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TMI Blog2024 (5) TMI 1483X X X X Extracts X X X X X X X X Extracts X X X X ..... g the course of assessment and filed its first, partial reply at the fag end of the time barring after a period of 15 months from the issuance of first notice. 3. Whether Ld. CIT (A) is correct in concluding that took of accounts was accepted by the AO, when assessing officer specifically mentioned in the assessment order that months wise cash in hand figures have been manipulated by the assessee to justify the unaccounted cash. 4. Whether Ld. CIT (A) is correct in referring to the Judgment of ITAT, Vishkapatnam in ACIT, Central Circle-1 V/S M/s Hirapanna Jewellers in the present case, when facts of the cases are different in the present case to the relied on. 5. The appellant craves leave to add, alter, remove and modify any ground of appeal." 3. Brief facts of the case are, the return was filed by the assessee on 29/10/2017 declaring total income of Rs. 13,34,370/-. The case was selected for scrutiny under CASS to examine the issue 'Cash deposit during demonetization period'. Accordingly, notice u/s 143(2) and 142(1) were issued through ITBA Portal of the Department on 27/08/2018 and 25/09/2018. Since, no compliance from the assessee side, further notices were iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counted cash available with him to deposit the same in bank accounts to make it appears to be genuine. The assessee has declared total cash sales of Rs. 2,82,99,977/- in the month of October and upto 8th Nov. 2016 (Rs.1,19.77,883/- Rs 1,63,22,094/-). Further, it is also observed that month wise cash sales has been declared by the assessee is in the range from Rs. 5.00 lakhs to Rs. 46.00 lakhs (except the sale declared in the month of Oct, and Nov, 2016). Being the quarterly VAT return for the quarter ending on 30.09.2016 either already filed or due for filing before the demonetization period, therefore, the assessee was unable to manage the cash sales before Oct., 2016. (iv) Under the provisions of section 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. (v) Considering the submissions made by the assessee and facts of the case as narrated abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer has reproduced the earlier order dated 20/12/2019 and pointed out that the above order was erroneously printed with the wrong data and passed a detailed assessment order in the form of corrigendum. At page 9 of the assessment order, he pointed out that the demand notice, computation of tax etc. are remain unchanged as passed alongwith the original Assessment Order dated 20/12/2019 as under: "Further, it is hereby informed that all other contents (i.e. demand notice, computation of tax and penalty notice etc.) of the said order are remained same." 5. Aggrieved with the above order, assessee preferred an appeal before the Ld. CIT(A), NFAC, Delhi. The assessee filed grounds of appeal and detailed note which is reproduced in the appellate order at page 5 to 18. 6. After considering the detailed submissions of the assessee, the Ld. CIT (A) allowed the appeal of the assessee with the following observations: "6.2 In my opinion, the AO did not bring any material on record against assessee in respect of cash sales which was deposited by assessee in his bank accounts. The assessing officer accepted the records and books of account as per assessment order and he has admitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k. To disbelieve the sales either the assessee should not have the sufficient stocks in their possession or there must be defects in the stock registers/ stocks. Once there is no defect in the purchases and sales and the same are matching with inflow and the outflow of stock, there is no reason to disbelieve the sales. The assessing officer accepted the sales and the stocks. He has not disturbed the closing stock which has direct nexus with the sales. The movement of stock is directly linked to the purchase and the sales. Audit report u/s 44AB, the financial statements furnished in paper book clearly shows the reduction of stock position and matching with the sales which goes to say that the cash generated represent the sales. The assessee has famished the trading account, P& L account in page No. 7 of paper book and we observe that the reduction of stock is matching with the corresponding sales and the assessee has not declared the exorbitant profits. Though certain suspicious features were noticed by the AO as well as the DDIT (Inv.), both the authorities did not find any defects in the books of accounts and trading account, P&L account and the financial statements and faile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal on 20.12.2019? The Corrigendum