SREE BALAJI BULLIONS,SALEM V. DCIT, CIRCLE-1(1), SALEM

ITA 2302/CHNY/2024

AI Insights

The case involves Sree Balaji Bullions, a partnership firm engaged in the trading of gold and silver bullions, which appealed against the order of the Commissioner of Income Tax (Appeals) confirming the addition of Rs.3,73,28,680 as unexplained money. This amount represented cash deposits made during the demonetization period in India. The Assessing Officer had initially added this amount to the assessee's income, suspecting it to be unaccounted money. The Tribunal examined the evidence provided by the assessee, including sales ledgers and bank statements, and found that the assessee had adequately demonstrated that the deposits were from legitimate business activities. The Tribunal also noted that the books of accounts were not rejected by the lower authorities, and no defects were pointed out in them.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 103714 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: Sudhir Kumar Sharma (HUF) vs CIT, Smt Srilekha Baneriee and others Vs CIT, Bihar & Orissa, Durga Prasad More and Smt. Srilekha Banerjee and others vs. CIT, Bihar and Orissa
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T.M. SUGANTHAMALA
• Assessee Lawyers: S. SRIDHAR; HIMSELF; IT IS NECESSARY
• Keywords: Set aside; Corroborative evidences; Unexplained cash credit; Rejection of books of accounts; Income from undisclosed sources; Principle of natural justice; TDS; Wrong claim; Maximum Marginal Rate; Bogus
• Section: 143(3); 142(1); 251; 13; 69A; 73; 44AB

Judgement Text

" आयकर अपीलीय अिधकरण, ‘बी’ ᭠यायपीठ, चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ᮰ी जॉजᭅ जॉजᭅ के, उपा᭟यᭃ एवं ᮰ी एस.आर.रघुनाथा, लेखा सद᭭य के समᭃ BEFORE SHRI GEORGE GEORGE K, HON’BLE VICE PRESIDENT AND SHRI S.R. RAGHUNATHA, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.: 2302/Chny/2024 िनधाŊरण वषŊ / Assessment Year: 2017-18 Sree Balaji Bullions, 22/43, Vasagasalai, Shevapet, Salem– 636002. [PAN: AASFS-5947-E] V. Dy. Commissioner of Income Tax, Circle 1(1), Salem. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri.S.Sridhar, Advocate and N.Arjun Raj, Advocate ŮȑथŎ की ओर से/Respondent by : Ms.T.M.Suganthamala, CIT सुनवाई कȧ तारȣख/Date of Hearing : 25.02.2025 घोषणा कȧ तारȣख/Date of Pronouncement : 17.04.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER: This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2017-18, dated 21.08.2024. 2. The assessee has raised the following grounds of appeal: 1. The order of the NFAC. Delhi dated 21.08.2024 vide DIN & Order No.TTBA/NFAC/S/250/2024-25/1067820366(1)) for the above :-2-: ITA. No: 2302/Chny/2024 mentioned Assessment Year is contrary to law, fact and in circumstances of the case. 2. The NFAC, Delhi erred in partly sustaining the addition to the tune of Rs.3,73,28,680/- being the cash deposits in SBNs during demonetization period from 09,11.2016 to 15.11.2016 as unexplained money in terms of Section 69A in the computation of taxable total income without assigning proper reasons and justification. 3. The NFAC, Delhi to appreciate that provisions of Section 69A r.w.s 115BBE of the Act had no application to the present facts and in circumstances of the case, there by vitiating the findings in relation there to. 4. The NFAC, Delhi failed to appreciate that the pre-requisite conditions required for making an addition in terms of Section 69A r.w.s 115BBE of the Act were absent in the present case and in circumstances, there by negating the findings in relation there to. 5.The NFAC, Delhi failed to appreciate that having not examined the books of accounts which were made available at every stage of proceedings, the presumption of unexplained money should be reckoned as wholly unjustified and not sustainable in law. 6. The NFAC, Delhi failed to appreciate that having not rejected the financial statements as faulty, the presumption of unexplained money within the scope of Section 69A from the disputed cash deposits was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 7. The NFAC, Delhi failed to appreciate that in any event having not independently examined the status s of the cash deposits made earned from the sales of jewelleries, the consequential sustenance of the entire addition as unexplained money in terms of Section 69A of the Act was Wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 8.The NFAC, Delhi failed to appreciate that the findings from para 3 of the impugned order were wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 9. The NFAC, Delhi failed to appreciate that having established the source for the cash deposits through regular sales duly captured in the returns filed for other statutory authorities, the levy of enhanced rate of tax in terms of Section 115BBE of the Act in any event should be reckoned as bad in law. :-3-: ITA. No: 2302/Chny/2024 10. The NFAC, Delhi failed to appreciate that having shown the disputed sum as part of the turnover, assessment of the turnover once again as unexplained money was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 11. The NFAC, Delhi failed to appreciate that the entire re- computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 12. The NFAC, Delhi failed to appreciate that having not adhered to the prescription of faceless appellate regime, the consequential appellate order passed should be reckoned as bad in law. 13. The NFAC, Delhi failed to appreciate that there was no effective/proper opportunity given before passing the impugned order including non granting of personal hearing and any order passed in violation of the principles of natural justice is nullity in law. 14. The Appellant craves leave to file additional grounds/arguments at the time of hearing. 