TaxTMI 
TaxTMI 
2022 (12) TMI 1309
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.... 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 bank account despite the fact that the AO did not make any inquiries to satisfy himself about the explanation offered by the appe....
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....egal 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in granting relief solely on the basis of the statements given by Mr.Neel Sundar before Investigative agencies which was retracted in his subsequent statement given before the DDIT(Inv) on 09.02.2017, wherein he categorically stated in reply to Q.No.13 that ?the cash does not belong to me or my family or my concern M/s. Ashta Lakshmi Gold nor does it belong to any of my friends from th....
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....t 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 appellant in his letter dt.01.11.2017 is not a fact and is based on the wrong appreciation of the contents of the assessment order. 10. The finding of the ld.CIT(A)'s that the requirements of section 68 are met by AO is not based on correct appreciation of the provisions of section 68 of the Act in as much as....
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....nt 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 officer simply ignored the material produced before him by the assessee and made his own conclusions without bringing any material evidences to show that Sri Pavan Agarwal had contributed Rs.37.11 crores, except for referring to the Bank CCTV footage and Cell phone recordings, which were never produced before Income tax authorities at any point of time. 13. The Id.CIT(Appeal) erred in of restrict....
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.... 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 their business premises. In fact, the claim of the assessee of receiving cash of Rs.40.11 crores and the probability of entering the details of 2153 customers (5200 customers including the customers of M/s MGJPL), printing cash receipt vouchers within three hours from 09.00 PM to 12.00 midnight on 08.11.2016 was questioned in the statement recorded u/s 131 on 01.12.2016 vide Q.No.70. To this, the Director of the assessee company rep....
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....wn' 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 separate discussion on this-issue of entry of cash advances is made in the ensuing paras (3.5.5). 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 statement recorded u/s 131 (pl. refer to para 2.6 above) averred that he got a cal....
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.... 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 notes.- (1)Subject to the provisions of sub-section (2), every bank note shall be legal tender at any place in India in payment, or on account for the amount expressed therein, and shall be guaranteed by the Central Government. (2) On recommendation of the Central Board the Central Government may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification any series of bank notes of any ease to be legal tender save at such office or agency of the Bank and to such extent 'as may be specified in the notification......
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....d 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 operations, made cash sales during the demonetization period, paid sales tax (VAT) wherever required, and also reported such sales to the VAT Authorities. As already discussed above, in a concluded and valid Contract of Sale, price for the goods sold shall only be the receipt of money in legal tender. Once the assessee says that he has carried out sales, even during demonetization period, it ha 'to be understood thit he has received the money not in legal tender, because from 09-11-2016 onwards, the SBNs are no longer money but a mere piece of paper as between the seller and the buyer, and do not constitute money in legal tender....
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....tiates 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 profit & loss account and that since the character of such sale has already been offered to tax, the question of treating the said credits as unexplained u/s 68 of the Interne Tax Act, 1961 does not arise at all. In the case on hand, the assessee is claiming that the cash deposits made on 10.11.2016 by others directly in their bank account do not belong to them. Acceptance of this version as such does not help the case of the assessee in view of the discussion made as above on SBNs and other allied Acts. The assessee after receipt of cash deposits purportedly made by others in their bank account on 1-01172-CYI acted on such deposits and made bul....
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....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 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 in....
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.... 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 receipts on the same day from the systems available in your premises in tally software and issued to all the customers. Likewise, in the case of M/s VBPL, you have received Rs. 40,11,50,000/- as cash advances from one customer (2100 customers earlier) and followed the Ohm piticedure.as was done in the case of M/s MGJPL? Ans. Yes. I confirm that in M/s MGJPL, I have received approximately Rs.57 crores from sis customers and Rs.40 crores from one customer in M/s VBPL. Entered the details of cash advances bifurcating all below Rs.2 lakhs in the names of various persons (as provided by six and one customer respectively), started generating cash deposits on 8th No. 2016 to 09th Nov.2016 from the systems available in our premises in Tally software and hand....
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....t 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 survey, all the systems shown by you were impounded from the business premises, purportedly used for entering cash receipts received on 08th November, 2016. Against this, the- CFSL report suggests that these systems used for entering the cash receipts were not at all opened (four systems) and one was closed by 06.45 PM. Therefore, the findings of CFSL clearly indicate that the cash receipts were generated much after 09th November, 2016. Please comment. Ans. On the inputs given by my staff, I stated 25. I am showing you again the statement recorded n 01.12.2016. Your attention is invited to reply to question No.67, wherein you have stated that the receipt invoices were entered in the five computers installed in this premises...... Please offer your comments. Ans. I do not exactly remember on which computer the cash....
