TaxTMI 
TaxTMI 
2025 (2) TMI 1239
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....ny by the Id AO who invoked provisions of sec. 145(3) of the IT Act, 1961 by allegedly holding that they are not reliable and sales during demonetization period was allegedly unverifiable. (b). The Id CIT (A) is further wrong and has erred in law in upholding finding recorded by the Id AO that cash deposit to the extent of Rs. 220258445/- made by the appellant company in its bank account during demonetization period from 09- 11-2016 to 30-12-2016 on account of sale was allegedly fabricated and was allegedly its income from undisclosed sources. The Id CIT(A) is further wrong and erred in law in confirming addition of said Rs. 220258445/- made to the income of the appellant by Id AO u/s 68 of IT Act, 1961 as unexplained cash credit. 2. That on the facts and in the circumstances of the case the Id CIT (A) is wrong, unjust and has erred in law in confirming rejection by the Id AO of submission of the appellant that income of Rs. 63000000/- offered to tax by the appellant during course of search was its additional business income from sale of gold ornaments assessable under the heed income from Business and instead upholding finding recorded by the Id AO that the said ....
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....oncealed thereof and no part of it is false. SO HELP ME GOD. DEPONENT Date : 20.01.2025 Place : Jaipur 3.1 The fact contended by the assessee in the affidavit duly supported by the evidence was not disputed by the Id. DR. 4. We have heard the contention of the parties and perused the materials available on record. The bench after considering the contention raised in the condonation petition filed by the assessee and thereby condone the delay as observed by the registry. 5. Now coming to the merits of the appeal. The brief facts of the case are that a survey u/s 133A of the IT. Act, 1961 at the business premises of the assessee company was carried out on 02.08.2017 which was subsequently converted into search and seizure action operation as per provision of section 132 of the Act on 03.08.2017. Based on that fact even the jurisdiction over the case was assigned to Central Circle - 2, Jaipur by the Pr. Commissioner of Income Tax, Jaipur-1, Jaipur by means of an Order u/s 127 of the Act dated 16-10-2017. 5.1 Subsequent to that action notice under section 153A of the Act dated 13-12-2017 was issued and served upon the Assessee on 19-12-2017 requiring it....
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....12-2019. In connection with the same assessee furnished various details and documents. The details, documents and explanations furnished by the assessee were perused by Id. AO and based on the submission he he observed that ; (A) On perusal of the submission it is found that, the assessee made cash sales aggregating to Rs. 21,05,47,868/- in a single day through invoice no. 1051 to invoice no. 1649. The cash sale of Rs. 21,05,47,868/-on a single day does not seems genuine following the past year's trends. (B) When the cash sales of corresponding months of previous years are compared, it was noticed that the cash sale during the month of November 2016 was Rs. 28,02,77,549/-, during November 2015 it stood at Rs. 3,43,35,825/- and November 2014 at Rs. 1,00,44,334/ -. Therefore, during the year under consideration cash sales during November month increased by 8.16 times compared to November 2015 and increased 27.90 times compared to November 2014. (C) The cash sales made during November 2016 is 88.00% out of total cash sales made during the financial year 2016-17. The cash sales made in one month by the assessee is higher compared to cash sales in remainin....
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....o the sale of earlier years or the assessee has claimed a bogus claim of the sale to introduce his unaccounted income during the period of demonetarization as he could not kept the SBN notes of 500 and 1000. (C) Further, on examination of the sales bills it is found that bills were issued without complete details of the sold jewellery items as well as customers. The issued bills do not contains details of full description of the item sold like chain, Sat, Topas etc. and the items so purported to be sold cannot be verified from stock register on the date of issuance of bills whether the items were part of stock register or not. It is surprising that some of the bill having lower sale amount related to October and November have been issued with the detail of description of item sold for example bill no. 984 dated 02-11-2016 issued for amount Rs. 8350/- contains details of goods as 1 pair tops under 22/22 Kt gold jewellery. The said bill also contain mobile number of purchaser Namrta Ji Devatwal whereas the bill of higher amount issued in the month and date of demonetarization no such detail have been mentioned and no detail of mobile number has been found. This fact....
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....d. (F) Further on perusal of VAT return filed by assessee it is found that first three quarters of VAT return was revised by assessee. The details. are as under: Vat return filed by assessee for the financial year 2016-17 Original Revised Time Period Date of filing Turnover Date of filing Turnover Difference 01.04.2016 to 30.06.2016 31 0.2016 19018724 25.05.2017 19383536 364812 01.07.2016 to 30.09.2016 122.10.2016 96736721 25.05.2017 92447124 -4289597 01.10.2016 to 31.12.2016 14,02.2017 327892002 25.05.2017 327879120 -12882 01.01.2017 to 31.03.2017 25.05.2017 45 41192 Revised not filed On further examination, it is found that the assessee has revised his retail sale significantly and increased the retail sale by Rs. 1,01,56,812/- in compare to sale shown at Rs. 1088052/-in original VAT return for the period 01-04-2016 to 30- 06-2016. The assessee also revised the return for 2nd and 3rd quarter. The details is tabulated as under: Quarter Retail sale in Original return Retail sale in revised return Difference 1st 10880....
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....ssee has shown 1175 bills during the same period which is not possible. Further, the statement of above staff members were confronted to director of the assessee company, Shri Narendrasingh Laxmansingh Rathod vide his statement recorded u/s 132(4) dated 04-08-2017 wherein in reply to question no. 12 he vehemently admitted that he is agreed with the statement of Shri Om Prakash Sharma that the process of issuance of 1 bill takes about 5 minutes. He in reply to question number 15 further accepted that showroom was opened and billing of jewellery was done even after 12 PM of 08.11.2016. Further, another fact was revealed during the course of search proceeding that there was only one computer assigned/available at the showroom to issue the sale bills. In view of these fact it is evident that a buyer takes average 5 minutes to choose any item and staff of the assessee company takes average 5 minutes to issue the bill. By this average time of 5 minutes per bill the assessee company, could have prepare maximum of 50 to 60 bills in the stipulated time of 4 hours whereas the assessee has shown 1175 bills on that day which clearly shows that the assessee has issued....
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....017 at the time of booking of the buyers. Further, on the page No. 39, which is back side of Annexure-AS Exhibit-2 page No. 40, the details of inward and outward quantities of the gold are mentioned, which shows that the booking and supply was made of Bullion not gold jewellery. Moreover, Id. AO further noted that there are two entries written as 3300-000 KFJ 2 and 100-000 KFJ 2 in the left side of the Annexure AS Exhibit-2 page No. 40. It is pertinent to mention here that KFJ is short form of Kiran Fine Jewellers Pvt.Ltd. During the post search investigation, Shri Narendrasingh Laxmansingh Rathore in his statement dated 17 11 2017 accepted that this was his own money of showroom of Mis Kiran Fine Jewellers Pvt. Ltd. Based on that he noted that bullion and supplied the same after 08.11.2017 and received the amount in cash in old currency. The booking and supply of Bullion were made in Mis Mohit Jewellers and the cash was deposit in the accounts of Mis Kiran Fine Jewellers Pvt. Ltd. under grab of cash sale by issuing bogus sale bills. 5.7 Further, to verify the genuineness of the purchaser as shown by the assessee company on dated 08-11-2016. A survey action u/s 133A of the Act w....
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....BN notes but the assessee has also failed to explain the remaining amount of Rs. 1570555/- (Rs. 22,18,29,000/-minus Rs. 22,02,58,445/-) as cash receipt from genuine sale. Therefore, a sum of Rs. 22,18,29,000/- (Rs. 22,02,58,445/- plus Rs. 1570555/-) so deposited in the bank account is held unexplained cash credit u/s 68 of the Act which the assessee has induced in books under the grab of cash sales and resultantly addition of Rs. 22,18,29,000/- is being made and added to the total taxable income of the assessee and taxed at the rate of 60% as provision u/s 115BBE. 5.9 Since, in the instant case books of accounts are rejected as discussed above, and NP rate for the year is to be estimated and it will be reasonable to estimate the at 14.50% considering the fact that the assessee himself declared NP at 14.32% for the year under consideration. Therefore, N.P at 14.50% is applied for AY 2017-18 against the declared NP at 14.32%. Further, looking to the fact during AY 2017-18 assessee has induced his undisclosed income in books under the grab of cash sale, cash advance, receipt from debtor as discussed in above Para, out of the total turnover of Rs. 48,46,90,040/- the bogus turnover t....
