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TMI Blog2025 (3) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... deposited out of such cash sales which duly reflected in the books of accounts is unexplained. The Assessing Officer failed to find any error in the details and evidences filed by the assessee.
The realization of cash sales is duly recorded in the cash book maintained on day to day basis which is evident from the perusal of the cash book submitted during the course of assessment proceedings. AO has tried to support his finding merely on the basis of incorrect comparison of daily cash sales and cash deposits in the bank accounts in the year before us as well as in preceding year and such observations have already been answered by the assessee and not controverted by Revenue
Thus we are of the considered view that when the AO has accepted the entire sales no addition could be made on account of cash deposit in the banks which is part of such sales and is tantamount to double taxation of income which has already been offered to tax sales. Addition u/s 68 of the Act on account of unexplained income towards the cash deposit in the bank account during demonetization is hereby deleted. X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. 3.3 That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding the addition by failing to appreciate that once books of accounts are correct and complete and therefore, the sales as recorded in the books of accounts out of stock available with the appellant could to be regarded as cash sales merely on statements without appellant disregarding the factual matrix/evidence tendered by the appellant. 3.4 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate that once the sales are duly recorded in the books of accounts and have been made out of stock available in the books of accounts then both logically and legally, such sales could not be separately assessed to tax as bogus sales and unexplained cash credit u/s 68 of the Act. 3.5 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in recording various adverse inferences which are contrary to the facts on record, material placed on record and, are otherwise unsustainable in law and therefore, addition so sustained is absolutely unwarranted. 4. That without prejudice to the above and in the alternative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made trading of gold, silver and diamond jewelry on wholesale and 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 price 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. The Ld. AR further submitted that the AO has failed to appreciate that the cash was deposited during demonetization out of the cash balance available as on the date of demonetization pronounced by the Hon'ble PM i.e. on 08/11/2013 which was the accumulation out of the cash sales made by the assessee. The Ld. AR further submit that during the year assessee has made cash sales of Rs. 38.58 Cr. out of which cash available on 08/11/2016 was deposited in the bank accounts. He further drew our attention to the table at pages 4 to 6 of the assessment order which contained monthly cash sales and cash deposited in the bank account in the year under appeal and in immediate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16, it was ₹ 88,85,16,130 This clearly shows a decrease of 56.57%, not an increase. The AO's observation is therefore baseless and contrary to the facts on record 2. The AO's assertion that on page 6 of the assessment order, claiming a 616% increase in cash sales from 01.04.2016 to 08.11.2016 compared to the same period in the previous year, is factually incorrect. As evident from the tables on pages 3 to 6, the correct figures are ₹ 30,47,74,192 for FY 2017-18 and 160,95,14,510 for FY 2016-17, clearly showing a decrease of 81.06%. The AO's observation is therefore baseless and inconsistent with the facts on record. 3 The AO's claim on page 6 of the assessment order, stating that cash deposits in t the bank for FY 2016-17 increased by 243% over FY 2015-16, is factually incorrect. As evident from the tables on pages 3 to 6, the correct figures are ₹ 35,20,78,500 for FY 2017-18 and 286,86,59,100 for FY 2016-17, indicating a decrease of 59. 47%. The AO's observation is therefore erroneous and contrary to the facts on record. 4. The AO's claim on page 6 of the assessment order, stating that cash deposits in the bank from 09.11.2016 to 31. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 when the demonetization was announced by the Hon'ble Prime Minister. We find that the AO has not pointed out any defects in the date to day stock records maintained by the assessee. Copies of the sales bills were also produced before AO for examination during the course of assessment proceedings who except stating that all the bills were issued below Rs. 2 lacs and no PAN was available of the buyer was available which is not requirement of the Act, failed to point out any defect nor it is the allegation of AO that sales were made without stock. It is also seen that the assessee has filed regular returns under the VAT Act where the sales declared by the assessee were accepted. Once the Assessing Officer has accepted the books and not raised any doubts on the day to day stock register maintained and sales made thereon, it is not correct to say that the cash deposited out of such cash sales which duly reflected in the books of accounts is unexplained. The Assessing Officer failed to find any error in the details and evidences filed by the assessee. 