TaxTMI 
TaxTMI 
2025 (11) TMI 554
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....the material available on record and case laws submitted by the appellant. The action of Ld. CIT(A) is contrary to the law as well as facts and deserves to be quashed. 3. Under the facts and in the circumstances of the case and in law, Ld.CIT(A) erred in confirming the action of Ld. AO in making the addition relying upon the statement recorded/material seized / impounded during survey carried u/s 131 without providing the copies of the same to be appellant. The said action is is bad in law and on facts being against the principal of natural justice. 4. Under the facts and in the circumstances of the case and in law, Ld.CIT(A) erred in confirming the action of Ld.AO in making addition in perfunctory manner on preposterous basis by not issuing valid show cause notice as mandated and prescribed in CBDT instructions and under the law, which omission vitiates the entire action. 5. Under the facts and in the circumstances of the case and in law, Ld.CIT(A) erred in confirming the action of Ld. AO in making addition of Rs. 1,30,82,000 u/s 68 of the Act. 6. Under the facts and in the circumstances of the case and in law, Ld.CIT(A) erred in confirming the ....
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....f sale and cash deposited into the bank account with the last year for each month and cash book containing details of opening cash in hand as on the date of demonetisation. 6. On going through the details so filed, Ld.AO noted that a survey operation was conducted at the business premises of the assessee on 24.03.2017. During the course of survey, assessee was asked to explain the source of cash deposit of 1.58 Crores SBN Notes made in the period 09.11.2016 to 30.12.2016, to which assessee explained that said cash is out of the cash generated from the cash sales but assesseehad agreed that out of total 1.58 Crores deposited, 60% cash deposit (Rs. 94,80,000) is unrecorded sale of the assessee, which will be declared under Pradhan Mantri Garib Kalyan Yojana (PMGKY). Assessee declared the said amount under PMGKY and paid the due tax, interest and penalties. However, during the course of assessment, Ld. AO observed that since, the cash deposited in old currency noted by the assessee in his bank accounts is Rs. 2,88,82,000/- against the surrendered amount of Rs. 1,58,00,000/- during the survey proceedings, therefore the balance amount of cash deposited of Rs. 1,30,82,000/- in old cur....
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....al of natural justice: 1. During the course of appeal before CIT(A)-4, Jaipur, detailed Paper Book, containing the replies submitted before Ld.AO, Charts of Cash Deposits and withdrawals, Bank Books, stock and sale registers for both Rajasthan and Haryana were submitted along with complete compilation of relevant case laws (PBP 180- 181), however, Ld. CIT(A) completely ignored the material available on record. No efforts were made even to look into the material and case laws relied upon by the assessee and all the grounds were summarily dismissed. The said action of Ld.CIT(A) is against the principal of natural justice and resultantly the order so passed by Ld.CIT(A) deserves to be quashed. 2. A perusal of the assessment order (Page-7) clearly shows that addition has been made by placing sole reliance on the statement recorded during the course of survey. Findings so rendered by Ld.AO is placed hereunder: During the assessment proceedings the assessee submitted that he deposited total cash of Rs. 5,00,98,000/- in his bank accounts during the period of demonetization and out of that cash deposited in old currency (SBN) is of Rs. 2,88,82,000/ -. During the ....
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....survey on 08.03.2017 you have stated that the total cash deposited during 08.11.2016 to 30.12.2016 was around Rs. 3,00,00,000/-, however in the ITR filed the total cash deposited in various bank accounts has been shown of Rs. 5,00,98,000/ -. Please explain the discrepancy with the evidence and furnish the source of the cash deposited of Rs. 5,00,98,000/- as called for in the above queries. In response to this, vide letter dated 30.09.2019, specific request was made before Ld.AO to provide the copy of statements recorded during the course of survey (PBP- 25). However, the same was never provided. The said action has resulted into failure on the part of Ld.AO to provide the evidence he had gathered u/s 142(2) Act, therefore, erroneously skipping the mandatory intermediary step prescribed u/s 142(3) of the Act. Thus, when the A.O. has directly gone on to pass the Assessment Orders u/s 143(3) of the Act to make the impugned additions u/s 68, the same is in direct violation of the procedure of enquiry prescribed in the Statute that inherently encompasses the Principles of Natural Justice. 4. Supporting Case Laws: - ITAT Delhi in the case of M/s Surbuildcon P L....
