TaxTMI 
TaxTMI 
2025 (7) TMI 583
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....2017-18 under consideration, the assessee filed return of income declaring a total income of Rs. 3,19,390/-. In the return so filed, the assessee declared business income u/s 44AD at Rs. 4,38,952/- @ 8.09% on sales of Rs. 54,24,396/-. The case of assessee was selected for scrutiny on the reasoning of "large value cash deposits during demonetisation period as compared to returned income" and the notices u/s 143(2)/142(1) were issued. During scrutiny, the AO found that the assessee made total deposit of Rs. 1,34,44,000/- in bank accounts during demonetisation period. The AO raised queries to assessee qua the sources of deposits. In response, assessee submitted that the sale/repair proceeds of jewellery business was deposited in bank a/cs. The assessee also filed month-wise cash-flow for entire financial year to AO to show the availability of funds for making deposits. The AO issued final show-cause notice dated 17.12.2019 to assessee. In response, the assessee submitted that the total cash of Rs. 2,01,45,219/- was deposited in bank accounts during the financial year out of (i) business sales of Rs. 94,80,810/- (excluding VAT), (ii) cash of Rs. 70,01,539/- received from different sour....
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....nt could have been taxed. Thus, the addition of Rs. 1,00,86,463/- is liable to be deleted. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), National Faceless Appeal Centre ('the Ld. CIT(A), NFAC') has erred in making addition of Rs. 1,00,86,463/- without appreciating that the cash deposited in the bank account from sales proceeds has been utilized for making payment of purchases and thus, the cash deposited of Rs. 1,00,86,463/- cannot be treated as unexplained money u/s 69A r.w.s. 115BBE of the Act. Thus, the addition of Rs. 1,00,86,463/- is liable to be deleted. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), National Faceless Appeal Centre ('the Ld. CIT(A), NFAC') and the Ld. AO have erred in not appreciating that the cash deposited in the bank account has been made out of sales proceedings in the regular course of business of proprietorship firm M/s. Anil Jewellers and thus, the transactions cannot be taxed u/s 69A r.w.s. 115BBE of the Act. Ground No. 1: 5. In this ground, the assessee has challenged the addition of Rs. 3,24,513/- made by AO and upheld by CIT(A) on account of undisclose....
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....ount of the assessee is made out of the Sales proceeds of the assessee. Further, the assessee has also made payments of purchases against the above-mentioned cash deposited in the business Overdraft bank account. The payment of such purchases is also made through banking channel. Details of the same are as under: Sr. No. Name of Party Name of Bank Date of payment Amount paid 1. R K Bullion Union Bank 16.11.2016 30,23,000 2. R K Bullion Union Bank 16.11.2016 30,23,000 3. R K Bullion Indian Bank 18.11.2016 29,93,000 4. Adinath Enterprises Indian Bank 22.11.2016 12,63,750 5. Adinath Enterprises Indian Bank 23.11.2016 12,63,750 6 N S Jewellers and Bullion Union Bank 23.11.2016 29,95,000 It is submitted that the Ld. AO has erred in treating the cash deposited in the bank account of the assessee out of the sales proceeds as unexplained money u/s. 69A without appreciating that the cash deposited in the bank account pertaining to business of the assessee is not covered under the provisions of Section 69A of the Act. Copy of Bank Statement of Union Bank is enclosed here....
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....7 dated 12/09/2017 1 observe that the Hon'ble High Court in respect of excess stock found during the course of survey and surrender made thereof was found to be taxable under the head 'business and profession'." Thus, since the cash deposited pertains to sales made by the assessee, the provisions * of 'Business head' would apply and the provisions of Section 69A r.w.s 115BBE of the Act would not apply. It is further submitted that the assessee is covered under the provisions of presumptive taxation u/s. 44AD of the Act and is not required to maintaim regular books of accounts and further that the cash deposited pertains to Sales made by the assessee, the provisions of Section 69A of the Act should not be applied in the instant case. Reliance in this regard is placed on the decision of Hon'ble Cochin ITAT in the case of Thomas Eapen vs. ITO (ITA No. 451/Coch/2019) (Date of Order: 19.11.2019) wherein it has been held that where assessee, a small trader in medicine falling under section 44AD, offered income on presumptive taxation basis, provision of section 69A could not be applied to make addition in respect of undisclosed cash cred....
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....e counsel for the Revenue that the assertion that the books of accounts were stolen had a hidden motive and the assertion is rather unbelievable. The respondent assessee therefore must suffer adverse consequences. The only question is whether the addition of Rs.1,13,22,334/- to declared income of Rs.34,21,970/- is adequate or a higher addition would be justified. As far as total turnover is concerned, the appellate authorities are right in holding that the figure of Rs.18.43 crores cannot be disputed as the assessee was only doing development work for the Greater Noida Authority. The total turnover is also supported by the tax at source certificate. The quantum of turnover was not adversely commented upon by the Assessing Officer. In view of the aforesaid position, we wanted the counsel for the Revenue to ascertain the gross profit or net profit rates declared and accepted by the Assessing Officer in case of other contractors engaged in similar work. We wanted ascertainment of this aspect as the counsel for the Revenue had submitted that net profit @ 8% was inadequate and low and a higher profit rate should be attributed. By order dated 19.08.2014, counsel for revenue was required ....
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....of the assessee, the same is clearly evident from perusal of the bank statement. Further, the cash deposited by the assessee from sales proceeds from sale of jewellery has been utilized for making payments to suppliers for purchases and thus, the provisions of Section 69A are not applicable in the instant case. Thus, the assessee requests your goodself that the addition of Rs. 1,00,86,463/- may kindly be deleted. Without prejudice to the above, it is submitted that since the cash deposited pertains to sales made by the assessee, deemed profit u/s. 44AD of the Act @8% of the above i.e. Rs. 8,06,917/- (i.e. 8% of Rs. 1,00,86,463/-) may kindly be added to the total income of the assessee. We shall be glad to furnish any other documents/information/explanations as may be required in this regard. Thanking You Yours faithfully For ANIL JAIN (ANIL JEWELLERS) (LEGAL HEIR) Date: 13th July, 2023 Place: INDORE 8. Thereafter, Ld. AR submitted that the assessee was a senior citizen engaged solely in the trading and repairing business of jewellery items having shop named as "M/s Anil Jewellers" at Bada Sarafa Bazar, Indor....
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....d. AR submitted that the assessee has already expired and the present appeal is being pursued by legal heir who does not have any further material except to submit the truth. Therefore, Ld. AR prays that to close the litigation, the legal heir of assessee gives acceptance if a direction is given to the AO to assess income at Rs. 8,06,917/- @ 8% on Rs. 1,00,86,463/- u/s 44AD. 9. Ld. DR for revenue supported the orders of lower-authorities. He submitted that the assessee was also running gold card schemes and the AO called certain customers of gold card schemes u/s 131 but as per statements, those persons were not having receipt or document to justify that they had given cash towards gold card schemes. He submitted that the AO has analysed the trend of assessee's deposits and found that a higher amount of deposit was made during demonetisation period than the normal/average trend of assessee. He submitted that the AO has made best exercise and assessed income properly and the CIT(A) has also upheld AO's order. He requested that the orders of lower-authorities must be upheld. 10. We have considered rival contentions of both sides and perused the orders of lower-authorities as we....