9911796707
TMI Blog2024 (12) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act, 1961 (for short 'the Act') along with questionnaire were served on the assessee. After issue of several notices u/s 142(1) of the Act, assessee filed the relevant information along with confirmation of unsecured loan, ledger copy of expenses and reconciliation of sale/turnover shown in ITR and VAT return. With regard to cash deposits during demonetization period, assessee submitted that out of cash of Rs. 2,01,53,000/-, cash of Rs. 29,00,000/- was deposited in new currency. He further submitted that entire cash deposited during the year was out of cash in hand appearing in cash book as on 08.11.2016. The Assessing Officer observed that no cash book was submitted by the assessee. 4. Further, directions under section 144A of the act were sought from the Addl.CIT, Range 22, New Delhi. The Addl.CIT sought further information from the assessee by issue of show-cause notice dated 11.12.2019 to the assessee to explain the abnormal higher cash sales for October and November, 2016 and consequently, deposit of Rs. 2,01,53,000/- during the demonetization period shall be treated as unexplained and other issues relating to cash deposits. In response, the assessee submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idences whereas the appellant has submitted documentary evidences such as VAT returns, quantitative details of purchase and sales etc. to substantiate the sales made during the year out of which cash were deposited in bank accounts. 4. Because the CIT(A) NFAC has erred in alleging that no cash book was submitted without considering the fact that the appellant had requested the Ld. AO vide reply dated 17.12.2019 to produce cash book during physical hearing because of being vary voluminous, however, the Ld.- AO proceeded to pass the order on 20.12.2019 without providing any opportunity to present the same which shows that the Ld. AO has passed the order without providing reasonable opportunity of being heard and made the addition u/s 68 of the Act based on his whims and fancies. 5. Because the CIT(A) NFAC has erred in doubting the cash sales made as the books of account of the appellant is duly audited by Independent Chartered Accountant and quantitative details were also given in audited report. 6. Because the Ld. AO has erred in making addition on account of cash deposited in bank account without rejecting the books of account. Moreover ~ on one hand the Ld. AO has accepted c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion period and the source of such cash in hand was cash sales made by the assessee duly recorded in the audited books. 8. Further, it was submitted that proceedings U/S 144A of the Act was initiated by the learned JCIT, Range 22, Delhi vide issue of notice dated 11-12-2019 wherein it was proposed to reject the books of accounts of the assessee u/s 145 of the Act for difference in turnover reported in the audited accounts and turnover submitted based upon the replies made during assessment proceedings. In reply during assessment dated 17.12.2019, wherein the assessee submitted the reconciliation of turnover and no discrepancies were found by the AO and the trading results of the assessee as per the audited accounts was accepted and the books of accounts were not rejected by the AO U/S 145(3) of the Act. The original and revised VAT returns were also accepted by the AO. The purchases, sales, opening stock, closing stock and financials of the assessee company was accepted as such and no discrepancy was reported by the AO. w.r.t the allegation of the AO that cash book requisitioned during assessment was not submitted, please note that the assessee vide reply dated 17.12.2019 requeste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be reliable in so far as unexplained sums have been credited as sales and a percentage of such unexplained amount is offered as profits. In a nut shell neither are the Purchases duly substantiated nor were the Sales substantiated with Sale Bills/Cash Receipts or names and addresses of the customers. In the background the Books of the appellant are not found to be reliable and do not reflect the correct picture of the affairs of the business. Hence, the books of accounts are rejected u/s 145 (3) of the Act by exercise of powers of the Commissioner of Income Tax (Appeals) which are co-terminus with the powers of the Assessing Officer. In the background of the rejection of the books of accounts, the addition made U/S 68 of the IT Act is found to be inconsistent with the facts. In the present case the finding is that the appellant was found to be in possession of unexplained cash of Rs 1,62,46,533/- which was deposited in the bank accounts. hence, since, the possession of cash precedes its credit in books as sales, it would be more appropriate to tax the money of Rs 1,62,46,533/- for which the appellant failed to give satisfactory explanation, U/S 69A of the Income Tax Act." 