TaxTMI 
TaxTMI 
2024 (11) TMI 854
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.... 3. The fact as culled out from the record is that the assessee is an Individual. The assessee filed e-return of income on 31.03.2018 declaring total income of Rs. 8,98,600/-. The case was selected for scrutiny and thus, notice under sec. 143(2) of the I.T. Act, 1961 was issued on 21.09.2018, which was duly served upon the assessee through speed post as well as e-mail. During e-assessment proceedings, Notices were issued under sec.142(1) of the Income-tax Act, 1961 thereby calling the relevant details from time to time. In compliance with the notices issued assessee e-filed, the necessary details / information, as required, during e-assessment proceedings, which were examined by the AO. During the assessment proceedings, the assessee produced Books of Accounts along with supporting vouchers and Bank Statement which were examined on test check basis by the AO. 3.1 As is evident from the record that the assessee engaged in the business of manufacturing and trading of Gold & Silver jewellery under the name & style M/s DPD Jewellers. Assessee has declared total Sales / Turnover from the said business activities at Rs. 1,17,87,858/-. The assessee has declared his profit from the sai....
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....9/69A etc. these become income and become taxable. Section 14 of the Income-tax Act, 1961 Heads of income Assessment year 1984- 85-Whether opening words of section 14, 'save as otherwise provided by this Act. clearly leave scope for 'deemed income' of nature covered under scheme of sections 69, 69A, 69B and 69C being treated separately, because such deemed income is not income from salary, house property, profits and gains of business or profession, or capital gains, nor is it income from 'other sources' Held, yes. [Fakir Mohmed Haji Hasan v. Commissioner of Income-tax [2002] 120 Taxman 11 (Gujarat)/[2001] 247 ITR 290 (Gujarat)/[2001] 165 CTR 111 (Gujarat) [10-08-2000]]. In the judgements referred by the appellant, the above referred judgements of honourable Supreme Court have not been considered. Further the facts of the case of the appellant are different as these pertain to the deposit of cash during the demonetisation period wherein it is a known fact that those who were having earlier accumulated unaccounted cash tried different means to somehow deposit such cash in the bank account without attracting the section 115BBE of the Act. Demonetisation was in....
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....smissed." "Ground No. 1 that Ld. AO had erred in making addition u/s 68 on account of unexplained cash credit on the basis of suspicion and surmises. Decision:- (v) The appellant deposited Rs. 58,00,000 in the old currency in his bank account during the period of demonetisation. The appellant has submitted that the source of the same is from the sales made by him in the pre-demonetisation period. From the sales history of the appellant himself, it is seen that the appellant has shown sudden spike in sales in the period close to the announcement of demonetisation. Further the appellant has not deposited the cash in the bank account on a matching basis as on the one hand the appellant has claimed huge cash sales however on the other hand such cash receipt from the sales have not been deposited in the bank account. (vi) It is to be noted that each entry must be separately explained by assessee to prove the genuineness of the transaction, While explaining the various credits and investments, it is possible that the assessee may be successful in explaining some of them, but that does not by itself mean that the entire investments has to be considered as explained. The Assessing ....
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....emphasis supplied) It is further observed in this case by the Hon'ble Supreme Court as under- "In the present case, the assessee claimed that the high denomination notes were a part of the cash balance at the head-office. The Income-tax Office found that at first the cash on hand was said to be Rs. 1,62,022, but on scrutiny, it was found to be wrong. Indeed, the assessee himself corrected it before the Appellate Assistant Commissioner and stated there that the balance was Rs. 1,21,875. Ordinarily, this would have prima facie proved that the assessee might have kept a portion of this balance in high denomination notes. But the assessee failed to prove this balance, as books of the assessee did not contain entries in respect of banks. Though cash used to be received from banks and sent to the various places where works were carried on and vice versa, no central account of such transfers was disclosed. There was also no account of personal expenses of the assessee and he had failed to prove why such large sums were kept on hand in one place when at each of the places where work was carried on, there were banks with which he had accounts. The Appellate Assistant Commissioner al....
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....71) 82 ITR 540 (SC)], " Science has not yet invented any instrument to test the reliability of the evidence placed before a court or tribunal. Therefore, the courts and Tribunals have to judge the evidence before them by applying the test of human probabilities". As Hon'ble Supreme Court has observed, in this case, "..it is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make selfserving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities....................... appellant as disclosed in her sworn statement as well as other material on the record an inference could reasonably be drawn that the winning tickets were purchased by the appellan....
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.... is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents." 13. According to section 3 of the Evidence Act, a fact is said to be proved when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that the prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. Section 114 of the Evidence Act provides that the Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct, and public and private business, in their relation to the facts of the particular case. The aforesaid provisions are nothing but recognition of board principles of common law governing the....
