TMI Blog2022 (4) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... ositing in the Bank Account. In the instant case the opening stock, purchases and the closing stock has not been doubted, no inflated purchases were found or suppressed sales were noticed during the course of search held on 12/04/2017 i.e; just after the closing year relevant to the assessment year under consideration. It is also not a case that the assessee was not selling the stock/jewellery through exhibition which is clear from the figures given in para 18 of the impugned order which revealed that the percentage increase in sales in the month of exhibition as compared to the preceding month was 114.99% and 118.26% in the month of March 2014 and July 2015 respectively while in the year under consideration the percentage increase was only 62.88% in the month of October 2016. The assessee explained before the Ld. CIT(A) and furnished the chart for various assessment years which had been reproduced at page no. 65 to 67 of the impugned order, in the said chart it has been shown that the cash sales in the month of October 2016 i.e; period under consideration was 92% while in the preceding year it was 95% in April 2014, 93% in May 2015, 94% in June 2015, 93% in July 2015, 92% in Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the computer and the pen-drive found from the residential premises of the part time accountant of the assessee but no opportunity to cross examine the said accountant was given to the assessee and moreover, no specific defect was pointed out in the proper books of account maintained by the assessee in the regular course of business and nothing is brought on record to substantiate that the sales from 01/10/2016 to 29/10/2016 were not made, out of the existing stock available with the assessee. In the present case the assessee explained that the exhibitions were held in every year and the sales were normally higher in certain month and that in the month of October 2016 the cash sales was on the higher side as lots of festivals like Diwali, Dhanteras, Bhaiya Duj and Karwa Chauth etc. fell in that period. The said explanation cannot be brushed aside considering the trend of the society in India wherein people make the purchases of jewellery during the festive season. Thus the assessee was maintaining complete stock tally, the sales were recorded in the regular books of accounts and the amount was deposited in the bank account out of the sale proceeds, therefore, the addition mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DVO for the cost shown by the assessee. Thus mpugned addition made by the AO and sustained by the Ld. CIT(A) on account of difference in valuation of the showroom owned by the assessee alongwith another co-owner M/s Kalaneedhi Jeweller LLP, is deleted. - Decided in favour of assessee. - ITA No. 310/Chd/2021 And ITA No. 311/Chd/2021 - - - Dated:- 25-3-2022 - Shri. N.K.Saini, VP And Shri. Sudhanshu Srivastava, JM For the Assessee : Shri Sudhir Sehgal, Advocate For the Revenue : Smt. Priyanka Dhar, Sr. DR, Shri Vivek Nangia, CIT, DR ORDER PER N.K. SAINI, VICE PRESIDENT These two appeals by the different assessees are directed against the separate orders each dt. 30/09/2021 of the Ld. CIT(A)-5, Ludhiana. 2. Since the appeals were heard together and one of the issues is common in both these appeals therefore these are being disposed of by this consolidated order for the sake of convenience and brevity. 3. At the first instance we will deal with the appeal in ITA No. 311/Chd/2021 wherein following grounds have been raised : 1. That the Ld. Commissioner of Income Tax (Appeals)-5, Ludhiana has erred in confirming the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted in the order passed u/s 143(3) and even the assessment of the assessee for Asstt. Year 2018-19 having been framed u/s 143(3) and, thus, the confirmation of addition by the CIT(A) is against the facts and circumstances of the case and the detailed submissions as filed on number of occasions, during the course of 'appellate proceedings' have not been considered properly. 8. That the Ld. CIT(A) has failed to appreciate that merely on the basis of oral statement of part time Accountant, the confirmation of addition by the Ld. CIT(A), specially, when no cross examination of the Accountant have been afforded to the assessee, is uncalled for. 9. That the Ld. CIT(A) has erred in confirming the addition of ₹ 7,96,905/-on account of unexplained investment on the construction of show room, which is against the facts and circumstances of the case. 10. That notwithstanding the above said ground of appeal, the CIT(A) has erred in confirming the action of the Assessing Officer for reference to the Valuation Cell of the construction of shop and has not followed the various judgments as filed before him. 11. That the appellant craves leave to add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artner of the assessee Sh. Kamal Aggarwal in his statement recorded during the course of search/survey had no where mentioned about any such exhibition or sale. The relevant question by the authorized officer and answer by Sh. Kamal Aggarwal is reproduced as under ; Q.23 Perusal of the balance sheet of the previous year reveals that cash in hand as on 31.03.2016 is ₹ 33,639/- and as per the cash book for the period 01.04.2016 till 31.03.2017. Also reveals the similar picture upto October, 2016. Please explain the high cash in hand from 03.10.2016 upto 08.11.2016. Is it normal practice to have such s high cash in hand in excess of ₹ 2 crore when you are also having ODI limit with the bank. Please also clarify where this cash was kept? Ans. From 03.10.2016 onwards, difference festivals like Navratras, Dushehra and Diwali was occurred and celebrated and the cash was kept at the premise. ii) The other explanation of the assessee is that cash deposited was as per books of accounts and verifiable from the sale bills. This plea of the assessee is also not acceptable as the sales were found to be inflated later on by entering back dated bills. iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merit in the aforesaid reply of the assessee and observed that the books of accounts of the assessee were not correct and complete and did not depict the real statement of affairs. He asked the assessee to show cause as to why the books of accounts may not be rejected under section 145(3) of the Act and the assessment may not be completed in the manner provided under section 144 of the Act by observing in para 5 of the impugned order as under: 2. A search u/s 132 was conducted in your case and during the course of search various documents were impounded and relevant extract of computer data was taken. During the course of assessment proceedings, the following discrepancies have been noticed in the books of accounts: i) Two sets of books of accounts have been found in the Pen Drive and Computer in possession of accountant working with your firm. On comparison of sale account for the period 01.10.2016 to 31.10.2016 there is huge difference in the cash sale:. As per one set total sales for the period 01.10.2016 to 31.10.2016 have been shown at ₹ 4,08,33,912/- and as per another set of account books sales for the same period have been shown at ₹ 1,42,19,678/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts. 3 In view of the above facts the books of account maintained by you are not correct and complete, as such do not depict the real and true statement of affairs. I therefore, propose to reject the same u/s 145(3) of the Income Tax Act and assessment is proposed to be completed in the manner provided u/s 144 of the Income Tax Act. 4. During the demonetization period, you have deposited Rs. ₹ 2,90,20,000/- in CC limit account No.65183224280. Vide questionnaire dated 21.12.2018, you were required to produce documentary evidence with regard to the sources of cash deposit ₹ 2,90,20,000/-The explanation filed by you is not convincing as such do not justify the cash deposit of ₹ 2,90,20,000/-. As discussed above, your books of account do not depict the true state of affairs and sales have been inflated by showing cash sales in back dates i.e. October, 2016. I therefore propose to make appropriate addition on account of in-genuine sales entered after demonetization in back dates. 