TaxTMI 
TaxTMI 
2025 (5) TMI 880
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....tization period in the facts and circumstances of the instant case. The 2nd issue involved is deletion of addition made u/s 69C of the Act in the sum of Rs. 16,06,335/- treating interest paid as unexplained expenditure. 3. We have heard the rival submissions and perused the material available on record. The assessee is engaged in the business of sale/ purchase of gold and diamond jewellery. The assessee filed return of income for AY 2017-18 on 01.11.2017 declaring total income of Rs. 97,91,450/-, which was duly processed u/s 143(1) of the Act. A survey u/s 133A of the Act was conducted at the business premises of the assessee firm on 10.11.2016. Subsequently, a search u/s 132 of the Act was conducted at on the assessee firm on 23.03.2018. Pursuant to the search, notice u/s 153A of the Act stood issued to the assessee on 15.07.2019. The assessee filed the return u/s 153A of the Act on 08.08.2019 disclosing the return of income of Rs. 97,91,450/-. During the course of survey operation on 10.11.2016, wherein, discrepancies were found with regard to sales of gold on 08.11.2016 to cover up unexplained cash of Rs. 2,00,97,526/- and cash sales of silver during October 2016 to cover up ....
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....t, 1961 was carried out on 23.03.2018 on Luv Kush Group of cases. The case of the assessee was also covered u/s 132 of the Income tax Act, 1961. The Assessee is engaged in the business of jewellery. During the course of search operation at the business premises of the assessee, the value of jewellery found at the Business premises of M/s. Shri Ram Hari Ram, 1658- 59, Daribakalan, Chandni Chowk, Delhi, came to Rs. 60,51,48,590/-. At the time of recording of statement u/s 132 of the Income Tax Act, 1961 on 23/03/2018, Shri Rajat Gupta, one of the partners of M/s Shri Ram Hari Ram stated that the aforesaid items of jewellery found at the business premises at the time of search and seizure operation on 23/03/2018 belonged to M/s Shri Ram Hari Ram. However, minor difference of stock was detected during the time of valuation vis-à-vis the books of accounts found in the business premises. During the course of assessment proceedings the assessee explained the minor difference in the stock. Also cash of Rs. 52,63,250/- found at the office cum Business premises of M/s Shri Ram Hari Ram at 1658-59, DaribaKalan, New Delhi, ShriRajat Gupta stated in his statement recorded u/s 132(4) of t....
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....was demonetization. Further the AO has discussed the analysis of the impounded material of the Survey and has mentioned that the bills of the appellant for 08.11.2016 did not have the name, address or mobile number of the buyer, that all the said bills were of cash sales and were on average of higher amount as compared to the sale prior to the date. In the concluding Para of the assessment order, the AO has stated that on consideration of all the facts of the case and explanation of the assessee, entire sale of Silver of Rs. 2,41,51,751/- and Gold of Rs 2,00,97,526/- could not be considered as bogus only on the ground of unusual pattern of invoices. That the Diwali and the day of announcement of demonetization were unusual events and possibility of higher sale of gold and silver on such occasion could not be overruled. However, as per the AO, the sale of silver to the extent of Rs. 2,41,51,751/- and Gold of Rs. 2,00,97,526/- appeared on higher side and were unverifiable, which were introduction of unaccounted business income of the assessee in the form of cash sales in the books. On the basis of the analysis from various tabular charts, the AO has made an estimated addition of Rs. ....
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....ious purchases is also some indication for suspicion of fictitious sales. Therefore, it is imperative to examine as to whether the case of the assessee falls into these parameters are not. 9.4 The appellant has submitted that comparative charts were called for by the Assessing Officer during the assessment proceedings in order to analyse the business pattern viz a viz cash sales. The appellant has filed its written submissions, which were also submitted during the assessment proceedings. From the said submissions the comparative charts are reproduced below and the trend emerging from the said charts is also analysed hereunder: Chart No. 1.: Percentage of cash turnover viz a viz total turnover over the past 5 years. Details of Trend of Sale of Jewellery/Bullion on Cash Basis during last 6 year F.Y. SECTION UNDER WHICH ASSES SMENT MADE TOTAL SALES CASH SALES % of Cash Sales CASH DEPOSITED IN BANK ASSESSMENT ORDER F.Y. 2011- 12 143(3) 33,64,47,396 20,97,91,686 62.35 20,22,38,535 Copy of Assessment Order & CIT(A) Order enclosed F.Y. 2012- 13 143(3) 32,84,22,563 20,80,00,742 63.33 19,99,87,000 Copy of As....
