TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 302
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....ash deposited in his bank account during demonetization period whereas same is arising out of sale of diesel/ petrol and thus Ld AO has grossly erred in appreciating facts of the case by wrongly treating the same as unexplained cash and which may please be please be deleted. 3. That AO has erred in doing trading addition @ 0.90% based on the comparative Gross Profit of preceding year which may please be directed to be deleted. 4. That Ld AO has grossly erred in determination of tax @ 60% by applying the provisions of section 115BBE for the AY 2017-18 whereas substantial provision of section 115BBE has come into statute book w.e.f. 1.4.2017 i.e. after getting assent from the President. Thus Ld AO without having any application of mind has imposed tax at higher rate and which may please be deleted. 5. That action of Ld CIT (Appeals), NFAC, Delhi is perverse so far as mechanically confirming the addition as made out by the Ld AO which may please be declared as illegal. 6. That the appellant craves leave to add, amend or alter any of the ground to this appeal with the request to allow to submit written submission at the time of hearing of appeal." 3. The fact as culled out fro....
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....ouchers for verification and thus the trading result submitted by the assessee not accepted and the books of accounts rejected invoking the provisions of section 145(3) of the Act. Considering the interest of the justice and the past trend ld. AO applied Gross profit @ 2.8 % as shown in A. Y. 2016-17. Based on this the addition on account of the lower G.P. to the extent of Rs. 4,60,052/- was made in the total income of the assessee. 3.3 Further, as per information available on record, the assessee has deposited cash of Rs. 74,35,500/- in the bank account no. 3420787121 maintained with the State Bank of India and Rs. 12,55,000/- in the account no. 3241071566 maintained with the Central Bank of India during the demonetization period. Thus, the assessee has deposited a total sum of Rs. 86,90,500/- during the demonetization period but source of such cash deposits was not explained. Therefore, on this issue explanation called for from the assessee vide show cause notice dated 01.12.2019 fixing the case for hearing on 04.12.2019 but the assessee did not complied with. As no explanation regarding the source of this cash deposit appearing in the bank account during the demonetization and ....
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.... invoking the provisions of section 145(3) of the Act and applied a GP @ 2.8% as shown by the assessee for the preceding AY 2016-17. Further, in the absence of any explanation in respect of source cash deposit in bank accounts, the AO added the cash credit of Rs. 80,90,500/- u/s 68 of the Act Aggrieved by the order the assessee has filed this appeal. 6.3 Ground no.1 of the appeal is on the issue of addition of Rs. 86,90,500/-. Since the only issue involved is of addition made u/s 68 on account of unexplained money found credited in the bank account of appellant. It is imperative to look upon the ratios laid down by the various Hon'ble Courts in respect of unexplained credit/money found credited in the books / bank accounts of the assessee. 6.4 The fundamental question involved is that whether or not the AO was justified in making the addition of Rs. 86,90,500/- under section 68 in the hands of the assessee, and the most critical thing to be examined in this regard is explanation of the assessee with respect to these credits. There is no, and there cannot be any, dispute on the fundamental legal position that the onus is on the assessee to prove 'bonafides' or 'g....
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....decision in the case of Sumati Dayal v. CIT [(1995) 214 ITR 801 (SC)]. Hon'ble Supreme Court rejected the theory that it is for alleger to prove that the apparent and not real, and observed that, This, in our opinion, is a superficial approach to the problem. The matter has to be considered in the light of human probabilities............Similarly the observation..........that if it is alleged that these tickets were obtained through fraudulent means, it is upon the alleger to prove that it is so, ignores the reality. The transaction about purchase of winning ticket takes place in secret and direct evidence about such purchase would be rarely available..... In our opinion, the majority opinion after considering surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant's claim about the amount being her winning from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably". 6.10 An addition under Section 68 can be made where any sum is found credited in the bank account for any previous year, and the assessee either offers no expla....
