R.S Syal, A.M:— These two cross appeals-one by the assessee and other by the Revenue along with Cross Objection by the assessee arise out of the order passed by the CIT(A) on 20.12.2010 in relation to the assessment year 2006–2007.

2. The assessee's appeal is a recalled matter inasmuch as the earlier ex-parte order passed by the tribunal was subsequently recalled vide its order dated 2.12.2011

3. The only issue raised in the assessee's appeal is against the confirmation of addition of Rs. 22,06,672/-. Briefly stated the facts of the case are that the assessee is engaged in the business of trading in metal, scrap etc. under the name and style of Poonam Enterprises. Some information was received from the Directorate of Revenue Intelligence, Ahmadabad that during the course of investigation into the affairs of Gurukrupa Metal Recycling (in which the assessee is a partner), Jam Nagar and others, a sum of Rs. 54 lacs was seized on 5.10.2005 from the premises of the assessee. On being called upon to explain the source of such seizure of Rs. 54 lacs, the assessee gave the details of seized cash as of i) Poonam Enterprises - Rs. 23.1 lacs; ii) Radha Bhanushali (sister-in-law of the assessee) - Rs. 3.62 lacs; and iii) Premji Bhanushali (brother of the assessee) - Rs. 27 lacs. In order to substantiate his claim about the cash of Rs. 23.1 lacs relating to his proprietorship concern, the assessee produced books of accounts along with sales/purchase voucher. The Assessing Officer observed that the assessee registered a total turnover of Rs. 10.29 crore. On the examination of the sales register, it was noticed that four cash memos were issued by the assessee on 28.9.2005 and 29.9.2005 detailed as under:—

Sl. No. Bill No. & Date Name & Address of the party Amount 1. No. 085, 28/9/05 Afroj Allam, Muradabad 5,52,448 2. No. 86, 28/9/05 Yusuf Khan, Muradabad 5,24,784 3. No. 87, 29/9/05 Salim Khan, Aligarh 5,20,832 4. No. 88, 29/9/05 Mohmad Raffik, Aligarh 6,08,608

4. The Assessing Officer observed on the perusal of the details that except for these four cash memos depicting cash sales totaling Rs. 22,06,672/-, there were no other instances of cash sales. These cash memos did not carry address of the purchaser whereas the other bills did carry proper addresses. It was further observed that these cash memos were in the handwriting of a person different from other invoices. The A.O further noticed that these cash memos did not carry any detail of transporter who carried heavy items like metal. Since, these cash memos were issued a few days before the search was conducted by the DRI on 5.10.2005, the A.O called upon the assessee to clarify such abnormalities. The assessee tendered his reply. Not convinced with the same, the Assessing Officer made addition of Rs. 22,06,672/- u/s. 68 of the Act. No relief was allowed in the first appeal.

5. We have heard the rival submissions and perused the relevant material on record. There is no dispute on the fact that the search carried out on 5.10.2005 resulted into seizure of cash amounting to Rs. 54 lacs, whose source was explained as, inter alia a sum of Rs. 23.1 lacs coming from Poonam Enterprises, namely, the assessee's proprietorship concern. The assessee produced his books of accounts to show that this much cash was available in his books on the date of search. Apart from other invoices, the assessee issued four cash memos totaling Rs. 22.06 lacs, as tabulated above, which amount was included in the books of account. The assessee replied to the A.O's. objections by stating that usually sales were made through demand draft/cheque and only in a case of certain new unknown party, the assessee was making sales either after collection of cheque or on receipt of cash. The reason for the above four cash memos amounting to Rs. 22.06 lacs was stated to be for as these parties approaching the assessee and coming directly to godown for collecting their goods and directly transporting them to their respective destinations. The assessee further submitted that all the goods were sold after charging due VAT, which amount was duly deposited in the government account within the specified time. The reason for such cash memos in the handwriting of a different person, was stated to be their issuance by the assessee's brother who was there at the time of delivery of goods at stockyard. Relevant extract of the assessee's cash book from 7.6.2005 to 4.10.2005 is available on pages 34 and 35 of the paper book, from which it is clear that the cash in hand of the assessee stood at Rs. 23.10 lacs at the close of 4.10.2005 It is further relevant to note that the assessee was maintaining stock register in respect of the items dealt with by him. A copy of the relevant parts of the stock register is available on pages 44 to 49 of the paper book. This stock tally was admittedly before the Assessing Officer, who has not pointed out any deficiency in them. There is no law which prohibits a trader or a manufacturer in making cash sales. The Hon'ble Bombay High Court in R.B Jessaram Fatehchand (Sugar Deptt) v. CIT, (1970) 75 ITR 33 (Bom) has held that sales can be in cash and it is hardly necessary for the seller to bother about the name and address of the purchaser. We find that so long as the availability of stock is there and there is nothing adverse against the cash memos issued by the assessee, such cash sales cannot be doubted. Here it is pertinent to note that the volume of such cash sales at Rs. 22.06 is to be seen in the light of the assessee's total turnover of Rs. 10.29 crore. It is but natural that if a customer makes cash purchase and lifts the goods, there is no duty cast upon the seller to insist for the address of the purchaser. In the light of the fact that the stock record was available with the assessee, which evidenced the making of sale, we fail to appreciate as to how any addition can be made by treating cash sales as bogus.