5. As discussed in para 2 (ii) above, the cost of construction of showroom shown by you in your books of account is not correct, I therefore, propose to make additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such jewellery. (ii) As regards point no. 2(ii) In addition to our reply dated 25/02/2019 point No. 5 and other explanatory chart, the comparative investment on construction chart below which clearly shows the variation in %age each year. The difference are attributable to difference between actual expenditure with estimated expense on yearly basis. %age of completion on yearly basis by DVO is a work of mere estimation while in totality the after making requisite corrections the differences are within permissible limits under law. (iii) In addition to our reply dated 25/02/2019. point No 5. as regards point 104 of Annexure-3 which has been submitted vide point No 56 However the stand of the assessee is clear thai the construction was undertaken by Sh Kesar Singh (Contactor) on cum-matenal basis and there can be all eventuality that certain bills would have been issued by the various suppliers to Kesar Singh who had been working for different persons and these bill due to some error would have been titled favouring the assessee and in the pleading of the assessee it is submitted that merely some supplier, writing the name of the assessee does not signify that the bil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h in hand. The other contention of the assessee that there is fall in the Gross Profit ratio in respect of sales made during 01.10,2016 to 08.11.2016 showing that old jewellery was sold is not relevant as its admitted fact that demonetization was announced on 08.11.2016 and sales for the past period were inflated to generate cash in hands in the books as on 08.11.2016.Further, the statement of accountant Sh. Naveen Goya! was again confronted with the assessee and the assessee has failed to offer any comments on the statement of Sh. Naveen goyal. b) In para 2, the assessee has furnished year-wise chart of investment in the construction of building which is being discussed in the subsequent paras. c) In para 3, the assessee has contended that the books of accounts were duly maintained and supported by vouchers is not acceptable as the two sets of books of accounts were found with different sale figures. Further, the receipts issued by Sh. Kesar Singh in respect, of construction were not found to be genuine. 5.3 In view of above facts, discrepancies pointed out above, statement of Sh. Kesar Singh and Sh. Naveen Goyal which have not been contradicted by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4497580 13446874 6.91 *These figures are of gross sales without considering sales return The above chart shows that the assessee has shown 32% of the annual sales in October, 2016 whereas maximum percentage of sales in October in other years is 11.23% i.e. in A.Y. 2015-16. Thus the percentage of sales in October to total annual sales is exceptionally high in the A.Y. 2017-18. In view of above discussions, facts, perusal of both sets of books of accounts, statement of accountant and contents of the bill books shows that the assessee has inflated its cash in hand as on 08.11.2016 to the extent of ₹ 2,19,85,395/- by issuing back dated bills to meet the cash in hand requirement of cash deposited in bank account. Accordingly, an addition of ₹ 2,19,85,395/- is being made as unexplained money u/s 69A of the Income Tax Act and charged to tax u/s 115BBE of the Income Tax Act. Penalty proceedings u/s 271AAB are being initiated on this undisclosed income. 6. Being aggrieved the assessee carried the matter to the Ld. CIT(A)and furnished the written submissions which are incorporated in para 3 of the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sit during demonetization , presuming the same as inflated cash in hand and such addition is based on conjectures and surmises and hence the addition made is against the facts and circumstances of the case. 6. It is submitted that year after year, the assessee has been filing the returns by drawing year-wise trading account of each item of Gold and Diamond jewellery and other related items including silver, Gem Stone, Moti beds etc. as per copy of the Trading Account placed in the Paper Book at pages 5 to 6. The same record has been maintained since the inception of the business and in this year also, same type of record has been maintained and no defects at all have been pointed out by the Assessing Officer on such quantitative tally. 7. Even in the Tax Audit report for the year under consideration, there is Annexure-I, which has been attached at page 27 of the Paper Book. The quantitative summary of Gold and diamond have been given by mentioning the opening stock, purchases and sales during the year under consideration and closing stock and this detail is being filed year after year. 8. It is submitted that there was search and seizure operations on the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties and majorly all the payments for the purchases have been made through normal banking channels and nothing has been doubted about such purchases. Thus, all the purchases are fully vouched. The sales are also fully vouched but majorly, the sales are made in cash, due to the nature of trade and some of the sales are on account of online transactions like debit card, credit card, cheques and pay you money etc. In every bill of purchase and sale, quantity and description of the item purchased or sold has been given in full form. 12. Thus, there is no finding of the Assessing Officer that any item of purchase and sale are not verifiable and even during the course of search, none of the loose papers have been found, from where any inference could be drawn that there has been certain purchases and sale outside the books of accounts and even the copy of the assessment order would prove the above fact. 13. It is beyond doubt that the Assessee was having sufficient stock of Jewellery, Bullion, diamond etc. and the same was duly accounted for in the books of accounts for the year under consideration. The entire sales were made from the regular stock in hand of the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this regard, it is submitted that assessee maintained 2 set of books is totally incorrect 1) as the books found at accountant s computer was found from accountant s house and not found during the course of the search carried out in the premises of the assessee. 2) assessee s books complete in all respect has been found in pen drive at accountant s house, which has been taken by him from accounts maintained at Laptop. Thus, the incomplete books were not foundduring the course of search at assessee s premises, but found from accountant s house which were not in the possession or control of assessee. Thus, addition could not have been made in the hands of the assessee for such alleged difference in sales entered in books. 17. Further, AO failed to bring on record any cogent material to establish that assessee has done any cash sales after demonetization to generate cash in hands in books of accounts. Further, as is a matter of knowledge to common man in Patiala that all Jewellery shops were closed for 2 days after demonetization on night of 8th November, 2016. Further, assessee s shop have been closed at 8.00 p.m on 8th November, 2016 as done usually on other days. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vious years increase. AO overlooked the submission of assessee made the addition without any incriminating material found during search. 19. It is submitted herewith that, though, there is statement of Sh. Naveen Goyal Accountant of the assessee, who have stated about certain alleged manipulation in the actual books of assessee as per alleged direction of the partner and, which, he has stated under coercion and pressure and Sh. Kamal Aggarwal, partner had clearly denied it during the course of search as mentioned in the assessment order itself above para 4. 20. It is also submitted that our Accountant is part time Accountant and comes twice in a week and, whatever, the sales or purchases or other expenses are to be recorded, he records the same in his computer, which exclusively belongs to him and he is absolute owner of the same and the said computer was not found from the premises of the assessee and it was brought from the residence of the Accountant and it is a fact and cannot be denied. The said Sh. Naveen Goyal had been working not only with us, but various other jewelers also and in his computer at the desk top, not only there is data of our concern, but there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Serial Number, because the regular Sr No is 435 and the serial Number 1-50, 51-100 and 101-150 come before 435, resultantly this cannot be said to be in Serial Numbers. The bills have been issued and accounted/recorded/disclosed/declared in the books that s why the bills have been found and the Provisions of Section 44AA requires the maintenance of books of account which has been done. The increase in sales relatable to Kundan is to be excluded from Gold (Exhibition) and various other market related forces resulted into increase in sales, which required bills to be issued and this maintenance issuance of the bills is required even by the department. While the sales were increasing as explained above then for the need of the time there were certain bill books which were pending (and relates to studded Jewellery itself please note (S) mentioned on impugned bill book impounded signifying (Studded jewellery) to be completed (1-50, 51-100 and 101-150) hence the same were used. Even, further none provision of law requires that the bill books need to be in a chronological order, though, the provision of law requires transactions to be accounted, recorded, disclosed, declared a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13595400 6930321 6.49% 12.72% 542651.00 0.51% 5,13,885/- 2017-18 12,83,62,906 15676038 8064631 6.28% 12.21% 2017448.00 1.57% 6,96,171/- 23. It is hereby submitted that Data from Accountant, Naveen Goyal, cannot be regarded as evidence and as it do not qualify for being termed as Information admissible under Evidence Act 1872 and the Information Technology Act, 2000:- PROVISIONS AS PER EVIDENCE ACT 1872 RELEVANCE IN PRESENT CASE (a) the computer output containing the information was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer; Here Two important aspects 1. Computer w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its contents; and The impugned computer system found from Naveen Goyal, Accountant was not operating properly during various periods under question and was being regularly got repaired from un unorganized sector with inappropriate non-professional manner which can directly affect the electronic records or the accuracy of its contents the said fact is substantiated with the bills of repairs from unorganized sector vendors showing the repairs. (d) the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities. The Desktop at the house of accountant do not contain any complete set of books and have no authenticity or Assessee s rightful data, which can be considered to have been fed in the ordinary course of the business of the assessee. The information contained in the seized records/HDD (Hard Disk Drive) cannot gives any inference by presumption that such information was being fed into the computer in the ordinary course of the said activities because the whole argument is based on the evidence seized and retain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipal amongst the assessee and Naveen Goyal as required by the provisions of the Contract Act, 1872 and neither had any such relationship being established in the case set up by the A.O. It was stated that no express or implied authority was given by the assessee to Shri Naveen Goyal for changing / altering the transactions and that the assessee as a principal be it so had not ratified the acts of accountant and had refused the knowledge / authority of such acts. It was stated that Shri Naveen Goyal, Accountant was writing accounts for various persons in Patiala and it was not known neither brought on record as to the recording of his statement was doctored /coercion and under what circumstances it had been given by him. It was submitted that it was not known as to why and how Shri Naveen Goyal maintained two sets of data with what purposes, since no such onus was discharged by the A.O. for arriving at a finding to that extent. Therefore the statement of Shri Naveen Goyal was not sustainable in law particularly when no opportunity was given to cross examine. The reliance was placed on the following case laws: Prakash Chand Mehta vs CIT (2008) 301 ITR 134 (M.P) Andaman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O (1981) 7 Taxman 13 (SC) A.S. Sivan Pillai vs. CIT (1958) 34 ITR 328 (Madras) Roshan Di Hatti vs CIT 107 ITR 938 (SC), CIT vs Value Capital Services Ltd 307 ITR 334 (Del.), CIT vs Real Time Marketing (P) Ltd 306 ITR 35 (Del.) , CIT vs Kamdhenu Steel and Alloys Ltd. 248 CTR 33 (Del.) 6.4 It was also submitted that the amount deposited in the bank account was out of sale of jewellery which had been held by the assessee as stock in trade and since the deposits in the bank account were out of sale of stock therefore the stock of the assessee has depleted and the cash has come in respect of stock, such sales had been disclosed in the trading account against the purchase which had not been doubted, neither the opening and closing stock had been doubted. Therefore, nothing could have been doubted when the source of cash was well explained and was shown in the bank account. However the addition was made only on the basis of statement of account at back of the assessee without establishing any motive on the part of the assessee and without disturbing the closing stock as on 31/03/2017 which had been arrived at after reducing the sale in quantity of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 2017-18 31.03.2017 27/09/2017 43742505.00 105610568.00 128362906.50 36666205.00 15676038.50 09/05/2017 7 2018-19 31.03.2018 10/08/2018 36666205.00 175200943.79 194497580.00 34733316.00 17363747.21 21/09/2018 8 2019-20 31.03.2019 29/10/2019 34733316.00 131543735.37 147401553.00 37037121.00 18161622.63 29/10/2019 9 2020-21 31.03.2020 12/11/2020 37037121.00 104283107.47 126557701.00 27892768.00 13130240.53 07/11/2020 6.6 It was stated that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Sudeep Goenka as reported in 29 taxmann.com 402 (All) Pr. CIT Vs Dilip Kumar Swami as reported in 106 taxmann.com 59(Raj) ITO Vs Sh. Pavan Kumar Bhagatram Sharma (ITAT Ahm) Kishore Jeram Bhai Khaniya Prop. M/s Poonam Enterprises Vs ITO, in ITA No. 1220/Del/2011 (ITAT Del) CIT vs Devi Prasad Vishwnath Prasad (1969) 72 ITR 194 (SC) CIT vs. Durga Prasad More (1969) 72 ITR 807 (SC) Smt. HarshilaChordiavs ITO (2008) 298 ITR 349 (Raj) M/s Heera Steel Limited vs. ITO (2005) 4 ITJ 437 (Nag) CIT vs. Ghai Lime Stone Co. (1983) 144 ITR 140(MP) R.B. Jessaram Fatehchand (Sugar Dept.) v. CIT reported at [1970] 75 ITR 33 (BOM.) M. Durai Raj v. CIT [1972] 83 ITR 484 (Kerala) M/s Asian Consolidated Industries Limited vs ITO in ITA No. 4873/Del/1998 order dated 05.10.2018 (Del Bench) ITO vs. M/s Sunny Jewellery House in ITA No. 196/Chd/2014 order dated 06.05.2016 (ITAT Chd) ACIT vs. M/s Kewal Singh in ITA No. 664/Chd/2016 order dated 08.02.2017 (ITAT Chd) Hon ble Delhi ITAT in the case of ITO v. Jethu Ram Prem Chand reported at [2001] 114 Taxman 219 (Delhi)(Mag.) NITISHA SILK MILLS (P.) LTD. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO via filing their name, address and PAN number. ❖ Comparison of amount of cash sale with the earlier years is not proper as every year has its business and business opportunities and therefore, the amount of cash sales is not at all comparable to previous years. Sudden spurt or sudden downfall in sales is not totally dependent upon the business trends in the market and the assessee being a business man would always be in the favour of increasing his sales either on cash basis or credit. Addition so made by the AO deeming the impugned cash deposits arising out of accounted cash sales as unexplained cash credits merely on the basis surmises conjectures is fallacious and deserves to be deleted. 6.8 It was also submitted before the CIT(A) that the A.O. without taking into consideration the VAT Return, which were also on record, made the addition. It was stated that while one Government Authority had accepted that the sales and purchases were genuine then the another Government Authority should have sustainable reasoning to reject such purchases and sales. However the A.O. made the addition without doubting the genuineness of purchase and consequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;changed data', even then, no addition is called for, because as per the 'inflated data of sales' which is being alleged by the department, there is a sufficient stock of the gold and the other items and from that, it is proved beyond any iota of doubt, that the assessee had sufficient stock of gold and other items and against which, the cash has been recovered by way of sales and the profit on such sales have been disclosed and accepted by the Assessing Officer. We are submitting herewith the stock tally from 01.10.2016 to 31.10.2016 for the period, for which, data was recovered from the residence of the accountant, which will prove that there is no shortage of stock and neither any case of 'unexplained money' introduced in the books of accounts can be made. The cash has been generated out of the sale of the gold stock, diamond jewellery etc. and, thus, on one hand, the stock of gold has reduced and against which the stock of gold in quantity in the books has depleted and the resultant profit disclosed in the books of accounts and which has been accepted by the AO. The detail, which is being marked as Annexure-A is self-explanatory which is a copy of the sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished a Chart of total sales as per the books of accounts of the assessee s partnership firm giving the total sales both by way of cash/credit as reflected before the changes as being alleged by the Department and the total sales as per alleged inflated figures of sale and the difference worked out in the following manner: Chart of total sales as per books of accounts and as per the data seized from the residence of accountant Opening Balance Sale Before Change of data After Change of data Difference 01-10-2016 367920.00 1202564 834644.00 02-10-2016 328519.00 848029 519510.00 03-10-2016 207611.00 376782 169171.00 04-10-2016 664779.00 1260796 596017.00 05-10-2016 1383186.00 2173339 790153.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1123725 301674.00 27-10-2016 76916.00 404118 327202.00 28-10-2016 1691321.00 4639284 2947963.00 29-10-2016 13000.00 2057776 2044776.00 Grand Total 15766609.00 35537736 19771127.00 From the above chart, if we go by the allegation of the department, there is inflation in the sales from 1-10.2016 to 29.10.2016, for which the data was found from the computer of Accountant and it has been alleged that sales have been inflated by ₹ 1,97,71,127/-. This increase in the sales is not on account of any unexplained money introduced into the books of accounts of the assessee, but against this, extra sales as being alleged, the stock of different varieties of Gold, Diamond or Silver was sold and the stock as per books have depleted, which is proved from the day today stock register from 1.10.2016 to 29.10.2016, where the stocks equiva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1036190 8-Oct-16 0 11964 11964 8-Oct-16 1134368 11964 1146332 9-Oct-16 0 0 9-Oct-16 292028 3000 295028 10-Oct-16 619827 10000 0 619827 10-Oct-16 1516484 10000 2800 1519284 11-Oct-16 251251 20000 271251 11-Oct-16 868552 20000 888552 12-Oct-16 779889 0 779889 12-Oct-16 1328558 0 1328558 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 429383 315400 744783 23-Oct-16 1006089 315400 1321489 24-Oct-16 1285578 0 1285578 24-Oct-16 2103653 0 2103653 25-Oct-16 1122680 184811 1307491 25-Oct-16 1434445 184811 1619256 26-Oct-1 6 756451 65600 822051 26-Oct-16 1058125 65600 1123725 27-Oct-16 57016 19900 76916 27-Oct-16 384218 19900 404118 28-Oct-16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-2016 629827.00 1000000.00 43588.60 11-10-2016 251251.00 - 294839.60 12-10-2016 779889.00 250000.00 824728.60 13-10-2016 18000.00 220000.00 622728.60 14-10-2016 33050.00 230000.00 425778.60 15-10-2016 14000.00 220000.00 219778.60 16-10-2016 395625.00 6566.00 608837.60 17-10-2016 398920.00 425000.00 582757.60 18-10-2016 21871.00 200000.00 404628.60 19-10-2016 908748.00 - 1313376.60 20-10-2016 813580.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jewellers LLP Particulars l-Oct-2016to 15-Nov-2016 Transactions Closing Debit/Out of cash sales Credit/Out of flow of cash) Balance Opening Balance 443097.60 Dr 10/1/2016 1022564.00 350000.00 1115661.60 Dr 10/2/2016 657029.00 1772690.60 Dr 10/3/2016 271058.00 14404.00 2029344.60 Dr 10/4/2016 1175257.00 100000.00 3104601.60 Dr 10/5/2016 2168339.00 2005800.00 3267140.60 Dr 10/6/2016 2279975.00 400000.00 5147115.60 Dr 10/7/2016 958190 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15440066.60 Dr 10/28/2016 3896354.00 150000.00 19186420.60 Dr 10/29/2016 1894971.00 717540.00 20363851.60 Dr 10/30/2016 5806872.00 26170723.60 Dr 10/31/2016 1148716.00 145620.00 27173819.60 Dr 11/1/2016 193078.00 3200000.00 24166897.60 Dr 11/2/2016 250602.00 24417499.60 Dr 11/3/2016 874212.00 25291711.60 Dr 11/4/2016 29227.00 535000.00 24785938.60 Dr 11/5/2016 2184689.00 1630730.00 25339897.60 Dr 11/6/2016 1304031.00 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8000.00 513869.60 Dr 9/5/2016 5130.00 2480.00 516519.60 Dr 9/6/2016 238687.00 1800.00 753406.60 Dr 9/7/2016 61402.00 17668.00 797140.60 Dr 9/8/2016 307610.00 1019305.00 8544 5.60 Dr 9/9/2016 77983.00 163428.60 Dr 9/10/2016 14550.00 16212.00 161766.60 Dr 9/11/2016 253812.00 415578.60 Dr 9/12/2016 367994.00 680.00 782892.60 Dr 9/13/2016 9929.00 792821.60 Dr 9/14/2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dr 10/4/2016 1175257.00 100000.00 3104601.60 Dr 10/5/2016 2168339.00 2005800.00 3267140.60 Dr 10/6/2016 2279975.00 400000.00 5147115.60 Dr 10/7/2016 958190.00 1000860.00 5104445.60 Dr 10/8/2016 1134368.00 6238813.60 Dr 10/9/2016 292028.00 1582.00 6529259.60 Dr 10/10/2016 1526484.00 1000000.00 7055743.60 Dr 10/11/2016 868552.00 7924295.60 Dr 10/12/2016 1328558.00 250000.00 9002853.60 Dr 10/13/2016 56 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 193078.00 3200000.00 24166897.60 Dr 11/2/2016 250602.00 24417499.60 Dr 11/3/2016 874212.00 25291711.60 Dr 11/4/2016 29227.00 535000.00 24785938.60 Dr 11/5/2016 2184689.00 1630730.00 25339897.60 