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2022 (12) TMI 1309
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.... in confirming the addition of Rs.11,74,50,000/- which is not sustainable on facts and in law. 2. The ld.CIT(A) erred in not considering the fact that the cash deposited in the bank account of the appellant reflected the business turnover of the appellant and the appellant has offered net profit earned on such turnover in his return of income and paid taxes. 3. The ld.CIT(A) erred in not considering the evidence that the cash deposited in the bank account of the appellant was utilized for purchase of gold bullion by the appellant in the normal course of his business. 4. The ld.CIT(A) erred on facts and in law in granting partial relief of Rs.28,37,00,000 out of cash deposit of Rs.40,11,50,000 and confirming the addition of Rs.11,74,50,000/- although the entire cash deposits are of the same genre of business. 5. The ld.CIT(A) erred in law in confirming the AOs findings that the provisions of section 68 are attracted in respect of cash deposits made in the appellant's bank account. 6. The ld.CIT(A) erred in law in confirming the AOs findings that the provisions of section 68 are attracted in respect of cash deposits made in the appellant's....
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....so consistent with earlier general law; will prevail over the earlier general law- when the Reserve Bank of India issued Special Law by way of Notifications after demonetization barring SBNs as legal tender after 08.11.2016 - the sale advances received not in legal tender cannot be treated as per general law of Income Tax Act. 6. The Ld.CIT(Appeal) erred in ignoring the findings of Central Forensic Science Laboratory that the computer systems claimed to have been used by the assessee for making advance credit entries on 08.11.2016 were not at all opened/used on that date and consequently the credit entries in the books of account are ante-dated to escape the consequences of accepting SBNs after demonetization. 7. The ld.CIT(Appeal) erred in taking into cognizance the letter dated 01.11.2017 claimed to have been filed by the assessee before the assessing officer without calling for a remand report as no such letter had been filed before the assessing officer. 8. The ld.CIT(Appeal) erred in granting relief solely on the basis of the statements given by Mr.Neel Sundar before Investigative agencies which was retracted in his subsequent statement given before ....
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....e provisions of section 68 are attracted in respect of cash deposits made in the appellant's bank account. 6. The ld.CIT(A) erred in law in confirming the AOs findings that the provisions of section 68 are attracted in respect of cash deposits made in the appellant's bank account despite the fact that the AO did not make any inquiries to satisfy himself about the explanation offered by the appellant although making of such inquiries is a condition prerequisite for invoking the provisions of section 68. 7. The ld.CIT(A) erred on facts and in law in ignoring the various judicial pronouncements of High Courts and Supreme Courts submitted by the appellant which showed that the AO could not have invoked the provisions of section 68 considering the facts of the appellant's case. 8. The ld.CIT(A)'s finding that the AO, in the statement recorded from the appellant u/s 131 on 20.11.2019 discussed the issues raised by the appellant is contrary to the facts on record. 9. The ld.CIT(A)'s finding that the AO, in the statement recorded from the appellant u/s 131 on 20.11.2019 discussed at length the explanation regarding sources of cash as submitted by the app....
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....ort as no such letter had been filed before the assessing officer. 8. The ld.CIT(Appeal) erred in granting relief solely on the basis of the statements given by Mr. Pawan Agarwal before Investigative agencies without appreciating the fact that no material evidence was furnished in support of the claim. 9. The ld.CIT(A) erred in relying on the confession statement given by Mr. Pavan Kumar Agarwal before the police authorities even though such statement is not admissible as evidence. 10. The ld.CIT(A) erred in relying on the statement of Sri Pavan Kumar Agarwal given before Police Authorities on 17.02.2017 that he contributed 37.11 crores out of total cash deposits made in the bank accounts of the assessee, without considering the fact that this averment was different from the statement recorded before the Income Tax authorities. 11. The Ld.CIT(Appeal) erred in deleting the addition made stating that no enquiries were conducted. The ld.CIT(A) who has coterminous powers to conduct further enquiries before coming to his conclusions instead of deleting the addition for lack of enquiry. 12 The Ld.CIT(Appeal) erred in holding that the assessing....
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....1.2017 filed under PMGKY. For the A.Y. 2017-18, assessee filed its return of income admitting an income of Rs.1,42,71,390/- after adjustment of brought forward losses of Rs.8,60,150/-. The case was selected for scrutiny and a notice u/s 143(2) of the Act was issued on 14.08.2018. Later, notice u/s 142(1) of the Act were issued from time to time calling for certain information and after considering the information filed, assessment was completed by the AO u/s.143(3) of the Act on 31.12.2019 assessing the total income at Rs.41,57,69,390/- by making an addition of Rs.40,11,50,000/- u/s 68 of the Act. 8. The relevant portion of Assessing Officer's discussion and finding reads as under : "3.5.1 Apparent inconsistency even in the second version of cash advance from one customer: The first issue for consideration is the deviation of the assessee in replacing single customer in place of their earlier stance of 2153 customers, who purportedly lent advance of Rs.40.11 crores. In para 15 of the above submissions, the assessee now brings in the concept of 'human possibility' of receiving cash of below Rs.2 lakhs from 2100 persons within three and half hours in t....
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....erefore, they acted prudently for legitimate profit on the (ill)advice of their Chartered Accountant. This claim of the assessee has two components. The first component is that their acceptance of proposal for cash advance against sale of gold was, entered in their books on the night of 08.11.2016 itself, (and not after 09.11.2016 against the intention of demonetization announcement): This claim of the assessee has two pronged flaws. As per assessee's own' ad-Mission, the list of 2153 customers was provided by Sri Neel Sundar Tharad and accordingly they entered the advance cash receipts in their books against 2153 customers. Having accepted (even other-wise proved later by the Investigation Wing that the list of customers is a fabricated one) that the list is a bogus one,, the assessee cannot 'Claim that cash advances were entered in their books on the night of-08.11.29164sell and only physical cash was directly deposited by the purported lone customer on 10.11.2016. 'The second flaw is also factual and was proved by the CFSL report that no entries whatsoever were made in the systems impounded from the business premises of the assessee on 08.11.2016. A sepa....