2.1 In brief the sole ground before us raised by the assessee is the ld.CIT(A) has erred in confirming the addition of Rs.3,73,28,680/- u/s.69A r.w.s. 115BBE of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 3. The brief facts are that the assessee M/s.Sree Balaji Bullions is a partnership firm, having its place of business at Salem, deriving income from business of trading of Gold and silver bullions. The assessee filed its return of income for the assessment year 2017-18 on 30.09.2017, admitting an income of Rs.21,11,200/-. The return was processed u/s.143(1) of the :-4-: ITA. No: 2302/Chny/2024 Act and later selected for scrutiny assessment under CASS. Accordingly, notices u/s.143(2) and 142(1) of the Act were issued to the assessee calling for source for cash deposits made during demonetization period into various bank accounts in the form of Specified Bank Notes along with other documents in support of the return of income filed. In response to notices, the assessee filed the replies / documents through e-proceedings on 22.10.2019. During the assessment proceedings in support of the demonetization deposits the assessee submitted the sales ledger, cash book, detailed statement of cash received from customers from 01.11.2016 to 08.11.2016 and 09.11.2016 to 31.12.2016 separately on 01.12.2019. Later in response to show cause notice issued by the AO, the assessee submitted the reply on 26.12.2019 by providing the details of month wise cash sales and cash deposits made to the bank account from 01.04.2016 to 08.11.2016 and also cash deposits made from 09.11.2016 to 31.12.2016 i.e. demonetisation period. However, the AO was not satisfied with the explanation / documents furnished by the assessee, since the assessee used to deposit the major portion of cash collection immediately and cash holding capacity is less and doubted the cash balance of Rs.3,75,30,057/- on 08.11.2016 as unreasonable and suspicious. Further, the AO also doubted :-5-: ITA. No: 2302/Chny/2024 the sales made on 08.11.2016, since the assessee had not provided the CCTV record to show the sale made on 08.11.2016 to the tune of Rs.2.13 crores along with non-deduction of TCS on sales made above Rs.2.00 Lakhs of bullion and Rs.5.00 lakhs of jewellery to the individual customers. Therefore, the AO made an addition of total cash deposits of Rs.4,57,18,500/- to income as unexplained money u/s.69A r.w.s. 115BBE of the Act on account of demonetized currency deposit of Rs.3,73,18,500/- and cash deposit made on 08.11.2016 of Rs.84,00,000/- to Indian Bank account before the announcement of demonetization and completed the assessment u/s. 143(3) of the Act on 28.12.2019 by holding as under: vi. However, the assessee had not submitted any proof of CCTV record to show that Hugh customers have come to assessee showroom till 12.00PM of the O8.11.2016 and the details of partywise break up of the customers to whom the sales were made before 12.00 P.M of the 8.11.2016. Hence the claim of assessee that the entire sale of Rs 5,66,49,644/- made as on 8.11.2016 could not be ascertained and accepted. VII. It is also observed that. for the entire cash sales of Rs 5,66,49,644/- were made during the period 01.11.2016 to 08.11.2016. the assessee had not deducted any TCS on sale of jewellery of more than Rs 2.00.000/- in cash and sale of bullion more than Rs 5,00,000/-, as required u/s 206 C (1D) of the IT Act 1961. Section 206C sub section (1D) of Income Tax Act, 1961 reads as \"Every person, being a seller, who receives any amount in cash as consideration for sale of bullion or jewellery [or any other goods (other than bullion or jewellery) or providing any service], shall, at the time of receipt of such amount in cash, collect from the buyer, a :-6-: ITA. No: 2302/Chny/2024 sum equal to one per cent of sale consideration as income-tax, if such consideration,- (i) for bullion, exceeds two hundred thousand rupees; or (ii) for jewellery, exceeds five hundred thousand rupees; [or] (ii) for any goods, other than those referred to in clauses (i) and (i), or any service, exceeds two hundred thousand rupees\" vii. The above activity of the assessee clearly spelt that either the assessee's unaccounted money have been introduced and accommodated under bogus customer's name nor somebody's unaccounted