9911796707
TMI Blog2023 (12) TMI 1348X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has grossly erred in law as well as on the facts of the case in passing the Exparty order and confirming the order of the ld. AO without providing adequate and reasonable opportunity of being heard and not considering the material on record in the gross breach of natural justice. Hence the same entire addition may kindly be deleted and the assessment order may kindly be quashed. 2.1 Rs. 1,78,08,630/-: The ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the addition of Rs. 1,78,08,630/- made by the ld. AO on account of cash sales made before demonetization which was deposited in the bank account as alleged unexplained amount credited in the books u/s 68, also erred in invoking the provisions of Sec. 68 which is not invokeable in the present case . The Ld. CIT(A) and AO have also erred in not considering the vital facts and material available on record in their true perspective and sense. Hence the addition so made by the ld. AO is also being contrary to the real facts of the case and not according to the provision of law, hence the same may kindly be deleted in full. 2.2: The ld. CIT(A) has grossly erred in law as well as on the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired details/documents through e-filing portal which placed on record. Further, on perusal of the submission filed by assessee, notices u/s 142(1) was again issued on dated 19.12.2019 to the assessee for necessary information / details from the assessee. In response thereto the AR of the assessee submitted his reply on ITBA Portal. The assessee is engaged in the business of all gold jewellery, watches etc. having retail showroom. The assessee has filed its return of income for the year under consideration declaring the total income of Rs. 29,09,080/- on dt. 26.10.2017. The turnover of the assessee for the year consideration is at Rs 23,98,45,370/- as against the turnover of Rs. 26,96,06,094/- in last year. 3.1 During the assessment proceeding the ld. AO noted that the assessee has deposited a sum of Rs. 2,25,82,742/- cash in the banks account during the period of Demonitisation. The assessee was required to produce the information in the a particular format for cash deposit, cash sales and cash balance so as to compare the same with the figures of AY 2016-17. The assessee submitted a reply. The assessee explained source of such huge cash deposits in bank. The assessee in his repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of Rs. 1,00,33,680/- for only one day i.e. 8th November 2016. b) It is humanly impossible to sell goods worth Rs. 1,00,33,680/- in one day. The assessee's argument is that these sales were made after demonetization was declared at 8 pm. It is not possible to sale goods worth Rs. 1,00,33,680 in a span of 4 hours because old currency was not allowed to be accepted after 12 pm on 8th November, 2016. c) The assessee has sold goods to approx 107 People via separate bills. How it is possible that amidst such rush in the shop, the assessee could enter amount and weight and took a print out and got it signed by these 107 purchasers. How the assessee could manage to attend 107 people in 240 minutes! It is next to impossible. d) The assessee was asked to produce the bills for such sales. The same were produced but such bills are not verifiable. Generally, jewelers maintain a database of their customers with their complete address and contact number but here the bills do not contain proper name and address of the purchaser. In such case, the transaction is genuine or not cannot be ascertained. e) Further, during the bill verification, it was marked out that the assessee has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emonetization. Therefore, average monthly cash sales booked by the assessee in the rest of the months i.e from April to September are considered as sales are considered as genuine sales. Average sales per month comes to Rs. 61 lac approx (rounded off) and accordingly excess sales booked by the assessee for the month of November at Rs. 17808630/- considering exorbitantly high and unprecedented. However, as discussed assessee's average monthly sales at Rs. 61 lac means Rs. 2 lac daily. So, for 8 days of November, sales of Rs. 16 lacs is considered to be genuine and excess sales i.e. Rs. 1,78,08,630 is considered as unexplained amount credited in the books of the assessee. As the assessee could not provide any satisfactory arguments for amount credited in the books, and thus considering the provisions of section 68 an amount of Rs. 1,78,08,630/- is considered as unexplained cash credits of the assessee. 4. Aggrieved from the above finding recorded in the order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. Apropos to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below: "6. Decision I have carefully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of the assessee, and the most critical thing to be examined in this regard is explanation of the assessee with respect to these credits. There is no, and there cannot be any, dispute on the fundamental legal position that the onus is on the assessee to prove 'bonafides' or 'genuineness' of the money credited in his bank account. This approach finds support from the scheme of Section 68/69, which provides that where any sum is found credited in the books / bank accounts of an assessee maintained for any previous year, and the 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, such sum may be charged to income tax as the income of that assessee for that previous year. The burden is thus on the assessee to prove the nature and source thereof, to the satisfaction of the Assessing Officer. Everything thus hinges on the explanation given by the assessee and on how acceptable is the explanation so given by the assessee. The next question is as to what the kind of explanation that the assessee is expected to give. 7.2 As noted by Hon'ble Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably". 