9911796707
TMI Blog2025 (3) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... without finding out any specific defects in books of account and also without rebutting the evidences produced is unjustified and be deleted. CIT(A) has committed gross error in not accepting the cash generated out of sales made by the assessee on 08/11/2016 as genuine when he himself has accepted the part sales made which is also supported by the same bills which have not been accepted for confirming the addition. Accordingly, we hereby direct to delete the addition upheld by the Ld. CIT(A) u/s 68 of the Act. The ground of appeal No. 2 is allowed. Addition on account of under valuation of stock towards the stock which has not been sold - We find that this addition is made solely for the reason that the cash deposited during the demonetization period was held as undisclosed income of the assessee and not generated out of the cash sale claimed by the assessee. Since while dealing the assessee's ground of appeal No. 2 above, we have already held the sales made on 08/11/2016 as genuine and deleted the additions made of the cash deposited in SBN during the demonetization thus there is no reason for making the addition by holding the cost of goods out of such sale as unexplained. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Income Tax (Appeal), National Faceless Appeal Centre (NFAC), Delhi erred in law and fact in upheld the addition of Rs. 23,99,550/- on account of under valuation of stock. 4. That the Appellant craves leave to add/alter any/all grounds of appeal before at the time of hearing of the appeal." 5. Before us, the Ld. AR of the assessee submitted that during the year under appeal assessee has made trading of diamond jewellery on retail basis. The assessee has maintained regular books of account which were duly audited and no defect whatsoever was pointed out by the auditor. During the course of hearing before the AO, assessee has filed every details as asked from time to time and the AO has not pointed out any defect in the details so submitted nor has doubted the genuineness of books of account produced before him. The trading results declared by the assessee were accepted which are progressive in nature. Ld. AR further submitted that when books of accounts have been accepted and the sales have not been doubted, the cash deposit out of the said sales could not be held as unexplained. Ld. AR argued that when sales have already been offered for tax, the cash generated out of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nwala Jewellers Vs. ITO in ITA No. 1540/Del/2022 vide order dt. 27/03/2023 7. On the other hand, the Ld. Sr. DR vehemently supported the orders of the lower authorities and stated that the AO has made analysis of the cash deposited and sales made by the assessee during the year under appeal and immediately preceding year. He further submitted that the assessee has declared sales of Rs. 1,23,58,411/- just after the demonetization announced by the Hon'ble PM on 08/11/2016 which is nothing but a story concocted by the assessee to prove the source of cash deposited into bank in SBN during demonetization. He further stated that ld. CIT(A) has already allowed substantial relief to the assessee and, therefore, the ld. CIT(A) was very much reasonable in confirming the addition of Rs. 85.00 lacs which orders deserves to be upheld. 8. We have heard the rival submissions and perused the materials available on record. In the instant case, the books of accounts of the assessee are subject to audit and from the perusal of the financial statement, we find that neither the auditor has pointed out any deficiency in the maintenance of the books of accounts nor the Assessing Officer has pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 11. From the perusal of the provisions of section 68 of the Act it is very clear that assessing officer can make addition u/s 68 only under two circumstances, i.e. (i) Appellant does not offer any explanation about nature and source of such credit; or (ii) Explanation offered by Appellant is not upto the satisfaction of Ld. AO. 12. In other words, whenever Appellant provides explanation, before rejecting the same ld. AO has to record dissatisfaction as to why the explanation furnished by Appellant is not acceptable. As is evident that assessee not only offered explanation regarding nature and source of such credits but also substantiated the same with documentary evidences in the shape of Audited Financial Statements, Stock Register and Cash book. No specific defects whatsoever was brought out on record by the ld. AO/ ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s challenged the addition of Rs. 23,99,550/- uphold by the ld. CIT(A) out of the total addition of Rs. 99,15,777/- made by AO on account of under valuation of stock towards the stock which has not been sold. This addition is made by AO by alleging that that the cash of Rs. 1,27,15,000/- deposited was from undisclosed sources which assessee has camouflaged as cash sales therefore, for consequential effect, the value of closing stock was reduced by the assessee in its books of accounts. He accordingly, made the addition of Rs. 99,15,777/- being cost of goods sold which stood reduced from the gross value of stock in the books of account. Ld. CIT(A) while reducing it to Rs. 23,99,550/- has observed as under: "5.4 The assessing officers finding is that there would be consequential reduction in stock if the sales effected are reduced. Here reduction in stock at the rate of 28.23% which was accepted by the assessing officer as pertaining to the previous year that is FY 2015-16 is taken here also and 28.23% of the cash sales disallowed at Rs. 85,00,000/- is taken as the reduction in stock. This comes to Rs. 23,99,550/- The addition to that extend is upheld." 16. From the perusal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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