TaxTMI 
TaxTMI 
2024 (8) TMI 1113
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....d disposed of by this common order for the sake of convenience. 3. The only issue to be decided in this appeal of the assessee is as to whether the ld CIT(A) was justified in confirming the taxation of additional income of Rs. 3,67,13,530/- u/s 115BBE of the Act in the instant case. 4. We have heard the rival submission and perused the material available on record. The assessee company is trading of jewellery. It does retail sales as well as wholesale exports. A search and seizure operation was carried out in the premises of the assessee u/s 132 of the Act on 17.11.2016. During the course of search, various materials/ documents were found and seized and statements were also recorded. The case of the assessee was centralized vide order passed u/s 127 of the Act by the Ld PCIT on 17.07.2017. Later notice u/s 153A of the Act stood issued to the assessee for AYs 2011-12 to 2016-17 and notice u/s 142(1) of the Act for AY 2017-18 dated 27.07.2018. 5. During the search, a Government empanelled valuer was summoned to assist in the valuation of the stock of jewellery found at the time of search. The valuer adopted a rough method and took the weight of jewellery on estimated basis c....
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....r tax rate prescribed u/s 115BBE of the Act. The assessee preferred appeal against this action of the ld AO before the ld CIT(A). The ld CIT(A) held that the revised return filed by the assessee is a valid return but however, proceeded to treat the additional income disclosed/ surrendered during the search which was included by the assessee in the revised return, as undisclosed income eligible to tax u/s 115BBE of the Act. Aggrieved, the assessee is in appeal before us. 8. It is pertinent to note that against the action of the ld CIT(A) in holding that the revised return filed by the assessee to be a valid return, the revenue is not in appeal before us. 9. We have gone through the entire paper book submitted by the assessee and we find that the assessee's AR vide letter dated 24.11.2018 filed before the ld AO had categorically stated that the additional income offered in the sum of Rs. 3,67,13,530/- at the time of search proceedings u/s 132(4) of the Act was only on account of difference in valuation of stock of jewellery. Since there was absolutely no difference in quantity of jewellery according to the assessee, and the difference arose only in the valuation thereon, the of....
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....luer at the time of search thereby resulting in alleged discrepancy. Be that as it may, the discrepancy has been accepted by the assessee in the statement u/s 132(4) of the Act as well as in the revised return filed on 20.09.2018 by offering the discrepancy amount to tax in the sum of Rs. 3,67,13,530/- as business income which is evident from the revised computation of income enclosed at page 36 of the Paper Book. 10. It is also pertinent to note that the disclosure of additional income was made by the assessee at the time of search on 18.11.2016 while giving statement u/s 132(4) of the Act at 10 PM whereas the higher tax rate of 60% got introduced u/s 115BBE of the Act only pursuant to Taxation Laws (2nd Amendment) Act, 2016 which got notified in the official gazette only on 15.12.2016, being the date of receipt of accent of the Hon'ble President of India which got further culminated as the Taxation Laws (2nd Amendment) Act, 2016. Hence, obviously the provisions of section 115BBE of the Act applying higher tax rate @ 60% cannot be applied at all in respect of search conducted prior to 15.12.2016 and incomes earned prior to 15.12.2016. Hence, the assessee is entitled for relief ....
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....pported its contention by enclosing VAT/ GST returns during the quarters ended December 2015, December 2016, December 2017 to prove the quantum of sales made during the quarter ended 2016 compared well and reflected normal behaviorial pattern with that of the 2015 and 2016 as tabulated below:- Sales during Qtr. Ended in Rs. Dec. 2015 80,42,73,485.09 Dec 2016 84,41,69,300.00 Dec 2017 56,13,79,595.00 16. In respect of sales made actually on 07.11.2016 and 08.11.2016, the sale bills were effected from 09.11.2016 to 11.11.2016 by the assessee. The assessee in this regard had explained the same even at the time of search proceedings while recording statement u/s 132(4) of the Act from the Director that due to festive seasons followed by demonetization where the showrooms remained open till midnight reporting large footfalls and human constraint in generating proper sale bill on the same day, there was no option to generate them on the following days i.e. 09.11.2016 till 11.11.2016. These facts stood corroborated with the statement of the Director as well as the accounts manager Shri Sudhir Arora taken during the search operation and thereafter. Further, the in....
