AI Drafter 
TaxTMI 
TaxTMI 
2022 (11) TMI 711
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....n accepting additional evidence without affording opportunity of being heard to the Assessing Officer contrary to Rule 46A of the I.T. Rules ? 3. The Appellant craves leave to add, amend, modify, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. 3. The only grievance of the Department in this appeal relates to the deletion of addition of Rs. 97,50,000/- made by the AO on account of cash deposited during the demonetization period by invoking the provisions of Section 69 A of the Income Tax Act, 1961 (for short the 'Act'). 4. The facts of the case in brief are that the group cases of M/s Roop Square Group of Companies to which the assessee belongs were searched under section 132(1) of the Act on 01/11/2017. Thereafter notice under section 153A of the Act requiring the assessee to file the return of income was issued on 14/02/2019. In response no return was filed by the assessee and nobody appeared on behalf of the assessee when the notice under section 142(1) was issued. 4.1 The AO observed that the assessee had declared an income of Rs. 2,35,350/- under the head income from Business & Profess....
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....their name, address, PAN and amount from whom cash has been received and which was deposited during demonetizaton period vii. Kindly give details of demonetization of the currency (New/Old) deposited during demonetization period. Kindly submit the copy of bank deposit slips showing the currency withdrawals. 4.2 The assessee furnished the financial monthly data which has been reproduced at page no. 3 of the assessment order dated 28/12/2019. The AO also asked the assessee to explain the source of the deposit in its bank account. He further observed that the assessee had deposited Rs. 2,47,50,000/- during demonetization period and failed to submit any satisfactory reply with regard to cash deposited. He was of the view that the assessee had introduced its own unaccounted money in the disguise of sale in the wake of demonetization. The AO worked out the average sale from April 2016 to October 2016 at Rs. 1,00,27,807/- and considering this fact that due to festive season there was surge in October 2016. He estimated the sales of the assessee at Rs. 1,50,00,000/- considering the 50% surge in sale of October 2016. The AO opined that the assessee had deposited excess cash of R....
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...., Gujjar Mai Road, Ludhiana for Assessment Year 2017-18. PAN: AALFR 5035M This is an appeal filed by the assessee by raising various grounds of appeal. In, so far as, the nature of business is concerned, the submissions have been made in Asstt. Year 2012-13, which are being relied upon here also. Similarly, by way of Ground No. 1 & 2, we have challenged the very validity of assessment as framed u/s 153A, as there has been only survey at the partnership concern and no search was conducted and for which, we have given our detailed submissions in our appeal for Asstt. Year 2012-13. Since the facts are identical, the same submissions may, please, be considered here also alongwith the evidences as furnished by us in the form of paper book for Asstt. Year 2012-13. 2. The only addition in this year has been of the amount deposited in the regular bank account, out of cash sale/realization from debtors from the accounted for parties, and the Ld. Assessing Officer out of the cash of Rs. 2,47,50,000/-, deposited on estimated basis during the demonetization period, has accepted the sales of the assessee at Rs. 1,50,00,000/- and for the balance, addition of Rs. 97,50,000/- has....
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....realized from debtors as reflected in the audited books of accounts are as under:- ASSTT YEAR TOTAL SALES CASH SALES CASH REALISED FROM DEBTORS 2015-16 17,21,85,280/- 2,47,74,931/- 8,08,69,295/- 2016-17 18,01,49,041/- 6,89,63,188/- 6,37,18,386/- 2017-18 13,82,27,373/- 4,12,59,227/- 3,09,78,586/- iii) Thus, there being no doubt in the modus operandi of the trade and it a case where the stock has been realized by way of cash sales and realization from debtors, its nature and source of amount stands established beyond any iota of doubt. Even most of the parties from whom the cash has been realized are identifiable parties as is evident from the copy of cash book submitted to the Investigation Wing. Thus, no doubt could have been raised for which, the ad-hoc addition has been made without any justification by the Assessing Officer. In short, your goodself shall observe that cash sales in the Financial Year 2015-16 are more by Rs. 2,77,03,961/- as compared to Asstt.Year 2017-18 and realization from debtors is more in the earlier year by Rs. 2,99,39,800/-. iv).It is also a fact that the assessee is a trader and running the....
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....bsp; The assessee is found to be owner of money, bullion etc and the same is not recorded in books. The assessee is maintaining regular books of accounts and such amount of sales have been recorded in the books of accounts and there is no case of investment outside the books of accounts. Hence section 69A is not applicable. The books of accounts being maintained for any source of income The books of accounts have been maintained and duly audited in respect of trading of ladies dress material/hosiery cloth. No doubt has been raised by the Assessing Officer. The assessee offers no explanation about the nature and source of valuable articles with him. The assessee has offered explanation supported by documentary evidences of audited books of accounts, purchase and sale vouchers, past history of the case and even the reply was submitted immediately in the month of December 2016 to the Investigation Wing and no doubt was raised by the Investigation Wing. Or the explanation offered by him is not in the opinion of the Assessing Officer satisfactory. The Ld. Assessing Officer has accepted the sale and cash realisation from t....