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under sub-section (2-A) of that section, or (c) having made a return, fails to comply with all the terms of a notice issued under subsection (2) of Section 143, the Assessing Officer, after taking into account all relevant material which the Assessing Officer has gathered, shall, after giving the assessee an opportunity of being heard, make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment: Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the assessee to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment: Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-section (1) of Section 142 has been issued prior to the making of an assessment under this section. A plain reading of the aforementioned provisions would indicate that the AO or CIT(A) wields an authority to make additions on the basis of estimation of income upon fulfillment of the conditions mentioned in Section 145(3) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 202-233 of the paper book. On the other hand, it was duly submitted before the learned CIT(A) that proceedings u/s 144A of the Act was initiated on the assessee by the JCIT vide letter dated 11-12-2019, refer page 53-55 of the paper book, and a proposal was made to reject the books of accounts of the assessee on account of difference in turnover reported in ITR and turnover reported in the VAT return. The JCIT also questioned about the revised VAT returns filed by the assessee in the said letter. 6. In reply to the said letter, refer page 106-109a, the assessee satisfactorily explained the reconciliation of turnover. At page 107 of the paper book, the assessee has clearly reconciled the quarter wise turnover as per the VAT return and audited accounts. W.r.t the query that the VAT return has been revised for the first three quarters starting from April, 2016 to December,2016, it was submitted that there is no change in value of turnover as filed in the original VAT returns and Revised VAT returns. These returns were required to be revised for incorporating change in TIN number of some dealers. The assessee also submitted a tabular chart showing that there was no change in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent year was reported at 7.1% and for the immediately preceding year, the same was reported at 7.14%. Similarly, the net profit percentage on turnover for the current year was reported at 0.32% and for the immediately preceding year, the same was reported at 0.4%. Details of GP and NP ratio of the last 3 years is tabulated below: AY GP Ratio NP Ratio 2015-16 7.10% 0.35% 2016-17 7.14% 0.40% 2017-18 7.27% 0.31% Thus, there is no deviation in the financial results of the current year as compared to the immediately two preceding years. Same accounting policies is followed by the assessee consistently year after year. The appellant is a private limited company and is required to maintain its books of account as per Companies Act' 2013 and the same was audited by an Independent Chartered Accountant u/s 44AB of the Income Tax Act, 1961. Nothing adverse was pointed out by the auditor of the company w.r.t correctness or completeness of the accounts. Furthermore, as a normal practice followed every year the assessee takes physical stock of all the machinery items at the year end and item wise quantity of stock at the yearend is duly reported in the Tax Audit Report and the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a business would differ according to the system adopted. This is made clear by defining the word 'paid' in section 43(2), which is used in several sections from sections 30 to 43C, as meaning actually paid or incurred according to the method of accounting upon the basis of which profits or gains are computed under section 28/29. That is why, in deciding the question, as to whether the word 'expenditure' in section 37(1) includes the word 'loss', one has to read section 37(1) with sections 28, 29 and 145(1). Accounts regularly maintained in the course of business are to be taken as correct, unless there are strong and sufficient reasons to indicate that they are unreliable. Under section 28(i), one needs to decide the profits and gains of any business which is carried on by the assessee during the previous year. Therefore, one has to take into account stock-in-trade for determination of profits. The Act makes no provision with regard to valuation of stock. But the ordinary principle of commercial accounting requires that in the profit and loss account, the value of the stock-in-trade at the beginning and at the end of the year should be entered at cost or m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d [2024] 160 taxmann.com 93 (Delhi)pronounced on 01-03-2024 wherein detailed discussion was made w.r.t rejection of books of accounts u/s 145(3). Relying on the judgment of the Hon'ble High Court of Delhi in the case of Pr. CIT v. Swananda Properties (P.) Ltd. [2019] 111 taxmann.com 94/267 Taxman 429/2019 SCC, the Hon'ble HC held that, "19. A plain reading of the aforementioned provisions would indicate that the AO wields an authority to make additions on the basis of estimation of income upon fulfillment of the conditions mentioned in Section 145(3) of the Act. Once the AO is satisfied about the existence of irregularities in the books of account as per Section 145(3) of the Act, it shall proceed in the manner provided under section 144 of the Act. At this juncture, what needs consideration is the question whether such an addition must be made only after the rejection of the books of account by the AO. 20. The Division Bench of the High Court of Bombay in the case of Pr. CIT v. Swananda Properties (P.) Ltd. [2019] 111 taxmann.com 94/267 Taxman 429/2019 SCC OnLine Bom 13359, had an occasion to consider the said question and the same was accordingly answered as under:- "11. