TaxTMI 
TaxTMI 
2025 (11) TMI 398
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.... After claiming deductions under Chapter VI-A at Rs. 1,67,500/-, the income declared by the assessee includes salary income of Rs. 3,00,000/- and business income of Rs. 18,02,345/- and income from other sources of Rs. 5,600/-. The business gross receipt declared by the assessee of Rs. 9.54 crores against the purchases of stock of Rs. 14.76 crores, assessee reported closing stock of Rs. 6.45 crores. The case was selected for complete scrutiny through CASS for the reason of large value cash deposited during demonetization period. Accordingly, notices u/s 143(3) and 142(1) of the Act were issued and served on the assessee. In response, assessee has furnished the business activities, business organization structure and audited books of account and with a justification of cash deposit during demonetization period. 3. During assessment proceedings, AO observed that assessee has deposited cash during demonetization period with IDFC Bank to the extent of Rs. 5.345 crores and he observed that the monthly cash deposit furnished by the assessee along with bank statement was FYs 2015-16 and 2016-17 were processed and he observed that during previous assessment years, assessee has depo....
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.... CIT Vs. Durga Prasad More 82 ITR 540 considered the cash deposited in the bank account as unexplained/unverified. The Assessing Officer further observed that there were discrepancies in the VAT return also. 7.2 The appellant has filed detailed submission in support of grounds raised in the memo of appeal. My attention was drawn to summary of events which were relevant to the issue under reference. It was submitted that the assessee has been engaged in the business of jewellery for number of years and jewellery business has been carried on by M/s. Basant Jewellers (India) Pvt. Ltd(Company), a corporate entity till its takeover by MI s. Jainsons Jewellers, a proprietorship concern of Mr. Basant Jain w.e.f. pt October, 2016. As a result of such takeover, the stock of jewellery was transferred by M/s. Basant Jewellers (India) Pvt. Ltd. to Jainsons Jewellers being the proprietary concern. The sequence of events filed by the Appellant is extracted as under :- S No Date of Event Particulars of Event PB Page No. 1 01 October 2016 Stock of Jewellery transferred from M/s Basant Jewellers India Private Limited to M/s Jainsons Jewellers (prop. Concern) 34 ....
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.... Tax Audit Report. The appellant made reference to various case laws as part of its submissions which have been extracted supra. 7.4. I have carefully considered the basis of addition made by AO and submission of assessee. The fact of deposit of cash during demonetization period is not in dispute. It is noted that the appellant is engaged in business of jewellery as a proprietor. The appellant acquired the business being carried on by the Company as proprietorship concern under the name and style of M/s Jainsons Jewellers. 7.5 After going through the documents placed on record and the assessment order, it is observed that the assessee has been engaged in the business of jewellery as proprietor and had taken over the business from the Company during the year. It is noted that AO has not adversely commented on trading activities except observing that the cash sales in the month, October 2016 and Nov 1st to Nov. 8th (i.e., period prior to demonetization) was abnormally high; that the cash was kept in hand without being deposited in the bank account after sales and that the confirmation of the parties were not filed. In fact, AO has made addition only in respect of ca....
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.....Y. 2017-18 MONTH TOTAL SALE TOTAL CASH SALE SALE THROUGH BANK APRIL 5,220,025.00 1,162,995.00 4,057.030.00 MAY 5,372,491.00 3,644,300.00 1,728,191.00 JUNE 5.657,064.00 2,888,480.00 2,758,584.00 JULY 1,226,475.00 1,216,449.00 10,026.00 AUGUST 4,641,545.00 4,200,749.00 440,796.00 SEP 5,356,555.00 4,750.108:00 606,447.00 OCT 8,993,407.00 7,862,922.00 1,130,485.00 NOV 19,289,582.00 18,349,959.00 939.623.00 DEC 15,730,634.00 15,283,494.00 447,140.00 JAN 19,958,550.00 17,198.316.00 2,760,234.00 FEB 28.108.667.00 26,063.810.00 2,044,857.00 MARCH 15,298,445.00 13,727.669.00 1.570,776.00 TOTAL 134,853,440.00 116,349,251.00 18,504,189.00 7.6 The appellant has also clarified that the sale was fully reconciled with Annual VAT returns and that the VAT assessment orders fully support and corroborate the trading activities declared by the appellant relevant to the year under reference. The AO has not pointed out any mistake in the inventory or the purchases of stock by the appellant from the Company which had transferred ....
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....he stocks shown by the appellant. I have gone through various case laws as referred by the appellant and find that in the absence of any evidence, the sales recorded by the appellant cannot be held to be bogus. Further, reliance is also placed on the decision of Hon'ble ITAT Delhi in the case of Fine Gujranwala Jewelers Vs 1T051 taxmann.com 340 (Delhi - Trib.) and Hon'ble High Court of Delhi in the case of PClT Vs Agson Global 134 taxmann.com 256 which are relevant to the facts of the case. 7.8 In view of the above facts and findings, the addition of Rs.5,34,50,000/- made by the AO u/s 68 is hereby deleted and this ground of appeal is allowed." 6. With regard to advance received from its customers, ld. CIT (A) deleted the addition by observing as under :- "9. Ground No.3: In this ground the appellant has challenged addition of Rs. 35,75,988/- being advance received from the customers. The Assessing Officer has observed that in the absence of confirmation from the parties such advance is considered as unexplained in terms of sec. 68 read with sec. 115BBE. 9.1 The appellant has filed details of Advances from Customers amounting to Rs. 35,75,988/-....