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....he case laws cited above, it is apparent that the appellant has completely failed to offer any explanation either before the AC during assessment proceedings or before me during appellate proceedings, despite affording sufficient number of opportunities and hence, I find no infirmity in the order of AO. Accordingly, the addition made of Rs. 86,90,500/- is confirmed. As a result, appeal is dismissed. 7. Ground no. 2 is in respect of rejection of books of accounts. As can be seen the AO has rejected the books of accounts after observing a fall in the GP results of assessee for the instant year in comparison to last year and due to assessee's none compliance to produce the books of accounts along with bills/vouchers for proper verification/examination of his trading results, the AO/being unable to examine the trading results thus having no other option, rejected the books. Even during the course of entire appellate proceedings, the appellant has not filed any details/ documents in support of his claim. In the absence of any evidence brought on record by the appellant, I found no reasons to interfere with the stand taken by the AO, accordingly, Ground No:2 of the appeal is also d....
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....er, 2016 5614520.00 6960972.00 Add: Cash received on sale of petrol/ diesel in December, 2016 3955328.00 5033603.00 Less: Cash deposited in bank in November, 2016 5164990.00 9788800.00 Less: Cash deposited in bank in December, 2016 5444850.00 4729113.00 That by going through with above chart it is clear and explicit that there is opening cash in hand as on 8.11.2016 of Rs. 5206068/- and which is cash sale collection of previous months and further on comparison analysis it comes out that lower cash is deposited in the month of December, 2016 than cash as deposited in December, 2015. That during f/year 2016-17 appellant has withdrawl cash from the bank account wherein single withdrawl of Rs. 10,00,000/- is made from bank on dt.20.4.2016 and apart from same there is opening cash balance of Rs. 413423/- as on 1.4.2016 as per audited balance sheet for f/year 2015-16 (31.3.2016). Copy of cash book for relevant months and bank statement of Central bank of India and SBI Bank for f/year 2016-17 are enclosed herewith and marked as Annexure-B (colly). Thus it is crystal clear that there is no case of additional cash deposited in bank account. 2. That Ld AO has grossly erred in ....
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.... 15.12.2016 and which is further extended by Notification no.:2774 dt.24.11.2016 and wherein exemption were given "for purchase of petrol, diesel and gas at the stations operating under the authorization of Public Sector Oil Marketing Companies." Copy of all these Notification are enclosed as Annexure-E. Thus the appellant was allowed to accept old SBN notes during demonetization period. 4. That appellant has filed all relevant documents and these were submitted before Ld AO vide letter dated 27.11.2019 and wherein parawise reply to the queries raised by AO were submitted (annexed as Annexure-C). That against the impugned assessment order, appellant filed appeal before the CIT(A), NFAC and this being the new mechanism of faceless appeal and wherein appellant has filed adjournment application for submission of documents and which is filed on dt.07.01.2023 and wherein request was made for adjournment for two weeks i.e. upto 24.1.2023 but Ld CIT(A) ignored said application and without taking into consideration of said application has passed the appeal order and thus Ld CIT(A) has acted in very hurried manner and wherein without looking to the adjournment application, the appeal orde....
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....rewith as Annexure-G. That in below cases it is held by Hon'ble Courts that when proper books of account along with duly audited by Form 3CD, requisite details are before Ld. AO then there is no justification for rejecting the books of account and making estimated addition on gross profit:- (a) CIT vs. Gotan Lime Khanij Udyog, 256 ITR 243 (Raj. High Court) (b) Ajay Goyal vs. ITO, 99 TTJ 164 (copy of judgments are attached) Thus when there is no basis with both the lower authorities in doing GP addition and under these circumstances action of Ld AO and Ld CIT(A) may please be held erroneous and GP addition made may please be deleted. GROUND NO.3 : ERRONEOUSLY APPLYING PROVISION OF SECTION 115BBE LEVYING TAX @60% That Ld AO has erred in levying provision of Section 115BBE by doing addition u/s.68 of IT Act whereas this being the substantive provision made in the statute books w.e.f. 01.04.2017 only i.e. after getting assent from the President of India dated 15.12.2016 itself and thus can not be implemented prior to getting assent from President of India and thus can never be retrospective in nature. That it is further to submit that there can not be two rate of tax in o....
