9911796707
TMI Blog2022 (4) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... posits in the regular bank account of the assessee, during demonization period, which was on account of accounted for sales of the assessee, duly recorded in the regular books of accounts of the assessee. 2. That the Ld. CIT(A) has failed to appreciate that all the purchases and sales are fully vouched and no defects in the quantitative details or in the day to day stock register, maintained by the assessee have either been found and, therefore, the confirmation of addition of Rs. 2,04,85,395/- is against the facts and circumstances of the case. 3. That the Ld. CIT(A) has failed to appreciate that there was no difference in the stock of jewellery as noticed by departmental officials during the course of search, conduced in the premises of assessee in April 2017 and, therefore, it is not a case of 'unexplained money' as being alleged by the CIT(A) but the accounted for sale proceeds of the jewellery, which have been deposited in the regular bank account of the assessee. 4. That the Ld.CIT (A) has failed to appreciate that the Assessing Officer having not found any fault in the regular books of accounts during the course of assessment proceedings and, therefore, no such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2,04,85,395/- on account of alleged unexplained cash deposits in the regular bank account. 5. The facts related to this issue in brief are that a search operation under section 132 of the Income Tax Act, 1961 (hereinafter referred to Act) was conducted in Kalaneedhi group of cases on 12/04/2017. Thereafter a notice under section 153A of the Act was issued to the assessee on 30/10/2017. In response to the said notice the assessee filed its return of income on 29/11/2017 declaring an income of Rs. 22,52,980/-. During the course of assessment proceedings the A.O. noticed that the assessee had deposited Rs. 2,90,20,000/- during post demonetization in its CC Account and that during the course of search, books of accounts and sale bills books relating to demonetization period and pre demonetization period were verified which revealed that the assessee was maintaining its books of account in the computer of its Accountant. The A.O. further observed that on examination of digital data it was noticed that there were two sets of books of accounts i.e. one in the computer of Accountant and another in the Pen Drive of the Accountant. On comparison of both the accounts it was found that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement of Sh. Naveen Goyal was ouiy confronted with Sh. Kamal Aggarwal in his statement recorded u/s 132(4) and the relevant part of the statement is reproduced as under: "Q 4 I am showing you the statement of Sh. Naveen Goyal S/o Sh. Tara Chand, Patiala, your part time Accountant, taken u/s 131 of the IT. Act, 19861 in the camp office at 123-C, Model Town, Patiala on 12.04.2017 wherein he has submitted that after demonetization on 08.11.2016 he had modified and change the actual books of accounts of your business concerns M/s Kalaneedhi Jewellers LLP, Bhupindra Road, Patiala by modifying the cash sales in the month of October, 2016 and November, 2016 ending 08.11,2016 by an amount of Rs. 2.90 crores (Approx.). He further submitted that the said modification was done on your directions on 10.11,2016 on the basis of sales bills provided by you which were back dated to generate cash in hand of Aprox. 2.90 crores \on 08.11.2016- In the notes of old currency of Rs. 500/1000. In this regard, you are show caused to explain why it should not be concluded that the cash in hand as on 08.11,2016 in your books is bogus and has been created to facilitate the deposit of your unaccounted cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course pf search confirmed that he has changed the sale figures by increasing cash sates after demonetization to increase the cash in hand. Copy of statement of Sh. Naveen Goyal is enclosed. ii) During this period you have shown investment on the construction of showroom as per your books of accounts at Rs. 73,06,405/-. The issue of cost of construction was referred to Valuation Call of the Income Tax Department by the. DDIT(inv.). As per Valuation report a copy of which has already been provided to you. the total cost of construction has been worked out at Rs. 1,32,24,900/- and Investment on construction during the A.Y. 2017-18 has been estimated at Rs. 92,92,400/- whereas you have shown lesser amount in your books of accounts. On verification of seized/impounded documents during the course of search/survey, it has been noticed that the following bills of material in respect of construction of showroom has not been shown in the construction account as per your books of accounts. S.No. Annexure No. and page No. Date Name of the Party Amount 1 A-4 Page-104 16.12.2016 Kulwinder Iron Store 2,06,768/- 2 A-4 page -103 24.03.2017 Thakur Steels 22,400/- F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore 435, resultingly this cannot be said to be in Sr Numbers. The bills have been issued and accounted/recorded/disclosed