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....enquiries conducted by the A.O. u/s 142(2) of the Act have not been confronted to the assessees, we are inclined to agree with the Ld. A.R. that there has been a violation of the Principle(s) of Natural Justice implied within Section142 (2) of the Act and such statutory non-compliance vitiates the entire assessment proceedings, therefore, rendering it to be null and void. Thus, the Cross Objection taken on the violation of the Principle(s) of Natural Justice is also allowed in favour of the assessees. " - T Takano Vs SEBI and Anr. In civil Appeal No.487-488 of 2022 vide order dated 18.02.2022 (DPB 446-495) - Evidentiary value of Statements recorded during the course of survey: 5. As submitted above, assessee was subject to a survey u/s 133A of the Act, however, a perusal of order of Ld.AO as well as Ld. CIT(A) clearly shows that there is no such reference of any incriminating material found during survey suggesting that any undisclosed source of income was detected or any document was found suggesting any unrecorded sale being made by assessee to generate any undisclosed cash or any incriminating material was found suggesting that cash deposit was made ou....
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....vant assessment orders 7. In this regards, we also place our reliance on the decision of Hon'ble Bench in the case of Satish Chandar Agarwal Vs ITO in ITA No.311/JP/2015 vide order dated 12.04.2018 holding as under: "Section 133A, however, enables the income tax authority only to record any statement of any person which may be useful, but does not authorize taking any sworn statement. Thus, it is trite law that Section 133A does not empower any Income tax authority to examine any person on oath and then use it as evidence to make addition. In such a situation, no addition can be made or sustained only on the basis of the statement recorded during the survey U/s 133A of the Act." 8. In this regard, kindly also refer to the decision of Hon'ble Delhi High Court in the case of PCIT, Central-3 Vs ARN Infrastructure Limited in ITA No.37/2019 vide order dated 27.07.2023 holding as under: "18. We have heard learned counsel for the parties and perused the record. 19. According to us, what clearly emerges from the record is that the addition of Rs. 10 crores to the taxable income of the respondent/assessee was made purely on the basis of t....
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.... High Court in case of Micro Marble P Ltd Vs ITO Ward-1 Civil Writ Petition No.13719/2021 (DPB 24-27) 10. In view of the facts and judicial precedents cited hereinabove, it is evidently clear that any addition to the income of the assessee made solely on the basis of statements recorded during a survey under section 133A of the Act, without any independent corroborative evidence or material substantiating such addition, is legally unsustainable and devoid of merit. The settled position of law, consistently upheld by various judicial forums including the Hon'ble Supreme Court, High Courts, and Income Tax Appellate Tribunals, categorically holds that statements obtained during survey operations lack evidentiary value and cannot independently justify additions to taxable income. Therefore, the impugned addition, being purely based on uncorroborated statements recorded during the survey proceedings, deserves to be deleted. GROUND OF APPEAL-5: Under the facts and in the circumstances of the case and in law, Ld.CIT(A) erred in confirming the action of Ld. AO in making addition of Rs. 1,30,82,000 u/s 68 of the Act. Brief Facts: a. At Page-2....
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....00,195.00 23,749,500.00 41,149,695.00 - 52,207,340.00 52,207,340.00 5 Aug-15 18,830,792.50 24,083,750.00 42,914,542.50 - 39,137,070.00 39,137,070.00 6 Sept-15 23,585,302.50 16,252,500.00 39,837,802.50 - 27,752,550.00 27,752,550.00 7 oct-15 9,961,990.00 25,556,800.00 35,518,790.00 - 30,544,950.00 30,544,950.00 8 Nov-15 11,098,040.00 13,581,500.00 24,679,540.00 - 34,469,630.00 34,469,630.00 9 Dec-15 10,308,100.00 18,665,500.00 28,973,600.00 - 27,424,800.00 27,424,800.00 10 Jan-16 8,281,040.00 17,495,000.00 25,776,040.00 - 17,040,000.00 17,040,000.00 11 Feb-16 10,600,540.00 17,796,500.00 28,397,040.00 - 33,686,000.00 33,686,000.00 12 March-16 22,958,595.00 19,096,600.00 42,055,195.00 - 33,415,000.00 33,415,000.00 Total 151,142,815.00 238,364,800.00 389,507,615.00 - 393,199,006.45 393,199,006.45 S.No. Month Sales Purchases Cash Credit Total Cash Credit Total 1 April-14 6,829,412.00 15,271,500.00 22....
