TaxTMI 
TaxTMI 
2023 (7) TMI 1652
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....31.10.2017 declaring total income at Rs..74,44,000/-. Subsequently, Survey was carried out in the case of the assessee company on 01.12.2016. Based on the information that the Assessee had large cash deposits in bank account during the demonetization period. 3. During the course of Survey action carried out at premises by investigation wing, Mumbai, the officers team have physically verified the stock kept. There was no discrepancy found between physical stock and stock in books. The Assessee had deposited an amount of Rs..10,72,20,000/- in its bank Accounts namely Yes bank, Union Bank of India and ING Vysya Bank in Specified Bank Notes (SBNs) during the demonetization. The Assessing Officer has made a total addition of Rs..11,64,20,000/- u/s. 68 of the Act vide the Assessment Order under section 143(3) of the Act. Total income assessed by Assessing Officer as per Assessment Order u/s 143(3) of the Act: Sr Particulars Amount (Rs.) Income As Per Return 74,44,000/ 1. Addition on account of Unexplained cash credit u/s 68 10,72,20,000/- 2. Addition on account of Unexplained cash credit u/s 68 92,00,000/- Total asses....
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.... T Act, 1961. Shri Pankaj Bhandari, in answer to Question No. 27 of his statement recorded during the Survey on 1.12.2016 has stated that the entire cash sale was actually made on 8.11.2016 after the announcement of demonetisation of Rs. 500 and Rs. 1000 notes. In order to show the sale as genuine cash sales, the invoices were raised from 1.11.2016 to 8.11.2016. 3. During the assessment proceedings, the AO had issued Summons u/ s. 131 to 15 parties out of 701 parties to whom the cash sales have been shown. However, all these 15 Summons were returned back with the remark 'undelivered' by postal authorities. Accordingly, notice u/ s. 142(1) was again issued by the AO to the Assessee on 14.12.2019 requesting the Assessee to produce these parties for verification. However, the assessee has not produced these parties for verification. The assessee has also not produced the CCTV footages regarding recordings from 1.11.2016 to 8.11.2016. It was explained that the data is stored in the System only for 15 days. 4. The AO held that the Assessee has not explained the cash sales of Rs. 10.72 crores satisfactorily in view of the following: ....
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....ers was invited to the fact that in this list of 701 parties, many parties are not from Mumbai city. As per the detail mentioned, many parties are from Gujarat, Rajasthan, Delhi and from different cities of Maharashtra. v). Shri Pankaj Bhandari during the statement recorded in the Survey u/s. 131 of the I T Act on 1.122016, in the answer to Question No. 27 has stated that the entire cash sale has actually been made on 8.11.2016 after the announcement of demonetisation. However, for the purpose of giving the colour of genuineness, the invoices were raised from 1.11.2016 to 8.11.2016. Therefore, the accounting entries made in the Books regarding sales are incorrect and hence the Books/Stock position shown by the assessee are not reliable . vi). Demonetisation was announced by the Hon'ble Prime Minister on 8.11.2016 at 8.00 p.m. and as per the demonetisation scheme, specified notes of Rs. 500 and Rs. 1000 will not be legal tender from 9.11.2016. Thus, the assessee has got only 4 hours i.e. from 8.00 pm to 12.00 pm on 8.11.2016 to sell the gold in demonetised specified notes. Practically even 4 hours were not available to the assessee, conside....
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....he abuse of power and authority by the AO. Whilst it is true that it is the obligation of the AO to conduct proper scrutiny of the material, given the fact that the two appellate authorities above are also forums for fact finding, in the event of AO failing to discharge his functions properly, the obligation to conduct proper inquiry on facts would naturally shift to the door of the said appellate authority. For such purposes, we only need to point out one step in the procedure in appeal as prescribed in section 250 of the Income tax Act wherein, besides it being obligatory for the right of hearing to be afforded not only to the assessee but also the AO, the first appellate authority is given the liberty to make, or cause to be made "further enquiry", in terms of sub-section (4) which reads as under .- "The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals)" 39 The further inquiry envisaged under section 250(4) quoted above is generally by calling what is known as "remand report". The purpo....
