ACIT vs Ashish Kumar Ahuja

“4.4

On perusal of the appellant’s submission and AO’s findings, it has been observed that the AO has not raised any objection on the books of account of appellant filed during the assessment proceedings. The AO has not found any anomaly in book result of the appellant. The AO has simply worked on a theory backed by the historical data of the appellant’s business and reached on a conclusion that cash deposit made during demonetization was from unaccounted sources. However, this theory of the AO cannot be relied upon as cash of Rs. 2.34 Cr was deposited during April, 2016 to October, 2016 and cash sale during this period was 4.28 Cr. Here it is important to note that cash deposit can be made when sufficient cash sales are there whereas vice-a-versa is not possible. Hence, it is an undeniable fact that there were sufficient cash sales prior to demonetization period and out of which cash deposit was made. This facts is further corroborated by the VAT return and books of account of the appellant.

4.5

Further, it is a fact that the business was in existence prior to the demonetization and VAT return was also filed declaring purchase and sales which were duly accepted by the concerned department. The Jurisdictional ITAT Delhi in the case of ACIT vs Delhi Spot Bullion TradingCo. Pvt Ltd in ITA No. 1965/D/2021 vide order dated 23.04.2024 has stated that-

“No discrepancy in the VAT return has been found out. No specific defects in the books of accounts of the assessee have been found out and there was no negative s tock on any of the dates which only goes to prove that the cash sales have been made against the available stock. Further , the Assessing Officer has accepted the sales and hence the proceeds of the sales cannot be considered u/s68 of the Income Tax Act, 1961. The ld. CIT(A) has rightly placed reliance in the comparable judgments of the Tribunal in the case of Agson Global Pvt . Ltd. vs.ACIT (supra) and ACIT, Central Circle Vs. Hirapanna Jewellers, Vishakhapatnam(supra).”

4.6

On identical set of facts Hon’ble ITAT Chandigarh in the case of Kalanidhi Jewelers LLP vs DCIT, ITA No. 311/Chd/2021 vide order dated 25.03.2022 has accepted the cash deposited during the demonetization period as genuine. The relevant portion is reproduced herein under:

“10.13

In the present case also the cash deposited post demonetization by the assessee was out of the cash sales which had been accepted by the Sales Tax / VAT Department and not doubted by the AO, there was sufficient stock available with the assessee to make cash sales and there was festive season in the month of October 2016 prior to the making of the cash deposit in the bank account out of the sales. So, respectfully following the aforesaid referred to 63 orders by the various Hon’ble High Courts and the Coordinate Benches of the ITAT, we are of the view that the impugned addition made by the AO and sustained by the Ld. CIT(A) was not justified, accordingly the same is deleted.”

4.7

Further, Hon'ble ITAT Vishakhapatnam in the case of ACIT vs Hira panna jewellers ITA No. 253/Viz/2020 vide order dated 12.05.2021 wherein held as under:

“9.

In view of the foregoing discussion and taking into consideration of all the facts and the circumstances of the case, we have no hesitation to hold that the cash receipts represent the sales which the assessee has rightly offered for taxation. We have gone through the trading account and find that there was sufficient stock to effect the sales and we do not find any defect in the stock as well as the sales. Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition 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 Vishal 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.”

4.8

Furthermore, the ITAT, Jaipur in the case of Mahesh Kumar Gupta Vs ACIT, CIRCLE-4,JAIPUR vide ITA. No. 149/JP/2022dated 23.03.2023 has decided the issue in favour of assessee. The relevant portion of the order is as produced as under:

“9.7

In the light of the detailed discussions and finding that has been recorded by us in the preceding para we are of the considered view that the action of the ld. AO making an addition under section 68 for an amount of Rs. 80,00,000/-as unexplained cash deposit without rejecting the books of account is unwarranted based on the discussion so recorded here in above. Even the ld.AO has not find any defects in the details submitted by the assessee and audited books were considered and accepted while finalizing the assessment. Similar view has been taken by this coordinate bench of Jaipur in the case of Chandra Surana in ITA No. 166/JP/2022 wherein the similar view has been taken. The relevant finding is reproduced here in below;

