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2024 (2) TMI 1198
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.... addition in a hypothetical way which is against principle of natural justice. 3. That on the facts and in the circumstances of the case the ld. CIT(A) grossly erred in upholding the provision of sec 145(3) of the Act applied by the ld. AO for rejection of books of accounts. 4. That on the facts and in the circumstances of the case the ld. CIT(A) grossly erred in sustaining addition of Rs. 8,95,23,633/- in respect of cash sales made on 08/11/2016 deposited in bank account as unexplained money u/s 69A of the Act. 5. That on the facts and in the circumstances of the case the ld. CIT(A) grossly erred in recording observation and finding in the appellate order contrary to the principle of law laid down by Hon'ble Courts and also against the principle of natural justice. 6. That on the facts and in the circumstances of the case the ld. CIT(A), grossly erred in treating the normal transaction in respect of business transaction as something unusual and out of the ordinary only as undiscernigiy which is against the principle of natural justice. 7. That on the facts and in the circumstances of the case the ld. CIT(A), grossly erred in upholding t....
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.... various persons in cash. The ld. AO noted that assessee has changed his name and style of doing business in the instant year under consideration and the quantum of the turnover from AY 2015-16, AY 2016-17 and even in AY 2018-19 is much less that even the books of account are not audited. There is no business in the proprietorship concern M/s Shrinath Jewellers, which is evident from the Bank A/C which was came into operation on 28.07.2016 and there is no transaction before this date. Further, assessee has also not declared balance on date 31.03.2016 in the return filed by him for AY 2016-17. As per submission of assessee, he is running his business at 'Bhistiyon Ka Bass, Patel Chowk, Jodhpur'. It is also pertinent to mention that assessee is a director in the Dwarika Jewellers Pvt. Ltd. which is also running its trade business on the same premise. As the assessee had deposited Rs. 9,38,64,808/- into bank account during the demonetization period. On the perusal of above business profit of the assessee it is evident that these two facts does not commensurate with each other, further investigation was conducted on the purchase and sale of the goods traded during the year under co....
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.... not found acceptable on grounds that the assessee's plea that name of the concern mentioning Shri Nath Corporation and showing as income from service is not acceptable. As he has current bank account in the name of Shree Nath Corporation A/C No. 200003147881 in Indusind Bank Ltd. Further, in the ITR for AY 2017-18 he has made claim of expenses of Rs. 2544581/- against receipt of Rs. 5793875/- and not shown any opening stock or closing stock. Even in his the revised return and his reply he has accepted that silver was seized by sales tax department and released in 2011, by the order of Hon'ble High Court. Further, High Court also imposed penalty of Rs. 4500000/- on the silver and as such the silver should have been sold then and there to deposit the penalty. There was no stock available with assessee is also proves from the return of AY 2011-12 in which no closing stock has been mentioned by the assessee. Notwithstanding to the shop timings and without prejudice to the assessee's claim it is accepted that on the date of demonetization his shop was not closed at 8.00 PM as mentioned in his reply. In this regard it is worth to mention here that the Hon'ble Prime Minis....
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.... customers have come to purchase the gold ornament, which involves certain checks and balances i.e., weight, rate and the actual weight in the weighing machine, preparing bill, giving cash and checking the cash by the self either by physical counting or through cash counting machine and delivering the jewellery in a proper packed condition. It is also pertinent to mention here that there is also need to cut the raw gold in the pieces as per the requirement of the purchaser. Moreover, from the details of cash sales and invoices raised there is no proper mention of complete address of the parties to whom such cash sales were made. The action of the assessee, clearly establishes the fact that the assessee intentionally made such arrangement of manufacturing artificial bills. Further, during the assessment proceeding assessee had provided invoices/bills generated from tally software which is signed by the assessee. As it is clear that assessee was the sole person handling all the affairs of the shop. The counter sign is also substantiating it. Further, as per the signature of the assessee it is clear that he was not in hurry and took his sweet time to put it on the bills, which is a ti....