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.... We also note that the provisions of section 69A cannot be applied in relation to the sales receipt shown by the assessee in its books of accounts. It is because the sales receipt has already been shown in the books of accounts as income at the time of sale only. viii). We are also aware of the fact that there is no iota of evidence having any adverse remark on the purchase shown by the assessee in the books of accounts. Once the purchases have been accepted, then the corresponding sales cannot be disturbed without giving any conclusive evidence/finding. In view of the above we are not convinced with the finding of the learned CIT(A) and accordingly we set aside the same with the direction to the AO to delete the addition made by him.''' 5. Without prejudice to above, now coming to the merits of the case, it is submitted that the assessee has deposited the amount of Rs. 2,47,50,000/- in its regular bank account during the demonetization period, out of the cash sales and realization from the debtors and cash sales are forming part of total sales of Rs. 13.82 crores as reflected in the trading account forming the part of the paper book and similarly real....
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..... 5.2 It was also submitted that it was very much clear that all the above informations were with the AO during the course of assessment proceedings and that the AO was free to verify the same as per his statutory powers. However, the AO did not look into the details filed by the assessee and made the addition for the sake of making the addition without any evidence on record to negate cash sales and realization from debtors of the assessee. 5.3 It was further submitted before the Ld. CIT(A) that the books of accounts of the assessee were duly audited under section 44AB of the Act, the copy of Tax Audit Report, Balance Sheet and P&L Account were duly enclosed in the Paper Book, the Auditor had not pointed out any discrepancy in the books of accounts which had not been rejected by the AO under section 145(3) of the Act. It was also stated that the stock position depicted in the books of account had been accepted by the AO and the sales were made out of the accounted stock, accepted as such by the AO, thus, it was only exchange of asset from stock to cash by way of cash sales and realization from debtors to whom sales were made in earlier period, the stock available with the as....
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....ted by the Department and the sales recorded therein were considered in arriving at the assessed income of the assessee, the cash deposited in banks against such sales could not be treated as undisclosed income of the assessee under section 69A of the Act without bringing on record any credible evidence / material in support of such allegation was merely on the basis of surmises and conjecture of the Revenue Authorities. Reliance was placed on the following case laws: * Lalchand Bhagat Ambica Ram Vs. CIT[1959] 31 ITR 288(SC) * Mehta Parikh & Co. Vs. CIT [1956] 30 ITR 181 (SC) * CIT Vs. Anil Kumar & Co. in ITA No. 200001 & 200002 vide order dt. 25/02/2016 (Karnataka HC * ITO Vs. Amit Verma in ITA No. 4558/Del/2011 vide order dt. 19/12/2012 (Del Bench) * ACIT Vs. Ercon Composites reported in 49 taxmann.com 489 (Jodhpur Bench) * ITO Vs. Pranab Prakash Dutta in ITA No. 1492/Kol/2011 vide order dt. 25/06/2012 * CIT Vs. PashupatiNath Agro Food Products P Ltd. ITA No. 165 of 2010 (Allahabad HC) * Ramjiwan Lal Vs. CIT (1980) 123 ITR 319 (All.) * ACIT Vs. Roopchand Tharani (2012) 66 DTR 104 (Chattisgarh) ....
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....t been rejected by invoking the provisions of Section 145(3) of the Act. The stock position depicted in the books of accounts had been accepted by the AO and the cash in hand / cash sales were made out of the accounted stock and that the cash sales as well as realization from debtors were duly supported by the relevant vouchers which were produced before the AO in the course of assessment proceedings and nothing adverse in connection there with was noted by the AO. 5.9 It was further stated that the figures of cash sales offered by the assessee for F.Y. 2016-17 were accepted as such by the AO, therefore, the corresponding cash deposit made out of such cash sales and realization from debtors could not be rejected. It was also stated that the AO had not pointed out any defect in the purchases, sales and expenses debited in the books of accounts, no adverse remarks had been made against the documents filed by the assessee, therefore, the addition made on account of deposit of cash which was duly accounted for in the books of account was totally against the law. The reliance was placed on the following case laws: * CIT Vs. K.C. Malhotra reported in 164 Taxman 101 (P&H) ....