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account are maintained by the assessee in accordance with the system of accounting, in the regular course of his business, the same would form the basis for computation of income. In the instant case it is noticed that neither the Assessing Officer nor the Commissioner of Income-tax (Appeals) have rejected the books of account maintained by the assessee in the course of the business. As such the Tribunal has rightly rejected or set aside the partial addition made by the Assessing Officer for arriving at gross profit and sustained by the Commissioner of Income-tax (Appeals) and rightly held that the entire addition made by the Assessing Officer was liable to be deleted. The said finding is based on sound appreciation of facts and it does not give rise for framing substantial question of law." [Emphasis supplied] 22. In another case of Pr. CIT v. Marg Ltd. [2017] 84 taxmann.com 52/249 Taxman 521/396 ITR 580 (Mad.)/2017 SCC OnLine Mad 37852, the Division Bench of the High Court of Madras has held that the rejection of books of account is sine qua non before the AO proceeds to make his own assessment. Paragraph 4(c) of the said decision is reproduced as under:- "4(c). Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a particular system has been followed by the assessee uniformly and regularly for the past several years, and was accepted by the department. It is not open to the ITO to intervene and substitute a different system of accounting on the ground that the system which commends to the ITO, is better. In the instant case, the assessee had been following a consistent system of accounting and regularly employing the same system of accounting for declaring its income from year to year. It was also not in dispute that this system of accounting was not found to be defective by the ITO in the past years. There was no material to indicate why the ITO considered the system of accounting regularly followed by the assessee as defective, or such that correct profits could not be deduced there from. It was not open to the ITO to intervene and substitute a different system of accounting than the one which was followed by the assessee, on the ground that the system which commended to the ITO was better. The ITO was, therefore, not justified in rejecting the assessee's method and substituting his own method for it." 10. In the present case, the learned CIT(A) rejected the books of accounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n has to be established and substantiated based on facts and figures, which further depends on the circumstances of each case. Mere minor mistakes/typological errors/absence of stock registers/lower GP may not ipso facto amount to incorrectness/incompleteness of accounts in terms of section 145(3) of the Act. But the case would be different where the above-mentioned mistakes are coupled with other findings. [Para 18.8] In the given case, the Assessing Officer has rejected the book results of the assessee based on the finding that there was less production of tiles in comparison to the companies available in the public domain and non-maintenance of production registers properly. In the light of the above facts, the Assessing Officer invoked the provisions of section 145(3) of the Act and thereby he has made certain upward additions on account of suppressed production which was sold outside the books. [Para 18.9] The books of account cannot be rejected if the assessee does not maintain the stock registers until and unless it is coupled with other defects such as sales/ purchase outside the books of account. But in the instant case, there was no such conclusive finding by the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly, following the method of determining its stock at the end of the year by physically verifying the same and not maintaining any stock register since it was dealing in a large number of small items. We fail to understand how the non-maintenance of stock register has affected the determination of true and correct profits of the assessee in the circumstance. The Revenue has found no other defect in the books of the assessee. All purchase and sale vouchers and other records have been found to be in order. The Revenue has not demonstrated before us as to how the non-maintenance of stock register has been a hindrance in determining the true and correct profits earned by the assessee and also what was the infirmity in the method adopted by the assessee of physically verifying its stock at the end of the year. Therefore in our opinion the mere fact of non-maintenance of stock register cannot be the basis for rejection of books of account." 