“2.6

We have heard both the parties and perused the materials available on record. From the assessment records, it is noted that the AO made an addition of Rs.2,90,93,500/-in declared income by holding that said amount of cash deposited by the assessee in his bank account during the demonetization period is nothing but the undisclosed income of assessee which was shown under the garb of cash sales and thus it is liable to be added u/s 68 of the Act and taxable @ 60% under the provision of Section 115BE of the Act. It is also noted from the order of the ld. CIT(A) at para 4.1 wherein the ld. CIT(A) has described para 1.4 of assessee written submission that complete regular books of accounts, bill, vouchers and day to day stock register having complete quantitative details have been maintained by the assessee. The said books of accounts are audited. A copy of audited statement of account alongwith complete quantitative details have been submitted alongwith the return of income. The assessee maintained manual itemwise stock register. The said stock register was bulky and so could not be produced in eproceedings but was produced before the AO in course of hearing as is evident from submission dated 27-09-2019. The fact of maintenance of stock register manually is stated in Tax Audit Report also. Thus the cash sales transaction is recorded in regular books of accounts, sales are made out of stock-in-trade. The assessee also filed copies of sales invoice No. 82 to 158 of Bangaluru and 110 to 216 of Koklata outlets before AO which were of 28-10-2016 and these were earlier produced before Investigation Wingh in F.Y. 2016-17 i.e. after the sales were made and same were verified by the Investigation Wing also. This view of the ld. CIT(A) indicates that the assessee has maintained regular books of accounts, bills, vouchers and day to day stock register having complete quantitative details and said books of accounts are audited. The assessee vide submission dated 27-09-2019 had produced stock record during the course of hearing. The cash sales transactions are recorded in regular books of accounts and the sale are made out of stock in trade for which no adverse finding had been observed by the AO except for the change in the methodology in issuing bills as mentioned at page 7 to 8 of the assessment order. Further the ld. CIT(A) observed that the AO had treated the cash deposited in the bank during the demonetization period in demonetized currency as unexplained cash credit u/s 68 of the Act although the nature and source of the cash deposits being proceeds arising out of cash sales etc. was evident from the entries in the audited books of accounts of the assessee. In this case, the books of account of the assessee had been audited by an independent auditor. The cash sales and receipts are duly supported by relevant bills which were produced in the course of assessment proceedings before the AO and it is not the case of the AO that the assessee did not have sufficient stock for making the sales. Hence, it cannot be said that the figures of sales and purchases are not supported by the quantitative details and the AO did not make any enquiry on the material supplied by the assessee. Thus the AO neither brought any material on record to establish that the sale bills are bogus nor provided any evidence that such sales are bogus. It is also an open fact that the demonetization of Rs.500/- and Rs.1000/-note was declared by the Hon’ble Prime Minister at 8 PM on 8-11-2016 and after this announcement the persons reached the jewellery shop to buy jewellery in exchange of notes. Thus all such scenario indicates that the assessee had duly substantiated its claim from the documentary evidences and also with the facts. It is also observed from the assessment order that the AO had not rejected the books of account of the assesee as no contrary material was available with him to reject the books of account of the assessee. As regards the addition of Rs.2,90,93,500/- made by the AO by applying the provisions of Section 68 of the Act, it is noted that provisions of Section 68 are not applicable on the sale transactions recorded in the books of accounts as sales are already part of the income which is already credited in P&L account. Hence, there is no occasion to consider the same as income of the assessee by invoking the provisions of Section 68 of the Act. In view of the above deliberations and case laws relied upon by both the parties, we find that the AO was not justified in making an addition of Rs.2,90,93,500/-u/s 68 of the Act which has rightly been deleted the ld. CIT(A) and we concur with his findings. Thus the appeal of the Revenue is dismissed.” Respectfully following the consistent view and after considering the factual matrix of the cash on hand in our considered view the addition made cannot sustain and therefore, we vacate the addition of Rs. 80,00,000/- made under section 68 of the Act as the same cannot be made without rejecting the books of account of the assessee regularly maintained by the assessee and the said cash deposited is duly supported by the entries passed in the books of account and part of the sale accepted by the AO. In terms of these observations ground no. 1 raised by the assessee is allowed.”

4.9

In view of the above discussion and respectfully following the decision of various Courts, it is held that that the addition made by the AO are only on presumption basis and has no force in it. I do not subscribe with the AO’s view in this matter. Hence, the addition of Rs. 2,48,74,100/-is hereby deleted and grounds of appeal are allowed accordingly.”