AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 496
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....10.2017 declaring loss of Rs. 45,20,980/-. The Assessing Officer noted that during the demonetization period i.e. from 09.11.2016 to 31.12.2016, the assessee had made cash deposits amounting to Rs. 3,02,00,000/- in cash in demonetized currency of Rs. 500/- and Rs. 1000/- notes. The assessee submitted before the Assessing Officer that it started its business of jewellery in the month of February, 2016 and the source of cash deposits during the demonetization period amounting to Rs,3,02,00,000/- was majorly from sales made in cash in the months of October and November 2016 from its jewellery business. The Assessing Officer based on the submission of the assessee prepared a chart showing the opening balance of cash, cash sales and cash deposits on page-3 of the assessment order, which is reproduced as below :- Details of cash deposit in financial year 2016-17 Sr. No. Month Opening Balance of Cash Cash Sale Cash Received Rent etc. Cash Deposited in Bank (Cash) 1 Apr-16 642,838.00 - 64,337.00 - 2 May-16 750,471.44 - 13.530.00 - 3 Jun-16 698.687.07 - 13,530.00 - 4 Jul-16 616.916.07 13,5....
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....with all the documentary evidences and show cause as to why the amount may not be added back to your income." 3.3. The assessee submitted its reply on the ITBA stating that this was amount was on account of the festive season due to which more customers were available, resulting in the high cash sales of Rs. 2.66 cores. The relevant reply of the assessee is reproduced in para 4.6 of the page-4 of the assessment order is reproduced as under :- "That the assessee company has started the business of jewellery in the month of February. 2016 and the sale of jewellery items is a seasonal business which is dependent on Hindu marriages season and festival occasions. That the month of October to November is the festive season in our country comprising of many festivals like Karwachauth, Dhanteras. Diwali, etc. During such period the retail sales of the company was huge, due to availability of more customers at such period which resulted in a high cash sale of 2.66 crore approximately The amount so generated from the sales was deposited in bank by the company. 3.4. The Assessing Officer noted that all the cash sales bills were below value of Rs. 2 lakhs, not requiring the PAN ....
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....s. 6,21,688/-) u/s 68 r.w.s. 115BBE of the Act. In this regard, the Assessing Officer relied upon the test of human probability and relied upon the following decisions :- i. CIT vs Durga Prasad More (214 ITR 801)(SC) ii. Hersh Win Chadha Vs DCIT (ITA Nos.3088 to 3098 & 3107/Del/2015)(Del. Trib.) iii. McDowell & Co. Ltd. vs The Commercial Tax Officer 1986 AIR 649: 4. Aggrieved with the said order, the assessee preferred an appeal before the Ld. CIT(A). Before the ld. CIT(A), in the statement of facts, it was submitted that the assessee i.e. Viney Gems and Jewellery Ltd. was incorporated in the financial year 2006-07 on 28.08.2006 in the name of M/S Archit Infra developers Ltd. and the name of the company was changed to NUPUR CAPTAB Ltd. on 02.07.2010 and further changed to the present name of M/S Viney Gems and Jewellery Ltd. on 14.12.2015 . It was further submitted that the assessee has started its business of jewellery in the month of February, 2016 and had made a sale of Rs. 32,784/- in the month of February 2016 and corresponding purchase of Rs. 86,82,734/- was made and the value of closing stock of jewellery as on 31.03.2016 was Rs. 86,55,435/ -. I....
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....al because while on the one hand he is accepting the purchases made by the assessee and on the other hand he is declaring the sale as bogus. 4.2. During the appellate proceedings, the assessee filed fresh evidence to establish the genuineness of its purchases and the stock in hand. This evidence included :- i. Copy of bills of suppliers from whom the appellant had made purchases during the year. ii. Copy of ledgers of suppliers in the books of the appellant. iii. Copy of Axis Bank Statement from which the appellant made payments to the suppliers. 4.3. The ld. CIT(A) after calling remand report from the Assessing Officer (in which the Assessing Officer objected its submission) admitted the same in the appellate proceedings. The Ld. CIT(A) noted that the Assessing Officer had relied heavily on the preponderance of probabilities in deeming certain events as unlikely to have taken place while holding other scenarios as more probable. The ld. CIT(A), after considering the material and fresh evidences filed during the appellate proceedings took note of the fact of the purchases amounting to Rs. 86,82,734/- that the assessee had made during F.Y. 2015-16, o....
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....d. The ld. CIT(A) also took note of the fact that a crucial piece of evidence that was filed by the assessee during the assessment proceedings was the original VAT return for the quarter 01.10.2016 to 31.12.2016 and the sales shown in the VAT return corresponds with the sales declared by the assessee in its books of account which further establishes the genuineness of the sales and purchases of the appellant. The Ld. CIT(A) also took note of the fact that VAT return for this period was not revised by the assessee. Further, the ld. CIT(A) relied upon the following case laws :- i. ACIT, Central Circle-14. Delhi vs Delhi Spot Buliion Trading company private limited ITA No. 1965/Del/2021, ii. DCIT vs Kundan Jewellers ITA No. 1035/Mum/2023 iii. Bharat Agro Industries vs DCIT (ITA No.3934/Del/2023) iv. M/s Heera Panna Jewellers (ITA No.253A/ViZ/2020) 4.5. In view of the above findings, the Ld. CIT(A) deleted the addition of Rs. 2,95,78,312/- made by the Assessing Officer u/s 68 r.w.s. 115BBE of the Act. 5. The ld. DR relied upon the order of the Assessing Officer. 6. The Ld. AR supported the order of the Ld. CIT(A) and also relied upon the dec....
