AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (4) TMI 1210
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.... has grossly erred in law and to the facts of the case in making lump sum addition on the basis of his presumptions and guess work, without the support of any material either collected or placed upon records. 4.4. That the Ld AO has formed the decision merely on the basis of figures without considering the facts of the case. This shows that the decision was made prima facie from the beginning of the proceedings. The justifications provided by the assessee were not even considered and no alternate view or proof was given by AO, 5.5. That in the case law of, ITO Vs Manasa Medicals (ITAT Bangalore) it was held that cash deposited on account of cash sales during demonetization period cannot be added as unexplained under section 68 of the Income Tax Act as AO didn't rejected the books of accounts nor brought anything contrary on records to show that cash sales is not the source for cash deposits. Keeping the above judgement in view, the same should be held for the case under dispute. It is also noted that the ld. AR of the assessee has filed vide application dated 15-02-2024 has filed following additional ground praying therein to admit the same. ADDITIONAL GROUND 1. In....
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....dered the facts of the case, submission made by the appellant and order passed by the A.O. u/s 143(3) of the 1. T. Act, 1961. In this case, the case was selected for scrutiny under CASS, and the main issue involved in this case, is the source of cash deposits amounting to Rs. 52,89,500/- during the demonetization period. During the assessment proceedings, the assessee had filed details before the AO, but did not offered any specific explanation in support of the source of the said cash deposits. 6.1 During the assessment proceedings, before the AO, the appellant has submitted the cash balance as on 01.11.2016, the details of which are as under:- Branch Opening cash balance as on 01-11-2016 Cash sales from 01-11-2016 to 08- 11-2016 Closing cash balance as on 08- 11-2016 Jaipur 34,80,471 15,86,000/- 50,63,931/- Mumbai 2,73,519/- 5,00,940/- 5,54,519/- Total 37,53,990/- 20,86,940/- 56,19,450/- From the above table it is seen that, the assessee had submitted the breakup of cash sales and details of cash deposited from 01.11.2016 to 08.11.2016 However, the assessee has neither submitted the details of party wise breakup to whom the gold was sold from the month of....
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....ms of cash sales from 01.10.2016 to 08.11.2016. It is very important to discussing the prevailing situation on the day which had impacted the motives and guided the actions of the assessee on a substantive level. The FY 2016-17 is marked by a major policy initiative Le demonetization announcement on the night of 8th November 2016. With effect from midnight of 8th November 2016, the currency notes of denomination of Rs 500 and Rs 1000 seized to be legal tenders. After that, transactions in these notes were barred by law except few exceptions. The case of the assessee does not fall into those exceptions The intention behind the policy move was to unearth black money hoarded in the form of cash(currency notes of Rs 500 and Rs 1000). Once these notes were discontinued to be legal tenders, those hoarding cash in these notes had only one option which is to deposit the same into bank account otherwise the same will be rendered as mere piece of papers. The assessee's case was no different. In light of the facts it can be safely held that assessee had cash balances hoarded in the form currency notes of Rs 500 and Rs 1000. In order to keep the value intact he was forced to deposit the ....
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....business which is nearly more than a decade old and also sells personalized jewellery pieces tailored for film stars. 2. The assessee firm had the honour of designing a crown for the Miss World pageant. This achievement showcases the firm's expertise and creativity in crafting prestigious and beautiful pieces. 3. The assessee firm deals in both credit and cash sales. The nature of the business inherently involves cash sales. The head office of the assessee firm is located in Jaipur and branch at Mumbai at following address: Jaipur-Kailashpuri, 46, Sahapura Bagh, Near Trident Hotel, Amber Road, Jaipur, Rajasthan. Mumbai-Rizvi Mahal Chs Ltd, Shop No. 8/3, water field, 106 TPS, Mumbai, Maharashtra 4. Copy of GST certificates evidencing the above address of the assessee firm are enclosed [PB 51-56] 5. The assessee firm, during demonetization period, from 09.11.2016 to 30.12.2016, deposited a sum of Rs. 52,89,500 in its bank account. The assessee firm submitted following details of cash balances as on 01.11.2016 to 08.11.2016 before ld. AO[Page 2 of AO Order] Branch Opening cash balance as on 01.11.2016 Cash Sales from 01.11.2016 to 08.11.2016 Closing cash ....