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....e in view of the above decision of the Himachal Pradesh High Court, the sales credited in the book of accounts are taxable u/s 68 of the I.T.Act, if the Assessing Officer is not satisfied with the explanation provided by the Assessee and for this there is no need to reject the books of account. 7. The Hon'ble Member had pointed out that the Ld.CIT (A) has accepted the stock position shown by the assessee. In this regard, it was argued that the AO has specifically mentioned in the Assessment Order that, the stock details were not maintained properly. Bogus bills were prepared for sale of such bogus stock on 8.11.12016. Thus, the AO has given categorically finding regarding the stock position of the Assessee. The Ld.CIT (A) has merely accepted the contention of the Assessee without verification of facts in details. 7.1 In this regard, the Hon'ble Bench had directed the AR of the assessee to submit the stock position of assessee and the case was part heard on 15.12.2022. The AR of the assessee has submitted the stock register for the period 01.4.2016 to 13.01.2017. In this regard,it was submitted by me before the Hon'ble Bench that, the assessee ....
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....invoices have been raised from 1.1.12016 to 8.11.2016 for the only purpose to appear the same as genuine sale. iv) The admission of Shri Pankaj Bhandari clearly shows that the stock position and sales shown by the assessee are fabricated and hence not reliable. 7.5 The issue of cash sales is summarised as under- (i) The assessee is not in the business of trading the gold coins. (ii) The assessee has shown the cash sale of gold coins only after demonetization (iii) The purchases shown for the same are immediately before the sales. (iv) The sales booked from 1.11.2016 to 8.11.2016 are incorrect. Thus the stock position shown by the assessee has been manipulated and hence not reliable. The above fact shows that the observations of the ld.CIT(A) that, the company was maintaining the stock almost constantly the same is factually incorrect and clearly demonstrates that the ld.CIT(A) has not verified the stock register of the assessee but merely accepted the same without any verification. 8. The arguments made during the hearing are summarised as under :- 1. The Assessee is manufacturer and seller of....
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.... to defraud the revenue. 9. The conduct of the assessee is abnormal with the sole motive to cause harm to well intentioned demonetization scheme. The withdrawal of legal tender character was one of the significant step in weeding out fake currency and to curb black money in the country. However, giving accommodation entries in the guise of bogus cash sales is nothing but an attempt to give a setback to well intended and well thought policy of Government of India. In view of the above, it is humbly requested to the Hon'ble Bench to set aside the order of ld. CIT (A) and confirm the addition made by the AO." Ld.DR SUBMISSIONS VIDE LETTER DATED 30.05.2023 "Please refer to my earlier submission dated 16.12.2022 and hearing held on 17.05.2023. In continuation of my earlier submission dated 16.12.2022, it is submitted as under2. The assessee has made cash deposits of Rs. 10.72 crores during post demonetisation period. The explanation given by the assessee is that, cash sales of gold was carried out on 08.11.2016 Le. on the day of announcement of demonetisation. To support its claim, the assessee has submitted a list of 701 parties, to whom the....
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.... admission by Shri Pankaj Bhandari itself shows that the stock book entries of sales are fabricated. Hence the stock book submitted by the assessee is not reliable. 6. During the Survey carried out on the assessee, statement of Shri Pankaj Bhandari was recorded on 01.12.2016. The copies of statement have already been submitted before the Hon'ble Bench. Shri Pankaj Bhandari was asked in question no. 31 of his statement to explain regarding the stock position. The relevant extract is reproduced below: "Q.31. On physical verification of stock during the course of survey proceedings at this premises, four 100 grams gold bars of 24CT (total 400 grams) are found. Please reconcile the same with stock as per books of accounts. Ans. The stock register is maintained in tally by Mrs. Gunbala Bhandari and as she has not been well for last few days, the stock register is not updated. I will submit the reconciliation of stock as per books and stock found on physical verification in a week's time." 7. The explanation given by Shri Pankaj Bhandari clearly demonstrates that the stock register on the date of survey was not complete and update. Kindly again refer to....