7.7 An addition under Section 68 can be made where any sum is found credited in the books of account for any previous year, and the assessee either offers no explanation about the nature and source as regards the same, or the explanation offered by him in the opinion of the assessing officer is not found to be satisfactory. That before adverting further, the relevant extract of the aforesaid statutory provision, viz. Section 68, which reads as under: - "Cash credits. 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the 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: 35 [Provided that where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, any explanation offered by such assessee shall be deemed to be not satisfactory, unless, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed to be read into a statutory provision in the garb of giving effect to the underlying intent of the legislature. 7.9 In a much-related case of identical facts of abnormally huge cash deposits in the bank accounts by a jeweller, the Hon'ble ITAT Hyderabad, 'B' Bench in the case of Assistant Commissioner of Income Vs M/s. Vaishnavi Bullion Private Limited in ITA Nos.560 & 561/Hyd/2020 and ITA 58 & 59/Hyd/2021, Hon'ble ITAT upholds the addition of about Rs. 100 Cr. as unexplained credit in the batch of appeals involving two jewellery and bullion dealers in the context of post-demonetisation cash deposits; 7.9.1 The Hon'ble ITAT rejects Assessee's submission of receiving cash from thousands of customers immediately after announcement of demonetisation. ITAT remarks, "The assessee either deposited its undisclosed amount or otherwise helped DR undisclosed, unanimous and unidentifiable persons to convert their undisclosed prohibited currency into bullion after notification of demonetization. In both circumstances, the action of the assessee was not permissible in the eyes of the law"; 7.9.2 The Hon'ble ITAT Holds the addition to be sustainable un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is engaged in the business of all gold jewellery, watches etc. having retail showroom. The assessee has filed its return of income for the year under consideration declaring the total income of Rs. 29,09,080/- on dt. 26.10.2017. The turnover of the assessee for the year was of Rs 23,98,45,370/- as against the turnover of Rs. 26,96,06,094/- in last year. The case was selected for the scrutiny assessment. The ld. AO issued the notice U/s 143(2) on dt. 22.09.2018 in response thereto assessee has submitted the reply thereafter the ld. AO has issued the notice u/s 142(1) on 05.10.2019 and 19.1.2019 in response thereto assessee filed the reply details as required admittedly vide page 2 para 1 of the assessment order. During the course of assessment proceedings the ld. AO has noted that the assessee has deposited cash of Rs. 2,25,82,742/- in the bank during the demonetization period. The ld. AO required to the assessee to file the the information in the a particular format for cash deposit, cash sales and cash balance so as to compare the same with the figures of AY 2016-17. In response thereto the assessee has submitted the same vide page 2-5 of the assessment order and (PB50,51,58,60,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Rs. 1,00,33,680/- in one day. The assessee's argument is that these sales were made after demonetization was declared at 8 pm. It is not possible to sale goods worth Rs. 1,00,33,680 in a span of 4 hours because old currency was not allowed to be accepted after 12 pm on 8th November, 2016. 6). The assessee has sold goods to approx 107 People via separate bills. How it is possible that amidst such rush in the shop, the assessee could enter amount and weight and took a print out and got it signed by these 107 purchasers. How the assessee could manage to attend 107 people in 240 minutes! It is next to impossible. 7). The assessee was asked to produce the bills for such sales. The same were produced but such bills are not verifiable. Generally jwellers maintain a database of their customers with their complete address and contact number but here the bills do not contain proper name and address of the purchaser. In such case, the transaction is genuine or not cannot be ascertained. 