Dr 11/6/2016 1304031.00 26643928.60 Dr 11/7/2016 1049208.00 1170000.00 26523136.60 Dr 11/8/2016 2520150.00 10500.00 29032786.60 Dr 11/9/2016 29032786.60 Dr 11/10/2016 9500000.00 19532786.60 Dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58.00 17808.00 2287.60 Dr 12/3/2016 21608.00 23895.60 Dr 12/4/2016 66820.00 16500.00 74215.60 Dr 12/5/2016 8114.00 11000.00 71329.60 Dr 12/6/2016 26797.00 44532.60 Dr 12/7/2016 21951.00 19444.00 47039.60 Dr 12/8/2016 18776.00 28263.60 Dr 12/9/2016 21123.00 49386.60 Dr 12/10/2016 16240.00 33146.60 Dr 12/11/2016 354.00 1800.00 31700.60 Dr 12/12/2016 240 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .60 Dr 6.16 On the basis of the aforesaid Chart the assessee submitted to the Ld. CIT(A) that there was always a sufficient debit cash in the books of account of the assessee and such sales as per the alleged changed figure of cash sales on the higher side had been reflected in the trading account of the assessee. Thus the resultant profit had been disclosed therein and accepted by the Department. It was further submitted that the cash in hand had always been in the books of the assessee and not utilized anywhere thus no adverse view could have been drawn. It was contended that the sales as well as stock figure as on 01/04/2016 and 31/03/2017 had been accepted and that the cash in hand had not been utilized anywhere till 08/11/2016 and thereafter whatever cash had been deposited it was as per regular books of accounts. 6.17 It was contended that the entries of the sales for the month of October 2016 showing higher sale had been recorded in the regular books of account and there was no interpolation in the regular books of accounts therefore the rejection of books of accounts by the A.O. under section 145(3) was not correct. 6.18 It was stated that vide repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the net profit had been disclosed in the audited set of account therefore the rejection of books of account was against factual facts. 6.19 It was further submitted that the percentage of cash sales to the total sales was always very high and in some months it was to the extent of 95% in the preceding as well as succeeding years which proves the modus operandi of the business that majority of the cash transaction took place in this trade, in support of above contention the assessee furnished the details of the sale vs. cash details for the various years in the following manner: Sales v/s Cash Details 2014-15 Month Sales Cash Against Sales % Cash Sales April 11105543.00 10532864.00 95% May 4920266.00 3719576.00 76% June 6292287.00 5592314.00 89% July 6458206.00 5396146.00 84% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 81% March 471036.00 93036.00 20% Grand Total 108023491.88 90159821.00 83% Sales v/s Cash Details 2016-17 Month Sales Cash Against Sales % Cash Sales April 6629677.00 5645641.00 85% May 3340867.00 2643931.00 79% June 5501348.00 3515923.00 64% July 7691291.00 7091306.00 92% August 7313951.00 5909411.00 81% September 25370388.00 5536904.00 22% October 42929708.00 39704317.00 92% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Month Sales Cash Against Sales % Cash Sales April 12454660.00 9274155.00 74% May 12362411.00 10328056.00 84% June 6239045.00 5291284.00 85% July 12862652.00 10646669.00 83% August 14728663.00 12465220.00 85% September 10762958.00 7502980.00 70% October 8507424.00 5406747.00 64% November 14828803.00 10493761.00 71% December 9411290.00 7255015.00 77% January 14405567.00 9886476.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as value and it was not a case of unexplained money and the enhanced sales for the month of October 2016 as being alleged have been recorded in the regular audited books of account and purchases had not been doubted by the A.O. the alleged enhanced sales had been accepted by the A.O because as per the computation of income the net profit as per the P L account had been taken and the A.O. had made further addition, accordingly it was the case of double addition which deserves to be deleted as the addition had been made against the facts and circumstances on the basis of surmises and conjectures. The reliance was placed on the judgment of the Hon'ble Apex Court in the case of CIT Vs. Laxminarain Badridas reported in 5 ITR 170 (PC). 6.23 The Ld. CIT(A) after considering the submissions of the assessee allowed the relief of ₹ 15,00,000/- and sustained the addition of ₹ 2,04,85,395/- by observing in para 4.1 of the impugned order as under: 4.1 Ground of Appeal No. 1 relates to addition of ₹ 2,19,85,395/- on account of cash deposited in the bank account of the assessee. The AO has mentioned that a search u/s 132 was conducted in the case on 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was not aware of the books maintained by the Accountant and did not have access to data, was also not acceptable by the AO who observed that the Accountant was maintaining books of account on the basis of vouchers and sale bills provided by the assessee and that correctness of the books of account is primary the responsibility of the assessee and it cannot be absolved of this responsibility. The AO mentions about the discrepancies in the construction account and was of the view that books of account of the assessee are not correct and complete and do not depict the real statement of affairs. As such a show cause notice was issued on 07.03.2019 as to why the books of account may not be rejected u/s 145(3) and assessment may be completed as provided u/s 144. The show cause notice is reproduced in the assessment order where it was mentioned that two sets of books of account have been found where there is a huge difference in cash sales; as per one set total sales for the period 01.10.2019 to 31.10.2016 have been shown at ₹ 4,08,33,912/- and as per another set the sale for the same period have been shown at ₹ 1,42,19,678/-. The major difference is on account of bill books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on cum- material basis and that certain bills would have been issued by suppliers to Kesar Singh titled favoring the assessee which does not signifies that the bill is of the assessee. Regarding section 145(3) it was submitted that assesses has maintained books of account with supporting vouchers and completion of assessment u/s 144 is unwarranted. Regarding cash deposit, it was argued that the detail reply has been submitted and it does not call for any addition. The reply of the assessee was considered and discussed by the AO stating that the assessee admitted that the bills representing serial number 1-50, 51-100 and 101- 150 are not as per regular series and apparently these bill books, which are out of series, were not found entered in a particular set of account. Further the Accountant of the assessee admitted that these bills were entered on a later date to inflate the cash-in-hands and the statement of the accountant Sh. Naveen Goyal was again confronted to the assessee. The contention that books of account were duly maintained and supported by vouchers was not acceptable as two set of books of account were found with different sale figures. In view of the above discrepanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antitative details of various items of gold, diamonds and other jewellery have been given. As per AR, assessee is maintaining day to day stock register of each and every item dealt by it and such register was produced during the assessment and no defect or any omission with regard to purchasing and sales have been pointed out by the AO. As per the AR, all purchases are from identifiable parties and majorly all payments for purchase are through banking channels, all purchases and sales are fully vouched and there is no finding of the AO that any item of purchase and sale