TaxTMI 
TaxTMI 
2024 (2) TMI 1292
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....n the following grounds which are reproduced as below: 1. That on the facts and in the circumstances of the case, the order passed by ld CIT(A) is bad in law and bad in facts. 2. That on the facts and in the circumstances of the case the CIT(A) grossly erred in not analyzing the submission of assessee supported from material evidence in right prospective and judicious manner and sustained the 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 upholding the findings recorded by the Ld AO that cash deposit in bank account during demonetization period out of cash sales as unexplained money being unexplained cash money available with the appellant which had tried to introduce in the books. 5. That on the facts and in the circumstances of the case the Ld CIT(A), grossly erred in sustaining the addition of Rs. 64,49,220/- in respect of cash deposit in b....
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....iction and a contemptuous act on his part. 3 That on the facts and in the circumstances of the case, the ld CIT(A) erred in upholding the validity of the retracted statement under section 133A, particularly when such statement has no evidentiary value in the eyes of law. 4. That on the facts and in the circumstances of the case, the ld CIT(A) erred in deliberately and consciously not considering the legal & valid documentary evidences furnished in support of retraction of statement immediately after the survey. 5. That on the facts and in the circumstances of the case the ld CIT(A) grossly erred in represented irrelevant, arbitrary and contrary facts and law while upholding the validity of addition made by ld AO. 6 . That on the facts and in the circumstances of the case the ld CIT(A) grossly erred in upholding the finding recorded by ld AO that the stock found at the time of survey was excess without taken to consider the valid & legal documentary evidences and also no adverse material or evidence found as a result of investigation made by ld AO during the proceedings. 7. That on the facts and in the circumstances of the case the ld CIT(A) gross....
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.... added back u/s 69A by imposing tax u/s 115BBE of the Act for impugned assessment year 2018-19. The stock difference of the assessee with the survey team amount to Rs. 1.30.14.836/-. The physical stock calculated by survey team amount to Rs.7,15,00,000/-. After deduction of the approval, the revenue valued the closing stock amount of Rs.6,43,54,832/-. But as per the books of account the closing balance of the stock on 31.03.2018 was amount to Rs.5,18,17,873/-. So, the ld. AO added back the difference of closing stock as income. Accordingly, the Gross Profit of the date of survey was calculated by the revenue amount to Rs.3,91,88,467/- and the GP declared on dated 31.03.2018 by the assessee amount to Rs.2,97,60,771/-. Therefore, the difference amount of Rs.94,27,696/- was added back with the total income of the assessee. Being aggrieved assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) uphold both the assessment orders. Being aggrieved on the appeal order, the assessee filed an appeal before us. 6. The ld. AR filed the written submissions which are kept in the record. The ld. AR started argument on appeal bearing ITA No. 353/Jodh/2023. 6.1 The ld. AR submitted the....
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....5 4,34,000 1,26,99,325 Cash in hand on the last day of month 15,21,504 20,43,372 16,80,135 1,45,690 5,17,785 2,38,173 11,50,780 3,32,845 7,07,584 11,53,803 3,20,533 4,78,347 1,02,90,552 1. It was noticed that the cash in hand of assessee as on 31.10.2016 was Rs. 11,50,780/- and as on 07.11.2016 was Rs. 22,30,745/- Further, it was also noticed that huge sale booked by assessee resulting into cash balance of Rs. 7939745/-. That means the Jewellery of Rs.57,09,000/- was sold on 08.11.2016 only. It was noticed that on an average the sale of jewellery per day after Diwali was Rs. 2 lakh. On the previous day from 07.11.2016 it was 7.2 lakh as per the cash book in cash. There was no sudden reason for such high cash on 08.11.2016. It was also noticed that assessee was never maintaining cash balance of more than 5 lakh previous to 10.10.2016. A query was raised in this regard and reply furnish by the assessee on 27.09.2019 is as under:- "1.There as on for the huge Cash Balance:- 1. Maintaining huge cash balance is necessary looking to nature of business. For purchases of small and antique item....
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....n the audited financial statement on which income has been offered for taxation in the return of income. 6.4. That to substantiate the source of cash deposit out of sale proceed, the documentary evidences like cash book, purchase & sales register, sales & purchase invoices showing stock position, VAT order and other relevant record were furnished before the Ld AO during the assessment proceeding which are available at P.B Page No. 19 to 182. 6.5. The ld. AR further argued that further the each & every detail like month wise sales, purchase, cash deposit etc and also the comparative figures of previous years on the basis of audited books of accounts maintained by the assessee were furnished before the Ld AO during the assessment proceeding. The explanation supported from documentary evidence established beyond the doubt that the source of cash deposit out of cash sales of sufficient stock available with appellant firm which is duly recorded & supported and genuineness of same cannot be doubted. The AO has neither disproved the genuineness of the purchase and stock position submitted by the assessee nor sales transactions in support of its claim that sale was made out of sto....
