SHYAM SUNDER BAHETI,HYDERABAD vs. INCOME TAX OFFICER, WARD-9(4) , HYDERABAD

Being aggrieved by the assessment order, the assessee preferred appeal before the learned CIT(A) and reiterated the submissions made before the Assessing Officer along with certain evidences and claimed that the Assessing Officer has erred in comparing cash sales and cash deposit for the month of November, 2016 to the cash sales and cash deposit of remaining period ignoring the fact that for the last 03 financial years, the assessee’s cash sales is almost similar and there is no abnormal deviation in the cash sales for the year under consideration. Further, the 4 ITA.No.89/Hyd./2025 source for cash deposit is out of sales declared for the year under consideration which are supported by necessary bills and books of accounts maintained and as per cash book available in hand as on 08.11.2016 was more than the amount of cash deposited during demonetization period. Therefore, submitted that Assessing Officer was erred in making addition as unexplained cash credits. The learned CIT(A) after considering the relevant submissions of the assessee and also taking note of relevant facts observed that, there is unexplained spurt in the sales during demonetization period which is beyond preponderance of probability. Further, although, the assessee has filed relevant evidences including books of accounts along with sales invoices, but, the Assessing Officer noted that the bills are unverifiable as complete details like address or phone no. of the purchasers are not written on the Invoices. Hence, the invoices furnished by the appellant cannot be considered as genuine. Therefore, by taking note of the decision of Hon'ble Apex Court in the case of CIT vs., Durga Prasad More [1971] 82 ITR 540 (SC) and Sumati Dayal vs.,

Aggrieved by the order of the learned CIT(A), the assessee is now in appeal before the Tribunal.

CA Shreya Jhawar, Learned Counsel for the Assessee, submitted that, the learned CIT(A) erred in sustaining the additions made by the Assessing Officer towards cash deposit u/sec.68 of the Act without appreciating the fact that the sales declared in the books of accounts cannot be brought to tax as unexplained cash credits. Learned Counsel for the Assessee further referring to various evidences submitted that the Assessing Officer never disputed the fact that available cash in hand as per books of accounts as on 08.11.2016 was in excess of cash deposited into bank account during demonetization period. However, rejected the explanation of assessee only on the ground that in the sales bills complete information of 6 ITA.No.89/Hyd./2025 purchases are not referred ignoring the fact that if the sale value is less than Rs.2 lakhs the assessee need not to maintain KYC of the purchasers and further, the assessee is dealing in goods where the sale value is higher and where the purchase bills are issued with handwritten bills. Therefore, merely for the reason of non-availability of certain details in the sale bills, the genuineness of the sales cannot be doubted and additions cannot be made towards cash deposit when the assessee has explained the source. Learned Counsel for the Assessee further submitted that if we consider the additions made by the Assessing Officer towards cash deposit, it amounts to double addition because the sales has already been taxed and once again the Assessing Officer has taxed the cash deposits which is out of from same cash sales declared by the assessee in his books of accounts. Therefore, she submitted that addition made by the Assessing Officer should be deleted.

Dr. Sachin Kumar, Sr. AR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that mere documentary evidences are not 7 ITA.No.89/Hyd./2025 sufficient to establish the genuineness of the transaction in all situations. Documents must also stand the test of human conduct, surrounding circumstances and preponderance of probability. In the present case, going by the observations of the Assessing Officer and the learned CIT(A), there is a sudden increase in sales in the month of November, 2016 when compared to earlier period of the financial year and also for the corresponding period of previous financial year and the same could be explained by the assessee with relevant evidences. The Assessing Officer and the learned CIT(A) after considering all the relevant facts has rightly treated the cash deposited into bank account as unexplained cash credits u/sec.68 of the Act and, therefore, the order of the learned CIT(A) should be upheld.

We have heard both the parties, perused the material on record and the orders of the authorities below. There is no dispute with regard to the cash deposited into bank account during demonetization period and explanation of the assessee with regard to source for cash deposit out of 8 ITA.No.89/Hyd./2025 cash sales declared in the books of accounts. In fact, there was a cash deposit of Rs.65,11,500/- in the current account of the assessee maintained with Mahesh Bank, Himayatnagar and as against this, available cash in hand as per cash book maintained by the assessee as on 08.11.2016 was at Rs.80,53,566/-. The assessee has explained the source for cash deposit out of cash in hand available as per books of accounts which is further supported by sales declared for the month of October and November, 2016. The assessee has filed a comparative chart of total sales, cash sales, cash deposited for the period from April, 2016 to November, 2016 and also the corresponding period of previous financial year. The assessee had also filed three financial years cash sales right from financial year 2014- 2015 to 2016-2017. From the details filed by the assessee, we find that there is no abnormal increase in total cash sales for the year under consideration when compared to two preceding financial years. Further, although, the Assessing Officer has observed that there is a sudden increase in cash sales for the month of November, 2016, in 9 ITA.No.89/Hyd./2025 our considered view, ti is incorrect to compare cash sales for the month of November, 2016 alone just because the said month is the demonetization period. Therefore, in our considered view, when the assessee has explained the reasons for increase in sales for the month of November, 2016 and further, it is not even the case of the Assessing Officer that the product dealt by the assessee is having sales throughout the year, the reasons given by the Assessing Officer to disbelieve the claim of the assessee for source for cash deposit cannot be appreciated. Further, the Assessing Officer has arrived at a conclusion on the basis of his own assumption of cash sales prior to demonetization period and during demonetization period without appreciating the fact that the sales are never predictable and just because the sales are high in the period of demonetization, the Assessing Officer cannot assume that such sales were fictitious sales and more particularly, when the assessee has submitted relevant sale bills in respect of sales. Since the assessee is having sufficient cash in hand as on 08.11.2016, as per the cash book maintained for the period, in our considered

In the result, appeal of the Assessee is allowed.