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TMI Blog2025 (2) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... spicious nature such as making sales of 270 bills in the span of 4 hours, non availability of KYC documents for sales, non writing of tag of the jewellery to the sale bills, non-availability of CCTV footage for huge rush of public etc., were not found to be good enough to make addition u/s 68.
Also, the contention of the assessee that due to demonetization, the public became panic and the cash available with them in old denomination notes becomes illegal from 09.11.2016 and made the investment in jewellery, thereby thronged the jewellery shops appear to be reasonable, and deserved due consideration, as done by the Ld. CIT(A). Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ir Kumar Sharma (HUF)([2014] 46 taxmann.com 340) against which SLP was dismissed by the Hon'ble Supreme Court, wherein it was held that since assessee had failed to give list of persons who advanced cash to him along with their confirmation in respect of said cash credits, addition made by Assessing Officer under section 68 was to be confirmed." 3. Ld. DR has primarily relied the findings of Ld. AO while ld AR has relied the findings of CIT(A) and has further relied the decision of coordinate bench in the case of Manuvel Malabar Jewelers (P) Ltd. ITA 1011/Del/2022 order dated 18.08.23, to contend that the facts and circumstances are similar and the appeal of revenue was dismissed. 4. We find that the Assessing Officer treated part of the cash sales claimed to have been made by the appellant in the night of 8th November 2016 (the day of announcement of demonetization) as unexplained cash credit in his books u/s 68 and added Rs. 3,06,92,049/ in its income. The AO in his order has stated that appellant has claimed cash sale of Rs. 3,24,71,745/- on 8th November from 8 pm to midnight (the "window period" after the announcement of demonetization to the midnight when specified bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has further claimed that the shop has multiple billing points and has record of successfully handling huge crowds (like on Dhanteras). The assessee also claimed that issuing 195 invoices on 8th November was not impossible for him considering the past records. He further stated that all the contentious invoices of sales were submitted to AO and no doubts on genuineness of any invoice were raised by him. 7. The CIT(A) was satisfied with the plea and allowed the appeal with following observations and findings; "After careful perusal of the submissions of the appellant I find that catering of 175 customers in the window period of 3 to 4 hrs with multiple billing points is not impossible specially when the customers came to the shop with a mindset to buy jewellery or gold and to get rid of SBNs which were becoming illegal after midnight. 9.3 With regard to details of customers who bought the jewellery, the appellant stated that PAN of customers, buying goods for less than Rs. 2 Lakhs, were not collected by him as it was neither legally mandatory nor practically advisable/possible. The appellant cannot be expected to do things which are legally not mandated. I find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." 8. We have considered the submissions and perused the material placed on record. In the instant case, the assessee has admitted the receipts as sales and offered for taxation. The assessing officer made the addition u/s 68 as unexplained cash credit of the same amount which was accounted in the books as sales. In this regard, it is worthwhile to look into section 68 which reads as under: "68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year." 9. This section 68, of the Act provides that the sum found credited in the books of accounts for which the assessee offers no explanation, the said sum is deemed to be income of the assessee. The explanation from a business entity should be on the basis of facts supported by some evidences which will establish that in due course of business, such income could have been generated by the assessee. It is not a case of survey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee are required to see in the light of 'Human Probability laid down by the Hon'ble Supreme Court." 11. Now to every purchase increases the stock and every sale decreases the stock. We find that auditors mentioned assessee was maintaining the aforesaid mentioned six set of books. However, the assessing officer has not examined them show any defect or inconsistency. Especially with regard to the purchases vouchers the assessing officer should have made some attempt to examine them and show that as the stock register is not maintained the purchaser vouchers reveal a different picture than as canvassed by assessee for the sales and cash book. To disbelieve the sales either the assessee should not have the sufficient stocks in their possession or there must be defects in the stock registers/ stocks. This was very much possible to be established by examination of whatever books assessee had made available. Merely for no maintaining stock register, a suspicious circumstance to say that assessee has failed to discharge the onus of cash sales supported by invoices. Without showing defect in the purchases and sales AO cannot allege that inflow and the outflow of stock may not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the hands of the assessee. If the balance at hand on the relevant date is sufficient to cover the value of the high denomination notes subsequently demonetised and even more, in the absence of any finding that the books of account of the assessee were not genuine, the source of income is well disclosed and it cannot amount to any secreted profits within the meaning of the law." 15. The reasons to suspect the sales merely because of some routine observation of suspicious nature such as making sales of 270 bills in the span of 4 hours, non availability of KYC documents for sales, non writing of tag of the jewellery to the sale bills, non-availability of CCTV footage for huge rush of public etc., were not found to be good enough to make addition u/s 68 of the Act, in ACIT Vs Hirapanna Jewellers (ITAT Visakhapatnam), I.T.A.No. 253/Viz/2020 order dated 12/05/2021. Also, the contention of the assessee that due to demonetization, the public became panic and the cash available with them in old denomination notes becomes illegal from 09.11.2016 and made the investment in jewellery, thereby thronged the jewellery shops appear to be reasonable, and deserved due consideration, as done by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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