Analysis of Case Laws- Cash Sales before Demonetization period

This article covers analysis of case laws- Cash Sales before Demonetization period. Issue under Income Tax Covered here is-

Questions

  1. Whether books of account can be rejected on the ground that Particulars including Addresses of the Customers are not recorded?
  2. Where cash sales are accepted Can the cash deposits in the bank ac count out of Cash Sales to be held as Unexplained ?

Answer:

  1. In the matter of cash sales books of account can not be rejected on the mere allegation that
    (i). Address including particulars of the Customers are not reflected on the cash memos,
    (ii) Consolidated cash memo was prepared for several petty cash sales;
    (iii) Failure to issue Cash Memos .
    Once sales value is accepted Non maintenace/non issuance of cash memos including non availability of Addresses of the Customers shall not act as a valid ground for rejection of books of account.
    This view is held in favour of Assesee by following Court Orders.
    R.B.Jessaram Fatechand Vs. CIT ( Bom.HC).
    M.Durai Raj Vs. CIT (Ker. HC).
    ACIT Vs. M/s Kamlesh Kumar ( Lkw Trib).
  2. Once cash sales are accepted addition of cash which was realised out of cash sales as ‘ UNEXPLAINED INCOME’ shall result Double Taxation of the same amount that is Once as Cash Sales and again as Unexplained Income.

Hence once cash sales are accepted , cash deposits out of cash sales can not be held as unexplained income as held by Tribunals in favour of Assessee in the following cases.
Agson Global Pvt. Ltd vs. ACIT ( Del. Trib).
New Pooja Jewellers vs. ITO . ( Kol.Trib).
Nitisha Silk Millls Pvt Ltd vs. ITO( Ahd. Trib).

Nut Shell:

  1. Once sale figures of cash sales was accepted books of account can not be rejected for issues like non issuance of cash memos including non availability of addresses of customers.
  2. When cash was deposited out of cash sale proceeds same can not be held as Unexplained Incone as it will result Double Taxation of same amount.

Matter is explained in easy language. Pls read and circulate.

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