11. W.r.t the allegation of the learned CIT(A) that neither the purchases is substantiated nor sales is substantiated with sale bills/cash receipts or names and address of the customers, it is submitted that purchases and sales made by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these circumstances, the reason given by the ITO for rejecting the book results shown by the assessee's accounts or for not accepting the cash transactions as genuine could not be accepted as good and sufficient unless there was an obligation on the part of the assessee to keep a record of the addresses of the cash customers. It could not, therefore, be said that the failure on his part to maintain the addresses was a suspicious circumstance giving rise to a doubt about the genuineness of the transactions entered into by the assessee. Since, having regard to the nature of the transactions and the manner in which they had been effected, there was no necessity whatsoever for the assessee to have maintained the addresses of cash customers, the failure to maintain the same or to supply them as and when called for could not be regarded as a circumstance giving rise to a suspicion with regard to the genuineness of the transactions. The Tribunal, therefore, was not right, in setting aside the order of the AAC and restoring that of the ITO. There were no circumstances disclosed in the case nor was there any evidence or material on record which would justify the rejection of the book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited ; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory : Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10." A bare reading of Section 68 of the Income-tax Act, 1961, suggests that for a sum so credited to be charged to income-tax as the income of the assessee of that previous year by the A.O. the following have to be present: (i) there has to be credit of amounts in the books maintained by the assessee ; (ii) such credit has to be a sum of money during the previous year ; and (iii) either (a) the assessee offers no expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of section 69A: 1. Assessee is found to be owner of any money, bullion, jewellery etc, and 2. Such money, bullion, jewellery is not recorded in the books of accounts for any source of income, and 3. The assessee either offers no explanation or explanation is found not satisfactory by AO. In other words, a reading of section 69A of the Act makes it clear that the prime condition for addition u/s 69A of the Act is that the assessee is found to be in possession of money, bullion jewellery, etc., not recorded in its books of account. In the present case, the cash deposits in the Bank A/c of the assessee was on account of retail cash sales made by the assessee and the same was duly recorded in the audited accounts and was also reported in the VAT returns. The assessee maintains regular books of account which were audited by an independent Auditor as per the requirement of Companies Act and also audited u/s 44AB of the Act. The cash sales and the corresponding cash deposits in banks are duly reflected in books of the Assessee. Thus, section 69A of the Act could not have been invoked in the present case since cash deposits and its source, being cash sales, was duly recorded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cross examination has been provided to the assessee company. The mandate of law to conduct enquiry by the Assessing Officer on due information coming to him to verify authenticity of information was not done as per section 142 of the Act. Therefore, mere receipt of unsubstantiated statement recorded by some other officer in some other proceedings more particularly having no bearing on the transaction with the assessee does not create any material evidence against the assessee. This is because section 142(2) mandates any such material adverse to the facts of assessee collected by AO u/s 142(1) has to be necessarily put to the assessee u/s 142(3) before utilizing the same for assessment so as to constitute as reliable material evidence through the process of assessment u/s 143(3) of the Act." Further reliance is placed on the recent judgment of the Hon'ble ITAT Delhi in the case of ACIT vs M/s Sur Buildcon Pvt Ltd (I.T.A No.6174/Del/2013) pronounced on 15-07-2021 wherein relying on the above judgment of the Hon'ble Kolkata ITAT in the case of SPML Infra (supra) it was held that, "7.11 Applying the law to the case at hand, it is evident that the Inspector Reports, that had been re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are inclined to agree with the Ld. A.R. that there has been a violation of the Principle(s) of Natural Justice implied within Section142 (2) of the Act and such statutory non-compliance vitiates the entire assessment proceedings, therefore, rendering it to be null and void. Thus, the Cross Objection taken on the violation of the Principle(s) of Natural Justice is also allowed in favour of the assessees." Thus, the order passed by the learned CIT(A) in the present case without affording an opportunity of being heard w.r.t his findings and observations during the course of appellate proceedings is not as per law and in violation of principles of natural justice 16. Having said that, at this juncture, your kind attention is invited to the audited accounts of the assessee, placed at page 1-27 of the paper book. On perusal of the Balance Sheet of the assessee, it may kindly be noted that the own funds of the assessee as on 31-03-2016 was Rs. 62,98,902/- and as on 31-03-2017 was Rs. 67,27,274/-. This means that the assessee is not a cash rich person and works with a very little capital. The assessee normally runs his business on trade credits and loans. To reduce the hardship on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit and Loss A/c and accordingly offered to taxation. Thus, adding the same again tantamount to double addition of the same amount. In the present case, additions have been made on the basis of suspicions, surmises and conjectures. 