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2023 (8) TMI 1015 - AT - Income TaxEstimation of income - bogus purchases - assessee was also a beneficiary among others with regard to bogus purchase of diamonds - CIT(A) confirmed the addition @ 20% on the alleged purchases as bogus - HELD THAT:- Decision of the ld. CIT(A) is oxymoronic as the ld. CIT(A) having given categorical observation that the diamonds have been indeed purchased, sold, the profit is offered to tax, the name of the assessee has not been mentioned by the so-called bogus bill provider namely, Sh. Bhanwarlal Jain, but went on to disallow 20% of the purchases as bogus. Having satisfied with the reply, the AO has not made any further enquiries but made addition solely based on the information received from the Investigation Wing. Even, the statement given by the Sh. Bhanwarlal Jain has not pointed out any transactions with the assessee company. Hence, keeping in view, the entire facts and circumstances, we hold that the ld. CIT(A) has rightly deleted 80% of the addition made on account of alleged bogus purchases and wrongly confirmed 20% of the same purchases without any basis. We find that the assessee has duly discharged the onus placed upon the assessee regarding proving genuineness of the purchase. - Decided in favour of assessee. Unexplained Cash Sales/Cash Deposits - Assessee has deposited cash during the period of demonetization and has not able to substantiate with cogent reasons and documentary evidence about the source of cash - CIT(A) restricted part addition - HELD THAT:- As at the time of demonetization i.e. on 08.11.2016 there was not much variation in the cash sales/turnover of the assessee company in comparison to the preceding years. Explaining the fluctuations, the ld. AR submitted that the assessee company had cash in hand balance as low as Rs. 11,16,165/- as on 06.05.2016 and as high as Rs. 2.97 crores as on 10.08.2016 and Rs. 1.74 Crores as on 24.09.2016. Based on these amounts, it was not for the first time that the assessee had held cash in hand balance of Rs. 3 Crore or Rs. 4 Crores. In fact, in the year under consideration there were many occasions evident from the cash book which proves that assessee company has held such huge cash in hand balances in past also. Also the assessee has shown big increase in sales on 08.11.2016 in a single day which lead to increase in cash in hand which was done because VAT returns had not been filed for the said month, thus the logic given by the AO to doubt the genuineness of cash sales made on 08.11.2016 is again illogical and without any basis -As per the VAT legislation the VAT returns are filed quarterly i.e. the end of each quarter of the financial year. Meaning thereby the VAT return for the month of November, 2016 was due for filing in the month of January, 2017 i.e. at the end of 3rd quarter of the financial year. Hence, the observation of the AO in the assessment order has no legal standing, accordingly liable to be rejected. We also find that the ld. CIT(A) has rightly deleted the amount of Rs. 1,94,00,000/- owing to proving the details of all the parties with name and PAN number. Thus comparison of cash sales from the month of April 2016 to October 2016 reflected total cash sales of Rs. 15.29 Cr. which was also accepted by the Revenue. Further, the total cash deposits in the F.Y. 2014-15 was Rs. 27.53 Cr., F.Y. 2015-16 was Rs. 40.50 Cr., F.Y. 2016-17 was Rs. 32.39 Cr. and F.Y. 2017-18 was Rs. 32.90 Cr. approximately. Hence, keeping in view the entire cash deposits of the assessee were a period of four years including the period before us, the cash deposits of Rs. 2.63 Cr. as confirmed by the ld. CIT(A) cannot be upheld. - Decided in favour of assessee.
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