are not verifiable and even during the course of search none of the loose papers indicate such things. The AR argued that the assessee was having sufficient stock of jewellery bullion, diamond etc. and the same were duly accountant for in the books of account, the entire sales were made from regular stock in hand, hence it is a case where stock is out and cash comes in which stands deposited in the bank account and the same is disclosed in the books of account of the assessee. It is also submitted that during the course of search no excess cash was found neither any cash was seized nor any excess stock of gold, diam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank is out of sale of jewellery which has been held by the assessee as stock-in-trade and since the deposit in the bank are out of sale of stock, the stock depleted and cash came in. It is also argued that each and every detail was provided to the AO along with the details of the opening stock, closing stock etc. and argued that the addition has been made on suspicion and surmises. The AR referred to the various case laws regarding the demonetization and submitted that the stock records were kept on day to day basis. It is alternatively also argued that the AO made addition by rejecting the books and which has resulted in unrealistic higher net profit. Regarding the rejection of the books of accounts, the AR has argued that the same has been done on the basis of statement of the accountant whose testimony cannot be relied upon. The AR referred to various case laws relating to the demonetization in support of his contention and argued that the books should be accepted unless some evidence is found to the contrary, it was further Submitted that the action of the AO in adding the cash sales amount to double #C$iti0n since, such sales have also been reflected in the books of acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on one hand the credit of such sales have been made to the sales account and correspondingly the stock items have been reduced. It is also mentioned that at the time of search, no excess or shortage of stock was found and only a difference of ₹ 1,01,000/- was calculated that too on account of certain difference in weight. Lastly, it was submitted that percentage of cash sales to the total sales is very high and in some months, it is to the extent of 95% and the book result have been accepted all along and small variation in GP is on account of gold rate. The above arguments of the AR have been considered but not found fully convincing. The argument of the AR regarding the statement by Sh. Naveen Goyal, Accountant given under coercion/pressure is not found tenable since there is nothing of this sort on records. Sh. Naveen Goyal, Accountant has never alleged any coercion/pressure from the department for given such statement. In fact, the two sets of books of account were found from his possession and when asked to explain, he admitted that he has changed sale figures of October, 2016 by increasing cash sales after demonetization to generate cash-in-hand in the hooks of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation offered by the assessee tuned out to be false/manipulated. The addition has not been made merely on suspicion and rather the AO made the addition on the basis of facts and documents found during the course of search and unearth as a result of search. The argument about the deposit in bank being out of sale of stock fades away in the light of the fact that as per the statement of the accountant, the cash sales were entered after demonetization on the basis of back dated bills as per the directions of the -partner. The argument of the AR regarding rejecting of books solely on the basis the statement of the accountant is not found correct because the AO has mentioned that some of the bills relating to the construction activities were also not found entered in the books and therefore on the basis of the documents found during the search, the books were unreliable and hence rightly rejected. Therefore, in view of the above discussion and facts on record including the facts mentioned by the AO in the assessment order, the AO was right in making the addition on account of back-dated bills entered in the books after demonetization to create cash-in-hand. However, the argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that no difference in the stock of any variety in quantity of gold and other items was noticed by the department at the time of search which took place on 12/04/2017. The reference was made to page no. 226 to 234 of the assessee s compilation, emphasis was made to page no. 228 para 3, and it was stated that though certain difference had been noticed during the search but after making the necessary clarification the addition of ₹ 1,01,869/- only had been made which was negligible by taking into consideration the fact that the closing stock as on 31/03/2017 had been to the tune of ₹ 3,66,66,205/-, the addition work out to 0.27% only which was of no significance at all. It was stated that if, in the regular books of accounts opening stock as on 01/04/2016, purchases sales during the year 2016-17 and the closing stock as on 31/03/2017 were accepted then no adverse inference could have been drawn. 8.1 It was submitted that the assessee was engaged in the business of trading of Gold, Silver and Diamond jewellery Moti etc. for the past many years and was being assessed to tax, the returns of income were filed on the basis of audited books of accounts year a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was emphasized that all the sales had been made out of the regular stock of the assessee as per the books of account and there was no unexplained money was found in the books of accounts of the assessee on the one hand there was decrease of stock in lieu of that, the cash had been received from the customer which had duly been recorded in the regular books of accounts of the assessee. 8.4 As regards to the alleged difference in the cash sales from 01/10/2016 to 29/10/2016, it was stated that correct books of accounts had been found from the assessee s premises and it was only from the residential premises of the part time accountant, certain sale difference in the electronic record of the Accountant s Computer for the month of October 2016 had been found but not from the assessee s premises. It was stated that the accountant had been working for many other parties and that the AO had not allowed the cross examination of the part time accountant while making the arbitrary addition. It was submitted that the assessee held exhibition every year and the sales were normally higher in certain month specially in the month of October 2016 due to the festive season as lot of festivals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of ITAT Vishakhapatnam Bench in case of Hirapanna Jewellers Vs. ACIT reported in 128 taxmann.com 291, copies of the same were furnished which are placed on record. 