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.... OCTOBER 7,45,43,048 24,04,614 3,55,17,715 11,45,733 NOVEMBER 6,32,69,371 21,08,979 4,02,28,859 13,40,962 From the above chart it is seen that the assessee company has reported turnover for the financial year 2016-2017 (Upto November, 2016) which is comparable with the turnover of the immediately preceding previous year both in terms of monthly sales as well as average daily sales. Further the net sales in the months of October 2016 are more than the sales in the month of November 2016. Thus it is not the case wherein the sales are high only in the month of November 2016. Chart No. 4 Comparative data of Cash Sales and Cash Deposits Oct. Nov. 2016 and 2015. Month Op. Cash in Hand Cash Sales Cash Deposited In Bank Cash Withdrawn from Bank Closing Cash in hand October'2016 22,35,318 5,59,94,787 2,20,50,000 3,21,23,720 Till 08.11.2016 3,09,88,398 45,00,000 - 5,83,44,623 From the comparative of cash sales made by the assessee during Nov till 08.11.2016, it can be seen that it is not unusual for the assessee to ma....
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..... 1181.631 kg. Thus the sales of Silver of Rs. 2,41,51,751/- in October 2016 were out of stock of silver of Rs. 5,24,81,022/- ie 1181.631 kg available with the assessee which was duly accounted for in the books of accounts and verified by the survey team. Chart No.7 : Comparative sale and cash deposit of assessee are as under:- CASH DEPOSITS IN BANK 1.1 (a) Total cash deposit in Bank in F.Y. 2015-16 199,495,000 (b) Total cash deposit in Bank from 01.04.2015 to 08.11.2015 110,545,000 (c) Total cash deposit in Bank from 09.11.2015 to 31.12.2015 88,950,000 1.2 (a) Total cash deposit in Bank in F. Y. 2016-17 198,234,300 (b) Total cash deposit in Bank from 01.04.2016 to 08.11.2016 98,524,300 (c) Total cash deposit in Bank from 09.11.2016 to 31.12.2016 62,510,000 From the above chart it is evident that during the current year, the total cash deposit in the bank was of Rs 19,82,34,300/- which was slightly less than the cash deposit in the AY 2016-17 of Rs 19,94,95,000/-.It is a usual practice in the business of the assessee to deposit cash generated out of cash sales into the bank accoun....
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....months of August, September, October and November were Rs. 1,33,00,000/- Rs. 1,80,90,000/- Rs. 2,20,50,000/- and Rs. 45,00,000/- respectively. Thus the figures reflect fairly comparable trends for the corresponding periods of both the years. 9.5 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 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 67.29% for the period ended 31.03.2016 have co....
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....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. 9.8 The AO has made an ad-hoc estimated addition of Rs. 90,00,000/- on account of unaccounted business income as cash sales of gold u/s 68 which is not based on incriminating material found during the course of search or survey. From the sales chart of the assessee as reproduced supra, it is seen that majority of sales of appellant takes place as cash sales. In comparison to the average cash sales during the previous years have been above 60% of the total sales during the impugned financial year 2016-17 the percentage of cash sales to total sales is only 45% of the total sales. It is a matter of fact that on 08.11.2016 all jewelers kept their shops opened post announcement of demonetization, and there was huge rush of customers to buy jewellery to utilise the old currency lying with them....
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....sessee. The details of Silver Purchase and Sales during the year along with copies of Sale and Purchase Bills and the copy of VAT Returns along with copy of trading account as on 01.10.2016 have been submitted by the appellant. The stock of silver as per trading account for the period 1.04.2016 to 01.10.2016 shows silver stock valuing Rs. 5,24,81,022/-. This working is based on books of accounts as verified and impounded during survey 10.11.2016. During the course of survey on 10.11.2016 the stock of silver was valued and verified with reference to the books of accounts and found to be in order. Regarding the search on the appellant nothing incriminating has been brought on record about the purchases, stock or sales made by the assessee in October 2016. Accordingly it is inferred that the sales of Silver of Rs. 2,41,51,751/- in October 2016 were out of stock of silver of Rs. 5,24,81,022/- available with the assessee which was duly accounted for in the books of accounts of the assessee and was verified by the survey team During the course of survey or search on the appellant, nothing incriminatory was found which has been brought on record in the ....
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....k. It is not the case where the physical stock found in the course of search was in excess of the book stock, which could have probably indicated at the possibility of recording of bogus cash sales. The cash sales are duly supported by relevant vouchers and bill books, which were produced in course of the assessment proceedings and bill books, and gold and silver purchase register were also impounded during the course of survey, and nothing adverse was found. The figure of cash sales offered by the Assessee in its Return of Income for F.Y. 2016-17 has not been disturbed by the AO. Since the cash sales recorded in the books of the assessee have been accepted by the AO, the corresponding cash deposits made out of such cash sales cannot be rejected and deemed to have arisen on account of income from unexplained sources. Also no incriminating material was found in course of search or survey to suggest that the assessee had indulged in any other unaccounted business activity leading to generation of unaccounted cash. 9.14 In the practice of book keeping the purchases, sales and the stock are interlinked. Every purchase increases the stock and every sale decreases the stock. To ....
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....dded back to the total income of the assessee by the AO. 8.1 The unsecured Loan of Rs. 1,70,00,000/- was received by the appellant company during the earlier A.Y 2016-17 from M/s Vagmi Financials Pvt. Ltd. through account payee cheque which was refunded back in A.Y 2018-19. The said loan was accounted for in Audited Financial Statements and Return of Income of the appellant for the A.Y 2017-18. The appellant during the year under consideration has paid interest on the said loan amounting to Rs. 16,06,335/- after deduction and deposition of applicable TDS. That the Loan was fully repaid during the FY 2017-18 through banking channel along with applicable interest @ 9% after deduction and deposition of TDS in F.Y 2017-18. 8.2 M/s Vagmi Financials Pvt. Ltd. had given unsecured loan amounting to Rs. 1,70,00,000/- to appellant company out of their Audited Net Worth comprising of their Share Capital and Reserves and Surplus. It is seen that Net Worth of the company as per the Audited Financial Statements of the company as on 31.03.2016 are multiple times more than the unsecured loan given to the assessee company. Further, it is seen from the submissions of the appellant ....
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.... 8.4 Further, the appellant has submitted that it is trite law that where since no incriminating evidence against assessee was found or seized during course of search so as to attract provisions of section 153A proceedings, no additions could be made on basis of statement which was recorded under section 131 much later after search. The appellant has relied upon the following judgements. i) Saumya Construction (P.) Ltd. [2017] 81 taxmann.com 292 (Gujarat) ii) Sunrise Finlease (P.) Ltd. [2018] 89 taxmann.com 1 (Gujarat) iii) Moon Beverages Ltd. ITA No. 115 to 118/Del/2018 dated 27.11.2020 (Del-ITAT) iv) Hi Tech Residency (P.) Ltd. [2011] 257 Taxman 390 (Del) 8.5 The appellant has denied having ever made any transaction with or through Mahender Lal Sethia or Praveen Aggarwal or any entity in which they were directors or shareholders. The statements of Praveen Agarwal and Mahenderlal Sethia were recorded u/s 131 after conclusion of search behind the back of the appellant company without providing opportunity to rebut, which have been retracted by the deponents. Since the statements were not confronted to the appellant and those people....