7. The realization of cash sales is duly recorded in the cash book maintained on day to day basis which is evident from the perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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, Sale Register, Purchase Register, Stock Register and Cash book. No specific defects whatsoever has been brought out on record by the ld. AO/ ld. CIT(A) in those evidences and books of accounts so furnished. It is not understood as to how the addition has been made by the lower authorities when the source of such cash deposits, being cash sales, was duly accepted by him. Even no discrepancy was pointed out by the VAT department in respect of purchases and sales made by the assessee. Therefore, addition so made u/s 68 of the Act without finding out any specific defects in books of account and also without rebutting the evidences produced is unjustified and be deleted. 11. The Co-ordinate bench of Mumbai ITAT in the case of ACIT v. Ramlal Jewellers (P.) Ltd. Reported in [2023] 154 taxmann.com 584 (Mumbai - Trib.) under similar circumstances, deleted the addition made u/s 68 on account of cash deposit in SBN dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the same. The Hon'ble High Court dismissed the appeal filed by the Department. 13. The Co-ordinate bench of ITAT Delhi in the case of S. Balaji Mech-Tech Private Ltd Vs. ITO in ITA No. 556/Del/2024 vide order dt. 25.09.2024 has observed as under: 18. Coming to the issue of stock movement and excess sales, we observed that the assessee has submitted relevant stock reconciliation and auditors report of stock movements and there is no negative stock movement which will indicate that the assessee has booked excess sales without there being proper purchases. 19. In our considered view, there are chances that during the demonetization period the regular customers may have choose to buy the spare parts and bearing by making payment by cash so that their excess SBN is transferred. We noticed that the credit sales has come down during this period and the sales of the assessee is more or less maintained during this period. Therefore, it shows that the changes in the patterns recorded in the sales are not abnormal. 20. Whether the recording of cash sales which is already declared in the books of account will attract the deeming provisions of sec.68 or 69A of Act. We observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance available with the assessee and, hence, there is absolutely no case made out by the revenue for making addition under section 68." 14. Further, in the case of Fine Gujaranwala Jewellers Vs. ITO (ITA No. 1540/Del/2022 dated 27.03.2023, wherein it was held as under: 22. In the case in hand the reason for disbelieving the cash deposit is that the assessee has been deposited below Rs. 2 lakh in every transactions that lead to the conclusion of the Assessing Officer that the same has been done to avoid the application of provision of section 285BA read with Rule 114E of the Act. The said observation made by the Assessing Officer without any material in his hand. There is no prohibition under law to make sale transaction below Rs. 2 lakhs as such the assessee had at liberty to manage his own affairs. From the action of the assessee in raising the sales bill below Rs. 2 lakhs the Assessing Officer cannot interpret as the sale are bogus only to give colour to non-genuine transaction as genuine transaction. The evidence brought on record by the Assessing Officer are not enough to hold that sales were not genuine. More so, the other wing of the Govt has already accepted the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout their being any material to support on their contrary view, the provisions of section 68 or 69A cannot be invoked. 22. In the result, appeal filed by the assessee is allowed. 15. Further Co-ordinate Bench of ITAT, in the following case laws has held as under: * ITAT Delhi in the case of M/S Godwin Tourism Pvt. Ltd. V. DCIT 2024 (8) TMI 1173, dated- August 21, 2024, held that- 19. Considered the rival submissions and material placed on record, we observed that the assessee has submitted cash book in the Paper Book wherein assessee has received share application money on various dates and received the same by way of cash on verification of the cash book submitted before us. We observed that on various dates, the assessee has maintained sufficient cash which are out of share k withdrawals and it is substantiated that sufficient source application money and some bank of cash available with the assessee to make the bank deposit of Rs. 8 lacs. After considering the facts on record, we observed that assessee has sufficient cash in hands to make above said dash deposit. Accordingly, additions made by the Assessing Officer is deleted." * In the case of ITO V. Mis J.K. Wood In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 68 or tax the same u/s 115BBE again. This view is also supported by the decision of Hon'ble Delhi High Court in the case of Kailash Jewellery House (Supra) and the Hon'ble Gujarat High Court in the case of Vishel Exports Overseas Ltd. (supra), Hence, we do not see any reason to interfere with the order of the Ld. CIT(A) and the same is upheld." * ITAT Delhi in the case of M/S. Fine Gujaranwala Jewellers V. ITO, 2023 (3) TMI 1196-ITAT Delhi, dated- March 27, 2023, where Hon'ble Tribunal observed that where assessee has filed its submissions and placed evidence on record, then it is the duty of AO to act fairly as a reasonable person and examine the fact of the case in the light evidence available and should not come to a conclusion on the basis of surmises and conjectures. Tribunal further held that AO without rejecting the books of accounts, cannot come to a conclusion that sales are not genuine, relevant finding are as under- "When the assessee gives any reply or submission or any documents to the Assessing Officer, it is duty of the Assessing Officer to examine the same in the light of the available evidence. In the present case the Assessing Officer and the I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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