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.... c. In response to this, complete details of cash, sales book, stock details, details of deposits and Bank Books were submitted along with reconciliation between the turnover shown in Vat Returns and shown in the ITR. Justification for increase in sale was also provided duly supported by documentary evidences. No defects were found in the details submitted. d. In subsequent paras, Ld.AO has placed its sole reliance on the facts that during the survey, assessee has agreed and confessed that out of total SBN deposited, 60% constitute his unaccounted sale (emphasis supplied) e. On the said ground, section 68 was invoked and assessment was made by holding as under: 6.3 In view of the reasons mentioned above and settled position of the law by Hon'ble Supreme Court in the aforementioned cases, the genuineness of the sale bills could not be verified and remains unverified by the undersigned. Therefore, it is held that the assessee failed to prove the source of the cash deposited of Rs. 76,50,000/- in his bank account with HDFC Bank on 14.11.2016, therefore addition u/s 68 on account of unexplained and unverified cash deposits made to the income of the asses....
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....a fair opportunity to explain his position on the proposed additions/disallowances in accordance with the principle of natural justice. In this regard, the Assessing Officer shall issue an appropriate show cause notice duly indicating the reasons for the proposed additions/disallowances along with necessary evidences/reasons forming the basis of the same. Before passing the final order against the proposed additions/disallowances, due consideration shall be given to the submissions made by the assessee in response to the show cause notice. Additionally, the show cause notice issued as annexed at Page 100 to 101 of PB is without any statutory provision under which addition was proposed which is core foundation of the entire assessment proceedings are indisputably part of records before lower authorities as well as before Honourable bench. There are plethora of decisions of supreme court and jurisdictional high court where it is held principally that show cause notice issued cannot be vague and generic and must whisper the exact charge/provision under which action is proposed in law. Without jurisdictional ingredient show cause notice cannot be held valid. Hence, an....
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....ng regard to the statutory limit within which the Appropriate Authority has to act and his failure to act in conformity with the principles of natural justice, we do not think we can remand the matter to the Appropriate Authority. We must set his order aside. The appeal is accordingly allowed. The judgment and order under appeal is set aside. The order of the Appropriate Authority dated May 31, 1993, is quashed" - Hon'ble apex court decision in case of Oryx Fisheries Pvt ltd vs UOI reported at 2010 13 SCC 427 " 24. It is well settled that a quasi-judicial authority, while acting in exercise of its statutory power must act fairly and must act with an open mind while initiating a show cause proceeding. A show cause proceeding is meant to give the person proceeded against a reasonable opportunity of making his objection against the proposed charges indicated in the notice. 25. Expressions like "a reasonable opportunity of making objection" or "a reasonable opportunity of defence" have come up for consideration before this Court in the context of several statutes. 28. It is no doubt true that at the stage of show cause, the person proceeded again....
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....ssee having thoroughly discharged the burden of proof by submitting extensive documentary evidence, including sales registers, purchase registers, VAT returns, and cash flow summaries. It is pertinent to mention that all these documents were independently submitted during assessment proceedings. Furthermore, the trading results of the assessee were neither rejected nor questioned. Hence, this ad-hoc addition results in double taxation, taxing the very profits already offered for taxation in the audited Profit & Loss Account through recorded cash sales. Once it is established and accepted that the source of cash deposits into the bank account is from routine cash sales to customers, no further addition or presumption regarding the genuineness of sales can legally arise unless the books of accounts are rejected explicitly under Section 145 of the Income Tax Act, 1961. For this preposition we rely upon the following case laws: - ITAT Jaipur in the case of Mahesh Kumar Gupta Vs ACIT, Circle-4, Jaipur in ITA No.149/JP/2022 vide order dated 23.03.2023 held as under (DPB: 182): "9.3 The bench noted the ld. AR of the assessee has relied upon the various judgment and the s....