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....the explanation as unacceptable when the source of cash deposited in the bank on 13-11-2016 was stated to be the loan which was further withdrawn in cash on 29-09-2016 in view of the fact that the assessee has not properly explained as to why the loan was availed by the assessee and for what purpose he has withdrawn the amount on 29- 09-2016 and deposited the same after one and half months. "6. Insofar as the loan of Rs. 2,60,000/- is concerned, the contention of the assessee is that he has availed a loan and withdrawn the amount and redeposited the same in his bank account. On perusal of this transaction of the assessee, I find that the assessee has availed a loan on 26/9/2016 and withdrawn the same on 29/9/2016. But, the assessee has deposited the said amount on 13/11/2016. The assessee has not properly explained as to why the loan was availed by the assessee and for what purpose he has withdrawn the amount on 29/11/2016 and deposited the same after one and half months. Therefore, the contention of the assessee is not tenable. Hence, I am of the view that the assessee has not properly explained the source for the cash deposit of Rs. 2,60,000/- and thus I sustain the addition to....
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....accommodate increase of retail sales in cash to accommodate the unaccounted cash in hand. Further the appellant has not given any plausible or cogent reasoning for the sudden spike in sales as noted in the assessment order. The appellant is also silent on the aspect of the sharply rising cash in hand which was just kept in hand and was not deposited in the bank account as against the regular business practices of the appellant himself. Month Sale in cash during FY 2016-17 Cash deposited during 2016-17 Cash deposit as % of cash sales Sales in cash during FY 2015-16 Cash deposited during 2015-16 Cash deposit as % of cash sales A B C D April 162452 77500 47.71 115500 50,000 43.29 May 56804 100000 176.04 85710 50,000 58.34 June 19870 77500 390.04 105515 0 0.00 July 657464 78000 11.86 65510 43,500 66.40 August 600924 96500 10.06 85715 50,000 58.33 September 723810 12000 1.66 135813 50,000 36.82 October 484162 10000 2.07 187306 48,000 25.63 Upto 8th Nov. 3222668 0 0.00 370981 50,000 13.48 Total 5928154 451500 7.62 1152050 341500 29.64 From the tabulated data below it is seen ....
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....he larger portion of Rs. 40 lacs was deposited only on 16/11/2016. The appellant has not explained issue and has maintained a complete silence. The explanations of the appellant are contradictory to the facts of his own case. It shows creation of back dated non- genuine sales bills to introduce cash in books. Further the learned AO has done a detailed analysis of the facts and reasoning which are referred to. In view of the above discussion the books of accounts of the appellant are not reliable and do not present a correct and fair view and the correct taxable income cannot be deduced therefrom. Learned AO in the assessment order has held that, in view of human tendency and the reason furnished by the appellant, the assessee has inflated his sales during the month of November, 2016 (01.11.2016 to 30.11.2016) by Rs. 12,90,178. The sales figures have not been relied upon in the assessment order. Powers of the CIT Appeal are co-terminus with the powers of the assessing officer. Accordingly the books of accounts of the appellant are rejected u/s 145(3) of the Act. The Id. AO has held in the assessment order that the out of deposited cash of Rs. 58,00,000/- SBNs during the demonetiza....
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....books of the assessee within the meaning of section 2(12A) and, therefore, addition u/s 68 can also be made, irrespective of whether credit entries are made in the books of account of the assessee or not. Further alternatively such amount Rs. 12,90,178 having found its place in the bank account is also taxable as unexplained investment u/s 69 of the Act. Accordingly this ground of appeal is hereby dismissed." 5. Aggrieved from the order of the ld. CIT(A) the assessee has preferred this appeal on the grounds as reiterated in para 2 above. In support of the grounds so raised ld. AR of the assessee has relied upon the following written submission: - "BRIEF FACTS: Assessee was engaged in the business of Manufacture and job work of jewellery during the year under consideration. Assessee had deposited cash of Rs. 58,00,000/- in old currency during the period of demonetization. Ld AO added the amount of Rs. 12,90,178/- as unexplained cash credit on estimate basis u/s 68 and raised demand of Rs. 14,34,724-/-. Such addition/ disallowances were challenged by the assessee before Ld. CIT(A) who confirmed the addition. Now the assessee has preferred appeal before your honor. Ground w....
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....the accounts, such an exercise is validly undertaken. This is for the simple reasons that the expression "any sum" refers to any specific amount and nothing more". In view of above, addition of Rs. 12,90,178/- deserves to be deleted. Ground No. 1: That addition u/s 68 is not possible if no books of accounts are maintained: As per Sec. 68 of the income tax act, 1961, Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year: Sec. 68 starts with the words if any sum is found credited in books of an assessee. In the present case, assessee had filed return u/s 44AD and therefore, no books of accounts were required to be maintained. In the absence of books of accounts, no addition u/s 68 is possible. In the present case, Ld. AO passed the assessment order by rejecting books of accounts and making addition u/s 68. However, no books of accounts were maintained by the assess....