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.... declared that use of all Rs. 500 and Rs. 1000 bank notes would be invalid post-midnight of 08/11/2016. b. Demonetization resulted in cash deposits in large magnitude. General Public was allowed to deposit the demonetized bank notes between the period 09/11/2016 to 30/12/2016. B. The assessee company has deposited cash of Rs. 10,72,20,000/- between in two banks post demonetization i.e. Yes Bank Ltd, Union Bank of India and ING Vysya Bank as per table below:- Date Particulars Amount (Rs.) 10.11.2016 Yes Bank Ltd 50,00,000 10.11.2016 Union Bank of India 3,00,000 10.11.2016 ING Vysya Bank 3,98,00,000 10.11.2016 Union Bank of India 10,00,000 10.11.2016 Union Bank of India 5,00,000 10.11.2016 Union Bank of India 30,00,000 10.11.2016 Union Bank of India 10,00,000 10.11.2016 Union Bank of India 10,00,000 10.11.2013, Union Bank of India 10,00,000 11.11.2016 ING Vysya Bank 4,88,00,000 11.11.2016 ING Vysya Bank 14,20,000 13.11.2016 ING Vysya Bank 44,00,000 Total 10,72,20,000 (Copy of....
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.... ● Furnishing PAN details does not mean that buyer have to pay tax& file return. It is merely a means of establishing financial identity. Upon reading the above analysis, it is revealed that PAN requirement made mandatory to IDENTIFY the person who is making transactions above Rs. 2 Lakh in cash. And based on that Identity the department's system can retrieve the Financial Identity & other details to keep track on that person's financial transaction & related income tax compliance. However, upon careful reading of Section 139A& Rule 114B, it is nowhere mention that the person making transaction of more than Rs. 2 Lakh is liable to file the Income Tax Return U/s 139 mandatorily. Where the act prescribes a rule, it has to be strictly and mandatorily followed and further if the Statute has conferred a power to do an act and has laid down the method in which that power is to be exercised, it necessarily prohibits the doing of the act in any other manner than that has been prescribed. In support of such legal proposition, the following judicial pronouncements are relied upon i. Bharat Hari Singhania (1994] 207 ITR 1 (SC)] ii....
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.... compliance status. Hence, if a genuine buyer turns out later on a non-filler, the seller is not supposed to be liable for the same. Hence the argument meted out in not in line with the legal matrix and hence is perverse and unsustainable in any court of law; It is submitted that the entire sale including the sale pointed out by Ld. ACITS supported by corresponding purchase whose payment has been made through banking channel. The Ld. ACIT has also not disputed the purchase because complete ledger of purchase as well as sale account was furnished to the DCIT CIRCLE 6(1)-2 at the time of assessment itself. ● Further, the Appellant hereby addressed each and every issue highlighted in the Assessment Order, extract of which is stated below for your kind consideration: E. With reference to the Assessment Order Para No. Points Raised 3.3 Subsequently, summons u/s 131 of the Income Tax Act, 1961 was issued to 15 parties out of the 701 parties on the addresses given by the assessee on sample test check basis. However, all the summons were returned back undelivered by Postal Authorities. ● As your Honor is aware, Section 131 g....
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....e addition made u/s 68. When the summons issued to the alleged clients could not be complied with, without any further effort and verification, the Ld. DCIT proceeded to make an addition u/s 68 merely relying on the information based on suspicion which is not a proper approach. To establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the AO under s. 131 by the alleged creditors will not be sufficient to draw an adverse inference against the assessee However the Appellant has been able to satisfy the requirements in terms of Identity, and Genuineness of the transaction as statutorily mandated per Rule 114B [complete Name, Address, PAN], the said argument is an observation lacking in content so as to justify an addition to income. Suspicion however strong it may be, it should not be decided against the assessee without disproving the sales with tangible evidence. The LD ACIT has not been able to advance any evidence to prove his hypothesis. ● Respectfully taking note of decision of Hon'ble Supreme Court i....
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....the initial onus which lay on it in terms of s. 68 by proving the identity of the creditors by giving their complete addresses, GIR Numbers/Permanent Account Numbers and the copies of assessment orders wherever readily available. It has also proved the capacity of the creditors by showing that the amounts were received by the assessee by account payee cheques drawn from bank account of the creditors and the assessee is not expected to prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove the source of the credits in its books of account but not the source of the source as held by the Hon'ble Bombay High Court in the case of Orient Trading Co. vs. CIT (1963) 49 ITR 723 (Bom). The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques. Merely because summons issued to some of the creditors could not be served or they failed to attend before the AO, cannot be a ground to treat the loa....