money would have been introduced and accommodated under bogus customer's name during the period of demonetization for commission basis. Since all the cash sales bills were spiltted up and booked under bogus customers name or the identity of the customer who have purchased jewellery by exchanging old jewellery or by paying cheque or any other bank mode details have been used to conceal the assessee's unaccounted income nor the third party unaccounted money who's identity had not been revealed by way of collection of TCS on cash purchases more than the prescribed limit as per sec 206C(1D) of the IT Act 1961, the claim of the assessee could not be ascertained. Therefore, the claim of assessee is not found to be genuine regarding the sources of cash deposit made during the period of demonetization. Hence, on relying Upon the decision of Hon'ble Supreme Court in the case of Sudhir Kumar Sharma (HUF) vs CIT (2016) 69 taxmann.com 317(Punjab and Haryana)/(2014) 224 taxmann.com 178(Punjab and Haryana) \"that the huge amount of cash deposit in bank, assessee failed to give list of persons who advanced the cash to him along with the confirmation in respect of said cash credits. Hence, the action of AO was justified in adding the said amount to the assessee's taxable income u/s 68\". Therefore, the amount of Rs 4,57,18,500/- is added as unaccounted money u/s 69A of IT Act 1961. (c) Also, the assessee has deposited the SBN notes of Rs 4,57,18,500/- in various dates from 10.11.2016 to 14.11.2016. Even assuming, but not accepting the assessee's plea or justification for depositing the SBNs on various dates represents sales, the purpose and intent of the Government was to eradicate the Black Money from the system and :-7-: ITA. No: 2302/Chny/2024 bring out the hoarders of such money. When the announcement had been made on 8-11-2016 at 8.15 pm that Rs.500 and Rs.1000 ceases to be a legal tender, the traders or businessmen ought not to have accepted the same from the general public in the garb of sales or realization of debts. The very act of the assessee in depositing Rs 4,57,18,500/- in various dates from 10.11.2016 to 14 .11.2016 clearly proves beyond doubt that either the same were his unaccounted income that was lent earlier and realized at the latter date or had involved in converting SBNs into legal tender and thereby earn huge commissions or by way of unaccounted sales realization. In all possibility, the very act of the assessee cannot be subscribed or supported to as the same is against the intention and the very purpose for which the ban on SBNs were clamped by the Government of India. Thus, by the human test of probabilities as laid down and tested by the Highest Court of the land as well as the circumstances of the case as discussed below, the plea of the assessee is not acceptable. 1.A. Rajendran & Ors. Vs.ACIT (2006) 204 CTR (Mad) 9 2.Hacienda Farms (P) LTD. vs. CIT (2011) 239 CTR (Del) 212 3.Major Metals Ltd. vs. UOIAND ORS (2012) 251 CTR (Bom) 385 4.Pradip Kumar Loyalka vs. ITO (1997) 59 TTJ (Pat) (TM) 655 5.ACIT Vs. Sampat Raj Ranka (2001) 73 TTJ (Jd) 642 Thus, the Court has laid down a test to analyze the genuineness of the entry through the logical analysis. The \"Human Probability Test' could be applied when the Assessee makes the Officer to believe his/her story as a valid event. The false claims of the Assessee cannot sustain before the test of Human Probabilities. Hence, the total cash deposited Rs 4,57,18,500/- during the period of demonetization, as per system record information available with this office, is treated as unexplained and unaccounted money in the hands of the assessee u/s. 69A of the I.T. Act and taxed the same at maximum marginal rate invoking section 115BBE or the 1.T. Act, by relying upon the decision of Hon'ble Supreme Court in the following cases as discussed under: The Hon'ble Supreme Court in the case of Smt Srilekha Baneriee and others Vs CIT, Bihar & Orissa, reported in 1964 AIR 697, dated 27/O3/1963, the Hon'ble Court held :-8-: ITA. No: 2302/Chny/2024 that the source of money not having been satisfactorily proved, the Department was justified in holding it to be assessable income of the assessee from some undisclosed source. “The fact of the case are that the assessee had encashed 51 high denomination notes of Rs. 1,000/ each in January, 1946. The assessee's explanation in his application for encashment of the notes was that he was a colliery proprietor and contractor, that for conducting the business and for payment to labour which came to about Rs.30, 000/- to 40,000/- every week he had to keep large sums of money to meet emergency and that the Page 11 of 13 sum of Rs. 50,000/- realised by encashment of the notes was neither profit nor part of profit but was floating capital for the purpose of conducting business. The Income— tax Officer did not accept this explanation and treated this amount as profit from some undisclosed source and assessed it as assessable income. In Manindranath Das V. Commissioner of Income