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....he 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 put beforethem-173inst the submissions made; and on the other hand claims that Sri Tharad confessed before CCS and ED owning up the money in question and therefore, their responsibility of proving the genuineness of the transaction is discharged. In this process; the assessee company resorted to (i) forgery of documents by furnishing false information in respect of 12 identified customers, (ii) falsification of their accounts by claiming that they entered all the cash receipts in their cash on the night of 08th November, 2016, which was proved otherwise. At the same time, the assessee company accepts that their Directors succumbed to the inducement of other persons and accepted the proposal of cash advances on the ill-advice of their Consultant, the list of customers against whose names the cash receipts were to be generated was to be provided by the alleged lone person, they accept....
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....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 share capital (or any cash credit u/s 68) are genuine borrowings, since the facts are exclusively within the assessee's knowledge". Similarly in the case of CIT Vs Mohankala (291 ITR 278) (SC), the Apex Court held that: "A bare reading of the sec.68 of the Income Tax Act, 1961 suggests that (i) there has to be credit of amounts in the books maintained by the assessee; (ii) such credit has to be a sum of money during the Previous year, and (iii) either (a) the assessee offers no explanation about the nature and source of such credits found in the books or (b) the explanation offered by the assessee, in the opinion of the Assessing Officer is not satisfactory. It is only then the sum so credited may be' charged to income tax as the income of the assessee of that previous year. The expression "the assessee offers no explanation" means the assessee offers no proper, reasonable and acceptable explanation as reg....
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....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 115BBE of the IT Act." In view of the detailed discussion above and the provisions of section 270A(9), I am satisfied that the assessee has indulged in under-reporting of income in consequence of mis-reporting of income, and accordingly, Penalty proceedings u/s 270A are initiated for mis-reporting of income u/s 270A(9)." 9. Feeling aggrieved with the order of Assessing Officer, assessee carried the matter before ld.CIT(A), who partly allowed the appeal of the assessee. The relevant portion of the discussion and finding of the ld.CIT(A) are as under : "5.1) On receipt of credible information that the appellant received cash of Rs.40,11,50,000/-on 08.11.2016 and deposited cash of 39.64 crores in Axis Bank Jubilee Hills Branch in A/c No.916020066093266 which was opened on 10.11.2016 and also deposited an amount of Rs.SO lakhs in Bank of Baroda, PBB Branch, Road No.10, Banjara Hills, Hyderabad, during the period of Demonetization in November, 2016, between the period 10.11.2016 t....
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....ings with the help of another Director of Musaddilai Gems & Jewels Pvt Ltd, Sri Mallesh and cashier Sri Jeelan Basha. In course of survey, it was found that another sister-concern M/s Musaddilal Gems and Jewels Pvt Ltd also carried business from the same premises and the above findings were Quite similar and since the assessee is making seemingly incomprehensible and dubious claims with regard to the receipt of advances, fabricated KYC forms/declarations, a police complaint was lodged with the Jubilee Hills police Station. Accordingly, an FJR was registered vide No.7552016, dated 07.12.2016 against the Directors of the assessee company. Based on the above F1R registered with Jubilee Hills, Hyderabad, 1nvestigations were carried out further by the police Department and an F1R was registered by the central Crime Station with No.263/2016. 5.4) 1nformation was also gathered in the case of the assessee and others and the same was shared with Enforcement Directorate and the ED registered a case under PMLA-2000 against the assessee and others.Further, the computers/CPUs and other hard disks impounded during the course of survey wherein the assessee claimed to have entered the cash recei....
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....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 Jain @ Ramu Jain 1,50,00,000 7 Ashoka Jewelers, Ameerpet, Rep. by Amit Kumar Jain, 1,75,00,000 8 Kamya Jewelers, Ameerpet, Rep. by Arun Kumar Jain, 1,50,00,000 9 Venus Jewelers, Chikkadpally, Rep. T. Ram Praveen, 1,00,00,000 10 Tirumala Jewelers, Abids, Hyderabad, Rep. Amit Agarwal, 1,00,00;000 11 Balaji Jewelers, Abids, Hyderabad 2,00,00,000 12 A.P.Furnitures, Nampally, Hyderabad 3,00,00,000 13 Own Funds of Neel Sunder Tharad 5,50,00,000 28,00,00,000 Others (Names not provided by Neel Sunder) 12,00....