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....he relevant material details and particulars were given by assessee to the AO. In the above circumstances, the view taken by the Tribunal cannot be faulted. F. with reference to the Assessment Order Para No. Points raised 4.2 During the course of assessment proceedings, the assessee submitted that it has sold gold to various people on 08.11.2016 and since there was no sale of more than Rs. 2,00,000/-, the assessee did not take PAN of the parties. The assessee also stated that it took advantage of the opportunity as people just wanted to dispense their cash due to demonetization announcement. Therefore, all cash were received in 500 & 1000 Rs. Notes. The assessee also submitted that it had a stock of gold worth more than Rs. 10 crore in its office before announcement of demonetization. With regard to specific query for CCTV footage and entries in visitors register, the assessee stated that it has CCTV camera in the office, however, they keep the data only for 15 days in the system and no visitor book is being kept at the society premises ● The Ap under section 68 of the Act needs to be deleted appellant wishes to l....
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....rruption and tax evasion will boost larger jewellery retailers' market share from 30 percent in 2015. Enclosed Article by My Gold Guide for you reference as a part of paper book page no. 257-265 ● Among the many challenges India faced in 2016, the gold bull market was one of the biggest hit. Besides the Budget 2016 blow where excise duty was imposed on jewellery, which left business conditions volatile in the first quarter, demonetisation was a policy decision no one saw coming. The decision by the Narendra Modi Government to discontinue the use of INR 500 and INR 1000 notes was backed by the reasoning that the action would "curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism," according to a leading publication. The precious metal saw an immediate gold buying rush on the eve of demonetisation, following the PM's announcement. Individuals from all corners of the country rushed to invest their old notes in gold, as sellers too enjoyed an influx in sales and offered competitive prices. This suddenly lifted gold's price to a 3 year high. The department has found that to escape t....
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....t disputed the purchase because complete ledger of purchase as well as sale account was furnished to the AO at the time of assessment itself. ● It may be worthwhile to mention that the books of Accounts have not been rejected by the Ld ACIT under Section 145(3) of the Act. The books of accounts regularly maintained by the Appellant including quantitative details have not been rejected by the Ld. A.O u/s 143 of the Act except the alleged Sales. No other major discrepancy has been noticed in the books. Books of accounts are duly audited. Purchases made by the assessee are not in dispute. The Appellant is into the business since many years and is consistently showing the gross profit and net profit. Alleged supplier of goods are duly registered under Value Added Tax Act. Payment made through banking channel. Quantity maintained in the alleged bills are part of quantitative records maintained by the assessee. There is no drastic change in the gross profit and net profit rate. Since the Purchases have not been doubted there ought to be corresponding Sales. However, some of the ingredients for testing the genuineness of Sales are missing but for this reason itself total Sa....
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....Section 131 gives the same power to an AO to enforce the attendance of any person including any officer of the banking company and examining him on oath as are vested in a Court under the CPC, 1908 when trying a suit. Order 16, Rule 10 of the CPC deals with this type of situation, where a person does not appear despite service of valid notice of the authorities, enjoying the power of Civil Court, Sub-rule (2) says where the Court sees reason to believe that such evidence or production is material and that such person has without lawful excuse, failed to attend or produce the document in compliance with such summons or has intentionally avoided service, it may issue a proclamation requiring him to attend to give evidence or to produce the document at the time and place to be named, therein; and a copy of the proclamation may be affixed on the outer door or conspicuous part of the house in which he ordinarily resides. Subrule (3) of Rule 10 says that in lieu of or at the time of issuing such proclamation or at any time afterwards, the Court may in its discretion issue a warrant either with or without bail for the arrest of such person and may make an order for the attachment of the p....
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....t in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) Such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10.1" Upon perusal of Section 145(3) above, it is observed that correctness of Sales cannot be challenged without pointing out any specific mistake or deficiency in the books of account or without recording a firm finding that the profits and gains cannot be properly deduced from such books of accounts. In this regards, the Appellant have correctly shown sale transactions as revenue from operation in the book of accounts as per notified accounting standards prescribed. Further, the same sale is being reduced from inventory in the books of accounts. The same books is audited and tax audit report has been uploaded with Revenue Department. The inventory details are al....