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....om sale proceeds of gold ornaments on 08-11-2016. Hence, same is additional business income. The reply of the assessee duly considered however not found acceptable as the amount of Rs. 6,30,00,000/- has been found recorded against the name of Sangam Ji who has denied having any purchase from assessee company which is evident from the above statement also. The assessee has claimed that the said amount is profit of sale made on 08-11-2016. However, he failed to furnished details such as name, address and PAN of purchaser to whom the sale was made. In the absence of such evidence and denial of the person Sangam Ji (director of M/s Sangam Handicraft Pvt. Ltd.), the claim of the assessee remains unsubstantiated. Further, in the independent Auditors reports, the auditor has opined the amount as 'other business receipt of Rs. 6,30,00,000/-recorded in books of accounts on 08-11-2016'. Similarly at note no. 17.2 of financial statement the amount has been recorded as 'other business income'. Further, at para.2 of 3 of form no. 3CA, the same has been declared as 'other business income'. These fact clearly shows that the income of Rs. 6,30,00,000/- is not a business inc....
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....e held valid in law. The appellant has countered the findings of Ld. A.O. that on examination of the sales bills it is found that bills were issued without complete details of the sold jewellery items as well as customers. The issued bills do not contains details of full description of the item sold like chain, Sat, Topas etc. and the items so purported to be sold cannot be verified from stock register on the date of issuance of bills whether the items were part of stock register or not. Appellant also submitted that mentioning of complete address & PAN of buyers on below Rs. 2 Lac sale bills is neither requirement nor there is any provision in the 1. T. Act, 1961 to ask IT PAN complete address and name proof etc. from the customers buying goods in cash upto the prescribed limit. In fact many customers do not inform the same and those inform their complete address and PAN that is noted on sale invoice by assessee. Having perused the facts of the case, a survey u/s 133A of the I.T. Act, 1961 at the business premises of the appellant assessee company on dated 02-08-2017 which was subsequently converted into search and seizure action u/s 132(1) of the Income Tax Act,....
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....he total sales and in November 2014 it was 8.19% compared to total sales. Show cause notice was issued during the assessment proceedings which was responded by the appellant. In para 8.4 of the assessment order the arguments of the appellant have been dealt with by the Id assessing officer. The assessment order also discusses the festive sales of the earlier years and the abnormal increase shown by the appellant in the year under appeal. The assessment order also highlights that the sale bills have been issued by the appellant without the description of the item sold and the item wise weight, purity etc. of the same and it is another important observation of the assessment order that the items cannot be tallied with the stock register and hence it cannot be verified whether the item for which the sale bill is claimed to have been issued by the appellant was part of the stock or not. The assessment order also highlights that in some lower value sale bills of earlier period the appellant has mentioned the item description and the purity details, name and mobile number of buyer etc. however with respect to the cash sales which are claimed to be a source of the cash d....
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....he survey such parties denied having purchased any gold bullion or jewelry from the appellant company. Accordingly, In view of the above discussion and evidence brought on record it is evident that the appellant has indulged in issuances of bogus sale bills and gold items shown to be sold in the sales invoices do not have any description and cannot be verified from stock register whether the items shown to be sold on particular date was part of stock in trade or not. Therefore, the cash book, sale book and stock register so furnished by the assessee is afterthought and does not disclose true income of the assessee. Accordingly, same cannot be relied upon and the item shown to be sold in sale bill during the course of demonetarization could not be verified. Accordingly the correct income can not be determined from such books. The action of the Id. AO in rejecting the books of accounts in terms of the provisions of section 145(3) of the Act is hereby upheld. This ground of Appeal is hereby dismissed. Ground No. 2 5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in th....
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....ative data of cash sale during 1 November to 08 November of different years is not on record. The cash sales made during November 2016 is 88.00% out of total cash sales made during the financial year 2016-17. The cash sales made in one month by the assessee is higher compared to cash sales in remaining 11 months of that year. Further when the trend of cash sales is compared to previous years it was noticed that in November 2015 cash sales was just 25.63% of the total sales and in November 2014 it was 8.19% compared to total sales. The facts regarding the announcement of demonetization estate by the appellant are factual information and does not require further discussion. Further the claim of the appellant that after the announcement of demonetization there was a rush of customers with the jewelers till the midnight of 08-11-2016 is also not completely deniable as it is a matter of common knowledge. However these are all general facts. That cannot mean that any amount of sale can be claimed to have taken place between 8 pm to 12 midnight on 08-11-2016. The above contention is not acceptable as the Id. AO has held in the assessment order as under: ....
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....ee company takes average 5 minutes to issue the bill. By this average time of 5 minutes per bill the assessee company, could have prepare maximum of 50 to 60 bills in the stipulated time of 4 hours whereas the assessee has shown 1175 bills on that day which clearly shows that the assessee has issued bogus bills under dummy names to accommodate his unaccounted income under grab of cash sales." The appellant has further objected to the findings in the assessment order regarding the number of sales which could have been made on the date of announcement of demonetization after the announcement of the demonetization in a general manner and has not countered the detailed facts brought on record in the assessment order. The appellant has admitted and not countered the factual analysis regarding the billing as done in the assessment order and the statements referred in the assessment order in this regard have also not been claimed to be retracted. As noted by the Id AO the assessee has shown cash sales aggregating to Rs. 21,05,47,868/- in a single day. The appellant has made general submissions and has not placed on record evidences and documents to counter the statements....
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....ncy issued as legal tender by a Government. Hence, in a concluded and valid contract of sale, the 'price' for which the goods have been sold to the buyer has to be understood as money in legal tender only. In India such legal tender status to the paper currency is given by the Central Government in terms of the provisions of sec.26 of the RBI Act. Under the same section, the Central Government is also empowered to withdraw the 'legal tender status of the currency notes. Thus, the currency notes are a mere piece of paper unless the same are recognized by the Government of India as legal tender in terms of section 26 of the RBI Act. On the night of 8-11-2016, the Hon'ble Prime Minister of India while addressing the Nation has announced the decision of the Central. Government to withdraw the legal tender status to the existing series of bank notes of the value of Rs. 500 and Rs. 1000 w.e.f. 9-11-2016. Accordingly, a Notification in S.O. No. 3407(E) dt. 8-11-2016 was also issued withdrawing the, legal tender status to the bank notes of the value of Rs. 500 and Rs. 1000 (referred to as specified bank notes or SBNs). However, in the said Notification a f....
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.... as a part of contract of sale, if accepted, would defeat the provisions of sec.26(2) of RBI Act, 1934 and the Notification in S.O.No.3407(E) dt. 8-11-2016 issued there under, through which the Central Government has withdrawn the legal tender status of SBNs from 9-11-2016 onwards. As per the said Notification, the only way-out given to the persons holding SBNs as on 9-11-2016 to realize the equivalent value of such SBNs is to deposit the same into his bank account (please see Para 2(iii) and 2(iv) of the Notification). If the SBNs are claimed to have been dealt by the persons who held the SBNs as on 9- 11-2016, in a manner other than what was prescribed in the statutory Notification, like exchanging the same with unauthorized persons other than banks, and if such a claim is accepted, it would bring the said statutory Notification, which was issued as a measure to tackle black money, to ridicule and renders nugatory. Also, since the 'public policy' behind the withdrawal of legal tender status to the SBNs from 9- 11-2016 onwards was explained by the Central Government to be a measure to tackle the black money in the economy, to lower cash circulation which is direct....
