TMI Blog2022 (11) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... of the goods specially the laptop is duly un-reconciled and found excess during the physical verification in survey - As documents the assessee filed the reconciliation and the evidence related basis of valuation. The valuation of stock is based on cost market price whichever is lower. The stock of goods cannot be valued suo moto without any basis. The reconciliation was accepted by the ld. CIT(A), no discrepancy was found in the number of itemof the stock. CIT-Dr was unable to bring any contrary fact against the submission of assessee Accordingly, the addition made by the ld. AO is quashed and the balance addition which was up-held by the CIT(A) is also liable to be deleted. Addition u/s 69 - Deposit huge cash in the bank account of the assessee during the demonetisation period especially after 08.11.2016 - cash deposited in old currency in the bank account during the demonetisation period - HELD THAT:- The entire addition was made on basis of human probability and assumption. AO made a percentage on aggregate sale and cash sale from September 2015 in October 2016. The ratio in between aggregate sale and aggregate cash sale was 50% and in November 2016, 36.14%. On basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 94 is applicable only in the case of Jewellery/Ornaments and not in case of bullion found from the possession of assessee during the search proceedings. 2(a). Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs. 18,00,000/- on account of unexplained cash, as assessee had miserably failed to furnish any evidence in support of his claim that an amount of Rs. 15,09,343/- was received by his daughter-in- law from his deceased wife at the time of her death. 2(b). Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the appeal of the assessee only on the ground that mere possession of New Currency Notes after conversion of old demonetized Currency Notes does not render the cash as explained cash. 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the appeal of the assessee while deleting an addition of Rs.32,55,984/- out of total addition of Rs. 43,54,000/- on account of difference in closing stock found during the course of the Search Seizure proceedings. 4. Whether on the facts and circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Only in point of addition of jewellery and bullion and in difference of stock were partly upheld. 4. Being aggrieved by the order of the ld. CIT(A) both revenue and assessee had filed appeal before us. 5. At the outset, we are simultaneously adjudicating both the appeals of the revenue and the assessee. Ground no. 1 of the revenue. The ld. CIT DR first pointed out that the excess gold was found which is undeclared during the time of survey and the addition was made amount of Rs.28,70,000/-. The assessee filed the appeal before the ld. CIT(A) and the appellate authority has taken the following observation which is extracted here as below: The AR has argued that the AO was not justified in rejecting the claim of cash as per books of accounts of M/s. Prime Computers Ltd., the proprietary concern of Sh. Rajesh Gupta who has been filing the return from last so many years and huge amount of cash were deposited in financial year 2010-11 (Rs. 2,49,84,000/-), 2011-12 (Rs. 2,74,62,520/-), 2012-13 (Rs. 6,41,59,136/-), 2013-14 (Rs. 24,87,537/-), 2014-15 (Rs. 14,74,325/-) and 2015-16 (Rs. 9,44,120/-). The AR has referred to the returns of income filed by Sh. Rajesh Gupta and fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier performed by the deceased. And most importantly the assessee has already disclosed a cash of Rs. 19,59,650/- (as non business cash) in his return filed before the date of search. There is further merit in the argument of the AR that the AO has given benefit of past savings only in respect of Sh. Rajesh Gupta and Smt. Madhu Gupta whereas no benefit in respect of past savings of the assessee has been given. The other basis taken by the AO for rejecting the contention of the assessee were various notifications issued by the RBI after demonetization. Here it is relevant to mention that at the time of search, no demonetized currency notes were found. Therefore, whatever cash-in-hand was available with the assessee before demonetization got converted by the assessee. How he converted the old demonetized currency notes into new currency notes of Rs. 2,000/- can be a matter of debate but the fact of the matter is that no old demonetized currency of Rs. 1000 and Rs. 500 denomination were found or seized during the search and hence it has to be presumed that all of them were converted by the assessee into new currency notes of Rs. 2000/- or Rs. 500/- may be through legal means or in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wife Late Smt. Rama Kanta Gupta, son, Sh. Rajesh Gupta daughter in law Smt. Madhu Gupta total gold was calculated 1200 gms under possession. Further, the assessee s wife was died on 29.10.2015 and all her gold ornaments are also in the hands of the family. The ld. Counsel further replied that the assessee declared the gold in the return of income in historic value amount of Rs. 9 lacs which was declared in his return for A.Y. 2013-14, APB Pages 36 to 60 . The assessee is now 89 years of age for the A.Y. 2017-18, so, this gold is acquired in his marriage at the age of 25 years. Accordingly, this value is actually covered the current value of gold ornaments. As per this return of income the assessee also declared the gold for A.Y. 2014-15 the proof which is enclosed in APB pages 61 to 90 . 