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TMI Blog2024 (12) TMI 1105X X X X Extracts X X X X X X X X Extracts X X X X ..... total turnover) stands accepted for the purposes of determination of taxable income. The source of cash deposits thus are clearly attributable to cash sales. Besides, the assessee has also furnished ledger accounts of its main customers where the sales and the payment of cash to the assessee has been confirmed by the corresponding customers. CIT(A), on analysis of facts, noticed that the assessee has furnished confirmation of more than 40 parties to whom cash sales have been made. Similar cash sales and corresponding cash deposits have been demonstrated in preceding two AYs as well as subsequent AYs. Thus, the cash deposits made are in the ordinary course of carrying of business and cannot be seen with any kind of suspicion as rightly held by the CIT(A). Clearly, the factual matrix, when seen in totality, holds the sway in favour of the assessee and against the Revenue. The cash deposits thus cannot be seen by applying a different yardstick. Not only sales have been made to GST registered customer, the confirmatory letters also vouches for bonafides of transactions. AO on the one hand, assessed cash sales and on the other hand also made additions towards cash deposits resulting in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een submitted by the assessee before the Ld.CIT(A). 5. Whether on facts and circumstances of the case and in law, the Ld. CIT(A)-3, Noida has erred in allowing the appeal of the assessee despite the fact that the assessee has failed to establish any nexus between the seized cash and the sales made by the assessee in cash. 3. As per grounds of appeal Revenue has essentially challenged the reversal of additions of INR 1,46,84,779/- towards cash deposits. 4. Briefly stated, the assessee filed return of income declaring total income of INR 68,23,670/- for AY 2021-22 in question. The return filed by the assessee was subjected to scrutiny assessment under s. 143(3) of the Act. In the course of assessment proceedings, the Assessing Officer ( AO ) observed that the assessee has deposited cash of INR 1,46,84,779/- in aggregate in its HDFC Bank Account. Accordingly, the assessee was asked to furnish source of all cash deposits. The assessee furnished chart of cash deposits and explained that cash deposits have been sourced out of cash received from various debtors against sale of clothes to such customers. However, the explanation offered by the assessee towards source of cash deposit was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under:- Observation Decision 5. In the light of the above submissions and documents filed by the AR during the course of appellate proceedings and findings of the AO in the assessment order and remand reports sent by the AO, the various grounds of appeal are adjudicated as below: 5.1 Grounds of Appeal Nos. 1 to 5: In these grounds, the AR has contested that the AO made an addition of Rs. 1,46,84,779/- on account of cash deposits in the bank account of the assessee by treating the same as unexplained money u/s 68 of the Income Tax Act, 1961. The assessee is into the business of wholesale trading of clothes. The AO made the addition on account of cash deposits on the following basis: 1. The genuineness of ledger account transactions is doubtful. 2. The assessee could not furnish the confirmation from customers from whom the cash payments were received. 3. The tax invoices are self-generated and hence lack evidentiary value. 4. In some cases, hand written vouchers have been furnished. The AR in his reply during the course of appellate proceedings contended as under: 1. The assessee company sells clothes to several hundred customers spread across many states in the country. 2. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereas in the AY 2019-20, the same was at 9.77%. The AR has contended that the AO has not questioned the genuineness of purchases and other expenses, then how can the sales be questioned. A perusal of the assessment order reveals that the AO has not given any finding to the effect that the purchases, the opening stock and the closing stock of the assessee firm is questionable. The AO has reached the conclusion that the cash sales of the assessee concern are bogus and the assessee has introduced his own cash into the bank accounts. In case, the AO had any doubts regarding the cash sales being bogus, then genuine efforts should have been made to prove the purchases to be bogus as well. In the present case, no such enquiries have been done. Natural Justice It is further observed that show cause for making the said addition was issued on 15.12.2022 and the assessee filed submissions on 17.12.2022 and the assessment order was passed on 18.12.2022. It appears from above that the order was passed in a hurry and adequate opportunity of hearing was not provided to the appellant. To provide adequate natural justice to the appellant, during the appellate proceedings, the AR was directed to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has only submitted that the same should not be considered. From the above discussion, it is seen that confirmations have been filed by the appellant