9911796707
TMI Blog2024 (2) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 of the Act. 2(i) That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming the addition of cash sales to the extent of Rs. 3,25,52.833/-made during the period 1.10.2016 to 8.11.2016 and erroneously held to be unexplained credit u/s 68 of the Act read with section 115BBE of the Act. (ii) That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the approach adopted to assume and hold that some part of the cash sales for the period 01.10.2016 to 08.11.2016 represent unexplained cash credits is illegal, invalid and untenable. (iii) That while making the above addition, the learned Commissioner of Income (Appeals) has failed to appreciate the factual substratum of the case, statutory provisions of law and as such, addition so made is highly misconceived, totally arbitrary. wholly unjustified and therefore, unsustainable (iv) That the entire addition is based on whimsical assumptions, arbitrary inferences and overlooks the factual position on record and therefore, the same is invalid, illegal and hence unsustainable. (v) That furthermore the learned Commissioner of Income Tax (Appeals) has proceeded to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany. (ii) That the aforesaid disallowance has been confirmed without adjudicating the same and without giving any findings on its merits which is not a valid course of action in law. 4 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming the disallowance of car running & maintenance expenses to the extent of Rs. 4,04,656/- being expenditure incurred wholly and exclusively for the business of the appellant company. 5 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming the disallowance of Rs. 72,000 out of salary paid to the following persons: Sr. No. Name of Director Salary (i) Deepak Jain 25,000 (ii) Ravi Aggarwal 23,000 (iii) Parvinder Kaur 24,000 Total 72,000 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming the disallowance of a sum of Rs. 7,920/- representing expenditure incurred on mobile phone on account of persona nature wholly and exclusively for the business of the appellant company. (i) Without prejudice to the above and in the alternative, even assuming for the sake of an argument, addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the light of Rule 18(6) of the ITAT Rules. 6. Briefly stated, the facts of the case are that the assessee is into the business of trading and manufacturing of jewelry like gold and diamond, etc. Return for the year was electronically filed on 30.10.2017 declaring income of Rs. 15,07,573/-. Return was selected for scrutiny assessment and accordingly, statutory notices were issued and served upon the assessee. 7. During the course of assessment proceedings, the assessee was asked to provide month-wise comparative chart of cash/credit sales of current year and previous two years. 8. Details sought by the Assessing Officer were furnished and on perusal of the same, the Assessing Officer observed that in F.Ys. 2014- 15 and 2015-16, cash sales in comparison to total sale was less than 5%, which, in F.Y. 2016-17, increased to 10% on total sale of the year. The assessee was asked to justify the increase. 09. The Assessing Officer further pointed out that in every cash sale entry, name of the purchaser and PAN is not mentioned. 10. The assessee filed detailed reply. Reply of the assessee was duly considered but did not find any favour with the Assessing Officer who formed a belief that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --- ---- 21,100 3,13,346 xi) February' 2017 3,13,346 ---- ---- ---- 32,745 2,80,601 xii) March' 2017 2,80,601 7,64,806 5,50,130 ---- 1,50,070 3,45,207 Total 5,00,27,918 16. Break-up of total sales is as under: Sr. No. Month wise Credit Sales Cash Sales Total (Rs.) i) April' 2016 2,36,07,083 ---- 2,36,07,083 ii) May' 2016 5,83,57,443 14,73,478 5,98,30,921 iii) June' 2016 93,00,247 ---- 93,00,247 iv) July' 2016 29,81,612 ---- 29,81,612 v) August' 2016 41,99,099 2,41,885 44,40,984 vi) September' 2016 3,32,19,407 --- 3,32,19,407 vii) October' 2016 46,29,546 3,38,11,665 3,84,41,211 viii) November' 2016 12,46,53,252 1,35,46,934 13,82,00,186 ix) December' 2016 3,21,40,903 ---- 3,21,40,903 x) January' 2017 1,92,37,859 1,89,150 1,94,27,009 xi) February' 2017 8,75,81,633 ---- 8,75,81,633 xii) March' 2017 9,65,07,845 7,64,806 9,72,72,651 Total 49,64,15,930 5,00,27,918 54,64,43,848 17. The entire quarrel revolves around the period 01.10.2016 to 08.11.2016 and cash sales during this period have been held to be unexplained credit u/s 68 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.10.2016 and it is common knowledge that in our society, festival runs 15 days after diwali and it is also a common fact that once the demonization was declared by the Hon'ble Prime Minister, there was frenzy in the market and people were purchasing goods they never intended to purchase just to get rid of demonetized currency. 24. For the sake of repetition, the assessee had furnished month-wise purchases, month-wise details, stock register, valuation of closing stock, month wise details of cash sales, copies of VAT returns and not a single defect has been pointed out by the Assessing Officer in these clinching evidences. 25. The most important fact is that since the cash sales have already been offered as income, the same cannot be taxed in the garb of inflation sales to cover up demonetization currency. 26. In so far as the allegation of non-mentioning of names of the purchasers is concerned, it is not only baseless but without any backing of law as the assessee is not required to keep the names of purchasers for cash sales less than Rs. 2 lakhs and not even one instance has been pointed out by the Assessing Officer where cash sales were more than Rs. 2 lakhs. 27. Consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elates to deletion of disallowance of Rs. 1,62,347/- on account of business promotion. 35. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has claimed business promotion expenses of Rs. 1,62,347/-. The Assessing Officer was of the opinion that such expenses were not necessary and added the same. 36. Before the ld. CIT(A), it was strongly contended that the Assessing Officer cannot sit into the armchair of the assessee company to determine which expense was commercially expedient or not. 37. The ld. CIT(A) was convinced with the contention of the assessee and deleted the addition. 38. Before us, the ld. DR strongly supported the findings of the Assessing Officer. 39. Per contra, counsel for the assessee reiterated what has been stated before the lower authorities. 40. On perusal of record, we find that business promotion expenses include amount incurred on providing free gifts to customers on purchase of large amount of jewellery items as it is general practice in this line of trade. It is a settled proposition of law that the Assessing Officer should not decide how a business man should do his business. 41. Moreover, all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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