9911796707
TMI Blog2024 (8) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... ake of convenience. 3. The only issue to be decided in this appeal of the assessee is as to whether the ld CIT(A) was justified in confirming the taxation of additional income of Rs. 3,67,13,530/- u/s 115BBE of the Act in the instant case. 4. We have heard the rival submission and perused the material available on record. The assessee company is trading of jewellery. It does retail sales as well as wholesale exports. A search and seizure operation was carried out in the premises of the assessee u/s 132 of the Act on 17.11.2016. During the course of search, various materials/ documents were found and seized and statements were also recorded. The case of the assessee was centralized vide order passed u/s 127 of the Act by the Ld PCIT on 17.07.2017. Later notice u/s 153A of the Act stood issued to the assessee for AYs 2011-12 to 2016-17 and notice u/s 142(1) of the Act for AY 2017-18 dated 27.07.2018. 5. During the search, a Government empanelled valuer was summoned to assist in the valuation of the stock of jewellery found at the time of search. The valuer adopted a rough method and took the weight of jewellery on estimated basis completely ignoring the tag in each of the jeweller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see preferred appeal against this action of the ld AO before the ld CIT(A). The ld CIT(A) held that the revised return filed by the assessee is a valid return but however, proceeded to treat the additional income disclosed/ surrendered during the search which was included by the assessee in the revised return, as undisclosed income eligible to tax u/s 115BBE of the Act. Aggrieved, the assessee is in appeal before us. 8. It is pertinent to note that against the action of the ld CIT(A) in holding that the revised return filed by the assessee to be a valid return, the revenue is not in appeal before us. 9. We have gone through the entire paper book submitted by the assessee and we find that the assessee's AR vide letter dated 24.11.2018 filed before the ld AO had categorically stated that the additional income offered in the sum of Rs. 3,67,13,530/- at the time of search proceedings u/s 132(4) of the Act was only on account of difference in valuation of stock of jewellery. Since there was absolutely no difference in quantity of jewellery according to the assessee, and the difference arose only in the valuation thereon, the offer made by the assessee in the statement u/s 132(4) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... screpancy. Be that as it may, the discrepancy has been accepted by the assessee in the statement u/s 132(4) of the Act as well as in the revised return filed on 20.09.2018 by offering the discrepancy amount to tax in the sum of Rs. 3,67,13,530/- as business income which is evident from the revised computation of income enclosed at page 36 of the Paper Book. 10. It is also pertinent to note that the disclosure of additional income was made by the assessee at the time of search on 18.11.2016 while giving statement u/s 132(4) of the Act at 10 PM whereas the higher tax rate of 60% got introduced u/s 115BBE of the Act only pursuant to Taxation Laws (2nd Amendment) Act, 2016 which got notified in the official gazette only on 15.12.2016, being the date of receipt of accent of the Hon'ble President of India which got further culminated as the Taxation Laws (2nd Amendment) Act, 2016. Hence, obviously the provisions of section 115BBE of the Act applying higher tax rate @ 60% cannot be applied at all in respect of search conducted prior to 15.12.2016 and incomes earned prior to 15.12.2016. Hence, the assessee is entitled for relief on this count also. 11. In view of the aforesaid observatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... normal behaviorial pattern with that of the 2015 and 2016 as tabulated below:- Sales during Qtr. Ended in Rs. Dec. 2015 80,42,73,485.09 Dec 2016 84,41,69,300.00 Dec 2017 56,13,79,595.00 16. In respect of sales made actually on 07.11.2016 and 08.11.2016, the sale bills were effected from 09.11.2016 to 11.11.2016 by the assessee. The assessee in this regard had explained the same even at the time of search proceedings while recording statement u/s 132(4) of the Act from the Director that due to festive seasons followed by demonetization where the showrooms remained open till midnight reporting large footfalls and human constraint in generating proper sale bill on the same day, there was no option to generate them on