TaxTMI 
TaxTMI 
TaxTMI 
2022 (7) TMI 536
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....ring discrepancies of stock during survey amounting Rs. 8,60,778/- against Income offered under PMGKY amounting Rs. 3,00,00,000/- to cover the discrepancies. 5. That Appellant craves leave to add, alter, amend or to substitute the above grounds of appeal either before or at the time of hearing of case. 2. The ld. AR inviting attention to the assessment record submitted that the assessee partnership firm was subjected to a search & seizure operation as well as survey operation u/s 132(1) and 133A of the Act on 21.03.2017. It was submitted that in the course of the survey it was noticed that during the demonetization period of 09.12.2016 to 30.12.2016 the assessee had deposited an amount of Rs. 7,61,70,000/- in its bank. The assessee was required to explain the same. It was submitted that it had been explained that these deposits had been made in the normal course of business and during Diwali. These were as per cash in hand shown in the books of account as on 08.11.2016. It was submitted that there were some other shortcomings also found by the Survey team including excess of silver stock as per books. In the said background, it was submitted that the assessee in order to buy pea....
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.... mind and to avoid any litigation and is order to settle the group cases of the persons covered under survey/search in connection with C.M. Jewellers group, a sum of Rs. 3 Crore (three crore only) is offer under PMGK scheme. The head wise bifurcation shall be submitted within next few days. We assure to deposit the application along with deposited & tax under the scheme before 31.03.2017. This is subject to condition that no penalty & prosecutions under the provisions of Income Tax Act, 1961 shall be untreated against the group cases pertaining to action conducted on 21.03.2017. Thanking you, For C.M. Jewellers (Group cases) (emphasis supplied) Sd/- (Sachin Aggarwal) Sd/- (Rohit Aggarwal) Sd/- (Arvind Aggarwal) (emphasis supplied) 2.2. Copies of decisions of the ITAT Chandigarh in the cases of Famina Knit Fabs dated 8-2-2019 (Paper Book pages 9-18) and Arora Alloys Limited dated 6-11-2019 (Paper Book pages 19-25) and decision of Hon'ble Punjab & Haryana High Court in the case of Sudershan Gupta 10D TR 184 (Paper Book pages 26-29) were heavily relied upon so as to argue that Section 69 was wrongly applied on facts. 2.3. Attention was also invited to ....
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..... 109134044/- as per your books of accounts dated 07.03.2017. What would you say about the excess stock of Rs. as per your books? Ans 9. I want to tell you that sale bills after 03.03.2017 are not entered in the books of accounts. Above mentioned sales bill no. 637 to 663 are presented before your honor and also three purchase bills are not entered in the books, details of which have already been provided to you above. 2.5. Inviting attention to Circular No. 2 of 2017 dated 18.01.2017 available at pages 60 to 63 which is copy of the Clarification on Taxation and Investment Regime for PMGKY argued that the tax authorities have incorrectly interpreted the Scheme as the shortfall in the silver stock was explained as sale outside the books of account and the profit therein stood covered under the Scheme. Reliance was also placed upon Circular 9 of 2017 dated 14.03.2017, copy of which is available at Paper Book page 64 which is again Clarification on Taxation and Investment Regime for PMGKY. It was explained that the profits from the said sale were available in the form of cash and as such is covered by the Scheme. Para 2 addressing the background addressed in para 3 by the CBDT to c....
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....is extracted hereunder also for completeness: 2.7. Accordingly, it was his submission that the position of law has incorrectly been considered by the CIT(A). Reliance was placed upon decision of the Chandigarh Bench dated 22.05.2018 in the case of DCIT Vs Marshal Machines Pvt. Ltd. 2018(5) TMI 1872 and Gaurish Steels Pvt. Ltd. (2015) 43 ITR (Trib) 414 (ITAT Chandigarh). Copies available at pages 65 to 74 and 75 to 81 of Paper Book. 2.8. In the said factual background it was vehemently submitted that the cash deposits made by the assessee, though questioned in the demonetization period were regular deposits of the assessee in the regular course of business during Diwali and excess silver jewellery also stood covered therein. The assessee has offered these under the Scheme and the excess in the silver stock noticed by the Survey Team also stood covered therein. The treatment given in the books of account of the assessee, it was argued is supported by the Scheme. Accordingly, it was his submission that the addition on facts was incorrectly made and sustained. 3. The ld. Sr. DR relied upon the impugned order. Specific attention was invited by him to the assessment order para 4 which....
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....onfirmed in appeal. Subsequently, at the ITAT, considering the evidences on record, certain further relief was granted to the assessee, however, for the remaining items which remained unexplained, addition u/s 69A of the Act was confirmed. The assessee carried the issue before the Hon'ble High Court. The Hon'ble High Court upheld the order of the ITAT holding that once the assessee was found to be in possession of the stones, it was for the assessee to explain the nature of his possession. It was highlighted that the Hon'ble Court held in para 20, "if a satisfactory explanation was not forthcoming it was open to the Tribunal to conclude that the assessee was the owner of the stones in question. The Tribunal has considered the explanation of the assessee and the entire circumstances of this case." Accordingly, in the facts of the present case, it was his submission that the Hon'ble High Court clearly mandated that the explanation of the assessee has to be considered. In the facts of the present case, the explanation of the assessee consistently on record has been discarded without any plausible reason. It was argued that no other source exists even as per the Departm....
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.... AO has made an addition in paras 6 to 6.3 which is the subject matter of consideration in the present proceedings. These specific reasons have been heavily relied upon by the ld. Sr. DR. These reasons for making the present addition have been assailed by the ld. AR. For ready reference, para 6 to 6.3 of the assessment order is reproduced hereunder for completeness: "6. During the survey proceedings, Stock of silver of Rs. 50.513 Kg was found on 21.03.2017. Whereas, the stock of silver has been shown at 26.409 Kg as on 21.03.2017 in the books of accounts of the assessee firm. The assessee did not offer any valid explanation about the difference of stock in silver jewellery in its reply. Therefore, vide order sheet entry dated 06.12.2019, the assessee was required to show cause as to why the difference quantity of 24.104 Kg @ Rs. 35,711/- Kg i.e. the rate of silver taken by the Govt. Approved Valuer on 21.03.2017, which comes to Rs. 8,60,778/- may not be added to its income as unexplained money within the meaning of section 69A of the Act. In response to the query, the assessee has submitted that an it has offered an amount of Rs. 3,00,00,000/- under the PMGKY scheme and due taxes....
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....e within the meaning of Section 69A of the Act and the same is hereby added to the income of the assessee firm accordingly. Penalty proceedings u/s 271AAC of the Act is hereby initiated separately on this issue. (emphasis supplied) 5.2. The ld. AR has referred to the submissions as advanced before the CIT(A) extracted at pages 5 to 11. A perusal of the same shows that the excess Silver Stock via-a-vis the books of account of the assessee was noticed to the tune of 24.104 Kg. A perusal of the submissions extracted in the order shows that it has been argued that, "As a matter of fact all such differences unearthed during the course of survey including difference of Rs. 8,60,778/- was considered as Income and was offered on consolidate basis under Pardhan Mantri Garib Kalyan Yojna (PMGKY) Rs. 3,00,00,000/- on 31-3-2017". 5.3. A further reading of the submissions extracted in the impugned order shows that it has also been argued that, "AO under Para 6.1 page 4 of the assessment order has observed that declaration under PMGKY is for demonetize deposit only and do not cover any other discrepancies which is not the correct position of law. As per section 199C of Taxation and Investmen....