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TMI Blog2024 (9) TMI 1435X X X X Extracts X X X X X X X X Extracts X X X X ..... f rejection of Books of accounts, application of provisions of section 145(3), treatment, out of total SBN'S of Rs. 26,00,000/- deposited in the bank by the assessee, SBN'S of Rs. 20,00,000/- as undisclosed income and consequently adding the same i.ec. Rs. 20,00,000/-u/s. 69A r.w.s. 115BBE in the total taxable income of the assessee are most arbitrary, unjust and untenable and in the alternative highly excessive w.r.t. facts and circumstances of the case. 2. That the learned CIT(A) failed to appreciate that the AO failed to discharge the burden of proof which squarely lay upon him for treating, out of total SBN'S of Rs. 26,00,000/- deposited by the assessee in his bank account during Demonetization period i.e. 08/11/2016 to 31/12/2016, SBN'S of Rs. 20,00,000/- as undisclosed income of assessee and consequentially adding the same i.e. Rs. 20,00,000/-u/s. 69A r.w.s. 115BBE in the total taxable income of the assessee. 3. That the learned CIT(A) failed to take into consideration various papers and documents including the under mentioned papers and documents produced/furnished during assessment proceedings before the AO:- a. Details, in the format provided by the AO, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal from the ends of Income Tax Department till date. Now after knowing this fact that my above mentioned appeal is dismissed by the Commissioner of Income Tax (Appeal) I am belatedly, separately and simultaneously filing appeal against this order of Commissioner of Income Tax (Appeal) before the hon'ble Income Tax Appellate Tribunal, Jaipur Bench and it is humbly prayed that delay in filing appeal may kindly be condoned. I further say that I shall ever remain grateful to the hon'ble Bench for this act of kindness. An Affidavit in support of it is enclosed.'' 2.2 On the other hand, the ld. DR objected to such delay made by the assessee in filing the appeal. 2.3 The Bench has heard both the parties and perused the affidavit of the assessee and feel that there is a merit in the submission of the assessee and thus in view of the affidavit of the assessee, the delay in filing the appeal by the assessee is condoned. 3.1 Brief facts of the case are that he assessee, an individual, carries on sole proprietary business under the name and style of M/s. Shubh Laxmi Trading Company. The said concern deals in tobacco and its products, paan masala etc. The return of income for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xure and schedules for the year under appeal. b. Month wise details of sales and purchases. c. Details of month wise cash sale and cash deposit in bank. d. Periodical details of cash sales, cash deposited in bank and cash balance. e. Comparative details of cash deposit in banks and cash sales during different periods of financial years 2015-16 and 2016-17 relevant to assessment years 2016-17 and 2017-18 respectively. f. Copy of VAT Returns filed with VAT Department of Govt. of State of Rajasthan for the period 01/04/2016 to 31/03/2017 relevant to year under appeal and VAT assessment order for F.Y. 01/04/2016 to 31/03/2017 relevant to A.Y. 2017-18. g. Ledger accounts of purchases for the period 01/04/2016 to 08/11/2016 accompanied with purchase invoices. h. Copy of ledger accounts of dealers to whom payment made after 08/11/2016. i. Copy of cash book, ledger, journal, bank statement and invoices manually given to the AO in response to summon u/s. 131 of the I.T. Act issued to the assessee by the AO during assessment proceedings. j. Copy of delivery challans furnished by the assessee. k. Explanation of source of SBN's of Rs. 26,00,000/- deposited in bank during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the lower authorities that in issuing cash invoices the appellant has disregarded the provisions of Income Tax Act including section 269ST of the Act which interalia says that it will be infringement of law if an individual cash invoice exceeding Rs. 2,00,000/- is issued at one point of time. (2) Sustainment by the ld. CIT(A) of the action of the AO whereby he (the ld. AO) treated an amount of Rs. 20,00,000/- as undisclosed income out of total SBN's of Rs. 26,00,000/- deposited by assessee in his bank account during demonetization period 09//11/2016 to 31/12/2016 and consequently adding by the AO Rs. 20,00,000/- in the total income of assessee u/s. 69A r.w.s. 115BBE of the I.T. Act. 1. Section 69A is not applicable in this case because there are proper entries in the books of accounts of the assessee in relation to cash sale, cash balance and cash deposit (SBN's) in bank. 2. That sale transactions in cash cannot be taxed u/s. 69A of the Act because the sales against cash and deposit of such cash in assessee's bank account cannot be called unexplained money. Cash memos were immediately issued