TaxTMI 
TaxTMI 
2025 (12) TMI 923
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.... that AO has invoked the provisions of Section 145(3) of the Act merely on surmises and personal presumptions/assumptions without bringing on record any specific defect/discrepancy in the books of accounts maintained by the appellant which were duly audited. In view of the above, the rejection of books results by the AO and confirmed by the learned CIT(A) being contrary to the facts of the case and settled legal principles, requires to be quashed. 2. Addition on account of cash deposited/in Bank A/c during demonetization period being sale proceeds u/s. 68 of the Act (i) The learned CIT(A) has grievously erred in law and on facts in confirming the addition of Rs. 59,90,000/- on account of cash deposited in bank account during the demonetization period as unexplained cash credit u/s. 68 of the Act on the basis of findings/observations given in the appellate order. In view of the facts, explanations and evidences filed during the course of assessment proceedings, the cash deposits aggregating to Rs. 59,90,000/- in the bank account during the demonetization period as unexplained cash credit is wholly unjustified and bad in law and thus requires to be deleted.....
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....he explanation offered by the appellant for the % of GP for the year in question and the preceding year and merely on surmises and conjectures adopted the identical % of GP of the preceding year so as to make the addition. In view of the above, the impugned addition of Rs. 6,17,750/- on account of GP requires to be deleted. The appellant craves leave to add, amend, alter, modify or delete any of the above grounds and to submit additional grounds at the time of hearing of the appeal." 3. The brief facts of the case are that the assessee filed his return of income for A.Y. 2017-18 on 22.02.2018 declaring a total income of Rs. 6,05,960/-. The case was selected for scrutiny on account of substantial cash deposits made during the demonetization period. During the assessment proceedings, the Assessing Officer noted that the assessee had deposited cash of Rs. 59,90,000/- in his Bank of Baroda account between 09.11.2016 and 30.12.2016. The assessee submitted that the deposits were made from the cash sales of gold jewellery. On examination of the books and stock records, the Assessing Officer observed that the assessee had made cash sales of 1235 grams of 24-carat gold ....
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....bserved that once books are rejected, no addition can be made on the basis of the same books. Relying on Indwell Constructions and other judicial pronouncements, the CIT(A) deleted this addition and allowed this ground. Ground No. 4 related to the addition of Rs. 6,17,750/- on estimation of G.P. at 26.14%. The CIT(A) held that once the books were rejected, income had to be estimated on turnover and therefore upheld the addition made by the Assessing Officer. This ground was dismissed. Accordingly, the CIT(Appeals) partly allowed the appeal by deleting the addition relating to opening stock but sustained the rejection of books and the additions made under section 68 as well as the G.P. estimation. 5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee in part. 6. Before us, the ld. counsel for the assessee reiterated the submissions made before the Assessing Officer and CIT(Appeals) and submitted that the Department has not doubted the sales made by the assessee. the assessee had furnished the stock summary before the Tax Department, VAT returns had been furnished by the assessee to substantiate the sales made, the....
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....ntiate the explanation that the cash deposits represented genuine jewellery sales. The Assessing Officer had clearly demonstrated that the pattern of alleged sales was inconsistent with past trading behaviour, lacked supporting documentation, and was uncorroborated by purchase history. This conclusion is materially strengthened by the FIR placed on record by the learned Departmental Representative, concerning M/s Hari Darshan Jewellers-the very party from whom the assessee claimed to have purchased 70% of its stock prior to demonetisation. The FIR reveals that M/s Hari Darshan Jewellers, operated by Shri Kaushik Vrajlal Patadia and family, was involved in a large-scale banking fraud of over Rs. 10.36 crores, which included the use of fabricated stock statements, diversion of funds, disappearance of stock, and complete absence of genuine business activity. The FIR records that only 25% of the declared stock was ever found during inspection, and the remaining stock was non-existent and removed from the premises. These findings establish a pattern of systematic fabrication of stock and transactions, which directly undermines the assessee's claim of having purchased genuine stock from ....