TaxTMI 
TaxTMI 
2026 (2) TMI 62
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.... 145(3) of the Income Tax Act, 1961 making the order itself void-ab-initio by violating the principle of natural justice. 3. That the Id.CIT(A) has erred in confirming addition of Rs. 1,93,48,000/- u/s 68 of the IT Act, 1961 rws 115BBE of the IT Act, 1961. 4. That the Id.AO as well as Id.CIT(A) has erred in confirming addition of Rs. 1,93,48,000/- u/s 68 of the IT Act, 1961 rws 115BBE of the IT Act, 1961 leading to double taxation as the cash deposit has already been considered in the return of income. 5. That the Id. CIT(A) has erred in not appreciating the fact that the sale has been made out of the stock available with the appellant out of which the major stock is out of opening stock and during the year of purchase made from registered dealer and only minor part of purchase in stock amounting to Rs. 15,88,468/- has been made in cash. 6. That the Id.AO has erred in making addition of Rs. 23,06,000/- u/s 40A(2)(b) of the Income Tax Act, 1961. 7. The the Id.CIT(A) has erred in not providing the proper and adequate opportunity of hearing to the appellant in the form of virtual hearing as requested by the appellant. 8. That the o....
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....long with supporting documents filed before A.O during the course of assessment proceeding. Stock Register of Gold Jewellery Stock Register of Gold Diamond Purchase Register Sale Register 14 Copy of stock summary opening, purchase and sale alongwith summary of cash/credit purchase and sale for F.Y 2016-17 15 Copy of Purchase accounts for F.Y 2016-17 16 Coy of sale accounts for F.Y 2016-17 17 Copy of ITR, Computation of Pankaj Arora for A.Y 2017-18 to 2014-15 18 Copy of ITR, Computation of Smt. Versha Kumari for A.Y 2017- 18 & 2015-16 19 Copy of ITR, Computation of Palak Arora for A.Y 2017-18 20 Copy of ITR, Computation of Beena Arora for A.Y 2015-16 & 2016-17 21 Copy of ITR, Computation of Mohit Kumar Dua for A.Y 2014-15 to 2017-18 22 Copy of intimation filed before Sales Tax authorities surrender of TIN and closure of business 23 Copy of GST registration documents of new partnership M/s. K Pankaj Chain & Jewellers along with copy of PAN Card. (C.1) Moreover, written submissions were also filed from the assessee's side which are reproduced below for the ease of reference: - "1. That it is undisputed....
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.... of the Id.AO. 5. The appellant humbly submits before your honour that Id.AO has doubted the cash deposit on account of sale on the basis of erroneous presumption that the appellant does not have any jewellery business and that there is no opening stock as on 01.04.2016 and that the appellant has made an imaginary story of trading of jewellery business so that the unexplained cash deposit may be whitened. Whereas the appellant humbly submits that the Id.AO has erred in making such presumption as the appellant has been doing trading of jewellery business since long in support of which the appellant has filed ITR, Computation, Balance Sheet and Sale Tax Order for FY 2013-14, FY 2014-15 & FY 2015-16 as appearing on page 27 to 73 of the paper book. 6. The appellant further humbly submits that the allegation of the A.O. that there is a abnormal high sales in huge volume mainly in the month of October, 2016 whereas the Ld. A.O. has failed to appreciate that there is high sale in October because of Diwali festival and because of appellants determination to close the business because of old age, the appellant has cleared his entire inventory as per books upto Oct....