to Order dated 24.12.2019 has not been uploaded as an Assessment Order but as a communication that too in a new tab on e-proceedings portal. III. If the Assessment Order dated 24.12.2019, signed by the Ld. AO on 24.12.2019, is sustainable in the eyes of law, then, whether the demand notice under section 156 dated 20.12.2019, signed on 20.12.2019, is illegal as demand notice cannot be issued prior to the signing of the Assessment Order as held in Kallyan Kumar Ray V. CIT (1991) 191 ITR 634.? IV. Whether the CIT (A) erred in declaring the Assessment Order dated 20.12.2019 as null and void without appreciating that there cannot be two Assessment Orders for same assessment proceedings and since the Order dated 20.12.2019 was a non- speaking order therefore was liable to be quashed at the threshold itself ? V. Whether the AO erred in issuing the Corrigendum to the Assessment Order without issuing any notice to the Assessee ? " 8. At the time of hearing, the Ld. AR submitted as under: "At the outset it is imperative to bring on record that the Ld. A.O. has passed Assessment order u/s 143(3) on 20.12.2019 and issued Computation and Notice of De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in issuing the Corrigendum to the Assessment Order without issuing any notice to the Assessee. ? No notice was ever served upon the Assessee before passing the "Corrigendum to the Assessment Order dated 20.12.2019" this makes the corrigendum order invalid. Issuing a corrigendum order without giving notice to the Assessee is against the principles of natural justice. As per law, notice of demand can only be issued once the Assessment order is drafted and signed by the Assessing Officer and not prior to that otherwise, the validity of the Notice of Demand will be vitiated. Reliance is placed on Kallyan Kumar Ray V. CIT (1991) 191 ITR 634. No additions were made in the first Assessment order, but the computation and notice of demand were issued. Addition u/s 68 was only made in the Corrigendum to the Assessment Order." 9. On the other hand, the Ld. DR objected to the above submissions and submitted that the Assessing Officer has passed the order within the time and she agreed that Assessing Officer has passed the initial order dated 20/12/2019 by mistake in the ITBA Portal and she explained at that point of time such mistakes cannot be rectified by the Assessing Officer and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... many fold. She supported the findings of the Assessing Officer by filing hand written stock movements for the period of September and November. She submitted that assessee has recorded sales of 1,67,26,558/- and purchase recorded at Rs. 66,48,686/- with the stock movements of Rs. 1,00,97,129/-. She has calculated the G.P. Ratio of 39.63% for the month of November and similarly she has submitted the G.P. for the month of September and it is at 13.8%. With reference to above statistics, she submitted that assessee has manipulated the sales during the period. She prayed that the findings of the Assessing Officer may be sustained. 12. On the other hand, the Ld. AR submitted that the Assessee is a proprietor of three business concerns Rajput Jewellers, Rajput Electronics and Rajput Handloom. The primary source of cash deposited is through the sale proceeds of Rajput Jewellers. Rajput Jewellers is a trading concern which deals in purchase and sale of Gold, Silver and Diamond Ornaments. Rajput Jewellers also purchases old gold from the customers and convert it into new ornaments. The present appeal is relating to AY 2017-18 wherein the case of the Assessee was selected for scru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h-wise closing cash in hand for the Assessee is as follows: Monthly closing cash in hand: Month AY 2016-17 AY 2017-18 April 54,44,398/- 79,45,210.61/- May 58,29,818/- 34,12,633.21/- June 27,42,407/- 44,43,979.21/- July 29,36,624/- 66,10,616.21/- August 30,95,777/- 81,59,103.21/- September 54,78,043/- 1,20,20,990.21/- October 64,44,836/- 2,35,74,608.21/- November 82,87,105/- 16,15,568.02/- December 44,17,201/- 24,05,820.61/- January 48,56,017/- 34,86,376.61/- February 31,99,792.61/- 46,10,121.61/- March 9,32,309.61/- 61,56,608.61/- 16. The Ld. AR also submitted that, as far as the finding of the Ld. A.O. that the Assessee withdrew Rs. 31 lakhs from bank despite having Rs. 49,21,712/-cash in hand is concerned, in this regard it is submitted that the Assessee has a practice of having high cash in hand, he don't keep much balance in its bank accounts. This fact can be corroborated by the fact that when there is any payment is to be made through banking channel then only the Assessee deposit the amount so that the payment could be honored. Although, this withdrawal of Rs. 31 Lakhs