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TMI Blog2025 (3) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciate the fact that the claimed no. of cash sales transactions of the assessee on 06.11.2016 is 471. Even with the assumptions that no other transactions were performed on that day, and that the assessee company worked round the clock, it still boils down to around 20 transactions in cash sales per hour on that day which is impracticable. 4. The Ld. CIT(A) failed to appreciate the fact that the business of assessee is a going concern. In contrast to all precedents in its business, the assessee claims to have effected cash sales of Rs. 16,77,06,483/- in the 8 days of November 2016 immediately preceding demonetization. 5. The Ld. CIT(A) failed to observe the fact that all of the claimed cash sales of jewellery had been made from 01.11.2016 to 08.11.2016. No cash sales were made prior to 01.11.2016 and a few cash sales were made during the demonetization period and none after that. 6. The Ld.CIT(A) failed to appreciate that every documents, relied on by the assessee to claim that the cash credited in books is out of sales, can be prepared as an afterthought to accommodate the cash deposits by modifying the books of accounts and making statutory filings. 7. The Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales. However, the ld.AO was not satisfied with the explanation furnished by the assessee, since the assessee had not deposited entire amount of Rs. 16.64 crores immediately on announcement of demonetisation instead the same had been deposited to bank from 09.12.2016 to 30.12.2016. Further, the AO stated that the assessee had not made any cash sales of jewellery prior to 01.11.2016 and the entire amount cash deposit of Rs. 16.64 crores in SBNs made during demonetisation period was out of cash sales only from 01.11.2016 to 08.11.2016. The AO also stated that the assessee does not have retail outlet and is only manufacturer of jewellery to sell the same to retail jewellers and hence made an addition of total cash deposits of Rs. 16,64,18,000/- to income as unexplained money u/s. 69A r.w.s. 115BBE of the Act and completed the assessment u/s. 143(3) of the Act on 23.12.2019 by holding as under: "2.6 As laid down in CIT v Durga Prasad More [(1971)] 82 ITR 540], the apparent must be considered as real until it is shown that there are reasons to believe that the apparent is not the real and the tax authorities are entitled to look at the surrounding circumstances to find out the realiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 16,77,06,483/- is brought to tax as unexplained money u/s. 69A and charged to tax u/s 115BBE of the IT Act 1961. Penalty proceedings u/s 271AAC is initiated separately. 3.0 Since the cash sales amounting to Rs. 16,77,06,483/- is bogus and fictitious, the Gross Profit admitted in the return of income for the year towards these fictitious sale is reduced. The G.P % admitted during the year is Rs. 5.47% and Gross Profit admitted on the fictitious sale is 91,73,544/-. 4.0 Total Assessed Income is computed as under: Particulars Amount in Rs. Returned Income 1,17,00,790 Less: GP Reduced on fictitious sales as discussed in para 3.0 above 91,73,544 25,27,246 Add: Addition u/s. 69A as discussed in Para 2 above 16,64,18,000 16,89,45,246 Assessed Income 16,89,45,250 4. Aggrieved by the assessment order of the AO, the assessee preferred an appeal before the ld.CIT(A). 5. Before the ld.CIT(A), the assessee reiterated that it was carrying on the business of manufacturing and trading in Gold jewellery and assessed to TNVAT Act. The assessee maintained regular books of accounts along with stock inventory. The assessee stated that they had furnished the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscussion made in earlier paragraphs has perused each and every aspect of the allegations made by the AO in his assessment order dated 23.12.2019. The undersigned has also minutely studied the explanation given by the appellant. Both these sides were tested on the mantel of the provisions of the Income Tax Act 1961 as well as the various case laws judgments delivered by the Honourable Supreme Court some of them emanating from the Madras High Court. In the totality of the case and after perusal of allegations and counter explanation the undersigned has come to