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....trading of gold and in this business line persons are habitual of large cash handling and security of the same is ensured by the various methods and skills developed over the time. Further, the action of the assessee in relation to late cash deposit on 07.12.2016 also supports the aforesaid view. Assessee has not given any valid reply with proper supporting documents in relation to restriction by bank and safety purpose. Thus, out of total cash deposit, amount claimed to be received on date 08.11.2016 of Rs. 8,95.23,633, being the cash sale on 08-11-2019 reported by the is nothing but the unaccounted cash of the assessee routed through books as cash sales. The Human probability Test" could be applied when the Assessee makes the Officer to believe his/her story as a valid event. The false claims of the assessee cannot sustain before the test of Human Probabilities. As enumerated in the decision of the Hon'ble Supreme Court in the case of Roshan Di Hatti vs. CIT (1977) 107 ITR 938 (SC), Kale Khan Mohammed Hanif vs. CIT(1963) 50 ITR 1 (SC), it has been held in various judicial pronouncement that where the nature and source of any receipt/investment, whether it be a money or other prop....
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....he assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under.- I. The appellant is engaged in the business of trading and had sold silver and gold to various person in cash. In last two AY, his total turnover is 25.30 lakh and 57.93 Ikah. It is pertinent to mention here that in the year under consideration the total turnover is Rs 16.92 cr which is exorbitant high and that too sale in cash. It is again important to mention here that books of accounts are not audited. 30 - 30m ^ 2 * 3 Book of MC me andred II. The AO specified in the assessment order that the assessee had not furnished the correct position of opening and closing stock in the ITR of previous year and subsequent year. It shows that the assessee was not having such stock. The AO had doubted that there was no opening stock or no such stock was available for such huge cash sale of stock. III. The assessee had disclosed 44.90 kg of gold under IDS scheme 2016 valued at 12.76 Cr. The assessee converted the same into stock in trade on various date and claimed LTCG as the gold was pertains to AY 2011-12.It is noticed that ....
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....t was also having unaccounted cash which he tried to introduced in bank on the day of demonetization in the guise of IDS stock. VIII. The appellant had relied upon various judgments. The facts of the present case are different from other cases which are as under a. The day to day stock register was not maintained in the present case whereas in the case laws replied upon by the appellant, the stock register was maintained on day to day basis and the same were produced before AO as well before appellate proceedings. In the present case the AO had unearthed the stock anomalies, b. In the present case the AO had proved and doubted the availability of stock on the day of cash sale whereas in the case laws replied upon by the appellant the stock availability was not doubted C. In the present case the books of accounts were rejected u/s 145(3) of the Act whereas in some case laws replied upon by the appellant the books of accounts were accepted by the AO. d. The case laws relied by the appellant in the case of Smit Harshila Chordia vs. ITO, the matter was related to section 68 but in the present case the AO had proved that the appellant had una....
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.... 8.2 I have considered the facts of the case and written submission of the appellant as against the observations/ findings of the AO in the assessment order for the year under consideration. The appellant had claimed that he had converted the gold into stock in trade on various dates and LTCG was paid on it. The gold stock declared in IDS was of Rs 12,76,81,150/- and after conversion into stock in trade the total sale proceeds was Rs 15,63,62,967/- the AO had observed that the per gram rate taken by the appellant was higher than the per gram value of prevailing rate. The AO concluded that the assessee was trying to diver the difference of amount between as LTCG; however the same should be considered as business income. The AO had given detailed chart in which date wise rate taken by appellant, stock converted in gm and rate as per prevailing market was there and accordingly calculated that the Appellant had taken excess value of Rs 1,09,57,300/- in underline LTCG rather than it should be taxed as business income. The appellant argued that the addition was based merely on assumption. This argument is not on merit. The AO had taken rate per gram as per prevailing market rate on....
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....sessee cannot be again be taxed when the same stock is converted by sale into cash. Here the revenue is trying to tax the same income thrice, one at the time the asset declared, then at the time of conversion and when the same is ultimately sold, so the contention raised by the lower authority is not tenable. 5.1 To support, contentions so raised the ld. AR of the assessee relied upon the written submission made before the CIT(A) and the same is reproduced herein below: Submission in respect of sales considered as unexplained cash "a) It is an admitted fact that assessee has declared the sales of stock of gold amounting to Rs. 156362967/- out of stock of gold held him on conversion. The complete documentary evidence in support of sales transaction are fumished before the Ld. AO and also disclosed in VAT Return however only on the basis of statistical analysis and assumption & presumption the Ld. AO had made arbitrary allegation "that amount entered in the cash book on date 08/11/2016 ie Rs. 8,95,23,633/- cannot be considered for receipt of sale. However out of total sales made of Rs. 156362967/-, the cash deposited out of cash sales made on 08/11/2016 is treated as n....