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....edit sales 96,87,612 70,10,481 90,22,660 2,57,20,753 Total 1,06,77,862 70,10,481 97,49,660 2,74,38,003 Jaipur: AY 201718 01.04.16 to 07.11.16 08.11.16 to 30.12.16 31.12.16 to 31.03.17 Total Cash sales 48,06,100 11,75,000 - 59,81,100 Credit sales 1,15,22,119 7,00,000 10,00,000 1,32,22,119 Total 1,63,28,219 18,75,000 10,00,000 1,92,03,219 14. Comparative chart of cash deposits made by the assessee firm is as under: Particulars AY 2016-17 AY 2017-18 Turnover 4,32,77,865 4,66,41,222 Cash deposits 2,17,77,000 1,36,60,500 % of Sales 50.31% 29.28% 15. It is apparent from the above data, that the total cash deposits have decreased by Rs 81,16,500. If we compare the cash deposits on percentage basis, the same was 50.31% in the preceding year which came down to just 29.28% in the relevant year. The trend of cash deposits are in declining trend, despite of the fact that the turnover of the assessee has increased during the relevant year. 16. The above data signifies that the cash deposits out of cash sales is a regular feature of the assessee firm. The increase of cash deposits during the period of demonetization, compared to same p....
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.... 62-63] The said fact is undisputed. Screenshot of the relevant submission before ld. AO is as under: 23. It is further submitted that the cash book for following period were submitted before ld. AO[PB 61] Year Month 2015 November and December 2016 November and December 2017 November and December 24. It is worthwhile to note that ld. AO has also accepted the opening stock, purchase, as well as the closing stock at the year-end to be genuine and correct. Copy of ledgers of purchases are placed at PB67-73Ld. AO has not rejected the books of accounts by invoking the provisions of section 145(3) of the Act. This means that all the entries in the books of accounts recorded by the assessee are correct. Suspicion, however strong it may be, cannot be termed as evidence. It should not be used against the appellant without disproving the sales with tangible evidence. 25. Once the books of accounts are not rejected, no separate addition for the sales recorded in the books of account can be made by treating the same to be undisclosed income of the assessee. 26. Ld. AO also ignored the fact that trading results of the assessee firm are in increasing trend. The following details ....
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....venue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. This view is also supported by the decision of Hon'ble Delhi High Court in the case of Kailash Jewellery House (supra) and the Hon'ble Gujarat High Court in the case of Vishal Exports Overseas Ltd. (supra), Hence, we do not see any reason to interfere with the order of the Ld. CIT (A) and the same is upheld." 31. Attention is also invited towards the decision of the Hon'ble ITAT, Delhi Bench in the case of Agson Global Pvt Ltd vs. ACIT (2020) 115 taxmann.com 342 [CLC 1-76] The facts in this case are assessee company was engaged in purchase and sale of dry fruits and other grocery items. It deposited Rs. 180.53 crore post-demonetization in its Bank accounts, out of sale proceeds. During the course of assessment proceedings, assessee submitted details of closing stock, list of debtors, details of purchases and sales party-wise for year, VAT returns etc. However, AO made an addition of Rs. 150.53 crore as income u/s 68. CIT (A), restricted addition to Rs. 73.13 crores. The Hon'ble Bench deleted the addition. The relevant para 126 (vii) is reproduced hereunder: ....