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.... from the material available on record and also the corroborative material on record / gathered during the course of search. (g) The statements given by Sri Neel Sunder before the Police Authorities arid ED have not been contradicted by the AO. The Assessing Officer simply ignored the same. (h) The AO has not conducted any enquiry with the parties whose details have been given by Sri.Neel Sunder. (i) 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. (j) The deposits of cash in the appellant's bank account by third parties as authorized under RBI guidelines has not been disputed/contradicted by the AO. (k) The Assessing Officer simply ignored the material produced by him by the appellant and made his own conclusions contrary to claims of the appellant without bringing any material on record basing mainly on probabilities 'and earlier statements of Sri Nitin Gupta, Managing Director of the appellant company which were already retracted. (l) In view of the factual position as brought out above, it is held that deposits in t....
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....so recorded the statement of Mr. Nitin Gupta on 02.12.2016 and 07.12.2016. The statement of Mr. Nitin Gupta was also recorded by Enforcement Department on 20.12.2016. Even after recording of the statement by the ED, the assessee had filed the affidavit and sought to avail the scheme under the PMGKY. The documents seized along with the computer and CCTV footage were handed over to the ED by the Income tax Department on 13.12.2016. The neighbour's statement was recorded by the revenue on 12.01.2017, whereby it was confirmed that CCTV footage of the neighbouring premises showing the assessee's premises were removed by the relatives of the assessee and thereafter, storage drive was replaced with new one. The computer hard disk recovered from the premises of the assessee were sent for CFSL report received by the E.D/Revenue. The report of the CFSL was received by the Revenue on 10.03.2017, and the Forensic Analysis of the Computers and the Software installed therein clearly shows that no events between 27.10.2016 to 09.11.2016 had occurred (Page 142 of the paper book.). The CFSL Report further shows that the system was shut down on 08.11.2016 at 18:45:34 and it was again logged on 09.11....
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....in the office of the Assessing Officer. However, he had not disclosed who had delivered the said letter in the office of the Assessing Officer. 15. The ld. DR had submitted that in the subsequent statement of assessee recorded on 19.11.2019 after two years, the assessee has not given any reasons for making the contrary statements on 02.12.2016. It was submitted that different reasons were given for making the different statement than that of the previous statement and also different reasons were given for withdrawing the affidavit filed under PMGKY Scheme. The ld. DR had submitted that the deletion was made by the ld.CIT(A) is non-est in the eye of law. In fact, during the course of argument, the advocate of Mr.Neel Sunder had also insisted for including him as a party to the proceeding u/s 148 has been initiated against the said Neel Sunder for an amount of Rs.28 crores. Vide our separate order, we have disposed of the application filed by Mr. Neel Sunder for impleading him as a party to the present proceedings. 16. Ld. DR for the Revenue had drawn our attention to the order of the Assessing Officer wherein the Assessing Officer had dealt with the contention of the assessee in h....
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.... the facts of. the case and the submissions of the appellant, along with the paper book submissions submitted in course of appellate proceedings. I have also gone through the confessional statements given by the appellant before various investigative agencies and after considering the same, the issue is decided as under : (a) The appellant's claim regarding mobilization of amount other than Sri Neel Sunder is not backed by any evidence. No evidence is produced by the appellant to support its claim. (b) No confirmation from any of the parties is field by the appellant. The onus in respect of the claim is clearly on the appellant, which has not been discharged. (c) Mere claims not backed by any evidence has no value in the eyes of law. (d) The statement of Sri Neel Sunder is clear that balance money is given to him by the appellant for depositing in the bank account. In view of the factual and legal position as above, the addition to the extent of Rs.11.63 crores in the hands of the appellant is confirmed. The grounds raised are disposed off with above direction. 10.0) The appellant raised contention against the application of provisions of Section 68 for making addit....
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....tter dt.01.11.2016 addressed to the officer of the CCS and copy of which was delivered in the office of the Assessing Officer. In the said confessional statement, it was submitted that the admission was made by the Assessing Officer on 01.12.2016 and 07.12.2016 on account of pressure from these persons. It was submitted that only eight persons had given the list of customers, including Mr. Neel Sunder and Pavan Kumar, and the said persons have also acknowledged in their statements recorded before the police that they have given the amount to the assessee and they have also given the list of the persons to the assessee. It was submitted that the statement of these persons was recorded by the police as well as E.D. and therefore, the action on the part of the ld.CIT(A) was correct in deleting the addition of Rs.28 crore as the said amount does not belong to the assessee, instead, it belongs to Mr. Neel Sunder. Secondly, it was submitted by the ld. AR for the assessee that the entire sale of Rs.40 crore was disclosed in the profit and loss account of the assessee and the Revenue has accepted the profit declared by the assessee. Once the Revenue had accepted the profit, then Revenue ca....
