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TMI Blog2024 (12) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... material, the AO ought not to have made addition merely on the basis of suspicion that the amount was deposited in cash by the assessee. Assessee appeal allowed. - Shri Kul Bharat, Judicial Member For the Appellant : Shri Navjot Ahuja, Adv. For the Respondent : Shri Siddharth B.S.Meena, Sr. DR ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee is directed against the order passed by Ld.CIT(A), National Faceless Appeal Centre ( NFAC ), Delhi dated 30.03.2024 for the assessment year 2017-18. 2. The assessee has raised following grounds of appeal:- 1. That the Ld. CIT (A) NFAC erred in law and facts in confirming the addition of Rs. 8,90,000/- made by the AO u/s 69A r.w.s 115BBE on account of cash deposited in bank during demonetization period by not considering the submissions filed and decisions relied on by the appellant in proper perspective, without appreciating the facts of the case and without assigning proper reasons and justification. 2. That having regard to the facts and circumstances of the case, the Ld. CIT (A) NFAC erred in sustaining the addition of Rs. 8,90,000/- when the source of cash deposited during demonetization was from cash in hand as on 08.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pat. The nature of the business of the assessee is manufacturing of bricks. Cash sales and corresponding Cash deposit into assessee's Cash Credit (C/c) a/c No. 6174010000360 with Oriental Bank of Commerce has been a regular feature of the business of the assessee. 2. The assessee had filed its return of income, declaring total income of Rs 4,25,980/- on 02.11.2017.The case of the assessee was taken up for re-assessment to verify the source of cash deposit of Rs 10,90,000/- during demonetization period in his aforesaid C/c account. The AO finalized the case by making an impugned addition of Rs 8,90,000 out of Rs 10,90,000 for the amount deposited in bank during demonetization period as unexplained u/s 69A r.w.s. 115 BBE of the act. 3. Aggrieved against this, the assessee preferred appeal before the Ld.CIT (A), who sustained the addition made by the AO. 4. Aggrieved against the order of Ld.CIT (A), the assessee preferred this appeal before the Hon'ble Income Tax Appellate Tribunal. 5. Hon'ble Sir, respectfully it is submitted before your honour that addition u/s 69A of the Act made by the AO which is sustained by the Ld CIT(A) cannot be made in respect of cash deposits re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the cash deposited in the earlier years were higher or lower the important fact to consider here is that the cash sales and depositing the corresponding cash to bank are being regularly made by the assessee as per prevailing business practice and the same is part and parcel of the assessee's normal business. 7.1 In this regard your honour's kind attention is invited to Page 82 of Paperbook which is the Comparative table of Cash Sales for the FY 2014-15 to FY 2017-18 and also at Page 83 of Paperbook which is Comparative table of Cash Deposit for the FY 2014-15 to FY 2017- 18 which demonstrates regular and prevailing practice of depositing cash to the bank in earlier assessment years as well as succeeding assessment years. 8. Hon'ble Sir, the entire cash deposits made during the demonetization period, into the C/c bank account were sourced Out of the Closing Cash in hand balance of Rs 12,09,023/- available as of November 8, 2016. This balance is duly recorded in the cash book, as per page 58 of the paper book. 8.1 All relevant documents as requisite by the AO, including the Cash Book, Sales Register, Cash Sale invoices, Cash expense vouchers, Bank statement, Audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment Year 2017-18), pronounced on 27.02.2024. In this decision Hon'ble members held that 'The audited books of accounts of the assessee has not been rejected and the sales of the assessee has not been disturbed, then the Revenue Authorities are precluded from making any addition'. (Ref. Page 20-27 of J-PB) The decisions cited supra suggest that once, the assessing officer accepts the books of a/c the entries in the books of a/c are matched, there is no case for making the addition as unexplained. 9. Hon'ble Sir, during the Financial year 2016-17, a total of Rs. 22,40,000/- was deposited into the bank. Out of this total, Rs. 13,50,000/- (i.e. Rs. 22,40,000 minus Rs 8,90,000) was accepted by both the AO and the Ld CIT(A) as business turnover for the pre-demonetization and post-demonetization periods, additionally, a partial cash deposit of Rs. 2,00,000/- made on November 10, 2016, during the demonetization period, was also recognized as business turnover. However, the remaining cash deposit of Rs. 8, 90,000/- made during the demonetization period was treated as unexplained, despite there being no adverse findings related to purchases and stock. i) Pre-demonetizati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the principles of taxation. 