9911796707
TMI Blog2025 (2) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... f income (RoI) for AY 2017-18 on 06.11.2017 admitting total income of Rs. 3,01,31,901/-; and the Rol was later selected for complete scrutiny and the AO noted that during the year assessee had deposited SBNs of Rs. 53,34,899/- after 08.11.2016 (demonetization period). So, the AO asked the assessee to explain the nature and source of the cash/SBN's deposited; and the assessee explained that out of the said amount Rs. 8,58,344/- was cash balance available in cash-book as on 08.11.2016 and the balance of Rs. 44,76,555/- was received from the debtors who had purchased the fireworks on credit-basis during Diwali festival that was celebrated Pan- India on 30.10.2016 in the relevant year. The AO verified and accepted Rs. 1,08,763/- (cash-in-hand) as on 08.11.2016, which he accepted. But In respect of balance amount of Rs. 52,57,601/-, even though the assessee filed the name/details of the customers/debtors from whom assessee retrieved the sale-receipts and also filed the financials (P & L A/c, audited books, balance sheet and other details); which facts the AO acknowledged that the assessee had furnished the list of debtors from whom the collections have been received, but found fault ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay) for sale of firecrackers, whereas, we find that assessee had sufficient stock for making the sale in the last week of October, 2016; and it is not the case of the AO that assessee had any other source of income other than the business income from sale of firecrackers. Thus, it is noted that assessee's total sale of firecrackers during the year under consideration is to the tune of Rs. 26,11,94,207/- which included the Impugned cash deposited/sale of Rs. 52,57,601/-. In other words, the profit derived from the total sales of Rs. 26,11,94,207/- includes cash sales of Rs. 52,57,601/-, which was shown as total income for the purpose of Income Tax and the assessee has paid taxes on the said income. And we note that assessee has been regularly filing GST/VAT returns and has filed the relevant details. [CST sales Rs. 15,71,91,043/-, as per CST order Rs. 15,71,91,043/-]; [TNGST TN Sales Rs. 10,40,03,164/-, as per VAT returns Rs. 10,40,03,164/-] [ie total Rs. 26,11,94,207/-]. In the light of the discussion (supra), it can be safely inferred that the profits embedded in Rs. 26,11,94,207/- has been accepted by the AO. However, the AO has made separate addition of Rs. 52,57,601/- which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghout India and has given the dealers/distributors name, city, amount & PAN except '01' person i.e. of M/s.Behal Trading Company, Delhi, whose ledger extracts as well as confirmation has been filed [refer Page Nos.45 & 53 of the Paper Book]. Out of 12 persons, once PAN of the trader/distributors (eleven PANs) have been given, it takes only a click of the mouse to find out the address as well as the return details filed by that person. Therefore, it is presumed that once assessee filed all these details before the AO and the AO have not found any adverse material against them, the action of the AO to have rejected the same/relevant- evidences can't be countenanced. Thus, it is noted that assessee has placed before the AO the primary facts to prove the nature and source of SBNs, which has not been found by him to be incorrect or false. Therefore, the action of the AO to make addition u/s. 68 of the Act, is not acceptable for the aforesaid reasons and stated (infra). 7. And as noted, the AO has not found any infirmity in the details filed by assessee to prove the nature & source of SBN's (supra) rather it is noted that the AO had acknowledged that assessee had filed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessee's bank account. The details of cash deposits into bank in earlier and subsequent Financial Years reveals that there is no much deviation of cash sales and cash deposits when compared to earlier Financial Year and demonetization period. It is also not in dispute that in this line of business, the majority of the sales is in cash during festivals, marriages, etc., and therefore, from the business model of the assessee and the trade practice, there is no doubt whatsoever with regard to the explanation offered by the assessee that it has collected cash from debtors towards sales made in cash before demonetization period. Further, it is noted that the assessee has also regularly filing GST/VAT returns and there is also being no change or deviation in the VAT returns filed for the period i.e. before the announcement of demonetization. And note that the assessee also declared sales made in cash in their books of accounts and filed necessary return of income and paid tax of the said income. Moreover, we note that the assessee has also made cash deposits regularly before and during demonetization period and therefore, it is not a case of amount deposited in SBNs as come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough the analysis furnished by the assessee in respect of total sales, cash sales realization from debtors and cash deposits during financial year 2015-16 & 2016-17, there is no significant change in cash deposits during demonetization period. Therefore, we are of the considered view that when there is no significant change in cash deposits during demonetization period, then merely for the reason that the assessee has accepted specified bank notes in violation of circulation/notification issued by Government of India and RBI, the source explained for cash deposits cannot be countenanced. 11. We also note from the financials filed by the assessee that assessee had enough stock of the fireworks to sale same to the customers on credit during the Diwali Festival l.e. 30.10.2016. Thus, we find that the assessee had sufficient stock as on 30.10.2016 (Diwali period) for sale of the goods which generated amount of Rs. 53,34,899/- (out of which, the AO accepted Rs. 1,08,763/-) to be deposited during the demonetization period and there are no defects in the stock registers. Every purchase and sale matches with inflow and outflow of the stock and as assessee has placed on record that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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