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....humble appellant do hereby seeks leave of the Hon'ble Bench for allow to submit Additional Evidences in support of the case which are quiet essential and crucial for decide of the case. That additional evidences which are being submitted are consisting of below documents:- (i) M.S. Petrol and HSD stock record inward and outward during financial year 2015-16 and 2016-17 maintained as per requirement of HPCL (ii) Copy of Purchase Invoices of material inward from Hindustan Petroleum Corporation Limited That stock register was filed before Ld AO during the course of assessment vide submission dt. 27.11.2019 and all these documents were about to submit by the appellant before the CIT(A) and for which adjournment application was submitted on dated 07.01.2023 on online IT Portal and wherein request was made for adjournment for two weeks i.e. upto 24.1.2023 but without rejecting said application the appeal order dated 09.01.2023 is passed and thus Ld CIT(A) has acted in very hurried manner and wherein without looking to the adjournment application, the appeal order is passed and which is absolutely illegal and unjustified in the facts & circumstances of the case. The screen shot ....
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....hi High Court in their judgment in para 12. (iii) National Thermal Power Co. Ltd. Vs. Commrr. of Income tax (1998-229- ITR-page 383) Supreme Court That in the case it has been held by Hon'ble Supreme Court that "Undoubtedly, the Tribunal will have the discretion to allow or not a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee." (copy of above judgments are enclosed herewith) The humble appellant request to kindly allow the additional evidences in the interest of equity and justice & oblige." 5.3 The ld. AR of the assessee to drive home to the contentions so raised has relied upon the following decisions:- * Rajendra Pathak v. Asstt. DIT (2015) 173 TTJ 68 (Jp. Trib) * Commissioner of Income-tax-iv v. Text Hundred India (P.) Ltd. (2013) 351 ITR 57 (Hel-HC) * National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC) * Ajay Goyal vs. ITO (2006) 099 TTJ 0164 (Jodh-Tr....
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....as permitted to accept the SBN notes against the sale of petroleum products as per notification no. 2653 dated 8.11.2016 (APB-188) and thereby the date was extended till 15.12.2016. As the assessee permitted to accept the SBN he has deposited the same till 15.12.2016 and therefore, the cash so received by the assessee is against the sale proceeding of the petroleum product by the assessee. The ld. AR of the assessee further submitted that the assessee objects to the figure of the addition of Rs. 86,90,500/- . As the assessee has cash sales during the demonetization period from 09.11.2016 to 30.11.2016 and 01.12.2016 to 15.12.2016 Rs. 46,43,367 and Rs. 21,49,893/- respectively totaling to Rs. 67,93,260-. Whereas the assessee has deposited the cash into the bank account during the demonetization for the three period as tabulated here in below : Cash deposit in bank during 09.11.2016 to 30.11.2016 Rs. 94,38,500/- 01.12.2016 to 15.12.2016 Rs. 21,83,000/- 16.12.2016 to 31.12.2016 Rs. 25,31,500/- Thus, he argued that the ld. AO has not appreciated the correct facts. Since, the assessee permitted to accept the SBN notes for a particular date the same being against the sale procee....
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....re clearly not applicable based on the facts already on record. The monthly stock summary was given and there is no adverse remark even the stock is daily maintained the same is given just to confirm and satisfy that the assessee is covered by the essential commodity Act and the assessee without purchase cannot sale the goods and the assessee purchase the goods from HPCL which is not under dispute. The assessee has filed the cash book which is also not disputed by the ld. AO. As regards the addition of GP the ld. AO has not rejected the book results by invoking the provision of section 145(3) and thereby pinpointing the defects in the audited books of accounts. The ld. AR of the assessee further submitted that the assessee being the dealer of the petroleum company and the price being fluctuated and there by the commission also the GP cannot be compared and in fact in this line of business net profit should be compared. 6. Per contra, the ld DR is heard who has submitted as under:- "Kindly refer to the subject mentioned above. 2. In this connection it is respectfully submitted that during the hearing of the said case before the Hon'ble bench, the AR of the assessee, vide hi....
