DCIT vs Anjula Singhal

“5.0 CIT's Decision:

The grounds of appeal, assessment order and the appellant have been carefully considered as under :

5.1

The appellant was in the business of Trading of Gold and Diamond jewellery and was providing Lockers facility, both under the name and style as A.S. Traders The appellant was in the business of Trading of Gold and Diamond Jewellery The appellant filed the Return of Income for the A.Y. 2017-18 declaring a total income of Rs.43,79,190/-. The case was selected for scrutiny under CASS for the reason "Large cash deposit during demonetization period", Further notices u/s 142(1) were issued from time to time and the appellant submitted cash sales invoices/bills without the complete details of the customers with whom the sales were made. Order u/s.143(3) of the IT Act was passed by the AO on 20.12.2019. The returned income of Rs.43,79,190/- was elevated to Rs.2,05,60,650/-with the addition of cash credit u/s.68 amounting to Rs. 1,61,81,460/-,

5.2

The appellant in the grounds of appeal has raised objecting to the aforesaid assessment order stating that the LAO erred in not considering the genuineness of the cash sales as per books of accounts.

5.3

The appellant has stated that:

The Ld AO has erred on facts and in law for the addition of Cash deposit of Rs. 1,61,81,460/- in bank during demonetization period from 09.11.2016 10 30.12.2016 as unexplained Cash Credit u/s 68 of 1. Tax Act, 1961, arbitrary against the actual Cash deposit of Rs. 1,55,79,500 / Ignoring the true facts and circumstances and without application of sound mind in view of the explanations and evidences furnished. There is an absolutely no legality and justification for this addition.

5.4

The submission of the appellant has been carefully considered.

1.1

The appellant has explained and produced during the appellate proceedings, copy of cash book, purchase and sales ledger, copy of audited balance sheet, cash flow statement during the demonetization period etc, to prove the genuineness of the transactions.

1.2

below: The addition has been made under section 68 and the same is reproduced

Section 68: Where any 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:

Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless-

(a)

the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and

(b)

such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:

Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10. 1.3 In the facts of the present case, the appellant has furnished cash flow statement, cash ledgers, sales ledgers, sales invoices, VAT details, Stock register evidencing the purchases, sales and cash deposits. From the details furnished it is ascertained that the appellant has maintained proper Books of accounts, with Purchases and sales recorded The appellant has also furnished cash flow statement showing detailed transactions. It is to be mentioned that the Assessing Officer has not brought on record any tangible material to show that the cash deposits is from other undisclosed source. Thus both the nature & source of the credits received was fully explained by the appellant. As the appellant has discharged his onus the appeal filed is hereby allowed in favour of the appellant.