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.... an agreement to (4)An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred Section 2 of the Sale of Goods Act : 2.Definitions.-In this Act, unless there is anything repugnant in the subject or context, (1). ....... ......... ..... (10)"price" means the money consideration for a sale of goods; .(emphasis supplied) Section 23 of Indian Contracts Act 1872 : 23. What considerations and objects are lawful, and what not.- The consideration or object of an agreement is lawful, unless-it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent ; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. (emphasis supplied) Section 26 of the Reserve Bank of India Act 1934 : 26. Legal tender character of....
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....ounced the decision of the Central. Government to withdraw the legal tender status to the existing series of bank notes of the value of Rs.500 and Rs.1000 w.e.f. 09-11-2016. Accordingly, a Notification in S.O.No.3407(E) dt. 08-11-2016 was also issued withdrawing the, legal tender status to the bank notes of the value of Rs.500 and Rs.1000 (referred to as specified bank notes or SBNs). However, in the said Notification a facility was granted to the holders of SBNs for the deposit of such SBNs in their account maintained with any bank on or before 30-12-2016 so that the equivalent value of SBNs will be credited to such accounts. The Government has further announced that the SBNs will continue to be legal tender during demonetization period for the limited purpose of making payments at places like petrol bunks, gas agencies, etc. Thus, except where the SBNs were deposited in a bank, or exchanged for goods / services at designated places like petrol bunks etc., in all other cases such SBNs are no longer legal tender w.e.f. 09-11-2016. Coming to the present issue on hand, as discussed in para 5.3.2, it was proved that the assessee has carried on their trading operation....
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....r than banks, and if such a claim is accepted, it would bring the said statutory Notification, which was issued as a measure to tackle black money, to ridicule and renders nugatory. Also, since the 'public policy' behind the withdrawal of legal tender status to the SBNs from 09-11¬2016 onwards was explained by the Central Government to be a measure to tackle the black money in the economy, to lower cash circulation which is directly linked to corruption, fake currency etc., any claim of acceptance of SBNs as a part of-contract of sale is opposed to the said 'public policy' as announced by the Central Government and vitiates the whole exercise of demonetization. Hence, for these reasons, the contract of sale if it involves receipt of SBNs as price', is ab-initio void as per the provisions of Sec.23of the Contracts Act, 1872 and thus non-est in the eyes of law. Hence, such SBNs cannot be treated as having arisen out of a contract for sale. The above discussion takes care of the additional submissions made by the assessee on 24.12.2019 that entire credits in the books are nothing but advance against sales which; were ultimately 'credited to the pro....
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.... me to. raise the advance cash receipts. The advance cash receipts were prepared as per the list of names given by them by accepting advance amount. I have received nearly about 40 Crores for Mr Neel Sunder Tharad who is owner of M/s Astha Laxmi Gold and nearly 35-37 Crores from Mr Pavan Agarwal who is the owner of M/s Balaji Gold, nearly 3-3.5 crores received from Tarun Jain who is a private Individual; nearly about 1.5-2 crores received from Mr Manish Gupta who is owner of Musaddilal & Sons Jewellers, Basheer Bagh, Hyderabad, nearly about 6-7 crores from Mr Sanjay Sarda who is partner of M/s Sanjay & Sunil Associates situated at Secunderabad & some amount received from other customers the names of the customers I don't remember. I have done the above transactions purely as a business transaction and without any intention of any illegal gain from this transaction since my both firms were having Secured and un-secured loans. I thought by doing these legal business transactions I will earn some profit and clear my loans. I requested the customers who have deposited the cash with me on 8-11-2016 to help me to assist us in depositing the cash in bank by carrying their own....
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....ssessee-company, Sri Nitin Gupta on 01st / 2nd December, 2016. Of the many issues covered in this statement, the date of entry of cash advance receipts by the assessee in the systems is one of the issue. The relevant questions and replies of the Director on this aspect are reproduced hereunder: Q 67. Please state in which computer system in this premises the receipt vouchers have been entered and state which employee has entered these details in the computer. Ans. The receipt vouchers for both these companies were entered in the five computers installed in this premises. I don't remember the name of the employee who entered the details in the tally accounting package installed in these computers. The-same version was reiterated by the assessee in a recent statement recorded u/s 131 on 20.11.2019, the relevant portion of which is as under: "20. To SLIM up, you are confirming that you have received cash advances of Rs.57,75,35,000/- from six customers (against 3100 customers stated in the statement recorded on 01.12.2016) ion the case of MGJPL on 08.11.2016 after 09.00 PM, entered the cash advances in your books on the same day, generated cash ....
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.... in the B-Block of the compound. Our residence is in the A-Block of the compound. As you know, today is computer is necessity of life to us and to our children and we are having Systems even in our residence and during that time, lot of shuffling of systems had happened. I may not be aware of the timing of opening and closing of a system. 23. Please refer to Q.12 & 13 above and the replies, wherein you have stated that generation of the' cash receipts Started on night 'of 08th Nov. 2016 and concluded on 09.14.2016. Also refer to Q.20 above and your reply, wherein you have stated that this work of generation of cash receipts was done in the systems available in your premises on the-date-of servey. How-could you deviate from the replies already given-above in reply to Q.22 above? Ans. I am not a technical expert in operating computer systems. Whatever Was conveyed to me by my staff, I in turn conveyed to the IT authorities on the date of survey. I cannot comment too much on the technicalities involved in computer systems. 24. We are not interested in involving you too much into technicalities of computer systems. The question is when on the date of ....
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....CS / ED, no addition can be made in their case u/s 68. The submissions of the assessee and other case laws relied upon can be considered as such, once it is initially proved that the assessee had discharged their onus of proving the three tests applicable for not invoking the provisions of section 68- genuineness of the transaction, identity of the creditor and their creditworthiness. In this context, it is the claim of the assessee that they have given the identity of the creditor by furnishing their address, their creditworthiness / credentials in the field of bullion trading are verifiable and the transaction of receiving cash from them as advance towards sale of gold is genuine. However, it is also equally the case of the said Sri Tharad that he traded in bullion with the assessee on receipt of RTGS and no further. In this context, it is seen that on one hand, the assessee company submits to accept the averments made by their Directors, who constantly went on changing their versions from time to time before various investigating agencies to suit their convenience and feigned to ignorance on occasions when clinching evidences and circumstantial evidences were p....