6. We heard the rival submission and considered the documents available in the record. We find there is no infirmity in the order of the ld. CIT(A). The assessee is covered his gold ornaments which was declared in return of income in the Schedule -AL . The ld. CIT-Dr was unable to bring any contrary fact against the submission of assessee. The assessee declared the gold in his return of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereafter the household cash passed on to Smt. Madhu Gupta. It is also submitted that the assessee has shown a cash of Rs. 19,95,650/- as 'cash other than business cash' in his return for assessment year 2015-16 and as per the AR, there cannot be any stronger evidence than this to justify the cash found at the time of search. The AR has filed the copy of the income tax return of the assessee for assessment year 2015-16 and the relevant part is reproduced in para 3.1 (at page 19). The AO has rejected the explanation about cash received from the wife of the assessee Late Smt. Rama Kant Gupta by the daughter-in-law of the assessee by observing that no documentary proof for the same has been filed. It is illogical to expect that the old lady Smt. Rama Kant Gupta will call her daughter-in-law and prepare a document duly signed by her and handover the cash to her daughter-in-law along with such documents before dying. Therefore, to expect documentary evidence in support of the contention that the cash in possession of Smt. Rama Kant Gupta at the time of her death, passed over to Smt. Madhu Gupta after her (Smt. Rama Kant Gupta) death is most absurd. It is but natural that after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is merit in the contention of the appellant that his statement was not recorded at the time of search and the declaration made by Sh. Rajesh Gupta u/s 132(4) who was an employee in assessee's concern is not binding on the assessee, especially in view of the fact that the assessee retracted from the declaration made by Sh. Rajesh Gupta through a letter filed on the very next day before the DDIT (Inv.), Jammu explaining all the points on which declaration was made by Sh. Rajesh Gupta u/s 132(4). The presumption u/s 292C is a rebuttable presumption and the AR has argued that the assessee has successfully rebutted the presumption. Even the AO has made addition of Rs. 18 lacs only as against surrender of Rs. 30 lacs taken during the search u/s 132(4). Thus, the declaration made by the Sh. Rajesh Gupta has not been accepted as such or relied upon by the AO. This also strengths the arguments of the AR on this point. On the basis of facts and documents filed on behalf of the assessee, the contention of the AR is found acceptable. Accordingly, this ground of appeal is allowed. 7.2 The ld. Counsel further argued that the cash amount of Rs.19,59,650/- was already declared in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing. The AR further submitted that out of valuation of Laptops at Rs. 57,17,882/- the AO gave credit for demo laptops for Rs. 1,67,416/- as against actual value of Rs. 11,08,664/-, for defective laptops the credit of Rs. 8,34,360/- was given as against eligible credit of Rs. 12,54,280/-. In respect of laptops sold to M/s. Asia IT Solutions, as per the AR, the actual cost was Rs. 4,38,571/- against which credit given by the AO was Rs. 3,68,100/- only. After reducing the 5% VAT on local purchases, the difference was calculated by the AR at Rs. 10,89,016/- which was claimed on account of counting error by the team. It is argued that the purchases are through proper channel and recorded in the books of accounts and cannot be said to be unaccounted. There is some merit in this argument of the AR since the assessee was dealing in branded items which has can be purchased from the authorized source only and has to be sold against proper bill. A perusal of the assessment order shows that the AO has calculated excess stock mainly on account of value of laptops at Rs. 57,17,820/-. This has been explained by the AR with respect to the demo laptops, defective laptops and sales made to M/s. Asia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e item and stock-wise statement and details of goods return, un-dispatched stock was submitted in APB page no. 148 to 330 . The ld. Counsel specifically mentioned that there is no difference in between quantity and item of stock which was produced before the revenue authorities. Only, the difference in the valuation of the stock related to laptops. The purchased bills with tax invoice are also annexed from APB pages 152 to 198 as proof determining the valuation of stock. The difference of some laptops of 233 numbers is only related to the gift item and the demo sample which were also reconciled (paragraph 9.2.). 9.4. The ld. Counsel mentioned that during the appeal hearing, the appellate authority allowed the difference of the stock but only Rs.10,89,016/- was upheld. There is no discrepancy in the item and quantity. The valuations are duly backed by the purchase value. So, the entire stock difference is liable to be rejected. 10. We heard the rival submission considered the documents available in the record. Perusal of the above documents the assessee filed the reconciliation and the evidence related basis of valuation. The valuation of stock is based on cost market pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 the cash in hand as per books was Rs. 7,03,9438/-. In August 16 also, the Ld. AO verified that cash in hand in books was amount of Rs. 20,65,556. Even when demonetization period was over the cash in hand duly verified and accepted is at Rs 28,45,667/. Lastly when sales are around Rs 24 Crores in a financial year, then to object the old sales through employees and recovered due to pressure of demonetization that to less than the figure of Rs 2 crore for the period from 1-10-2016 to 8-11-2016 is absolutely unjustified. If sales in a year are Rs 24 Crores then average sales per month has to be Rs 2 Crores. Once again, it is pertinent to state that sales cannot be in doubt, stocks stand verified then how can cash sales be unjustified by which stocks to that extent stands reduced. If the books of accounts are incorrect, then AO should have brought certain instances of mistakes. Everywhere the AO's actions are presumptive and on his own whims and fancies. Finally, counter evidence, the VAT returns ( ENCLOSURE- 8 : copies of VAT returns) are enclosed with written submission APB Page 334-342 which is evidence for sale. These returns are not in doubt and are duly matching with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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