TMI Blog2021 (5) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... shal Exports Overseas Ltd. [ 2012 (7) TMI 1110 - AHMEDABAD HIGH COURT ] Hence, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. - Decided against revenue. - I.T.A.No.253/Viz/2020, Cross Objection No.02/Viz/2021 (Arising out of I.T.A. No.253/Viz/2020) - - - Dated:- 12-5-2021 - Shri N.K.Choudhry, Hon ble Judicial Member And Shri D.S. Sunder Singh, Hon ble Accountant Member For the Assessee : Shri G.V.N. Hari, Advocate For the Revenue : Shri D.K. Sonowal, CIT DR ORDER PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER : This appeal is filed by the revenue against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-3, Visakhapatnam in Appeal No.603/2019-20/10540/CIT(A)-3/VSP/2020-21 dated 19.10.2020 and cross objection is filed by the assessee. 2. All the grounds of appeal are related to deleting the addition of ₹ 4,71,35,500/- made u/s 68 r.w.s 115BBE of the Income Tax Act, 1961 (in short Act ). Brief facts of the case are that the assessee is a firm with two partners i.e. Sri Mahendra Kumar Jain and his son Sri Rajendra Kumar Jain engaged in the business of jewellery trading has filed it s retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anaging Partner stated that they do not insist for mobile numbers or addresses of customers, since, it was not mandatory in the case of sales below ₹ 2 lakhs and all the sales that were made on 08.11.10216 was below ₹ 2 lakhs only. He further explained to a question that the sales after 8.00 P.M to 12 A.M on 08/11/2016 were extraordinary due to the announcement of demonetization. Since, the assessee failed to furnish the evidences of CCTV footage, KYC documents etc. for abnormal sales on 08.11.2016 the AO believed that the sales stated to have been made between 8.15 p.m. to 11.58 p.m. amounting to ₹ 4.71 crores consisting of 270 bills are nothing but unexplained cash credits representing unaccounted money brought in to the business in the guise of jewellery sales and the paper work was done, merely to give the colour of authenticity of sales and accordingly made the addition of ₹ 4,71,31,500/- u/s 68 r.w.s.115BBE of the Act and taxed the same @60%. The AO also relied on the decision of Durga Prasad More 82 ITR 540, wherein, Hon ble apex court held that an apparent must be considered real until it is shown that there are reasons to believe that the apparent i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the assessee s argument that due to unexpected announcement of demonetization on the night of 08.11.2016 the public largely purchased the the jewellery as alternative for exchange of currency, and held since, the sales were credited in the assessee s books of accounts as revenue receipt and offered for taxation, the same amount cannot be taxed again u/s 68 of the Act as unexplained cash credit. The Ld.CIT(A) relied on the decisions of Vishal Exports Overseas Ltd (supra) of Hon ble Gujarat High Court. The Ld.CIT(A) further observed that the decisions of Hon ble Supreme Court in the case of SumatiDayal Vs. CIT and Durga Prasad More s case (supra) has no application in assessee s case. The ld. CIT(A) also observed that there was ample evidence to show that there were large number of public thronged the jewellery shops on 08/11/2016, and thus held that there is no justification for the AO to treat the sum of ₹ 4,71,35,000/- as unexplained cash credit and accordingly deleted the addition and allowed the appeal of the assessee. 5. Against the order of the Ld.CIT(A), the department is in appeal before us. During the appeal hearing, the Ld.DR heavily placed reliance on the find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the jewellery in the cities consequent to declaration of demonetization of ₹ 1000 and ₹ 500 notes on 08.11.2016. The Ld.AR also distinguished the case laws relied upon by the Ld.DR stating that facts are not identical and none of the case laws relied upon by the DR are applicable in the assessee s case. In none of the cases, sales that were offered for taxation, was brought to tax again u/s 68 and hence argued that the Ld.CIT(A) has rightly deleted the addition and no interference is called for in the order of the Ld.CIT(A).. 7. We have heard both the parties and perused the material placed on record. In the instant case, the assessee has admitted the receipts as sales and offered for taxation. The assessing officer made the addition u/s 68 as unexplained cash credit of the same amount which was accounted in the books as sales. In this regard, it is worthwhile to look into section 68 which reads as under: 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, therefore, held that there was no reason to treat this amount as income from undisclosed sources and it was not a fit case for treating the said amount as concealed income of the assessee. The revenue moved to Calcutta High Court against the order of the tribunal and the Hon'ble High Court has confirmed the order of the Tribunal while deleting the penalty, Hon ble Calcutta high court held as under: 8. The Tribunal was of the view that the assessee had sufficient cash in hand. In the books of account of the assessee, cash balance was usually more than ₹ 81,000. There is no reason to treat this amount as income from undisclosed sources. It is not a fit case for treating the amount of ₹ 81,000 as concealed income of the assessee and consequently imposition of penalty was also not justified in this case. In the case of Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288 (SC), the Hon'ble Apex Court decided the matter in favour of assessee of the ground that it was clear on the record that the assessee maintained the books of accounts according to the mercantile system and there was sufficient cash balance in its cash books and the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness may not be persuasive for the past events especially in wake of facts as discussed above; and lastly, once neither any item in the trading account, nor gross profit has been rejected, then one part of credit side of the trading account, that is, sales cannot be discarded completely so as to hold that it is unexplained money. 7.2. In the instant case the assessee has established the sales with the bills and representing outgo of stocks. The sales were duly accounted for in the books of accounts and there were no abnormal profits. In spite of conducting the survey the AO did not find any defects in sales and the stock. Therefore we do not find any reason to suspect the sales merely because of some routine observation of suspicious nature such as making sales of 270 bills in the span of 4 hours, non availability of KYC documents for sales, non writing of tag of the jewellery to the sale bills, non-availability of CCTV footage for huge rush of public etc. The contention of the assessee that due to demonetization, the public became panic and the cash available with them in old denomination notes becomes illegal from 09.11.2016 and made the investment in jewellery, thereby thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d due to demonetization. Whereas in the assessee s case there were no such deduction or the exempt income and the profits were also not abnormal. The assessee explained the reason for huge sales with evidence and thus the case law relied up on by the DR is distinguishable. The Ld.DR relied on various case laws and all the case laws more or less are related to the additions made u/s 68 as unexplained cash credit and in none of the cases the assessees have admitted the same as income. Therefore, we find that the case laws relied up on by the Ld.DR has no application in the instant case and the same are distinguishable. 9. In view of the foregoing discussion and taking into consideration of all the facts and the circumstances of the case, we have no hesitation to hold that the cash receipts represent the sales which the assessee has rightly offered for taxation. We have gone through the trading account and find that there was sufficient stock to effect the sales and we do not find any defect in the stock as well as the sales. Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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