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.... Assessment Year 2016-17 Copy of VAT return & VAT order of the F.Y 2015-16 (Pg 66-68 & 69-71) Copy of ITR alongwith financial statement for A.Y 2016-17 (Pg 54-61) Copy of intimation under section 143(1) for A.Y 2016-17 (Pg 62-65) Details of Stock Register & Purchase/Sale Register: Copy of Stock register of Gold Jewellery (Pg 114-120) Copy of Stock Register of Diamond (Pg 121-123) Copy of Purchase Register (Pg 124-125) Copy of Sale Register (Pg 126-132) Stock Summary of Opening Stock, Purchase & Sale alongwith Summary of Cash/Credit Purchase & Sale for the F.Y 2016-17 (Pg 154) Copy of Purchase Account for F.Y 2016-17 (Pg 155-165) Copy of Sale Account for FY 2016-17 (Pg 166-198) 10. The appellant humbly submits before your honour that from the above the facts are undisputed that the appellant is doing trading of jewellery business and that the stock as on 01.04.2016 was available at Rs. 1,04,96,122/- reflecting in the VAT Return for FY 2015-16 and VAT Order for FY 2015-16 on page 66-68 and 69-73 respectively and that the purchase out of Rs. 76,92,388/- cash purchase is at R....
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....ase of DEWAS SOYA LTD, UJJAIN v/s Income Tax (Appeal No 336/Ind/2012 has held that "The claim of the appellant that such addition resulted into double taxation of the same income in the same year is also acceptable because on one hand cost of the sales has been taxed (after deducting gross profit from same price ultimately credited to profit & loss account) and on the other hand amounts received from above parties has also been added u/s. 68 of the Act. This view has been held by the Hon'ble Supreme Court in the case of CIT vs Devi Prasad Vishwnath Prasad (1969) 72ITR194 (SC) that "It is for the assessee to prove that even if the cash credit represents income, it is income from a source, which has already been taxed". The assessee has already offered the sales for taxation hence the onus has been discharged by it and the same income cannot be taxed again. (Disallowance of Salary of Rs. 23,06,000/- u/s 40A(2)(b) 13. The appellant would like to humbly submit that the issue has been discussed by the Ld. A.O. in the body of assessment order vide para 7 & 8. The Ld. A.O. has disallowed salary by estimate paid to Pankaj Arora, Versha Kumari Arora, Palak Arora, Beena Aro....
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....d ornament the major role of female member cannot be denied.. Therefore salary paid to her in consolence of services the Id. A.O has not denied her services but he has estimated the same on presumptive basis. 16. That Smt. Palak Arora, she is a regular employee of assessee. She has also introduced interest free capital of Rs. 1240000/-, she is well verse in repairing in motimala of gold. She also disclosed income there form in her hand. She is skill lady having knowledge in sales of jewellery ornaments and looking entire counter sales. Therefore salary paid to her in consolence of services the Id. A.O has not denied her services but he has estimated the same on presumptive basis. 17. That the salary of Mohit Kumar has not increased in this year as in A.Y 2014-15, 2015-16, 2017-18. His salary was Rs. 192000, 198000, 160000/- respectively. The id. A.O has himself stated that a salary of Rs. 3 lac per year is reasonable therefore salary is below 3 lacs and similar is the position of Smt. Beena Arora. 18. Your honour may appreciate that the remuneration during the year has link with the turnover / profit of the entity. The Id. A.O has not issued any show caus....
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.... paper book referred to in foregoing paragraph no. (C) and (C.1) of this order. The Ld. Departmental Representative for Revenue supported the impugned order of the Ld. CIT(A) as well as on the assessment order referred to foregoing paragraph no. (B) and (B.1) of this order. (C.1) We have heard both sides. We have perused the materials available on records. As far as the aforesaid addition of Rs. 1,93,48,000/- is concerned; perusal of the assessment order shows that the AO has taken view of the fact that the assessee showed heavy cash purchases in the range of Rs. 18,000 to 19,900/-. This range is significant, because purchase transactions above Rs. 20,000/- (slightly above this range) are hit by section 40A(3) of the Act. The AO has also observed that the assessee made heavy sales in cash, in the range of Rs. 1,46,000/- to Rs. 1,48,500/-. This range is also significant, because in this range, an assessee is able to avoid being hit by provisions of section 271DA r.w.s. 269ST of Income Tax Act. Further, the AO has also noted that the assessee failed to produce cash books and bills/vouchers for examination. The AO has also noted that on perusal of cash deposits and squared up accou....