8). Further, during the bill verification, it was marked out that the assessee has not entered mobile no of the persons to whom goods were sold on 8th November. However, the number is available on almo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... September are considered as sales are considered as genuine sales. Average sales per month comes to Rs. 61 lac approx (rounded off)and accordingly excess sales booked by the assessee for the month of November is computed as below: Sales for the month of November(upto 8th November) : The assessee has booked Rs. 1,94,08,630 on account of cash sales during these 8 days which is exorbitantly high and unprecedented. However, as discussed above assessee's average monthy sales is Rs. 61 lac means Rs. 2 lac daily. So, for 8 days of November, sales of Rs. 16 lacs is considered to be genuine and excess sales i.e. Rs. 1,78,08,630 is considered as unexplained amount credited in the books of the assessee. All of the above facts indicate that the assessee fabricated the books and tried to bring the unaccounted income in the form of cash sales and deposited the said cash in the bank account. Considering the above facts, it is clear that the assessee could not provide any satisfactory arguments for amount credited in the books. Therefore, provisions of section 68 are attracted here. 5. Applicability of section 68: The onus to prove the identity, genuineness and creditworthiness was on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o been replied by the assessee admittedly. Thereafter the ld. AO has completed the assessment on 21.12.2019. In support note sheet on portal is enclosed at Page 1 of Annexure A. 1.2 On perusal of above notices it is clear these nowhere the ld. AO has given or issued any show cause notice before making the additions or allegations or invoking the provisions of 68 and Sec. 115BBE. The ld. AO has not brought any allegation in the notice of the assessee before making the same and It was mandatory on the part of the ld. AO to issue the specific show cause notice to this effect asking to the assessee as to why the income should not be taxed as above before doing so. It is very settled legal position that a person (assessee) is entitled to opportunity to show cause as to why not the income of the assessee is determined and charged or taxed in the manner as proposed by the Assessing Officer but in the instant case no such type of opportunity had been provided hence the addition so made may kindly be deleted . But the ld. AO has failed to do so, which is against the principal of natural justice and against the law. Thus how the ld. AO can make the addition of alleged undisclosed receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recent decision of this honble Tribunal in the case of M/s Motisons Jewellers Ltd in ITA No. 161 & 178/Jp/2022 dt. 29.09.2022. Copy enclosed. 2. All the allegation of the ld. AO based on guess work, assumption, presumption and suspicion and our WS on the same are as under: 2.1). On the allegation that the cash sales in the month of October and November(upto 8th Nov) is Rs. 4,29,08,725/- whereas total cash sales for AY 2017-18 is Rs. 10,74,41,749/-. It means that the assessee made 40% of the total cash sales in these 39 days, If we compare these sales to the rest of the months, average monthly sales for Rs. 60 lacs only. Thus sale recorded in October and November(upto 8th Nov) is purely adjustment and sounds abnormal.: In this regard it is submitted that the allegation of the ld. AO based purely of assumption, presumption and suspicion, the ld. AO has ignored the facts, there was Deepawali Season and thereafter the marriage season had started and in the marriage session the sale of gold and silver jewelry increased. And the items in which assessee deals based on demand and there was huge demand due to marriage season and admittedly the sale was high for 4 hours due to demonetiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.4-5). The assessee has produced cash book and sales ledger in support of its claim of the above cash sales. On verification of the same, it was noticed that the assessee is claiming sales of Rs. 1,00,33,680/- for only one day i.e.8th November, 2016.It is humanly impossible to sell goods worth Rs. 1,00,33,680/- in one day. The assessee's argument is that these sales were made after demonetization was declared at 8 pm. It is not possible to sale goods worth Rs. 1,00,33,680 in a span of 4 hours because old currency was not allowed to be accepted after 12 pm on 8th November, 2016.:- In this regard we have already stated that the observation of the ld. AO based purely on guess work, assumption, presumption and suspicion because 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 jewellery business and maintaining the regular stock registers and no differences were found in the stock register or the stocks of the assessee. Purchases, sales and the Stock are interlinked and inseparable. Every purchase increases the stock and every sale decreases the stock. To disbelieve the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making the addition u/s 68 or tax the same u/s 115BBE again. This view is also supported by the decision of Hon'ble Delhi High Court in the case of Kailash Jewellery House (Supra) and the Hon'ble Gujarat High Court in the case of Vishal Exports Overseas Ltd. (supra),Hence, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld." Further assessee admittedly produced sales bills, cash book and all books of account which have not been rejected. The sales was not only 4 hours as presumed by the ld. AO but the same was also for whole days i.e form 10.AM to 8.00 PM. Further the sale of 4 hours of 8th Novemeber cannot be denied and the sale of from 8.00 PM to 12.00 PM was valid and allowed in old notes and the ld. AO herself admitted the same and not held invalid or illegal. that there was a rush in the shop to purchase the jeweller after the news was published in various newspapers. 2. 