TaxTMI 
TaxTMI 
2023 (7) TMI 742
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..... Whether on the facts and circumstances of the case and in law, the Ld.CIT(A)-47, Mumbai has erred in deleting the addition to the tune of Rs. 1,76,35,114/- made by the Assessing Officer as unexplained cash credit on account of failure of the assessee to satisfactorily explain the cash sales. 2. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A)-47, Mumbai had erred in partially deleting the addition to the tune of Rs. 1,76,35,114, when the Pr. CIT(A)-47, Mumbai himself found the remaining sales of Rs. 33,29,886/- as implausible? 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT (A)-47, Mumbai had erred in partially deleting the addition to the tune of Rs. 1,76,35,114/- on account of unexplained cash sales, when the assessee neither had any past history of cash sales nor has shown cash sales post application of Specified Bank Notes Ordinance, 2016? 4. The Appellant craves leave to add, to amend and / or to alter any of the grounds of appeal, if need be. 03. In ITA No. 331/Mum/2022 the Assessee has raised the following grounds of appeal; 1. Addition made u/s 68 of Rs. 33,29,886/- as Unexpla....
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....account no. from the retail customer. However, the permanent account no. is collected from who have purchased diamond and gold and gold jewellery worth Rs. 2 lakh and above. It was further stated books of account of assessee are audited and the sale proceeds are credited to the profit loss account. Assessee explained that source of cash deposit is customers whose transaction is supported by the PAN, and transaction is sale. Therefore, the above cash deposited may be treated as explained. 06. The Ld. AO categorically noted that assessee has shown to have business in trading of diamond and gold at 3 places in the country Mumbai, Surat and Jaipur. The assessee's Jaipur Branch has not shown any substantial turnover. However, Surat branch has shown huge cash in respect of trading in diamond. The assessee company's Mumbai Branch has also disclosed an abnormally high sale of gold and gold jewellery in cash. 07. The details filed by the assessee also show cash sales are only from 01.11.2016 and there is no such history of cash sales prior to November 2016. Further, after 08.11.2016 again assessee has not made any sales in cash. Therefore the specific 142(1) notice was issued to the a....
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....ale of diamond gold or Jewellery, accordingly, cash deposits at Rs. 02,09,75,000/- was considered as unexplained cash credit. The same is assessed as total income of the assessee as per assessment order dated 26.12.2019 u/s 143(3) of the Act. 08. Assessee aggrieved and preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) passed an order on 25.01.2021 and gave finding as per Para no. 5.5. With respect to the sales by the assessee at Surat and Mumbai branch in case of 7 persons to the addition to the extent Rs. 33,29,886/- was held to be unexplained and addition to that extent was sustained. With respect to the balance sales the ld. CIT(A) relying heavily on the decision of Visakhapatanam Bench in case of Heerapanna Jewellers for assessment year 2017-18 and several other judicial precedents deleted to the addition to the extent of Rs. 1,76,35,114/-. The main reason for deleting this addition was that the assessee has established the sales with the bills and outgo of stocks. The sale was duly accounted for in the books of account and no abnormal profit was shown. He further held that Ld. AO did not find any defects in books of account with respect to the sales and stock detail....
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....ersons at Mumbai office and at the Surat office. He further submitted that none of the cash sales is less than Rs. 2 lakhs, all the cash sales above Rs. 2 lakhs are supported by permanent account no. of the customers. Despite this, the Ld. AO has treated the same to be bogus. He, therefore, extensively referred to the decision of co-ordinate bench in 128 taxmann.com 291 of Heera panna Jewellers and also the decision of co-ordinate bench in case of M/S Mangal Jewels Pvt. Ltd. ITA No 1408/mum/2021. It was further claimed that the parties who have purchased from Surat and from Mumbai on same date is doubted by the Ld. CIT(A). He submitted that identical details are furnished before the AO for other sales also which is accepted by the Ld. CIT(A). He, submitted that there is no much distance between Surat and Mumbai which is hardly four hours, therefore, it cannot be said that a person cannot purchase gold and diamond at Mumbai in morning and at Surat in afternoon. In any case sales are Rs. 2 lakhs and above as recorded in Para no 5.5 of the AO. Assessee has already submitted permanent account no. of these persons. There was no prohibition of sales of Jewellery in cash. The only require....
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....th branches on the same day. It is not improbable that a person purchases gold and diamonds at two places on the same day looking at the distance between two cities. Even otherwise if the AO has a doubted with respect to these seven parties whose permanent account no. and address given by the assessee, at least inquiry should have been made. The LD AO has not made any such inquiries with those customers. We find that assessee has reasonably explained the nature and source of cash sales credited in his books of account. Further, the allegation of the AO that those parties to whom assessee has sold gold and Jewellery in cash was neither the customer of the assessee prior nor post demonetization. Arguably this answer could have been obtained by the AO had he examined any of the customers whose permanent account no. and address are provided to him. The issue would have been different had AO made inquiry by issue of summons u/s 131 or inquiry u/s 133(6) which would not have been responded or satisfactory explanation was not available. Such is not the case before us. Identical issue has been dealt with by the coordinate bench in Heera panna Jewellers [ Supra] and M/S Mangal Jewels Pvt. L....