TMI Blog2013 (8) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... iled to produce any credible evidence to establish that cash sales were effected of brass scrap. The surrounding circumstances with regard to not debiting cartage expenses and other expenditure like salary or wages also show that there was no man-power available with the assessee to deal with the huge quantity of brass scrap. The assessee’s claim that transportation charges made to the Thelawalas is not recorded in the books of account makes the claim of assessee of sale of brass scrap as more doubtful. Thus, the assessee has failed to produce any credible evidence to establish the cash sales of the brass scrap. There is mismatch of dates appearing on the sale bills. Bill nos. 67 and 68 are dated 27.12.2004 and 28.12.2004 respectively while bill nos. 69 an 70 are dated 23.12.2004 and 25.12.2004. These facts also show that sales transactions were a covered up action of the assessee and were not genuine. There is no scope to treat this mistake as clerical mistake. Considering all records and factual aspects, the addition of Rs.20,58,255/- is confirmed – Decided against the Assessee. Addition of Rs.7,51,946/- made on account of purchases shown from Shiva Sanitary, Jam Nagar – ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in respect of Shiva Sales, Jam Nagar. In respect of addition made for cash deposited in bank and other clearing in bank account, CIT (A) directed Assessing Officer to work out the peak balance of the bank account and restricted the addition to that extent. Now, assessee is in appeal before us. 3. The assessee has taken the following grounds in the appeal :- 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax(Appeals) (CIT(A)] is bad both in the eye of law and on facts. 2(i). On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs.20,58,255/- made by the AO. (ii). That the above said addition has been made despite the assessee bringing all the material and evidences on record to prove the genuineness of the transaction of sale of scrap. 3(i). On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs.7,51,946/- made by A.O on account of purchases from Shiva Sanitary, Jam Nagar. (ii). That the above said addition has been made despite the assessee bringing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT (A) has confirmed the addition made by Assessing Officer as under :- 3.3.1. While it is true that the address details of parties to whom cash sales are made are not usually kept by the seller, such sales are invariably of petty amounts. In the instant case, however, the quantum of scrap sales of 7,590 kgs for Rs 8,23,515 and 11,380 kgs for Rs 12,34,730 merited record. More so when the goods sold could not have been lifted at one go by the two buyers given that the shop of the appellant is situated in a narrow lane requiring several rounds to transport the 18,970 kgs of metals scraps and in all likelihood the entire payment also would not have been made one time. That no detail of the two buyers of 18,970 kgs of metals scraps, at a value of Rs.20,58,245, could be furnished by the appellant is indeed an anomaly that required explanation. Since the claim of the aforementioned sales is not capable of verification, the surrounding circumstances become crucial to determine the genuineness of the sale transactions. 3.3.2. The stock statement furnished by the appellant reveals that the entire brass scrap of 18,970 kgs was bought from Times International on four different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntentions cannot be starker! Not only the particular purchase sale transactions of brass scrap come under a cloud, the veracity of the entire books of accounts comes into question. The books of accounts cannot be said to reflect the true and fair picture. In the absence of address particulars of the parties to whom sale was made arid non-confirmation of the corresponding purchase, the other expenses (such as cartage) relatable to such purchase sale transactions assume singular importance for these expenses could indicate towards the genuineness of the purchase sale transactions. However, in the case at hand, the investigative efforts of the assessing officer once again met with a dead end. 3.3.5. The 'clerical mistake' explanation of the appellant, with regard to mismatch of dates appearing on the sale bills numbered between 67 to 70, with bill nos. 67 and 68 dated 27/1212004 and 28/12/2004 respectively and bill numbers 69 and 70, (which were under question) dated 23/12/2004 and 25/12/2004 respectively, is clearly not a valid argument. The profit and loss account does not refer to any salary/wage expense during the year which suggests that the proprietor himself was conducting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee s claim that transportation charges made to the Thelawalas is not recorded in the books of account makes the claim of assessee of sale of brass scrap as more doubtful. Thus, the assessee has failed to produce any credible evidence to establish the cash sales of the brass scrap. There is mismatch of dates appearing on the sale bills. Bill nos. 67 and 68 are dated 27.12.2004 and 28.12.2004 respectively while bill nos. 69 an 70 are dated 23.12.2004 and 25.12.2004. These facts also show that sales transactions were a covered up action of the assessee and were not genuine. There is no scope to treat this mistake as clerical mistake. Considering all records and factual aspects, we are in agreement with the CIT (A) in confirming the addition of Rs.20,58,255/-. Hence, ground nos.2(i) (ii) of assessee s appeal stand dismissed. 9. In ground nos.3.(i) and 3.(ii), the issue involved is confirming the addition of Rs.7,51,946/- made on account of purchases shown from Shiva Sanitary, Jam Nagar. 10. The ld. AR submitted that the assessee himself has never visited the premises of M/s Shiva Sanitary, Jam Nagar and do not know the owner. The dealing was through salesman located at Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties and also the failure of the appellant to come out clean and explain the true nature and modus operandi of his business, the addition of Rs.7,51,946 is confirmed. The arguments relating to the appellant's inexperience in the conduct of business merits outright rejection considering his brazen opening of bank accounts with fictitious joint names where during the year there were cheque deposits of Rs.34,56,617, cash deposits of Rs.15,50,500 and withdrawals of Rs.51,70,835: Clearly, it is not open to the appellant to first conceal information from the assessing officer or give incomplete answers and then to question. the addition made by the assessing officer on the ground that he had failed to point out where the unaccounted and undeclared money was stored or make guesses about some other circumstances that could explain the case of the appellant. In view of the above, when the book results are unreliable and there is a question mark on the true nature of business itself, no purpose would be served by dwelling on the appropriate GP rate. For these reasons, therefore, the addition of Rs.7,51,946 is confirmed and ground 2 of the appea1.is rejected. After hearing both the sides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not come forward with clean hands. The argument, that the appellant is a young and inexperienced man and that his 'over zealous intent to earn money by en-cashing third party cheque for 1 % commission which he failed to declare by oversight' is not maintainable because he failed to provide the names and addresses of the so called third parties and substantiate his claim of deriving only commission income. Thus, the source of cash and cheque deposits remained concealed. Under these circumstances, the assessing officer was justified in treating the entire deposits (cash and cheque) as income from other sources. However, the argument relating to consideration of only the peak amount has merit for the reason that the source of the deposits as well as the destination of the withdrawals remains unknown and unexplained. The possibility of the same money being used for deposits as well as withdrawals cannot be ruled out. Therefore, the assessing officer is directed to work out the peak balance of the concealed bank accounts and restrict the addition to that amount only. The assessing officer is also directed to verify the cash and cheque entries in the bank statement for the relevant year ..... X X X X Extracts X X X X X X X X Extracts X X X X
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