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....d of receiving cash from one person, instead thereof , he had stated the cash was received from Neel Sunder. XIII. He had also submitted that he had given the confession statement before the police on 17/1/2017, copy of which was also delivered through the employee after 11 months. No proof of such delivery of confessional statement was provided by the assessee. Retraction by the Director of the assessee : 21. In the present case, (1) the assessee had given statement on 02.12.2016 and 07.12.2016, (2) affidavit before the Assessing Officer admitting the income of Rs.40 crore in Pradhan Manthri Garib Kalyan Yojana Scheme on 30.12.2016 (3) Withdrawal of affidavit on 13.01.2017. In the affidavit dt.13.01.2017 whereby the assessee has sought to withdraw the declaration made under PMGKY - 2016. The assessee has submitted that ... By our affidavit we have informed you that we are going to get covered under the "Prime Minister Garth Kalyan Yojana" (PMGKY),since we were given strong assurance that such a course of action will protect us from criminal prosecution and PMLA enquiry / investigation. Sincerely, believing the same, we have submitted that the affidavit to get covered under....
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....r 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 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 ....
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....le, namely Mr.Pavan Agarwal from M/s Balaji Gold, Mr Neel Sunder Tharid of M/s Asta Lakshmi Gold, Mr. Sanjay Sarda private individual, Mr. Tharun Jain a private individual, Mr. Maneesh Gupta of M/s Musaddilal & Sons Jewellers, Basheerbagh, Mr. Prakash Agarwal of M/s P. Satyanarayana Jewellers and Mr. Aditya Sarogi a private individual. 15. What prevented you from stating the above version on the dates of giving statement to IT authorities, i.e., on the date of survey, i.e., 01.12.2016 and 07.12.2016 ? Ans : The pressure from the above seven people to me and my family has prevented me from giving true statement on the date of survey and before. 24. The statement of Mr. Neel Sunder Tharad was also recorded by the DDIT, Hyderabad on 07.12.2016 and in the said statement, Mr. Neel Sunder in reply to questions 13 to 16 had stated as under : Q.13 Please state what is the total amount of sales (including Quantity) made by you on 08.11.2016 and 09.11.2016 ? Ans: The total sales of gold and silver made on 08.11.2016 and 09.11.2016 is Rs.5.82 crore and the details of the same are as under : S.No. Description of the metal Quantity Amount (Rs. In crores) 1 Pure Gold ....
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....filed on 30.12.2016, it is abundantly clear that the assessee had admitted that the assessee had shown the bogus entry in the books of accounts mentioning to have received the advances of less than Rs.2 lakhs from 2153 customers amounting to Rs.40 crore. Moreover, the assessee had accepted Rs.40 crore as its income and agreed to deposit taxes as per the Scheme Pradhana Mantri Garib Kalyan Yojana, 2016". 26. It is the case of the assessee before us that the initial statements dt.01.12.2016 and 07.12.2016 were recorded under pressure. In the first affidavit filed on 13.01.2017, the assessee had submitted that the assessee had agreed to cover under the Pradhana Mantri Garib Kalyan Yojana, 2016 as the assessee was given the assurance, no criminal prosecution / PMLA inquiry / investigation would not be done. Further, it was the case of the assessee in the said affidavit that the assessee had disclosed under the said Scheme "under the pressure and misrepresentation by Police / E.D. / I.T." 27. From the reading of the above said affidavit, it is clear that the contents thereof are untrue, as the FIR was registered against the assessee on 07.12.2016 with the local police as well as the E....
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.... under the pressure of the people who gave him the money as they had confirmed that they will take care of the matter. The above said statement of the assessee recorded on 20.11.2019 if juxtaposed with the affidavit submitted on 13.01.2017 whereby the assessee had submitted that it had given the affidavit and opted for the PMGKY Scheme on the pressure and misrepresentation of police / E.D. / I.T. then it is clear that both the statements were contrary to each other. The above said aspect of contradiction of statements had duly been addressed by the Assessing Officer in his order. Thus, in our view, the assessee has failed to establish any plausible reason for taking a contrary stand, while giving the statement on 20.11.2019. In our view, the statement initially recorded on 01.12.2016 coupled with the statement dt. 07.12.2016 and affidavit dt.30.12.2016 clearly shows that the assessee had admitted the income of Rs.40 crore and further agreed to pay the tax on the said amount. Needless to say that the assessee in furtherance of the affidavit dt.30.12.2016 had also deposited an amount of Rs.1 crore with the Revenue in the main case of assessee and Rs 4 crore in the Musaddilal in ITA N....