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....sustainable under law. (viii) That infact, the source of cash deposits made by the Appellant is duly recorded in the Audited books of accounts and as such the addition made by the Assessing Officer is against the scope and purview of provisions of section of 68 of the Act. 2 That the provisions of section 115BBE read with section 68 of the Act in charging the income tax @60% are unconstitutional and against the principles of natural justice and even otherwise, the same are applied on illegal and arbitrary basis. 3(i) That on the facts and circumstances of the case, the Assessing Officer was not justified in making addition of advances received from customers to the extent of Rs. 35,75,988/- on the alleged ground that onus regarding the genuineness, creditworthiness and identity of these "customers was not discharged by the appellant. (ii) That transaction of advances being supported from relevant documentary evidences and the same having been adjusted in the subsequent years, the impugned addition u/s 68 of the Act is illegal and arbitrary. (iii) That appellant having discharged the burden of proof and in absence of any adverse material/....
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....t the facts in the present case are exactly similar to the coordinate Bench decision in the case of S. Balaji Mech-Tech (P.) Ltd. (2025) reported in (2025) 170 taxmann.com 639 (Delhi-Trib) dated 25.09.2024. He heavily relied on the findings of the ld. CIT (A). 10. Considered the rival submissions and material placed on record. We observe that the nature of the business of the assessee is trading of gold, diamond and silver jewellery through his proprietorship concern, namely Jainsons Jewellers. It is brought to our notice that the assessee was a director in the erstwhile company, namely, Basant Jewellers India Pvt. Ltd. and the company has continued the same business till AY 2016-17. This company was fully acquired by the assessee and continued to do the same business in the name and style of Jainsons Jewelers as a proprietorship concern. Therefore, the business carried on by the assessee is exactly similar to the business carried out by the erstwhile company. It is brought to our notice that the nature of the business is the same and the terms of dealing with the customers by means of cash and credit sales are exactly similar, the pattern of cash deposits out of the sale procee....
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....ssee to maintain such details like name of the customer and address. This requirement raised by the Ld CIT(A) is also not practical, mere his opinion. 16. Now let us discuss the actual issues raised by the AO that the assessee has recorded sales only during the demonetization period and there is no history of such cash sales in the earlier period. Based on the above observation, he was of the view that the assessee has introduced its own undisclosed cash into the system and booked the cash sales without there being any cash sales. This can be traced if at all the assessee has introduced such unaccounted money into the system, it will show from the financial results or parameters where it can be deducted with: a. Abnormal profit b. No stock movement c. Recording of excess sales From the information submitted before us, all the purchase and sales are properly recorded in the books and also substantiated by the information submitted before the GST officials and relevant quarterly reports. There is absolutely no discrepancies found by the lower authorities either in the stock registers submitted or quarterly reports submission before the GST....
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....pression "explanation is found not satisfactory to the AO" is purely relates to the money found with the assessee which are not recorded in the books of account. In this case, the above expression has no relevance since the assessee had already declared the cash sales in its books. In the similar situation, the coordinate bench has held in the case of J.R. Rice India (P) Ltd as under: "At the cost of repetition, to the extent of sales made, the stock position is also correspondingly reduced by the assessee which goes to prove the genuineness of the claim of the assessee. On examination of the cash book of the assessee, it is found that the assessee had cash balance of Rs. 55.94 lakhs as on 8-11-2016, i.e., the date on which demonetization was announced, which sufficiently explains the source of deposit of Rs. 52.60 lakhs in specified bank notes. Apart from this, the assessee had duly furnished the month wise details of sales, month wise details of purchase, corresponding freight charges incurred month wise, month wise power and fuel expenses and month wise selling expenses in the form of rebate and discount. The assessee also furnished the quantitative details of goods mon....
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....ts to the Assessing Officer, it is duty of the Assessing Officer to examine the same in the light of the available evidence. In the present case the Assessing Officer and the ld CIT(A) have concluded the findings on the basis of conjectures and surmises. The Assessing Officer has to establish the link between the evidence collected by him and the addition to be made. The entire case has to be dependent on the Rule of evidence, the assessee in this case explained the source of bank deposits are from cash sales. The Assessing Officer proceeded to disbelieve the explanation of the assessee on the presumption basis without bringing the corroborative material on record. The Assessing Officer is required to act fairly as reasonable person and not arbitrarily capriciously. The assessment should have been made based on the adequate material and it should stand on its own leg. The Assessing Officer without examining any parties to whom the goods are sold by the assessee, came to conclusion that the sales are not genuine, without even rejecting the books of account which is in our opinion is erroneous. 21. Respectfully, following the above decisions, we are inclined to allow the gro....