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TMI Blog2024 (5) TMI 1483X X X X Extracts X X X X X X X X Extracts X X X X ..... ned to adjudicate the issue in favour of the Revenue and we hold that the corrigendum assessment order passed by the Assessing Officer is proper. Addition made u/s 68 - unexplained cash deposits - assessment failed to provide any justification for maintaining high level of cash - case was selected for scrutiny under CASS to examine the issue Cash deposit during demonetization period - HELD THAT:- As long as assessee explains the source of sales, submits the details of receipts particularly cash sales and demonstrates the availability of cash and sufficient stock in the business to support the cash deposit in the bank and at the same time, AO has not brought anything on record to substantiate his finding, merely interprets the data rather than indulging in making proper enquiry. In our considered view merely comparing the sales in cash deposits with the earlier assessment years without bringing on record anything against the assessee for making cash sales and cash deposits, in our considered view, the assessee has explained the source of cash deposits and rightly offered to tax in its books of accounts, therefore, it does not call for separate disallowance. Further, considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... After perusing the details submitted by the assessee, the Assessing Officer observed certain mismatch in cash deposits and cash withdrawal of the assessee and he observed that on several occasions, assessee had withdrawn money even though it has sufficient funds in hand. The Assessing Officer observed from the monthly cash sales and cash deposits during the Financial Year 2015-16 and 2016-17, observed that there is substantial increase in cash sales and cash deposits during demonetization period when compared to previous assessment year. The Assessing Officer determined the unexplained cash deposits made in bank account to the extent of Rs. 2,93,00,000/- by observing as under: 5. (i) In response o the above notice, the assessee furnished details/documents on 18/12/2019, which have been examined. On the perusal of the details filed by the assessee it has been observed that in the regular manner cash in hand was maintaining from the range of Rs. 16.00 lacs to 50.00 lacs. Further, it is observed from the details furnished by the assessee that the assessee has withdrawn cash of Rs. 31,00,000/- from the bank in spite of the fact that cash in hand of Rs. 49.21,712/- was otherwise availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of the cash sales for the quarter ending on 30.09.2016, the cash sales in the month of Oct, 2016 to 8th Nov, 2016 (i.e. 1.25 month) is estimated at Rs. 47,00,000/-(being the cash sale of July, Aug Sept, 2016 amounting to Rs. 4295084 + 2321865+4620588-11237537/3=3745845X1.25=46,82,230/-1. Since the demonetized currency was not a legal tender in the market w.e.f. 09-11- 2016, therefore, a prudent businessman in the normal course of business shall deposit this currency in bank in one-go, which has not been done, rather has been deposited in six piece-meals. From the perusal of facts narrated here-in-above, the only inference can be drawn that the assessee has not furnished the true and correct particulars of the actual source of the cash deposits made during the demonetization period and in actual no cash was available in the books of account and the unaccounted demonetized currency available with assessee has been introduced in the books of account in the form of cash receipts from bogus sale. The assessee has deposited total cash of Rs. 3,80,00,000/- during the demonetization period in the bank accounts maintained in Bank of Baroda, Indusind Bank and Yes Bank. Hence, the cash dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the appellant/ assessee's business. Purchases, sales and the Stock are interlinked and inseparable. Every purchase increases the stock and every sale decreases the stock. To disbelieve the sales either the assessee should not have the sufficient stocks in their possession or there must be defects in the stock registers/stocks. Once there is no defect in the purchases and sales and the same are matching with inflow and the outflow of stock, there is no reason to disbelieve the sales. The assessing officer accepted the purchases and the stocks. He has not disturbed the closing stock which has direct nexus with the sales. Once the purchases and stock is considered as genuine, the allegation that the genuineness of the cash sales remained unexplained is prima facie contrary and factually incorrect. The appellant explained that the cash was received on account of his business of trading in jewellery, electronics and handloom. On the other hand, the AO, in the assessment order, has not given any findings with regard to the sales or purchases of assessee. 6.3 The appellant relied on the judgement of Hon'ble ITAT, Visakhapatnam in the case of ACIT v Hirapanna Jewellers [2021] 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case as explained above, it is clear that the cash receipts represent the sales which the assessee has rightly offered for taxation. Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. Hence, the addition made by the AO is liable to be deleted. Grounds No. 1 to 6 are accordingly allowed. 