9911796707
Advanced Search 
TMI Blog2023 (4) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... are that the AO invoked the provisions of Section 145(3) of the Act and concluded that there was defects and anomalies in the reply/ submissions filed by the assessee and consequently the AO made an addition of Rs.33,98,989/- by holding that during the year under consideration, the assessee company has deposited total cash amounting to Rs.36,92,500/- in SBN during demonetization period on 16-1-2016 in his saving bank account No. 3642000100144701 maintained with Karnataka Bank Ltd. During the assessment proceedings, the assessee was asked to furnish statement of monthly cash deposits during the F.Y. 2016-17 and 2015-16 and quantify the income declared with the cash deposited in his bank account(s). In response to this, the assessee furnished the details which are reproduced as under:- Details of cash deposit in Bank 1 (a) Total cash deposit in bank F.Y. 2015-16 0 (b) Total cash deposit in Bank from 01-04-2015 to 08-1-2015 0 (c) Total cash deposit in bank from 09-11-2015 to 31-12-2015 0 2 (a) Total cash deposit in Bank F.Y. 2016-17 36,92,500/- (b) Total cash deposit in Bank from 01-4-2016 to 08-11-2016 0 (c) Total cash dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verification so that the fact may be verified. 2.2 During the appellate proceedings, the ld. CIT(A) after considering the written submissions filed by the assessee which are at para No. 4.2 of the impugned order, dismissed the appeal of the assessee, thereby upholding the addition made by the AO. The operative portion of the order of the ld. CIT(A) is contained in para 4.3 and the same is reproduced herein below. ''4.3 I have carefully considered the matter. Assessee is stated to have started its own Jewellery business from November, 2015 and claimed to have made regular purchases of jewellery from M/s. Nakshatra Brands Ltd Mumbai. For the period from 01.04.2016 to 31.03.2017, the assessee claimed to have purchased mix jewellery worth Rs.4,86,30,978.00 from M/s Nakshatra Brand, Mumbai. But there seems to be hardly any sale which was commensurate with the purchase. According to the AO, total sales for the whole year was Rs.62,66,499/- Out of that total sales, assessee had claimed that there was sales to the tune of Rs.33,98,989/- on the night of 08.11.2016. Therefore, it is seen that for the rest 364 days of the year, there was sales of Rs.28,67,510/-. That gives total daily aver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee on this part of the sales claimed in proportion to turnover declared. This aspect of argument is allowed. 4:33 At another part of written submission, the appellant argued that tax rate prescribed u/s 115BBE is not applicable in A.Y. 2017-18. In this regard, it is seen that the Taxation Laws (Second Act) 2016 says that the amendment will be applicable from 01.04.2017. Therefore, the same will be applicable in A.Y. 2017-18. Unless any Hon'ble High Court or Hon'ble Court adjudged the amendment to be unconstitutional, have no authority to say that tax rate will not be applicable in AY. 2017-18. This aspect of argument is rejected. Appeal is treated as partly allowed. Addition of Rs.33,98,989/- is confirmed AO is also directed to give relief per para 4.3.2 of this order.'' 2.3 Now before us, the ld. AR has filed the written submission in respect of both the grounds which are reproduced as under:- ''Ground No. 1. The Ld. CIT(A), NFAC has erred on facts and in law in confirming the addition of Rs.33,98,989/- u/s 69A of the Act by treating the cash deposit to this extent as unexplained income of the assessee. Submission:- 1. The various observations/ allegations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out any real estate activity. All the activities of the year is of jewellery business and therefore, the observation of AO that the segregated trading/ P&L A/c is not made has no impact. Further non audit of accounts for AY 2018-19 has no relevance for the AY under consideration. e. The AO incorrectly stated that the assessee has not furnished bills/ vouchers of sales made on 08.11.2016 whereas the same were furnished vide submission dt. 27.11.2019 as per the table given at Pg 9 of the CIT(A) order. f. The observation of Ld. CIT(A) that books are manufactured is without basis. Further his observation that filing of VAT return, paper evidence of purchase & sale are not proof of actual transaction having taken place without bringing any material on record that purchase & sales are not genuine cannot be viewed against the assessee more particularly when sales declared is accepted and no evidence is brought on record that such sale is not a genuine sale. Thus, the various observation made by the lower authorities by not accepting the cash sales made on 08.11.2016 are on surmises & conjectures and therefore, such cash sales cannot be considered to be introduction of on money thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s 68 could not be made in respect of the same amount. PCIT Vs. Agson Global (P) Ltd. (2022) 210 DTR 225 (Del.) (HC) Having regard to the extensive material which has been examined by the Tribunal, in particular, the trend of cash sales and corresponding cash deposited by the assessee with earlier years, the Court is of the view that there was nothing placed on record which could have persuaded the Tribunal to conclude that the assessee had in fact earned unaccounted income i.e., made cash deposits which were not represented by cash sales. Therefore, the Tribunal correctly found in favour of the assessee