I declared in the books that's why the bills have been found and the provisions of section 44AA requires the maintenance of books 6f account which has been done. The increase in sales relatable to kundan 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 through the provision of law requires transactions to be accounted, recorded, disclosed, declared and which is a fact as has been done acceptedly by the assessee. In addition to our previous reply Dated 25/02/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally it is submitted that the 1 st notice for starting of the assessment proceedings was received on dated 13/12/2018 and thereafter the assessee has submitted number of replies and additionally visited number of times in person to explain the written replies. Resultingly the completion of assessment u/s 144 is an unwarranted action ad devoid of merits. 4. Regarding the cash deposit in cash credit limit account No. 65183224280. The detailed explanation has already been furnished on dated 25/02/2019 along with present reply (Supra) of Pg. 1-4 and the said explanation of 16 Pages is enclosed. 5. It is humbly submitted that with the aforesaid facts and circumstances explaining everything, it does not call for any addition and in the respectful pleading the prayer is to kindly vacated such an action. 5.3 The A.O. however did not find merit in the submission of the assessee and made the addition of Rs. 2,19,85,395/- by observing in para 5.2 and 5.3 of the assessment order as under: 5.2 The above reply of the assessee has been considered and discussed in the following paras. a) In para 1, the assessee admitted that the bills representing serial No, 1-50, 51- 100 and 101-150 are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 as taken from pen drive and as taken from hard disc revealed that bills from Serial number_ 15 to-147 totaling Rs. 2,19,85,385/- have not been entered in one set of books. These bills were prepared and entered after demonetization i.e. 08.11,2016 and shown to have issued in the month of October, 2016 back dated to increase cash in hand as on 08.11.2016 for justifying cash deposit of Rs. 2,90,20,000/- in its bank account. This fact was admitted by the accountant of the assessee who stated that the sales of the month of the October were changed after demonetization. The assessee could never rebut the statement of accountant which was confronted during search as well as during assessment proceedings. The argument of the assessee that there is a general increase in the sales in-the month of October is also not supported by his own books. A comparison of the sales for the month of October for the last three years and one subsequent year is reproduced as under: Sl.No. A.Y. Gross sales for the entire year* Sales in the month of October Sales in October as %age to total sales 1 2015-16 95696563 10744407 11.23 2 2016-17 108023492 6982352 6.46 3 2017-18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the return of income of the partnership concern have been filed on the basis of such audited books of accounts. There has been no dispute in respect of assessments of the earlier years and the assessee's book result have been accepted year after year on the basis of 'stock tally' of different items of jewellery and said stock register have been maintained right from the date of start of business. During the earlier years, there has been no dispute of any nature, whatsoever, and the book results of the assessee have been accepted by the department. 4. For the year under consideration, the return of income was filed an income of Rs. 22,52,980/- and the assessment have been framed by the Assessing Officer by making the above two additions, which have been challenged by us and the income have been assessed by the Assessing Officer at Rs. 2,27,82,300/- vide order, dated 27.03.2019. 5. We have attached the statement of facts along with Form No. 35 before your goodself and while ground No. 1 is general in nature and ground No. 2,3,& 4 relate to the addition of Rs. 2,19,85,395/- on account of cash deposit during demonetization , presuming the same as 'inflated cash in hand' and such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titative detail of various items of Gold, Diamond and other related jewellery have been given and which form the part and parcel of the books of accounts. For the year under consideration, the Tax Audit Report alongwith Balance Sheet is attached at page 1 to 27 of the Paper Book and against which, no discrepancy have been pointed out/noticed by the Assessing Officer during the course of assessment proceedings. 10. In fact, the assessee is maintaining day to day 'stock register' of each and every item dealt in by the assessee, which takes into consideration the opening stock, purchases, sales and closing stock on each day of each of each item of gold and diamond jewellery and other related items. The said stock register was produced during the course of assessment proceedings and no defects or any other omission with regard to the purchases and sales have been pointed out in such detailed 'stock register' maintained on day to day basis. Sample copy of such stock register is enclosed at Paper Book pages 34 to 36. 