9911796707
TMI Blog2024 (7) TMI 1602X X X X Extracts X X X X X X X X Extracts X X X X ..... admitting total income of Rs. 29,74,010/-, which was processed u/s. 143(1) of the Act; and later, selected for complete scrutiny. The AO noted that during the year assessee had deposited SBNs of Rs. 3,09,37,567/- 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 the same/SBN's were received/deposited by his customers who had purchased the fireworks on credit during the Diwali festival (i.e. on 30.10.2016 in the relevant year). Further, the assessee also filed the name/details of the customers and also filed the financials (P & L A/c, audited books, balance sheet and other details), from which, the AO acknowledged that assessee had furnished the details of 773 customers/cash depositors; but according to the AO since failed to submit the PAN of 379 depositors and didn't file complete address/e-mail IDs, explaining the source of the payment, he was pleased to hold that the SBN deposits to tune of Rs. Rs. 3,09,37,567/- needs to be added u/s. 68 of the Act because the Central Government has declared that the SBNs ceased to be legal tender w.e.f. 09th No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs. 29,74,010/- 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. 6,55,37,435/- which included the cash deposited/ sale of Rs. 3,09,37,567/-. In other words, the profit derived from the total sales of Rs. 6,55,37,435/- includes cash sales of Rs. 3,09,37,567/-, 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 before the AO. In the light of the discussion (supra), it can be safely inferred that the profits embedded in Rs. 6,55,37,435/- has been accepted by the AO. However, the AO has made separate addition of Rs. 3,09,37,567/- which has already been considered for the purpose of Income Tax by adding the entire cash/SBNs which was sales of Rs. 3,09,37,567/- u/s. 68 of the Act by alleging it to be unaccounted income of the assessee. It is settled position of law that when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 customers/dealers, which included relevant details of customers:- i) PAN details of 394 customers. ii) VAT/Sales Tax of customers numbering 223 iii) Address of 156 unregistered 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. 3,09,37,567/- 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. It is true that u/s. 68 of the Act, when the AO find any sum credited in the books of the assessee and no explanation was given by assessee about the nature and source thereof, or the explanation offered by the assessee is not in the opinion of the AO satisfactory, then the sums credited may be charged to Income Tax as the income of the assessee. In this case, we f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 out of undisclosed source or under any circumstances only to change colour of the money. From the details filed by the assessee, it is evident that during the month of Diwali festival, assessee used to have the maximum sale made (on credit). From the analysis of earlier or subsequent years reveal that there is no significant change in the pattern of cash sales/cash collection and cash deposit during demonetization period. The AO is not disputing the claim of the assessee that the nature and source of the deposits were from sale of firecrackers to 773 customers whose details were furnished by the assessee. The AO has made addition towards cash deposits in SBNs after demonetization period only for the reason that assessee was not eligible to transact or receive SBNs after demonetization as per the notification dated 08.11.2016 by Government of India and concluded since assessee has accepted the demonetized currency in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to verify the explanation offered by the assessee with regard to realization of debtors where said debtors were outstanding in the previous year or credited during the year etc. Therefore, from the circular issued by the CBDT, it is very clear that, while making additions towards cash deposits in demonetized currency, the Assessing Officer needs to analyze the business model of the assessee, its books of account and analysis of sales etc. In this case, we have gone through 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. 13. It is noted that the assessee has given all the financials for the earlier years and subsequent years and the chart supra sho ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