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.... as explained. In this connection, the following case laws, which underline that the three ingredients of section 68 should be satisfied together and further cast the initial burden of proving the credits in their books on the assessee are relied upon: The Apex Court in the landmark case of Kalekhan Mohd Haneef Vs CIT (1963) 50 ITR 01 (SC) and Roshan Di Hatti Vs CIT (1977) (107 ITR (SC) laid down that the onus of proving the source of sum of money found to have been received by an assessee, is on the assessee. Once the assessee has submitted the documents relating to identity, genuineness of the transaction and creditworthiness, then the AO must conduct an enquiry, and call for more details before invoking sec.68 of the Act. If the assessee is not able to provide a satisfactory explanation of the nature and source, of the investments made, it is open to the revenue to hold that it is the income of the assessee, and there would no further burden on the revenue to show that the income is from any particular source. With respect to the issue of genuineness of transaction, it is for the assessee to prove by cogent and credible evidence that the investment made in the ....
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....ee is bringing in unaccounted cash in the form cash advances into their books of account, whether such cash belongs to the assessee or to others. By bringing in, such unaccounted money into books the assessee tried to give the transaction a colour of trading in gold, and caused loss to the exchequer to the extent of taxes on such unaccounted cash. 5. Conclusion: To sum up, though the assessee made out two versions of sources for the credit of Rs.40.11 crores in their books of account on 08.11.2016, one as received from 2153 persons and the other as received from single person, the assessee failed miserably to prove that the same belong to either the said 2153 persons or one person with cogent evidences. The assessee has indulged in mis-representation/suppression of facts. Therefore, for the reasons discussed above and particularly in para 3.5.1 to 3.5.5 & 4,111e -credits appearing in the books of account of the assessee in the form of cash advances against gold sales on 08.11.2016 aggregating to Rs. 40,11,50,000/- are treated as unexplained credits in the hands of the assessee u/s 68 and assessed-as such, @ 60% tax irate as prescribed under provisions of section 1....
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....en questioned about the details of such 2153 customers who gave advances on 08.11.2016, the appellant furnished names and addresses of 65 customers. On verification it was found that the customers were from faraway places like Mumbai, Vizag, Krishna District, Trivandrum and Odisha. When enquired in about 12 customers, it had come to light that none of them out of these 12 customers visited the business premises of the appellant and that no such cash advances were given by them for purchase of gold/bullion on 08.11.2016. 5.3) Sri Gupta also claimed that around 2153 customers attended their office in the night of 08.11.2016 after announcement of demonetization and gave advances ranging from Rs.1,89,000/- to 1,72,000/- and that they entered these advances in their systems and generated receipts to all the 2153 customers and this work continued till midnight. When questioned as to how he handled 2153 customers by way of collecting cash on one side, generating receipts and discussing the weightage etc.. Sri Nitin Gupta said that he managed the things with the help of another Director of Musaddilai Gems & Jewels Pvt Ltd, Sri Mallesh and cashier Sri Jeelan Basha. In course of sur....
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....ts and we have paid the self assessment tax thereon. It is only under pressure and misrepresentation by police / ED / IT we have submitted to get covered under the scheme. All our directors are under threat of arrest and their petition for Anticipatory Bail are pending. Hence, we hereby withdraw our affidavit dated 30.12.2016 and hence our request for getting covered under the scheme is hereby withdrawn / rescinded" 5.6. Against the police FIR, the appellant along with other companies approached the Hon'ble High Court of Telangana seeking anticipatory ball in relation to Crime No.263/2016. The Hon'ble High court vide their common order in CRLP Nos.124, 125, 132, 155 and 157 of 2017, dated 30.01.2017 dismissed tile anticipatory bail. Subsequently, the appellant was arrested on 31.01.2017 along with Sri Kailash Chand gupta father of Sri Nikhil Gupta, brother of the appellant. ....................... "7.3 Coming to the amounts mobilized by Sri Neel Sunder Tharad, Proprietor of M/s Ashtalakshmi Jewellers, he had in fact confessed in his statement dated 21.01.2017 before the ACP that he mobilized Rs.28 crores from the fo....
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....0 12-11-2016 140853 3,15,30,000 15-11-2016 140860 1,54,25,000 17-11-2016 140862 3,00,00,000 18-11-2016 140866 3,09,70,000 18-11-2016 140865 1,54,25,000 19-11-2016 140867 42,25,000 TOTAL 28,37,70,000 "7.5 On consideration of the explanation of the appellant, material placed before me and the assessment order, the following points emerge: (a) The appellant gave a statement on 01.12.2016 during the course of survey that the amount to the extent of Rs.40,14,98,000/-crores was received from 2153 customers. (b) The appellant filed application under PMGKY Scheme on 30.12.2016 along with affidavit disclosing Rs:40.00 crores as his income and paid Rs.1 crore on 13.01.2017. (c) Subsequently, the affidavit under PMGKY was withdrawn on 16.01.2017. (d) appellant filed explanation as to sources of cash on 01.11.2017 retracting from the earlier statement. (e) The above sequence of events clearly show that the appellant has not been truthful and inconsistent with his statements and conduct during the survey and also during the assessment proceedings. According....
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....Rs. 40 crores. ii) On the intervening night of 08.11.2016 to 09.11.2016, Shri Nithin Gupta had admitted that the receipt of advances were issued to these persons. iii) The cash of Rs.40 crores were deposited in various branches in Axis Bank, Banjara Hills, Hyderabad after opening the account on 10.11.2016 with the said bank. iv) The bullions were purchased from M/s Astha Laxmi Gold and Impex Gold and thereafter, it was given to the holder of the receipt. 13. Ld. DR further submitted that the assessee had made the declaration under Pradhan Mantri Garib Kalyan Yojana and voluntarily declared the amount of Rs.40 crores of its income by filing an affidavit under the said scheme. In the said scheme, it was admitted by the assessee that the assessee owned the entire amount of Rs. 40 crores. 14. The Revenue had reported the matter about the wrong and illegal activity of the assessee with the Enforcement Directorate under the PML Act and also with the local police. The local police had registered the F.I.R on 07.12.2016. The same was challenged by the assessee before the Hon'ble High Court and the stay of arrest was granted to the assessee. In the meanwhile, the confessional statemen....