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....16 to 31.12.2016. The claim made by the assessee that the amount of Rs. 3,02,00,000/- was on account of cash sales of the jewellery was required to be satisfied with verifiable evidence in view of the period of demonetization and the Assessing Officer calling for documentary evidences to support its claim. Therefore, as per the provisions of section 68 of the Act, the onus was on the assessee to establish that the cash sales amounting to Rs. 2,95,78,312/- represented cash sales of jewellery business with the name and addresses of the such purchasers. Unless the same is produced by the assessee, the onus on the part of the assessee in claiming that the amount of Rs. 2,95,78,312/- represents cash sales is not discharged by the assessee. In view of this fact, the ld. CIT(A) erred in taking a view that the AO should have verified the claim of purchases made by the assessee and the availability of the jewellery stock and without establishing the same to be not genuine, the Assessing Officer could not have disputed the claim of the assessee that the said amount did not represent cash sales of jewellery. In fact, in the given facts even if the claim of purchases and stock available is fou....
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.... 16,205,784 16,205,784 Jan-18 18,859,447 18,859,447 Feb-18 1 42,109,888 42,109,888 Mar-18 295,487 45,179,231 45,474,718 Total 485,947 276,529,547 277,015,495 Sales as per Balance Sheet 277,015,495 M/S VINEY GEMS & JEWELLERY LIMITED Details of Month Wise Sales for the FY 2018-19 2018-19 MONTH Cash Sales Credit Sales Total Apr-18 42,798,011 42,798,011 May-18 45,148,480 45,148,480 Jun-18 37,352,346 37,352,346 Jul-18 13,696,199 13,696,199 Aug-18 8,667,156 8,667,156 Sep-18 291,263 22,837,541 23,128,804 Oct-18 47,791,760 47,791,760 Nov-18 8,650,483 8,650,483 Dec-18 37,390,098 37,390,098 Jan-19 42,527,143 42,527,143 Feb-19 11,576,810 11,576,810 Mar-19 8,680,207 8,680,207 Total 291,263 327,116,233 327,407,496 Sales as per Balance Sheet 327,407,496 M/S VINEY GEMS & JEWELLERY LIMITED Details of Month Wise Sales for the FY 2019-20 2019-20 (....
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.... for FY 2016-17. However, no such comparable quantum of sales has been shown in the subsequent Financial Years i.e. 2017-18, 2018-19 and 2019-20 and, therefore, the contention of the assessee that the cash sales of Rs. 2,64,40,274/- and Rs. 30,13,993/- for the months of October, 2016 and November, 2016 (prior to demonetization) was on account of cash sales of jewellery is not acceptable. As stated above, the assessee has claimed to have started its jewellery business from February, 2016 and therefore no such comparative figures of cash sales are available for the previous financial years. 8.4. Further, the ld. CIT(A) did not negate the reasoning of the Assessing Officer wherein the Assessing Officer had stated as to why the assessee was forced to manipulate its cash book and show the cash sales for the month of October 2016 and during the prior period of demonetization i.e 01.11.2016 to 08.11.2016 because the assessee had already filed its VAT return for the period 01.04.2016 to 30.09.2016, which could not be revised and therefore the manipulation in the cash book by showing the cash sales of Rs. 2,66,40,274/- and Rs. 30,13,983/- in October, 2016 and from 01.11.2016 to 08.11.201....
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....is on the assessee to establish its cash sales by way of submitting the name and address of the purchasers particularly in view of the adverse finding of the Assessing Officer and the circumstances in which the cash sales amounting to Rs. 2,95,78,312/- has been claimed to be an account of cash sales of jewellery. This fact is also supported by our finding that the explanation of the assessee for the so-called boost in the sale of jewellery in the month October, 2016 and November, 2016 is not acceptable in view of the fact that no such boost in sale in cash sales of jewellery was reflected in the month of October or any other festive month in FY 2017-18, 2018-19 and 2019-20 and other factors as discussed above. Moreover, it has been judicially held that once the books of accounts are rejected, no separate addition can be made by the Assessing Officer in respect of the items forming part of the said books of the accounts. In fact, we are of the considered view that the Assessing Officer rightly did not reject the books of accounts because by rejecting it, the books of accounts would not have been in existence and the Assessing Officer could not have made the addition of Rs. 2,95,78,3....
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....s that the assessee is carrying on a genuine jewellery business and also that it had an available stock from which to make sales. We have considered the above observation of the ld. CIT(A) but not found to be acceptable because the nature of the claim of the business of the assessee is not very relevant as the assessee has to satisfy the Assessing Officer regarding the cash sales of Rs. 2,95,78,312/- in its books of accounts being claimed from the sale of jewellery business or any business claimed to have been carried out by the assessee which as per our finding in this order, the assessee has failed to do so. Income tax is a civil proceeding, wherein, the view is taken on the preponderance of probability and not on the test of beyond doubt. 8.8. Therefore, in view of the above facts and discussion, the Assessing Officer was correct in holding that in a situation like this the matter should be considered by applying the test of human probabilities and not beyond doubt and in the given facts the said test of human probability was satisfied in treating the so called cash sales of jewellery amounting to Rs. 2,95,78,312/- as unexplained cash credit u/s 68 of the Act r.w.s. 115BBE of....