Tax, Bihar & Orissa, the tax-payer had encashed Notes of the value of Rs. 28,600, which he contended were his accumulated savings. His explanation was accepted in respect of Rs. 15,000, because 15 notes could be traced to a bank, but was rejected in respect of the balance. The Patna High Court pointed out that if an assessee received an amount in the year of account, it was for him to show that the amount so received did not bear the character of income, and the tax-payer in the case had failed to prove this fact in respect of the remaining notes. The Hon'ble Supreme Court has held that The cases involving the encashment of high denomination notes are quite numerous. In some of them the explanation tendered by the tax-payer has been accepted and in some it has been rejected. Where the assessee was unable to prove that in his normal business or otherwise, he was possessed of so much cash, it was held that the assessee started under a cloud and must dispel that cloud to the reasonable satisfaction of the assessing authorities, and that if he did not, then, the Department was free to reject his explanation and to hold that the amount represented income from some undisclosed source.” The Hon'ble Supreme Court further held in the case of Smt Srilekha Banerjee and others (supra) that the Department was justified in holding that Rs 51,000/- was assessable Income of the assessee from some undisclosed source. It was not correct that the assessee Was not required to prove anything and that the burden was entirely upon the department to prove that the amount received from the encashment of :-9-: ITA. No: 2302/Chny/2024 high denomination notes was Income. The correct position is as follows. If there is an entry which shows the receipt of a Sum or conversion of the notes by the assessee by himself, it is necessary for the assessee to establish, if asked, what the source of that money was and to prove that it did not bear the nature of income. The department is not at this stage required to prove anything. The fact that there was receipt of money or conversion of notes is itself prima facie evidence against the assessee on which the Department can proceed in absence of qood explanation.' Therefore, in the case of assessee where huge Cash was deposited in the bank accounts during the period of Demonetization (9thNovember, 2016 to 30th December, 2016), but the sources were neither explained nor such money offered for taxation, the onus is on the assessee's' to prove that the Cash deposits made did not bear the character of income. Subject to above discussion, the total income of the assessee is assessed for the FY 2016-17 as under: Returned Income Rs.21,11,199 Add: unexplained income as discussed above in para 7 Rs.4,57,18,500/- Assessed Income Rs.4,78,29,699/- 9. Further, in respect of above said unexplained money Rs 4,57,18,500/-as discussed in para 7, penalty proceedings u/s 271AAC of the IT Act 1961 is initiated separately 4. Aggrieved by the assessment order of the AO, the assessee preferred an appeal before the ld.CIT(A). 5. Before the ld.CIT(A), the assessee reiterated that it was carrying on the business of trading in Gold and Silver Bullions and assessed to TNVAT Act. The assessee maintained regular books of accounts along with stock inventory. The assessee :-10-: ITA. No: 2302/Chny/2024 stated that they had furnished the cash book, month wise purchases and sales for the entire year, sales register, tax audit report u/s.44AB of the Act wherein the entire inventory details for the year, monthly VAT returns filed with TNVAT Department and demonstrated that the cash was deposited in SBN was out of sales proceeds of stock on hand. However, the AO completely ignored the submissions. The assessee submitted that the AO without considering the reply/submissions filed and relying on the Hon’ble Supreme Court in the case of Smt. Srilekha Banerjee and others vs. CIT, Bihar and Orissa reported in 1964 AIR 697, 27.03.1963, wherein the Hon’ble Court held that the source of money not having been satisfactorily proved, the department was justified in holding it to be assessable income of the assessee from some undisclosed source and also relying on the “Human Probability Test” laid and tested by the highest court of the land concluded the assessment by making an impugned addition. Since the case law is not applicable to the present case as the AO has not found any discrepancy in any of the documents available before him. The AO has not discharged his primary responsibility of dis-proving the documents submitted and therefore the addition made is preposterously liable to be set aside. The ld.CIT(A), after considering the submissions made by the :-11-: ITA. No: 2302/Chny/2024 assessee along with the various judicial pronouncements relied, held that the assessee’s submissions with regard to cash deposits made on 08.11.2016 of Rs.84,00,000/- has been explained with proper evidence and hence deleted the same. However, the ld.CIT(A) was not convinced with the documentary evidence