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....gainst the principal of natural justice. The Hon'ble Rajasthan High Court in the case of Smit Harshila Chordia vs, ITO (2007) 208 CTR 208 (Raj) Held - "Cash credit - Cash received from customers - Tribunal has found as a fact that the assessee was receiving money from the customers against which delivery of vehicles was made- Such cash deposits are self-explanatory and would not attract sec 68- Therefore, no addition could be made F ] It is further submitted that the Id. AO made addition in respect of cash deposited in bank account as unexplained money u's 69A which is double taxation on same income as on one hand the Ld. AO had taxed the profit on sale made by assessee and on the other hand Id. AO taxed the cash received from sales realization which was deposited in bank as unexplained money also been added u/s. 69A of the Act. The Hon'ble Supreme Court in the case of CIT vs Devi Prasad Vishwnath Prasad (1969) 721TR194 (SC) that "It is for the assessee to prove that even if the cash credit represents income, it is income from a source, which has already been taxed" The assessee has already offered the sales for taxation hence the onus has been discharged by it....
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....der section 68 of the Act. The Tribunal observed that the provisions of section 68 of the Act can be attracted where there is a credit found in the books of accounts and the assessee failed to offer any explanation or the offer made by the assessee is not satisfactory in the opinion of the assessing officer. Whereas in the instant case, the assessee had explained that the impugned amount represented the sale which had not been doubted by the authorities below. Therefore, the impugned amount could not be treated as unexplained cash credit under section 68 of the Act merely on the ground that the assessee failed to furnish the details of the existence of the parties. The Tribunal also opined that the provisions of section 68 could not be applied in relation to the sales receipt shown by the assessee in its books of accounts. It was because the sales receipt had already been shown in the books of accounts as income at the time of sale only and once the purchases had been accepted by the authorities, then the corresponding sales could not be disturbed without giving any conclusive evidence/finding" iv. CIT v. Vishal Exports Overseas Limited (Gujarat High Court) Tax Appeal No. ....
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.... 69A of the Act. Probably, an addition under section 68 of the Act could have been considered: but then that is not the case of the AO The assessee, apart from raising several other grounds, has challenged the legality of the addition being made under section 69A of the Act. In support of the assessee's contentions, the leamed AR placed reliance on the decision of the ITAT-Mumbai Bench in the case of DCIT VS Karthik Construction Co. in ITA No. 2292/Mum/2016 dated 23.02.2018, wherein the Bench at para 6 thereof has held that addition under section 69A of the Act cannot be made in respect of those assets/ monies/entries which are recorded in the assessee's books of account. In my considered view, the aforesaid decision of the ITAT Mumbai Bench (supra) is squarely applicable to the facts of the case an hand, where the entries are recorded in the assessee's books of account in this view of the matter, I am of the opinion that the addition of Rs 33,23,425/- made under section 69A of the Act is bad in law ITA Nos. 1383 and 1384/Bang/2019 in the facts and circumstances of the case on hand and therefore delete the addition of Rs. 33,23,425/-made there under. The AO is according....
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....s below. Therefore, the impugned amount could not be treated as unexplained cash credit under section 68 of the Act merely on the ground that the assessee failed to fumish the details of the existence of the parties. The Tribunal also opined that the provisions of section 68 could not be applied in relation to the sales receipt shown by the assessee in its books of accounts. It was because the sales receipt had already been shown in the books of accounts as income at the time of sale only and once the purchases had been accepted by the authorities, then the corresponding sales could not be disturbed without giving any conclusive evidence/finding." c) That the id AO in his order had rejected the books of accounts for the sole reason that the sales made by assessee were bogus. However, the addition has been made & based on these very books of accounts only. It is settled law that once, the books of account had been rejected thereafter no addition can be made on the basis of books of account as held by Hon'ble ITAT Kolkata Bench in the case of Kabra Brothers ITA No 2022/Kol/2017 dated 08.07.2020. Further also the Hon'ble Jurisdictional High Court [Rajasthan High Court....