11. All the purchases are from identifiable parties and majorly all the payments for the purchases have been made through normal banking channels and nothing has been do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmary from period 01.04.2015 to 30.06.2017 were submitted before AO, wherein the same have been accepted as such, during the assessment being an accepted fact on record. Please refer to chart in para 35, page 21 of this submissions. 15. During assessment proceedings u/s 153A, assessee had deposited Rs. 2,90,20,000/- during post demonetization in its cash credit account. AO order [dt. 31.03.2017 Pg. 2 Para 3 and Pg 10 Para A] alleged that assessee maintained 2 sets of books of accounts i.e. 1) in the computer of accountant and 2) in the Pen drive of the accountant. On comparison of both the accounts, there was difference in the sales account for the month of October, 2016 that bills from serial number 15 to 147 totalling Rs. 2,19,85,285/- allegedly have not been entered in one set of books. The statement of accountant was recorded during the course of search and he admitted that he has changed the sale figures of October 2016 by increasing cash sales after demonetization to generate cash in hands in books of accounts. 16. 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 acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Turnover 5811753.00 10442052.00 15764758.00 % increase in sales in the month of exhibition as compared to previous month 114.99% 118.26% 62.88% Assessee has held exhibition every year and in said months, sales were exorbitantly higher than other than months of the year, hence the trend of similarity and consistently conducting the said sales. Further in October 2016 for the reason that alongwith exhibition, there was festival season in October 2016 & during that period as per Hindu Tradition, people usually purchase gold ornaments in higher quantity. Rather in the year consideration the %age increase in sales were lower than the previous 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 orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hibition by the assessee for marketing of Gold and Kundan Jewellery. Thus, cash deposited during demonetization was as per books and verifiable from sale bills. Further, AO at Pg. 4 Para top has just brushed aside the request of assessee for cross examination of Sh. Naveen Goyal, Accountant by saying that statement of Sh. Kamal Aggarwal shows that the statement of Sh. Naveen Goyal was duly confronted with him & except disagreeing he could not say anything. 22. As regards AO's objection regarding bill books not in serial number, it is submitted that the billing books for Sr No 1-50, 51-100 and 101-150 correctly said, the bills are not 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 was used regularly to store ...information..." Here the alleged computer storage/data is not regularly used /fed as is evident from the fact that the alleged data is grossly incomplete in every respect (information is fed upto 30/10/2016 only and that too incomplete and, therefore, cannot give correct picture hence cannot be termed as Information. 2. "...having Lawful Control" here alleged computer is a Desktop which is the personal property of Naveen Goyal, the Accountant, and is kept by him at his residence for his personal use. Assessee has no Knowledge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 retained while records and enquiry as mandated in accordance with the Provisions of Evidence Act r.w Information and Technology Act have not been taken to logical end by in accordance with the procedure of law (3) Where over any period, the function of storing or processing information for the purposes of any activities regularly carried on over that period as mentioned in clause (a) of sub-section (2) was regularly performed by computers, whether- (a) by a combination of computers operating over that period; or There is none such case set up that Naveen Goyal, Accountant's computer is the one upon which activities regularly carried on over that period was regularly performed by computers which wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Timber Industries reported in 281 CTR 241 (SC) 6.2 It was further submitted that the A.O. invoked the provisions of Section 69A of the Act in the absence of any corroborative evidence even when the assessee had explained the nature and source of cash deposits in the bank account and that nowhere in the assessment order, the A.O. had mentioned that he was not satisfied with the explanation offered to him since no deficiency was raised by him with regard to the said deposited cash. It was stated that the assessee deposited cash amounting to Rs. 2,90,20,000/- during the demonetization period out of cash sale proceeds and cash balance available which could have been reconciled from the cash books, PVAT Returns filed with the Trade & Taxes Department and P&L Account for the relevant assessment year. It was stated that the addition under section 69A of the Act could have only been made when the assessee was found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement 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 stock in trade. The reliance was placed on the decision of the Hon'ble Delhi High Court in the case of PCIT Vs. Akshit Kumar reported in 197 DTR 121. 