to the buyer and delivery was made then and there against SBN's/cash and thus sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords total sales including cash sales made by the assessee as per his books of accounts duly tallies with the turnover assessed by the VAT authorities of state Govt. 8. That as regards adverse observations of the AO in the assessment order particularly in para 3.5 of the assessment order that there has been abnormal increase in cash sales as well as cash balance during the period prior to demonetization period the assessee craves leave to submit that increase or decrease of sales depends on various factors including behavior of the customers coming to the shop of the assessee and specific time prevailing at the time of visit of the customer to the assessee shop i.e. time of festivals like Navratri, Diwali etc. It is respectfully submitted that number of customer walking to the shop of the assessee and the volume of goods purchased by each such customers is not in the control of businessman (here the appellant) and rather it is beyond his control. 9. That the appellant craves leave to submit that during the immediately preceding previous year i.e. 2015-16 relevant to AY 2016-17 the assessee's cash sales were of Rs. 6,09,73,170/- and during the previous year relevant to year unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the instant case the assessee duly explained the source of cash deposit which is out of cash sales effected by him upto 08/11/2016 i.e. much before the date of amendment of section 115BBE on 15/12/2016, opening cash balance as on 01/04/2016 and cash withdrawn from the banks during the period 01/04/2016 to 08/11/2016. 15. The provisions of section 115BBE are applicable only on the income taxable u/s. 68, 69, 69A, 69B, 69C or 69D of the Act. But in the present case source of cash deposit in Bank is income from business and as such section 115BBE is not applicable. 16. It is further submitted that treatment of SBN's deposited of Rs. 20,00,000/- (Out of total SBN's deposited of Rs. 26,00,000/- during demonetization period) as unexplained income and consequentially adding it in the total income of assessee u/s. 69A of the IT Act is in utter disregard of provisions of section-4 of the IT Act which says that levy of Income tax is not on gross receipts but it is on profits and gains properly so called. GROUND OF APPEAL NO. 3 1. That the lower authorities failed to note that the appellant has duly discharged the initial burden of proof which lay upon him by explaining that sour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Citation Parties to the case Brief narration 1 a. ITA No. 161/JP/2022 for A.Y. 2017-18 And b. ITA No. 178/JP/2022 for A.Y. 2017-18 ACIT, Central Circle-2, Jaipur Vs. M/s Motisons Jewellers Ltd Motisons Jewellers ltd. Vs. Central The Hon'ble jurisdictional Income Tax Appellate Tribunal i.e. ITAT, Jaipur Bench. vide the common appellate order dated 29/09/2022 dismissed the department appeal no. 161/JP/2022 by observing that sale is duly reflected in the invoice issued, assessee having sufficient stock in the books and the sales is duly reflected in the books of accounts supported by payment of VAT Simultaneously the honorable Income Tax Appellate Tribunal, Jaipur Bench, Jaipur vide the common appellate order dated 29/09/2022 allowed assessee's appeal no. 178/JP/2022 by observing that the assessee maintains proper books of accounts audited by chartered accountants and the profit may be derived from the audited books of accounts therefore there is no justification in estimation of income by applying NP Rate and accordingly the lower authorities are directed to delete the addition of Rs. 47,72,297/- sustained by learned CIT(Appeal). 2 2021 (5) TMI 447 ITAT Visakhapatnam Asst. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the other hand amount received from above parties has also been added u/s. 68 of the IT Act. 6 (1966) 59 ITR 733 (Supreme Court) Chhabildas Tribhuvandas Shah vs. CIT In this case it is held that an assessee who maintains regular account books which are not found to be incorrect, the mere fact that a stock register is not maintained and book profit is considered by the AO as low may provoke an enquiry, but they may not be sufficient to justify action u/s. 145. 7 26 ITR 159 Pandit Brothers vs. CIT The AO cannot say that merely because there is no stock register the account books must be false. 8 (1973) 87 ITR 395 (SC) CIT vs. K.S. Kannan Kunhi The hon'ble supreme court held, "where explanation of the assessee was not absurd and it was capable of being examined, I.T. authority acted arbitrarily in rejecting the explanation without making proper enquiry. Further, it may be noted that A.O. merely disbelieved but not disproved the facts stated by the appellant in respect of the said creditor." 