cash sale

AO is rightful to check the purchase bill of the company if he is doubtful about that. whether cash sale made by the company is showed in the sales return or not ?

Dear Sir,

Thanks a lot for your valuable input.

The company in question is showing full records of the cash sale including the sale tax return. The AO wants to verify the purchaser citing it as bogus sale. He is of the opinion that there was a cash shortage and that has been made good by way of bogus cash sales. He intends to take an statement on oath from all the purchasers for the goods purchased by them in cash.

Whether there is any case law on the matter??

Is there any way to defend the sales a genuine??

The Company have to provide relevant details of cash sales like Vat return,CST return, Excisable gate pass, excise return to prove that sales made were genuine. For reference of A.O. Company has to provide the name, address of the purchasers if he requires. the aim behind details of purchasers is to know whether sales made by company is correct or not. U can obtain statement from relevant buyers alongwith a copy of gate pas entry made at the factory of the purchasers.

regards,

ratan

Dear Sir,
 

The AO wants to add  cash sale under sec 68 as unexplained cash. He was unable to verify the purchasers. He is also not accepting the sales tax return as a proof that the sales were genuine. Whether we can defend the case?? How?? please guide and provide case law references if any.

thanks in advance

You should be having something. A transportation GR if goods went by truck. Normally when scrutiny is going on AO usually asks for details of cash sales made to particular party in excess of certain amount in a year. Now if you claim to have received substantially high amount by cash from a single party even on multiple dates, he can rightfully ask your buyer to submit to him the ledger account as per his books and whether his accounts are liable to be audited or not. The purchaser will have to respond to this querry.

We also have computer shop that sells Laptops and sometimes we have laptops of over 50000 value being sold to a person in cash. You have to tactfully in a non intrusive way take some identification from the party. Normally they always have their MDL handy. Some may have PAN Card. From Students we take their College ID Cards copy. From employees in big companies who come to the shops with their ID tags hanging , we request copy. We make excuses that we have to send the full address and ID to the company for registration of warranty on all India basis and whatever fast ones we can come up with in order not to offend the customer. To some we just say that we have to attach id/address proof for sales over Rs.50000 and what not. You must be able to identify a person for a cash dealing over a certain amount. Normally Income Tax Department considers amount in excess of 20000 as a moderate risk and anything over 50000 they consider as high risk and may ask if you have a PAN number of the party.This is normally in cash transactions.

This will not be reflected in any law books or rule books.  It is just a guideline to an AO what steps to follow. Nowadays with CASS the AO has a detailed printout of basis of selection and this will not be disclosed to you. You will make out during the course of scrutiny exactly why your return was flagged by CASS.

For 5* hotels it is mandatory to take PAN numbers for receiving cash in excess of Rs.25000 in a day from a guest.

You have no choice. Your AO will adjust your income accordingly and he will complete the assessment. Before adjusting he will inform you what he proposes to adjust and you can raise your dispute and go into appeal.