6). The assessee has sold goods to approx 107 People via separate bills. How it is possible that amidst such rush in the shop, the assessee could enter amount and weight and took a print out and got it signed by these 107 purchasers. How the assessee could manage t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id this to hide the identity of the buyers or it is possible that these buyers do not exist at all. To make this transaction not verifiable, the assessee did not fill the column of Mobile/Contact Numbers. :- Vide para 2.8, further the ld. AO has not put these allegation nor asked as we have already stated in above para-1 vide notices and note sheet. And in the crowed some data is left then it mean not there was no sales. It is not compulsory or mandatory under the I. Tax Act, 1961 to collect the collect the information related to full name, address and PAN of the customer to whom goods were sold in cash during the course of business below to the prescribed limit. It is voluntary to the customer to provide their personal information to the assessee while goods being sold. The assessee cannot enforce or compel to their customer to give their personal information and if the assessee would do it ruined to the business of the assessee. Further in the preceding financial year the same practice being followed by the assessee where no details of name, address and PAN of customer was available with the assessee. In the preceding year the cash sales made by the assessee were accepted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains stock register in Qty in Grams only having columns of Qty Inward, Qty Outward, Closing Qty. In such case, it becomes unverifiable whether the assessee had a stock of the goods or not which has been claimed as sales by him.e.g. We do not know if the assessee had stock of 20 pcs of chains or earnings which has been claimed by it as sales on 8th November, 2016.:- In this regard it is submitted that the assessee maintained the stock register in the same manner as maintained in the earlier years and consistently following the same method in past years and later years and the revenue has not raised any question on the same and nowhere stated that the same is not permissible nor found any defect in the same, if she was of the view that the stock register is not as per law, she could have rejected the books of accounts but not invoked the provisions of sec. 145(3) nor rejected the same. The ld. AO has failed to mention that the description is available on the sales bills which were admittedly produced before her. We are also filling the stock register from Oct. 2016 to Dec. 2016 for example(PB106-111C). 2. 10). Similarly, on verification of the purchase bills also it was noticed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already stated. 4. The ld.AO stated that, average monthly cash sales booked by the assessee in the rest of the months i.e from April to September are considered as sales are considered as genuine sales. Average sales per month comes to Rs. 61 lac approx (rounded off)and accordingly excess sales booked by the assessee for the month of November is computed as below: Sales for the month of November(upto 8th November) : The assessee has booked Rs. 1,94,08,630 on account of cash sales during these 8 days which is exorbitantly high and unprecedented. The ld AO has taken average monthly sales at Rs. 61 lac means Rs. 2 lac daily. So, for 8 days of November, sales of Rs. 16 lacs is considered to be genuine and excess sales i.e. Rs. 1,78,08,630 is considered as unexplained amount credited in the books of the assessee by the ld. AO. By invoking the provisions of sec. 68. And sated that The onus to prove the identity, genuineness and creditworthiness was on the assessee and it failed to discharge it. Therefore, the amount of Rs. 1,78,08,630/- which is cash deposited in the bank during the period of demonetization is considered as unexplained cash credits and therefore, provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of accounts or in the bank account even for a single day throughout the year which is evident from the peak analysis of bank account is submitted here with. As evident from the bank account, sale proceeds realized was deposited in the bank are utilized in the same day for making payments of purchases. The sale proceeds realized was not lying as credit in the books of accounts of the assessee even for a single day. Hence by any stretch of imagination, payments received from the trade debtors cannot be covered within the meaning of credits under section 68. (f) In the case of "Dewas Soya Ltd. Vs ITO ITA NO.336/IND/2012" HAT Hon'ble ITAT has also held just because the amounts were received from the buyers in cash, the assessee cannot be penalized because the restriction placed for payment u/s 40A(3) of the Act applies to buyer and not the seller. There being no restriction under the Act to accept cash against sales, the assessee Company cannot be penalized. (g) Hon'ble supreme court in the case of CIT v. P. Mohan Kala 291 ITR 278 (SC) has clearly explain that the primary condition for invocation of section 68 is that there has to credit of amount in the books of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion and perused the orders of the authorities and the material available on record arguments advanced by both the parties and also gone through the judicial decision relied upon by both the parties to drive home to their contentions. We find from the records that show cause notice so as to rejection of books of account u/s 145(3) of the Act was not given by the AO and the assessment completed