9 (1956) 30 ITR 228 (Nag.) Lajwanti Sial vs. CIT The finding that cash credits or high denomination notes encased upon demonetization represent undisclosed income, would be rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle and such money, bullion, jewellery or valuable article was not recorded in the books of account, if any, maintained by the assessee for any source of income. In these circumstances, the AO can resort to making an addition under section 69A of the Act only in respect of such monies / assets / articles or things which are not recorded in the assessee's books of account. In the case on hand, the cash deposits are recorded in the books of account and are reportedly made on the receipt from a creditor. Further, the PAN and address of the creditor as well as ledger account copies of the creditor in the assessee's books of account have also been field before the AO. In these circumstances, it is evident that the AO has not made out a case calling for an addition under section 69A of the Act. Probably, an addition under section 68 of the Act could have been considered; but then that is not the case of the AO. The assessee, apart from raising several other grounds, has challenged the legality of the addition being made under section 69A of the Act. In support of the assessee's contentions, the learned AR placed reliance on the decision of the ITAT - Mumbai Bench in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the balance in cash is matching with the books, it can be said that the assessee has explained the nature and source of such deposit. 19 [1959] 35 ITR 416 (SC) Lakhmichand Baijnath Vs. CIT The Hon'ble Apex Court held that amount credited in business books is presumed as business receipt. When an amount is credited in business books, it is not an unreasonable inference to draw that it is a receipt from business. 20 ITANo.264/Hyd/ 2011 In the case of M/s. S.B. Steel Industries. Hon'ble Hyderabad Bench "A", of income tax appellate Tribunal held that it is an established fact that only cash credits can be considered u/s. 68 and not trade receipts. GROUND OF APPEAL NO. 2 1 159 ITR 78 Supreme Court Orissa Corporation Pvt. Ltd. vs. CIT The Hon'ble Apex Court in the leading case of CIT vs. Orissa Corporation Pvt. Ltd. 159 ITR 78, finally concluded the judgment after mentioning that, "in the premises, if the Tribunal came to the conclusion that the respondent has discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017-18. g. Ledger accounts of purchases for the period 01/04/2016 to 08/11/2016 accompanied with purchase invoices. h. Copy of ledger accounts of dealers to whom payment made after 08/11/2016. i. Copy of cash book, ledger, journal, bank statement and invoices manually given to the AO in response to summon u/s. 131 of the I.T. Act issued to the assessee by the AO during assessment proceedings. j. Copy of delivery challans furnished by the assessee. k. Explanation of source of SBN's of Rs. 26,00,000/- deposited in bank during the period 08.11.2016 to 31.12.2016 l. G.P. Chart confirming the fact that G.P. rate in the year under appeal i.e. A.Y. 2017- 18 is higher as compared to G.P. rate of preceding assessment years. 2. That, both the lower authorities also erred in not taking into consideration following facts and circumstances of the case:- a. All the books of accounts are duly audited by a Chartered Accountant and there is no adverse observation/comment of the auditors at any stage. b. There is no change in the method of accounting nor in the method of valuation of closing stock. c. That each and every entry in the books of accounts is supported by bills & vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the decision of Coordinate Bench, Jaipur (supra) which has form part of judicial pronouncement. Even otherwise, there is no findings by the lower authorities that in issuring cash invoices, the assessee had disregarded the provisions of Income Tax Act including Section 269ST of the Act which inter alia says that it will be infringement of law if an individual cash invoice exceeding Rs. 2,00,000/- is issued at one point of time. Since, this is not a case of Revenue, therefore we are not in agreement with findings of the ld.CIT(A).Thus the Bench allows the ground No. 1 raised by the assessee. 4.1 The second ground raised by the assessee related to challenging the order of the ld. CIT(A) wherein the amount of Rs. 20.00 lacs was treated by the Revenue as undisclosed income out of total SBN's of Rs. 26.00 lacs deposited by the assessee in his bank account during the demonetization period. 4.2 The ld. AR of the assessee relied upon the detailed written submission (supra) which is not required to repeat the same. 4.3 After hearing both the parties and perusing the materials available on record, the Bench noticed that Section 69A of the Act is not applicable in this case because t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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