AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 302
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....O has grossly erred in doing addition of Rs. 8690500/- of cash 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 subm....
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....d not complied with the notices so issued and did not produced the books of accounts, bills/vouchers 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 regardi....
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....complied. In the absence of books of account for verification the AO rejected the trading result submitted by the assessee by 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,....
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....ourt or tribunal. Therefore, the courts and Tribunals have to judge the evidence before them by applying the test of human probabilities". 6.9 Similarly, in a later 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 unr....
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.... no word howsoever meaningful it may so appear can be allowed to be read into a statutory provision in the garb of giving effect to the underlying intent of the legislature. 6.12 Having considered entire facts of the case, and the 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 appella....
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....hat summary position of cash deposit during demonetization period is given as below:- PARTICULARS Amount (In Rs. ) f/year 2015-16 Amount (In Rs. ) f/year 2016-17 Opening cash balance as on 8.11.2016 825001.00 5206068.00 Add: Cash received on sale of petrol/ diesel in November, 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/ye....
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....AO in contending about deposition of cash during demonetization period does not stands any where. That monthwise chart of stock received and out during f/year 2016-17 of Petrol/diesel is enclosed as Annexure-D. 3. That Ministry of Finance vide F.No.10/3/2016-Cy.I dated 8.11.2016 has issued Notification whereby exemption was given for acceptance of old currency notes having denomination of Rs. 500/- & Rs. 1000/- during the period of 9.11.2016 to 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 fac....
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.... HPCL portal. Further books of accounts of assessee are audited and has filed return of income alongwith audit report in form 3CD alongwith all enclosures wherein quantitative details of petrol/diesel received, supplied alongwith opening and closing balance quantities are written and thus accordingly despite of having availability of stock record on public domain, finding about non submission of stock record is erroneous finding of Ld. AO. Copy of IT return and audit report for AY 2017-18 and AY 2016-17 are annexed herewith 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 ....
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....ification no. 10/03/2016 dt. 8.11.2016 and No. 2774 dt. 24.11.2016 (annexure -E) 186-189 11. Screen Shot of adjournment application filed before CIT(A) on dt. 7.11.2023 (annexure -F) 190-191 12. Copy of Income tax return for assessment year 2017-18, 2016-17 with trading and P & L a/c for showing of GP ratio (annexure-G) 192-218 13. Judgments relied upon 5.2 The ld. AR of the assessee made an application u/r 29 of ITAT Rules, 1963 praying to allow the submission of the additional evidence: "APPLICATION U/RULE 29 OF ITAT RULES, 1963 FOR ALLOWING TO SUBMIT ADDITIONAL EVIDENCES MAY IT PLEASE BE YOUR HONOURS, 1. Most respectfully the 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....
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....dmit or reject documents at the stage of appeal, it was pointed out that such a discretion can not be exercised in an arbitrary manner, that if the Tribunal found that the document filed are quiet relevant for purpose of deciding this issue arising before, it would be well within its powers to admit the evidence, consider the same or remit the matter to the lower authorities for such consideration." The Hon'ble Delhi High Court has referred and relied upon the various decisions of the difference High Courts and have also relied upon the decision of the Hon'ble decision of Supreme Court reported in K. Venkatramaiah Vs. A. Seetharam Reedy, AIR-1963-S.C.-1526. This judgment of the Hon'ble Supreme Court is placed by the Hon'ble Delhi 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....
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....6 is also complied and given as below:- Details of opening cash balance as on 9.11.2016 Particulars Amount (In Rs. ) Opening cash balance as on 1.4.2016 413423 Add:- Cash Sales (during 1.4.2016 to 8.11.2016) +49662360 Add:- Cash collection from buyers/debtors (out of credit sales) +3325669 Add:- Cash withdrawal from bank +1187000 Total 54588452 Less: Cash deposit in bank during 1.4.2016 to 8.11.2016 -49157000 Less: Salary, office & other expense (in cash) -314585 Closing balance as on 8.11.2016 5116867 That detailed ledger account of cash sales, cash collection from buyers/debtors, cash withdrawal and deposit from bank during the period of 1.4.2016 to 8.11.2016 are enclosed as Annexure-B" 5.5 The ld. AR of the assessee in addition to the written submission so filed also argued that the assessee is registered petroleum product dealer. During the period of demonetization the assessee was 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 t....