6.5 It was stated that the assessment order would reveal that primarily all the transactions had been accepted except the minor discrepancy /defect of Rs. 1,01,869/- and Rs. 28,498/-. It was further submitted that during the year under consideration the assessee had gross turnover of Rs. 12.83 Crores and that the assessee's business was a going regular partnership concern caring on the jewellery business for the past 70 years. The assessee furnished the financial statement for nine years i.e; from A.Y. 2012-13 to 2020-21 which read as under: Sr No. Asstt Year Year Ending Date of filling Return Opening Stock Purchases Sales Closing Stock Gross Profit Date of Tax Audit Us/44AB 1 2012-13 31.03.2012 09/05/2012 NA 2 2013-14 31.03.2013 09/09/2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f addition on account of deposit of cash which was duly accounted for in the books of account was against the facts and circumstances of the case. The reliance was placed on the following case laws: * CIT-II vs. Amarjit Singh Bajwa (2013) 84 CCH 198 (P&H) * Lalchand Bhagat Ambica Ram vs CIT [1959] 37 ITR 288 (SC) * Mehta Parikh & Co. vs CIT [1956] 30 ITR 181 (SC) * ACIT vs. Roop Chand Tharani (2012) 66 DTR 104 (Chhattisgarh) * CIT vs. Paradise Holidays (2010) 325 ITR 13 (Del ) * CIT vs. Smt. Poonam Rani (2010) 326 ITR 223 (Del ) * CIT vs. Om Overseas (2009) 315 ITR 185 (P&H ) * CIT vs. Ludhiana Steel Rolling Mills (2007) 295 ITR 111(P&H) * CIT Vs K.C. Malhotra 164 Taxman 101 (P&H) * Eland International (P) Ltd. V/s Deputy Commissioner of Income Tax as reported in 124 TTJ 0554 (DEL-TRIB) * CIT vs. Jaora Flour and Foods (P) Ltd. as reported in 33 taxmann.com 566 (M.P) * CIT 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. ❖ All the sales, purchases, stock are recorded in the books of accounts and the same have not been doubted by the AO. ❖ The sales are being accepted by the Sales tax department. ❖ The books of accounts, maintained by assessee and book results arriving out of them have also been accepted by the AO without pin pointing any specific defect. ❖ The cash sales made by the assessee have been credited in the books of accounts duly accepted by the AO and therefore, once the book results are accepted by the AO, the sales out of which those book results have been arrived cannot be doubted, otherwise it would amount to double taxation. ❖ The identity and genuineness of the parties to whom cash sales have been made is also proved to the 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 busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of certain data, recovered from the accountant's residence only wherein, there was certain alleged manipulation in the value of cash sales from 01.10.2016 to 31.10.2016. We have already submitted that such data were not found from the premises of the assessee, but the data was taken from the computer of the accountant from his residence and, as such, the assessee cannot be held liable for the same. We rely on the submission already made to your good self. b) It may be stated, without prejudice, to the submissions already made in our earlier submissions and for the sake of argument that even if, the data recovered from the residence of the accountant, which is being alleged as the '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 submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged inflated figure of sales as per books of accounts and, therefore, the profit embedded on such transactions on sales have already been disclosed in the Audited Trading and Profit & Loss account and, taxed by the Assessing Officer. Thus, no separate addition on account of further credit can be made. 6.10 The reliance was placed on the decision of the ITAT Vishakhapatnam Bench in the case of M/s Hirapanna Jeweller Vs. ACIT, Central Circle-I, Vishakhapatnam in ITA No. 253/Viz/2020. The reliance was also placed on the judgment of the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. K.C. Malhotra reported in 164 Taxman 101 (P&H). 6.11 The assessee also furnished 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 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation in cash sales Before Updation After Updation Date Cash Advance Bank Trf Grand Total Date Cash Advance Bank Trf Total l-Oct-16 187920 180000 367920 1-Oct-16 1022564 180000 1202564 2-Oct-16 137519 191000 328519 2-Oct-16 657029 191000 848029 3-Oct-16 101887 105724 207611 3-Oct-16 271058 105724 376782 4-Oct-16 579240 85539 664779 4-Oct-16 1175257 85539 1260796 5-Oct-16 1383186 0 1383186 5-Oct-16 2168339 5000 2173339 6-Oct-16 990189 93949 1084138 6-Oct-16 2279975 93949 2373924 7-Oct-16 388669 78000 466669 7-Oct-16 958190 78000 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 ]3-Oct-16 18000 0 18000 13-Oct-16 564643 0 564643 