the following days i.e. 09.11.2016 till 11.11.2016. These facts stood corroborated with the statement of the Director as well as the accounts manager Shri Sudhir Arora taken during the search operation and thereafter. Further, the information technology in charge person Shri Rajesh Somai in his statement recorded during the search had also stated that sales bills generated and saved on the server cannot be edited nor can the sequence be altered once a bill has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uently deposited in the bank. The ld AO on the basis of daily average sales and estimation concluded that sales on 07.11.2016 of Rs. 51 lakhs and on 08.11.2016 of Rs. 1.02 crores. Accordingly, the ld AO concluded that legitimate cash available with the assessee till midnight of 08.11.2016 was only Rs. 1.53 crores (Rs. 51+1.02). Accordingly, he proceeded to treat the sum of Rs. 11.99 crores as unaccounted income of the assessee computed in the following manner :- Sales reflected on 07.11.2016 by assessee Rs. 6.09 crores Sales reflected on 08.11.2016 by assessee Rs. 7.43 crores Total Rs. 13.52 crores Cash balance available with the assessee as on 08.11.2016 Rs. 1.53 crores Addition made Rs. 11.99 crores 17. The ld CIT(A) considering the entire contentions of the assessee deleted the addition of Rs. 11.99 crores by accepting the same as regular cash sales by observing as under:- "9.1 The appellant during the assessment proceedings submitted date wise cash collections on account of sales and advances against sales achieved from 24/10/2016 to 08/11/2016 which is as under : CASH SALES ADVANCES - CASH TOTAL CASH COLLECTIONS FOR THE DAY 24/10/2016 27,20,700.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verification of cash transactions relating to demonetization. The said Instructions are: 1st instruction issued on 21/02/2017 vide number 03/2017, 2nd instruction issued on 03/03/2017 vide number 4/2017, 3rd instruction issued on 15/11/2017 vide F.No. 225/363/2017-ITA.II and the last on 09/08/2019 vide F.no.225/145/2019- ITA.II. The above instructions provide guidance as to the kind of investigation, enquiry, evidences that the assessing officer is required to take into consideration for the purpose of assessing such cases. The instructions speak about the comparative analysis of cash deposits, cash sales, month wise cash sales and cash deposits. It also provides that whether in such cases the books of accounts have been rejected or not where substantial evidences of wide variation be found between these statistical analyses. The instruction dated 21/02/2017 provides that the assessing officer will look into the basic relevant information e.g. monthly sales summary, relevant stock register entries and bank statement to identify cases with preliminary suspicion of back dating of cash and is or fictitious sales. The instruction has also suggested some indicators for suspicion of back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cr. in FY 2015-16 to Rs. 283.69 Cr. in FY 2016-17 leading to corresponding increase of sales. Chart No. 4 : Comparison of month wise average daily sales during F.Y. 2015- 16 & 2016-17. F.Y. 2015-2016 F.Y. 2015-2016 F.Y. 2016-2017 F.Y. 2016-2017 MONTHS NET SALES Avg sales per day NET SALES Avg sales per day APRIL 13,19,56,902.19 43,98,563.41 28,31,98,401.00 94,39,946.70 MAY 18,01,09,509.00 60,03,650.30 30,60,59,661.00 1,02,01,988.70 JUNE 9,11,92,545.00 30,39,751.50 18,09,97,095.00 60,33,236.50 JULY 19,40,96,470.00 64,69,882.33 14,85,58,204.00 49,51,940.13 AUGUST 16,40,73,305.00 54,69,110.17 14,13,80,816.00 47,12,693.87 SEPTEMBER 12,94,54,453.00 43,15,148.43 20,00,73,480.00 66,69,116.00 OCTOBER 35,10,71,966.00 1,17,02,398.87 36,54,14,109.00 1,21,80,470.30 NOVEMBER 22,21,60,177.00 74,05,339.23 29,17,66,881.00 97,25,562.70 From the above chart it is seen that the assessee company has reported turnover for the financial year 2016-2017 (Upto November, 2016) which is comparable with the turnover of the immediately preceding previous year both in terms of monthly sales as well as average da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company's account properly record and reflect these sales. The charts reflect that the appellant is regularly incurring cash sales. It is a normal business practice in the business of jewellery that part sales are done in cash. The percentage of cash sales to the total turnover which was 55.13% for the period ended 31.03.2016 have come down to 38% for the period ended 31.03.2017 i.e. in the AY 2017-18. Further the