in the manner provided u/s 144 of the Act. It is also noteworthy to mention that that the AO has not given any show cause notices as required u/s 144/145 of the Act before estimation of income by applying the N.P. Rate. It is also ridiculous to note that AO had rejected the books of account u/s 145(3) of the Act which has been confirmed by the ld. CIT(A) but assessment has been framed u/s 143(3) and not u/s 144 as required u/s 145(3) of the Act which indicates that the assessment is bad in the eyes of law. From the order of the ld. CIT(A) it is seen that the ld. CIT(A) had examined the genuiness of purchases from M/s. Paras Gems and Jewellers, M/s. Girdhar Jewellers (P) Ltd. and M/s. Girdhar Jewellers and held the same as genuine on the basis of her detailed findings in para 6.2 (x) for whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of the AO. As regards the genuineness of advance from customers, the assessee received advance of Rs. 11,86,250/- from the customers which the lower authorities considered the corresponding sales made to these customers as genuine and it happens in such business that receiving of advance from customer is regular feature and the same was also prior and after the period 03-11-2016 to 8-11-2016 and advances made during this period cannot be treated as non-genuine. Such advances are adjusted against sales made to the parties. It is also noted that the ld.CIT(A) sustained the addition of Rs. 47,72,297/- on account of N.P and ground against such addition is unverifiable amount of Rs. 37,82,730/- (i.e. on account of realization Rs. 25,96,480/- from debtors and Rs. 11,86,250/- from advances). It is apparent from records that all the amounts realized from debtors and received as advance from customers during the period 03-11-2016 to 8-11-2016 was genuine and verifiable from the accounts then there is no cogent reason by the lower authorities to treat the same as non genuine. Hence, looking into the entirety of the facts, circumstances of the case and the case laws cited by the AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... near future it would go less as compare to present position. 8. Double Taxation is Unconstitutional therefore Illegal: The Ld. AO has grossly erred in law and facts in making addition on account of Undisclosed Income u/s 68 of the act, of Rs. 1,78,08,630/- alleging that Cash sales is unexplained amount, though it is very much included in the Sales of the assessee of concerned period and profit has been offered for Tax on such amount (Rs.1,78,08,630-) too and similarly accepted by the Ld. AO during the course of assessment proceedings, therefore such allegation is evasive, conjecture, surmises and vague in the air, therefore deserve to be deleted. It is fundamental rule of taxation that unless provided, same income cannot be taxed twice. In this preposition kindly refer the decision of this Honble Bench in the case of Sh. Avdesh Dangayach V/s ACIT Cir.6 in ITA No. 464/Jp/2016 dt. 23.02.2017 vide page 10. Also Kindly refer Laxmipat Singhania v/s CIT 72 ITR 291(SC), CIT v/s M.P. JayaRam 100 Taxman 544(Kar), Gyan Chand Jain v/s ITO 73 TTJ 859(Jd). Gem Palace v/s CIT 168 ITR 543(Raj.)., Ramanlal Madan Lal v/s CIT 116 ITR 657(Cal.), Jain Brothers v/s UOI 77 ITR 107(SC), Further the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. ACIT 316 ITR 120(Raj.) it has been held that In each trading account, only four entries were there of opening stock, purchase on debit side, sales and closing stock on credit side. The quantum and value of purchases and sales had not been in dispute inasmuch as they were held to be fully vouched. Value of opening stock also cannot be disputed as it came from closing stock of previous year. The inventories of closing stock was also not found to be incorrect. That is to say actual stock position was not in dispute. The previous year's books of account were not found to be incorrect. In the face of these undisputed facts and circumstances, the Tribunal could not have interfered with the order of CIT(A). In doing so, it had ignored all admitted facts in the face of which there was no occasion for the AO to have resorted to estimate method. There being no dispute about the sales and purchases, non maintenance of stock register lost its significance so far as arriving at GP is concerned. Therefore, the CIT(A) was right in his reasoning about admitted state of affairs. Resorting to estimate of GP rate was founded on no material. Mere deviation in GP rate cannot be a ground for rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e GST on wrong sales/purchase, hence the same cannot be ignored. Commercial Tax Deptt., or GST were directly concerned with the collection of tax on sales and hence, the with correctness thereof. The sales, having accepted by them, there was no reason to make a further enhancement in the declared sales Kindly refer Shree Shankar Khandsari Sugar Mills v. CIT 193 ITR 669 (Kar). More particularly, when no evidence of suppression of sale is found nor alleged so. 12.1 We have already stated that that the cash in hand is supported with the cash book, sales book, purchase book, inventory register and ledgers which are duly maintained during the course of day to day business transaction, which also duly audited by the qualified chartered accountant and accepted by the ld. AO as the ld. AO nowhere invoked the provisions of sc. 145(3). Cash is maintained on daily/periodic basis and supported with the sufficient