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....abad on 17.01.2017 is in place. "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 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.....
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....uence of others, he continued to stick to his version of accepting cash advances 'from customers on 08th December, 2016 (though the number of customers are not specifically mentioned), asked them to assist in depositing the cash into their bank account from their office, etc. Against this confessional statement given on 17.01.2017 before the CCS, Hyderabad the assessee claims that he had decided to retract from the statements given on 1st December 2017 before the IT authorities and make corrections to his earlier statements. 33. Ld CIT(A) in his order had dealt with the retraction as under :- "4.2. However, later vide letter dated' 01-11-2017(Annexure-7), ,Sri Nitin Gupta retracted the statement given and submitted the true facts to the Assessing Officer. The same, in brief, are as under: f) After the demonetization was announced, the Appellant saw a business opportunity. His CA also assured him that there is nothing illegal in generating cash receipts below Rs.2 lakhs, i.e. below the threshold limit requiring KYC of the customers. g) The fact was Sri Neel Sunder Tharad, Proprietor of Ashtalakshmi Gold contacted the Appellant after the announcement of demonetization ....
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....mi Gold". iv. It is not the case of the assessee that he had not received Rs.40 crore in old currency notes. Assessee changed his version whereas in earlier statements and documents, it was admitted that he had received Rs.40 crore from 2153 customers, wherein in letter dt.17.01.2017, he alleged that it was given by Mr. Neel Sunder. v. The assessee had admitted to have prepared the cash receipt advances after receiving the amount. vi. No reasons were assigned by the assessee to retract the earlier statements after one year from the original statements. vii. Mr. Neel sunder was arrested by the police on 11.01.2017 and his confessional statement was also recorded by the police on 17.01.2017 without getting his statement recorded under section 164 of Cr.PC. viii. The assessee had not filled any receipts issued by it in favour of seven persons as alleged by him in subsequent statement dated 20/11/2019. ix. It is not the case of the assessee that at the time of recording of statement during survey, seven person including Neel sunder were present and had pressurized the assessee to admit the income/ transactions. 35. In view of the above and considering the Judgment of hon'b....
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....11.2016 (Question No.6). However, the cash advances of Rs.40.11 crore were received from 2153 customers on 08.11.2016. It was also the case of the Assessing Officer that the purchases were made between 09.11.2016 to 30.11.2016 for an amount of Rs.37.39 crore. Out of the said amount, Rs.28.97 crore valuing gold (91 kg bullion) was purchased from Asthalakshmi Gold of Neel Sunder. It is an admitted case of Assessing Officer as well as the assessee that the sale invoices below Rs.2 lakhs were made on 08.11.2016 and 09.11.2016 from the Computer installed in the premises of the assessee. Admittedly, the computer of the assessee from the business premises were seized and sent to CFSL for verification and report of the CFSL was received wherein it was categorically mentioned that no cash receipts / bills were generated on 08.11.2016 and 09.11.2016 or thereafter. 39. The Director of the assessee had given the statements on 02.12.2016 and 07.12.2016 to the Revenue, and admitted to have shown the details of 2153 customers as advances in assessee's books of accounts. Though, it is the case of the assessee that the details of these customers were provided by Neel Sunder or other persons in the....
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....ll be deemed to be the assessee was not satisfactory and was against the preponderance of probability and evidence on record, hence, the Assessing Officer had rightly made the assessment in the hands of assessee on the basis of the credit entries made in the books of accounts which were duly supported by the deposit of SBNs in the bank account. 41. The assessee has not been able to explain the entries made in the books of accounts. On the contrary, the assessee in subsequent statement dt. 20.11.2019 had even admitted that the invoices issued by the assessee were issued in the name of various persons details of which were provided by these 7 persons. The Director of the assessee in reply to question 20 is as under : "Q.20 To sum up, you are confirming that you have received cash advances of Rs.57,75,35,000/- from six customers (against 3100 customers stated earlier in the statement recorded on 01.12.2016) in the case of M/s. MGJPL on 08.11.2016 after 09.00 pm, entered the cash advances in your books on the same day, generated cash receipts on the same day from the systems available in your premises in tally software and issued to all the customers. Likewise, in the case of M/s.....