from more than 40 parties to whom cash sales were made. In above circumstances, it is observed that the cash sales of the assessee concern have been verified by the major debtors of the assessee. Also, the AO has accepted the purchases, expenditure and trading results of the assessee as the books of accounts have not been rejected. Once the cash sales of the assessee have been confirmed, the purchases have not been questioned by the AO, the GST returns have been filed, the AO having brought no evidence on record to prove that the cash sales are bogus, the book result have been accepted and on the contrary, the assessee has filed confirmations from the parties with whom cash transactions have been made; then considering the cash sales as bogus shall not stand the test of law. Addition u/s 68 As regards, the addition of Rs. 1,46,84,779/- u/s 68 and invoking the provision of section 115BBE is concerned, the order of the AO and the detailed sections of the assessee along with the case laws have been thoroughly perused and various case law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Delhi High Court in the case of Pr. CIT Vs Akshit Kumar in ITA No. 348 of 2019 as reported in 197 DTR 121, decided on 17th of November, 2020 and judgment of Ld. Tribunal Bench of Delhi in the case of Agsons Global P Ltd. vs. ACIT (Appeal No 3741 to 3746/Del/2019) order dated 31.10.2019 are applicable to the facts circumstances of the case and these two judgments have been relied upon by the Hon'ble Chandigarh Bench of ITAT in a detailed judgment of Ld. Tribunal Bench of ITAT in the case of Kalaneedhi Jewellers reported in (2022) 96 ITR Trib. 66 (Chd) and the following relevant paragraph from the Judgment is being reproduced as under: 10.11 In the present case also the opening stock, purchases 1200 closing stock, declared by sales and the assessee has not been doubted, the sales were made by the assessee out of the opening stock and purchases and the resultant closing stock has been accepted, the sales had not been disturbed either by the AO or by the sales tax/VAT Department and even there was no difference in the quantum figures of the stock at the time of search on 12/04/2017, therefore, the sales made by the assessee out of the existing stock were sufficient to explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished 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 furnished 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 exorbitant profits. Though certain suspicious features were noticed by the AO as well as the DDIT (Inv.), both the authorities did not find any defects in the books of accounts and trading account, P L account and the financial statements and failed to disprove the condition of the assessee. Suspicion however strong it may be, it should not be decided against the assessee without disproving the sales with tangible evidence. 7.2 In the instant case the assessee has established the sales with the bills and representing outgo of stocks. The sales were duly accounted for in the books of accounts and there were no abnormal profits. In spite of conducting the survey the AO did not find any defects in sales and the stock. Therefore, we do not find any reason to suspect the sales merely because of some routine observation of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a), Hence, we do not see any reason to interfere with the order of the Ld. CIT(A) and the same is upheld. The judgment of Ld. Tribunal Bench 'B' of Chandigarh in the case of DCIT, Central Circle-1, Ludhiana vs. M/s. Roop Fashion, Ludhiana in ITA No. 136/Chd/2021, it has been held by the Bench, as under: 9. We have considered the submissions of both the parties and material available on the record, In the present case it is not in dispute that the books of accounts maintained by the assessee in the regular course of its business were audited and accepted by the AO while framing the assessment through deep scrutiny under section143(3) of the Act. The AO did not point out any specific defect in the books of account maintained by the assessee, no inflated purchases or suppressed sales were found, In the instant case, even the Investigation Wing asked the assessee to furnish the details which were submitted, copy of which is placed at page no. 75 to 123 of the assessee's compilation, on those details, no adverse comment was made by the Investigation Wing. It is also noticed that the assessee is having cash sales in all the years which is evident from page no. 4 of the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 5. The findings of the Commissioner of Income-tax (Appeals) and the Tribunal, which are purely in the nature of the factual findings, do not require any interference and, in any event, no substantial question of law arises for our consideration. The appeal is dismissed. Further, in the judgment of Hon'ble HIGH COURT OF GUJARAT in the case of Hemant Manaharlal Shah (HUF) vs. Income Tax Officer, Ward-8 reported at [2018] 94 taxmann.com 463 (Gujarat) it has been held as under: Section 69A, read with section 147, of the Income-tax Act, 1961 - Unexplained money etc. (Agricultural income) - Assessment year 2010-11 During relevant year, assessee earned agricultural income which was exempt