TaxTMI 
TaxTMI 
2022 (5) TMI 91
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....peal relying on the same Stock Tally and ignored the same in this unjustified addition. The addition is arbitrary, unjust, uncalled-for, illegal and in any case highly excessive and against the material placed on record. 2. That the worthy CIT(A) has erred in law and facts in sustaining the addition of Rs. 6,00,000/- on account of unexplained cash credit u/s. 68 of the I.T. Act, 1961 as made by the Assessing Officer. Such action being palpably wrong and grossly unjust must be quashed. 3. That the orders of the worthy CIT(A) and AO are against the law and facts of the case. 4. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal." 2. Succinctly stated, the assessee who is engaged in the business of purchase/sale of bullion had e-filed his return of income for assessment year 2013-14 on 30.09.2013, declaring an income of Rs. 4,02,710/-. Return of income filed by the assessee was initially processed as such u/s. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that t....
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.... 1080-870 936-720 144-150 31.03.2013 144-150 - 144-150 99-710 44-440 On a perusal of the copies of the purchase/sale bills which were produced by the assessee in the course of the assessment proceedings, it was noticed by the A.O that bullion sold by the assessee as per the following sale bills were not recorded in the aforementioned stock statement: Name of the parties Date of sale Bill No. Quantity of gold Amount 1. M/s. Kapoor Sons Jewellers, Hsp. 28.01.2013 V 1 451.250 Gram Rs.13,85,360/- 2. M/s. Jagdambay Jewellers, Hosp. 28.08.2013 V 2 1000 gram Rs.30,60,000/- Backed by the aforesaid facts the A.O called upon the assessee to put forth an explanation as regards the aforesaid unrecorded sale transactions. In reply, the assessee vide his letter dated 03.12.2015 filed with the A.O a revised stock statement incorporating the aforesaid two sale transactions, as under: Date Opening Balance ( In Grams) Purchase Qty. (  ....
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....13 1913.08 0.00 299.68 1613.40 40 29.03.2013 1613.40 0.00 532.53 1080.87 41 30.03.2013 1080.87 0.00 936.72 144.15 42 31.03.2013 144.15 0.00 99.71 44.44 Total 0 34502.50 34458.06 44.44 Elaborating on the reasons leading to filing of the revised stock statement, it was the claim of the assessee that in the original stock statement that was filed on 27.08.2015 certain discrepancies had crept in due to mistakes on the part of his accountant while compiling the same. However, the Assessing Officer rejected the aforesaid explanation of the assessee. Confining himself to the original stock statement that was filed by the assessee on 27.08.2015, the A.O dubbed the aforesaid two transactions of sale of bullion by the assessee as unrecorded sale transactions. Holding a conviction that the assessee had as per his convenience revised the stock statement and manipulated the same with a clear intent to incorporate the aforesaid unrecorded sales transactions the A.O concluded that the assessee had made the aforesaid unrecorded sales transactions from purchases which were made by him out of his undiscl....
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....in his books of accounts, the A.O was of the view that the assessee had suppressed 1330.29 grams [1374.73 grams (-) 44.40 grams] in the closing stock of bullion on 31.03.2013. Accordingly, the A.O on the basis of his aforesaid deliberations made an addition towards suppressed closing stock of bullion of Rs. 39,10,932/- [i.e 1330.29 grams X Rs. 2939.31 per gram]. Also, as the assessee had failed to come forth with any plausible explanation as regards the nature and source of cash deposit of an amount of Rs. 6 lac in his SB A/c No. 65152619547 with State Bank of Patiala, Branch: Kanak Mandi, Hoshiarpur, therefore, the A.O made an addition of the same as an unexplained cash credit u/s. 68 of the Act. Accordingly, the A.O vide his order passed u/s. 143(3) of the Act, dated 21.03.2013 assessed the income of the assessee at Rs. 97,08,950/- 4. Aggrieved, the assessee assailed the impugned assessment order before the CIT(Appeals). In so far the addition of Rs. 44,94,205/- that was made by the A.O on account of the impugned two unrecorded transactions of sale of bullion of 1451.240 grams (supra) was concerned, the CIT(Appeal), inter alia, after taking cognizance of the fact that the sale....
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....t that was filed by the assessee on 27.08.2015, i.e. in the course of the assessment proceedings. As observed by us hereinabove, the assessee had thereafter, on 03.12.2015, i.e. in the course of assessment proceedings placed on record a revised stock statement, therein claiming that the original stock statement suffered from certain mistakes which had crept in at the time of compiling of the same by his accountant. We find that the CIT(Appeal) while vacating the addition of Rs. 44,94,205/- (supra) that was made by the A.O as regards the unaccounted sales of 1451.240 grams (supra) of bullion, had, inter alia, relied and acted upon the revised stock statement that was filed by the assessee on 03.12.2015, i.e. in the course of the assessment proceedings. For the sake of clarity the relevant observations of the CIT(A) are culled out as under: (A). Re: Sales to M/s. Kapoor Sons (451.240 grams) : Rs. 13,85,306/-: "Further it is explained that sales were included in the total sales as per VAT return. As per the revised stock statement (reproduced in the assessment order) stock was available with the assessee out of which sale was made." (B). Re: Sales to M/s. Jagdambay Jewe....