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....shtalaxmi Gold and Impex Gold. It was submitted that the reliance of the ld.CIT(A) on the statement of Mr. Neel Sunder recorded by the police during the course of investigation cannot override the admission made by the assessee during the course of survey, which is further supported by the assessee's own books of accounts and / or will nor relieve the assessee from the onus casted on it u/s 68 of the Act. It was further submitted by the ld. DR that the revenue had also recorded the statement of Neel Sunder on 07.12.2016 whereby said Neel Sunder had confirmed the original statement of the M.D. of the assessee. It was submitted by the ld.DR that the statement recorded by the police u/s. 161 Cr.P.C can not be used for any other purpose except to confront the witness during the course of trial u/s 162 Cr.P.C. However, the confession statement recorded by the police u/s 26 of the Evidence Act while Mr. Neel Sunder was in police custody has no binding effect in the eyes of law. The ld.DR had submitted that there is an admission of liability by the assessee and further, there is no retraction of the statement recorded on 01.12.2016 / 07.12.2016 in the eyes of law. It was also submitted th....
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....vered the gold through M/s Brinks Arya Agency and that he personally visited the remaining firms, collected gold and handed over major part of the gold. to Nitin Gupta and the remaining gold to Sri Seeram Mallesh and other persons, as instructed by Nitin Gupta. The same fact was also proved by way of ledger account balances in the books of the appellant. 8.2. On the other hand, Nitin Gupta in his confessional Statement dated 20.12.2017 argued that that it had no role in procuring the gold from the above concerns by Sri Neel Sunder. Moreover, Sri Nitin Gupta 'had denied of receiving back the gold bullion from Neel Sunder for handing over the same to any of the customers. The appellant submitted that it had placed orders amounting to Rs.6,21,40,000/- from SK Impex and on receipt of the gold, the same was handed' over to Neel Sunder. Thus, both the parties are at loggerheads in accepting the total deposit of Rs.40 crores so also the delivery of gold to each other. The appellant further submitted that in the process of deposits in entire transactions, there are corroborative evidences to show that the amounts were brought to the bank by the concerned parties and the em....
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....the replies given during the statement recorded on 20.11.2019. The explanation given is on similar lines which has been considered by the AO. The AO discussed the statement and the explanation given at length in his assessment order. In view of the above, it cannot be said that requirements of Section 68 are not met. The explanation basically containing the reliance on statements given by Neel Sunder of M/s Ashtalakshmi Jewellers before the Police Authorities, Enforcement Directorate Authorities have been dealt with in the assessment order by the AO. In view of the factual position as above, the contention of appellant that explanation is not considered by the AO is not correct and the argument is liable to be rejected. Accordingly, the ground raised is rejected." 18. Per contra, the ld. AR for the assessee had submitted that Mr.Neel Sunder had admitted in his statement given before the police on 21.01.2017 to have deposited an amount of Rs.28 crores in the bank account and had also admitted to have supplied the Gold of Rs. 28 crores, therefore, the action on the part of ld.CIT(A) was in accordance with law. 19. Besides the above, the assessee has raised the following submiss....
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.... the statement dated 2/12/2016, the receipts of advance cash received from 2135 customers were prepared and issued on 8-9/11/2016 from 5 computers of the assessee. III. The copy of receipt of invoices of 2135 were found during the course survey from the premises of assessee IV. Assessee gave the details of 65 customers. V. Out of 65 customers , 9 were found. The statements of these 9 persons were recorded by IT department as well as police and in the statements all 9 persons have denied to have purchased the gold from the assessee . VI. Bank account was opened on 10/11/2016 VII. Money was deposited in the bank account in seven tranches for Rs 39.64 crore starting from 10/11/2016 to 30/11/2016 VIII. The gold purchased by the assessee from Ashtlaxmi and Impex Gold. IX. Assessee allegedly taken the advance without having the gold in their stock X. The receipt of advances from 2135 customers on 8/11/2016 were not supported by any evidences. Even the staff of assessee had left the premises before 8 pm. The security recorded in the system of Assessee did not show presence of crowd at the premises of assessee. Even th....
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....ommissioner of Police, CCS, Hyderabad at Page 93 of the paper book, the Managing Director of the assessee had made a confession. The copy of the said confession of the Managing Director Mr. Nitin Gupta was given to the Assessing Officer on 01.11.2017. In the said confession statement dt.17.01.2017 Mr. Nitin Gupta submitted as under : "Further, I would like to inform that all three firms, (i) Musaddilal Gems & Jewels Pvt. Ltd., (2) Vaishnavi Bullion (P) Ltd., and (3) Musaddilal Jewellers Pvt Ltd, are independent of each other doing business separately. On 08.11.2016 at around 7 PM I was at my office of M/s Musaddilal Gems & Jewels (Pvt) Ltd and M/s Vaishnavi Bullion (Pvt) Ltd, during that time some people called me for purchase of gold& then I have informed them to come to my office and they said that they want to purchase gold from me at that time. I did not have much stock of gold due to which I told that customers to place order by giving advance amount, accordingly those people have place booking by paying the amount and giving the names on which they wanted me to. raise the advance cash receipts. The advance cash receipts were prepared as per the list of names....
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.... ............ Therefore, I have lastly decided that 'to give my confessional statement in writing and submit at your office and your good self." 23. Similarly, in the statement recorded u/s 131 of the Act on 20.11.2019, the assessee had changed his version and in reply to questions 4 to 6 and 15 had submitted as under : "4. I am showing you the statements given by you and recorded u/s 131 in the case of M/s Musaddilal Gems & Jewels Pvt Ltd., on 01.12.2016 (concluded on 02.12.2016) and 07.12.2016. Please go through them and offer your comments? Ans Yes. I have gone through the statements. The same are recorded as per my version and the facts stated therein are NOT true to the best of my knowledge and belief 5. Could you please explain the reason in mentioning that the facts stated therein are not true to your best of knowledge? Ans. The reason for that is that I have given the statements on 02.12.2016 and 07.12.2016 under the pressure of people who have actually given me the money, as they have given me a confirmation that they will take care of the matter, when the time comes. Further, on 09.12.2016 and various dates going ....