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....ent periods and concluded without any basis, that the vouchers of cash transactions were fabricated documents and assessee had merely introduced its unaccounted money in the garb of the bogus cash sales and advances which stood subsequently deposited in the bank. The ld AO on the basis of daily average sales and estimation concluded that sales on 07.11.2016 of Rs. 51 lakhs and on 08.11.2016 of Rs. 1.02 crores. Accordingly, the ld AO concluded that legitimate cash available with the assessee till midnight of 08.11.2016 was only Rs. 1.53 crores (Rs. 51+1.02). Accordingly, he proceeded to treat the sum of Rs. 11.99 crores as unaccounted income of the assessee computed in the following manner :- Sales reflected on 07.11.2016 by assessee Rs. 6.09 crores Sales reflected on 08.11.2016 by assessee Rs. 7.43 crores Total Rs. 13.52 crores Cash balance available with the assessee as on 08.11.2016 Rs. 1.53 crores Addition made Rs. 11.99 crores 17. The ld CIT(A) considering the entire contentions of the assessee deleted the addition of Rs. 11.99 crores by accepting the same as regular cash sales by observing as under:- "9.1 The appellant during the asses....
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.... had stated that sale bills generated and saved on the server cannot be edited nor can the sequence be altered once a bill had been entered. All sale bills even though generated on 09/11/2016 till 11/11/2016 pertaining to 07/11/2016 & 08/11/2016 were serially numbered and not tampered with. 9.2 I have also gone through the standard operating procedures laid down by the CBDT regarding verification of cash transactions relating to demonetization. The said Instructions are: 1st instruction issued on 21/02/2017 vide number 03/2017, 2nd instruction issued on 03/03/2017 vide number 4/2017, 3rd instruction issued on 15/11/2017 vide F.No. 225/363/2017-ITA.II and the last on 09/08/2019 vide F.no.225/145/2019- ITA.II. The above instructions provide guidance as to the kind of investigation, enquiry, evidences that the assessing officer is required to take into consideration for the purpose of assessing such cases. The instructions speak about the comparative analysis of cash deposits, cash sales, month wise cash sales and cash deposits. It also provides that whether in such cases the books of accounts have been rejected or not where substantial evidences of wide variation be found be....
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....increase in the quarter October to December in the year 2016 is a small 4.9% as compared to the same quarter of 2015 Chart No. 3 : Comparative figures of sales for the month of Nov. 2014, 2015 & 2016. Particulars Amount Sales during Nov 2014 * * 1,66,14,800.00 Sales during Nov 2015 22,19,17,646.00 Sales during Nov 2016 29,17,66,881.00 * Business commenced in August 2014 It may be noted that the turnover of the appellant increased from Rs. 216.88 Cr. in FY 2015-16 to Rs. 283.69 Cr. in FY 2016-17 leading to corresponding increase of sales. Chart No. 4 : Comparison of month wise average daily sales during F.Y. 2015- 16 & 2016-17. F.Y. 2015-2016 F.Y. 2015-2016 F.Y. 2016-2017 F.Y. 2016-2017 MONTHS NET SALES Avg sales per day NET SALES Avg sales per day APRIL 13,19,56,902.19 43,98,563.41 28,31,98,401.00 94,39,946.70 MAY 18,01,09,509.00 60,03,650.30 30,60,59,661.00 1,02,01,988.70 JUNE 9,11,92,545.00 30,39,751.50 18,09,97,095.00 60,33,236.50 JULY 19,40,96,470.00 64,69,882.33 14,85,58,204.00 49,51,940.13 AUGUST 16,40,73,305.00 54,69,110....