11.1 Reliance is placed on the various judgments on the issue and the gist of a few judgments is reproduced below: 1. CIT vs. Kailash Jewellery House (ITA No. 613/2010): The Hon'ble Delhi High Court pronounced on April 09, 2010, the cash deposited out of sales cannot be treated as income u/s 68 of the Act once the sales are not disputed by the revenue. (Ref Page 32 of J-PB) 2. Ramesh Kochar v. ITO (ITA No. 171/Del/2022): The Delhi ITAT SMC Bench, pronounced on April 26, 2022, that if sales have already been accepted as revenue receipts, they cannot be added again as income. This decision underscores that once a revenue receipt is acknowledged, it should not be subjected to double taxation by reclassifying it as income. (Ref. Page 33-45 of J-PB) 3. Jaspreet Kaur v. ITO (ITA No.13/Del/2024): In a recent ruling dated August 8, 2024, the coordinate bench of ITAT Bench C , New Delhi addressed a similar matter, adhering to the principle that sales, once recognized as revenue, should not be added again as income. (Ref. Page 46-50 of J-PB) 4. Anantpur Kalpana v. ITO (ITA No. 541/Bang/2021) AY 2017-18: ITAT Bangalore pronounced on December 13, 2021. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok. b) The AO accepted the cash sales reported by the assessee for September and October 2016 in their entirety without pointing any defect in Cashbook, Sales Register and Cash Invoices. c) The Cash expenses, supported by Cash vouchers, were provided to the AO. Despite this, the AO hypothetically estimated expenses amounting to Rs 4,22,655. There is no whisper in the order regarding the utilization of this estimated amount. d) The cash balance of Rs 12,09,023/- as of November 8, 2016, derived from documentary evidence, matches exactly with the amount recorded in the Cash Book. 15. Regarding the deposits made in parts, it was submitted during the assessment proceedings, as detailed in the submission dated March 14, 2022 (refer to Para 13, page 4 of the Reply Book, which is placed at Page 96 of the Paperbook), that the banks were overcrowded with long queues. To ensure the safety of the funds, it was necessary for the assessee to make deposits in installments within the time period permitted by the Competent Authority. 15.1 In this context, reliance is placed on the judgment delivered by the Hon'ble ITAT, Delhi Bench SMC , New Delhi in the case of Tilak Raj Anand v. ITO (ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee 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 detailed findings of the Ld. CIT(A), we do not see any reason to disturb the same. Accordingly, ground raised by the Revenue is dismissed . (Ref. Page 93-123 of J-PB) 17. As regards not mentioning name and addresses of purchaser on Cash bills, it is submitted that entire cash bills issued during the FY 2016-17 were within the range of Rs 9,500/- to Rs 19,854/-. Entire bills irrespective of cash bills or credit bills; were issued in an ascending Chronological Series. Further, there is no requirement under section 139A r.w. rule 114B to mention the name and identity of the purchasers where the sales do not exceed Rs. 2 lakhs, and in the case of assessee, the cash sale bill never exceeded even Rs 20000/-. No specific defect in books of accounts which were duly audited by Chartered Accountant was noticed by the AO. Books of accounts were not rejected u/s 145(3) by the AO. Book results were duly accepted without disturbing Sales, Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting to INR 10,90,000/- in the Oriental Bank of Commerce. He submitted that closing balance of INR 13,65,737.93 as per bank statement is tallied with the bank balance shown in the Income Tax Return and audited balance sheet as on 31.03.2017. The entire cash sales by the assessee is duly recorded. It was further contended that the assessee has demonstrated the cash sales for the past years and the addition has been made purely on the basis of presumption. Considering the material placed before me, the Revenue has not brought any adverse material controverting the contention of the assessee that the amount so deposited was out of cash sales. The accounts of the assessee are audited. In my considered view, the Revenue ought to have brought some adverse material against the assessee. Admittedly, it is the case of the assessee that the assessee has made cash sales and books of accounts are audited. The Revenue has not rejected the accounts and sales have been accepted. The Assessing Authority ought to have verified the correctness of the claim of the assessee by verifying the stocks of the assessee if there was no mis-match between the sales and purchases, no addition would be called ..... X X X X Extracts X X X X X X X X Extracts X X X X
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