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....he Hon'ble Jurisdictional High Court in the case of Smt. Harshila Chordia v. ITO (2008) 298 ITR 349[CLC 82-88]wherein the Hon'ble High Court held as under: "So far as question No. 2 is concerned, apparently when the Tribunal has found as a fact that the assessee was receiving money from the customers in hands against the payment on delivery of the vehicles on receipt from the dealer the question of such amount standing in the books of account of the assessee would not attract section 68 because the cash deposits becomes self-explanatory and such amounts were received by the assessee from the customers against which the delivery of the vehicle was made to the customers. The question of sustaining the addition of Rs. 6,98,000 would not arise." "We, therefore, hold that no addition was required to be made in respect 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." 34. Attention is invited towards the recent decision of the Hon'ble ITAT, Mumbai bench in the case of R.S. Diamonds India Private Limited vs ACIT, Mumbai, ITA No 2017/Mum/2021[CLC 89-91] wherein it was held as under: ....
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.... submitted that allegation made by ld. AO is totally baseless as the same is a presumption. No evidence is brought on record by lower authorities in support of their allegation. 36. Apart from disbelieving the explanation of the assessee, ld. AO has not collected or placed on record an iota of evidence which could suggest that the bills of the assessee are self-made and fabricated. 37. Ld. AO on Page-10 of his order rejected the cash sales in two parts: i. Cash Sales of 07.11.2016 and 08.11.2016 of Rs 15,86,000 ii. Cash Sales of Rs 10,00,000 of October, 2016 38. Ld. AO without pinpointing any specific defect in such sales in the most arbitrary manner, rejected the same. Ld. AO is unjustified in not accepting the declared cash sales which are recorded in books of accounts which books were found to be correct and complete by ld. AO himself. 39. Ld. AO invoked provision of Section 68 in respect of sales. Section 68 deems non income to be income. A deeming fiction of income cannot apply to an item which is already treated as income by the assessee himself. In the instant case, the credits by way of sales were already offered for tax. Hence, Section 68 per se cannot be invok....
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....sed sources, and the burden was not on the assessee to prove how it had received these high denomination currency notes; for, until the Demonetisation Ordinance came into force high denomination currency notes could be used as freely as notes of any lower denomination and no one had any idea that it should be necessary for him to explain the possession of high denomination currency notes, the assessee has naturally not kept any statement regarding the receipt of these currency notes, and it was for the first time on January 12, 1946, when the Ordinance came into force, that it became necessary for the assessee to explain its possession of these currency notes; and (ii) that the explanation given by the assessee that the notes formed part of the cash balance of Rs. 34,000 and odd was fairly satisfactory and was not found by the Tribunal to be false; the statement of sales was hardly relevant to the question; the Department, in relying on the entries relating to the bills of each day, committed an error and no inference should have been drawn from them; that any one single transaction did not exceed Rs. 399 did not preclude the possibility of payment in high denomination no....
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.... be meticulously matched. Variation in facts would render the judgment inapplicable even if there is may be broad similarity in facts. b. Durga Prasad More [1971] 82 ITR 540 (SC) [Page 8 , AO Order] i. The Hon'ble Supreme Court delivered this decision while dealing with the reliability of a self-created document i.e. a trust deed in that case. The Hon'ble Supreme Court held that there was no source of income of wife of the assessee from which she could generate funds for purchase of property. Therefore, treated the income from property as the income of the assessee. ii. Whereas in the present appeal, the source of cash is clearly established. The evidences for cash sales are on record and there are no defects pinpointed by the ld. AO contrary to the facts submitted by the assessee. iii. The observation of the Hon'ble Supreme Court, in this case, at para 9, reproduced below supports the case of the assessee: "Now, coming to the question of onus, the law does not prescribe any quantitative test to find out whether the onus in a particular case has been discharged or not. It all depends on the facts and circumstances of each, case. In some cases, the onus may be heavy wherea....