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....t be made under section 68 on this count. The aforesaid principle has been upheld in the following decisions: a. Bombay High Court R.B. Jessaram Fatehchand (Sugar Deptt.) v. CIT [1970] 750 ITR 33 In the case of a cash transaction where delivery of goods is taken against cash payment, it is hardly necessary for the seller to bother about the name and address of the purchaser there was no necessity whatsoever for the assessee to have maintained the addresses of cash customers, the failure to maintain the same or to supply them as and when called for cannot be regarded as a circumstance giving rise to a suspicion with regard to the genuineness of the transactions. Kishore Jeram Bhai Khaniya Vs Income Tax Officer (ITAT Delhi) (ITA No. 1220/Del/2011) b. The Vishakapatnam ITAT in the matter of M/S Hirapanna Jewellers I.T.A. No. 253/Viz/2020 and CO No. 02/Viz/2021, A.Y.2017-18 dated 12.05.2021 has held on identical facts and of the case has held as under: In the instant case, the facts clearly support that the assessee has made the sales and there were sufficient stocks to meet the sales. Thus, the facts of the assessee's case are clearly dist....
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....e facts and the circumstances of the case, we have no hesitation to hold that the cash receipts represent the sales which the assessee has rightly offered for taxation. We have gone through the trading account and find that there was sufficient stock to effect the sales and we do not find any defect in the stock as well as the sales. Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. This view is also supported by the decision of Hon'ble Delhi High Court in the case of Kailash Jewellery House (Supra) and the Hon'ble Gujarat High Court in the case of Vishal Exports Overseas Ltd. (supra), Hence, we do not see any reason to interfere with the order of the Ld. CIT (A) and the same is upheld. The assessee filed cross objections supporting the order of the Id. CIT(A). Since, the appeal of the revenue is dismissed, the cross objection filed by the assessee becomes infructuous, hence, dismissed." The Ld. Delhi Tribunal in the case of AGONS GLOBAL P LTD v/s ACIT (Appeal No 3741 to 3746/Del/2019 has held that mere addition made on this ground that there is deviation....
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....CIT vs Durga Prasad More (1969) 72 ITR 807 (SC) in which it was held "If the amount represented the income of the assessee of the previous year, it was liable to be included in the total income and an enquiry whether for the purpose of bringing the amount to tax it was from a business activity or from some other source was not relevant". e. Reliance can be placed on the decision of Hon'ble Rajasthan High Court in the case of Smt. Harshila Chordia vs ITO (2008) 298 ITR 349 in which it was held 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 them". f. 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 Ito be mentioned here that wherein it was held that "Both the lower authorities failed to appreciate the case of the assessee that these were the trade advances and not cash credits and against such advance, the assessee has supplied the material in due time as per details available on record. In view of the above, there is no justification for the revenue authorities to trea....
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....sponding sales cannot be disturbed without giving any conclusive evidence/finding. In view of the above we are not convinced with the finding of the learned CIT (A) and accordingly we set aside the same with the direction to the AO to delete the addition made by him." j. New Pooja Jewellers v. ITO (Kolkata ITAT) ITA No. 1329/Kol/2018 in Para 15 it held that "Be it as it may, in the normal course, we would have restored the issue to the file of the AO for fresh verification of the claim of the assessee that it had received advances from customers on the occasion of Ramnavami Nayakhata. In other words, we would have given the AO more time to conduct enquiries and investigation. In this case we find that these advances have subsequently been recorded as sales of the assessee firm and that these sales have been accepted as income by the AO during the year. He has not disturbed the sales of the assessee. When a receipt is accounted for as income, no separate addition of the same amount as income of the assessee under any other Section of the Act can be made as it would be a double addition. In the result, we delete the addition made and allow its claim of the assessee ....
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....assessing officer or the Commissioner that apart from depositing this cash into bank as explained by the assessee, there was any other purposes it is used by the assessee of these amounts o. CIT vs. Goa Sponge and Power Ltd (13/02/2012) Tax Appeal No. 16 of 2012 (High Court-Bombay) "Once the authorities have got all the details, including the name and addresses of the shareholders, their PAN/GIR number, so also the name of the Bank from which the alleged investors received money as share application, then, it cannot be termed as "bogus". The controversy is covered by the judgements rendered by the Hon'ble Supreme Court in the case of Lovely Exports Pvt Ltd, vs. CIT, (2008) 216 CTR (SC) 195, as also by this Court in CIT vs. Creative World Tele films Ltd, (2011) 333 ITR 100 (Bom). In such circumstances, we are of the view that the Tribunal's finding that there is no justification in the addition made under Section 68 of the Income Tax Act, 1961 neither suffers from any perversity nor gives rise to any substantial question of law." p. CIT vs. Creative World Tele films Ltd (2011) 333 ITR 100 (Born-High Court) "The question sought to be raised in the appea....