7. Aggrieved with the above order, the Revenue is in appeal before us raising the following grounds of appeal: 1. Whether the Ld. CIT (A) is correct in law in deleting the addition made under the provision of section 68 of the Income Tax Act, 1961, and treating cash deposit as sales, when assessee during the course of assessment failed to provide any justification for maintaining high level of cash. 2. Whether Ld. CIT (A) is correct in concluding that AO did not bring any material on record against assessee is respect of cash sales which was deposited by assessee in the bank, when assessee itself is non cooperative during the course of assessment and filed its first, partial reply at the fag end of the time barring after a period of 15 months from the issuance of first notice. 3. Whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Order passed w/s 143(3) of the Income Tax Act, 1961 for the Asst. Year 2017-18 on 20.12.2019 vide order No. ITBA/AST/S/143(3)/2019. 20/1022786534(1). It is to be brought in your knowledge that while passing the assessment order, due to some technical error following were printed:-Assessment Order dated 20.12.2019. The same was erroneously printed. Now it is hereby informed that the same may be read as following:- Assessment Order dated 24.12.2019. The Ld. CIT (A) has observed at Page 2 of its order that As noted above, the Assessing Officer has passed the corrigendum to assessment order stating that the order dated 20.12.2019 was erroneously printed, assessment order dated 20.12.2019 is null and void. Thus, corrigendum order dated 24.12.2019 is treated as final assessment order u/s 143(3) of the Act. That the Assessee vide an Application under Rule 27 of the Income Tax Appellate Tribunal Rules has challenged the validity of the Assessment Order on the following grounds: I. Whether there can be two assessment orders for an Assessee for same assessment year. ? II. Whether the Assessment Order dated 24.12.2019 is illegal as the original assessment order was passed and uploaded on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer has clearly indicated that the demand notice and computation of tax etc. are the same as passed along with initial order dated 20/12/2019. She prayed that the corrigendum order passed by the Assessing Officer is a proper order. 10. Considered the rival submissions and material placed on record, we observed that the Assessing Officer had passed the original assessment order dated 20/12/2019 with the incomplete information along with demand notice, computation of tax and penalty notices. Subsequently, he noticed that he has uploaded wrong assessment order in ITBA Portal and the above said mistake could not be rectified through the system, he has passed the corrigendum order within the limitation period and passed the same on 24/12/2019 and all other demand and notices, computation sheet etc. are not modified or changed. Considering the fact that only the assessment order was uploaded by mistake and all other information relating to tax demand etc. are correct. Therefore, only the assessment order was modified not the demand, therefore, in our considered view that case law relied on by the assessee are not relevant for the facts on records, therefore, we are inclined to adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort in Form 3CB3CD at page 52-61 of the Paper book) Pertinently, apart from a bald allegation by the Ld. A.O. in its order at para 5(iii) at page 8 of the Assessment Order that the Assessee has manipulated its books no other fallacy has been pointed out by the Ld. A.O. in the books. Ld. A.O. should be specific in alleging manipulation, he has admittedly not disputed opening and closing stock, purchases etc. therefore as per law he cannot proceed on mere suspicion and doubt the sales of the Assessee. 14. The Ld. AR further submitted that the Ld. A.O. in its Show Cause Notice dated 12.12.2019 in Para 3 (Refer Page No. 46 of the Paper book) proposed to reject the books of Accounts of the Assessee and charge a Gross-Profit @18% however, post this SCN (, the Assessee's submissions dated 12.12.2019 were filed and in his Final Assessment Order dated 24.12.2019 (Corrigendum to Assessment Order) Ld. A.O has not rejected the books which clearly evidences that the Ld. A.O. has considered the voluminous documents filed by the Assessee and accepted the books. That during the course of the proceedings, the Assessee submitted the following documents: S. No. Particulars Page No. of the Paperbo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in October and November 2016 which is also accepted by the Ld. A.O. The only reservation raised by the Departmental Representative during the course of the hearing was regarding the high GP ratio on the sales made on 08.11.2016 which is in fact supports the case of the Assessee that the sale made on 08.11.2016 was made at relatively higher margin since the demand was at its peak. 18. The Ld. AR submitted that the further estimation of sales of the Assessee for 1.25 month i.e., 1.10.2016 to 08.11.2016 on average basis is also incorrect because sales have been accepted by VAT, by Income tax. If the Ld. A.O. wanted to reduce the sale he should take this figure out of the turnover as per P L account. 