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.... Cr 2 Silver 52.3 Kgs Rs.0.22 Cr. 3 Gold Ornaments 2.93 Kgs Rs.0.85 Cr 4 Silver articles Total Rs.47.98 Cr. Q.15 Please state what is the total amount of sales made by you to M/s. Vaishnavi Bullion Pvt. Ltd. during the period from 01.04.2016 to 07.11.2016 and from 08.11.2016 to till date and also produce copies of sales invoices and ledger account copy of M/s. Vaishnavi Bullion Pvt. Ltd ? Ans. During the period 01.04.2016 to 07.11.2016 no sales were made by us to M/s. Vaishnavi Bullion Pvt. Ltd during the period from 08.11.2016 to till date, the total sales made to M/s. Vaishnavi Bullion Pvt. Ltd is at Rs.28.37 Cr. (Quantity of pure gold : 91.131 Kgs). I submit herewith the ledger account of the party along with copies of sales invoices. Q.16. Please state how did you deliver the metal to M/s. Vaishnavi Bullion Pvt. Ltd and also state the names of the persons to whom you have delivered the metal ? Ans: I delivered the metal to M/s. Vaishnavi Bullion Pvt. Ltd at the office of BRINKS VAULT, SEQUEL and M/s DP ....
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....ssessee had filed an application for anticipatory bail before the Hon'ble High Court. Meanwhile, police had recorded the confession of Mr. Neel Sunder on 21.01.2017. The Hon'ble High Court had dismissed the bail application of Mr. Nitin Gupta was arrested on 31.01.2017. 28. Thus, it is clear that before filing the affidavit of owning the income of Rs.40 crore, the FIR was already registered on 07.12.2016 and the statement of the assessee was also recorded on 20.12.2016. by the Enforcement Department. Knowing fully well about the registration of F.I.R. and proceedings before the E.D., the assessee had chosen to avail the benefit of the PMGKY Scheme voluntarily - 2016 and had filed an affidavit on 30.12.2016 declaring the income of Rs.40 crore in PMGKY, 2016 Scheme. Thus, the allegation of the assessee that the assessee had made the disclosure in PMGKY, 2016 Scheme under the pressure of E.D / I.T. / Police had no legs to stand. 29. We may further mention that in the statement of Mr. Nitin Gupta, M.D. of the assessee, recorded on 20.11.2019 (supra), the assessee in reply to questions had submitted that "the same are recorded as per my version and the facts stated therein are NOT....
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....sence of any denial or explanation thereof, an admission is almost conclusive regarding the facts contained therein. They generally dispense with the requirement of adducing further evidence or proof to support a fact. Though section 31 of the Indian Evidence Act, 1872 states that admissions are not conclusive proof of the matters admitted, yet admissions in the absence of rebuttal may conclude an issue. Effect of Letter dt.17.01.2017. 32. In the present case, there is no retraction of the statements given on 2/12/2016 and 7/12/2016. Further, during the survey, incriminating invoices / receipts, KYC documents, computers were also impounded by the investigating team. It is also admitted position that the assessee had opted for PMJKY, 2016 Scheme and deposited Rs.1 crore towards its part of tax liability thereby admitted Rs.40 crore as its income. However, it is the case of the assessee in the statement given on 20/11/2019 that it had retracted from its earlier statement and confession was submitted to the ACP Police on 17/1/2017, copy of such retraction / confession was given by the employee of the assessee after a period of 11 months in the office of Revenue on 17.01.2017. (n....
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....saction since my both firms were having Secured and un-secured loans. I thought by doing these legal business transactions I will earn some profit and clear my loans. I requested the customers who have deposited the cash with me on 8-11-2016 to help me to assist us in depositing the cash in bank by carrying their own cash from our office to our respective banks. Accordingly they came to my office and helped me for depositing the cash in my bank from 10-11-2016 onwards since 9-11-2016 was bank holiday. As per the order received from the customers, we have placed the order of gold to various bullion dealers eg:- M/s Asthalaxmi Gold, M/s Sri Balaji Gold, M/s S.K.Impex, M/s Nav-Durga Bullion Co-op. We transferred all the amount to the bullion dealer by way of RTGS and cheques. Subsequently we have received the gold on various days and accordingly we have given the delivery of gold to the customers by raising the sales invoices against the oath receipts generated. Further, I would like to inform that the total business transactions has been reflected in our books of accounts and we have shown the profit earned and paid the necessary advance tax to the Income tax depart....
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.... "Accordingly, Mr. Nitin Gupta along with his younger brother Nikhil Seeram Mallesh with the assistance of their staff and others tasted generating fake and fabricated advance cash payment receipts on names of fictitious persons. Myself and Neel Sunder and some others al ed them by furnishing the names and details of some fictitious persons and assisted them in preparing the fake receipts. During the next 5-6 days, we have generated about 5200 such fake receipts amounting to Rs.100 cr. All the receipts were prepared for the amount less than 2 lakhs to avoid Income Tax, KYC and other future complications." 4.3 Part of the cash of Rs.40 Cr was deposited by Sri Neel Sunder Tharad and his wife Smt. Nisha Gupta, directly and part was deposited with the help of the staff of the Appellant. 'The initial statement given to the Investigation Wing was given under intense pressure from Sri Neel Sunder to protect his interests (Incidentally he is related to him as well). However, when the investigations were taken up. by the Police and Enforcement Directorate, the appellant was advised to come out clean and state the facts before the authorities. Accordingly, the MD of the Appellan....