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....r books of accounts during the earlier assessments starting from Asstt. Years ❖ The books of accounts maintained by assessee and book results arriving out of otherwise it would amount to double taxation. ❖The cash sales made by the assessee have been credited in the books of accounts duly accepted by the AO and therefore, once the book results are accepted by the AO, the sales out of which those book results have been arrived cannot be doubted, them have also been accepted by the AO without pin pointing any specific defect. ❖ ❖ As already stated that majorly the parties to whom the sales are made to identifiable parties and also realization from debtors is from the parties by our salesmen mainly in cash against which the proper reports are issued. ❖ It is also a fact that in the earlier year in the month of October/November 2015, there were much cash sales but in the month of October/November-2016, the cash sales are less, which proves the bonafide of the assessee. ❖ The AO himself has deleted part of the cash deposited by the assessee by allowing the benefit of cash balance as on 30.09.2016 whic....
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....substantiated about 60% of the amount deposited in the bank as the cash has been deposited from such modus operandi and why for the balance has not been accepted is not substantiated. g). Sales have been accepted as per the trading account filed by the assessee and there is no new unexplained credit/investment since there is available stock with the assessee and the opening stock, purchases, sales, closing sock have been accepted and assessed from ay 2012-13 to AY 2018-19 , thus, on account of the reduction of stocks, the sale proceeds have been recorded in the regular books of accounts and the profit embedded in such sale proceeds have also been offered to tax and taxed accordingly, by the Assessing Officer and, therefore, the Ld. Assessing Officer has grossly erred in making the addition of alleged unexplained cash credit, which amounts to double addition. g). The sales are recorded in the credit side of the books of accounts and as per the above judgment, the addition of Rs. 97,50,000/- cannot be sustained on surmises and conjectures. The reliance was placed on the following case laws: * Sh. Omar Salay Mohammed Sait Vs. CIT as reported in 37 ITR 151....
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....is enclosed herewith for kind reference. 3. M/s. Roop Fashion was mainly covered u/s 132(1) and the business premise of M/s. Roop Fashion at Dr. Gujjar Mall Road, Ludhiana was covered u/s 133A of the Act. Copy of the Authorization u/s 133A is also enclosed herewith. 4. It is further submitted that M/s. Roop Fashion is a partnership concern having two partners namely: (i) Sh. Ramesh Kumar Sachdeva (ii) Smt. Sarita Sachdeva As per partnership deed name/address of the partnership firm is mentioned as M/s. Roop Fashion, Ludhiana. Copy of the partnership deed is enclosed herewith. 5. It is further submitted that the Warrant of Authorization issued by the Pr. DIT (Inv.), Ludhiana for the premises at the address. H. No. B-XX-3190/C, Gurdev Nagar, Opp. Thapar Bhawan, Ludhiana was in the name of following assessee(s):- M/s. Roop Square (P) Ltd., M/s. Roopam International (P) Ltd., M/s. Roop Fashions group concerns and persons associated with this group namely Sh. Manohar Lai, Sh. Krishan Lai; Sh. Darshan Lai; Sh. Om Parkash; Sh. Sat Pal; Sh. Shiva Sachdeva and Sh. Ramesh Kumar & their respective family members was execu....
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....ober 2016 Rs. 62 lacs and in November 2016 Rs. 2.44 crores. Therefore the cash deposited in this year was far less than the cash deposited in the preceding years when there was no demonetization. He also observed that out of the cash deposits of Rs. 2,47,50,000/- the AO on estimate basis had accepted the sales to the tune of Rs. 1,50,00,000/- and the balance amount of Rs. 97,50,000/- had been added. The Ld. CIT(A) observed that the assessee had given figures of total sales, cash sales and cash realization from debtors for the A.Y. 2015-16, 2016-17 and 2017-18 which were at Rs. 17,81,85,280/-, Rs. 18,01,49,041/- and Rs. 13,82,27,373/- respectively out of which the cash sales were of Rs. 2,47,74,931/-, Rs. 6,89,63,188/- and Rs. 4,12,59,227/- and the cash realization from the debtors were at Rs. 8,08,69,295/-, Rs. 6,37,18,386/- & Rs. 3,09,78,586/- respectively. The Ld. CIT(A) pointed out that in reply to the Investigation Wing, the assessee submitted that the cash sales during the F.Y. 2015-16 and 2016-17 in the month of October 2015 and November 2015 were at Rs. 1,99,88,776/- and Rs. 3,18,76,008/- with the corresponding figure in October 2016 and November 2016 at Rs. 1,04,97,098/- an....
