TaxTMI 
TaxTMI 
TaxTMI 
2025 (1) TMI 1403
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....Trading Company, proprietorship of Sri Ankit Jain on 07.11.2019. During the course of search operation conducted, the statement of Sri Ankit Jain was recorded on oath wherein he has confessed that he had made fictitious purchases with many parties and he has given the details and names of the parties. One such party is Sri Nathmal Roopchand Jain, Proprietor of M/s. Pooja Jewellers with whom a transaction of Rs. 2,24,40,000/- has been done in the said year under consideration. The Assessing Officer accordingly issued statutory notices u/s 143(2) ands 142(1) of the Act along with a questionnaire which were duly served on the assessee. The AR of the assessee, in response to the same, appeared before the Assessing Officer from time to time and filed the requisite details. 3. The Assessing Officer further obtained information u/s 133(6) of the Act from the various banks with whom the assessee has maintained accounts. From the details so submitted by the banks in response to the notices u/s 133(6) of the Act, the Assessing Officer observed that the assessee has made cash deposits during the financial year 2019-2020 relevant to the assessment year 2020-21 to the tune of Rs. 4,43,90,000/-....
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....of search proceedings. It also clearly establishes that the cash deposited by Shri Nathmal Jain in the bank account (from alleged cash sales) was transferred by RTCG to show bogus purchase but was actually being used to provide cash by hawala means to various persons at Delhi with the help of Shri Ankit Jain, proprietor of M/s Rishab Trading Co. Therefore the entire cash deposited in the bank account of the assessee to the tune of Rs. 4,43,90,000/- is treated as unexplained cash deposit and brought to tax u/s 69A of the Income Tax Act, 1961." 5. The Assessing Officer accordingly determined the total income of the assessee at Rs. 4,64,48,518/- as against the returned income at Rs. 19,28,040/-. 6. Before the Ld. CIT(A)/NFAC the assessee made elaborate submissions, based on which the Ld. CIT(A)/NFAC deleted the addition of Rs. 4,43,90,000/- made by the Assessing Officer u/s 69A of the Act and directed the Assessing Officer to adopt the net profit rate at 1.33% to the total sales including the cash sales of Rs. 4,43,90,000/-. 7. So far as the deletion of Rs. 4,43,90,000/- is concerned, the Ld. CIT(A)/NFAC deleted the same by observing as under: "6.2.5 I have perused the order o....
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....s purchases from M/S Rishab Trading Company. But the appellant has proved that the sale invoices were submitted before the AO during the course of assessment proceedings on 23.09.2022 and no defect has been pointed out in the sale invoices submitted by the appellant. However the contention of the appellant regarding the bogus purchases has been found to be incorrect. The appellant has further stated that in order to invoke the provisions of Section 145(3) of the Act for rejection of books of account the AO has to prove that there are specific defects in the books of account and the profits cannot be deduced for the method of consistently employed by the assessee. However as mentioned above the AO has brought about the specific defect that the appellant has recorded bogus purchases in his books of accounts. Considering the fact that the appellant has indulged in making bogus purchases from M/s Rishabh Trading Co. the action of AO in rejecting the books of accounts of the appellant is sustained. The AO is also directed to recompute the business income of the appellant by applying a net profit percentage @ 1.33% (Average of 1.46% shown last year and 1.2% shown this year) to the ....
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....operly the Ld. CIT(A)/NFAC was not justified in deleting the addition made by the Assessing Officer u/s 69A. He accordingly submitted that the order of the Ld. CIT(A)/NFAC be reversed and that of the Assessing Officer be restored. 11. The Ld. Counsel for the assessee on the other hand strongly supported the order of the Ld. CIT(A)/NFAC. He submitted that the accounts of the assessee are regularly audited as per the provisions of section 44AB of the Income Tax Act, 1961 and the assessee during the course of assessment proceedings has submitted the details of items traded giving the quantitative analysis of opening stock, purchases, sales and closing stock and the same matches with the stock register. He submitted that the assessee is maintaining the day-to-day stock registers for each category of goods they deal with i.e. stock register is separately maintained for Bullion, Copper and ornaments. He submitted that during the impugned assessment year the assessee has completed 25 years of its business and had offered silver bars at discounted price for the period between 15.04.2019 to 30.05.2019. Referring to the copy of the advertisement published in newspapers and placed in the pap....
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....ing Officer that the cash sales have been shown only during the month of April and May, 2019 is concerned, he submitted that due to the attractive discount offered during the period between 15.04.2019 to 30.05.2019 on completion of 25 years, the cash sales of the assessee have gone up. 16. So far as the allegation of the Assessing Officer that the assessee has not been able to substantiate with documentary evidence of sales and purchases is concerned, he submitted that the assessee has duly submitted the copies of sales invoices, GST returns, copies of ledger of purchases, etc., therefore, the allegation of the Assessing Officer is not correct. 17. So far as the allegation of the Assessing Officer that the assessee has not produced the cash book nor furnished the source of cash deposited is concerned, he submitted that the allegation of the Assessing Officer is incorrect since the assessee has duly submitted the copies of cash book on 23.09.2022 which clearly gives the source of cash deposited and the acknowledgement of online submission is available at pages 46 to 47 of the paper book. 18. So far as the reliance of the Assessing Officer on the statement of Mr. Ankit Jain is con....
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.... orders of the Assessing Officer and Ld. CIT(A)/NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case on the basis of search conducted at the business premises of M/s. Rishabh Trading Company, proprietorship of Sri Ankit Jain on 07.11.2019, during which, Mr. Ankit Jain has confessed that he had made fictitious purchases with many parties and one such party is Sri Nathmal Roopchand Jain, Proprietor of M/s. Pooja Jewellers with whom a transaction of Rs. 2,24,40,000/- has been done, made addition of Rs. 4,43,90,000/- u/s 69A treating the cash deposited by the assessee in the bank account as unexplained cash. The Assessing Officer also rejected the books of account and determined the net profit of the assessee at 1.33% of the total sales excluding the cash sales of Rs. 4,43,90,000/- and made separate addition of Rs. 1,30,478/- being the difference between the profit declared by the assessee and profit determined by estimating the income. We find the Ld. CIT(A)/NFAC while upholding the rejection of books of account, however, deleted the addition of Rs. 4,43,90,000/- made b....