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....in books of accounts which were found to be correct and complete. We have also noted that the assessee has undertaken cash sales of Rs. 1,86,45,067. Out of the total cash sales, cash sales amounting to Rs. 80,00,000 has been found to be non-genuine and added under section 68 of the Act. Explanation offered to substantiate the cash sales has been arbitrarily rejected without holding that the sales is duly recorded in the books and is also supported by the various records produced in the assessment proceedings. " - ACIT Central Circle-1 vs. Shri Mahendra Kumar Agarwal ITA No. 172/JP/2022 We agree with the findings of ld. CIT(A) that the AO has not brought any material on record to establish that the sale bills are bogus nor any evidence indicating that such sales was bogus and merely having some doubt by twisting the data and giving some findings which are not alone sufficient to justify the addition the income so assessed in not tenable in the eye of law. In fact, the AO neither found any concrete and conclusive evidence of back dating of the entries of sales, evidence of bogus sales, evidence of bogus purchases, and non-existing cash balance in the books of accoun....
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....turnover declared by the assessee in ITR. Further, the VAT returns were accepted by the VAT authorities who are independent government agency and found no error in the VAT returns filed by the assessee. Assessee has deposited cash during the demonetization out of the cash available as on the closing hours of 08.11.2016 i.e. the date when the demonetization was announced by the Hon'ble Prime Minister and was the last day upto which the SBN could be accepted as valid currency. As observed above, assessee has already included the entire cash sales in the total sales and the profits have been derived which was offered for tax, thus taxing the same income twice once in the sales and other when the sale consideration was realised and deposited in the bank account which is doubted on conjectures and surmises. Thus, the source of cash deposited as out of the cash sales should not be doubted without bringing on record any contrary material. 2. For this proposition we further rely upon :- - Delhi High Court in CIT vs Kailash Jewellery House ITA No.613/2010 dated 09.04.2010 - Delhi High Court in PCIT vs Agson Global Pvt Ltd (2022) 441 ITR 550 (Del) - Delhi High ....
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....d that when the audited books of account were not rejected and the sales of the assessee have not been disturbed the Revenue authorities are precluded from making any addition u/s 68 of the Act in respect of the cash deposits made into bank account during demonetization period. 20. In view of the above discussion, we are of the considered view that there cannot be any addition u/s 69A of the Act in respect of cash deposits made by the assessee into its bank account as unexplained income in the case of the assessee. Therefore, we reverse the findings of the Ld.CIT(A) and direct the AO to delete the addition made u/s 69A of the Act. Grounds raised by the assessee are allowed. 21. In the result, appeal of the assessee is allowed. - ITAT Delhi in case of AG India Retail Pvt Ltd vs ACIT in ITA No.449/Del/2024 order dated 27.08.2024 (Delhi-Trib.) 20. We find that the Assessing Officer has not questioned the cash sales and has also not rejected the books of account. The AO has accepted the sales made during the year and the books of accounts of the assessee. We find considerable force in the ld AR argument that when the AO has not questioned the audited books of....
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.... it is not in dispute that the books of accounts maintained by the assessee in the regular course of its business were audited and accepted by the AO while framing the assessment through deep scrutiny under section 143(3) of the Act. The AO did not point out any specific defect in the books of account maintained by the assessee, no inflated purchases or suppressed sales were found. In the instant case, even the Investigation Wing asked the assessee to furnish the details which were submitted, copy of which is placed at page no. 75 to 123 of the assessee's compilation, on those details, no adverse comment was made by the Investigation Wing. It is also noticed that the assessee is having cash sales in all the years which is evident from page no. 4 of the impugned order passed by the Ld. CIT(A). For the year under consideration the assessee was having cash sales of Rs. 4,12,59,227/- out of total sale of Rs. 13,82,27,373/-, the cash sale was about 1/3rd of the total sales, similar was the position there in the preceding year. The assessee was also having cash realized from the debtors and it was not the case of the AO that the debtors of the assessee were bogus or those were not re....