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....ed in the present case. The assessee did not produce books of accounts, and also did not establish genuineness of purchase, sales, stock etc with credible evidence. Reliance of Revenue on decision of Hon'ble Supreme Court in the precedent restored at Sumati Dayal vs CIT 214 ITR 801 (SC) is quite apt in the facts of the case. The doctrine of Human Probability famously laid down by Hon'ble Supreme Court in Durga Prasad More 82 ITR 540 (SC) and in Sumati Dayal 214 ITR 801 (SC) is firmly against the assessee in the facts and circumstances of the case. The claims made by the assessee are; cumulatively, beyond the realm of human probabilities in the present case. Further, purchases and sales are not proved, and when the books of accounts have been rejected u/s 145(3) of the Act; the book results claiming cash sales as explanation for cash deposits of SBNs in bank; deserves to be rejected and cannot be relied upon. In view of the foregoing discussion, we confirm the finding of the AO and the Ld. CIT(A) that the amount of Rs. 1,93,48,000/- represented the assessee's unexplained income; and we sustain this addition. (D) As far as the disallowance of Rs. 23,06,000/- made u/s 40A(2) of the....
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....rticulars A.Y. 2017-18 A.Y. 2016-17 A.Y. 2015-16 Sales 3.05.04.1521 93.52.707/ 92,63.873/- Gross Profit 1.23.51,095/- 33,37,749/- 13.70.792/ G.P. Rate INCOME TAX PART NIEKAS 14% Net Profit 5.04.7437- 9.80.200/ 9.14.952/ N.P. Rate 24%% 10% 9% 7 During the course of assessment proceedings, the assossee has submitted ledger accounts of major transactions, audit report, Balance Sheet/P&L account, copy of bank statement etc. which were examined. 4. During the year under consideration, the assosseo has deposited cash of Rs. 1,93,48.000/- during the demonetization period. The details of cash deposits are 88 under :- Amount of Cash Deposit during demonetization period No No. Name of Bank S.No. Document 2 from 30.12.2016 09.11.2010 HDPG LIMITED BANK 012760200000226 89. 1.93,48,000/ TotalRs. . 1,93,48,000/- 1. On perusal of the month wlan's upown hot & October 2016 as confåhrad to l the year under consideration, tobi the month of September 2010 TffSales in the remaining previous month for ipinin wishcash solod. cash deposits & closing cash in hand (pl under.i= to being reproduced ae Month Closing BC TAX April, 2010 1200....
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....llation of registration has been submitted by the assessee during the course of assessment proceeding. 4. On perusal of ITR filed for A.Y. 2015-16;It was observed that the assessee has filed ITR - 4 on 31.03.2016 whichis filed after due date and the system has marked this ITR as invalid. In thugreturn, the essessee has shown gross profit of Rs. 13.79,792/- on which net profit shown at Rs. 9,14,952/ -. It has also been observed that the assersee haafffor shown gross receipt for A.Y. 2015-16. On perusal of ITR, It Is found that toe,assessoofhas not shown any turnover or gross receipt from trading business. In ylow of the facts and circumstances on record, it is established that the assetseo fi, not engaged In.trading of jewellery during FX. 2014-15, relevant 16 A.V .: 2016-10. Also, the assessee has not maintained books of dedants for 5. On perusal of the ITR (Rous herausogsoo for A.Y. 2016-17, it is found that the assessuo has shown total salda of'Rs. 93,52,787/- on which the assessee has shown Income u/s 44AD of the Act at Rs. 9,80,280/ -. Again on perusal of this ITR, the assessee has shown cash balance at Rs. 98,078/-, however, on perusal of the month wise chart of opening ....
