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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 ..... alance in the books of account. Moreover, no deficiency has been pointed out by the AO in the books of account nor has the availability of stock been doubted. Thus, the AO has, on the one hand, accepted the sales and purchases declared by the assessee and, on the other hand, has made addition on account of bogus sales made out of books of account and deposited in the Bank account during the period of demonetization. Undoubtedly, there has been a substantial jump in the turnover during the period of demonetization, but without there being any evidence to justify the claim of the AO that such jump in turnover was due to bogus sales having been created in the books, such claim remains a mere presumption. Although the principle of preponderance of probability is 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. AO was legally not entitled to calculate sales on a hypothetical basis completely ignoring v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee under section 68 of the Act. The AO, accordingly, computed the income of the assessee as under: Total income as per ITR : Rs.02,36,130/- Addition u/s. 68 : Rs.31,93,527/- Total assessed income : Rs.34,29,657/- Rounded off at : Rs.34,29,660/- 3. Aggrieved by the order passed by the AO, the Assessee preferred an appeal before NFAC. However, the appeal before the NFAC came to be dismissed by the Ld. First Appellate Authority. 4. Now, the Assessee has approached this Tribunal challenging the impugned order of the NFAC by raising the following grounds of appeal: 1. Because on proper consideration of facts and circumstances of the case an addition of Rs. 31,93,527/- as unexplained cash credit into the total income of the Assessee assuming the cash sales during demonetization period as bogus sales is highly arbitrary, unjustified, unwarranted, reason assigned is neither factually correct nor justified, no relations with the determination of impugned bogus sales and facts explanations submitted in response to show cause notice has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 calculate sales on hypothetical basis ignoring the evidence submitted during the course of assessment proceedings in the form of VAT return, purchase bills and quantitative details. Once the amount is declared as turn over cannot be called concealed income and be taxed doubly on same amount . 7. Because in any case and under all the facts and circumstances of the case an addition of Rs. 31,93,527/- as unexplained cash credit in the Books of the Assessee's firm is neither factually correct nor justified, therefore is liable to be deleted. 8. That under the facts, explanations submitted in response to the show cause notice the Assessing Authority has neither correctly nor properly appreciated the facts and explanations. All the assumptions are based upon presumptions and conjectures. Irrelevant and unjustified reasons has been recorded by him regarding treating the cash sales as bogus sales amounting to Rs. 35,44,160/-. The addition amounting to Rs. 31,93,527/- determining Unexplained Cash Credit U/s 69A of I.T. Act, 1961 is factually and actually not justified, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . While placing heavy reliance on the order of the Ld. First Appellate Authority, the ld. D.R. prayed that the appeal of the assessee be dismissed. 7. I have heard the rival contentions and have also perused the material on record. It is undisputed that the assessee has been maintaining regular books of account, which have been duly audited. It is also undisputed that the assessee has submitted responses to various queries raised by the AO during the course of assessment proceedings. It is also evident from a perusal of the assessment order that the AO has not rejected the books of account and has accepted the quantum of sales and purchases declared by the assessee in his return of income. It is also undisputed that the amount of sales and purchases tally with the returns filed with the Commercial Tax Department and nothing adverse has been pointed out by the Commercial Tax Department also in this regard. However, the AO was of the view that the assessee had inflated cash sales even prior to the declaration of the demonetization and had introduced bogus sales and had deposited cash so generated in the books of account to account for his unaccounted money, which was otherwise lying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 68 of the Act that will amount to double taxation once as sales and again as unexplained cash credit which is against the principles of taxation. It is also on record that the assessee was having only one source of income from trading in beedi, tea power and pan masala and therefore provisions of section 115BBE of the Act will have no application so as to treat the income of the assessee as income from other sources. Hon'ble Kolkata Tribunal in the case of CIT Vs. Associated Transport Pvt. Ltd. reported in 84 Taxman 146 on identical facts took the view that when cash sales are admitted and income from sales are declared as income, wherein the Hon'ble Tribunal found that the assessee had sufficient cash in hand in the books of account of the assessee, that there was no reason to treat the cash deposits as income from undisclosed sources. The Hon'ble Vishakapatnam Tribunal in the case of ACIT Vs. Hirapanna Jewelers in ITA No. 253/Viz/2020 on identical facts held that when cash receipts represent the sales which the assessee has offered for taxation and when trading account shows sufficient stock to effect the sales and when no defects are pointed out in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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