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....ewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.] 17[(2) Where any books of account, other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of section 132A, then, the provisions of sub-section (1) shall apply as if such books of account, other documents or assets which had been taken into custody from the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of section 132A, had been found in the possession or control of that person in the course of a search under section 132.]" 44. Si....
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....nner the language of a document is related to existing facts." 45. From the reading of the above said provisions, it is abundantly clear that the entries made in the books of accounts, if not disputed would be sufficient to charge the assessee with the liability. In the present case, the assessee has not disputed the maintenance of the books of accounts and had also not disputed the entries made therein showing the advance receipts of 2153 customers for an amount of rupees more than 40 crore. Therefore, the entries made in the books of accounts are admissible and are required to be satisfactorily explained by the assessee. 46. Though, the assessee had tried to explain that these entries were made on the suggestion / advice / inducement by seven persons, but the assessee has miserably failed to substantiate the same with any cogent, reliable and independent evidence. Further, as mentioned elsewhere, during the course of survey, the assessee had provided the documents pertaining to 65 customers which were seized from his premises at the time of survey, however, only 12 customers were traceable and they have denied to have transacted with the assessee either on 08.11.2016 or 09.11.2....
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....that the officer had not made any inquiries whose details had been given by Mr. Neel Sunder. In fact, the statement of Mr. Neel Sunder was recorded u/s 50(2) and (3) of PMLA Act, 2002. In the said statement, Mr. Neel Sunder had stated as under : "To your specific enquiries about Mr. Nitin Gupta and Nikhil Gupta, I state that they are the cousins of my wife Nisha Gupta. They are running business in the name and style of M/s. Musaddilal Jewellers Private Limited. I am doing Gold business with M/s. Musaddilal Jewellers Private Limited since May, 2016. To your enquiries about the cash deposits made by me and my wife in the bank account of M/s. Vaishnavi Bullion Private Limited at Axis Bank, Jubliee Hills, Hyderabad on 10.11.2016 onwards, I state that after the announcement of demonetization of old currency notes of Rs.500/- and Rs.1000/- by the Government of India on 08.11.2016, Mr. Nitin Gupta called me and requested to deposit cash in their company's account as they are facing employee shortage and promised that I will be given Gold bullion business. Mr. Nitin Gupta told that he will handover authorized letter on behalf of M/s. Vaishnavi Bullion Private Limited authorizing my wif....
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....have given the details of intended buyers whom I know from my past business experience. Shri Nitin Gupta or his persons contacted them directly. I have not interfered with their business. I have delivered the Gold bullion to the persons who were sent by Shri Nitin Gupta through his employee Shri Seera Mallesh and others and Shri Nitin Gupta used to confirm over the phone about the delivery. To your specific enquiries about the details of intended buyers which are provided by me to Shri Nitin Gupta, I state that I remember some of the names which I have provided to Shri Nitin Gupta and they are M/s. Sree Kalpataru Jewellers Private Limited, Pot Market, Secunderabad, M/s. Tibarmal Ranivas Gems, Jewels and Pearls, Jublihills, Hyderabad, M/s. Premraj Shantilal Jain Jewelers, Pot Market, Secunderabad, M/s. Sai Baba Jewellers, Pot Market, Secunderabad, M/s. N. Nemichand Jewellers, Pot Market, Secunderabad, M/s. Kamya Vaniya Private Limited, Lal Bangla, Ameerpet." 49. From the perusal of the above reproduced statement given before the E.D. u/s 50 of PMLA Act, it is clear that Mr. Neel Sunder had only given the name of five persons without admitting that he has received any amount from th....
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...., there is a mention of names of 12 persons with the amounts. The above said crucial aspect has not been examined by the ld.CIT(A) while deleting the addition. 52. In our view, the ld.CIT(A) has swayed away by the confession extracted from Mr. Neel Sunder while he was in police custody, however, the conclusion of ld.CIT(A) is without any basis, merit and against the settled principle of law. For the above said proposition, we may fruitfully rely upon section 26 of Indian Evidence Act, which provides as under : "26. Confession by accused while in custody of police not to be proved against him.-No confession made by any person whilst he is in the custody of a police officer, unless it be made in the immediate presence of a Magistrate1, shall be proved as against such person.-No confession made by any person whilst he is in the custody of a police officer, unless it be made in the immediate presence of a Magistrate2, shall be proved as against such person." 2[Explanation.-In this section "Magistrate" does not include the head of a village discharging magisterial functions in the Presidency of Fort St. George 3[***] or elsewhere, unless such headman is a Magistrate exercising the po....