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....wise stock vide submission dated 27.11.2019 and therefore, he has not disputed the quantitative records and sales. The only contention that he recorded in the assessment order is that "the assessee was asked to produce the books of accounts, bills and vouchers but has not produced." This contention is incorrect as the assessment was under ITBA online module where in there is no provision to upload the books of accounts. In fact the assessee has submitted almost all records and instead of finding fault on its merely contended that books of accounts are not produce. The assessee has already filed the cash book, sales and month wise stock details, on these records no defects is pointed out. 5.6 The ld. AR of the assessee also submitted that the assessee requested for an adjournment on 07.01.2023 and sought and adjournment upto 24.01.2023 (APB-190) but ultimately the order was passed on 09.01.2023 without dealing with the adjournment application of the assessee. The judicial decision cited by the ld. CIT(A) are 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....
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....ourse of hearings before the Hon'ble Bench on 10/08/2023, the Hon'ble Member categorically asked the assessee as to what is the need of filing stock register as additional evidence if the assessee has already submitted it before the AO. The assessee withdrew the additional evidence from record reiterating that the same has been filed before the A.O. during the assessment proceedings. 5. It is a clear case of falsification of facts and misleading the Hon'ble Bench in the form of written submission & oral arguments during the course of hearing by the assessee. 6. It was reiterated by the undesigned during the course of hearing that the issue of cash deposit during the demonetisation period needs to be scrutinised holistically. The assessee willfully did not produce the books of account (including the stock register) before the AO & the CIT(A). 7. In view of the above, it is seen that the assessee, despite being provided the sufficient time to submit the details by the AO as well as Id. CIT(A), has not furnished the requisite details viz. books of account, bills and vouchers including stock register. Therefore the AO has rightly rejected the book....
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....ased on the evidence already on record. 8. We have heard the rival contentions, perused the material placed on record and gone through the judicial precedent cited by both the parties to drive home their respective contentions. The bench noted that the assessee is an authorized dealer of HPCL and running a petrol pump in the name and style of M/s. Tibra H. P. Jaipur as a proprietary concern. The case of the assessee was selected for scrutiny through CASS. In compliance with the notices issued, the AR of the assessee submitted online reply and furnished the copy of cash book from 09.11.2016 to 30.12.2016, GP. Comparison chart, copy of bank statement, month wise cash sales and cash deposit chart for A.Y 2017-18 and copy of VAT return. The ld. AO noted that the comparative chart for gross profit / net profit ratio of last two years shown by the assessee is in lower side in comparison to preceding year. As the gross profit declared by the assessee is declining and the assessee did not comply with the notices so issued and not produced the books of accounts, bills/vouchers for verification the trading result submitted by the assessee not accepted by the ld. AO. Hence the books of acc....
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....ugh the order is passed u/s. 143(3) of the Act and not u/s. 144 of the Act. We have gone through the contention raised in the SCN and reproduced here in below for the sake of brevity : 1. The gross profit rate has been decreased in the year under consideration as compared to last year. The explanation was called for from you but no any proper reply has been submitted and no corresponding documents / books were submitted. In absence of same please explain why your books of account of may not be rejected u/s. 145 of the I. T. Act 1961 and addition made accordingly." The assessee has already advanced the reasons for low profit and has submitted the details called, ld. AO only requires the books of account which the assessee submitted that not requirement when the assessment is going on in ITBA and the books are audited. The assessment of the assessee completed u/s. 143(3) of the Act. No specific information was called for and ld. AO only insisted upon the producing of the books of accounts. Since, there is no specific defects observed in the books of accounts the addition made by the ld. AO on account of the low G.P. we see no reason to sustain the same. Hence, the additio....
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.... month wise cash sales and cash deposit chart for A.Y 2017-18 and copy of VAT return only. He mentioned that interest amount of Rs. 64,379/- paid to M/s. Toyota Finance on which TDS was not deducted has been added in the computation of income. Thus, the assessee in support of the cash deposited submitted the cash book for the period of demonetization, copy of bank statements, VAT return month wise cash sales and cash deposit chart. On this information there are no comments as to why the said information is not sufficient and correct. The bench also noted that a show cause notice dated 23.11.2019 fixing the hearing on 27.11.2019 upon which the above information was submitted by the assessee, the assessee in this notice directed nowhere to submit the books of accounts. Based on the rival arguments bench noted that it is not under dispute that the assessee is dealer of petroleum product. It is also not under dispute that these petroleum dealers were permitted to accept the demonetized currency and the extension was done for two different periods. The assessee submitted the copy of the cash book for the said period and the cash deposited into the bank account is also emanate from th....