and explanation submitted by the assessee in respect of cash deposits made during demonetization period to the tune of Rs.3,73,28,680/- and confirmed the additions made by the AO relying on the decision of Hon’ble Supreme Court in the case of Kale Khan Mohammed Hanif reported in 501 ITR 1 (SC) by passing an order dated 21.08.2024 by holding as under: “10. The appellant during the appellate proceedings submitted various judicial pronouncements wherein it has been held that the cash sales deposited in the bank account during the demonetization period cannot be treated as undisclosed income. These judicial pronouncements relied upon by the appellant is duly considered and it is found that the decisions referred by the appellant are with reference to those cases where the assessee has furnished all the details and supporting evidence to prove that the cash deposited during demonetization period are out of stock recorded in the books of accounts. Further, in the cases referred by the appellant, the assessee was able to establish the nexus of cash sales and deposits with supporting evidence. However, in the case of appellant, the appellant failed to submit the details of sales. With supporting evidence of purchase of stock, payments, etc. Hence the decisions relied upon by the appellant is factually distinguishable and is not applicable in the case of appellant. 11. As stated in earlier paras, during the demonetization period, the appellant had deposited cash amounting to Rs. 3,73,28,680 in the two bank accounts maintained by the appellant. During the assessment proceedings as well as during the appellate proceedings the appellant :-12-: ITA. No: 2302/Chny/2024 has failed to submit any documentary evidence which clearly support that there were sufficient stocks to meet the sales and the cash deposited are from the sale of stock in hand. The Hon'ble Supreme Court in the case of Kale Khan Mohammad Hanif reported in 50 TR1 (SC) held that the AO is permitted to make addition of unexplained cash credits even though the income is estimated on sales. In the instant case, the appellant has failed to establish that cash deposits are out of sales therefore, the Assessing Officer has treated the cash deposited in the bank account during demonetization period as unexplained. During the appellate proceedings the appellant admitted that the major sales are made after announcement of demonetization. As per the appellant, the firm has sold silver/gold bars to 496 parties from 8.00 PM to 12.00 Midnight on 8.11.2016, however, the appellant has not submitted the name and address of the parties to whom sales are made. The appellant further stated that the sales are made to manufactures of silver anklets located in Salem. It is beyond any human probabilities to sell such gold/silver items to 496 parties in the span of around 200 minutes considering the facts and circumstances in the case of the appellant. Therefore, I have no reason to interfere the decision of the Assessing Officer that the cash deposited during demonetization period as unexplained money. Accordingly, the addition of Rs. 3,73,28,680 made by the Assessing Officer u/s.69A of the Act is confirmed.” Aggrieved by the impugned order of the ld.CIT(A), the assessee preferred an appeal before us. 6. The Ld.AR, assailed that the ld.CIT(A) has erred in confirming the addition made u/s.69A r.w.s. 115BBE of the Act, even though the assessee has explained and substantiated the sales made from 01.11.2016 to 08.11.2016. Further, the ld.AR challenged the factual finding of the ld.CIT(A) and AO has noticed only the suspicious features of the transactions and has not :-13-: ITA. No: 2302/Chny/2024 rejected the audited books of accounts furnished by the assessee and not found any defects or mistakes in the same. 6.1 The ld.AR for the assessee assailed the action of the ld.CIT(A) and stated that the ld.CIT(A) has erred in confirming the addition made by the AO, since the assessee has maintained proper books of accounts like Cash book, bank book, sales register, purchase register, stock registers, monthly VAT returns, Audit report in Form 3CA and 3CD, Audited financials have been furnished during the assessment as well as appellate proceedings. The Assessee also furnished the month wise cash sales and cash deposit for the impugned year (A.Y. 2017-18) along with sales register specifically for the months from Sep 2016 to Dec 2016, entire cash sales details from 01.11.2016 to 08.11.2016 apart from day wise summary for the same period. The assessee also furnished day wise cash sales and cash deposited from 11.09.2016 to 31.12.2016 separately apart from statement of cash collections from customers and cash deposited from 01.11.2016 to 08.11.2016. The AO has also observed that the assessee has not made TDS u/s.206C of the Act for the sales made of each sales invoices for value more than Rs.2.00 Lakhs and Rs.5.00 Lakhs per person on sale of bullions and jewellary :-14-: ITA. No: 2302/Chny/2024 respectively. In this regard, the ld.AR stated that the AO has not noticed any of the invoices exceeding the said limit and which is not liable for TDS u/s.206C of the Act. Further, the ld.AR submitted that the PAN details of the buyers is applicable to the transactions beyond the threshold limit of Rs.2.00 Lakhs per transaction in accordance with the Rule 114C(2) read with sl. No.18 of Rule 114B of the IT rules 1962. The assessment was concluded by the Assessing Officer without finding any defect in the books of accounts furnished and also the same has been accepted. 