8.8 It was further submitted that since the sales proceeds had already been accounted for in the trading account and the said deposits in Bank Account were out of the sales and complete stock tally was there. Reliance was placed on the following case laws: Andaman Timber Industries vs. CIT reported in Civil Appeal No. 4228 of 2006 dated 2nd of September, 2015 reported in 127 DTR 0241 (SC). Dhakeshwari Cotton Mills reported in 26 ITR 0775 (SC) Pr. CIT vs. Akshit Kumar in ITA No. 348 of 2019 as reported in 197 DTR 121(Del) CIT vs. Poonam Rani (2010) 326 ITR 223 (Del HC) CIT vs. Om Overseas 315 ITR 185 (P H HC) Judgment of Hon'ble Jurisdictional Punjab Haryana High Court as reported in 164 Taxman 101 (P H) in the case of K. C. Malhotra Judgment in the case of Vinod Chadha reported in 73 taxmann.com 118 (Delhi Trib.) Eland International (P) Ltd. vs. DCIT as reported in 124 TTJ 0554 (Delhi Trib.) CIT vs. Sudeep Goenka as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t percentage of cash sale in the earlier years was in the range of 94% to 95% in the F.Y. 2014-15 and 2015-16 when there was no demonetization period and even during the year under consideration it was at 92% in the month of July which matched to the cash sales in October 2016 to the tune of 94%. It was submitted that the Ld. CIT(A) was not justified in observing that the provisions of section 69A of the Act were applicable in assessee s case as the addition had been made on suspicion and only on the basis of statement of accountant. It was stated that no unexplained money was found and the assessee was in a position to explain the source of the amount recorded in the books of account and the amount deposited in the bank account was out of the sales of stock available with the assessee then the provisions of Section 69 of the Act were not applicable. Therefore the Ld. CIT(A) was not justified in sustaining the addition after giving a relief of ₹ 15,00,000/- only. 8.10 It was stated that even if the books of account are to be rejected for the sake of arguments, a reasonable view has to be taken considering the facts and not an arbitrary view is to be taken. It was also st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of pen drive there was difference in the sales figures of October 2016. When the matter was taken to the Ld. CIT(A) the relief of ₹ 15,00,000/- was allowed by observing that the net profit of 1.57% had been declared by the assessee in the books of account and that the profit had already been disclosed on the sales of ₹ 2,19,85,395/-, which was added by the AO. In the present case it is noticed that the assessee was maintaining the sales bills which were recorded in the regular books of accounts maintained in regular course of business by the assessee who was also maintaining the stock register and no discrepancy was found in the quantitative tally in the stock register, the sales shown by the assessee amounting to ₹ 2,19,85,395/- was added by the AO, the quantity relating to the said sales was reduced in the stock register from the opening stock as well as purchases made during the year under consideration. In the instant case when there was a search at the premises of the assessee on 12/04/2017 no discrepancy in respect of cash or stock was found which is evident from page no. 227 to 234 of the assessee s compilation which is the copy of the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in October 2016 was the same as was in July 2016, therefore, it cannot be said that the assessee made more sales in cash during the period just before demonetization in the month October 2016, rather the cash sales were more in different months of the preceding year where there was no demonetization. It is also noticed that the GP rate shown by the assessee for the year under consideration was 12.21% which was comparable with the preceding year 2016-17 at 12.72% which shows that there was a small decline in the GP rate for the year under consideration in comparison to the earlier year, however in the assessment year 2014-15 and 2015-16 the G.P. rate was at 16.62% and 13.47% respectively which shows that there was a consistent declining trend in the G.P. rate which occurred due to increase in the sales which were at ₹ 3.04 crores, ₹ 9.46 crores, ₹ 10.68 crores and ₹ 12.83 crores for the A.Y. 2014-15, 2015-16, 2016-17 and 2017-18 respectively which also shows that due to increase in turnover the G.P rate declined, so, it cannot be said that the cash sales made by the assessee during the pre demonetization period i.e; October 2016 resulted in extraordinary fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.4 On a similar issue the ITAT Chandigarh Third Member Bench in the case of Bansal Rice Mills Vs. ITO (supra) held that since the sales proceeds have already been accounted for in the trading account no addition could be sustained even if the said deposits could be treated as bogus sales as complete stock tally was there . 10.5 In the present case also the assessee was maintaining complete stock tally, the sales were recorded in the regular books of accounts and the amount was deposited in the bank account out of the sale proceeds, therefore, the addition made by the AO and sustained by the Ld. CIT(A) was not justified. 10.6 On a similar issue their Lordship of the Hon ble Delhi High Court vide recent judgment pronounced on 19/01/2022 in the cases of Pr. CIT(Centra)-3 vs. M/s Agson Global Pvt. Ltd. In ITA No. 68-73/2021 observed in para 18 to 18.9 as under: 18. Before we conclude let us deal with the submissions advanced by Mr Sharma in the context of the three issues discussed The submission made by Mr Sharma that because there was a huge variation in the share premium i.e., the rate at which share premium was paid by the investor entities and the rate at whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oing so, observed that due confirmations were received from investor entities against notices issued to them under Section 133(6) of the Act. (v) The revenue did not point to any part of the record which would show that the statement made by Mr Praveen Agarwal was furnished to the assessee and was allowed to cross-examine or rebut the statement. Since the assessee was not allowed to cross-examine or rebut the statement made by Mr Praveen Agarwal, the said statement could not be used against the assessee. Furthermore, there is no ground taken in the appeal which makes any such assertion. (vi) The failure on the part of the revenue to demonstrate from the record that the aforesaid person i.e., Mr Praveen Agarwal was examined by the A.O. in the assessment proceedings concerning the assessee. Nothing was shown to us, which could establish that the A.O. conducted an independent enquiry to test the veracity of the statement made by Mr Praveen Agarwal. 18.3. Therefore, given the aforesaid circumstances, we are of the view that no cognizance can be taken of the statement made by Mr Praveen Agarwal. 18.4. As regards Mr Sharmas's contention that although the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not unexplained credit, and thus, not liable to be added under Section 68 of the Act to the income of the assessee, cannot be disturbed. 18.8. Insofar as the submission of Mr Sharma that the deviation report adverts to rejection of books of accounts and refers to the shortage of stock amounting to ₹ 450 crores, is concerned, the same has already been alluded to by us, and, therefore, needs no further elaboration. 18.9 Likewise, the aspect concerning cash deposits made post demonetization and bogus purchases/sales have also been discussed hereinabove at length. 