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....e who offered the explanation regarding the nature and source being the cash sales and realization of debtors out of earlier sales and that the money was duly recorded and accounted for in the books of account. The Ld. CIT(A) pointed out that the AO mentioned that the assessee had failed to prove the cash deposited during the demonetization was normal business receipts, however he himself accepted Rs. 1.5 crore as normal business receipt out of total cash deposit of Rs. 2,47,50,000/-therefore, it could not be said that the assessee failed to give substantial explanation about nature and source of cash deposit and that once, the explanation of the assessee was partially accepted by the AO for Rs. 1.50 crores without pin pointing the basis as to why the same explanation was not acceptable in respect of balance Rs. 97,50,000/-. 5.19 The Ld. CIT(A) observed that the facts that the assessee deposited Rs. 2.74 crores in October 2015 and Rs. 3.61 crores in November 2015 shows that it was a regular feature of its business to deposit the cash in bank even during the period prior to the announcement of demonetization on 08/11/2016, these facts had not been negated by the AO and that it wa....
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....In his rival submissions the Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee filed the return of income on the basis of audited books of account which had been accepted by the AO while passing the order under section 143(3) of the Act and no defect had been pointed out in day to day maintenance of such books of accounts neither any evidence of purchases or sales outside the books of accounts had been found. 8.1 The Ld. Counsel for the assessee referred to page no. 74 of the assessee's compilation and submitted that specific queries were raised by the Deputy Director of Investigation Wing, the assessee replied and submitted details of bank account, copy of the ITR's alongwith computation chart and audited balance sheet for the A.Y. 201516 and 2016-17, month wise details of cash deposits in bank for the period April 2016 to November 2016 etc. copy of which are placed at page no. 75 to 123 of the assessee's compilation, no doubt was raised on the said details by the Investigation Wing. It was stated that total sales of the assessee during the year under consideration were to the tune of Rs. 13.82 cror....
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....T(A), which is being relied upon. vi). We also rely on the submissions at page 7 of the order of CIT(A) and from page 6 , 7 & 8 of the order of CIT(A), the cash sales in the month of October are there and both the cash sales and recovery from debtors as compared to last year, are less and the cash deposited in November 2016 is to the tune of Rs. 2,44,80,000/- as compared to 3,61,64,350/- in November 2015. Thus, the same itself demonstrates the genuineness of our books of accounts. vii). We had also submitted that it is only an exchange of assets from stock to cash by way of cash sales and realization from debtors, to whom the sale is made in the earlier period and no doubt have been made in earlier period and, no doubt, have been raised by the Assessing Officer about the availability of stock and the gross profit has been accepted and taxed and, thus, the whole basis of addition is out of context. We had relied upon various judgments before the CIT(A) and we also rely on various judgments as per pages 21 to 23 and our summary of the arguments is at page 26. viii). It is also stated that the cash as per the regular books of accounts cannot be doubted out o....
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....t of Hon'ble Punjab & Haryana High Court in the case of Sh. K.C. Malhotra. xiii). We also rely on the latest judgment of Jurisdictional ITAT, Chandigarh Bench, Chandigarh in the case of Kalaneedhi Jewellers LLP in ITA No. 311/Chd/201 vide order dated 25.03.2022, (Copy of the judgment is placed in the Paper Book-Ill, at pages 462 to 531), wherein the Hon'ble Bench after discussing the similar judgment and by relying upon on number of judgments had deleted the addition as sustained by the Ld.CIT(A) on the context that if opening stock, purchases, sales and closing stock have been accepted, proper books of accounts have been maintained and after relying upon similar judgements as being relied upon here, the addition as sustained by the CIT(A) has been deleted. xiv). Compared the above said facts with our case, the facts in our case are more stronger, since there is no basis of making the adhoc addition of Rs. 97,50,000/- and on the contrary, the sales have not been doubted as recorded in the regular books of accounts, therefore,, the CIT (A) has rightly deleted the addition. 9. We have considered the submissions of both the parties and material available o....
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....as well as GP rate shown by the assessee. Therefore, the addition of Rs. 97,50,000/- made by the AO on the basis of surmises and conjectures was rightly deleted by the Ld. CIT(A). We do not see any valid ground to interfere with the detailed and logical findings given by the Ld. CIT(A) in the impugned order. 10. In Cross Objection the assessee had raised the following grounds: 1. That the Ld. CIT(A) has rightly deleted the addition of Rs. 97,50,000 on account of alleged unexplained cash deposits u/s 69A. in the regular bank account of assessee. 2.a) That the Ld. CIT(A)-5, Ludhiana has erred in confirming the action of the Assessing Officer for assumption of jurisdiction u/s 153A for the year under consideration, as there was no Panchnama draw in the case of the assessee b) That even in the remand report of the Assessing Officer, it could not prove that there was search warrant in the case of the assessee and, therefore, the proceedings as initiated u/s 153A, are void-ab-initio. c) That the Ld. CIT(A)-5, Ludhiana has failed to appreciate the decision of the Hon'ble Mumbai Bench in the case of Regency Mahavir Property in ITA No. 682 & 683/Mu....