6.2 The ld.AR also stated that the following documents were produced before the AO and that of ld.CIT(A) in support of the genuineness of the transactions carried out during the A.Y. 2017- 18 including the demonetisation period in paper book Volume -II consisting of 1 to 26 pages: Sl.No. Particulars Page No. 1. Details of purchase during the year : 2016-17 1 2. Details of month wise cash sales and cash deposits for period between 01.04.2016 to 08.11.2016 2 3. Details of month wise cash sales and cash deposits for period between 01.04.2015 to 08.11.2015 3 4. Sales register for period between 01.09.2016 to 30.09.2016 4 5. Sales register for period between 01.10.2016 to 31.10.2016 5 :-15-: ITA. No: 2302/Chny/2024 6. Sales register for period between 01.11.2016 to 30.11.2016 6 7. Sales register for period between 01.12.2016 to 30.12.2016 7 8. Details of month wise cash sales and cash deposits for period between 01.11.2016 to 08.11.2016 8 9. Details of month wise cash sales and cash deposits for period between 09.11.2016 to 31.12.2016 9 10. Item register for Gold Bullion for period between 01.04.2016 to 31.03.2017 11 11. Monthly summary for Gold Bullion for period between 01.04.2016 to 31.03.2017 12 12. Monthly summary for Silver Bullion Bars for period between 01.04.2016 to 31.03.2017 13 13. Monthly summary of Purchase register for period between 01.04.2016 to 31.03.2017 14 14. Month wise purchase register for period between 01.04.2016 to 31.03.2017 15-26 6.3 In this paper book the ld.AR drew our attention to particularly the documents submitted before the AO as well as the ld.CIT(A), the assessee’s bank accounts and the statement/ledgers thereon along with the Cash book, sales ledger, VAT returns, Purchase ledger, Stock registers, Purchase returns, Annual audit report under TNVAT Act, Sales Invoices for the A.Y. 2017-18. The AO has verified all the documents and has not rejected the books of accounts filed along with tax audit report of the assessee and not doubted the stock and purchases but with the assumption of impracticability of sales made on a particular days i.e. 01.11.2016 to 08.11.2016 as unexplained and :-16-: ITA. No: 2302/Chny/2024 brought to tax and also confirmed by the ld.CIT(A), which is against provisions of the Act. 6.4 Further, the ld.AR brought to our notice that the assessee had enough stock on hand of both gold and silver bullions apart from purchases made during the impugned assessment year (Page 15 to 26 of Paper Book-II). The ld.AR also stated that the assessee is having overdraft facility to the tune of Rs.4.00 Crores against the inventory held by the assessee. The average stock held by the assessee during the impugned assessment year was around Rs.4.75 to Rs.5.00 Crores. Therefore, the sales made from 01.11.2016 is supported by the proper evidence of holding stock along with the purchases and hence the impugned addition made by the AO and the action of the ld.CIT(A) in confirming the same cannot be justified and prayed for setting aside the order of the ld.CIT(A) by allowing the appeal of the assessee. The Ld.AR took us through following judicial decisions relied in support of the assessee’s claim and prayed for considering the same and allow the appeal of the assessee. Sl. No. Date Particulars 1. 20.12.2023 ITO, Coimbatore vs Sahana Jewellery Exports Pvt Ltd. Chennai ITAT – ITA No.999/2022 2. 21.03.2024 DCIT vs M/s. DAR Paradise Pvt. Ltd. Chennai ITAT – ITA No.1106/2023 :-17-: ITA. No: 2302/Chny/2024 3. 03.04.2024 DCIT vs ANS Jewellery – Chennai ITAT – ITA No.1151/2023 4. 05.04.2024 ITO vs Surabi Gold – Chennai ITAT – ITA No.372/2023 5. 05.04.2024 DCIT vs Navaratna Maaligai - Chennai ITAT – ITA No.801/2023 6. 05.04.2024 JCIT Vs. Tara Jewellery - Chennai ITAT – ITA No.276/2023 7. 10.04.2024 DCIT vs D Gem Mount – Chennai ITAT – ITA No.782/2023 8. 06.11.2024 KTM Maligai vs DCIT– Chennai ITAT – ITA No.1382/2024 9. 03.07.2024 M/s. RR Foods Pvt Ltd vs ITO – Chennai ITAT – ITA No.1359/2023 10. 26.07.2023 M/s. Micky Fireworks Industries vs ACIT – Chennai ITAT – ITA No.264/2023 11. 07.10.2024 Tamilnadu State Marketing Corporation Ltd ACIT – Chennai ITAT – ITA No.431/2023 7. Per contra, the ld.DR argued that the ld.CIT(A) has rightly confirmed the order of the AO to the extent of cash deposits of Rs.3,73,28,680/- made after the announcement of demonetization and has given relief of cash deposits of Rs.84,00,000/- made before the announcement of demonetization. Therefore, the ld.DR relied on the order of the AO and that of ld.CIT(A) and prayed for confirming the addition by dismissing the appeal of the assessee. 