20. Here, please note that once an assessee has offered his sales as business income, then again taxing the cash deposits made out of this accounted cash sales as unexplained cash credits/unexplained money amounts to double taxation, which is not permissible as per the canons of Income Tax Law. In this regard, the assessee places reliance on the judgement of Jurisdictional Delhi ITAT in case of Harisons Dismonds Pvt. Ltd. vs ACIT(ITA No. 1426/Del/2021) reported in [2024] 161 taxmann.com 669 (Delhi - Trib.) wherein the Honorable Delhi ITAT has held that 'where cash sales have already been offered as income, same cannot be taxed in the garb of inflation sales to cover up demonetization currency'. The relevant extract of the judgment is quoted below: "There is no dispute that the assessee was maintaining proper books of account which were produced before the Assessing Officer during the assessment proceedings. Month-wise details of cash deposited out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o far as the allegation of non-mentioning of names of the purchasers is concerned, it is not only baseless but without any backing of law as the assessee is not required to keep the names of purchasers for cash sales less than Rs. 2 lakhs and not even one instance has been pointed out by the Assessing Officer where cash sales were more than Rs. 2 lakhs. [Para 26] Considering the vortex of evidences, there is no merit in the impugned addition made by the Assessing Officer and also in the part relief given by the Commissioner (Appeals). Therefore, considering the totality of facts, the Assessing Officer is to be directed to delete the impugned addition. [Para 27]." * Reliance is also placed on the judgment of the Hon'ble jurisdictional ITAT, Delhi in the recent case of Vijay Kumar Jain vs ITO (ITA 1730/Del/2024) wherein on identical facts it was held that, "9. We have carefully considered the rival submissions and perused the assessment order and first appellate order. The material referred to and relied upon in the course of hearing was taken in to account as per Rule 18(6) of the Income Tax (Appellate Tribunal) Rules, 1963 together with case laws adverted to in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 10.2 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. 10.3 Having assessed a credit of revenue character as income, it is outside the remit of the AO to subject the same credit under different provision i.e. section 68 yet again, inflicting double whammy on the assessee. Besides, the books of accounts and book results have been not rejected per se. No defect has been pointed out on the declarations made towards purchases, the closing stock and the profits either. The additions made have resulted assessment of cash sales twice which is not permissible in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the assessee and, hence, there is absolutely no case made out by the revenue for making addition under section 68." * Further, reliance is also placed on the judgement of the Hon'ble Delhi Tribunal in the case of Agson Global (P.) Ltd. v. Asstt. CIT [2020] 115 taxmann.com 342 (Delhi - Trib.) wherein it was held that the addition made on the sole ground of deviation in ratio of cash sales and cash deposits during the demonetisation period with that of earlier period, is not proper and lawful. The case was affirmed by the Hon'ble Delhi High Court in 2022 134 taxmann.com 256 (Delhi). 21. Further, the appellant begs to submit that the Ld. AO had made the addition u/s 68 of the Act accepting the books of accounts. On the contrary, the Ld. CIT(A) affirmed the said addition by invoking section 69A of the Act and rejecting the books of accounts of the assessee. As per the Income Tax hierarchical structure, the order of CIT(A) supersede the order passed by the Ld. AO. Thus, the section 69A invoked by the CIT(A) will prevail and the assessee has duly explained as to how the provisions of section 69A could not be invoked in the present case. 22. Having said as above, it is furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Supreme court will not interfere. It is necessary, however, that every fact for and against the assessee must have been considered with due case and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence on record before it. The conclusion reached by the Tribunal should not be coloured by any irrelevant considerations or matters of prejudice and if there are any circumstances which required to be explained by the assessee, the assessee should be given an opportunity of doing so. On no account whatever should the Tribunal base its findings on suspicions, conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicion, conjectures or surmises and if it does