19. The Ld. AR further submitted that the VAT returns are duly accepted by the VAT authorities and pertinently, no VAT return was revised for the year under consideration. It is submitted that the VAT return for quarter ending 30.09.2016 was filed on 28.10.2016 therefore the same cannot be doubted. It is important to note that the VAT assessment was also done in the case of the Assessee for the year under consideration wherein no demand was raised. All the invoices, ledgers, returns w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are duly audited and reported to the Income Tax Authorities. It is important to note that no single adverse comment has been given by the auditors during their audit of the said books. 22. The Ld. AR submitted that the said order has been passed completely on surmises and conjectures and not on legal principles. The Ld. AO has wrongly stated that the Assessee has failed to provide documents and information to substantiate the claims which is contradictory to the records. 23. The Ld. AR submitted that the Assessee strongly relies on the recent order dated 12/05/2021 of the Hon'ble ITAT Vishakhapatnam in the matter of Asst Commissioner of Income Tax 1 V. M/s. Hirapanna Jewellers ITA/253/Viz/2020, (Refer Page 38 of the Legal Paperbook) wherein the Hon'ble ITAT held that the announcement of demonetization led to unprecedented rush towards the jewellery shops which soared the sales of gold and diamond jewellery and the cash receipts represent the sales which the Appellant has rightly offered for taxation. The facts of this case were similar to that of the Assessee as the sales in October and November were high on account of festival season and due to unprecedented demonetisatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and had found place in the profit and loss account was not interfered with. Relevant extract has been reproduced herein below: 4. The Tribunal also noted that the departmental representative could not challenge the factual finding recorded by the Commissioner of Income-tax (Appeals). Nor could he advance any substantive argument in support of his appeal. The Tribunal also observed that it is not in dispute that the sum of Rs 24,58,400/- was credited in the sale account and had been duly included in the profit disclosed by the Assessee in its return. It is in these circumstances that the Tribunal observed that the cash sales could not be treated as undisclosed income and no addition could be made once again in respect of the same. 26. The Ld. AR submitted that the Assessee also relies upon the order of Hon'ble ITAT Delhi in the matter of Kishore Jeram Bhai Khaniya v. ITO [ITA. No. 980, 1220/Del./2011 dated 13.05.2014 ITAT- Delhi) wherein it is specifically held that once the amount of cash sales has been shown as income by duly including it is his total sales, the same cannot be considered u/s 68 of the IT Act. Relevant extract has been reproduced herein below: There is ano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person shall quote his permanent account number in all documents pertaining to the transactions specified in the Table below, namely:- 18 Sale or purchase, by any person, of goods or services of any nature other than those specified at Sl. Nos. I to 17 of this Table, if any. Amount exceeding two lakh rupees per transaction 30. The Appellant relies upon R.B. Jessaram Fatehchand (Sugar Deptt.) V. CIT (1970) 75 ITR 33, wherein Hon'ble High Court of Bombay held that in the case of a cash transactions where the buyer takes the delivery of goods by paying in cash, in that scenario the seller is hardly bothers about the name and address of the purchaser. Relevant extract has been reproduced herein below: In the case of a cash transaction where delivery of goods is taken against cash payment, it is hardly necessary for the seller to bother about the name and address of the purchaser. 31. The Ld. AR also submitted that, from the submissions made above and settled legal position that Section 68 Is not applicable in the case of sales, because the amount which is taxed once cannot be taxed again. Therefore, the Ld. AO has wrongly invoked Section 68 and 115BBE of the IT Act without apprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on different dates, independently and no difference was found in the stock register or the stocks of the assessee. Purchases, sales and the Stock are interlinked and inseparable. Every purchase increases the stock and every sale decreases the stock. To disbelieve the sales either the assessee should not have the sufficient stocks in their possession or there must be defects in the stock registers/ stocks. Once there is no defect in the purchases and sales and the same are matching with inflow and the outflow of stock, there is no reason to disbelieve the sales. The assessing officer accepted the sales and the stocks. He has not disturbed the closing stock which has direct nexus with the sales. The movement of stock is directly linked to the purchase and the sales. Audit report u/s 44AB, the financial statements furnished in paper book clearly shows the reduction of stock position and matching with the sales which goes to say that the cash generated represent the sales. The assessee has famished the trading account, P L account in page No. 7 of paper book and we observe that the reduction of stock is matching with the corresponding sales and the assessee has not declared the exorbi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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