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....g exceptional circumstances as were due to an announcement of demonetization. 9.4 From the analysis of the above charts it is observed that cash sales are a normal part of business in the assessee's trade, that in the assessee's trade there are both lean and peak periods therefore comparison of per day sales gives misleading results, that quarter ending December every year sees a lot of festivals as well as mahurat's and marriages and the assessee's business gets almost 40% of its business during this period, that comparative data of cash sales / collections during similar periods / dates compares favourably from year to year with normal business fluctuations and that the assessee company's account properly record and reflect these sales. The charts reflect that the appellant is regularly incurring cash sales. It is a normal business practice in the business of jewellery that part sales are done in cash. The percentage of cash sales to the total turnover which was 55.13% for the period ended 31.03.2016 have come down to 38% for the period ended 31.03.2017 i.e. in the AY 2017-18. Further the sales during the period October to December 2015 were of Rs. 80....
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....by the Assessing Officer before rejecting the same. It is a matter of fact that the transactions of sales which are a part of the returns submitted by the appellant to the other taxation authorities. 9.6 The Hon'ble ITAT Delhi in the case of Agson Global (P.) Ltd. Vs Assistant Commissioner of Income Tax, Central Circle-28, New Delhi [2020] as reported in 115 taxmann.com 342 has dealt with the similar facts and has pronounced that where cash was deposited by the assessee, who was engaged in purchase and sale of dry fruits etc., in the bank post demonetization, which was treated by the AO as unaccounted income, on the basis of comparative sales with earlier years, no discrepancy in stock, details of purchases and sales, filing of VAT returns etc. the said deposit cannot be added u/s 68 of the Act. 9.7 The appellant has rightly submitted that notwithstanding the announcement of demonetization effective from midnight of 08.11.2016, the government had not imposed any restriction or prohibition on trade and commerce. The appellant has submitted that due to festival season and till the night of 08.11.2016, not only was the regular sales staff, required to be detained....
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....each and every item of unsold jewellery at the time of the search on 17.11.2016. It would be important to note that the sales were properly recorded in the accounts, duly supported by sales bills, when the search took place on the appellant on the 17.11.2016. The assessee has maintained the stock register which was found during the course of the search and was tallied with the stock found. The assessee had maintained the complete stock details in its accounting software. The said books of accounts are audited by the tax auditor. No evidence of bogus sales or bogus purchases or non existing cash in the books of accounts was found during the course of search. Merely because the cash holding as on 7.11.2016 was not deposited immediately on 8.11.2016 cannot lead to the conclusion that the assessee did not have the said cash. It can merely lead to a suspicion but based on this addition cannot be made without evidence that assessee did not have that kind of cash available. 9.9 In this case, all the cash sales have been included in the accounts of the Assessee as part of its Sales for the year. The Assessing Officer has accepted this position by accepting the accounts and causing....
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....ncrease in sales during the fag end of October 2016 till the first fortnight of November 2016 quoting the reasons of festivals season which fact cannot be disputed at all. There is absolutely no basis for the ld AO to arrive at the daily average sales of a particular day and arriving at the availability of cash sales as on 08.11.2016. Further, the very same transactions of Rs. 11.99 crores, being the addition made by the ld AO is already part of actual sales already disclosed by the assessee in its return of income and in the books of account. We hold that adding this sum of Rs. 11.99 crores will only result in double addition. The entire sales made by the assessee had been duly reflected in the VAT/ GST returns and no infirmity in any manner whatsoever was found by the concerned authorities. These facts were duly appreciated by the ld CIT(A) by giving elaborate reasons which are already reproduced hereinabove. None of the factual observations made by the ld CIT(A) were controverted by the ld DR before us except repeating what the ld AO had done in the assessment order. Hence, we do not find any infirmity in the order of the ld CIT(A). Accordingly, the ground (i) to (iii) raised by....