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....utances of the case, it is established that the assesgod has shown fictitious Purchase and sales to cover up the unexplained cash depositi of.B Bra door-during the demonetization period Le. from 09.11.2016 to 30.12:2016 for the year under consideration. There were no opening stock as on 01.04.2016, but in the shape of fictitious trading of jewellery, the assessee has made an imaginary story of trading of jewellery business so that the unexplained money / cash deposits made during demonetization period may be whitened. As the assessee could not established the sale, purchase, opening stock etc. with supporting evidences, therefore. In absence of the required documents / explanation the books of account Is hereby rejected u/s 145(3) of the Income Tax Act, 1961 to the extent of cash deposits made during the demonetization period I.e. from 09.11.2016 to 30.12.2016. 6. All this only establish that showing such a bogus cash sale before demonetization perlod is only a colourable device to legitimate his unaccounted cash accumulated in the form of SBN. The Hon'ble Supreme Court in Sumati Dayal vs. CIT [(1995)214 ITR 801] has observed that 'apparent must be considered real until it is sh....
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....ary of Bs. 3.00.000/- per person per year Is being estimated as reasonable, and accordingly salary of Bs. 16.00,000/- (5 persona.as above) is being allowed. A disallowance of Rs. 23.02.000/- (3802000 - 150000) is being made and added to the total Income of the assessee on account of disallowance of salary paid to the persons specified u/s 40A(2)(b) of the Income Tax Act, 1961. Document 8 3. The assessee is individual and engaged in the business of trading of gold diamond ornaments under the name & style of M/s Pankaj Chain & Jewellers, at Naya Ganj, Kanpur, The comparative chart of trading results are as under: Particulars A.Y. 2017-18 A.Y. 2016-17 A.Y. 2015-16 Sales 3,05,04,137/- 93,52,787/- 92,53,873/- Gross Profit 1,23,51,098/- 33,37,74g/- .13,79,792/- G.P. Rete 'INCOME TAX DEPARTMENT 14% Net Profit 73.64,74. 9,80,280/- 9,14,952/- N.P. Rate 24% 10% During the course of assessment proceedings, the assessee has submitted ledger accounts of major transactions, audit report, Balance Sheet/P&L account, copy of bank statement etc. which were examined. 4. During the year under consideration, the assessee has deposited cash of Rs. 1,93,48,000/- during the ....
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.... the assosseo has shown the fiera closed by 29.11.2016. A receipt from Commercial Tax Department dated 08.12.2016 for cancellation of registration has been submitted by the essessee during the course of assessment proceedings. 4.On perusal of ITR filed for a. Y.2015-16, At was observed that the assessee has Sied ITR - 4 on 31-03-2016 filed after due date and the system has marked this ITR as Invald. In this return, the assessse has shown gross profit of Ra. 13,79,7926- on which net profit shown at Rs. 9,14,9524. It has also been observed that the assessce has not shown gross receipt for Avy. 2015-15. On perusal of ITR, It is found that tive assessse has not shown argi r guscarcejet from trading business. In view of the facts and circumstances chy hnedshed that the assossoo is not engaged in trading of jemitery du eccoun Y.2014-75 relevant to A.Y.2015-16. Also the assesses has not me tained boç Br A.V.2015-16. 5.On perusal of ITR(Rev),(ed) fied by for A.Y.2016-17, 2 la found that the found that the a of Rs.9762.782/ on which the Again on perusal -90,0786 however, on penasal fin pand or A.Y. 2017-19 the opening ossoe could not explain the difere d. On perusal of Ori....