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.... The withdrawal of legal tender character was one of the significant steps in weeding out the fake currency and to curb the black money in the country. The persons like assessee have given a setback to well-intended and well-thought policy of Government of India and they have used this as an opportunity to convert their or others' illgotten money into bullions. In the present case the bank account. The above said act of the assessee is not only against the law but also against the interests of the nation. In the present case, the bank account with the AXIS Bank was only opened on 10-11- 2016. As per the notification, the assessee cannot deposit more than the amount of Rs. 50,000/- in its account till KYC is completed. It is not the case of the assessee that the KYC had been completed on the date of opening of its account. It is not understandable how the bank permitted the deposit of huge amounts in the newly opened account, on the date of its opening itself. The concerned agency must look into the role of the bank employees in this regard. When the assessee itself cannot deposit more than Rs. 50,000/- as per notification, then how a third party can be authorized to deposit mor....
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....insertion of section 20A of the Medical Council Act, 195611 (which serves as parent provision for the regulations), what is discernible is that the statutory regime requiring that a thing be done in a certain manner, also implies (even in the absence of any express terms), that the other forms of doing it are impermissible. (Emphasis added by us) 26......................... 27. It is also a settled principle of law that no court will lend its aid to a party that roots its cause of action in an immoral or illegal act (ex dolo malo non oritur action) meaning that none should be allowed to profit from any wrongdoing coupled with the fact that statutory regimes should be coherent and not self-defeating. Doctors and pharmacists being complementary and supplementary to each other in the medical profession, a comprehensive view must be adopted to regulate their conduct in view of the contemporary statutory regimes and regulations. (emphasis supplied by us). Therefore, denial of the tax benefit cannot be construed as penalizing the assessee pharmaceutical company. Only ....
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....The object of such an agreement must be held to be of such a nature that if permitted it would defeat the provisions of the excise law within the meaning of section 23 of the Contract Act. Such an agreement is declared by section 23 to be unlawful and void. The question is whether such an unlawful or void partnership can be treated as a genuine partnership within the meaning of section 185(1) and whether registration can be granted to such a partnership under the provisions of the Income-tax Act and the Rules made thereunder. We think not. When the law prohibits the entering into a particular partnership agreement, there can be in law no partnership agreement of that nature. The question of such an agreement being genuine cannot, therefore, arise. It is also a known principle that what cannot be done directly, cannot be achieved indirectly. As was said in Fox v. Bishop of Chester [1824] 2 BFC 635 Jagir Singh v. Raubir Singh [1999] 2 SCR 282 that it is a "Well-known principle of law that the provisions of an Act of Parliament shall not be evaded by shift or contrivance" And that: "To carry out effectually the object of a Statute, it must be construed as to defeat all attempts to do,....
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....re to rely upon any parliamentary debate or search for the purpose beyond the plain meaning of the law. The object of the law is set out in unambiguous term. If every allottee chosen after a process of selection under the Rules with reference to certain objective criteria were to enter into bargains of this nature, it will undoubtedly make the law a hanging (sic laughing) stock. 76. In light of the above discussions, it is crystal clear that the assessee has failed to prove the identity of the creditors, genuineness of the transactions and creditworthiness of the creditors. Therefore, the assessee had failed to discharge his onus under section 68 of the Act; hence, the order of the Assessing Officer is required to be restored and the order of the Id.CIT(A) is required to be set aside. We do it accordingly. In the result, we uphold the addition of Rs. 40, 11,50,000/-as unexplained credit in the hands of the assessee (Vaishnavi Bullion Private Limited.)" (Emphsis supplied) It is held by the Hon'ble Supreme Court in the case of Biharilal Jaiswal v. Commissioner of Income-tax [1996] 84 Taxman 236 (SC)/[1996] 217 ITR 746 (SC)/[1996] 130 CTR 143 (SC)[16-11-1995] ....
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....ion of item sold whereas the bill of higher amount issued in the month and date of demonetarization no such detail have been mentioned and no detail of mobile number has been found. This fact further strengthen that the bill issued without description of item sold are bogus bills issued in dummy names to bring back to his unaccounted money under grab of cash sale. It is observed that the assessee changed his methodology of issuance of bills to accommodate his unaccounted income under grab of bogus sale issued in dummy names. The assessee company engaged in out of books sales in cash and sales above Rs. 2,00,000/- were split in amounts below Rs. 2,00,000/- in order to avoid mandatory PAN compliance as also to conceal the real identity of the buyers. During the search statement of director of the company Shri Nagendra Singh Laxman Singh Rathore recorded on dated 04-08-2017 wherein in reply to the question no. 23 admitted that he has been indulged in splitting bill of more than Rs. 2,00,000/- into the bill of lower amount. This further shows that the sale bills are non-genuine and bogus. The assessee revised his quarterly VAT returns for the period 01-04-2016 to 31- 12-2016 w....
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...., 11.11.2016 & 12.11.2016 and shown this cash deposit against the sale of gold on 08.11.2016. Further, during the post search investigation, Shri Narendrasingh Laxmansingh Rathod has submitted that the Annexure-AS Exhibit-2 page No 40 is cash book. Further, noted from the page No 39, which is back side of Annexure-AS Exhibit-2 page No 40, the details of inward and outward quantities of the gold are mentioned, which shows that the booking and supply was made of Bullion not gold jewellery. It is also worthwhile to mention here that there are two entries written as 3300-000 KFJ 2 and 100-000 KFJ 2 in the left side of the Annexure-AS Exhibit-2 page No 40 It is pertinent to mention here that KFJ is short form of Kiran Fine Jewellers Pvt.Ltd. During the post search investigation, Shri Narendrasingh Laxmansingh Rathore in his statement dated 17.11.2017 accepted that this was his own money of showroom of M/s Kiran Fine Jewellers Pvt.Ltd On the basis of above discussion, it is very clear that Shri Narendrasingh Laxmansingh Rathod had booked the bullion and supplied the same after 08.11.2016 and received the amount in cash in old currency The booking and supply of Bullion were made in M/s Mo....
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..... The same is referred to and not repeated for the sake of brevity. Accordingly, this ground of appeal is hereby dismissed." Ground No. 3 6.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order the for year under consideration. The contentions/submissions of the appellant are being discussed and decided as under :- The Ld. A.O. has made addition of Rs. 15,70,555/- as cash receipt and held that assessee has failed to explained the amount received from genuine sales. The appellant has submitted that the said amount of cash which was not in SBNs but was of new currency issued by RBI after 09-11-2016 and so it can only be held to have been received on sales made by assessee after 09-11-2016 to 31-12-2016 and for that sale invoices have been issued. The A.O. without any material or evidence and without stating how the said new currency not being in SBNs could have been received without any sale and arbitrarily held it that assessee failed to explain the said cash receipt from genuine sale. I agree with the submissions of the appellant ....
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....to be bogus. It is a matter of common knowledge that when the parties can indulge into creating bogus sales and when they indulge into creating bogus turnover they also adopt means to suppress the taxable income. In such a scenario the only question which remains to be decided is that what should be the profitability on the genuine turnover of the appellant. The Assessment order has adopted the net profit profitability of 14.50%. The same is restored to 14.32% (after giving effect to all cash and non-cash expenditure) on the genuine sale, which is reasonable as well as the same is not countered factually by the appellant. This would mean and imply that expenditure has been incurred by the appellant also with respect to the activities of indulging in bogus billing and illegal activity as discussed in this order in the paragraphs above and such expenses cannot be allowed as deduction from the genuine part of the business. The appellant has not maintained the details of expenses spent in the activity of bogus billing, making sale in exchange of SBNs after the date of 08-11-2016, revision of VAT returns, legal advice expenses etc. which would also include pro....
