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Facts
The assessee, a proprietor of M/s Satawat Textile, engaged in the business of trading in cloths, deposited ₹34,13,774 in his bank account, with ₹33 lacs deposited during the demonetization period. The Assessing Officer made an addition of ₹33 lacs under Section 69A read with Section 115BBE of the Act, alleging that the cash sales were not properly explained and that the cash was transferred to his sister concern.
Held
The Tribunal held that the mere allegation of manipulated books of account without concrete evidence or rejection of the books of account is not sufficient to make an addition. The Tribunal agreed that while the absence of cash sales post-demonetization might raise suspicion, it cannot be a basis to disregard cash sales prior to that period without proper enquiry. The Tribunal noted that the sales invoices and books of account were available, and an enquiry to disprove cash sales should have been conducted.
Key Issues
Whether the addition of ₹33 lacs made by the Assessing Officer on account of cash deposits during the demonetization period is sustainable without disproving the cash sales substantiated by the assessee's books of account and invoices.
Sections Cited
143(3), 69A, 115BBE
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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Mr. Anil Champalal Jain (assessee / appellant) against the appellate order passed by the National Faceless Appeal Centre, Delhi [the learned CIT (A)] for A.Y. 2017-18 dated 16th November, 2023, wherein the appeal filed by the assessee against the assessment order dated 27.12.2019 passed under Section 143(3) of the Income-tax Act, 1961 (the Act), was dismissed.
“1. In the facts and circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in concluding that the learned AO rejected the books of accounts of the appellant.
In the facts and circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in ignoring the fact that the accounts of the appellant were audited by a qualified Chartered Accountant under the provisions 44AB of the Income- tax where the Auditor has certified that the proper books of accounts were maintained by the appellant.
In the facts and circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.33,00,000/- being cash deposited in the bank accounts during the period specified under Specified Bank Notes (Cessation of Liabilities) Act, 2017
In the facts and circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in ignoring the fact that the appellant has been selling goods on cash basis through the year and has deposited cash on various dates.
In the facts and circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in not appreciating the fact that the cash sales effected by the appellant is reflected in the
7. The appellant prays leave to add to, alter, amend or delete any of the above grounds of appeal
.”
03. Brief facts of the case shows that the assessee is an individual proprietor of M/s Satawat Textile engaged in the business of trading in cloths. The assessee filed his return of income on 7th November, 2017, a total income of ₹4,93,740/-. The case of the assessee was selected for scrutiny for verification of cash deposit during demonetization period. It is found that assessee has deposited in his current bank account ₹34,13,774/-, out of which ₹33 lacs were deposited during demonetization period. The assessee was asked to explain but assessee did not explain. The learned Assessing Officer noted that the assessee hardly has any cash sales further, the cash deposited by the assessee were transferred to his sister concern, M/s Satawat Textile. Part of this sum was transferred to the assessee’s own account. In absence of
4. Aggrieved assessee preferred the appeal before the learned CIT (A). Assessee was given four different opportunities but assessee submitted part of the details. However, the detail submitted by the assessee was with respect to the month wise details of sales and purchases in credit and cash. The assessee submitted that ₹33,99,332/- is cash sales of the assessee. The total sales of the assessee are more than Rs. 4.85 crores. The assessee also submitted a chart and a cash flow statement and thereby stated that sales have been reflected in the books of account and cash deposited is part of the business operation of the assessee. The learned CIT (A) rejected the contentions of the assessee stating that the cash book of the assessee shows cash sales only upto 9th November, 2016 and thereafter there is no cash sales thus, the cash book and the cash flow statement is manipulated. He further held that merely because cash sales are shown in the profit and loss account as the books of account are rejected the addition is rightly made under Section 69A of the Act. The appeal of the assessee was dismissed.
The learned Departmental Representative vehemently supported the order of the learned lower authorities.
We have carefully considered the rival contentions and perused the orders of the learned lower authorities. The fact shows that the assessee is a dealer in fabrics and has
All other grounds of appeal are not required to be adjudicated.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 09.07.2024.