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.....2016 for the year under consideration There were no opening stock of as on 01.04.2016, but in the shape of fictitious trading of jewellery, assesseo has made an imaginary story of trading of jewelery business so that the unexplained money/cash deposits made during the demonetization periodimay Be whitepod. As the assessee could not established the sale, purchase, (opening stock etc. with Supporting avidences, therefore, in absence of the required documents/explen the books of account is hereby rojectod u/s.145(3) of the Income tax Act, 1001-Jo cfon of cash deposits made during the demontization period i.e. from 09.11:2010 to-3 COMESTADe ERDALARTMENT 6. All this only establish that showl salo before demontization period is only a colourable device to.jegitimate-his.unaccounted cash accumulated in the form of SBN. The Hon'ble Supreme Court In Sumati Dayal Vs.GIT(1995) 214 ITR 801] has observed that 'apparent must be considered real until it Is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the te....
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....aid to his family members. No satisfactory justification/explanation were offered by the assossee on the above Issue of payment of salary. As por market trend, a person is available having salary of Rs.20,000/- to Rs.25,000/- per month. The assesses could not justify the monthly salary Document 12 paid to his family members. It is observed that the assessee has diverted his profit in shape of salary of Rs. 3.00.000/- per person per year is being estimated as reasonable and accordingly salary of Rs. 15,00,000/- (5 persons-as above) is being allowed disallowance of Rs. 23,02,000/ (3802000 - 150000) Is being made and added to the total Income of the assessee on account of disallowance of salary paid to the persons specified u/s 40A(2)(b) of the income Tax Act. 1961. Addition of Rs. 23,06,000/ -- 3.2 Aggrieved by the order of the AO, the assessee raised the following specific grounds of appeal: GROUNDS OF APPEAL: 4.0 1. That the learned Assessing Officer has erred in rojocting books of account. under section 145 ( 3) of the Income Tax Act, 1961 and making addition without any show-cause notice to the?appellant making the order void-ab-initio by violating the principl....
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....) of the Income Tax Act.1961. 2 That the assessoo boing aog Hoved is inseppeal before your honour for appropriate relief." 6.0 The assessee has raised 7 grounds of appeal, out of which ground NO. 6 and 7 are general in nature and do not require any adjudication. 6.1 The Ground No. 1, 2,2:afe ralsed against the AO saction In treating the amount of cash deposits during lig demonetization unexplained money u/s:60A 00119-TAS 1,93,48,000/ 6.2 The ground No.4 Is raised-against the AO's action in making an addition of Rs. 23,06,000/- u/s.40A(2)(b) of the Act. Ground No.5 is raised against the AO's action in not providing adequate opportunity. 7.0 ANALYSIS and DECISION: 7.1 I have carefully considered the Issues under dispute and examined the same in the light of the facts and circumstances of the case as emanating from the Impugned assessment order u/s. 143(3) of the Act and relevant provisions of the statuto. Ground No.1, 2, 3 are raised against the AO's action In treating the amount of cash deposits during the demonetization period of Rs.1,93,48,000/- as unexplained money u/s.69A of the IT Act Document 14 As seen from the facts of the case, the assessee made cas....
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....ppreciated the surrounding circumstances of the caso which force the assessee to close down the business, therefore before closure of business the assessee has clear all its assets and liability upto 8- 11-2016. This is not against human probability. The month wise cash sale, cash deposit and closing cash in hand Is as under :- Document 15 - - - -- ManA, 2019 834.84 3076 2016-17 7. The allegation of the A.O vide last para. of para-1 Is incorrect that there is a abnormal high sales in huge volume mainly in the month of October 2016 where as the factual position is as above (total cash sale in the month of October 2016 is et Rs.20708131/-) the Id. A.O has failed to appreciate that because of Diwali festival and because of assessee determination to close the business because of old age, the assessoo has cleared his entire inventory as per books upto October, 2016. The A O has accepted sales and purchases and has not pointed no defect therein. The sale is as per demand and supply, particularly and because of major festivals of Indian culture in the month of October, VAT Toturn has also been filed within time as per requirement of government law, All the transactions, ....