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....k. (c) That during the period of demonetization, not only the SBN Notes but almost an equal amount of regular/valid currency notes were deposited. (d) That in the subsequent months, regular cash has been deposited. In March, 2017 total cash of Rs. 4,44,47,250/- was deposited. 2. Here it is important to note the findings of Ld.CIT(A) made at Page-7, Para 9.1(i) of the order: (i) It is to be noted that each entry must be separately explained by assessee to prove the genuineness of the transaction, While explaining the various credits and investments, it is possible that the assessee may be successful in explaining some of them, but that does not by itself mean that the entire investments has to be considered as explained. The Assessing Officer has to apply his mind in each and every individual entry when an explanation is offered by the assessee as observed by the Hon'ble Rajasthan High Court in the case of CIT v. RS. Rathore[1995] 212 ITR 390 (Raj.). A perusal of the above, clearly shows that AO has to apply his mind in each and every individual entry when an explanation is offered as observed by Hon'ble Rajasthan High Court in th....
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....te heads of income such as profits, capital gains, etc., which would involve reporting of accounts maintained on an elaborate basis and also detailing expenditure, etc., the Assessing Officer may have the discretion to reject accounts and arrive at the income on the basis of estimation. However, in the case of section 68, there cannot be any estimate even if for the rest of the accounts, such an exercise is validly undertaken. This is for the simple reason that the expression "any sum" refers to any specific amount and nothing more. 7. In view of the above discussion, this court is of the opinion that the question of law framed has to be answered in favour of the assessee and against the Revenue. 8. The appeal is accordingly allowed. - Sahara India Financial Corporation Ltd Vs DCIT (2014) 41 taxmann.com 251 (Delhi Trib), held as under: "24.1. Apropos assessee's legal contention that fiction created by deeming provisions of sec 68 contemplate any addition at all, refers to a specific deposit and there is no provision for making estimated adhoc addition @ 35%. Besides department on a sample check basis has been adopting varying rates without an....
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....;s explanation was not found satisfactory, can be treated as assessee's deemed income under s. 68. Of course the onus is on the assessee to identify each credit in the whole lot of sundry creditors in the balance sheet or squared up accounts. Once having done so, then onus is on the AO to question to the assessee about nature and source of each credit, Wherever he does not do so, that is, in those cases of credits, where AO does not ask any question from the assessee, then they are presumed to be accepted by the AO as satisfactorily explained. There is no further liability on the assessee and the AO cannot resort to addition of such items of credits. Thus, where an assessee has large number of deposits in its books the AO has to identify credits whose nature and source is required to be explained by the assessee. In other words, non-satisfactory nature of explanation of a credit cannot be presumed unless AO asks the assessee to explain nature and source of a credit recorded in its books. Though the onus thereof is on the assessee, but finding to be given by the AO has to be with respect to each individual amount credited in the books during the assessment year in question. Ther....
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....ssessee is squarely covered by the decision of Hon'ble Ahemdabad Bench of Tribunal in the case of ITO Vs Shri Pawan Kumar Bhagat Ram Sharma in ITA No. 1652/Ahd/2011, vide order dated 11-04-2016 7. we further place our reliance on the decision of Sri Ramchandra Reddy Vs DCIT in ITA No. 791-794/Hyd/2013, vide order dated 09.01-2014, holding as under: 8. As submitted above, the deposits are only the business receipt of assessee, therefore the same to be taxed u/s 28 only and not u/s 68 of the act and resultantly there is no justification for taxing such income u/s 115BBE of the act. In support of our contention we place our reliance on the following case laws: - Shri Lovish Singh Vs ITO in ITA No. 143/Jodh/2018, vide order dated 25-05-2018. - Abdul Hamid Vs ITO (2020) 117 Taxmann.com 986 (Gauhati Trib) - The Hon'ble ITAT, Visakhapatnam, in the case of ACIT Vs. M/s Hirapanna Jewellers, in ITA No.253/Viz/2020, vide order dated 12.05.2021 held that: "9. In view of the foregoing discussion and taking into consideration of all the facts and the circumstances of the case, we have no hesitation to hold that the cash receipts represent the ....