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....hat the cash received on 08.11.2016 is deposited into the new account which is opened on 10.11.2016 in the Axis Bank, Jubilee Hills Branch. Please state the reason why a new account was opened for depositing the cash. Ans: We were having an account in Bank of Baroda, PBB Hyderabad Branch. We have opened new account in Axis Bank, Jubilee Hills Branch as Bank of Baroda did not accept the cash deposit about Rs.40 Crores. Axis Bank also did not accept the cash deposit at once. Hence, we have made the cash deposits in a staggered manner between 10.11.2016 to 17.11.2016. Q.19. It is observed from the statement of Axis Bank account of M/s. Vaishnavi Bullion Pvt. Ltd., there is a credit entry of Rs.1.98 Cr from M/s. Musaddilal Gems and Jewellers Pvt. Ltd on 16.11.2016 and on the same day Rs.2 Crore was transferred to M/s. Musaddilal Jewellers Pvt. Ltd. Please explain the nature of transactions. Ans: The amount received of Rs.1.98 Cr was out of the trade receivables from M/s. Musaddilal Gems & Jewellers Pvt. Ltd and the amount paid of Rs.2 crore to M/s. Musaddilal Jewellers Pvt. Ltd was towards the trade payables. Q.20 A perusal of the letters of customers submitted by you shows tha....
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....rency at the time of taking from them and requested them to present at the time of deposit of amounts at banks. Accordingly, persons concerned of who gave advances appeared at banks and attended to the job banking formalities of depositing cash. To your specific enquiries about deposits of amount by Smt. Nisha Tharad, W/o. Mr. Neel Sunder, I state that Smt. Nisha is my first cousin and she deposited amount in Axis Bank account of M/s. Vaishnavi Bullion Pvt. Ltd based on the authorization letter given by us to deposit the same in our bank account." 58. Beside these two persons' statements, if we look into the statement of other persons, namely, Seera Mallesh and Pavan Agarwal recoded u/s 131, from the perusal of the statements, it is abundantly clear that the cash was made available by the assessee, its directors and employees, which was later on deposited in the bank of assessee by Mr. Neel Sundar with the help of Director and employees of the assessee. Further, the said cash deposited in the assessee bank was utilized by the assessee for buying the gold after sending the money through RTGS. If the money was of Mr. Neel Sunder, then the assessee were having no right either to de....
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....view that accepting cash after 08-11-2016 in SBNs violates other allied acts. He specifically discusses the provisions of Sale of Goods Act and Indian Contracts Act. According to the AO, the Appellant claims to have received the amount for sale of goods, (bullion) is not correct and the same are unexplained credits in the books of appellant. a) The AO states that for a valid contract of sale, there should be a price for the goods and price means money and the money received in SBNs is not a legal tender after 08-11-2016 and therefore receiving SBNs after 08-11-2016 is illegal transaction. b) He then refers to the provisions of Indian Contracts Act and states that where the object or consideration is unlawful, the agreement is void. c) The sum and substance of the arguments put forth by the AO, in view the above quoted discussion, is that the sale of bullion is void and hence the Appellant cannot claim that the amount deposited is advance received for sale of bullion and therefore, by implication, the cash deposited belongs to the Appellant. 6.5. It is submitted that there cannot be a more illogical and preposterous reasoning and conclusion than the above. Without going into....
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....ill be treated as unexplained. 6.7. The above conclusions drawn by the AO are absurd. It is a fact that with effect from 09-11-2016, the SBNs were not legal tender. It means that SBNs shall not be accepted in cash (except in the cases mentioned in the Notification) and the same needs to be deposited in banks. 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: (y) 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, following standard banking procedure and on production of valid proof of identity of the person actually-tendering" 6.8. The above para of the Notification makes it abundantly clear that there is no ban on a person depositing SBNs in a third-party account after following due procedure prescribed 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 Sm....
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....ed receipt of advance on 8/11/2016 and 9/11/2016, no gold stock was available with the assessee and the assessee had only placed order for purchase of gold after depositing the amount in its bank account between 10.11.2016 to 30.11.2016. Further, in the absence of availability of gold with the assessee, it is difficult to infer that there is a sale agreement between the assessee and the anonymous buyers. The essential terms of agreement of sale are missing like the quantity of gold, rate, time of delivery etc. Hence, in the absence of requisite details, it is difficult to conclude a valid subsisting agreement of the sale of gold came into existence on or before 08.11.2016 between assessee and the anonymous buyers. 65. Now, the sequel to the above conclusion is that whether the cash received in specified notes allegedly on 08.11.2016 and 09.11.2016 and deposited thereafter in the bank account on or after 10.11.2016 for the purposes 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....