and deleted the addition made by CIT(A) u/s 68. CIT Vs. Kailash Jewellery House ITA No. 613/2010 order dt. 09.04.2010 (Delhi) (HC) In the facts of above case cash of Rs.24,58,400/- was deposited in bank account. The Assessing Officer made the addition on the ground that nexus of such deposit was not establish with any source of income. The assessee claimed that it was duly recorded in the books on account of cash sales and was considered in the Profit and Loss Account. The Assessing Officer had verified the stock and cash position as per books and had accepted the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of President on 17.12.2016 and made applicable from 01.04.2017 is not applicable to AY 2017- 18. Facts & Submission:- 1. The assessee before the Ld. CIT(A) stated that section 115BBE is not applicable in AY 2017-18. The Ld. CIT(A), however, held that the amendment is made applicable from 01.04.2017 i.e. AY 2017-18 and therefore, unless the Hon'ble High Court or Apex Court adjudged the amendment to be unconstitutional, he has no authority to say that this section is not applicable in AY 2017-18. 2. It is submitted that substituted section 115BBE by Taxation Laws (Second Amendment Act), 2016 received the assent of President on 17.12.2016. The section is made applicable w.e.f. 01.04.2017. Hence, this section will operate on the income referred to in sections 68, 69, 69A, 69B, 69C or 69D which accrues or arises on or after 01.04.2017. For this reliance is placed on the decision of Supreme Court in case of Karimtharuvi Tea Estate Ltd. Vs. State Of Kerala 60 ITR 262 wherein it is held that it is well-settled that the IT Act, as it stands amended on the first day of April of any financial year must apply to the assessments of that year. Any amendments in the Act which come into for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Finance Act or an Act providing a surcharge if the same is brought into force on the lst of April of the assessment year in which assessment for the previous year is being done as the same would only provide for ascertaining the rate, for existing liability under the Income Tax Act. But that is not the case here. Under the new provision, i.e. Section 64(1)(iii) a new liability has been prescribed and not the rate for ascertaining the liability. Such new liability under the Income Tax Act cannot be given a retrospective effect. Such liability can only be fastened on an individual if the same was existing at the time of accrual and not at the time of assessment. The observations of the Apex Court in paragraph 33 of the judgment in the case of Keshoram Industries and Cotton Mills (supra), clarifies this position. 18. In view of the judgments of the Apex Court in the case of Keshoram Industries (supra) as well as Karimtharuvi Tea Estate Ltd (supra) this Court would have no hesitation in holding that for deciding the liability of a particular provision of the Income Tax Act, the date of accrual of income would be relevant. If the provision comes into force in a particular financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of law that legislations which modify accrued rights or which impose obligations or imposed new duties or attach a new disability have to be treated as prospective. This is so held by the Hon'ble Supreme Court in case of CIT Vs. Vatika Township Private Limited (2014) 109 DTR 33 where the Hon'ble court has given the following finding for deciding whether a provision has prospective operation or retrospective operation:- "39(e) There is yet another very interesting piece of evidence that clarifies the provision beyond any pale of doubt, viz. understanding of CBDT itself regarding this provision. It is contained in CBDT circular No.8 of 2002 dated 27th August, 2002, with the subject "Finance Act, 2002 - Explanatory Notes on provision relating to Direct Taxes". This circular has been issued after the passing of the Finance Act, 2002, by which amendment to Section 113 was made. In this circular, various amendments to the Income Tax Act are discussed amply demonstrating as to which amendments are clarificatory/retrospective in operation and which amendments are prospective. For example, explanation to Section 158BB is stated to be clarificatory in nature. Likewise, it is mentioned t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch received the assent of President on 17.12.2016 and made effective from 01.04.2017 would apply in FY 2017-18 i.e. AY 2018-19. Thus the amended section is not applicable for AY 2017-18 and therefore tax charged by AO on the cash deposited @ 60% instead of taxing it under the regular provisions of the Act is not as per law.'' 2.4 During the course of hearing, the ld. DR relied upon the order of the ld. CIT(A) and also relied upon the decision in the case of Sanjay Kapur vs ACIT [2022] 138 taxmann.com 207 (SC). 2.5 The Bench has heard both the parties and perused the materials available on record alongwith citations referred by the parties. Admittedly, the Photostat copy of Franchisee Agreement dated 23-07-2013 allegedly entered between the assessee with M/s. Nakshatra Brands Ltd., Mumbai was neither before the AO at the time of assessment nor before the ld. CIT(A) at the time of appellate proceedings. Even before the Bench, no application for additional evidence as prescribed under Rule 29 of Income Tax (Appellate Tribunal) Rules, 1931 has been moved. In this situation, the Bench cannot accept the unverifiable Photostat copy of alleged agreement. It is also noted that even before ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