evidences which were duly verified/checked during the course of assessment proceedings we produced a complete set of Cash book from 01.04.2016 to 31.03.2017. The cash was generated through Cash Sales as made during the course of day to day business transaction supported with the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is revealed that all the details minutely have been mentioned. If the ld. AO was having any doubt he could have made in depended inquiry but he has failed to do so. The inventory, as sold out and was the main cause for generating cash has generated during day to day business transaction, as purchasing in normal business course from valid suppliers and supported with the valid purchase bill bearing GST Number and paying the GST to the suppliers which was dully deposited by the supplier into government account in due course. All Purchase bills were presented before Ld. AO, the payment of all the purchase bill were made before survey through an account payee cheque and cleared from bank before survey which was duly accounted for in the books of account as maintained during day to day business transaction which was verified by the survey team during survey/search as well as by Ld. AO also and purchase register is also part of books of account as impounded during search by the income tax department and kept them in soft copy (Copy of purchase register and copy of purchase bills are being submitted before your honor for your kind consideration). 13.1 GST Department has accepted suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Ltd. is manufacturing maximum of stoneware crockery and for many other reasons which were explained by the assessee vide its letter dated 26.03.04 which was ignored by the AO and the AO has not pointed out any specific defects in the purchases, sales, opening stock and closing stock of the assessee and the AO has not brought on record any cogent material to prove that the assessee has sold the under-production out of the books of account. Therefore, in such circumstances and facts of the case, the AO is not justified in rejecting the books of account by invoking Provisions of Section 145(3) of the Act and the additions made by the AO are liable to the deleted. The objection of the ld. DR that the ld. CIT(A) has not relied upon the CGCRI Report, Calcutta, the ld. AR has pointed out that the in the same report it has been mentioned that the said organization is not involved production practice and the are not sure to what extent their opinion will be useful for the purpose of the assesseeand in such circumstances and facts of the case, the report of CGCRI, Calcutta alone cannot be the basis for rejection of books of account and making an estimation of wastage and the ld. CIT(A) wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e should bring some corroborative material on record through which it can be proved, (a) In similar matter Honourable Supreme court has propounded in the matter of; CIT , ... vs Devi Prasad Vishwanath Prasad on 1 August, 1968 Equivalent citations: 1969 72 ITR 194 SC "9. The High Court, in disposing of the application under section 66(2), expressed the view that because the amount of Rs. 20,000 was entered in the books of account of the business, there was some material to hold that the amount was income of the assessee from the business and not from some other source. But it was not open to the High Court to direct the Tribunal to state a case on a question which was never raised before or decided by the Tribunal at the hearing of the appeal. The question again assumes that it was for the Income-tax Officer to indicate the source of the income before the income could be held taxable and unless he did so, the assessee was entitled to succeed. That is not, in our judgment, the correct legal position. Where there is an explained cash credit, it is open to the Income-tax Officer to hold that it is income of the assessee and no further burden lies on the Income-tax Officer to show t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smissed." (c) In the matter of Dr. Prabhu Dayal Yadav Vs. CIT reported (2018) 89 taxmann.com126 (Allahabad) has held; "9. Having considered the arguments so advanced by learned counsel for the parties, we find that in the peculiar facts of this case, the assessee had been subjected to a survey wherein the OPD register as also Indoor Patient register had been found to have been maintained and entries of receipts of money from different patients were found recorded therein. Then as to the alleged discrepancy, the allegation made in the assessment order is wholly vague inasmuch as the assessing officer has not recorded the nature and extent of discrepancy, if any noticed between entries found recorded in various books of account produced by the assessee during the course of the survey and assessment proceedings. Besides the above the assessee had also produced his cash book, ledger as also bank pass book. No specific discrepancy or deficiency has been pointed out in the assessment order on account of other books of account. Thus, it appears that the books of account of the assessee have been rejected merely because the assessee did not produce the vouchers. Though, such vouchers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Question no.4 thus does not require to be answered. Accordingly, the appeal is allowed. No order as to costs." (d) In the matter of PCIT-3 Vs. Swapnanda Properties Pvt Ltd. Reported