6. There is another dimension to this issue. The Assessing Officer made addition of Rs. 22.06 lacs u/s. 68 of the Act, which contemplates the making of addition where any sum found credited in the books of the assessee is not proved to the satisfaction of the A.O It is only when such a sum is not proved that the Assessing Officer proceeds to make addition u/s. 68 of the Act. We are dealing with a situation in which the assessee has himself offered the amount of cash sales as his income by duly including it in his total sales. Once a particular amount is already offered for taxation, the same cannot be again considered u/s. 68 of the Act. In fact, such addition has resulted into double addition.

7. In view of the foregoing discussion, we are of the considered opinion that the ld. CIT(A) was not justified in sustaining this addition. The impugned order is overturned on this issue and the addition is directed to be deleted. This ground is allowed.

8. First ground of the Revenue's appeal is against the deletion of addition on account of cash seized amounting to Rs. 30.26 lacs. The assessee explained the source cash seized amounting to Rs. 54 lacs inter alia including a sum of Rs. 3.62 lacs received from Radha Bhanushali and Rs. 27 lacs received from Premji Bhanushali. The Assessing Officer made addition of Rs. 30.62 lacs (Rs. 3.26 lacs + Rs. 27 lacs) by recording that no confirmation was furnished from them. The ld. CIT(A) deleted this addition by holding that both these persons, namely, Premji Bhanushali and Radha Bhanushali duly confirmed the cash belonging to them. The ld. CIT(A) directed to delete this addition and gave liberty to the A.O to examine the source of cash in the hands of Shri Premji Bhanushali and Radha Bhanushali, who had confirmed the possession and ownership in cash in question. The Revenue is aggrieved against such addition.

9. Having heard the rival submissions and perused the relevant material on record, it is observed that the assessee categorically stated before the Assessing Officer that a sum of Rs. 30.62 lacs belonged to Premji Bhanushali and Radha Bhanushali. This fact was confirmed by these two persons as well. When the assessee's brother and his wife admitted the possession of cash belonging to them, there can be no reason for making addition in the hands of the assessee in respect of cash when the facts and circumstances amply show that the cash did belong to them. It is for them to explain the source of cash available with them in their respective hands. In our considered opinion, the ld. CIT(A) rightly appreciated the facts in directing to delete the addition by asking the A.O to verify the source of cash in the hands of these two persons. This ground is not allowed.

10. The last ground of the Revenue's appeal is against the deletion of addition of Rs. 19,00,674/- being the amount credited to the assessee's capital account. The facts apropos this issue are that the assessee introduced a sum of Rs. 19,00,674/- as fresh capital in Poonam Enterprises. The assessee was asked to furnish details of such fresh capital vide questionnaire dated 24.3.2008 No reply was given. Again when the assessee was asked to explain the source of such introduction of fresh capital vide order sheet entry dated 22.12.2004, the assessee gave the following explanation which has been reproduced in the assessment order:—

“During the year capital account of proprietor in increased as he has received personal advances and inducted to the business which in the next year getting settled.”

11. The Assessing Officer held that this limited reply of the assessee did not indicate any source of funds introduced as capital. He, therefore, made addition for the said sum u/s. 68 of the Act. The ld. CIT(A) got convinced with the assessee's submissions and directed to delete the addition. The Revenue is in appeal against such deletion.

12. After considering the rival submissions and perusing the relevant material on record, it is observed that the Assessing Officer specifically requisitioned the assessee to explain the source of fresh capital amounting to Rs. 19.00 lacs and odd introduced in his books of accounts. The assessee gave only sketchy reply which has been reproduced above. In our considered opinion, the ld. CIT(A) was not justified in deleting this addition by rather strangely mentioning that this addition was made in a summary manner. It is severely simply that when a certain sum is credited to the assessee's capital account, the onus is on him to explain the source of such deposit to the satisfaction of the A.O The ld. AR has invited our attention towards the capital account of the assessee in which there are certain debit and credit entries. The ld. CIT(A) was swayed by the assesssee's submissions without recording any categorical finding on the explanation of the source of credit entries, more so when the assessee did not adduce any proper explanation before the A.O We, therefore, overturn the impugned order on this issue and remit the matter to the file of A.O for deciding it afresh after allowing a reasonable opportunity being heard to the assessee. Needless to say, the assessee will be at liberty to lead any fresh evidence before the Assessing Officer in support of the credit entries in his capital account.

13. The Cross Objection filed by the assessee, which is only in support of the CIT(A)'s order as become infructuous in view of our decision in the Revenue's appeal.

14. In the result, the assessee's appeal is allowed, the Revenue's appeal is partly allowed for statistical purposes and the Cross Objection of the assessee is dismissed.