from tax Assessee filed its return declaring certain other taxable income Assessment was completed without taking assessee's return in scrutiny Subsequently, Assessing Officer iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no justification to treat deposits made in bank account out of cash sales to be income from undisclosed sources - Held, yes - Whether, therefore addition made under section 68 was to be deleted - Held, yes [Para 14] [In favour of assessee] Further, in the judgment of Ld. IN THE ITAT AMRITSAR BENCH in the case of Balwinder Kumar vs. Income-tax Officer reported at [2023] 151 taxmann.com 338 (Amritsar - Trib.) has held as under: Section 69A, read with section 115BBE, of the Income-tax Act, 1961 Unexplained moneys (Cash sales) - Assessment year 2017-18 - During scrutiny proceedings, assessee explained before Assessing Officer that cash deposits made in Its bank account pertained to cash sales made during demonetization period Assessing Officer being not satisfied with sald explanation treated deposits as bogus deposits Commissioner (Appeals) upheld additions made by Assessing Officer without appreciating facts It was noted that revenue authorities had accepted opening stock, closing stock, purchases, direct expenses, sundry debtors, sundry creditors, all VAT 15 returns and annual VAT 20 of assessee, without pointing any defect Further, gross profit (GP) ratio of assessee was also a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial pronouncements, the source of the deposit in the bank accounts is adequately explained being sale of the clothes and the same having been recorded in the regular books of accounts and thus, Section 68 is not applicable at all and no case has been made out that the assessee is found to be owner of money, which is not recorded in the books of accounts and rather the assessee has valid explanation that there was available cash in hand, out of the sale of clothes and in view of the various judgments discussed above invoking of Section 68 r.w.s. 115BBE by the AO is not correct. In view of the foregoing discussion and taking into consideration all the facts and the circumstances of the case, It appears that cash deposits in bank account represent the sales which the assessee has rightly offered for taxation. No defect in the trading account and the stocks of the assessee has been pinpointed by the AO. Also, confirmations for the major cash sale transactions of the assessee concern were called for and submitted by the AR during the appellate proceedings, which were shared with the AO for any comments. The AO has not commented on the said submission on merits. The AO during the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out that most of the sales are made to the regular customers registered with GST Department and the cash sales to non-regular customers are hardly INR 19.38 lakhs. The remaining cash has been collected from GST registered regular shopkeepers. It was further pointed out that the total turnover made by the assessee during the year under consideration is INR 16.95 crores out of which cash sales made to non-regular customers is barely INR 19.38 lakhs which works out @ 1.14% of the total turnover. The cash received from regular customers stand at INR 148.56 lakhs and the cash sales to non-regular customers is INR 19.38 lakhs aggregating to INR 167.94 lakhs has been utilized towards deposits in the bank. The assessee further pointed out that cash realization against the sales comes to 9.90% only. 11. The Ld. Counsel for the assessee also pointed out that while AO has assessed cash sales made out of purchases declared, the AO has separately assessed the cash deposits resulting in double taxation of the same transaction. The Ld. Counsel for the assessee vehemently contested the action of the AO and submitted that the AO has miserably failed to appreciate the facts placed before him in cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tends that the cash sales have been made to the retail shopkeepers who are holding GST registration. The accounts of the assessee are subjected to statutory audit and other audits. The book results declared by the assessee include cash sales which has given rise to the cash deposits. Significantly, the books of accounts have not been rejected. Thus, cash sales (less than 10% of the total turnover) stands accepted for the purposes of determination of taxable income. The source of cash deposits thus are clearly attributable to cash sales. Besides, the assessee has also furnished ledger accounts of its main customers where the sales and the payment of cash to the assessee has been confirmed by the corresponding customers. The Ld.CIT(A), on analysis of facts, noticed that the assessee has furnished confirmation of more than 40 parties to whom cash sales have been made. Similar cash sales and corresponding cash deposits have been demonstrated in preceding two AYs as well as subsequent AYs. Thus, the cash deposits made are in the ordinary course of carrying of business and cannot be seen with any kind of suspicion as rightly held by the Ld.CIT(A). Clearly, the factual matrix, when seen i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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