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....ing the course of the Search, statement of Shri Subhash Gupta Director of Sangam Handicraft Pvt Ltd and his son Sahil Gupta were also recorded u/s 131 of the Act. on 04.08.17 at business premises of his proprietor concern M/S Mohit Jeweller, 958 Dhamani Street, Chaura Rasta, Jaipur wherein he admitted that amount of Rs. 6,30,00,000/- represent the old currency which was deposited on 11-11-2016 in bank account of M/s Sangam Handicraft Pvt. Ltd. held in Malviya Urban Cooperative Bank. He further admitted that the amount has been deposited by Shri Nagendrasingh Laxmansingh Rathor. Further, in the independent Auditors reports, the auditor has opined the amount as 'other business receipt of Rs. 6,30,00,000/- recorded in books of accounts on 08- 11-2016. Similarly at note no. 17.2 of financial statement the amount has been recorded as other business income'. Further, at para.2 of 3 of form no. 3CA, the same has been declared as 'other business income'. These fact clearly shows that the income of Rs. 6,30,00,000/- is not a business income of Jewellery but the income earned from sources which has not been disclosed by the assessee in the regular books of accounts. ....
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.... The present issue involves two aspects firstly the taxability under section 68 over 69A of the act and secondly the applicability of section 115BBE of the Act. Once the income is as per section 68/69/69/69C etc. of the Act there remains no further issue regarding the applicability of the section 115BBE of the Act as that is a specific provision with respect to the taxation of incomes falling under sections 68/69/69/69C etc. In the case of Roshan Di Hatti v. Commissioner of Income-tax [1977] 107 ITR 938 (SC)[08-03-1977] it is held by the Hon'ble Supreme Court as under :- "Now, the law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him. If he disputes the liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the revenue is entitled to treat it as taxable income. This was laid down as far back as 1958 when this court pointed out in A. Govindarajulu Mudaliar v. Commisioner of Income-tax [1958] 34 ITR 807, 810 (SC) that: "There is ample au....
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....lear that in the case of section 68, there should be credit entry in the books of account whereas in the case of 69 there may not be an entry in such books of account. The law is wellsettled, the onus of proving the source of a sum, found to be received/transacted by the assessee, is on him and where it is not satisfactorily explained, it is open to the Revenue to hold that it is income of the assessee and no further burden lies on the Revenue to show that income is from any other particular source. Where the assessee failed to prove satisfactorily the source and nature of such credit, the Revenue is free to make the addition. The principle laid down in CIT v. M. Ganpati Mudaliar [1964] 53 ITR 623 (SC)A. Govinda Rajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC) and also CIT v. Durga Prasad More [1969] 72 ITR 807 (SC) are the landmark decisions. The ratio laid down therein are that if the explanation of the assessee is unsatisfactory, the amount can be treated as income of the assessee. The ratio laid down in Cll v. Daulat Ram Rawatmal [1973] 87 ITR 349 (SC) further throws light on the issue. In the case of a cash entry, it is necessary for the assessee to prove not only the identity of....
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....ot done it taking view that excess stock represented income of assessee from undisclosed sources, set aside order of Commissioner (Appeals) and upheld order of Assessing Officer It was noted that once it was found by Assessing Officer that there was excess stock, in absence of explanation by assessce, conclusion was inescapable that excess stock, if any, was from undisclosed sources Further once assessee's explanation, if any, had not been accepted, resultant position was that there was excess stock undisclosed in books of account and non disclosure was only with a view to suppress income Whether order of Assessing Officer and that of Tribunal deserved to be affirmed Held, yes [Para 10] [In favour of revenue] (emphasis supplied) SLP against the above judgement Suraj Bhan Oil (P.) Ltd. v. Deputy Commissioner of Income-tax [2022] 138 taxmann.com 19 (Madhya Pradesh) was dismissed by Hon'ble Supreme Court. Reported at [2022] 141 taxmann.com 477 (SC)/[2022] 288 Taxman 635 (SC)[25-07-2022] Headnote Section 69B of the Income-tax Act, 1961 Undisclosed investments (Stock) Assessment year 2005-06 Assessee was engaged in manufacturing and trading of edibl....
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....263 purportedly on ground that decision of Assessing Officer was erroneous and prejudicial to interest of revenue High Court by impugned order held that in view of consistent view of various judicial authorities that where excess stock found in course of search is neither separately identifiable nor has independent physical existence, it cannot be treated as 'undisclosed investment under section 69 and since explanations offered by assessee were fortifiable by said consistent view, no case of perversity or lack of enquiry on part of Assessing Officer was made out so as to render his decision erroneous under Explanation 2 to section 263 Whether notice was to be issued in SLP filed by revenue against impugned order of High Court Held, yes [Para 3] [In favour of revenue] SVS Oil Mills v. Assistant Commissioner of Income-tax, Non Corporate Circle-6(1), Chennai [2020] 113 taxmann.com 388 (Madras)/[2020] 269 Taxman 508 (Madras)/[2019] 418 ITR 442 (Madras) [26-03-2019] 8. In our opinion, Section 69B providing for amounts of investments in Bullion, Jewellery or other valuable articles (including excess Stocks as well) would have been more appropriate Section to be ind....
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.... learned Tribunal has rightly held that the value of excess stock of Rs.58,02,095/-should suffer tax and by inclusion of those Stocks in the value of Closing Stock the Assessee has recognised income over and above recorded in its Books of Accounts. Such Additions of the excess Stocks declared by the Assessee during the course of search in the closing stock does not amount to double taxation as contended. Mere remand of the case by the Ahmedabad Bench of Income Tax Appellate Tribunal to the Assessing Authority for verifying the figures, does not lay down any principle as contended by the learned Senior Counsel for the Assessee. (Emphasis supplied) Accordingly, in case of unexplained credits and unexplained money, the following legal position emerges :- (1) Onus is upon the assessee to discharge the burden so cast upon. First burden is upon the assessee to satisfactorily explain the source. The burden has to be discharged with positive material. [As per principles laid down in Roshan Di Hatti v. Commissioner of Income-tax [1977] 107 ITR 938 (SC) [08-03-1977), Kale Khan Mohammad Hanif v. Commissioner of Income-tax [1963] 50 ITR 1 (SC)[08-02-1963), CIT v. ....
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....even clearly mentions that such unexplained expenditure will not be deductible under any head of income. Loans given / stock in hand / loan received etc. are otherwise not taxable as these are in the nature of asset/liability/capital nature in the hands of the taxpayer and not in the nature. (iv) Once it was found by Assessing Officer that there was unexplained credits and unexplained money, in absence of explanation by assessee, conclusion was inescapable that the same was from undisclosed sources - No double taxation Such Additions do not amount to double taxation as contended. [SVS Oil Mills v. Assistant Commissioner of Income-tax, Non Corporate Circle-6(1), Chennai [2020] 113 taxmann.com 388 (Madras)] Head of Income Regarding the contention of the appellant regarding applicability of charge to tax under a particular head, the question arises whether the income subject matter of addition is chargeable to tax as per provisions of chapters on salary, profits and gains of business and profession Or capital gain Or income from house property Or income from other sources. If the same is chargeable to tax under these chapters as per specifi....
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.... No Presumption in favor of business income. Onus to prove is on assessee: The Hon'ble Supreme Court in the case of Commissioner of Income-tax v. Devi Prasad Vishwanath [1969] 72 ITR 194 (SC)[01-08-1968] has held as under :- "There is nothing in law which prevents the Income-tax Officer in an appropriate case in taxing both the cash credit, the source and nature of which is not satisfactorily explained, and the business income estimated by him under section 13 of the Income-tax Act, after rejecting the books of account of the assessee as unreliable. This was so decided in Kale Khan Mohammad Hanif v. Commissioner of Income-tax [1963] 50 TTR 1 (SC). Whether in a given case the Income-tax Officer may tax the cash credit entered in the books of account of the business, and at the same time estimate the profit must, however, depend upon the facts of each case. .............................. .............................. The High Court, in disposing of the application under sec....