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....advertent mistake second pago of computation for A. Y 2015-16 of Pankaj Arora (son of assessee) has been uploaded instead of assessee's computation along with computation of assessee in two sheets. And third sheet was related to Pankaj Arora (son of assessee) for the reason best known to the A.O he has taken only note of this sheets which contain details of Pankaj Arora in support of his own return of Income us 44AD and A.O has completely brush aside assessee's own data In the form of Trading A/c, PIL A/e Balance sheet and Computation of Income. It appears that the purpose fordrawing the incorrect Inference was to demolish the assessoo's business activity on record stating that assessee is not engaged in trading of jewellery in A. Y 2015-16 and fait hot maintained books of account. By drawing this inference the A.O was tryrig to draw confusion thiji the assesses has no business Inventory and no trading of jowelldry In F.Y2014-15. 12. In para 5 & 6 for assessmentzonfor the la. 18admitted that there is a sale of Rs.9352787/- on which the assesses has Shown incomo u's 44AD at Ra. 980280/- and there Is a stock in trade showna( RC 19496122/-in rovisod rotd retami for A.y 2016-17. In ....
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.... examine by him and these very fact has been accepted by the A.O in his body of assessment order vide para 5 therefore this finding Is also contrary to the facts of the case. 14. Vido main para 5 of the assessment order the Id. A.O has wrongly held that taking Into consideration the facts mentioned in page 3, 4, 5 of the assessment order it is established that the assessee has shown fictitious purchases and sale to cover up unexplained cash deposit of Ra. 14893000/- during the- domonetization for the year under question. For drawing this conclusion he hold that tlfais Ip no opening stock as on 1-4-10 and the assessee has made fictitious trading of jewellery, 7 iging cary story of trading of jewoloiry, unexplained money/ cash depoalt during the demonetization periodmay be whitened he could not establish sale, purchase, opening stock thea fore he is applied provision of section 145(3) of the IT Act to the extent of cash deposit from 9.5\t-16 to 301.2-16. It is humbly submitted that he has not given any show cauld notice before rejecting partly books of account u/s 145(3) which is a precondition in a cases where the naponameniffa completed us 143(3) of the I.T Act. Secondly the rej....
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....duly audited and the entire transactions of purchase and sales, bank account are a part of assessee's regular books of account and bank account cannot be separated for the purpose of section 69A, therefore in the instant case applicability of section 69 A is unlawful. Further the assessee has given satisfactorily explanation regarding nature and source of Income (sale proceeds). It is not applicable to the sales receipts shown by the assessee recorded in the books of account. It is because salo proceeds have already been shown In the books of account as income at the time of sale only; There is no lote of evidence having any adverse remark on the purchase shown by assesses jo the books of account and once the purchase has been accepted, the corresponding esalos, cannot be disturbed without giving any conclusive evidence. There is a realization of sale of Rs. 30604137/- recorded In the books of account, books of accounts are audited along with auditora report and income on the sales has been accepted by the A.O and the;separate addition on account of cash sale and rotation thereof in bank account in a regular business bank account, the addition of the same by the A.O amounts to d....
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....a High Court in In the case of CIT vs Jawaharlal Oswal and Others (I.T.A. No. 49 of 1999,Judgment delivered on 29.01.2016). · Purchase and Sale alongwith Trading resulfilias not boen disturbed and has been accepted by AO except Cash deposit in SBN apart from cash sale post demonitization, once the sale is from business and has been included under the books of the business, the same can only be taxable under the head of Profit and again from business& profession u/s 28 and cannot be treated as unexplained u/s 694. moreover when there is no other source of income not disclosed in the return, the same can only be treated as business receipt. Reliance is placed upon: Pr.CIT V. BajargplVCC 12/09/2017 Traders 258 RE2017, Vide/ Judgement Dated TAX DEPA ART . HIGH COURTOF DELHIAT "NEW DELHIIn ITA 613/2010 COMMISSIONEROF INCOME TAX, Ms Suruchi Aggarwal Vorsus KAILASHJEWELLERYHOUSE ACT Central Circle-13 Mumbai V. Rahil Agencies, Order Dated 23 November, 2016, The Hon'ble Mumbai Tribunal Kanpur Organics Pvt. Ltd Vs. Dy. CIT Lucknow Bench Of ITATITA.675/LKW/2018 Dated 10/01/2020 Lakhmichand Baljnath V. CIT [19591351TR416, Supreme Court ITAT GAUHATI BENCH 'E' In Th....