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.... were recorded before and after 8 November 2016 except on 15.09.2016 and Rs. 108975/-on 03.10.2016. This pattern of sale is highly suspicious und raises serious concerns about the books of account. In this regard, the assessee was show caused to substantiate this anomaly in his books of account hut the submission received from assessee was not found acceptable" The observation made by Id AO is not only against the principle of natural justice but also contrary to law decided by Hon'ble Courts. Further also it is settled principle that no additions can be made on own guess work, assumption. presumption and suspicion. An allegation remains a mere allegation unless proved. Suspicion may be strong however cannot take the place of reality. In this regards I rely on the decision of Hon'ble ITAT Visakhapatnam bench in the case of M/s Hirapanna Jewellers in ITA No 253/Viz/2020 dated 12/05/2021. On the identical issue the Hon'ble Bench." On the issue of capital gain considered partly as business income "That the addition so made by Id AO only on the basis of assumption & presumption and also against the principle of natural justice. It is further submitted that....
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.... Madras High Court T/CIVIL Application No. 1526 of 2007 dt. 27/07/2007. 120 - 128 6. The ld DR is heard who has relied on the findings of the lower authorities and has relied upon the following case laws : Sr. No. Name Citation Date of judgment/order 1 Sunil Jain vs. Income Tax Department 154 taxmann.com 14(SC) 04/08/2023 2 Sapta Panchait Kirshk Seva Swablambi Sahkari Samit Ltd. vs. Union of India (2020) 121taxmann.com 332 (Patna) 3 Bharat Krishi Kendra vs. Union of India 136 taxmann.com 245 (Chhattisgarh) 15/03/2022 The ld. DR argued that ld. AO by giving the chart explained that in the earlier year the assessee was not liable for audit and has declared much less turnover and ultimately in the year under consideration directly recorded sales of Rs. 16,92,11,685/-. The assessee has not disclosed the correct position of stock of business in the earlier return of income filed by the assessee. The bank account of Shrinath Jewellers, came into operation on 28.07.2016 and there is no transaction before that date. The ld. DR reiterated the chart made in the order of the assessment wherein deposited of cash before in N....
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....o operation on 28.07.2016 and there is no transaction before this date. Further, assessee has also not declared balance on date 31.03.2016 in the return filed by him for AY 2016-17. As the assessee had deposited Rs. 9,38,64,808/- into bank account during the demonetization period. Assessee has submitted that he had disclosed 44.90 Kgs of Gold under IDS scheme 2016. As per assessee's submission, assessee had declared gold of Rs. 12,76,81,150/- on date 15.09.2016 as capital asset. Assessee also claimed that the said gold pertains to year 2011 and that IDS was considered, and form no. 4 was issued. Further, the assessee claimed that he had converted the said disclosed gold into stock in trade on various dates 19 dates referred in the computation of income starting from 15.09.2016 to 08.11.2016. The said conversion was accepted by the revenue but the rate adopted was disputed by the ld. AO and on that count the ld. AO noted that the assessee has shown capital gain higher side for an amount of Rs. 1,09,57,300/- and business income less to that extent. So on this issue once the assessee has converted the capital asset into stock in trade, the revenue sum moto cannot changed the value....
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....balance in the previous year's remains Rs. 1,71,801/-. When the same stats are compared with the current year, before November 2016, the average cash in hand balance is Rs. 9,94,860/- which is abysmal low in the comparison of the cash deposited during the time of demonetization in the name of cash sale. The ld. AO also noted that assessee has claimed that he had converted the gold declared in IDS, 2016 into stock in trade in the month of September and October. But the total cash sale received is only Rs. 70,585/- and Rs. 1,48,271/-. However, on date 08.11.2016 the assessee recorded cash sale from the gold for an amount of Rs.8,95,23,633/- which is unusual. On the perusal of details filed by the assessee the ld. AO noted that assessee has raised total number of 504 cash sale invoices in the month of November 2016, which is exceptionally high. Further, all the cash sale of gold was made on the day of 8th November 2016 only. It was observed that no other cash sales were recorded before and after 8th November 2016 except on 15.09.2016 and on 03.10.2016. This pattern of sale is highly suspicious and raises serious concerns about the books of account. In this regard, the assessee was sho....