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.... case. ii. The set of facts referred in the above case and instant case of the assessee firm are totally different as in the above decision a list of documents were asked to produced by the company in order to pass triple test laid down u/s 68. However, the company could not furnish those documents and then question of probabilities was arisen and addition was confirmed. In the instant case of the assessee firm, documents are produced before the lower authorities and, therefore, when documents are submitted for substantiating the claim, the same have to be looked first before examining the probabilities. iii. Hence, the above decision does not apply to the present case. f. Sampat Raj Ranka[2001]73 TTJ 642 (JD.)[Page 9, AO Order] i. The decision of Hon'ble ITAT, Jodhpur Bench is applicable to the present case. The decision of ITAT in fact supports the case of the assessee. Hon'ble Bench has itself admitted that "the lower authorities had rejected the direct evidence on the basis of assumptions and presumptions ignoring that that the assumptions and presumptions had to be examined in the light of evidence on record and the same could not override the facts" [Headnotes reprodu....
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....nd deserves to be quashed.'' 2.3 On the other hand, the ld. DR strongly supported the order of the ld.CIT(A). 2.4 We have heard both the parties and perused the materials available on record. Brief facts of the case are that Assessee, a partnership firm, is engaged in the trade of precious and semi-precious stones and jewellery since 2009. The assessee firm, for the year under consideration, filed its return of income on 27.10.2017, declaring loss of Rs. 10,68,145. Copy of ITR-V, Computation of income and audited financial statements for AY 2016-17 and AY 2017-18 are placed at PB 1-26 and Assessment proceedings u/s 143(3) were completed in the case of the assessee firm on 25.12.2019 by making additions amounting to Rs. 25,86,000 u/s 68 and taxed the income by invoking the provisions of section 115BBE. Subsequently, rectification order u/s 154 was passed by AO by revising the assessed total income of Rs 15,17,855 to Rs 25,86,000. The said revision, by way of rectification, was made on account of following two reasons: i. Adding back of donation of Rs 39,000 debited in profit and loss account ii. Not allowing set off of loss against the addition made u/s 68 of Rs 25,8....
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.... of cash deposits in the previous years has been admitted by ld. AO at Page-2 of his order. Screenshot of the same is as under: The above data as stated by . AO is summarized by the assessee in his written submission as under:- Particulars AY 2016-17 AY 2017-18 Cash deposits for whole year 2,17,77,000 1,36,60,500 D Cash Deposits for demonetization 25,50,000 52,89,500 It is evident from the above table that the total cash deposits have decreased as compared to the preceding year. The only reason for doubt in the mind of AO for cash deposits is the increase in the same during the period of demonetization. Copy of ledgers of sales are placed at PB 74-83. However, for ready reference, the same are reproduced branch wise as under: Mumbai Branch: AY 201718 01.04.16 to 07.11.16 08.11.16 to 30.12.16 31.12.16 to 31.03.17 Total Cash sales 9,90,250 - 7,27,000 17,17,250 Credit sales 96,87,612 70,10,481 90,22,660 2,57,20,753 Total 1,06,77,862 70,10,481 97,49,660 2,74,38,003 Jaipur: AY 201718 01.04.16 to 07.11.16 08.11.16 to 30.12.16 31.12.16 to 31.03.17 Total Cash sales 48,06,100 11,75,000 - 59,81,100 Credit sales 1,15,22,119 7,00,000 1....
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....nly for the reason that certain particulars were missing on the sales invoices. It is also noted from the records that the assessee firm maintained regular books of accounts. Books of accounts of the assessee were audited under the provisions Section 44AB of the Income Tax Act, 1961. In the audit, there were no adverse remarks of the auditor and the auditor found the underlying evidences, substantiating the transactions recorded in the books of accounts, w.r.t. cash sales, to be adequate and reasonable. The details of party-wise purchases along with their PAN and address were submitted before AO. Copy of reply is placed in paper-book[PB 57-58]. The said fact is not in dispute. . AO has not doubted the amount of purchases made by the assessee firm. Availability of stock for cash sales is not doubted by lower authorities. It is also noted that details of stock records and sales register were uploaded on e-filing portal. Copy of replies reflecting the same are placed in paper-book at [PB 62- 63]The said fact is undisputed. Screenshot of the relevant submission before ld. AO is as under: From the submissions of the assessee, it is noted that at the cash book for following period were....