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.... Satbir Singh Bhullar Vs. ITO [ITA 258/ASR/2022] [ITAT AMRITSAR] Further, it has been held in various judgements that Bank pass book cannot be considered as Books of accounts for the purpose of section 68: a. Rameshbhai somabhai patel v. ITO [ITA NO. 1864/AHD/2014] b. Smt. Manasi Mahendra Pitkar v. ITO [2016] 73 taxmann.com 68/160 ITD 605 (Mum. - Trib.) c. Smt. Ramilaben B. Patel v. ITO [2018] 100 taxmann.com 325 (Ahd.- Trib.) d. Amitabh Bansal v. ITO [2019] 102 taxmann.com 229 (Delhi-Trib.) e. Mehul v. vyas v. ITO [2017] 80 taxmann.com 311/164 ITD 296 (Mum.- Trib.) f. CIT v. Bhaichand N. Gandhi [1982] 11 Taxman 59/141 ITR 67 (Bom.) Further, Ld. CIT(A) had cited the judgement in case of Jagdish Prasad Sharma v. ITO [ITA 104/DEL/2015] and Judgement of Bombay High Court in Arunkumar J. Muchhala v. CIT [2017] 85 taxmann.com 306/250 taxman 362/399 ITR 256 (Bom.) stating that Bank pass book is also books of accounts for the purpose of addition u/s 68. However, facts of the case laws cited by the Ld. CIT(A) are different from the present case. In above cited case laws, Assessee had earlier admitted during assessment proceedings that books of accounts are maintained and wi....
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....of Purchases, Sales and Job Work account, Monthly Cash Account. However, issued SCN no. 1023025187 (1) on 24-12-2019 regarding justification of cash deposit and the same was replied as follows: - 1. Assessee is a manufacturer and work very marginally. As marriage season start from Dev Uthani Gyaras which was on 11-11-2016, so Assessee had huge orders in hand for this season hence assessee applied for a mortgage loan from PNB Housing Finance to fulfil orders and enhance business but the loan was delayed and was disbursed on 24-11-2016 for Rs. 22,22,213/-. As people start taking delivery 7 to 10 days before Dev Uthani Gyaras hence our sales occurred in first week of November 2016 and the whole amount was utilized to purchase raw material i.e., Gold/ Silver / Stones. Stock came on lower side due to good sales and delay of loan. However, stock came to average level after receiving loan and plough back of sales. 2. Whole purchases are fully verifiable and whole amount deposited in cash has been paid to purchase Goods (Raw Material). No amount has been withdrawn in cash hence business money remained in business. 3. Survey of the Assessee's premises was held on 28-02-2018 and no adv....
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....: 68. Where any sum is found credited in the books of an assessee.......................... From the perusal of section 68, the sum found credited in the books of accounts for which the assessee offers no explanation, the said sum is deemed to be income of the assessee. In the instant case the assessee had explained the source as sales, produced the sale bills and admitted the same as revenue receipt. The assessee is engaged in the jewellery business and maintaining the regular stock registers. Both the DDIT(Inv.) and the AO have conducted the surveys on different dates, independently and no difference was found in the stock register or the stocks of the assessee. Purchases, sales and the stock are interlinked and inseparable. Every purchase increases the stock and every sale decreases the stock. To disbelieve the sales either the assessee should have the sufficient stocks in their possession of there must be defects in the stock registers/ stocks. Once there is no defect in the purchases and sales and the same are matching with inflow and the outflow of stock, there is no reason to disbelieve the sales. The assessing officer accepted the sales and the stocks. He has not distur....
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....mend or alter any grounds of appeal before or at the time of disposal of this appeal: Not Pressed 5.1 To support the various grounds so raised by the ld. AR of the assessee and has relied upon the following evidences in support of the contentions so raised:- S. No. Particulars Page No. Authority before whom presented 1. Copy of ITR along with Computation and Balance sheet 1-3 AO 2. Copy of Judgement by Delhi High Court in D.C. Rastogi v. CIT [2014] 45 taxmann.com 489 4-6 Case Law 3. Copy of Judgement by Delhi ITAT in Babbal Bhatia vs. ITO [5430 & 5432/Del/2011] 7-20 Case law 4. Summary Sheet of day wise stock 21 AO & CIT(A) 5. Copy of order passed by Ld AO for the AY 18-19 22-25 Judgment 6 Copy of Judgement in ACIT vs. M/s Hirapanna Jewellers [ITA 253/VIZ/2020] 26-43 Case law 7. Copy of Judgement of Jaipur ITAT in Shree Vaibhav Laxmi Jewellers vs. ACIT [394/JP/2024] 44-60 Case law 8. Copy of Judgement of Jaipur ITAT in Mahesh Kumar Gupta vs. ACIT [149/JP/2022] 61-014 Case law 6. In addition to the written submission so filed ld. AR of the assessee submitted that finding of the lower authority is incorrect so far as the credit of the assessee ....