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....ection 69A of the Aet only in respect of such monias / assets / articles or things which are not recorded in the assessee's books of account. In the case on hand, the cash deposits are recorded In the books of account and are reportedly made on the receipt from a creditor Further, the PAN and address of the creditor as well as ledger account copies of the creditor in the assessee's books of account have also been field before the AO. In these circumstances, it is evident that the AO has not made out a case calling for an addition under section 69A of the Act. Probably, an addition under section 68 of the Act could have been conatdored: but then that is not the case of the AO. The assessee, apart from raising severe! Document 21 other grounds, has challenged the legality of the addition being made under section 69A of the Act. In support of the assessoo's contentions, the learned AR placed reliance on the decision of the ITAT - Mumbal Bench In the case of DCIT Va. Karthik Construction Co. in ITA No. 2292/Mum/2016 dated 23.02.2018, wherein the Bench at para 6 theroof has held that addition under section 69A of the Act cannot be made in respect of those assets / monles / entries w....
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....or the purpose of bringing the amount to tax it was from a business activity or from some other source was not relevant". 29. Rellance can be placed on the decision of Hon'ble Rajasthan High Court in the case of Smt. Harshila Chordia va ITO (2008) 298 ITR349 In 'which it was hold 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 thom". Document 22 30.In the decision of Hon'ble ITAT, Nagpur Bench in the case of Mis Heera Steel Limited vs ITO (2005) 4 IT J 437 is also worth to be mentioned here that wherein it was held that "Both the lower authorities failed to appreciate the case of the essessee that those were the trade advances and not cash credits and against auch advance, the assessce has supplied the 13 material in due time as per details available on record. In view of the above, there is no justification for the revenue authorities to treat these cash advances as unexplained cash credit u's 68". 31.Reliance can also be placed on the decision of Hon'ble M.P. High Court in the case of Addl. CIT va. Ghai Lime Stone Co. (1983) 144 ITR 140(MP).It is evident f....
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....016to 30-12-16 is against the opening stock inventory of the year as well as Document 23 against credit purchase during the year. c) The addition itself is not warranted u/s 69A and therefore the consequential application of section 115BBE is not applicable. It is further submitted that the retrospective change In section 115BBE through taxation amendment bil 2016 cannot be made applicable retrospective and it can be made only after the date of taxation bill publish in a Gazette of India and cannot be applicable to the transaction made prior to amendment. It is worthwhile to notice that section 115BBE was amended on 15-12-2016 therefore transaction falling beyond this date can be a subject matter of charging section of 115BBE. Reliance is being place to the judicial pronouncement in the order of Hon'ble Rajasthan High Court in the case of PCITvs. Bajrang Traders ITA No. 258/ 2017. It is submitted that similar question was aroused before the court and it was decided in favour of assessee. In the instant case there is source of income/amount credited in the assessee's books of account/regular bank account out being regular sales out of regular Inventory of stock as on 1-4-16 a....