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....ite details viz. books of account, bills and vouchers including stock register. Therefore the AO has rightly rejected the books of account in absence of the aforesaid details. The Id. CIT (A) has also concurred with the finding of the AO taking into account the non-compliance of the assessee. In the absence of details such as stock register, cash credit u/s 68 was added to the income of assessee & upheld by the Ld. CIT(A). 8. The Hon'ble bench is therefore requested to dismiss the appeal of the assessee for mis- reporting, non-compliance and providing false information before the Hon'ble bench and take rightful action against the AR for misleading the Hon'ble Bench. Respectfully submitted for kind consideration." 6.1 The ld. DR in addition to the written submission so filed also submitted that the case of the assessee is not only on the cash deposit. It is on account of demonetization and therefore, revenue has to see all the aspect of the case as it is on account of operation clean money. The ld. AO asked for the books of account which the assessee could not furnish and therefore, even the GP addition should sustain. As regards the contention that the ld. CIT(A) h....
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....rification the trading result submitted by the assessee not accepted by the ld. AO. Hence the books of accounts were rejected invoking the provisions of section 145(3) of the Act and applied Gross profit @ 2.8 % as shown in A. Y. 2016-17. Based on this observation the addition on account of the lower G.P. to the extent of Rs. 4,60,052/- was made in the total income of the assessee. Against this action of the ld. AO assessee is in appeal raising ground no. 3. Since the issue of books of account is required to be examined first, we deal with this ground no 3 of appeal first. On this account the bench observed that the only observation of the ld. AO in the assessment order while issuing the show cause notice dated 04.12.2019 is that the gross profit rate has been decreased in the year under consideration as compared to last year. The explanation was called for, but proper reply not submitted, and no corresponding documents / books were submitted. The bench noted that the assessee is a dealer of the petroleum company i.e. HPCL, as per the agreement placed on record all the purchases are to be made from the said company and the assessee purchases and thereby make sale of the petroleum p....
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....by the ld. AO on account of the low G.P. we see no reason to sustain the same. Hence, the addition made by the ld. AO for an amount of Rs. 4,60,052/- on account of the low G. P. is deleted and the finding of the ld. AO rejecting the book result is not correct. Based on these observations the ground no. 3 raised by the assessee is allowed. 9. As regards the ground of appeal no. 2 raised by the assessee, the bench noted that as per the information available with the ld. AO that the assessee deposited cash of Rs. 74,35,500/- in the bank account no. 3420787121 maintained with the State Bank of India and Rs. 12,55,000/- in the account no. 3241071566 maintained with the Central Bank of India during the demonetization period. Considering that aspect of the case the ld. AO contended that the assessee has deposited a total sum of Rs. 86,90,500/- during the demonetization period and was considered as unexplained cash deposits. During the assessment proceedings the explanation was called for from the assessee vide show cause notice dated 01.12.2019 fixing the case for hearing on 04.12.2019 but the assessee did not comply with the notice. As no explanation regarding the source of this cash de....
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....d period and the cash deposited into the bank account is also emanate from the sale of the petroleum product. The grievance of the revenue that the assessee failed to establish the source of the cash so deposited into the bank account with that of the availability of stock by the assessee. On this aspect of the case, we note the following submission of the ld. DR: In this connection it is respectfully submitted that during the hearing of the said case before the Hon'ble bench, the AR of the assessee, vide his paper book dated 06.07.2023 submitted (in para 2 at page no 2 of the paper book) "that Id AO has grossly erred in contending that the appellant has not produced the stock register whereas the same was submitted vide submission letter dt. 27.11.2019". The assessee has submitted the stock register in annexure-D (page no 134 185) of the paper book dated 06.07.2023. However on perusal of the assessment order it is found that the assessing officer in his order dated 09.12.2019 has categorically mentioned (in para 4 at page no 4 of the assessment order) that the assessee has not furnished any documentary evidences like stock register etc. Therefore, the assessing officer was a....