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....ating Wing nor it was made within reasonable time and nor any reasons for retraction of the earlier statements were given. In our view, the letter dt.17.01.2017 was after thought, motivated and against earlier conduct of assessee whereby he had accepted the income of Rs.40 Crore in the earlier statements, affidavit in PMGKY - 2016 and subsequent deposit of part of tax amount of Rs. 1 crore. Further it is not the stand alone statement of the assessee admitting the income at the time of survey rather in the present case the revenue is having other incriminating evidence in the form of 2135 invoices, CFSL evidence of computers, statements of neighbour, statements of other persons denying the purchase of bullion and recovery of KYC documents of 65 customers. In light of the above, the Assessing Officer was right in rejecting the reliance placed by assessee on letter dt.17.01.2017. Whether the ld.CIT(A) was right in deleting the addition of Rs.28 crore on the basis of statement of Mr. Neel Sunder Tharad recorded by Enforcement Directorate dt.26.12.2016 ? 36. The ld.CIT(A) in Para 7.5 of his order has mentioned various points which are reproduced hereinabove (at para 9 supra) for d....
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....the assessee that during the course of survey, the KYC documents were taken from 65 customers only. However, as recorded by the Assessing Officer in para 2.5 of his order, the verification was done in respect of 65 persons and out of them only 12 persons were identified and they have denied having transacted with the assessee. In further response to question nos.60 and 61, the director of the assessee on 02.12.2016 has mentioned as under : "Q.60 Please provide the mobile number, address proof, identity proof and KYC documents of 5200 customers at the time of receipt of advance and at the point of sale. Ans: We have collected the declarations / letters from around 65 customers, which is submitted. The KYC documents etc were not collected from the customers. Q.61. It is seen from the declarations / letters submitted by you that there is no mention to whom it was addressed. How do you claim that these declarations / letters were given to you. Ans: On many of the declarations, the sale invoice number is mentioned in pencil, which can be verified." 40. Further, The statement of one Mohd. Azam, who was one out of the said 12 persons whose KYC docume....
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....7 crores from six customers and Rs.40 crores from the one customer in M/s VBPL entered the details of cash advances bifurcating all below Rs.2 lakhs in the name of various persons (as provided by six and one customer respectively), started generating cash receipts on 08.11.2016 to 09.11.2016 from the systems available in our premises in Tally software and handed over the receipts to the respective seven customers." 42. From the perusal of various statements of the Managing Director of the assessee i.e., Mr. Nitin Gupta, it is crystal clear that the assessee had not disputed the book entries with respect to 2153 customers of rupees more than 40 Crore. Though, the assessee orally sought to explain the transaction by saying that instead of receiving cash advances from 2153 customers the said amount was provided by one Mr. Neel Sunder on 08.11.2016 and invoices were issued in the names supplied by Mr. Nitin Gupta. Thus, the assessee sought to contradict the books of accounts with the oral statement. In our view, the entries in the books of accounts maintained by the assessee during the course of his business are required to be accepted as per section 34 of the Evidence Act. For the ....
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....r any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting from, its terms: Proviso (1) .-Any fact may be proved which would invalidate any document, or which would entitle any person to any decree or order relating thereto; such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, 1[want or failure] of consideration, or mistake in fact or law: (1).-Any fact may be proved which would invalidate any document, or which would entitle any person to any decree or order relating thereto; such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, 3[want or failure] of consideration, or mistake in fact or law\:" Proviso (2).-The existence of any separate oral agreement as to any matter on which a document is silent, and which is not inconsistent with its terms, may be proved. In considering whether or not this pr....
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....rly settled where any books of accounts were found in possession of assessee during the course of survey / search, then such books of accounts were duly executed and maintained by the assessee. In the present case, the entries of 2153 customers were found in the books of accounts along with the corresponding invoices along with pencil remarks were found. Besides that the assessee had provided the KYC documents of 65 customers. The above said events clearly show that the assessee had failed to explain the entries in the books of accounts and no explanation was given for possessing the invoices of 2153 customers and their KYC documents. 47. There is yet another reason that the entries in the books of accounts are required to be accepted. As per law, oral statements cannot be accepted in contradiction to written documents. In our view, once the Revenue had examined the assessee during the course of survey and thereafter, during the course of assessment proceedings after recording the statements u/s 131 of the Act and the said statements of assessee were duly corroborated with the entries in the books of accounts and subsequent conduct of availing the PMGKY Scheme, 2016 and deposit ....
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....2, Banjara Hills, Hyderabad. My wife and I went there and n has given some cash and told that authority letter and some more cash will be sent directly to the bank. We took the cash and went to Axis Bank, Jubilee Hills, Hyderabad. Later, Shri Seera Mallesh of M/s. Vaishnavi Bullion Private Limited came with some more cash and authorization letter to deposit cash. Some more persons belonging to M/s. Vaishnavi Bullion Private Limited or Mr. Nitin Gupta came with cash to the bank and handed over the same to us. We have deposited the cash in the bank account of M/s. Vaishnavi Bullion Private Limited as instructed by Mr. Nitin Gupta. Either my wife or myself has made cash deposits till 17.11.2016. Of these cash deposits made by me or my wife in the bank account of M/s. Vaishnavi Bullion Private Limited, Mr. Nitin Gupta transferred an amount of Rs.28.37 crore to M/s. Ashtalakshmi Gold from 11.11.2016 to 19.11.2016. For this cash transfers, I have made a sale of 91 Kg of Gold Bullion to M/s. Vaishnavi Bullion Private Limited during 11.11.2016 to 22.11.2016. To your specific enquiries about the delivery of Gold Bullion to M/s. Vaishnavi Bullion Private Limited, I state that Mr. Ni....
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....his employers and the gold was also delivered directly to them. 50. In contradiction to the statement recorded before the E.D., ld.CIT(A) had wrongly relied upon the alleged confession statement dt.21.01.2017 made before the police while Mr. Neel Sunder had allegedly admitted to have mobilized the funds from 12 persons. The ld.CIT(A) in para 7.3 of his order mentioned as under : "7.3 Coming to the amounts mobilized by Sri Neel Sunder Tharad, Proprietor of M/s Ashtalakshmi Jewellers, he had in fact confessed in his statement dated 21.01.2017 before the ACP that he mobilized Rs.28 crores from the following persons. SI. No. Name of the party from whom amounts mobilized by Neel Sunder Tharad Amount in INR 1 P. Satyanarayana & Sons, Rep by Prakash Agarwal, * 2,50,00,000. 2 PSS Jewellers, Old City, Rep. by Jithin Agarwal 2,25,00,000 3 Tibarumal Jewelers, Jubilee Hills, Rep. by Praveen Agarwal, 2,25,00,000 4 Sri Kalpatharu Jewelers, Pot Market, Rep. by Himanshu Bapna, 2,25,00,000 5 Premraj Shantilal Jewelers, Pot Market, Rep. by Ashok Kumar Jain, 1,50,00,000 6 Saibaba Jewelers, Pot Market, Sec'bad, rep by Susheel ....