14-Oct-16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 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 1001500.00 1125456.60 21-10-2016 542205.00 800000.00 867661.60 ,22-10-2016 6130.00 - 873791.60 ^23-10-2016 429383.00 1303174.60 .24-10-2016 1285578.00 1500250.00 1088502.60 /25-10-2016 1122680.00 1217008.00 994174.60 26-10-2016 756451.00 1016575.00 734050.60 27-10-2016 57016.00 - 791066.60 28-10-2016 983121.00 150000 1624187.60 29-10-2016 - 715000.00 909187.60 Grand Total 13215935.00 12820245.00 909187.60 Average 426320.48 413556.29 730820.47 6.14 On the basis of the aforesaid Chart it was stated that there was regular cash in hand and it was not a case of shortage of cash in hand meaning thereby that the alleged inflated cash sales had not been utilized anywhere else upto 08/11/2016 and when the assessee had sufficient stock which had been converted into cash and the said cash had been deposited afterwards in the regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 11/1.1/2016 3501500.00 16031286.60 Dr 11/12/2016 9000790.00 7030496.60 Dr 11/13/2016 7029168.00 1328.60 Dr 11/14/2016 1328.60 Dr 11/15/2016 126394.00 18309.00 109413.60 Dr Grand Total 48235908.00 48569592.00 109413.60 Dr Average 1048606.70 1055860.70 13482681.82 Dr 6.15 The Assessee also furnished position of day to day cash in hand as per regular books of account from 01/09/2016 to 31/12/2016 which read as under: Daily Cash Balance Kalaneedhi Jewellers LLP 2016-17 Particulars l-Sep-2016 to 31-Dec-2016 Transactions Closing Debit Credit Balance Opening Balance 393484.60 Dr 9/1/2016 8204.00 176500.00 225188.60 Dr 9/2/2016 458350.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2103653.00 1500250.00 14796861.60 Dr 10/25/2016 1434445.00 1217008.00 15014298.60 Dr 10/26/2016 1058125.00 1016575.00 15055848.60 Dr 10/27/2016 384218.00 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 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 11/11/2016 3501500.00 16031286.60 Dr 11/12/2016 9000790.00 7030496.60 Dr 11/13/2016 7029168.00 1328.60 Dr 11/14/2016 1328.60 Dr 11/15/2016 126394.00 18309.00 109413.60 Dr 11/16/2016 109413.60 Dr 11/17/2016 54224.00 55189.60 Dr 11/18/2016 &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee 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 reply dt. 15/03/2019 it was submitted to the A.O. that the assessee had been maintaining different bill book for different verities of jewellery and also there was no law that the sale bill books need to be in chronological order, though the provisions of law required transactions to be accounted, recorded, disclosed and declared in the regular books of accounts which had been done by the assessee. It was stated that the increase in the sale was on account of sales during the exhibition which had been held d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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% August 7565869.00 6211400.00 82% September 5506455.00 4004296.00 73% October 10744407.00 7676823.00 71% November 7470736.00 5833701.00 78% December 10245197.00 7017142.00 68% January 10876502.00 8666653.00 80% February 7415973.00 5982199.00 81% March 7095122.00 5672334.00 80% Grand Total 95696563.00 76305448.00 80% Sales v/s Cash Details 2015-16 Month Sales Cash Against Sales % Cash Sales April 7560726.00 6746693.00 89% May 5913220.00 5487812.00 93% June 8980841.00 8397141.00 94% July 20172085.88 18774868.00 93% August 13474363.00 9161264.00 68% September 8885597.00 6775062.00 76% October 6982352.00 5665287.00 81% November 8271571.00 7364251.00 89% December 7638645.00 6110171.00 80% January 8389091.00 6473865.00 77% February 11283964.00- 9110371.00 81% March 471036.00 93036.00 20% Grand Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR SALES GROSS PROIFT PERCENTAGE 2014-15 3,04,32,382.00 50,58,084.00 16.62% 2015-16 9,46,55,149.00 1,27,52,813.00 13.47% 2016-17 10,68,48,155.00 1,35,95.400.00 12.72% 2017-18 12,83,62,906.50 1,56,76,038.50 12.21% 6.22 It was submitted that the book result had been accepted all along and small variation in G.P was on account of gold rates which were variable in nature and purchase and sales rate were fixed which were known to all, thus no adverse view could have been taken by the A.O. It was contended that during the course of search at the residential premises and survey at shop, no excess stock had been found by the Department and only negligible difference in the value to the tune of Rs. 1,01,869/- was pointed out for which addition had been made and that when during the course of survey / search operation neither shortage nor excess of stock was there as the actual purchases and sales had been made by the assessee. It was stated that the assessee had been maintaining day to day stock register in quantity 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 " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee for increase in sale in the month of October was stated to be exhibition by the assessee for marketing Gold and Kundan Jewellery. The assessee also filed pamphlets in support, however as per AO, during search no such pamphlets were found and the main partner