9911796707
TMI Blog2024 (9) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... placing any cogent evidence. As in view of various deficiencies in the books of assessee qua difference in cash balance, actual receipt from current sales or from debtors, which were called for explanations, but the assessee was unable to demonstrate before both the Authorities below, thus, it cannot be conclusively construed that the returned income offered by the assessee was again taxed under the provisions of section 68. Therefore, the contention that addition u/s 68 without rejection of books was invalid cannot be concurred with, but, we in our considered view are of the opinion that the issue in present case requires certain verifications qua the closing balance of cash as on 31.03.2016 and its matching with the opening cash balance as on 01.04.2016 from the audited accounts of the assessee, the verification of sale bills and sales recorded in the books of accounts, the verification of impact of cash collected from debtors on the returned income of the assessee for the year under consideration. Consequently, following the principle of natural justice the issue in the present appeal is remitted back to the file of Ld. AO for verification of all these material aspects and to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, CIT(A) has erred in confirming addition of Rs. 21,00,000/- made by the Assessing Officer under section 68 by treating cash (SBN) deposited during demonetization period as unexplained cash credit by ignoring the fact that there was sufficient cash balance in assessee's cash book and he himself has accepted the books of account as well as the book results. The assessee prays that the addition of Rs. 21,00,000/- made u/s 68 be deleted. 5) Without prejudice to ground nos. 1 to 4, on facts and in the circumstances of the case, CIT(A) has erred confirming action of the Assessing Officer in treating cash (SBN) of Rs. 21 ,00,000/- deposited during demonetization period as unexplained cash credit and applied tax rate as mentioned in section 115BBE in spite of the fact that he himself has not brought on records any evidences to prove that assessee had earned said income otherwise than from business activities income therefrom chargeable to tax at normal rates. The assessee prays that the income-lax be charged on such transactions @ 30%. 6) Without prejudice to ground nos. 1 to 4, on the facts and in the circumstances of the ease CIT(A) has erred in confirming a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly have made an addition on account of unaccounted cash credit u/s 68 of the Act for Rs. 21,00,000/-. Ld. AO also observed that the opening cash in hand for AY 2017-18 for Rs. 16,23,399/- defers the closing cash in hand for the AY 2016-17 which was Rs. 9,19,774/-. 4. Aggrieved by the aforesaid disallowance made by the Ld. AO, assessee preferred an appeal before the Ld. CIT(A), wherein the issue was deliberated upon and discussed at length, however, the contention of the assessee could not find favour and, therefore, the appeal of the assessee was dismissed with the following observations by the Ld. CIT(A). Decision: 6. I have carefully considered the grounds of appeal, facts of the case and the contents of the assessment order along with assessee's reply. The assessee has deposited total cash of Rs. 38,43,500/- including SBNs during the demonetization period. It has been claimed by the assessee that the deposits of cash were out of cash in hand available in day -- to- day cash book on respective dates. 6.1 The AO in the assessment order has highlighted that the closing cash balance as per cash flow statement filed for the period 01.04.2015 to 31.03.2016 is Rs. 9,19,774/- wherea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is hereby confirmed. All grounds of appeal are hereby dismissed. 5. Aggrieved by the aforesaid order of Ld. CIT(A), assessee is in appeal before us. 6. At the outset, Ld. AR of the assessee has submitted a written synopsis the same is extracted as under: Sukhdev Kumar Sood AX 2017-18 ITA no. 309/RPR/2023(Assessee) Ground no. 1 to 4 Submission of assessee 1. Assessee is in business of trading of mobile phones and other electronic gadgets. 2. Computation of income and acknowledgement of return filed is at PN 9 to 14 of PB. 3. Source of cash deposit Out of cash available in regular books, cash book at PN 43 to 102 of PB. 4. Cash sales both in terms of volume percentage to total sales is decreased as compared to last year. Comparative details at PN 2 of PB. 5. VAT returns - Sales disclosed by assessee reflected in VAT return as well, PN 30 to 37 of PB. Sales of October to December as per books and VAT return is also same. Not disputed 6. There is no difference in closing balance of cash as on 31.03.2016 opening balance as on 01.04.2016. Same is verifiable from reply dt. 19.12.2019 filed before AO which is placed at PN 38 to 42 of PB, relevant explanation is at para no. '1.27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to ground No. 1 to 4 of the present appeal has submitted that the cash deposit by the assessee was towards the sale proceeds from the business of the assessee and all such cash receipts are duly recorded in the cash book of the assessee copy of which is placed at page no. 43 to 102 of assessee s PB. Ld. AR further drew our attention to the Gross Profit % and Net Profit % of the assessee for the year under consideration which were 7.57% and 4.27% respectively, it is pointed out that this similar percentage in the previous year as accepted by the department were 6.07% and 2.09% respectively, this shows that the profit percentage during the relevant year were slightly more than the previous year. It is further submitted that the cash sale % of the current year was 2.26% only as compared to the preceding year of 17.21%. Such facts proves that the cash sales during the year under consideration in terms of percentage was less than the cash sale in the previous year, therefore, there was no occasion for the department to raise doubt on this aspect. Ld. AR further in order to substantiate his contentions have mentioned that the sales disclosed by the assessee in VAT return was also the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Delhi High Court in the case of Kailash Jewellery House (Supra) and the Hon'ble Gujarat High Court in the case of Vishal Exports Overseas Ltd. (supra),Hence, we do riot see any reason to interfere with the order of the Ld. CIT(A) and the same is upheld. - ACIT vs Nitin Sankhla in ITA No. 98/RPR/2020 vide order cit. 08.06.2023, PN 146 to 172 of PB, relevant finding at PN 170. 