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....eptember 2016 & October 2016 as compared to cash sales in the remaining previous months for the year under consideration. 7.9 There was an abnormal increase In cash sales mainly in the month of October 2016, In which total cash sales of Rs, 2,07,08,131/- were shown. 7.10 The assessee has shown total purchase of Rs. 76,92,388.41 (including VAT & Central Excise Duty). All the cash/purchases have been shown from 01.09.2016 to 07.10.2016. 7.11 The assessee has shown total sales of Rs. 3,08,09,199.81 (including VAT & Central Excise Duty). It was observed that the assessee has sold goods mostly in cash amounting to range of Rs. 32,000/- to 49,500/- upto the 08.10.2016. and has sold goods mostly In cash amounting to range of Rs. 1,46,000/- to 1,48,500/- from 27.10.2016 to 03.11.2016. It is found that the assessee has shown cash sale frostly in the, month of October 2016 i.e. just before the demonetization period i.e. before:09.11-2016. 7.12 On perusal of the cash book, it is found that the cash balance at the end of the month upto September 2016 was maximum in the month of September 2016 which was Rs. 11,04,675/- but the closing cash balance as on 08.11.2010 was shown at Rs. 2....
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.... assessee has not been able to furnish complete/necessary documentary evidence in support of the claim that the cash has been received from the customers just before the demonetization. Thus, It Is evident that the assessee had Introduced his own unaccounted cash in the books of accounts. 7.17 Regarding the argument of the assessee that the provisions of Sections 69A are not applicable as the sald cash deposits were recorded in the books of accounts, where the factual matrix is not:commensurate with the human probability. additions cannot be deleted merely on technical grounds as held by the Hon'ble ITAT Delhi in the case of Gloria Eugenia Rynph Banerji In ITA No.3510/Del/2019. Reliance Is also placed on the decisions of the Hon ble High Courts in the following cases I.e., 113 Taxmann.com(Mad), 20 Taxmann.com-853(CG) Further, even though the said cash deposits were recorded in the, books of accounts, as the assessee failed to substantiate the nature and source of the cash.credits, Ingredients.of section 68 are case,and therefore the additionshould be considered to have been done d/s 68. applicable to the facts of INCOME TAX DE ARTME 7.18 Further, regarding, the argument....
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....00 - 150000) has been disallowed on account of excess salary paid to the persons specified u/s 40A(2)(b) of the Income Tax Act, 1961. As seen from the above-the During the appellate proceedings, the assessee filed the written submissions the relevant part of which is reproduced as under "Application of section 40A(2)(b) This Issue has been discussed by the Id. A.O in the body of assessment order vide para 7 & 8. The Id. 'A.O has disallowed salary by estimate paid to PankajArora, Versha Kumari Arora, PalakArora, BeenaArora & Mohit Kumar Dua Document 27 holding without investigation, examination of persons and without giving comparable cases of market wrongly held that salary of Rs. 3 lac per person per year is being estimated as reasonable and therefore out of total claim of salary to the tune of salary 3802000/- on turnover of Rs. 30504137/ -. He has not doubted the services rendered by them and bonafidy payment of salary expenses. It is submitted as under :- 3. That Shri PankajArora is a regular income tax payer and he is woll verse with testing of gold and repairing thereof. He has also introduced interest free capital of Rs. 8 lacs. Sale for the assessment year u....
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.... The Id. A.O has himself stated that a salary of Rs.3 lac per year is reasonable therefore salary is below 3 lacs and similar is the position of Smt. BeenaArora. 17 7. Your honour may appreciate that the Increase in remuneration during the year has link with the turnover / profit of the entity. The assessee has filed reply and details thereof. The Document 28 Id. A.O has not issued any show cause notice. He himself raised the query and draws the question without any Investigation or opportunity of being heard. That the A.O has not disputed the rendering of services of the employees. It has been held in the case of Ramfal Kashl 106 ITR 189 Madras HC matter of commercial expediency should be left to the business concem. In the instant caso recipients are identified and payment of salary is also taxed in their hands they assessed in higher bracket of tax slab. The disallowance is purely based on surmises and conjuncture. The A.O has not brought any material on record, any cognizance basis as to why the business expenditure is disallowed. It is not the case that the expenditure was considered as bogus. It is a estimation without any basis. No disallowance in preceding year is ma....