Sh. Kamal Aggarwal did not mention about any such exhibition or sale in his statement. The other argument of the assessee was that the cash deposit was as per book but this plea was not accepted by the AO as the sales were inflated later on by entering back dated bills. The assessee further pleaded that the statement of Sh. Naveen Goyal did not have any evidentiary value as the same were recorded at the back of the assessee. This plea was also not found convincing as the statement of Sh. Naveen Goyal was duly confronted to Sh. Kamal Aggarwal during his statement recorded u/s 132(4) and the AO reproduced the relevant part of the statement of Sh. Kamal Aggarwal in the assessment order. The other contended of the assessee that it 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 accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er demonetization, in back dates. It was also proposed to make addition on account of unexplained investment in construction of the show room of the basis of valuation report of the Departmental Valuation Officer. The reply filed on 15.03.2019 is reproduced in the assessment order where the assessee accepted the fact of bills not being in serial and it was argued that there is no provision of law requiring that the sale bill book need to be in chronological order though the law required transaction to be accounted, recorded, disclosed, declared, which has been done by the assessee. It was argued that the assessee maintained different bill book for different variety of jewellery. Regarding the difference in cost of construction, it was submitted that the same was attributable to actual expenditure with estimated expenses on yearly basis and the difference are within permissible limit under law. Regarding Kesar Singh, contractor, it was submitted the construction was done by him 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order which shows 32% of the annual sales in October, 2016 as compared to maximum percentage of 11.23 in assessment year 2015-16. The AO concluded that on perusal of both set of books of account, statement of the accountant and content of the bill books, shows that assessee has inflated its cash-in-hand as on 08.11.2016 to the extent of Rs. 2,19,85,395/-. Accordingly, an addition of this amount of Rs. 2,19,85,395/- was made as unexplained money u/s 69A of the Income Tax Act, 1961 to the income of the assessee, to be charged to tax u/s 115BBE. The facts of the case, basis of addition made by the AO and the arguments of the AR during the course of appellate proceedings have been considered. The AR in this issue submitted that the assessee is maintaining regular books of account which are being audited year after year and return is filled on the basis of such audited books. It is also submitted that in the tax audit report complete quantitative 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re taken before the AO at the time of assessment. The AR also argued that statement of the Accountant was recorded at the back of the assessee and even cross examination of the Accountant was not provided during assessment proceedings. The AR also referred to the Evidence Act, 1872 and Information Technology Act, 2000 to argue that the data from the Accountant Sh. Naveen Goyal cannot be regarded as evidence. A reference was also made to the provision of Section 69A and the AR argued that the same is not applicable to the fact of the assessee as the assessee has explained the nature & source of cash deposit in the bank account. The AR further argued that no addition u/s 69A can be made in the absence of corroborative evidence and tax liability cannot be fastened without cogent evidence and the burden was on the department to prove the correctness of the addition and suspicion cannot be the basis of addition. As per AR the amount deposited in 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbedded on such transactions on sales have already been disclosed and no separate addition on account of further credit can be made. For this, the AR placed reliance on various case laws. As per the AR, the assessee has sufficient cash in hand for depositing in the bank account and to meet other expenses by taking data of cash sales as per the data seized from the residence of the Accountant and the data as per the regular books of account and argued that there is no negative cash balance at all. The AR argued that when the sale & stock figures have been accepted, then no case of unexplained money can be made out as per the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Akshit Kumar. Regarding the rejection of books, it is submitted that the detailed reply was filed to the AO in response to the show-cause issued in this regard. As per the AR, the enhanced sales have been reflected in the Audited books of the assessee and 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 R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on the basis of data found from the possession of the Accountant. The Accountant is an employee of the assessee and by providing the statement to the assessee, the requirement of the law has been