20. We have considered the rival contentions and perused the orders of the authorities below along with the relevant documents placed on record. The judicial pronouncement placed before ITAT to substantiate the contentions by the other parties. The factual matrix of the present case shows that there was a deposit of Rs. 2.90 Crs of old demonetized notes by the assessee after announcement of demonetization on 08.11.2016. It is an admitted fact that the assessee has opening balance of more than Rs. 2.90 crs when the demonetisation was pronounced, and this fact is not disputed by the department. The ld. AO has observed that there was no cash sales between 1st April, 2016 to 4th November, 2016. However, the assessee is in a trade wherein cash sales is a regular feature which is demonstrated by placing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h inspires us to agree with the contentions of the department to substantiate their claim that the deposits made by the assessee out of its cash sales were not explained or are bogus, we therefore having no distinguished view then the view taken by ld. CIT(A), upheld the finding of the ld. CIT(A) and therefore, decided this issue against the revenue. In the result, grounds no 2 to 7 on this single issue of the appeal of the revenue are dismissed. - ITO vs Parmanand Gupta in ITA no. 82/RPR/2017 dated 04.08.2022, relevant finding in para no. 21, page no. 38, last five lines. 21. On appeal, the CIT(Appeals) was of the view that though it was an admitted fact that the assessee had imported silk yarn from China and sold the same to the various weavers who were spread across the country, but on account of beggaries of their occupation could not furnish their complete contact details, however, for the said standalone reason the AO could not have justifiably recharacterized the aforesaid amount of duly accounted sale proceeds that were deposited by the out station based purchasers in the bank accounts of the assessee, as an unexplained cash credit u/s.68 of the Act. For the sake of clarity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the sales as were duly accounted by the assessee in his books of account. In sum and substance, though the A.O had on the one hand accepted that the amounts in question were the sale proceeds that stood credited in the books of account of the assessee and had brought the profit resulting there from as disclosed by the assessee to tax in his hand, but at the same time had held the said amounts as unexplained cash credits within the meaning of section 68 of the Act. Apart from that, the re-characterization of the duly accounted sales of the assessee which were earlier accepted by the AO in the original assessment that was framed by him vide his order passed under Sec. 143(3), dated 18.06.2010, without rejecting his books of accounts under Sec. 145(3) of the Act is beyond comprehension. In sum and substance, the recharacterization of the duly accounted cash sales of the assessee as unexplained cash credits u/s 68 by the AO without rejection of the books of account of the assessee u/s 145(3) of the Act is beyond comprehension. As stated by the ld. AR, and rightly so, the acceptance of the cash sales as disclosed by the assessee a/w simultaneous re-characterization of the same as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduce sale bills before him, the assessee was also apparently failed in producing the details of debtors as claimed by the assessee that cash was received from them. The addition was made on account of improper explanations by the assessee to explain the source of cash deposit, wherein the assessee has first claimed that the sale of electronic products was increased during the demonetization period but was unable to produce the sale bills before the Ld. AO. With a change in stand taken on the explanations, the assessee tried to explain that the cash receipts were from debtors but again failed to submit substantial proof to buttress this claim. Ld. CIT(A) also has given the similar findings that the assessee was squarely failed in explaining about the cash deposits during the demonetization period even the closing (as on 31.03.2016) and opening (01.04.2016) cash balance of the assessee was not matching having a difference of Rs. 7,03,625/- (Rs. 16,23,399- Rs. 9,19,774). Such observations of the revenue authorities, shows that the assessee was unable to substantiate his contentions with any corroborative evidence regarding receipt of cash on account of sale as well as recovery from d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce in opening cash balance with the closing cash balance of the previous year without any plausible explanation and in absence of details of debtors it cannot be conclusively establish that the cash recover from debtors pertains to and have profit included in the current years returned income. In view of such facts the case laws relied upon by the Ld. AR, distinguishable on facts, cannot rescue the contentions raised. 14. It is also worthwhile to note that if the sales made by the assessee was the actual source of impugned cash deposits, then acceptance of returned income and addition u/s 68 may cause double addition. However, in view of various deficiencies in the books of assessee qua difference in cash balance, actual receipt from current sales or from debtors, which were called for explanations, but the assessee was unable to demonstrate before both the Authorities below, thus, it cannot be conclusively construed that the returned income offered by the assessee was again taxed under the provisions of section 68. Therefore, the contention that addition u/s 68 without rejection of books was invalid cannot be concurred with, but, we in our considered view are of the opinion that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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