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.... Fourthly, That no case of Revenue that assessee has some anonymous /hidden source of income, e) Fifthly, no case of Revenue that assessee has some hidden or unaccounted asset generated corresponding to stated amount, f) Sixthly, no case of Revenue that assessee has not offered such amount in p&l account prepared on basis of books, duly offered in itr g) Seventhly, no case of Revenue that assessee has not offered such amount in vat returns to vat authorities h) Eighthly, no case of Revenue that profit margin shown by assessee is not reasonable as per industry standards i) Lastly, that no case of Revenue that purchases & stock are manipulated . When above all points are deemed answered in favour of assessee already in assessment proceedings by assessing officer .Thus in complete contrast and contradiction of above facts, addition cannot be proposed only on surmises and without bringing any objective satisfaction to prove those proposed action. 4. Important to note in section 115BBE(1)(b) is " "determined by assessing officer" : for meaning of word "determination" as referred in sec 115BBE(1) and title of chapter XII refe....
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....he head "business income" or "income from other sources". In the present case, the assessee is dealing in sale of foodgrains, rice and oil seeds, and the excess stock which has been found during the course of survey is stock of rice. Therefore, the investment in procurement of such stock of rice is clearly identifiable and related to the regular business stock of the assessee. The decision of the Co-ordinate Bench in case of Shri Ramnarayan Birla (supra) supports the case of the assessee in this regard. Therefore, the investment in the excess stock has to be brought to tax under the head "business income" and not under the head income from other sources". In the result, ground No. 1 of the assessee is allowed. 7. ITAT Delhi in Tirath Dass vs PCIT, Order dated 11/09/2023 3.1 The Hon'ble PCIT has failed to appreciate that section 115BBE can be invoked under two conditions namely if the assessesuo-moto reflects the income under section 68, 69, 69A, 69B, 69C or 69D in his return of income or if the Assessing Officer determines the income under those sections and in case of the assessee, none of the two conditions are satisfied. 3.2 The Hon'ble PCIT ha....
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....hether the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. 14. At the very outset, we would like to state that an amendment has been brought in section 115BBE w.e.f. 2017-18, but the same was not there in the statute on the date of survey, which is 15.09.2016. 15. Taking a leaf out of the amended provisions, the PCIT was of the opinion that the tax rate should have been 60% instead of 30%, because of which the assessment order has become prejudicial to the interest of the Revenue. 16. The moot point is as to whether the amendment is prospective or retrospective as on the date of survey he amended provisions were not there in the statute. 17. In our considered opinion, this is clearly a debatable issue which cannot be subject matter of assumption of jurisdiction u/s 263 of the Act. 18. A perusal of section 115BBE of the Act shows that where the total income of the assessee includes any income referred to in sections 68, 69, 69A, 69B, 69C or 69D, the income tax payable shall be @ 30% on income so referred to in the said sections. Further, in terms of amended provisions of section 115BBE of the Ac....
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.... of income surrendered. 27. It is a settled position of law that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exercise powers of revision can arise, nor can revisional power be exercised for directing a fuller enquiry to find out if the view taken is erroneous. This power of revision can be exercised only where no enquiry, as required under the law, is done. It is not open to enquire in case of inadequate inquiry. Our view is fortified by the decision of Hon'ble High Court of Bombay in the case of CIT vs. NiravModi, [2016] 71 Taxmann.com 272 (Bombay). 29. Considering the facts of the case in hand, in totality, in light of judicial decisions discussed here in above, we set....