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.... i) Paramount Impex v. AC IT, Circle-J, Ludhiana [2020] 117 taxmann.com 802 (Chandigarh Trib.) Section 145 of the Income-Tax Act, 1961 - Method of accounting - Rejection of Account (Non-maintenance of stock register) - "Whether where assessee was dealing in a large number of small items and it was consistently following method of determining stock at end of year by physically verifying same, in view of fact that all purchase and sale vouchers and other records had been found to be in order, mere fact of non-maintenance of stock resister could not be basis for rejection of books of account if Revenue had found no other defect in books of assessee and there was no hindrance in determining true and correct profits earned by assessee." ii)Chirag Nareshbhai Soni Vs ITO (ITAT Ahmedabad) ITA No. 19/Ahd/2022 11/10/2023 "9. We have heard the rival contentions and gone through the facts and circumstances of the case, including the materials available on record. As per the provisions of section 145(3) of the Act, the AO is empowered to reject the books of accounts of the assessee and make best judgment assessment in the manner as specified under section 144 ....
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....f purchases and sales were not disputed in as much as they were found to be fully vouched-Value of opening stock also cannot be disputed as it is the closing stock of the previous year-Inventory of closing stock was also not found to be incorrect-Thus, there being no dispute regarding purchases and sales, non-maintenance of stock register loses significance so far as determination of GP is concerned- All the lower authorities have accepted the reason for fall in GP rate namely, stiff competition in the market and the huge loss incurred by assessee in a particular transaction-Therefore, neither the rejection of books of account nor estimation of GP by application of rule of thumb was justified-When none of the date and entries in the trading account has been found to be incorrect in any manner, the result shown by the assessee in the books of account has to be taken as true." iv)The Hon'ble ITAT Jodhpur Bench in the case of M/s Dwarka Dass Doshi in ITA No. 477/JDPR/06 dated 30-10-07 held as under: - "We find that the books of account were rejected only because low gross profit was shown during this year. We are aware that non maintenance of muster roll or day to da....
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....n it was categorically held that if the Sales tax authorities accept the sale belonging to a party then in that eventuality, the said findings of the Sales tax authorities are binding on the income tax authorities and the A.O., thus, in this way, the income tax authorities has not power to scrutinize the said documents again in respect of sales which have already accepted by the Sales tax authorities. 8.1. It is further submitted that the finding recorded by ld. CIT(A) in para 4 page18 of appeal order regarding evidentiary value of sales & purchases by Sales Tax/VAT Department is apparently show the ld CIT(A) was predetermined to disobey the binding nature of judicial pronouncements. The allegation made by ld CIT(A) is contrary to principle laid down by Hon'ble Madras High Court in the case of CIT V/s Smt. Sakuntala Devi Khetan (2013 (352) ITR 484 (Mad), wherein it has been clearly held that the Assessing Officer has to adopt the figures and turnover finally assessed by the sales tax authorities. 8.2. The ld. AR further argued the business activates as carried out by the appellant firm and earned the profit on such business activities and same was offered for taxation which w....
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....er HC in 117 ITR 371 It is not open to the department while rejecting assessee's explanation to make presumption that the witness come forward to give false evidence to oblige the assessee Refer All HC in 72 ITR 766. An explanation given by the assessee has to be considered objectively before AO takes a decision to accept it or reject it that is department cannot convert a good proof into no proof on mere ipse dixit (suspicion etc) - Refer SC in 49 ITR 112. The Hon'ble Supreme Court in the case of Sreelekha Banerjee vs. CIT (1963) 49 ITR 112 (SC): The Department cannot by merely rejecting unreasonably a good explanation, convert good proof into no proof." 8.3.The Hon'ble ITAT Amritsar Bench in the case of Raj Kumar (M/s Radhika Sales Corp) V/s ITO, ITA No. 195/Asr/2022 dated 11.04.2023 held that:- "12.1 We also considered that the amount deposited in the bank account was out of ale of various items which had been held by the assessee as stock in trade an since the deposits in the bank account were out of sale of stock therefore the stock of the assessee has depleted and the cash has come in respect of stock, such sales had been disclosed in the trading account against t....
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.... and wisdom at any given time and no hypothesis can be applied by A.O just sitting on his chair". 9. The ld. DR vehemently argued and relied on the order of the revenue authorities. 10. The ld. AR further argued the appeal no ITA No. 354/Jodh/2023. The ld. AR first pointed out that the survey was conducted on 21.03.2018, the assessee filed the retraction on the declaration in survey dated 26.03.2018. The difference amount was due to the approval and the approval was not considered by the ld. AO during the hearing. The copy of the approval memo of M/s Solitaire Jewellers Pvt. Ltd. and KGK Creation India Pvt. Ltd.in APB page 46 to 49. The ld. AR further placed that both the parties are filed the affidavit before the revenue authorities. Copy of the affidavit are enclosed in APB page 52 to 53. All the documents are duly filed during the time of assessment and the copy of reply furnished before the assessment authority is enclosed from APB page 54 to 64. The ld. AR placed that without verifying the parties and without rejecting his affidavit the above was made by the ld. AO which is arbitrary and not accepted. 11. The ld. DR vehemently argued and invited our attention in asses....
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....gible margin is due to difference in valuation of precious and semi-precious stones. The assessee submitted that in view of the above question of excess or shortage of stock does not arise. 12. 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 Authority and the turnover and purchased was duly accepted. It is further submitted that from the documentary evidence the source, purpose and sequence of event duly established that there was direct nexus of cash deposit in bank account out of sales realization in cash. It is settled position of law that when the ld. AO had not doubted the sales, purchases, stock and gross profit declared by the assessee then the cash....