the conclusion that the additions made u/s 69A of the I T Act at Rs. 16,64,18,000/- is unsustainable under the Income Tax Act 1961. Hence the appeal raised by the appellant is allowed. Aggrieved by the impugned order of the ld.CIT(A), the Revenue preferred an appeal before us. 6. The Ld.DR, assailed that the ld.CIT(A) has erred in deleting the addition made u/s. 69A r.w.s. 115BBE of the Act, even though the assessee has failed to substantiate the sales made from 01.11.2016 to 08.11.2016 without having proper infrastructure to make a retail sales. Further, the ld.DR challenged the factual finding of the ld.CIT(A) that AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld.AR also stated that the following documents were produced before the AO and that of ld.CIT(A) in support of the genuineness of the transactions carried out during the A.Y. 2017-18 including the demonetisation period in paper book Volume -I consisting of 1 to 67 pages: S. No Date Particulars Page No. 1 27.08.2018 Notice issued u/s 143(2) of the Act 01 2 19.08.2019 Notice issued u/s 142(1) of the Act 05 3 19.10.2019 Screenshots of replies filed by the respondent in response to notice issued u/s 142(1) of the Act 07 4 29.10.2019 Notice issued u/s 142(1) of the Act 08 5 07.12.2019 Screenshots of replies filed by the respondent in response to notice issued u/s 142(1) of the Act 17 6 11.11.2019 Letter issued by the Assessing officer 19 9 14.11.2019 Screenshots of replies filed by the respondent 20 10 15.11.2019 Notice issued u/s 142(1) of the Act 22 11 20.11.2019 Screenshots of replies filed by the respondent 24 12 12.12.2019 Notice issued u/s 142(1) of the Act 26 13 17.12.2019 Screenshots of replies filed by the respondent 28 14 16.12.2019 Showcause notice issued to the respondent 33 15 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Sahana Jewellery Exports Pvt Ltd. Chennai ITAT - ITA No.999/2022 (ii) DCIT vs M/s.DAR Paradise Pvt. Ltd. Chennai ITAT - ITA No.1106/2023 (iii) JCIT Vs. Tara Jewellery - Chennai ITAT - ITA No.276/2023 (iv) ITO vs Surabi Gold - Chennai ITAT - ITA No.372/2023 (vi) DCIT vs D Gem Mount - Chennai ITAT - ITA No.782/2023 (vii) DCIT vs ANS Jewellery - Chennai ITAT - ITA No.1151/2023 (viii) Sonny Fireworks Pvt ltd vs DCIT - Chennai ITAT - ITA No.1081/2024 8. We have heard both the parties, perused materials available on record, all the paper books and gone through orders of the authorities below. The fact with regard to the impugned dispute are that the assessee has deposited a sum in specified bank notes during demonetization period to the bank account. It is admitted from the records that the assessee is engaged in manufacturing and trading business of gold jewellery. The case was selected for scrutiny to verify the source for cash deposited and called for certain details. The assessee deposited cash of Rs. 16,64,18,000/-, after announcement of demonetization by Government of India on 08.11.2016. The assessee deposited cash out of sale proceeds of gold and diamond jewellery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such abnormal sales could not be achieved before the announcement of demonetization by the Government, is bereft of any concrete evidence to prove otherwise on record. Further, the reliance on the decision of the Hon'ble supreme court in the case of Durga Prasad More, is not applicable to the present facts of the case, as the assessee has furnished the documents and records which are submitted to the statutory authority like TNVAT department and discharged the taxes on monthly basis, apart from the books of accounts audited by a Chartered accountant. It is trite law that no addition could be made merely on the basis of suspicion, conjectures and surmises. Moreover, since cash generated out of sales has been credited in the books of accounts, the provisions of section 69A could not be invoked in the present case. The assessee's reliance on the coordinate bench decision in the following cases which are identical to the present facts are taken into consideration: (i) ITO, Coimbatore vs Sahana Jewellery Exports Pvt Ltd. Chennai ITAT - ITA No.999/2022 (ii) DCIT vs M/s.DAR Paradise Pvt. Ltd. Chennai ITAT - ITA No.1106/2023 (iii) JCIT Vs. Tara Jewellery - Chennai ITAT - ITA No.276/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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