sales during the period October to December 2015 were of Rs. 80.42 crores whereas the sales during the period October to December 2016 were of Rs. 84.41 crores which again reflect that the sales were comparable in the said quarters. Again it is seen from the above charts that the sales during the month of November 2015 amounted to Rs. 22.19 crores whereas the sales during the month of November 2016 were of Rs. 29.17 crores, the increase in sales is due to the extraordinary demand for the jewellery on the night of 8.11.2016 due to demonetisation. It may also be seen that the turnover for the FY 2015-16 was Rs. 216.88 crores whereas the turnover for the FY 2016-17 was of Rs. 283.69 crores. Thus, taking into account the increase in turnover during the curre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of purchases and sales, filing of VAT returns etc. the said deposit cannot be added u/s 68 of the Act. 9.7 The appellant has rightly submitted that notwithstanding the announcement of demonetization effective from midnight of 08.11.2016, the government had not imposed any restriction or prohibition on trade and commerce. The appellant has submitted that due to festival season and till the night of 08.11.2016, not only was the regular sales staff, required to be detained for attending to the sales activities including bill preparation and collection, even the accounts staff and the administrative staff had to be posted to the sales and cash counters to attend to the heavy rush of the customers which is a normal business practice. With the normal system becoming overloaded, sales were made on the basis of proformas by the appellant. Due to heavy rush such sales could not be simultaneously loaded into the system and so the formal bills were raised subsequently in lieu of the copy of the proformas handed out originally to the customers at the time of sale on the night of 08.11.2016. The sales as made during the night of 08.11.2016 were of jewellery i.e. finished goods. Also no proo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed immediately on 8.11.2016 cannot lead to the conclusion that the assessee did not have the said cash. It can merely lead to a suspicion but based on this addition cannot be made without evidence that assessee did not have that kind of cash available. 9.9 In this case, all the cash sales have been included in the accounts of the Assessee as part of its Sales for the year. The Assessing Officer has accepted this position by accepting the accounts and causing the assessment to be made on the basis of the returned income appearing in the books of accounts. The Assessing Officer has added the sales already shown which results in the duplication of income which is erroneous and untenable. 9.10 In view of the above facts and discussions and respectfully following the decision of ITAT Delhi in the case of Agson Global (P.) Ltd. Vs Assistant Commissioner of Income Tax, Central Circle-28, New Delhi [2020] as reported in 115 taxmann.com 342, the addition of Rs. 11,99,00,000/- is deleted and this ground of appeal of the assessee is allowed." 18. We find that all the allegations leveled by the ld AO in his order had been duly replied and made by the assessee before the lower authorities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner whatsoever was found by the concerned authorities. These facts were duly appreciated by the ld CIT(A) by giving elaborate reasons which are already reproduced hereinabove. None of the factual observations made by the ld CIT(A) were controverted by the ld DR before us except repeating what the ld AO had done in the assessment order. Hence, we do not find any infirmity in the order of the ld CIT(A). Accordingly, the ground (i) to (iii) raised by the revenue are dismissed. 19. Ground Nos. (iv) and (v) raised by the revenue are challenging the deletion of addition of Rs. 18,23,000/- on account of deletion of disallowance of advertisement and exhibition expenses on ad hoc basis. 20. We have heard the rival submissions and perused the material available on record. The ld AO in the assessment proceedings made an ad hoc disallowance of 10% of total exhibition expenses and advertisement expenses on the ground that the assessee could not produce vouchers for some of the transactions and hence, the same remained unverified. The assessee on its part submitted ledger bills and vouchers before the ld AO and stated that the payments thereon were made by account payee cheques and duly su ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