8. We have heard both the parties, perused materials available on record, all the paper books and gone through orders of the authorities below along with the judicial decisions relied on. The fact with regard to the impugned dispute are that the assessee has deposited a sum of Rs.3,73,28,680/- in specified :-18-: ITA. No: 2302/Chny/2024 bank notes during demonetization period to the bank account. It is admitted from the records that the assessee is engaged in the trading business of gold and silver bullions. The case was selected for scrutiny to verify the source for cash deposited and called for certain details. The assessee deposited cash of Rs.3,73,28,680/-, after announcement of demonetization by Government of India on 08.11.2016. The assessee deposited cash out of sale proceeds of gold and diamond jewellery collected from its customers which was less than Rs.2.00 lakhs per person and there was no requirement on the part of the assessee to obtain details like name, address and PAN of the buyers. In response to notice u/s.142(1) of the Act, the assessee had furnished cash book, sales register, purchase register, bank statements along with stock registers for the relevant period. The stock moved out of the books on account of sales made by the assessee has established from stock registers, which is supported by the proper books of accounts maintained which are subjected to tax audit u/s. 44AB of the Act. The assessee also submitted the month wise abstract of purchases, sales, invoice wise details from 01.11.2016 to 08.11.2016, cash deposited in the impugned year along with prior F.Y. 2015-16, the details of cash deposited from 01.11.2016 to 08.11.2016 and from :-19-: ITA. No: 2302/Chny/2024 09.11.2016 to 30.11.2016. The VAT returns and annual audit report under TNVAT Act for the relevant period reflected such sales which have been accepted by the VAT authorities. These books of accounts, statements and other documents furnished by the assessee before the lower authorities, which have not been disputed nor rejected. The books of accounts of the assessee have been accepted by the lower authorities while framing the assessment and not rejected by pointing out any defects. 8.1 On perusal of the records and facts and circumstances of the case, we are of the considered opinion that when the sale has been reflected in the books of accounts and offered to tax, adding the same again would amount to double taxation, which is impermissible in law. The cash sales made by the assessee have been credited in the books of accounts and the same form part of the assessee’s cash book. On these facts, it could be very well said that the assessee’s claim was backed up by relevant evidences. Thus, the assessee has discharged the burden of proving the source of the cash/SBN deposited in the bank and the Assessing Officer failed to rebut the same. The allegations/statistics of entire sales made from 01.11.2016 to 08.11.2016 by accepting the SBNs to the tune of :-20-: ITA. No: 2302/Chny/2024 Rs.3,73,28,680/-, relied upon by the Assessing Officer and ld.CIT(A) to take an adverse view is not backed up by relevant evidence/material, and hence cannot be justified. The finding of the AO that such abnormal sales could not be achieved before the announcement of demonetization by the Government, is bereft of any concrete evidence to prove otherwise on record. Further, the reliance on the decision of the Hon’ble supreme court in the case of Durga Prasad More and Smt. Srilekha Banerjee and others vs. CIT, Bihar and Orissa reported in 1964 AIR 697, 27.03.1963, is not applicable to the present facts of the case, as the assessee has furnished the documents and records which are submitted to the statutory authority like TNVAT department and discharged the taxes on monthly basis, apart from the books of accounts audited by a Chartered accountant. It is trite law that no addition could be made merely on the basis of suspicion, conjectures and surmises. Moreover, since cash generated out of sales has been credited in the books of accounts, the provisions of section 69A could not be invoked in the present case. The assessee’s reliance on the coordinate bench decision in the following cases which are identical to the present facts are taken into consideration: :-21-: ITA. No: 2302/Chny/2024 Sl. No. Date Particulars 1. 20.12.2023 ITO, Coimbatore vs Sahana Jewellery Exports Pvt Ltd. Chennai ITAT – ITA No.999/2022 2. 21.03.2024 DCIT vs M/s. DAR Paradise Pvt. Ltd. Chennai ITAT – ITA No.1106/2023 3. 03.04.2024 DCIT vs ANS Jewellery – Chennai ITAT – ITA No.1151/2023 4. 05.04.2024 ITO vs Surabi Gold – Chennai ITAT – ITA No.372/2023 5. 05.04.2024 DCIT vs Navaratna Maaligai - Chennai ITAT – ITA No.801/2023 6. 05.04.2024 JCIT Vs. Tara Jewellery - Chennai ITAT – ITA No.276/2023 7. 10.04.2024 DCIT vs D Gem Mount – Chennai ITAT – ITA No.782/2023 8. 06.11.2024 KTM Maligai vs DCIT– Chennai ITAT – ITA No.1382/2024 9. 