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.... The opening words of section 14 'Save as otherwise provided by this Act' clearly leave scope for 'deemed income' of the nature covered under the 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' because the provisions of sections 69, 69A, 69B, and 69C treat unexplained investments, unexplained money, bullion, etc., and unexplained expenditure as deemed income where the nature and source of investment, acquisition or expenditure, as the case may be, have not been explained or satisfactorily explained. Section 69C even clearly mentions that such unexplained expenditure will not be deductible under any head of income. Loans given / stock in hand/loan received etc. are otherwise not taxable as these are in the nature of asset/liability/capital nature in the hands of the taxpayer and not in the nature of revenue income. However when these are unexplained in terms of sections 68/69/69A etc. these become income and become taxable. These are the special provisi....
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....968] It has also not been shown with sources details that it is only the earlier earned (during the same year) business income (manner of earning and source of earning of such income) which has been invested unexplained entries. Respectfully following the judgements of Hon'ble Supreme Court in the cases of Commissioner of Income-tax v. Devi Prasad Vishwanath [1969] 72 ITR 194 (SC) [01-08-1968] Suraj Bhan Oil (P.) Ltd. v. Deputy Commissioner of Income-tax [2022] 141 taxmann.com 477 (SC)/[2022] 288 Taxman 635 (SC)[25-07-2022) and Principal Commissioner of Income-tax v. Deccan Tobacco Company [2022] 137 taxmann.com 470 (SC)/[2022] 286 Taxman 558 (SC)[11-03-2022] and other judgements as referred in the discussion above, there can be no dispute in the facts of the present case regarding the applicability of sections 68/69A etc. In view of the above the action of the Id. AO in the assessment order in applying section 68 and 69A is upheld. Accordingly, further applicability of section 115BBE of the Act is upheld. In view of the above discussion, this ground of appeal is hereby dismissed. Ground No. 7 10. Ground of Appeal No. 7 rela....
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.... in confirming rejection by the ld AO of submission of the appellant that income of Rs. 6,30,00,000/- offered to tax by the appellant during course of search was its additional business income from sale of gold ornaments assessable under the heed income from Business and instead upholding finding recorded by the ld AO that the said income is allegedly appellants undisclosed income liable to tax as unexplained money u/s 69A of the IT Act, 1961. 3. That the ld CIT(A) is also wrong and has erred in law in upholding charge of tax by the ld AO on addition made to the income of the appellant vide ground No. (1) & (2) above @ 60% u/s 115BBE of the IT Act, 1961. 4. The appellant craves permission to add to or amend to any of grounds of appeal or to withdraw any of them. I. FACTS OF THE CASE The assessee is a private limited company engaged in business of Bullion and jewellery. A survey u/s 133A of I. T. Act, 1961 was carried out at business premises of assessee company on 02-08-2017 which was subsequently converted into search u/s 132 (1) on 03-08-2017. Thereafter A.O. issued notice u/s 153A on 13-12-2017 which assessee complied by filing return of incom....
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....me of Rs. 6,30,00,000/- is not jewellery business income. But, the same is income earned from business which has not been disclosed by the assessee in regular books of accounts. The learned AO further held that the said additional business income is taxable as unexplained money u/s 69A of the I. T. Act, 1961 under the head income from other sources liable to be taxed at the rate of 60% under provisions of section 115BBE. The balance Rs. 22,18,29,000/- deposited in Bank A/c [Rs. 28,32,58,445/- minus Rs. 6,30,00,000/-] have been considered by the learned AO as unexplained cash credit u/s 68 of the Act alleging that assessee has introduced its undisclosed income in its books of accounts. Further, after invoking provisions of section 145 (3) of the Act the learned AO reduced the said amount of Rs. 22,18,29,000/- from declared total sales of Rs. 48,46,90,040/ -. The learned AO further held that the sales of Rs. 26,28,61,040/- are only genuine sales, applied a N.P. rate of 14.5% thereon instead of N.P. rate of 14.32% declared by assessee and recomputed income from business of assessee at Rs. 3,81,14,850/ -. III. ACTION OF THE LEARNED CIT(A) The learned CIT (A) upheld th....
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.... the course of survey / search proceedings u/s 132 of the IT Act, 1961. It is evident from the assessment order that the A.O. in assessment also had accepted opening stock, purchases, gross profit (applied N.P. rate) and closing stock in quantity as declared by assessee. The A.O. has further accepted the declared closing stock which implies that outgo from op. stock and purchases has been accepted which can only be on account of sales made by assessee. Thus, out of declared sales some sales cannot be held as bogus or in genuine sales on presumption basis. This action of the learned AO is also against the settled position of law that he has accepted the one part i.e. sales of jewellery and Bullion in quantity whereas he did not accept the sales in amount. This action of the learned AO is in contradiction to the principle of accounting and natural justice. Further, the rejection of declared sale by A.O. (reducing it by alleged bogus sale) while accepting all other components of Trading Account is thus contradictory and only on that basis rejection of books of accounts cannot be held valid in law. As regards to findings of Ld. A.O. that "on examination of the sales bills it is found t....
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....ed that there is no justification to invoke provisions of section 145 (3) of I.T. Act and reject books of accounts and the Ld. A.O. as well as the learned CIT(A) are wrong and has erred in law in invoking provisions of section 145 (3) and rejecting books of accounts of appellant company. 1(B) GROUND (B) OF FIRST GROUND OF APPEAL (B) The ld CIT(A) is further wrong and has erred in law in upholding finding recorded by the ld AO that cash deposit to the extent of Rs. 22,02,58,445/- made by the appellant company in its bank account during demonetization period from 09-11-2016 to 30-12-2016 on account of sale was allegedly fabricated and was allegedly its income from undisclosed sources. The ld CIT(A) is further wrong and erred in law in confirming addition of said Rs. 22,02,58,445/- made to the income of the appellant by ld AO u/s 68 of IT Act, 1961 as unexplained cash credit. SUBMISSIONS : B(i) That the learned CIT (A) is wrong and has erred in law in upholding the action of the learned AO that out of total cash deposit of Rs. 28,32,58,445/- in bank account during the period of demonetization from 9-11-2016 to 30-12-2016 in specified bank notes (SBN....
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.... 2015 and increased 27.90 times compared to November 2014. (c) The cash sales made during November 2016 is 88.00% out of total cash sales made during the financial year 2016-17. The cash sales made in one month by the assessee is higher compared to cash sales in remaining 11 months of that year. Further when the trend of cash sales is compared to previous years it was noticed that in November, 2015 cash sales was just 25.63% of the total sales and in November 2014 it was 8.19% compared to total sales. (d) Further, the assessee failed to furnish the detail of the persons such as full name, address and PAN no. to whom cash sale was made during the demonetarization period. In view of the above facts it is evident that assessee has fabricated whole transaction to make it look real and cash so deposited as discussed above is undisclosed income of the assessee." B(iv) The above said findings of the learned AO has been held / confirmed by the learned CIT(A) vide para No. 5.2 at page No. 17 of the Appellate Order. It is evident and verifiable from the impugned Appellate Order that the learned CIT(A) has repeated / accepted as it is the findings of the le....
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.... - Register and the same has been accepted by the learned AO without pointing out any mistake or defect therein. Thus, the cash sales transaction is recorded in regular books of accounts and sales are made out of the stock-in-trade of the appellant. In this connection, the assessee relies on recent decision dated 17-11-2020 of Delhi High Court in case of PCIT Vs. Akshit Kumar (2021) 277 Taxmann 423 wherein it was held that where opening stock, sales and closing stock of assessee was accepted during assessment of previous year during scrutiny assessment, receipts made by assessee out of its opening stock, purchases could not be treated as unexplained income to be taxed as income from other sources. B(viii) It is further submitted that demonetization was announced in the evening of 8th November, 2016 viz. Indian Currencies of the denomination of Rs. 500 and of Rs. 1000 were withdrawn vide the Hon'ble Prime Minister announcement through television channels effective after midnight i.e. from 9th November, 2016 and vide Gazette Notification 2653 dated 8th November, 2016 declared that from 9th November, 2016 Rs. 500 and Rs. 1000 (specified Bank Notes) ceased to be legal tend....