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.... the Code of Criminal Procedure, 1882 (10 of 1882)4]." 53. In view of section 26 of Indian Evidence Act, we are of the opinion that the statement / confession of Mr. Neel Sunder recorded by the police while he was in custody is not admissible in the eye of law. Therefore, the conclusion of ld.CIT(A) that the statement has not been confronted by the Assessing Officer is without any basis. 54. The third reason given by the ld.CIT(A) for deleting the addition of Rs.28 crore was "the facts relating to the Authorization given by the appellant to Sri Neel Sunder and his concerns to deposit the amount in the bank account of the appellant were not examined nor contradicted." 55. The finding of the ld.CIT(A) is not based on correct appreciation of facts. The Assessing Officer had elaborately dealt with the above said issue of cash deposits in his order in the following manner : "Now coming to the second component of this claim, that the cash was directly deposited in their bank account by Sri Tharad on 10.11.2016 and therefore the same does not belong to them. It is against this claim of Director, Sri Nitin Gupta, the other Director of M/s MGJPL, Sri Mallesh in his stateme....
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....mers submitted by you shows that it mentions the name, address of the customers. However, the amount of advance received from them is left blank. Please offer your comments as to why the amount is left blank. Ans: Most of these letters contain the sale invoice numbers on it. Since the item has finally been delivered to all the customers and the cash receipts have been issued, therefore, the amount was not mentioned in the letters. Q.47. Please refer the answer to question No.22 wherein you have stated that there are only 3 employees in this company. Please go through all the advance receipt vouchers spiral bounded and confirm whether you have signed any of the vouchers or not. Ans: There are not only 3 employees, there are were around 10 total employees on the day of 08.11.2016. However, I don't remember their names. As far as I remember, I have not accepted any cash on that day and therefore, I remember that I have not signed any voucher. Q.58. Where did you keep Rs.90 Crore on 08.11.2016 night. Ans. In this office premises. Q.59. When did you deposit this Rs.90 crore in the bank. Ans: After 09.11.2016 for a period of ....
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....ugh RTGS. If the money was of Mr. Neel Sunder, then the assessee were having no right either to deposit in its bank account or use it to buy the bullion. Undoubtedly, it is not the case of the assessee that efforts were made by the assessee to return the amount to the Mr. Neel Sunder. Apart from the admissibility or otherwise of the confession of Mr. Neel Sunder, another fact that stares at the face of the assessee is that, as per version of the assessee, Mr. Neel Sunder has arranged the customers, money and bullion and made delivery to the customers. This version of the ass is incongruous and against human preponderance, as why Mr. Neel Sunder will approach the assessee to route his clients' transaction through the assessee. In that way Mr. Neel Sunder could have completed the entire transaction right from procuring to selling the gold to customers and retained the profit himself. It is also not the case of the assessee that Mr. Neel Sunder did not have the bank account in the same Axis Bank where the money was allegedly deposited by him in the account of the assessee. There is no explanation for the redundant routing of the transactions with the assessee if we have to believe Mr.....
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.... 6.5. It is submitted that there cannot be a more illogical and preposterous reasoning and conclusion than the above. Without going into a serious discussion about the various provisions of Sale of Goods Act or Indian Contracts Act, suffice to emphasis two points on this issue. a) Firstly, when an agreement is considered void or voidable because of reasons mentioned in the Indian Contract Act, it only means that the parties to the agreement cannot resort to legal action to enforce -such an agreement. It essentially means, that the right to repudiate an agreement rests with the parties to the agreement alone. If in this process, there has been any violation of law, then the concerned agency which administers that particular law will have to step in and take appropriate action. In the instant case, Income Tax Department is not the Government Agency to declare the sale as void. Hence, the entire argument of the AO on this ground has no legs to stand. b) Secondly, the taxability or otherwise must be decided as per the provisions of Income Tax Act. It is totally irrational on the' part of the AO to conclude that because the sale is rendered void, the ....
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....escribed by the banks. Specific Authorisation (Annexure-11) by VBPL was given to. Nisha Gupta to deposit the cash. In the instant case, deposit of cash by a third party viz., Sri Neil Sunder Tharad and Smt. Nisha Gupta in the Appellant's bank account was as per the above para of the Notification and there is absolutely no illegality, involved. It is for the Income-tax Department to conduct inquiries and determine whether the SBNs represent accounted or unaccounted income and who are the true owners of such SBNs, merely stating that the SBNs were received beyond 09-11-2016 therefore the cash is unexplained,' doesn't prove anything, which is not disputed by the Appellant that the cash was deposited beyond 09-11-2016 only. In fact, the deposit of SBNs into the bank accounts was permitted from 10-11-2016 only. In this case, the entire thrust of the argument of the AO was that transactions in SBNs after demonetization notification is illegal and be has not taken cognizance of the evidence i.e. bank transfers to bullion traders. It is submitted that there was nothing illegal in the deposit of SBNs by third parties in the bank account as already discussed in para 6.7 above. Ev....
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....oses of purchasing the gold is permissible in the eyes of law. 66. No finding was given by the Ld.CIT(A) on this crucial and important aspect. In this regard, AO had relied upon various provisions of Sale of Goods Act, Contract Act and Notification in S.O.No.3407(E) dt. 08-11-2016. Ld.A.R. for the assessee on the other hand had submitted that a. Firstly, when an agreement is considered void or voidable because of reasons mentioned in the Indian Contract Act, it only means that the parties to the agreement cannot resort to legal action to enforce such an agreement. b. The taxability or otherwise must be decided as per the provisions of Income Tax Act. It is totally irrational on the part of the AO to conclude that because the sale is rendered void, the advance amounts received should be taxed in the hands of the seller as unexplained credits. c. The AO while quoting from the Notification, failed to appreciate the contents of para 2(v) of the same Notification (Gazette Notification No.S.0.3407 (E)-RBI) (Annexure-10) which reads as under: "the equivalent value of specified bank notes tendered may be credited the equivalent value of specified bank....