fulfilled. If the assessee wanted any rebuttal in this regard, it was free to produce the Accountant as assessee's witness and got his statement recorded before the AO at the time of assessment. No such step has been taken by the assessee to produce and examine the Accountant as its witness and therefore the statement of the accountant recorded at the time of search when his residence was also covered simultaneously alongwith the assessee has to be accepted as such to be true & correct. Hence, this argument of the AR is found without merit. The argument about the application of Section 69A is also not found acceptable as the assessee was found to be the owner of unexplained money deposited in the bank account of the assessee and the explanation 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponding to the back dated sales of Rs. 2,19,85,395/- which have been separately added by the AO to the returned income of the assessee in the assessment order. To sum-up, out of total addition of Rs. 2,19,85,395/- made by the AO on this point, the appellant gets relief of Rs. 15,00,000/- and the addition to the extent of balance amount of Rs. 2,04,85,395/- is upheld. Accordingly, this ground of appeal is partly allowed. 7. Now the assessee is in appeal. 8. Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the cash was deposited in the regular bank account out of the accounted sales recorded in the regular books of account disclosed to the department and that no doubt had been raised by the Department for the opening stock, purchases and closing stock as on 31/03/2017. It was 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 differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice and made the addition of Rs. 2,19,85,395/- on the basis of cash sales reflected in the sale bills. 8.2 It was further submitted that the assessee maintained date wise stock register in respect of different items of gold and diamond jewellery which is placed at page no. 39 to 167 of the assessee's paper book. It as reiterated that no defect had been found by the AO in respect of stock as on 31/03/2016 or on 12/04/2017 i.e; on the date of search which was very close to 31/03/2017. 8.3 It was submitted that all the purchases were from identifiable parties and the payments had been made through normal banking channels, there was no evidence of purchases or sales outside the books of accounts as is evident from the assessment order for the year under consideration and the succeeding assessment years. It 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 account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not justified. Reliance was placed on the judgment of the Hon'ble Supreme Court in the case of Andaman Timber Inds. Vs. CIT reported in 281 CTR 241. 8.7 It was submitted that when the stock was available in the form of opening & purchases then it was very difficult to hold that the sales made by the assessee were not out of the available stock and could not have been treated as unexplained. It was stated that it had not been a case of the department that complete stock tally was not there, therefore no addition could have been made even when cash was deposited out of the sales during the demonetization period. The reliance was placed on the judgment of the Hon'ble Delhi High Court in the case of Agson Global Pvt. Ltd. Vs. PCIT in ITA No. 68/2021 order dt. 19/01/2022. Reliance was also placed on the 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. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which had been carried forward to the next years and was declared to the VAT Department also which had been accepted as well. The reference was made to page nos. 235 to 243(which are the copies of VAT Returns) of the assesse's compilation. It was further stated that even if, for the sake of argument, the sales are taken as per sale record in the computer of the accountant then also there was no shortage of cash in hand which is evident from the Chart, copy of which is reproduced in page no. 59 to 60 of the assessment order. Therefore action of the AO in invoking the provisions of section 145(3) of the Act was not correct. 8.9 It was stated that the explanation was given to the Ld. CIT(A) that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions of both the parties and perused the material available on the record. In the present case it is noticed that the AO made the addition of Rs. 2,19,85,395/- on account of cash deposited, claimed to be out of the sales which were accounted for in the regular books of accounts during the year relevant to the assessment year under consideration. The said addition was made for the reasons that during the course of search at the residential premises of one Shri Naveen Goyal (who was engaged as a part time Accountant with the assessee) entries relating to the assessee were found in his computer as well as pen drive. However when the entries in computer were compared with 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 Rs. 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 Rs. 