on [2019] 111 taxmann.com 94 (Bombay) has held; "11. We note that the books of accounts of the Respondent were rejected by the CIT (A) under section 145(3) of the Act. However, the Tribunal found in the impugned order that the invocation of section 145(3) of the Act is unjustified as no defect was noted in the books of accounts to disregard the same. We note that CIT (A) in his order while rejecting the Books of Account does not specify the defect in the record. The basis of the rejection appears to be best judgment of assessment done by him. The rejection of books should precede the best judgment assessment. On facts, the Revenue has not been able to show any defect in the Respondent's records which would warrant rejection of books and making a Best Judgment Assessment. Thus, on facts the view taken by the Tribunal is possible view. Therefore, no substantial question of law arises. Thus not entertained." Although in the case of assessee no books rejected and hence on much strong footing. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that whether the higher rate of tax applicable or not on the alleged income or the nature of income falls u/s 68/69 and 115BBE. Hence it was mandatory on the part of the AO to issue show cause before invoking the provisions u/s 115BBE, in absence of the same the rate cannot be charged more than to normal rate of tax, the addition if any sustained." Copy of order is enclosed. 16.2. Invalid invocation of Provision of Sec. 115BBE: When the cash was deposited out of the business receipts neither addition can be made nor provisions of Sec. 115BBE can be invoked. Because it is not unaccounted income u/s 68/69 rather it is the business receipts and the ld. AO has never brought on record any evidence that the assessee is having others sources of unaccounted income other than to business. He is only assumed, guess work and made the addition on assumption, presumption and suspicion by ignoring the evidences filed which has never been controverted by bringing any material evidences. And it is also settled legal position that suspicion may be strong, however cannot take place of reality kindly refer Dhakehswari Cotton Mills Ltd. v CIT (261 ITR 775(SC), in which held: "In making an assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR with computation of total income and Audit report for A.Y. 2017-18. 17-47 3. Copy of letter to AO dt. 27.11.219 with details 48-51 4. Copy of letter to AO dt. 11.10.219 and 20.12.2019 with details. 52-61 5. Copy of VAT/GST return. 62-105 6. Copy of Stock details of Oct. 2016 to Dec. 2016 106-111C 7. Copy of sales bills of November 2016 112-218 7. The ld. AR of the assessee in furtherance to the above written submission also argued that as regards the mentioning of the cell number in the bill he submitted that the Rajasthan High Court has held that there is no such requirement [Harshil Choradia 298 ITR 349]. The assessee has filed all the details that has been called for even for comparison last year data was submitted. There no defect found in the stock details as well as in the books of accounts. There is no rejection of the books which are audited under the income tax Act and companies act. Even there is no single defect found in those audited accounts and before making the addition the book results are not rejected. The action of the lower authority taxing the sales as well as cash deposit is double taxation and law does not permits. There is no show cause no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rthiness and genuineness of transactions". (Page No. 10 to 13) 4. Hon'ble Supreme Court in the case of CIT vs Durga Prasad More[(1971)] 82 ITR 540(SC) held that "Science has not yet invented any instrument to test the reliability of the evidence placed before a court or tribunal. Therefore, the courts and Tribunals have to judge the evidence before them by applying the test of human probabilities". (Page No. 14 to 19) 5. Hon'ble Supreme Court in the case of Sumati Dayal Vs CIT(91995) 214 ITR 801(SC)], rejected the theory that it is for alleger to prove that the apparent is not real, and observed that, "This, in our opinion, is a superficial approach to the problem,. The matter has to be considered in the light of human probabilities. Similarly the observation that if it is alleged that these tickets were obtained through fraudulent means, it is upon the alleger to prove that it is so, ignores the reality. The transaction about purchase of winning ticket takes place in secret and direct evidence about such purchase would be rarely available. In our opinion, the majority opinion after considering surrounding circumstances and applying the test of human probabilities has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nation." Thus, the judicial authorities have taken an extremely adverse view of such practices adopted by various assessees including appellant in the present case to make an attempt of aggregating their books and trying to explain the huge cash deposits by making bogus sales entries in their books of accounts. 