10.7 In the present case also as we have already pointed out in the former part of this order that the AO made the addition on the basis of the statement of Shri Naveen Goyal, the then part time accountant of the assessee but no opportunity to cross examine to rebut the statement made by Shri Naveen Goyal was allowed to the assessee and moreover nothing was brought on record to substantiate that cash obtained by the assessee from the sales which reduced the stock of the assessee was utilized elsewhere and that the cash sales made during the month of October 2016 were in the line of the cash sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, Assessee's trading activities were subjected to detailed scrutiny under Section 143(3). In the said year, the AO had rejected the trading result and even enhanced the GP rate and made an addition in the trading account. The ITAT thus held that in respect of AY 2012-13 the opening and closing stock and trading accounts including sales has not been disturbed. In these circumstances, the ITAT observed that in the impugned AY 2014-15, the audited balance-sheet reflected an opening stock of ₹ 19,53,29,660/- which stood accepted by the Department either under the scrutiny proceedings or by not selecting the return for scrutiny or by not taking any action to disturb such returned income. In these circumstances, it was held that the quantum figure and the opening stock which stood accepted in the earlier years had to be taken as actual stock available with the Assessee. In view of these facts, the sales made by the Assessee out of its opening stock were not treated as unexplained income, to be taxed as income from other sources. It thus manifests that the ITAT has taken into consideration the entire material placed on record including the report of the AO. The ITAT has applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68. Where any sum is found credited in th: books of an assessee maintained for any previous year, and he 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, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year: From the perusal of section 68, the sum found credited in the books of accounts for which the assessee offers no explanation, the said sum is deemed to be income of the assessee. In the instant case the assessee had explained the source as sales, produced the sale bills and admitted the same as revenue receipt. The assessee is engaged in the jewellery business and maintaining the regular stock registers. Both the DDTT (Inv.) and the AO have conducted the surveys on different dates, independently and no difference was found in the stock register or the stocks of the assessee. Purchases, sales and the Stock are interlinked and inseparable. Every purchase increases the stock and every sale decreases the stock. To disbelieve the sales either the assessee should not have the sufficient stocks in their posse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demonetization through the country. 10.13 In the present case also the cash deposited post demonetization by the assessee was out of the cash sales which had been accepted by the Sales Tax / VAT Department and not doubted by the AO, there was sufficient stock available with the assessee to make cash sales and there was festive season in the month of October 2016 prior to the making of the cash deposit in the bank account out of the sales. So, respectfully following the aforesaid referred to orders by the various Hon ble High Courts and the Coordinate Benches of the ITAT, we are of the view that the impugned addition made by the AO and sustained by the Ld. CIT(A) was not justified, accordingly the same is deleted. 11. Vide Ground No. 9 and 10 the grievance of the assessee relates to the confirmation of addition of ₹ 7,96,905/- made by the AO on account of unexplained investment in the construction of the showroom. 12. The facts relating to this issue in brief are that during the course of assessment proceedings the AO confronted the assessee with the difference in the cost of construction as estimated by the departmental valuer and as shown by the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The total investment in the A.Y. 2017-18 and 2018-19 by Smt. Charu Aggarwal and M/s Kalaneedhi Jewellers LLP comes to ₹ 90,13,825/- as against ₹ 1,08,85,800/- estimated by the departmental valuer. In the A.Y. 2018-19, the investment shown by the assessee is more than the estimated by the departmental valuer whereas in the A.Y. 2017-18, the investment shown by the assessee is less than the estimated by the departmental valuer. However, considering the overall difference in two years, the total difference comes to ₹ 18,71,975/- which is being added in the hands of Smt. Charu Aggarwal and M/s Kalaneedhi Jewellers in the proportion of investment shown by them and is worked out as under: A. Investment shown by Smt. Charu Aggarwal in A.Y. 2017-18 ₹ 4054857/- B. Investment shown by M/s Kalaneedhi Jewellers LLP in A.Y. 2017-18 ₹ 3005700/- C. Total investment shown by Smt. Charu Aggarwal and M/s Kalaneedhi Jewellers LLP ₹ 7060557/- Total diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search was not tenable, since some of the bills in respect of purchase of construction material were found and seized during the course of search / seizure which were not entered in the books of account and the contractor Shri Kesar Singh in his statement before the DDIT(investigation)denied to have issued receipts which the assessee claimed to have been issued by him therefore the reliance placed by the assessee on the various judicial pronouncements was without merit. 13.2 As regards to the issue relating to the benefit of self supervision the Ld. CIT(A) observed that the AO in the assessment order had mentioned that as per the assessee s own version the contract was given to Shri Kesar Singh for completing civil work including cost of material therefore the claim of the asessee that the CPWD rates were to be applied was not acceptable because the assessee had not accounted for all the bills in the books of accounts and hence the value reflected in the books of account towards cost of construction was not reliable and that the DVO being a technical Officer prepared the valuation after taking care of all the factors which were stated by the assessee, therefore, the AO was ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions Vs. DCIT(Pune Trib. Bench B) (2010) 38 DTR 19(Pune)(Trib) Krishna Enterprises Vs. ACIT(2017) 146 DTR 73(Mum Trib) ITO Vs. LGW Limited (Kol. Trib) (ITA No. 267/Kol/2013 dt. 07/10/2015 15.3 The Ld. Counsel for the assessee submitted that there was no justification in sustaining the addition made by the AO on account of valuation of the property as such the provisions of Section 115BBE were not applicable. Reliance was placed on the judgment of the Hon ble Apex Court in the case of Sunita Mansingha reported at 393 ITR 121. 16. In his rival submissions the Ld. CIT DR strongly supported the orders of the authorities below and reiterated the observations made in their respective orders. 17. We have considered the submissions of both the parties and perused the material available on the record. In the present case the AO referred the matter of valuation to the DVO relating to the construction of the showroom for which amount was spent by the assessee firm and Smt. Charu Aggarwal. The AO came to conclusion that there was difference in the valuation to the tune of ₹ 18,71,975/- and accordingly addition of ₹ 7,96,905/- was made in the hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluation determined by the DVO for the cost shown by the assessee. The aforesaid view is supported by the decision of the various coordinate Benches of the ITAT in the following cases on the similar issue: Honest Group of Hotels Pvt. Ltd. Vs. CIT[2002] 123 Taxman 464(J K): [2002] 177 CTR 0232 Suresh C. Mehta, Mumbai Vs. ITO [2013] 144 ITR 427 (Mum. Trib) John Fowler (India) Pvt. Ltd. Vs. DCIT I.T.A No. 7545/Mum/2014(Mum Trib) Sita Baikhetan Vs. ITO (2016) 181 TTJ 0549: (2016) 142 DTR 0122: (2016) 050 ITR (Trib)0196(Jaipur-Trib) Surendra S. Gupta Vs. ACIT(2018) 170 ITD 732 (Mum Trib) Rahul Constructions Vs. DCIT(Pune Trib. Bench B) (2010) 38 DTR(Pune)(Trib) 19 Krishna Enterprises Vs. ACIT(2017) 146 DTR 73(Mum Trib) ITO Vs. LGW Limited (Kol. Trib) (ITA No. 267/Kol/2013 dt. 07/10/2015 17.5 We therefore considering the totality of the facts as discussed here in above and by keeping in view the judicial precedence in the aforesaid referred to cases, delete the impugned addition made by the AO and sustained by the Ld. CIT(A) on account of difference in the valuation as determined by the DVO and shown by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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