9911796707
TMI Blog2025 (2) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessee had enough stock of the fireworks to sale same to the customers on credit during the Diwali Festival i.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, 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 purchased goods have already inflicted with VAT/Sales Tax and the AO has not found any infirmity in the books of accounts of the assessee. Appeal filed by the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,01,31,901/-; and the AO noted that the assessee has deposited SBNs to the tune of Rs. 53,34,899/- during the demonetization period, and the AO accepted the closing cash-balance as on 08.11.2016 to the tune of Rs. 1,08,763/-; and asked the assessee to prove the nature and source of balance of Rs. 52,57,601/- the same. Pursuant to which, assessee filed audited financials, P & L A/c, balance sheet of the relevant assessment year, as well as that of earlier assessment years & subsequent assessment years, and explained to the AO that the SBNs were from sundry debtors, who purchased goods from assessee on credit viz., trade receipts/sale receipts of fireworks/crackers sold during Diwali festival on 30.10.2016. It was brought to the notice of the AO with the aid of statistics that during Diwali Festival, assessee makes maximum sales and pointed out that in this relevant AY, Diwali Festival was celebrated eight (8) days before the demonetization; and that assessee booked sales during that week [Diwali) was 30% of its total sale i.e. Rs. 92.08 lakhs (excluding Sales Tax); and that assessee's credit sales in September, 2016 was Rs. 34.41 lakhs (11%) and that assessee's credit sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts and the assessee has been regularly filing GST/VAT returns and has shown Rs. 52,57,601/- as business/trade receipts of fire crackers sold during Diwali festival on credit which has been collected by the assessee during the second week of November onwards and deposited in the bank account. It is settled position of law that when the assessee has given an explanation regarding source of the credit/currency, which is plausible/probable from a prudent persons point of view, then, it cannot be rejected by the AO without having any material to rebut the plausible explanation given by assessee. The Hon'ble Supreme Court in the case of Sreelekha Banerjee & Ors. v. CIT reported in [1963] 49 ITR 112 (SC), observed that "the department could not act unreasonably and reject that explanation to hold that it was income. If, however, the evidence was unconvincing then such rejection could be made. The department cannot by merely rejecting unreasonably a good explanation, convert good proof into no proof". In the present case, the assessee has not only explained the source of SBNs deposited in the bank to the tune of Rs. 52,57,601/- as cash sales of fireworks on-credit along wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos.27 to 28 of the Paper Book and the total comes to Rs. 44,76,555/- + closing balance as on 08.11.2016 of Rs. 8,58,344/- [total Rs. Rs. 53,34,899/-], out of which, the AO has accepted Rs. 1,08,763/-, and didn't accept Rs. 52,57,601/-, without conducting any enquiry to ascertain the veracity of the nature and source of cash deposit furnished by the assessee i.e. names & amount deposited by '12' customers/dealers. 8. Thus, it is noted that the assessee has discharged his burden to prove the nature and source of the cash deposits during the demonetization period which was nothing but receipt from trade sale of firecrackers, which cannot be brushed aside by the AO on conjectures, surmises and assumptions. We note that the addition made by the AO to the tune of Rs. 52,57,601/- u/s. 68 of the Act cannot be legally sustained, because, the same has already been accounted as sales in the books of accounts of the assessee, and tantamount to double taxation of the same income which is against the basic fundamental principles of taxation. 9. Moreover, the assessee has filed the comparative details of the sales carried out in AY 2015-16, AY 2017-18 & AY 2018-19. (i.e. earlier t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presumed that both authorities have taken adverse view because cash deposits were in SBNs after demonetization period and that assessee was ineligible to transact or receive SBNs after demonetization as per the notification dated 08.11.2016 by Government of India and concluded that since assessee has accepted the demonetized currency in violation of the said order, therefore, source explained by the assessee cannot be accepted. In other words, the AO never disputed the fact that the assessee has made sales in cash before the demonetization period and also realized amounts from debtors against cash sales made before the demonetization period. 10. We further, notes that the Central Board of Direct Taxes had issued a circular for the guidance of the Assessing Officer to verify cash deposits during demonetization period in various categories of explanation offered by the assessee and as per the circular of the CBDT, examination of business cases, very important points needs to be considered is analysis of bank accounts, analysis of cash receipts and analysis of stock registers. From the circular issued by the CBDT, it is very clear that, in a case where cash deposit found in business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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