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....ase of PCIT Vs Agaon Global P Ltd in ITA No.68/2021 order dated 19.01.2022 44-58 8. ITAT Jaipur in the case of Nawal Kishore Soni Vs ACIT Central Circle-3. ITA No. 1256/1257/1258/JP/2019 order dated 15.09.2020 59-107 9. ITAT Jaipur in the case of ITO Ward-1(2) Vs Shri Raj Kumar Nawal. ITA No.165/JP/2022 order dated 22.11.2022 108-166 10. ITAT Jaipur in the case of ACIT Central Circle-2 Vs Shri Chandra Surana ITA No.166/JP/2022 order dated 15.12.2022 167-181 11. ITAT Jaipur in the case of Mahes Kumar Gupta Vs ACIT Circle-04. ITA No.149/JP/2022 order dated 23.03.2023 182-225 12. ITAT Jaipur in the case of Shree Jee Jewellers Vs ITO Ward (2)-1. Order dated 27.01.2020. ITA No.393/JP/2017 226-268 13. ITAT Delhi in the case of ACIT Circle-49(1) Vs M/s Goel Jewellers P Ltd in ITA No.1597/Del/2022. Order dated 24.08.2023 269-276 14. ITAT Mumbai in the case of ACTI-3(1)(1) Vs M/s Ramlal Jewellers P Ltd in ITA No.1600/Mum/2023. Order dated 26.07.2023 277-293 C. Alternatively, only profit rate could be taxed only in the business head of Income without application of Section 115BBE since no other source of income discovere....
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....g the addition of Rs. 1,30,82,000/- made by the ld. AO as unexplained cash deposits u/s 68.As the brief facts of the case have already been discussed herein the above paras and therefore, the same are not being repeated. The broadissue raised before this Tribunal is as to whether the cash sales recorded and supported by sale invoices, cash book, availability of stock, purchases be considered as unexplained money and that too when the profit derived from those sales proceeds is already taxed as part of sales. 12. As culled out from the findings of Ld.AO, the addition has been made relying upon the statements recorded during the course of survey. The bench notes that to drive home to this contention ld. AR of the assessee relied upon the CBDT Instruction F No.286/2/2003-IT (Inv) dated 10.03.2003 and following case laws: - Supreme Court of India in case of CIT Vs S Khader Khan Sons. 352 ITR 480 (SC) Civil Appeal No.6747/2012 order dated 20.09.2012, - Gujrat High Court in case of CIT Vs Shardaben Modi Tax Appeal No.123/2013 order dated 30.04.2013 - Delhi High Court in the case of PCIT Central-3 Vs Anand Kumar Jain HUF ITA 23/2021 order dated 12.02.2021 and....
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.... balance of just Rs. 55/ -. Therefore, no prudent businessmen would ever inflated his sales particularly when the VAT rates are as much high as 45% out of total cash deposited in 2015- 16, almost 35-40% approx. represents VAT. 15. The bench notes that on the one hand at page 7 Ld. AO noted that balance amount of cash deposited of Rs. 1,30,82,000/- in old currency notes is to be traded as unexplained and out of books sale whereas at page 9 para 6.3 it has been contented that genuineness of sales bills could not be verified. At the time of hearing of the appeal, ld. DR did not controvert said aspect argued by the ld. AR of the assessee. The justification for increase in cash sales and the fact that even before the period of demonetisation, the amount of cash deposits and significantly higher than the earlier year remained uncontroverted by the Ld.AO as well as Ld.DR. In support of the cash sales, ld. AR of the assessee also submitted that the assessee has maintained all the records that sales are duly reflected in the VAT return and also in the books of accounts. On this information Ld. AO has not made any independent inquiry. He considered part of the sales as genuine (made in ne....
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.... Therefore, the finding in respect of Rs. 6,98,000 should necessarily depend upon the outcome of the consideration to be made by the Income-tax Officer in pursuance of the directions issued by the Tribunal and cannot be outrightly rejected at this stage and to that extent the order of the Tribunal is set aside and ultimate decision in that respect would depend on the consideration by the Income-tax Officer about the issue relating to the unexplained cash credit in the light of the Tribunal's order. Until then no additions in respect of Rs. 6,98,000 or lesser amount can be sustained. Accordingly, while we set aside the Tribunal's order to the extent it sustains the addition of Rs. 40,13,000, we modify the directions of the Tribunal relating to addition Rs. 6,98,000 as part of the cash credit and hold that it should also be part of consideration by the Income-tax Officer in respect of other unexplained cash credits unembellished by any observation made in that regard. " 16. Thus, when the cash sales were duly recorded in the books of account and even part of the sales in new currency notes were already considered and part was not considered only due to the fact that in the....