which i.e. ₹ 17.83 crore is purchased by way of import and remaining sum of purchase ₹ 27.52 lakh is carried out by way of domestic purchase. The purchases so carried out were duly recorded in its books of accounts and the respective customs duty and other levy on such imports were paid by the assessee. Similar pattern of imports can be seen in other financial years also. The support the genuineness of the import/purchases, copy of sample bill of entry, purchase registers, bank book, payment of customs duty etc. were produced. The learned Counsel thus quipped that legitimacy of purchases made are not under any cloud. During the year under consideration, total sale of Goods stands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Revenue authorities are a mere ipsi dixit whereas the transactions reported by the assessee are objectively justifiable. Both profits from sales and the cash sales itself has been assessed driven by misplaced suspicion and conjectures and based on some unfounded contemplation. While holding the source of cash deposits explained to be out of cash sales, to be unsatisfactory, the books of accounts have not been rejected. The learned Counsel exhorted that where the AO believed on the existence of alleged irregularities in the books of accounts, it was incumbent upon him to exercise the powers conferred under section 145(3) of the Act which mandates the AO to make an assessment in the manner provided under Section 144 of the Act. For doing so, the books of accounts requires to be ordinarily rejected. Nothing of this sort has been done. For such proposition, the learned Counsel referred to the judgments rendered by the Jurisdictional Delhi High Court in the case of PCIT vs. Forum Sales Pvt. Ltd. ITA No.862/2019 judgment dated 1st March, 2024 which dwells upon rejection of books in such circumstances. The learned Counsel, thereafter, referred to the judgment delivered by the Hon bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in the vicinity of about 4% of the total sales. The assessee is engaged in trading of fabric which are prone to be obsolete and perish over a period of time. Having regard to the very low capital invested in the business and operations being carried out on working capital debt, the assessee was compelled to save reputations and indulge in cash sales for immediate redemption of stark paucity of financial resources and also to get rid of perishable component of stock. It is thus the case of the assessee that in the context of peculiar factual matrix, there is no warrant to make such additions solely on on suspicion, surmises and conjectures. 9.2 It is thus alleged that the additions were carried out disregarding the facts and are coloured by irrelevant considerations. The assessee has broadly discharged the onus to explain the proprietary of credits by way of cash deposits on the counters of Section 68 of the Act. 10. The issue involved is essentially a question of fact and depends on appraisal of all relevant evidences on record on cumulative basis. As contended, it is a matter of record that cash sales giving rise to cash deposits have been duly recorded in the statement of prof ..... X X X X Extracts X X X X X X X X Extracts X X X X
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