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.... same. At this stage, we may herein observe, that it is beyond our comprehension that now when the A.O had vacated the disallowance qua the unaccounted sales of 1451.40 grams (supra) of bullion of Rs. 44,45,306/- (supra), and had concluded that the said sales were duly accounted by the assessee in his books of accounts, then, after having so held how he could have relied and acted upon the original stock statement that was filed by the assessee on 27.08.2015 wherein the said sale transactions were not reflected. In sum and substance, having concluded that the sales of 1451.40 grams (supra) of bullion were duly accounted for by the assessee in his books of accounts, then, there was no justification on the part of the A.O in pressing into service the original stock statement that was filed by the assessee on 27.08.2015 for determining the quantity of closing stock of bullion on 31.03.2013. In our considered view, the A.O had partly relied upon the original stock statement, dated 27.08.2015 and partly on the revised stock statement, dated 03.12.2015, and on the basis of distorted facts and jumbled up figures drawn adverse inferences as regards suppression of closing stock of bullion b....
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....lation of sales by the A.O, which thereafter had been adopted by the CIT(A) reveals that the A.O had failed to take cognizance of certain facts, viz. (i) Bill No. V4, dated 29.03.2013 issued by the assessee to M/s. Mahavir Crockery House, Tanda Urmar of 560.560 grams (gross weight) of 95% purity on conversion into 99.50% purity was reduced to 532.50 grams and (ii). Bill No. V5, dated 30.03.2013 that was issued by the assessee to M/s. Jagdambay Jewellers, Hoshiarpur of 909.560 grams (gross weight) of 88% purity on conversion into 99.50% purity was reduced to 800.4 grams. Backed by the aforesaid facts, as stated by the ld. A.R, and rightly so, the lower authorities while arriving at the impugned suppression of 1330.29 grams (supra) of closing stock of bullion had failed to take cognizance of the net weight of bullion, i.e. of 99.50% purity gold weight (on conversion) as was mentioned in the respective invoices and was duly considered by the assessee in his revised stock statement. We find that the aforesaid claim of the assessee can safely be gathered on a perusal of the respective sale bills in question, viz. (i) Invoice No. V4, dated 29.03.2013 of 560.560 grams (gross weight) i.e. ....
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.... articles, therefore, the same by no stretch of imagination could be applied qua the cash deposits in the bank account of the assessee. It was the claim of the Ld. AR that as cash after having been deposited in the bank looses its character as that of money, therefore, the same though unexplained would clearly fall beyond the realm of the provisions of section 69A of the Act. In support of his aforesaid contention the Ld. AR had relied on the order of the ITAT, Delhi "A", Special Bench in the case of Manoj Aggarwal Vs. Deputy Commissioner of Income Tax (2008) 113 ITD 377 (Delhi) (SB). Also support was drawn by the Ld. AR from the judgment of the Hon'ble Supreme Court in the case of K.C.C. Software Ltd. & Ors Vs. DIT (Investigation) & Ors (2008) 298 ITR 1 (SC). Reliance was also placed on the judgment of the Hon'ble High Court of Karnataka in the case of CIT Vs. Andhra Pradesh Yarn Combines P. Ltd. (2006) 282 ITR 490 (Kar.) and that of the Hon'ble High Court of Allahabad in the case of CIT Vs. Jauharimal Goel, (2008) 296 ITR 263 (All.). 10. Per contra, the Ld. Departmental Representative (for short 'DR') supported the orders of the lower authorities. It was su....
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....le on facts would not assist his case. As regards the judgment of the Hon'ble High Court of Karnataka in the case of CIT Vs. Andhra Pradesh Yarn Combines P. Ltd. (supra), we find that the same too is distinguishable on facts. The aforesaid judgment of the Hon'ble High Court was in context of 'Demonetized Currency Notes'. It was observed by the Hon'ble High Court that as the currency notes on the day when they were found to be in possession of the assessee did not have any representative value, therefore, it could not be tendered as 'money' which has an intrinsic value. It was observed by the Hon'ble High Court that as 'Demonetized Currency Notes' in question were nothing but scrap paper which could not be used as circulating medium in general use and therefore, it could not be said that the assessee was in possession of unexplained money. Also we find that reliance placed by the Ld. AR on the judgment of the Hon'ble Apex Court in the case of K.C.C. Software & Ors Vs. DIT (Investigation) (supra) being distinguishable on facts, would not assist his case. In the aforesaid case, it was observed by the Hon'ble Apex Court that when moneys a....