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....the NOTIFICATION NO. S.O. 3407(E) [F.NO.10/03/2016-CY.I], DATED 8-11-2016, and THE SPECIFIED BANK NOTES (CESSATION OF LIABILITIES) ACT, 2017. Notification dated 8-11-2016 provides as under:- Now, therefore, in exercise of 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), the Central Government hereby declares that the specified bank notes shall cease to be legal tender with effect from the 9th November, 2016 to the extent specified below, namely:- 1. (1) Every banking company, 1[Co-operative Banks (only Urban Co-operative Banks and State Co-operative Banks)], corresponding new bank, subsidiary bank, regional rural bank and the State Bank of India as defined under the Banking Regulation Act, 1949 (10 of 1949) (hereinafter referred to as 'banking company' or 'bank') 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 10th November, 2016 to the designated Regional Office of the Reserve Bank of India (hereinafter r....
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....uch as may be specified by the Reserve Bank of India from time to time: Provided that cash withdrawal from a current account shall be such as may be specified by the Reserve Bank of India from time to time: Provided further that the withdrawal limit provided for current accounts shall also be applicable to the traders registered with the Agricultural Produce Market Committee (APMC) markets and mandis.] (vii) there shall be no restriction on the use of any non-cash method of operating the account of a person including cheques, demand drafts, credit or debit cards, mobile wallets and electronic fund transfer mechanisms or the like; 4[(viii) cash withdrawal from an ATM shall be such as may be specified by the Reserve Bank of India 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....
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....nd they have used this as an opportunity to convert their or others' ill-gotten money into bullions. In the present case the bank account. The above said act of the assessee is not only against the law but also against the interests of the nation. In the present case, the bank account with the AXIS Bank was only opened on 10.11.2016. As per the notification, the assessee cannot deposit more than the amount of Rs.50,000/- in its account till KYC is completed. It is not the case of the assessee that the KYC had been completed on the date of opening of its account. It is not understandable how the bank permitted the deposit of huge amounts in the newly opened account, on the date of its opening itself. The concerned agency 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....
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....JPL? Ans. Yes. I confirm that in M/s MGJPL, I have received approximately Rs. 57 crores from six customers and Rs.40 crores from 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 8th Nov. 2016 to 09th Nov. 2016, from the systems available in our premises in Tally software and handed over the receipts to the respective seven customers. 20. As you are aware, as per page -3 of the impounding order, the five systems available (one Compaq CPU SG 34401L, one assembled PU - Intex, One Lenovo CPU 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 impound....
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....nge of penalties and sanction extending to ban imposed on the medical practitioner), pharmaceutical companies cannot be granted the tax benefit for providing such freebies, and thereby (actively and with full knowledge) enabling the commission of the act which attracts such opprobrium. ..................... 24. Even if Apex's contention were to be accepted - that it did not indulge in any illegal activity by committing an offence, as there was no corresponding penal provision in the 2002 Regulations applicable to it - there is no doubt that its actions fell within the purview of "prohibited by law" in 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. ..............................................
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....stead of the licencee carrying on the business, it would be carried on by others - a situation not conducive to effective implementation of the excise law and consequently deleterious to public interest. It is for this very reason that transfer or subletting of licence is uniformly prohibited by several State Excise enactments. It, therefore, follows that any agreement whereunder the licence is transferred, sub-let or a partnership is entered into with respect to the privilege/business under the said licence, contrary to the prohibition contained in the relevant 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 enter....
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....ite clear that the parties contemplated a state of affairs which is completely inconsistent with and in clear collision with the mandate of the law. On its term, it stands out as an affront to the mandate of the law. 79. The illegality goes to the root of the matter. It is quite clear that the Plaintiff must rely upon the illegal transaction and indeed relied upon the same in filing the suit for specific performance. The illegality is not trivial or venial. The illegality cannot be skirted nor got around. The Plaintiff is confronted with it and he must face its consequences. The matter is clear. We do not require to rely upon any parliamentary debate or search for the purpose beyond the plain meaning of the law. The object of the law is set out in unambiguous term. If every allottee chosen after a process of selection under the Rules with reference to certain objective criteria were to enter into bargains of this nature, it will undoubtedly make the law a hanging (sic laughing) stock." 76. In light of the above discussions, it is crystal clear that the assessee has failed to prove the identity of the creditors, genuineness of the transactions and creditworthiness of the creditor....