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....nk') and every Government Treasury shall complete and forward a return showing the details of specified bank notes held by it at the close of business as on the 8th November, 2016, not later than 13:00 hours on the 10^th November, 2016 to the designated Regional Office of the Reserve Bank of India (hereinafter referred to as the Reserve Bank) in the format specified by it. (2) Immediately after forwarding the return referred to in sub-paragraph (1), the specified bank notes shall be remitted to the linked or nearest currency chest, or the branch or office of the Reserve Bank, for credit to their accounts. 2. The specified bank notes held by a person other than a banking company referred to in sub-paragraph (1) of paragraph 1 or Government Treasury may be exchanged at any Issue Office of the Reserve Bank or any branch of bank referred to in sub-paragraph (1) of paragraph 1 for a period up to and including the 30th December, 2016, subject to the following conditions, namely:- (i) 1a[***] (ii) 2[***] (iii) there shall not be any limit on the quantity or value of the specified bank notes to be credited to the account....
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.... from time to time.] (ix) any person who is unable to .......................... 5[(x) the limits for cash withdrawal by farmers ........................ (xi) for wedding expenses a maximum of Rs. 2,50,000 .........................] 5a[(xii) deposit of specified bank ....................................: Provided that the linked currency chest to District Co-operative Central Banks shall give the exchange value for verified specified bank notes only and subject to usual checks relating to identification of fake Indian currency notes.] 3. (1) ........................................ (2) ......................................... (3) ........................................... 70. From the reading of the above notification, it is abundantly clear that SB Notes may be exchanged at any issue Office of RBI and / or any branch of bank subject to the conditions laid down in the notification, as SBN ceases to be valid tender as per the powers conferred by sub-section (2) of section 26 of the Reserve Bank of India Act, 1934 (2 of 1934) (hereinafter referred to as the said Act)....
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....ncy must look into the role of the bank employees in this regard. When the assessee itself cannot deposit more than Rs.50,000/- as per notification, then how a third party can be authorized to deposit more than the specified limits in the bank account of the assessee. The disability of the assessee would entail the disability of its delegate / agent. 73. As per clause (v) of the notification (supra), the equivalent value of specified bank notes tendered may be credited to a third party account, provided specific authorization therefor accorded by the third party is presented to the bank, after following the standard banking procedure and on production of valid proof of identity of the person actually tendering. In the present case it is not the case that the notes were lying with the third party, rather it is undisputed case that S.B. Notes were received by the assessee from the so called purchaser of the gold and thee assessee had authorized one Asha, wife of Mr. Neel Sunder to deposit the notes in the bank account. The notes were deposited in the newly opened bank account after collecting from the undisclosed customers on various dates with the help of staff of assessee or its....
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.... S.No.LQCH015, One Lenovo CPU S.No.L9C3LC60 (belonging to MGJPL) and Lenovo CPU S.No.ES0Q7220256 (belonging to M/s VBPL) in your premises on the date of survey in which you have claimed to have entered the cash advances were impounded by the Department vide impounding .order We 133A(3)(ia) on 02.12.2016. Please confirm. Ans. I exactly do not remember the number and models of the systems. However, certain systems were impounded from our premises when the survey was conducted as per the above impounding order. 21. The above impounded CPUs were sent to Central Forensic Science Laboratory and a report was obtained. I am showing you the findings of CFSL, dated 01.05.2017, starting from pages 1 to 9 along with covering letter dated 01.05.2017. Please offer your comments? Ans. From the said report, I have understood that the timings of operation of our systems, which were impounded from our premises, four systems were not operated on 08.11.2016 and one system was operated and closed at 18:45:34 on 08.11.2016. In this regard, I would submit that the office of the above said two 'companies is in the B-Block of the compound. Our residence is in the A-Block of t....
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....n Explanation 1 to Section 37(1). 25. Furthermore, if the statutory limitations imposed by the 2002 Regulations are kept in mind, Explanation (1) to section 37(1) of the IT Act and the insertion of section 20A of the Medical Council Act, 195611 (which serves as parent provision for the regulations), what is discernible is that the statutory regime requiring that a thing be done in a certain manner, also implies (even in the absence of any express terms), that the other forms of doing it are impermissible. ( emphasis added by us) 26. .......................................... 27. It is also a settled principle of law that no court will lend its aid to a party that roots its cause of action in an immoral or illegal act (ex dolo malo non oritur action) meaning that none should be allowed to profit from any wrongdoing coupled with the fact that statutory regimes should be coherent and not self-defeating. Doctors and pharmacists being complementary and supplementary to each other in the medical profession, a comprehensive view must be adopted to regulate their conduct in view of the contemporary statutory regimes and regulations. (emphasis supplied by us). The....
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....nt excise enactment, is an agreement prohibited by law. The object of such an agreement must be held to be of such a nature that if permitted it would defeat the provisions of the excise law within the meaning of Section 23 of the Contract Act. Such an agreement is declared by Section 23 to be unlawful and void. The question is whether such an unlawful or void partnership can be treated as a genuine partnership within the meaning of Section 185(1) and whether registration can be granted to such a partnership under the provisions of the Income-tax Act and the Rules made thereunder. We think not. When the law prohibits the entering into a particular partnership agreement, there can be in law no partnership agreement of that nature. The question of such an agreement being genuine cannot, therefore, arise. It is also a known principle that what cannot be done directly, cannot be achieved indirectly. As was said in Fox v. Bishop of Chester [1824] 2 BFC 635 Jagir Singh v. Raubir Singh [1999] 2 SCR 282 that it is a : "Well-known principle of law that the provisions of an Act of Parliament shall not be evaded by shift or contrivance" And that "To carry o....