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....31st December, 2016. B(ix) It is a known fact to everyone in India that various persons after hearing the news of demonetization on television channels flooded to the shops of jewellers for the purpose of buying jewellery and bullions and dispensing with such SBN's. There was certain euphoria immediately after the announcement as the people having sums of money rushed to the jewellers to buy gold and other precious items. During such period gold worth crores of rupees was sold in few hours across the country and the jewellers have to do their business until midnight. This issue was also widely circulated in print media. Similarly, the comparative sales of other products across the country in various business segments also increased during such period. The effect of the same was that the sale figures of the demonetization period of the jewellery businesses was comparatively more than that of previous years. In case of assessee also the sales figures of November, 2016 increased as compared to November, 2015 as that of other jewellers in the country. The assessee otherwise cannot put a condition that no cash sales shall be made to it's customer as there is no provisio....
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....ld were out of stock held by assessee company which is evidenced from books of accounts and Stock Register of assessee company. The other observations of A.O. that such large No. of sales invoices and sale to customers is not possible to make in the time available with assessee company on 08-11-2016 also has no legal force and sales made by assessee cannot be held as bogus on non-genuine in proceedings under Income Tax where as the said sales have been accepted genuine sales under VAT Act by the VAT authorities. B(xiii) Further, from the assessment orders of learned AO and appellate order of learned CIT(A), it is evident and verifiable that sales of the assessee have not been accepted mainly for the reason that the cash sales during the demonetizing period and the cash sales in preceding years were much more / in disproportionate to the cash sale made during the demonetizing period and there was no addresses of the buyers, etc. etc. In this regard, it is submitted that the cash deposits made by the assessee were duly recorded in books of accounts, which were audited under various laws applicable and supported by following creditable evidence (a) Purchase Bills (wh....
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....es." (b) Shobha Tomar Vs DCIT [2024] 164 taxmann.com 61 (Jaipur-Trib.) - held notes - "Section 68 of the Income-tax Act, 1961 - Cash credit (Demonetization period) - Assessment year 2017-18 - Assessee was a medical practitioner - Assessee's case was selected for scrutiny for verification of cash deposit - During assessment, Assessing Officer noted that assessee had deposited substantial amount of cash in bank which was in form of specified bank notes (SBN) during demonetization - On perusal of cash book, Assessing Officer noted that assessee had not mentioned any narration regarding patients from whom consultation fees had been furnished nor there was any explanation with respect to sudden spike in cash deposit - Assessing Officer thus, considered deposits as unexplained income of assessee and made additions under section 68 - Whether, since cash was already considered as professional income, same could not be a base while making addition of income that had already been offered and substantiated with evidence and reflected in returned income by assessee - Held, yes - Whether thus, additions were to be deleted - held, yes." (c) ITO vs Sahana Jewellery Exports (....
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.... made by Assessing Officer was to be deleted - Held, yes." (e) ITO Vs. J.K. Wood India (P.) Ltd. [2024], 158 taxmann.com 208 (Delhi- Trib.) head notes - "Section 69A of the Income-tax Act, 1961 - Unexplained moneys (Cash deposits) - Assessment year 2017-18 - Assessee was engaged in business of sawing and wholesale trading of timber - During course of scrutiny assessment, Assessing Officer noticed that assessee had made cash deposits of certain amount in its bank account during demonetization period and asked assessee to explain source of such cash deposits - Assessee submitted that it had sold timber to various parties in cash and cash deposits were out of sale proceeds - In support of its claim, assessee filed copy of bills, sale / VAT return, stock register and VAT assessment order - Assessing Officer, however, rejected explanation of assessee and made addition of such cash deposits to income of assessee under section 69A - It was noted that cash deposits made by assessee were duly recorded in books of account which were audited under various laws applicable and were supported by credible evidence like copies of invoices, stock register maintained on a day to day basis, ....
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...., 1961 - Unexplained money (Search) - Block period 1997-98 to 2003-04 - Assessee was a partnership firm engaged in business of civil construction - Pursuant to search at residential premises of working partner of firm and at business premises of firm Assessing Officer made additions to income of assessee - Tribunal had recorded a finding in regard to additions made by Assessing Officer which was confirmed by Commissioner (Appeals), which was based only on mere assumption and not on any material recovered during search and seizure - High Court by impugned order held that in absence of supporting evidence, additions based merely on presumption that assessee had earned undisclosed income and incurred expenses outside books of account would not be sustainable - Whether Special leave Petition against said impugned order was to be dismissed - Held, yes." (i) ACIT Vs Himachal Fibres Limited (ITAT Delhi) (j) ACIT Vs Hirapanna Jewellers (189 ITD 608) (Vishakhapatnam Bench) (k) Smt. Charu Aggarwal Vs CIT (140 taxmann.com 588) (Chandigarh Trib.) (l) Anantapur Kalpana Vs ITO (130 taxmann.com 141) (Bangalore Trib.) (m) PCIT Vs Agson Global Pvt. Ltd (....
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....ppellant's case whereas the ratio decided by the case laws relied upon by the appellant are squarely applicable. 2. SECOND GROUND OF APPEAL That on the facts and in the circumstances of the case the ld CIT(A) is wrong, unjust and has erred in law in confirming rejection by the ld AO of submission of the appellant that income of Rs. 6,30,00,000/- offered to tax by the appellant during course of search was its additional business income from sale of gold ornaments assessable under the heed income from Business and instead upholding finding recorded by the ld AO that the said income is allegedly appellants undisclosed income liable to tax as unexplained money u/s 69A of the IT Act, 1961. 2(i) The income of Rs. 6,30,00,000/- was declared by assessee in course of search in statement on oath u/s 132 (4) as additional business income of the year which was not controverted in search proceedings and accepted. The assessee in accordance with his said statement declared the said income of Rs. 6,30,00,000/- in return of income filed for the year. The assessing officer without any material on record and without establishing it held that 'it is not business inc....
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....me of the appellant vide ground No. (1) & (2) above @ 60% u/s 115BBE of the IT Act, 1961. 3(i) The learned AO in the assessment order vide para No. 5, page No. 26 and para No. 2 at page No. 30 have simply mentioned as under : Para No. 5, Page No. 26 : " Therefore, a sum of Rs. 22,18,29,000/- (Rs. 22,02,58,445/- plus Rs. 15,70,555/-) so deposited in the bank account is held unexplained cash credit u/s 68 of the Act which the assessee has induced in books under the grab of cash sales and resultantly addition of Rs. 22,18,29,000/- is being made and added to the total taxable income of the assessee and taxed at the rate of 60% as provision u/s 115BBE." Para No. 2 at Page No. 30 : " In view of the above discussion a sum of Rs. 6,30,00,000/- found recorded in seized paper is held unexplained money u/s 69A of the IT Act under head income from other sources against no expenditure, allowance or setoff loss is allowed and same is taxed at the rate of 60% as per provision u/s 115BBE." 3(ii) It is apparent from the said findings of the learned AO that no evidence and / or other material tenable in the eyes of law has been brought on record that the sales and....
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....is liable to be deleted in full kindly refer Sanghi Brothers (Indore) Limited Vs Inspecting ACIT 122 CTR 19(MP), Malik Packaging Vs CIT 284 ITR 374 (All), T.C.N. Menon Vs ITO 96 ITR 148 (Ker). 3(iv) The submissions of the assessee are also drawing support from the Hon'ble Coordinate Jodhpur ITAT Bench, Jodhpur ITA No. 50/Jodh/2021 consisting Hon'ble Vice President Shri N.K. Saini and Hon'ble Judicial Member Shri Sandeep Gosain. The Hon'ble Bench held that " the AO has not issued any show cause notice before invoking the provision of Sec. 115BBE for taxing the income on higher rate. It was mandatory on the part of the AO to issue the specific show cause notice to this effect asking to the assessee as to why the income should not be taxed under sec. 115BBE before doing so. It is very settled legal position that a person (assessee) is entitled to opportunity to show cause as to why not the income of the assessee is determined and charged or taxed in the manner as proposed by the A.O but in the instant case no such type of opportunity had been provided but the AO has failed to do so, which is against the principal of natural justice and against the law. This se....