03.07.2024 M/s. RR Foods Pvt Ltd vs ITO – Chennai ITAT – ITA No.1359/2023 10. 26.07.2023 M/s. Micky Fireworks Industries vs ACIT – Chennai ITAT – ITA No.264/2023 11. 07.10.2024 Tamilnadu State Marketing Corporation Ltd ACIT – Chennai ITAT – ITA No.431/2023 8.2 Further, the coordinate bench decision in the case of DCIT vs ANS Jewellery in ITA No.1151/CHNY/2023 dated 03.04.2024 is applicable to the present case on hand, wherein the Tribunal held as under: “9. From the fact, it emerges that the assessee is dealing in precious metals. It transpired that the assessee deposited cash during demonetization period, the source of which was stated to be out of sales generated by the assessee up-to 08-11-0216. In support, the assessee furnished details of total cash deposited during earlier financial year as well as during this financial year with break-up of cash deposited before demonetized period as well as cash deposited after demonetized period and cash deposited during those corresponding periods in earlier year. The assessee also furnished monthly summary of sales along with summary of opening and closing cash balances. From the tabulation, it could be seen that the assessee is always conducting substantial sales in cash which are regularly being deposited in the bank account. The assessee is maintaining healthy opening cash balance since financial :-22-: ITA. No: 2302/Chny/2024 year 2015-16. The assessee has maintained opening cash balance of Rs.25.31 Lacs in this year. During financial year 2016-17 also, the assessee is carrying out cash sales and maintaining healthy cash balance throughout the year. The assessee has incurred cash sales up-to 08-11- 2016 which has been utilized to make impugned cash deposits in the bank accounts. Such sales have been offered in the Sales Tax Return as well as in the Income Tax Return which has been accepted. The stock-in-trade has moved out of assessee’s books of account. The books have not been rejected by Ld. AO and in fact, no single defect could be pointed out by Ld. AO in the books or financial statement of the assessee. When the sales has been reflected in the books of accounts and offered to tax, adding the same would amount to double taxation which is impermissible in law. The books are subjected to Tax Audit u/s 44AB and the assessee has maintained quantitative details of the stock-intrade. The cash sales proceeds have been credited in the books of accounts and the same form part of assessee’s cash book. On these facts, it could very well be said that the assessee’s claim was backed up by sufficient documentary evidences. The allegation of Ld. AO is that such abnormal sales could not be achieved by the assessee immediately upon announcement of demonetization by the Government. However, such allegations are bereft of any concrete evidence on record. It is trite law that no addition could be made merely on the basis of suspicion, conjectures and surmises. In the present case, the assessee has duly discharged the burden of establishing the source of cash deposit and the onus was on Ld. AO to disprove the same. However, except for mere allegation and few statistics, there is nothing on record to support the conclusions drawn by Ld. AO that the assessee’s own unaccounted money was introduced and accommodated under bogus customers’ name during the demonetization period. The demand of Ld. AO to produce CCTV recording after lapse of considerable period of time could not be said to be reasonable particularly when all the other evidences supports the case of the assessee. There is no finding by Ld. AO that any particular sales affected by the assessee exceeded threshold limit which would require collection of tax at source (TCS). Since cash generated out of sales has been credited in the books of accounts, the provisions of Sec.69A could not be invoked in the present case. The case laws as cited by Ld. CIT(A) duly supports the case of the assessee. Under these circumstances, the impugned additions have rightly been deleted by Ld. CIT(A). The same could not be faulted with. Therefore, the corresponding grounds raised by the revenue stand dismissed.” :-23-: ITA. No: 2302/Chny/2024 8.3 Therefore, in the present facts and circumstances of the case and by respectfully following the decisions of Tribunal (supra), the impugned additions of Rs.3,73,28,680/- are not sustainable in the eyes of law and hence, we are of the considered view that the action of the ld.CIT(A) confirming the addition is not justified and hence we are setting aside the order of the ld.CIT(A) by allowing all the grounds raised by the assessee. 9. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 17th April, 2025 at Chennai. Sd/- Sd/- (जॉजŊ जॉजŊ क े) (GEORGE GEORGE K) उपाȯƗ /VICE PRESIDENT (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखा सद˟/ACCOUNTANT MEMBER चे᳖ई/Chennai, ᳰदनांक/Dated, the 17th April, 2025 RSR आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3.आयकर आयुƅ/CIT –Salem 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF "