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TMI Blog2024 (4) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... ed hereinabove. We also noted that the written submission raised by the assessee contesting the orders of the lower authorities has merit and there appears no ambiguity. In such a situation, we do not concur with the order of the ld.CIT(A) and thus Ground of the assessee are allowed. Application of Section 115BBE - AO on finding that the assessee was unable to satisfactorily explain the donations and the donors were fictitious persons, held that the assessee had tried to introduce unaccounted money in its books by way of donations and, therefore, the amount was to be treated as cash credit u/s. 68. Delhi High Court in the case of Keshav Social and Charitable Foundation [ 2005 (2) TMI 84 - DELHI HIGH COURT ] held that section 68 did not apply, as the assessee had disclosed such donations as its income. Hence, in this view of the matter, application of Section 115BBE, by the AO, to the amount accounted for as sales by the assessee, is illegal and deserves to be quashed. Hence, on such amount, there cannot be any applicability of Section 115BBE. Thus the additional ground raised by the assessee is allowed. - Shri Sandeep Gosain, JM And Dr Mitha Lal Meena, AM For the Assessee : Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anted by invocation of provisions of section 115BBE. The above ground is a legal ground. All relevant facts are available on record. No new facts are required to be evaluated, nor is any further enquiry needed. The provisions of law are to be applied on the facts already available on record. Reliance is placed on the following judicial pronouncement: Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. [1998] 229 ITR 383 (SC) held that ...Under section 254, the Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 11,75,000/- recorded on 08.11.2016 It appears that assessee is claiming cash sale of Rs 11,75,000 on account of announcement of demonetization Further, the sales register shows that assessee booked cash sales of Rs 1,36,56,743/- in the month of October 2016 which is 29.28%. This looks to be very high considering that only cash sales in the month of October 2016 has been considered. The claim of so much of cash sales is not acceptable due to following reasons: 1. The assessee in the e-filed response sheet has submitted that sales were made to unidentifiable persons. Thus, the assessee could not establish the identity of the customers whom sales have been made 2. During the course of assessment proceeding assessee did not produce books of accounts, invoices of cash sales, name address of the persons whom cash sales have been made Thus, the cash sales claimed by assessee in the month of October 2016 to 08.11.2016 remained unverifiable 3. The assessee did not produce cash book and sales register for the whole year due to which the sales claimed in the month October, 2016 could not be verified properly 4. The column no 11(b) of the Form 3CD requires the Auditor to furnish the list of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- and even deposited cash of Rs.52,89,500/- into bank during the period from 01.11.2106 to 08.11.2016 and showing the cash balances of Rs. 56,19,450/-as on 8.11.2106 raises the question of credibility of assessee's claim that the cash deposited in SBN notes during the period of demonetization was out of accumulated cash balances and any genuine cash sales were made during the period from 01.11.2106 to 08.11.2016 and the cash in hand of Rs.56,19,450/-was really available as on 08.11.2016 or not. 6.3 Even presuming, the claim of assessee that the cash sale of Rs.20,86,940/- was made after the declaration of demonetization but before 12.00 P.M is found to be accepted, then the assessee had to submit the details of party wise breakup of the customers to whom the sales were made cash collected during the month of Oct 2016 to 8th Nov 2016. However, the assessee had not submitted the details of party wise breakup of the customers to whom the sales were made before midnight of the 8.11.2016. Hence the claim of assessee that the source of cash deposit from cash sales could not be ascertained and accepted. 6.4 Therefore, in the case of assessee, where huge Cash was deposited in the bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipur office and eventually added a sum of Rs 25,86,000 out of cash deposit of Rs 50,57,000 at Jaipur by disbelieving the cash sales of equivalent amount. 8. The assessee firm explained the source of entire cash deposits as the cash received out of the cash sales during the period under consideration. However, ld. AO disbelieved the explanation of the assessee for the following reasons: i. Identity of the customers not provided ii. Non-production of books of accounts, sales invoices and name and address of persons to whom sales have been made iii. Non-production of cash book and sales register iv. Non-mentioning of maintenance of stock register in Audit Report 9. The cash sales are one of the common practices in jewellery sector. The assessee has been selling jewellery in cash in past also. The cash sales of the previous months, previous years and next month or years was also made on the same trend with same set of particulars. The trend of cash deposits for the previous year were submitted before ld. AO. 10. The history of cash deposits in the previous years has been admitted by ld. AO at Page-2 of his order. Screenshot of the same is as under: 11. The above data as stated by ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh sales. 18. Ld. AO disbelieved the cash sales for the reason that name and address of the buyers were not maintained by the assessee firm. It is submitted that it is not mandatory under the Income Tax Act, 1961 to collect the information related to full name, address, contact details of the customers to whom goods are sold below the prescribed limit. It is voluntary on the customers to provide their personal information to the assessee. The assessee cannot force or compel the customers to give the information. If the assessee made such attempts, it could adversely affect the business of the assessee. Therefore, due to non-availability of this information of the customers with the assessee, the sales cannot be doubted. 19. It is submitted that the sales made and utilized for depositing the demonetized currency cannot be doubted only for the reason that certain particulars were missing on the sales invoices. 20. The assessee firm maintained regular books of accounts. Books of accounts of the assessee were audited under the provisions Section 44AB of the Income Tax Act, 1961. In the audit, there were no adverse remarks of the auditor and the auditor found the underlying evidences, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales but ignored the fact that the assessee firm had submitted complete details of cash and credit sales undertaken by the assessee firm. No adverse inference has been drawn on the purchases and stock-register submitted by the assessee. 29. Assessee firm was a registered VAT dealer and all such sales had been reflected in the VAT returns (Rajasthan and Maharashtra) of the assessee. The assessee submitted the same during the assessment proceedings [Page 7 of AO Order] 30. Attention is invited towards the decision of the Hon ble ITAT, Vishakhapatnam Bench in the case of ACIT ANR vs Hirapanna Jewellers ANR (2021) 212 TTJ 117. The facts in this case are that the assessee firm was engaged in the business of trading of jewellery. During the period of post demonetisation period, it had deposited Rs. 5.72 crores (SBN) in its bank account. Out of above, Rs. 4.72 crores pertained to sales before demonetisation period. The AO, treated the sales as unexplained cash credits, as no details of sales were provided, and made addition of Rs. 4.72 crores u/s 68 r.w.s. 115BBE. Hon ble Bench held that where assessee has admitted the sales as revenue receipt, there is no case for making the addition u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein the Hon ble High Court at Para 2 of the order held as under: In these circumstances, the reason given by the Income-tax Officer for rejecting the book results shown by the assessee s accounts or for not accepting the cash transactions as genuine cannot 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 the genuineness of the transactions entered into by the assessee. The Hon ble High Court at Para 3 of the order further held as under: 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. The Hon ble High Court at Para 4 of the order finally held as under: Since, having regard to the nature of the transaction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it was stated that the assessee did not collect complete details of the customers. Thus, it is seen that the advance amount collected from customers, the sales bill raised against them etc., have been duly recorded in the books of account. The impugned deposits have been made from cash balance available with books of account. I also notice that the Assessing Officer has not rejected the books of account. When cash deposits have been made from the cash balance available in the books of account, in my view, there is no question of treating the said deposits as unexplained cash deposit as opined by the Assessing Officer. 5. The Ld A.R relied on certain case laws which are relevant to the issue under consideration. In the case of Lakshmi Rice Mills (1974) 97 ITR 258 (Patna), it has been held that, when books of account of the assessee were R.S. Diamonds India Private Limited 3 accepted by the revenue as genuine and cash balance shown therein was sufficient to cover high denomination notes held by the assessee, then the assessee was not required to prove source of receipt of said high denomination notes which were legal tender at that time. In the case of M/s. Hirapanna Jewellers (IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 278 (SC),the Apex Court while dealing with the true nature and scope of Section 68 of the Act has held that the opinion of the assessing officer for not accepting the explanation offered by the assessees as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The court further held that the opinion of the assessing officer is required to be formed objectively with reference to the material available on record. Hence, application of mind is sine qua non for forming the opinion. ii. The Apex Court in Dalgobinda Paricha v. Nimai Charan Misra, AIR 1959 SC 914 defined opinion to mean something more than mere retailing of gossip or of hearsay; it means judgment or belief, that is, a belief or a conviction resulting from what one thinks on a particular question. iii. In S.R. Bommai v. Union of India AIR 1994 SC 1918 while construing the expression if the President is satisfied under Article 356(1) the Court at para 74 held that it is not the personal whim, wish, view or opinion or the ipse dixit of the President dehors the material but a legitimate inference drawn from the material placed before him which is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said cash deposited is duly supported by the entries passed in the books of account and part of the sale accepted by the AO. ACIT Central Circle-1 vs. Shri Mahendra Kumar Agarwal ITA No. 172/JP/2022 [CLC 120-176] We agree with the findings of ld.CIT(A) that the AO has not brought any material on record to establish that the sale bills are bogus nor any evidence indicating that such sales was bogus and merely having some doubt by twisting the data and giving some findings which are not alone sufficient to justify the addition the income so assessed in not tenable in the eye of law. In fact, the AO neither found any concrete and conclusive evidence of back dating of the entries of sales, evidence of bogus sales, evidence of bogus purchases, and non-existing cash balance in the books of account. The AO did not even reject the books of accounts of the appellant under the provision of section 145(3) of the Act. Therefore, the contention of the revenue on the facts and circumstances of the case is not accepted and we see no reason to interfere in the order of the ld. CIT(A). Thus, we sustain the order of the ld. CIT (A) with the observations above. The appeal of the revenue stands dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eory of human probabilities would only arise when the evidences are controverted by the lower authorities, which is not done in the present case. d. A. Rajendran [2011] 198 taxman 509 (Delhi)[Page 9 , AO Order] i. In the above decision, being in favor of the assessee, Hon ble High Court has held that the reasons which entered the mind of the authorities to reject the explanation offered by the assessee in each case and in the context of the case laws referred above, we have no doubt at all that the explanation offered by the assessee in each case has been arbitrarily and unreasonably rejected. All the reasons we have no doubt at all, are in realm of surmises, conjectures and suspicions, which approach stands totally prohibited by the decided case laws referred to above. ii. It is important to note that decisions of Hon ble Supreme Court in the case of Durga Prasad More [1971] 82 ITR 540 (SC) and Sumati Dayal [1995] 80 Taxmann 89 (SC)have also been referred in the said case. However, Hon ble Court has held that such decisions have been delivered in different set of facts and circumstances and are not applicable to the present case. iii. In the light of the above, above decision does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were treated as undisclosed income. ii. In the present case, the purchases made are well before the period of demonetization and subsequently, the transaction of sale has been carried out. There is no case of advance received by the assessee. Therefore, the facts of above-mentioned decision are clearly different from the present case. h. Pradip Kumar Loyalka [1997] 63 ITD 87 (Pat.)[Page 9, AO Order] The above decision was pronounced in different set of facts. The facts are that the assessee received certain amount of gifts, for which no returns of gift were filed. In the present case, the sales are added as income u/s 68. It is important to note that sales are already offered for taxation and such sales are not disturbed. i. R.S. Rathore [1996] 86 taxman 20 (Raj.)[Page 10, AO Order] The above decision of Jurisdictional High Court is totally based on different facts. The said decision was delivered in respect of certain investments made in a company and the money was borrowed for the said investment. In the present case, the set of facts are totally different. Sales which are already offered for taxation are doubted and that too without bringing on record any iota of evidence whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 50,64,931 Mumbai 2,73,519 5,00,940 5,54,519 Total 37,53,990 20,86,940 56,19,450 The cash deposits of Rs 52,89,500 were out of the cash balances in the books of accounts indicated by the assessee hereinabove. It is also noted that AO accepted the cash deposited of Rs 2,32,500 shown in respect of Mumbai Branch. However, he doubted the remaining cash deposits of Rs 50,57,000 (52,89,500-2,32,500) in respect of Jaipur office and eventually added a sum of Rs 25,86,000 out of cash deposit of Rs 50,57,000 at Jaipur by disbelieving the cash sales of equivalent amount. The assessee firm explained the source of entire cash deposits as the cash received out of the cash sales during the period under consideration. However, ld. AO disbelieved the explanation of the assessee for the following reasons: 1. Identity of the customers not provided 2. Non-production of books of accounts, sales invoices and name and address of persons to whom sales have been made 3. Non-production of cash book and sales register 4. Non-mentioning of maintenance of stock register in Audit Report It is seen that the cash sales are one of the common practices in jewellery sector. The assessee has been selling jewellery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities to doubt the sales. No deficiency is pointed out in duly maintained books and adequately supported business transactions. It is submitted by the ld. AR of the assessee that law nowhere prohibits cash sales. The assessee firm by selling the jewellery in cash did not violate any of the provisions of the Income Tax Act, 1961. It is submitted that ld. AO has not mentioned any provisions of the Act/ Rules having been violated by the assessee firm while undertaking such cash sales. It is noted that AO disbelieved the cash sales for the reason that name and address of the buyers were not maintained by the assessee firm for which the ld. AR of the assessee submitted that it is not mandatory under the Income Tax Act, 1961 to collect the information related to full name, address, contact details of the customers to whom goods are sold below the prescribed limit. It is voluntary on the customers to provide their personal information to the assessee. The assessee cannot force or compel the customers to give the information. If the assessee made such attempts, it could adversely affect the business of the assessee. Therefore, due to non-availability of this information of the custome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails were submitted before AO by the assessee which are undisputed[PB 61,84]: DETAIL OF G.P. N.P. CHART FOR LAST THREE YEARS FINANCIAL YEAR TURN OVER GROSS PROFIT NET PROFIT G.P. RATE 2014-15 43,349,255.01 10,146,305.13 (5,535,714.14) 23.41% 2015-16 43,277,885.98 11,234,298.31 (1,089,591.92) 25.96% 2016-17 46,641,222 41 12,308,060.28 (1,068,144.16) 26.39% The sales and profit figures in absolute terms are in rising pattern and the cash so deposited out of the cash sales are already included in the turnover of the year under consideration. It is also noted that AO emphasized on non-submission of party wise details of sales but ignored the fact that the assessee firm had submitted complete details of cash and credit sales undertaken by the assessee firm. No adverse inference has been drawn on the purchases and stock-register submitted by the assessee. Assessee firm was a registered VAT dealer and all such sales had been reflected in the VAT returns (Rajasthan and Maharashtra) of the assessee. The assessee submitted the same during the assessment proceedings [Page 7 of AO Order]. During the course of hearing, the ld. AR of the assessee submitted various case laws whose details menti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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