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.... provisions of section 69A and 69B and same had been rightly offered to tax by assessee under head of business income - Held, yes [Paras 29 and 30] [In favour of assessee]. (ii) Dipak Balubhai Patel (HUF) Vs. Income-tax Officer [ 2024] 165 taxmann.com 684 (Ahmedabad - Trib.) - In this case, the Hon'ble Bench held that during demonetization period, assessee deposited cash of Rs. 10.75 lakhs in bank account and offered it for tax - Assessing Officer made addition as unexplained money under section 69A and taxed same under section 115BBE - Whether since assessee had recorded cash deposits in his books of account and source of cash deposits during demonetization period was also maintained by assessee, Assessing Officer was not correct in invoking provisions of section 69A and charging tax under section 115BBE - Held, yes - Whether, therefore, impugned addition was to be deleted - Held, yes [Para6.3] [In favour of assessee] As per above settled position of law, it is submitted that the provision of Section 115BBE invoked by the learned AO on account of additional business income amount to Rs. 6,30,00,000/- offered to tax and duly declared in its P & L A/c and paid due tax t....
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....nbsp; * Case laws relied upon: S. No. Name of Cases/Statement Name of Court Date of order Page No. 1 Commissioner of Income-tax, Vs. Jeet Construction Company Supreme Court of India 20-11-2020 1-4 2 Omar Salay Mohamed Sait Vs. Commissioner of Income-tax Supreme Court of India 05-03-1959 5-19 3 Malik Packaging Vs. Commissioner of Income- tax High Court of Allahabad 29-04-2005 20-22 4 Hinima Atul Shah Vs. Income Tax Officer ITAT Ahmedabad Bench 04-06-2024 23-25 5 Shobha Tomar Vs. Deputy Commissioner of Income Tax ITAT Jaipur Bench 01-07-2024 26-43 6 Smt. Suraj Kanwar Devra Vs. Income Tax Officer, Ward-2(2), Udaipur ITAT Jodhpur Bench 23-11-2021 44-68 7 Income Tax Officer Vs. J.K. Wood India (P.) Ltd. ITAT Delhi Bench 03-01-2024 69-71 8 Mohammad Ashraf War Vs. Income Tax Officer ITAT Amritsar Bench 02-04-2024 72-78 9 Commissioner of Income-tax, Vs. Smt. Nandini Nopany High Court of Calcutta 17-12-1997 79-81 10 Income Tax Officer Vs. Sahana Jewellery Exports (P.) Ltd. ITAT Chennai Bench 20-12-2023 82-95 11 Sobha De....
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....fore the ld. AO as having been seized by the revenue in the search operation. Sales bill being below Rs. 2 lac no need to have PAN number and full address of the parties are required. So, the allegation of the ld. AO based on the surmises and conjectures. The ld. AR of the assessee submitted that the once the assessee has based on the stock records which were not disputed delivered the goods the sales proceeding cannot be considered as unexplained credit. The period of demonetization was panic and every one was thereby trying to convert the demonetized currency into the gold. As regards the revision of VAT return the same is clearly showing that the return was not revised for the demonetization period and the difference in turnover and detailed explanation was furnished to the ld. AO which was not considered. The assessee filed the reconciliation of VAT return with the turnover reported in the books of accounts and there was no difference so far as the turnover reported therein. Ld. AO has not given notice before rejecting the books of account. The ld. AO who passed the order of another jewellers i.e. Moti Sons (Supra) wherein the AO was same and therefore, the decision of that cas....
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....bank account, claiming they are from receipt as sales proceeds on the day of demonetization. 12. The brief facts related to the issue on that are that a survey u/s 133A of the IT. Act, 1961 at the business premises of the assessee company was carried out on 02.08.2017 which was subsequently converted into search and seizure action operation as per provision of section 132 of the Act on 03.08.2017. Subsequent to that action notice under section 153A of the Act dated 13-12-2017 was issued and served upon the Assessee on 19-12- 2017 requiring it to file a true and correct return of income as prescribed under Rule 12 of the Income Tax Rules, 1962 within 30 days of the service of the said notice. In response to the said notice(s), a return declaring an income of Rs. 10,64,13,890/- was filed by the Assessee on 18-01-2018. In the return of income originally filed by the Assessee u/s 139(1) of the Act on 06-12-2017 an income of Rs. 10,64,13,890/- was declared. However, in the return of income filed in response to notice u/s 153A of the Act no undisclosed income pertaining to the relevant year has been declared by the Assessee. Ld. AO noted that the assessee has not co-operated during th....
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.... cash sales made in one month by the assessee were higher compared to cash sales in remaining 11 months of that year. Further when the trend of cash sales is compared to previous years it was noticed that in November 2015 cash sales was just 25.63% of the total sales and in November 2014 it was 8.19% compared to total sales. On that aspect of the sales ld. AO noted that the assessee failed to furnish the details of the persons such as full name, address and PAN no. to whom cash sale was made during the demonetarization period. Based on that observations ld. AO noted that the assessee has fabricated the whole transaction to make it look real and cash so deposited was undisclosed income of the assessee. With that observation so made he issued a detailed show cause notice dated 21-12-2019 asking the assessee to justify the source of cash deposited into the bank account. The assessee submitted reply that show cause notice on 23.12.2019. 15. Ld. AO noted that the reply of the assessee cannot be considered as the assessee submits that they made sales of Rs. 21,05,47,868/- just after the announcement of demonetization. The assessee states that sales in jewellery business always depend ....
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....ames to bring back to his unaccounted money under grab of cash sale. The assessee has claimed that he was not bound to record detail of buyer such as complete address, PAN etc. on purchase below 2 lakhs. However as discussed in above para the claim of the assessee is contrary to the fact that in some of the bills issued at lower amount, the contact detail of the purchaser has been duly recorded. Therefore, he holds a view that the assessee company has intentionally not recorded such details on the invoices which can be used to verify the genuineness of the purchasers. The purchasers shown in bills are not subject to the verification which clearly shows that the assessee changed his methodology of issuance of bills to accommodate his unaccounted income under grab of bogus sale issued in dummy names. The ld. AO also makes an observation that a search action u/s 132 was carried out at the premises of the assessee wherein it is found that the assessee company engaged in out of books sales in cash and sales above Rs. 2,00,000/- were split in amounts below Rs. 2,00,000/- to avoid mandatory PAN compliance as also to conceal the real identity of the buyers. During the search statement of d....
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....ards notified under sub-section (2), the Assessing Officer may make an assessment in the manner provided in section 144. 13. Thus, as it is clear from the above provision of the act that the ld. AO or that of the ld. CIT(A) may proceed under Section 145(3) under any of the following circumstances: ● Where he is not satisfied about the correctness or completeness of the accounts; or ● Where method of accounting cash or mercantile has not been regularly followed by the assessee; or ● Accounting Standards as notified by the Central Government have not been regularly followed by the assessee. As it is not the case of the revenue for the second and third reason but is of on the first reason that the ld. AO was not satisfied about the correctness of completeness of the accounts. But the same is not the situation when the case was before the ld. CIT(A). Before the ld. CIT(A) the assessee has provided all the following evidence to justify the incorrect invocation of provision of section 145(3) of the Act. The bench noted that before the ld. CIT(A) the assessee made a detailed submission to support as to why the provision of section 145(....
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....nd purchases has been accepted which can be an account of sales made by assessee and thus out of declared sales some sales cannot be held as bogus or ingenuine sales, The rejection of declared sale by A.O. (reducing it by alleged bogus sale) while accepting all component of Trading Account is thus contradictory and only on that basis rejection of books of accounts cannot be held valid in law. As regards to findings of Ld. A.O. that on examination of the sales bills it is found that bills were issued without complete details of the sold jewellery items as well as customers. The issued bills do not contains details of full description of the item sold like chain. Sat, Topas etc. and the items so purported to be sold cannot be verified from stock register on the date of issuance of bills whether the items were part of stock register or not" It is submitted that mentioning of complete address & PAN of buyers on below Rs. 2 Lac sale bills is neither requirement nor there is any provision in the I. T. Act, 1961 to ask IT PAN complete address and name proof etc. from the customers buying goods in cash upto the prescribed limit. In fact many customers do not inform the same and those infor....