anything of the sort, its findings even though on questions of fact, will be liable to be set aside by the Supreme Court. In the result, the order of the Tribunal was set aside and the matter was remanded back to the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jected to the submissions of the Ld DR for remitting the issue back to the file of CIT(A), he submitted that several hearings were happened before AO/CIT(A) and once again remitting the same issue back to them will not pay any dividend and will cause injustice to the assessee in terms of money and time. 13. Considered the rival submissions and material placed on record. We observed that the assessee had deposited the cash out of cash sales recorded during the period Oct, Nov and Dec'2016. The reasons recorded by the AO to reject the reasons for such cash deposits are out of cash sales by observing that the cash is nothing but undisclosed funds of the assessee and it has manipulated the cash sales to make such cash deposits. From the records we observe that the AO neither rejected the book results or method of account adopted by the assessee. The AO or CIT(A) has not found any discrepancies in the method of accounting, margin declared by the assessee which are in consonance with the previous periods. Since the AO did not have any material against the assessee but made the addition merely on the basis his perception that the same is only out of assessee's undisclosed income. 14. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This requirement raised by the Ld CIT(A) is also not practical, mere his opinion. 16. Now let us discuss the actual issues raised by the AO that the assessee has recorded sales only during the demonetization period and there is no history of such cash sales in the earlier period. Based on the above observation, he was of the view that the assessee has introduced its own undisclosed cash into the system and booked the cash sales without there being any cash sales. This can be traced if at all the assessee has introduced such unaccounted money into the system, it will show from the financial results or parameters where it can be deducted with: a. Abnormal profit b. No stock movement c. Recording of excess sales From the information submitted before us, all the purchase and sales are properly recorded in the books and also substantiated by the information submitted before the GST officials and relevant quarterly reports. There is absolutely no discrepancies found by the lower authorities either in the stock registers submitted or quarterly reports submission before the GST authorities. 17. Let us analyze the financial results declared by the assessee in the last three years: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the above expression has no relevance since the assessee had already declared the cash sales in its books. In the similar situation, the coordinate bench has held in the case of J.R.Rice India (P) Ltd as under: "At the cost of repetition, to the extent of sales made, the stock position is also correspondingly reduced by the assessee which goes to prove the genuineness of the claim of the assessee. On examination of the cash book of the assessee, it is found that the assessee had cash balance of Rs. 55.94 lakhs as on 8-11-2016, i.e., the date on which demonetization was announced, which sufficiently explains the source of deposit of Rs. 52.60 lakhs in specified bank notes. Apart from this, the assessee had duly furnished the month wise details of sales, month wise details of purchase, corresponding freight charges incurred month wise, month wise power and fuel expenses and month wise selling expenses in the form of rebate and discount. The assessee also furnished the quantitative details of goods month wise for rice, sugar, chana dal and wheat flour before the Assessing Officer. All these facts clearly go to prove the genuineness claim made by the assessee that cash deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded the findings on the basis of conjectures and surmises. The Assessing Officer has to establish the link between the evidence collected by him and the addition to be made. The entire case has to be dependent on the Rule of evidence, the assessee in this case explained the source of bank deposits are from cash sales. The Assessing Officer proceeded to disbelieve the explanation of the assessee on the presumption basis without bringing the corroborative material on record. The Assessing Officer is required to act fairly as reasonable person and not arbitrarily capriciously. The assessment should have been made based on the adequate material and it should stand on its own leg. The Assessing Officer without examining any parties to whom the goods are sold by the assessee, came to conclusion that the sales are not genuine, without even rejecting the books of account which is in our opinion is erroneous. 21. Respectfully, following the above decisions, we are inclined to allow the grounds raised by the assessee with the observation that the AO/CIT(A) cannot invoke the provisions of section 68 or 69A when the assessee is already declared the source for cash deposits in the books of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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