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....e same is accepted that assessee made the whole sale during the day, even then assessee had working hours of 11 AM to 12 PM per customer time comes as 1.5 minutes which is approx. 90 seconds. The same cannot be accepted as genuine. Based on that finding it was hold that assessee has its own unaccounted cash of SBNs which have been introduced in its books way of cash sales for which has no proper records or justification and therefore, the cash in hand balance on date 09.11.2016 was Rs. 9,38,64,808/- but it was noticed that assessee deposited the same on date 07.12.2016. The explanation of the assessee in this regard was considered but is not acceptable as the assessee is indulged into trading of gold and in this business line persons are habitual of large cash handling and security of the same is ensured by the various methods and skills developed over the time. Further, the action of the assessee in relation to late cash deposit on 07.12.2016 also supports the aforesaid view. Assessee has not given any valid reply with proper supporting documents in relation to restriction by bank and safety purpose. Thus, the ld. AO considered that out of total cash deposit, amount claimed to be ....
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.... the assessee has offered the higher rate there is no loss to the revenue. From the records it is admitted fact that the assessee has declared the sales of stock of gold amounting to Rs. 15,63,62,967/- out of stock of gold held by him on conversion. The complete documentary evidence in support of sales transactions were furnished to the ld. AO. The assessee also supported that the sale made by him is in accordance with the disclosure of turnover in the VAT return. The only dispute is that whether the assessee's source of cash on account of available gold stock be considered as from the explained source of sales recorded in books or not. In support of the sales assessee has submitted VAT return, in support of the sales made by the assessee he has placed on record the date of sales, voucher number / sale bill number, name of persons to whom sale is made, weight of the gold sold, rate at which the same is sold, and the amount received from each customer. None of these details disputed and found incorrect by the ld. AO. He has merely stated that the sales recorded by the assessee is not possible to be made on 08.11.2016. The assessee has submitted all the details for sales of gold of R....
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....t of Rs. 6,98,000, which was found to be the cash receipts from the customers and against which delivery of vehicle was made to them. Thus, when in this case delivery of gold is not doubted supported by the stock and payment of cash the consequential receipt of the cash cannot be doubted and respectfully following that finding the receipt of the cash cannot be doubted merely the same has been received on the day of demonetization. The ld. AR of the assessee also relied upon the coordinate bench Jodhpur case decision in the case of Gems & Art Plaza Vs. DCIT wherein the co-ordinate bench held as under : "We heard the rival submission and considered the documents available in the record. First, we are adjudicating the appeal ITA No. 353/Jodh/2023. The assessee deposited cash by claiming that the amount was originated from the sale of stock. It is never a question that the assessee has never controverted that assessee has in sufficient stock and purchased on the date of announcement of demonetisation on dated 08.11.2016. The assessee sold goods from his shop. Before that date, the assessee was sufficiently covered by the stock. The assessment was completed by the Sales Tax ....
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....rity when out of total sales of Rs. 15,63,62,967/- only sales of Rs. 8,95,25,633/- without bringing anything contrary to the records proved and therefore, even the same income cannot be taxed twice once by accepting the income recorded in the books on account of sales and other by taxing the cash generated out of the cash sales reported in the books of account. As regards the human probability it is not contended the these sales were only made after demonetization declared at 8 pm. The assessee in support of sales submitted the invoice paid the VAT on it. On this invoice only the date is written and the it is not finding recorded on oath that sales is only after 8PM. Considering the stock available with the assessee and when the part of the sales is accepted there is no reasons to disbelieve the sales which is recorded on the date of demonetization. Therefore, once the goods is supported by the Invoice recorded in the books and no defects found merely the same is recorded on the date of demonetization addition of cash receipt cannot be made in the hands of the assessee as undisclosed money u/s 69A of the Act. The provision of section 69A of the Act reads as under : Unexpla....