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TMI Blog2025 (1) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee had made cash deposits, totaling to Rs. 50,60,000/- in his Bank Account No.2178257000020 maintained with Canara Bank during the demonetization period. The AO issued statutory notices, requiring the assessee to furnish details concerning the sources of such cash deposits duly supported with documentary evidences. The explanation of the assessee was that the cash deposits made by the assessee were from sales made by the assessee against cash payments. The AO prepared a comparative chart of month-wise cash sales, deposits in Bank and cash in Bank for financial year 2015-16 and 2016-17, wherefrom he noticed that the total cash deposits made in the bank during the year 2016-17 had substantially increased as compared to the immediately preceding year, i.e. 2015-16. The AO worked out the average sales per day made by the assessee excluding the period 01.10.2016 to 08.11.2016, which came to Rs. 8,990.58 and applying the same ratio of sales made by the assessee during the period 01.10.2016 to 08.11.2016, he estimated the sales made by the assessee during the period 01.10.2016 to 08.11.2016 at Rs. 31,93,527/- (Rs.8,990.58 X 39 days) and added the same to the income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n its audit certificate, the tax audit report in prescribed form 3-CB is available with the Assessing Authority. Moreover, no single entries incorporated in cash book as far as cash sales or other entries are concerned has been proved by the record any justified adverse material in the Assessment order itself. The formula and findings with reasoning recorded by him in the Assessment order is imaginary based on presumption and conjecture, therefore is not liable to be relied upon. The addition of Rs. 31,93,527/- is liable to be deleted. 4. Because the case law of Supreme & High Court cited by the Assessing Authority in its Assessment order is not applicable upon the facts of the Assessee's case distinguished and may not be relied upon the facts of the assessee's case. 5. Because Written Submissions filed before National Faceless Appeal Centre has not been properly appreciated and considered by the First Appellate Authority. 6. Because Hon'ble Tribunal(s) and High Courts have delivered several judgment(s) to this effect. In case of Raj Kumar (M/s Radhika Sales Corp) Dhab Wasti Ram vs ITO 3(3), Amritsar ITA No.195/Asr/2022 it was held that "the AO has no right to cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercial Tax Department, Kanpur and that the sales and purchases declared by the assessee have also been declared in the VAT returns and that the same have also been accepted by the Commercial Tax Department. It was submitted that, thus, the AO has proceeded only on presumption and has made addition without there being any cogent evidence on record. It was prayed that the addition be deleted. 6. In response, the Ld. Sr. D.R. submitted that the Ld. First Appellate Authority has given detailed findings against the assessee and it was submitted that the circumstantial evidence was very much against the assessee inasmuch as the assessee could not justify the jump in sales during the demonetization period. It was submitted that the Ld. First Appellate Authority has rightly reached the conclusion that the assessee had deliberately increased the cash sales just prior to the demonetization period and had credited such bogus sales in the books of account in order to substantiate the source of cash deposits and also to accommodate his unaccounted/unexplained income in the books of account. While placing heavy reliance on the order of the Ld. First Appellate Authority, the ld. D.R. prayed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an accepted principle, but such probability has to be backed by some cogent evidence and the onus is squarely on the Department to establish that what is being said to be probable has proper evidence to support such claim. The Ld. First Appellate Authority, while dismissing the appeal of the assessee has also not considered this aspect. 8. In this regard, the reasoning provided by the ITAT Bangalore Bench in the case of Smt. Malapur Mounika, Chitradurga vs. ITO, Chitradurga in ITA No.599/BANG/2023, vide order dated 30.10.2023 would equally apply in the assessee's case as well. The relevant portion from the above order is reproduced below: "I have carefully considered the rival submissions. Both the AO and CITA accepted the fact that the cash receipts are nothing but sale proceeds in the business of the assessee. The addition has been made only on the basis that after demonetization, the demonetized notes could not have been accepted as valid tender. Since the sale proceeds for which cash was received from the customers was already admitted as income and if the cash deposits are added under section 68 of the Act that will amount to double taxation once as sales and again as unexp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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