7. AO has rightly discussed the following reasons in holding the declared sales just before and on demonetization day as bogus, abnormal, just adjustments and against human probability:- (i) Out of total cash sales of A.Y. 2017-18 of Rs. 10.74 Cr, sales of Rs. 4.29 Cr. Le. 40% has been shown in 39 days from 1 October to 8th November, 2016, (ii) The cash sales in preceding A.Y. 2016-17 during these 39 days was only Rs. 1.74 Cr. as against this year's claim of Rs. 4.29 Cr. (iii) Assessee's claim of sale of Rs. 1.00 Cr on a single day on 8 ^ (1/2) November which is 10% of total sales of this year and of Rs. 1.94 Cr. in 8 days (1 November to 8th November, 2016) which is about 19% of annual sales is abnormal and improbable. (iv) It is humanly and practically improbable and unmanageable to issue 107 bills (many bills contained 2 or 3 jewellery items) in rush ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention and perused the orders of the authorities and the material available on record arguments advanced by both the parties and also gone through the judicial decision relied upon by both the parties to drive home to their contentions. The assessee is a private limited company deriving income from manufacturing and trading of Gold ornaments, trading of watches etc. The books of assessee's are audited by the independent Chartered Accountant under the companies act as well as in accordance with the provision of the income tax act. Copies of the audit report and statement of profit and loss account is filed by the assessee company. It is noted from the record that the case of the assessee was taken up for scrutiny assessment u/s 143(3) on the basis of CASS on complete scrutiny. The details called for by the AO were submitted by the assessee from time to time. Vide order dated 21.12.2019 assessed the income of the assessee at Rs. 2,07,17,710/- where by making an addition of Rs. 1,78,08,630/- being the amount of cash sales made as unexplained credit as per provision of section 68 of the Act. The bench noted that while doing so the ld. AO has not issued any show cause notice for making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he question of such amount standing in the books of account of the assessee would not attract section 68 because the cash deposits becomes self-explanatory and such amounts were received by the assessee from the customers against which the delivery of the vehicle was made to the customers. The question of sustaining the addition of Rs. 6,98,000 would not arise. We, therefore, hold that no addition was required to be made in respect of Rs. 6,98,000, which was found to be the cash receipts from the customers and against which delivery of vehicle was made to them. Thus, the fact of the case on hand is similar to the jurisdictional high court decision cited by the ld. AR of the assessee. The ld. AR of the assessee also relied upon the coordinate Jaipur ITAT decision also on the issue and the revenue not proved that the sale made by the assessee which is executed after giving the goods to the customer, duly supported by the invoice issued, assessee having sufficient stock in the books, sales is duly reflected in the books of accounts supported by payment of VAT. Therefore, the contention of the revenue based on the facts and circumstance of the case is not accepted and we see no reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out that the assessee has not entered mobile no of the persons to whom goods were sold on 8th November. However, the number is available on almost each and every bill except this date. Even on this issue since there is binding judgment of jurisdictional high court in the case of Smt. Harshil Chordia Vs. ITO reported at 298 ITR 349 (Rajasthan-HC) we do not find merits in the arguments of the revenue. f) In the stock register also, the assessee has not provided any description of the items purchased and kept as stock in trade. The assessee maintains stock register in Qty in Grams only having columns of Qty Inward, Qty Outward, Closing Qty. The bench noted that the ld. AO has accepted the facts that the assessee maintained the stock quantity in grams and the same is not found defective. The quantitative information was provided column no. 35bB of the Tax Audit Report already on record and the same is not disputed. g) Similarly, on verification of the purchase bills also it was noticed that such bills also do not have any description of the goods. The bills mention "Gold Jewellery 22K and Qty in Gms only. As discussed herein above once the ld. AO accepted that the assessee maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment on delivery of the vehicles on receipt from the dealer the question of such amount standing in the books of account of the assessee would not attract section 68 because the cash deposits becomes self-explanatory and such amounts were received by the assessee from the customers against which the delivery of the vehicle was made to the customers. The question of sustaining the addition of Rs. 6,98,000 would not arise. We, therefore, hold that no addition was required to be made in respect of Rs. 6,98,000, which was found to be the cash receipts from the customers and against which delivery of vehicle was made to them. 14. Thus, the fact of the case on hand is similar to the jurisdictional high court decision cited by the ld. AR of the assessee. The ld. AR of the assessee also relied upon the coordinate Jaipur ITAT decision also on the issue and the revenue does not prove the sales made by the assessee which is executed after giving the goods to the customer, duly reflected in the invoice issued, assessee having sufficient stock in the books, sales is duly reflected in the books of accounts supported by payment of VAT. The decision relied upon and cited by the ld. DR are on dif ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