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ively 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 July 2016. So it is not a case that in the month of October 2016 only the cash sales were more. It is also noticed that the cash sales 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee received, as share capital/share premium in AY 2012-2013 amounted to Rs. 48.20 crores, which included monies received from the aforementioned three companies controlled by Mr Praveen Agarwal. (iv) These transactions were examined by the A.O. in A.Y.2012-2013, and an assessment order dated 24.03.2015 was passed under Section 143(3) of the Act whereby, the addition of Rs. 18.50 crores was made by the A.O. under Section 68 of the Act, as unexplained credits. As indicated above, in appeal, the CIT(A), by an order dated 31.03.2016, set aside the deletion and, while doing 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee company and there is no cash movement, addition of entire share capital/premium ofRs, 365.28 Crs is not justifiable and may lead to allegation of high pitch assessment. Only where there is no direct trail of money being sourced from the bank account of the assessee, the introduced share capital/premium needs to be added to the income of the assessee. " 18.7. Concededly, the Tribunal, in its analysis, has adverted to the trail of money (which is something we have noticed above), and, therefore, its conclusion that it was 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt by the trading account in the earlier years viz. opening stock, purchase and sales, closing stock, gross profits and assessment made by the Department in AY 2007-08 when assessment was framed under Section 143(3)/147. The ITAT observed that since the entire books of account had been scrutinised and the Assessee's income had been accepted, it also means that the entire opening stock, sales and closing stock made during the year stood accepted. Additionally, in respect of AY 2012-13 also, 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 Rs. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khapatnam Vs. Hirapanna Jewellers [2021] 128 taxmann.com 291 (supra)held as under: 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 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 jewelle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee that due to demonetization, the public became panic and the cash available with them in old denomination notes becomes illegal from 9-11-2016 and made the investment in jewellery, thereby thronged the jewellery shops appear to be reasonable and supported by the newspaper clippings such as The Tribune, The Hindu etc. It is observed from the newspaper clippings that there was undue rush in various jewellery shops immediately after announcement of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7060557 3 2018-19 Nil 1953268 1953268 The total investment in the A.Y. 2017-18 and 2018-19 by Smt. Charu Aggarwal and M/s Kalaneedhi Jewellers LLP comes to Rs. 90,13,825/- as against Rs. 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 Rs. 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 Rs. 4054857/- B. Investment shown by M/s Kalaneedhi Jewellers LLP in A.Y. 2017-18 Rs. 3005700/- C. Total investment shown by Smt. Charu Aggarwal and M/s Kalaneedhi Jewellers LLP Rs. 7060557/- Total difference as per valuation report Rs. 1871975/- Difference relatable to Smt. Charu Aggarwal 1871975 * 4054857 = Rs. 1075070/- 7060557 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 right in making the addition proportionate to the assessee's share on the basis of the difference calculated between the cost of construction arrived at by the DVO and as shown by the assessee after rejecting the books of accounts. He accordingly sustained the addition of Rs. 7,96,905/-. 14. Now the assessee is in appeal. 15. Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt 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 Rs. 18,71,975/- and accordingly addition of Rs. 7,96,905/- was made in the hands of the assessee, the remaining addition of Rs. 10,75,070/- was made in the hands of other co-owner namely Smt. Charu Aggarwal. 17.1 In the present case the assessee asked for the benefit of 10 to 15% on account of self supervision but the valuation officer had given a benefit of only 3.75% and even the valuation officer applied the CPWD rates instead of local PWD rates. The CPWD rates were higher than the PWD rates. As regard to the application of the rates while valuing the property the Hon'ble Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... * 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 assessee in its regular books of account. 18. Now we will take up the appeal of the another assessee i.e; Smt. Charu Aggarwal, Patiala in ITA No. 310/Chd/2021 wherein following grounds has been raised: 1. That the Ld. Commissioner of Income Tax (Appeals)-5, Ludhiana ahs erred in confirming the addition of Rs. 10,75,070/- on account of alleged 'unexplained investment' on the construction of 'Show Room'. 2. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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