pertains to April 2016 which is not relevant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- AY 2017-18 Rs.7,70,86,240/- 21. The Ld. AR submitted that on the eve of 08th November 2016, the announcement of demonetization was made by the Hon'ble Prime Minister, after the announcement, there was an unprecedented rush at all the jewellery shops pan India including that of the Assessee. The shop is in the main market area making it easily approachable and the timing, i.e., 08:00 pm which is the peak time of the day when the footfall in the market is at its maximum as compared to any point of time in a day. The announcement triggered the public to rush towards jewellery shops as buying gold, diamonds and other precious stones was the most favorable investment one could make at such a short point of time. It is pertinent to mention that as per the news reports, all the Jewellers of the country reported unusual high volume of sale that day. Due to panic and high rush, the customers were not bothered with the design of the jewellery but only focused on its weight and purity, thereby the time and attention taken by a customer was substantially very less which enabled the Assessee and its staff to cater many customers. In fact, it is imperative to bring on record that the O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. In view of the foregoing discussion and taking into consideration of all the facts and the circumstances of the case, we have no hesitation to hold that the cash receipts represent the sales which the assessee has rightly offered for taxation. We have gone through the trading account and find that there was sufficient stock to effect the sales and we do not find any defect in the stock as well as the sales. Since, the assessee has already admitted the sales as revenue receipt, there is no case for 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. 24. It is humbly submitted that unparalleled situations breeds unparalleled outcomes, demonetization was one of such situation which bred extemporaneous rush in the jewellery shops pan India; Therefore, it cannot be said that the Assessee has manipulated the books to cover-up his unaccounted money which is cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition." 27. The Hon'ble Supreme Court in the case of CIT v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 that "It is for the Assessee to prove that even if the cash credit represents income, it is income from a source, which has already been taxed. The Assessee has already offered the sales for taxation hence the onus has been discharged by it and the same income cannot be taxed again." 28. Having provided the explanation for the said cash deposit by the Assessee, pertinently voluminous records were provided to the AO, but AO wrongly proceeded on conjectures and surmises without appreciating the material placed on record. It is a settled position that AO cannot just reject the material placed and or explanation provided by the Assessee without proving the same to be false with substantiating evidence. 29. The Ld. AR submitted that the Rule 114B of the Income Tax Rules, 1962, governs the requirement of reporting the PAN card details of the persons dealing beyond a threshold prescribed in the table provided in the said rule. Sale and purchase of jewellery are covered under serial number 18 of the said table which clearly provides that the PAN details of the customer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s selected for scrutiny. 33. On careful review of the cash in hand submitted by the assessee before the Tax Authorities show that during the Assessment Year 2016-17, the assessee has carried closing cash balance from the range of 27 lacs to 82 lacs at each of the closing month. During the current assessment year, the assessee has followed the similar pattern till August, 2017, however, in September to October, assessee has huge closing cash balance to the extent of Rs. 1,20,00,000/- and 2,35,00,000/- respectfully. The same was deposited during November and December. Subsequent to cash deposit in bank the assessee has maintained similar pattern of cash holding during the rest of the period. It clearly shows that assessee sold jewellery particularly during the demonetization period, we also observed that assessee had huge stock in September to the extent of Rs. 5,27,73,912/- and in November closing stock of Rs. 40,11,1,925/-, it clearly shows that assessee has sufficient stock to cover the cash sales during the period of demonization. When the assessee demonstrated that assessee has sufficient cash sales and carries sufficient cash balance in his books of accounts whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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