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....rse comment on that issue. So the contentions raised by the ld. AO and that of the ld. CIT(A) are without any merits. Not only that all the invoices were with the ld. AO he has not pointed out any of the error on the part of the assessee in maintaining the stock records and thus we do not find any merits on the reasons that the assessee has not maintained proper records and the same cannot be rejected on a general observations when the same are audited under two law i.e. one under the companies Act and other under the Income Tax Act. We get strength to support our view from the decision of our Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Sulabh marbles (P) Ltd. [ 165 Taxman 258 (Raj) ] wherein the Hon'ble Court held as under: 3. This appeal is directed against the order of Tribunal, Jodhpur Bench, Jodhpur, dated 14-9-2004. The revenue seeks to raise following substantial question of law arising for consideration in this appeal : "Whether on the facts and in the circumstances of the case and in law, the learned Tribunal was justified in upholding the order of learned CIT(A) deleting the addition of Rs. 13,53,310 by holding th....
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.... wrong in drawing adverse inference against the assessee by only referring to the electricity expenses. The Electricity Department had charged the assessee at the minimum rate rather than actual consumption. This is precisely for this reason that the assessee contested the account of the Electricity Department in the Court of law and the matter was decided by the Court in its favour. In any case, the revenue has not placed any material on record to controvert the finding of the CIT(A) that the assessee was charged electricity not at the minimum rate but on actual consumption. Thus, there being no specific finding recorded by the Assessing Officer for rejection of the book results and in the absence of any defects in the books of account, we are of the considered opinion that the CIT(A) was justified in deleting the impugned addition. We confirm his order and dismiss both the grounds of appeal of the revenue." 5. A bare perusal of the impugned order goes to show that the finding of the Tribunal, confirming the order of CIT(A) was finding of fact based upon the relevant material and no question of law much less substantial question arises for consideration in this appeal. Th....
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...., we get support from the decision of the our jurisdictional High Court in the case of Smt. Harshila Chordia v. ITO [2008] 298 ITR 349 in which it was held that "Addition u/s 68 could not be made in respect of the amount which was found to be cash receipts from the customers against which delivery of goods was made to them". Thus, the sales recorded in the books of account of the assessee company cannot be considered as unexplained and thereby we direct the ld. AO to delete that addition. When before us the ld. AO could not prove otherwise that the items sold were not stock and were shown to have been sold by the assessee even though the search team seized the records. It was the compelling circumstance of the rush the assessee must see the rush and hurry of the customer and thereby writing of the all the details based on the situation was not possible by the assessee-appellant. How can a cash receipt coupled with the delivery of goods recorded in the bill can be considered as bogus as bogus as it did not contain the name in full, PAN and address of the buyers, when the law does not enforce such compliance on the part of the assessee-appellant. Even the plea of the ld. AO was that ....
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....also the ld. AO should have considered that on that night the country was in rush to convert their savings into the precious money. As regards the contention of the ld. AO that " It is surprising that some of the bill having lower sale amount related to October and November have been issued with the detail of description of item sold for example bill no. 984 dated 02-11-2016 issued for amount Rs. 8350/- contains details of goods as 1 pair tops under 22/22 Kt gold jewellery. The said bill also contain mobile number of purchaser Namrta Ji Devatwal whereas the bill of higher amount issued in the month and date of demonetarization no such detail have been mentioned and no detail of mobile number has been found" (SIC). This observation in fact supports that there were reasons of the rush and that why show that the sales were made on that and it was not the case of the revenue that even though the rush was that but those details were maintained. Thus, these sales invoices that were prepared on that day support the contention and that plea of the revenue in a positive sense. As regards the contention of the ld. AO that why such sales did not happen in earlier years as festivals and marria....
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....er some dates mentioned as of 2017 but it is of 2016 which are mistakes of A.O. in assessment order) and received the amount in cash in old currency. The booking and supply of Bullion were made in M/s Mohit Jewellers and the cash was deposited in the accounts of M/s Kiran Fine Jewellers P. Ltd. under grab of cash sale by issuing bogus sale bills. This fact is not correct the as the director of the assessee company vide answering to the question no. 18 explained the page and the content of the reply given is reproduced here in below: As is evident that KFJ means Kiran Fine Jewellers and that deposit of cash is duly recorded in the books of the assessee as cash sales and thus in fact the assessee has correctly recorded sales in their books of account and therefore, no adverse inference of that page be drawn because cash deposit in bank transactions noted on page No. 40 are duly recorded in the books of accounts of the assessee. Thus, the above findings and conclusions of AO are based only on suspicions and not based on any material on record or evidence found in case of assessee company. The sale invoices issued by assessee company in respect to jewellery / ornaments items are sol....
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....judicial decision relied upon by both the parties to drive home to their contentions. The assessee is a limited company and deriving income from manufacturing and trading of jewellery. The books of assessee's are audited by the independent Chartered Accountant and copy of audit report and statement of profit and loss account is filed by the assessee company. It is noted from the record that the case of the assessee was taken up for scrutiny assessment u/s 143(3) on the basis of CASS and desired information by the AO were submitted by the assessee from time to time. After completion of assessment the AO vide his order dated 29-12-2019 assessed the income of the assessee at Rs.16,45,24,988/- as against return income of Rs.5,37,53,418/- . During the course of assessment proceedings, the AO rejected the books of account of the assessee by applying the provisions of Section 145(3) and estimated the net profit rate of 2.59% being average Net Profit of last three years and applied the same on the sales of Rs.1,96,92,45,899/- i.e. to say Rs.2,09,09,94,399 - Sales as per books and Rs. 12,17,48,500 - Cash deposited in Bank. It is further noted that the AO reduced the amount of Rs.12,17,4....
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....assessee company as on the date of demonetization is correct and possible looking to the strength of staff, space of demonstration and parking and the considering availability of stock on hand as proved that the sales made by the assessee company is genuine sales recorded in the books of account. All the details required to prove the sales made by the assessee were provided in the assessment proceedings. As regards the receipt of the cash from the customer the ld. AR of the assessee relied upon the findings of the jurisdiction high court judgement in the case of Smt. Harshil Chordia Vs. ITO reported at 298 ITR 349 (Rajasthan-HC). In this case the Jurisdictional Hon'ble High Court have held that 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 t....
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.... is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. As we note from the facts of the case that while in the search operation at the business premises M/s Mohit Jewellers, Prop. concern of Shri Narendrasingh Laxmansingh Rathod who is also director of the company, at 958, 2nd Floor, Dhamani Street, Chaura Rasta, Jaipur, wherein certain incriminating documents were found and seized as page no. 40, 42, 43, 44 and 45 of exhibit-1, Annexure-AS. On perusal of the above documents it is found that the right side of the page 40 of exhibit 2 it is written 6,30,00,000 Sangam Ji. During the search proceedings, when observed right side....
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....sidered. Further, in the independent Auditors reports, the auditor has opined the amount as 'other business receipt of Rs. 6,30,00,000/-recorded in books of accounts on 08- 11-2016'. Similarly at note no. 17.2 of financial statement the amount has been recorded as 'other business income'. Further, at para.2 of 3 of form no. 3CA, the same has been declared as 'other business income'. This fact clearly shows that the income of Rs. 6,30,00,000/- is not a business income of Jewellery but the income earned from business which has not been disclosed by the assessee in the regular books of accounts. In view of the above discussion a sum of Rs. 6,30,00,000/- found in seized paper is held unexplained money u/s 69A of the Act under head income from other sources. On this aspect of the matter the bench noted the seized material be read as whole when the assessee categorically stated that that page contains details of the sales and deposit of cash in to the bank account of the assessee as well as of the person named Sangamji who also stated that the cash in their companies account the money was deposited which was out of the sale proceeds recorded on the said seized ....
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