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....rts ca se has held that the identity of the shareholder alone is required to be proved, in case of the capital contributed by the shareholders. Accordingly CIT (A) and the Tribunal has not committed any illegality in allowing the appeal of the assessee. We do not find any illegality in the judgment of the CIT(A) and the Tribunal." t. CIT vs. Jay Dee Securities Finance Ltd (2013) 32 Taxmann.com 91 (All-High Court) The Tribunal recorded findings that the assessee had produced the return of income filed by the relevant shareholders who had paid share application money. The assessee had also produced the confirmation of shareholders indicating the details of addresses, PAN and particulars of cheques through which the amount was paid towards the share application money. The Tribunal thereafter. relied upon the judgment of the Supreme Court in CIT V. Lovely Exports (P) Ltd wherein it was held that if the assessee produces the names, addresses, PAN details of the shareholders then the onus on the assessee to prove the source of share application money stands discharged. If the Assessing Authority was not satisfied with the creditworthiness of the shareholders, it was open to the ....
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....doubts with regard to their creditworthiness, the Revenue could always bring the sum in question to tax in the hands of the creditors or subcreditors." W. CIT vs. Al Anam Agro Foods (P.) Ltd (2013) 38 Taxmann.com 375 (All- High Court) Tribunal, however, held that since identity of share holders stood proved on record, amount of share application money could not be added to income of assessee. According to Tribunal, in such a case amount could be taxed in hands of persons who had invested" X. CIT vs. Dwarkadhish Investment (P) Ltd (2011) 330 ITR 298 (Del-High Court) "Just because the creditors/share applicants could not be found at the address given, it would not give the Revenue the right to invoke s. 68-Revenue has all the power and wherewithal to trace any person-Moreover, it is settled law that the assessee need not to prove the 'source of source- In the instant case, the Tribunal has confirmed the order of the CIT (A) deleting the impugned addition holding that the assessee has been able to prove the identity of the share applicants and the share application money has been received by way of account payee cheques." y. CIT Namastey Chemicals 33 Tax....
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....nd in absence of any illegality much less any perversity too to interfere with the order of the both these authorities, who had concurrently held the due details having been proved. The assessee company had presented the necessary worth proof before both the authorities and it was not expected by the assessee company to further prove the source of the deceased." bb. CIT Nikunj Eximp Enterprises (P.) Ltd (2013) VS. 35 Taxmann.com 384 (Bom) "Whether merely because suppliers had not appeared before Assessing Officer or Commissioner (Appeals), it could not be concluded that purchases were not made by assessee Held, Yes. Further, there were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the purchases were in fact made. In our view, merely because the suppliers have not appeared before the Assessing Officer or the CIT(A), one cannot conclude that the purchases were not made by the respondent-assessee" cc. CIT vs. Samir Bio-Tech Pvt Ltd (2010) 325 ITR 294 (Del High Court) "Identities of the subscribers are not in doubt. The transactions have also been undertaken through ba....
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....nd address, which is placed on record in Page Nos. 101 to 112 of the paper book. The assessee also reconciled the gold stock with the above sales and purchases recorded during this period and submitted before Assessing Officer for subsequent three assessment years. These cash collection and bank deposits were also reconciled and submitted before Assessing Officer for the periods AY 2016-17 to 2018-19. The Assessing Officer has not found any discrepancies in the above statement and the stocks are matching with the audited financial statement submitted before him. Further we observe that the assessee has followed the procedure of declaring the details of persons from whom the transaction value is above the limit prescribed under rule 114B of the I T Rules and their PAN details has to be submitted. With regard to transaction values less than 2 lakhs, there is no requirement to declare the details of the parties. In this case, the assessee has followed the procedure accordingly. 12. Before us, Ld. DR submitted that the stock registers maintained by assessee are not reliable by bringing the stock variation noticed during survey action to the extent of 3049.80 grams. Further, he ....
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....dits were found, thus, the case law relied upon by the Ld.DR is also distinguishable on the facts of the case. The Ld.DR relied on the decision of CIT VS P. Mohanakala, 161 Taxmann 169, CIT vs Devi Prasad Vishwanath Prasad 72 ITR 194(SC) both the cases refer to the sums found credited in the books of account but not offered as income, whereas in the instant case the assessee admitted the same as sales and offered for taxation, hence, the case laws has no application in the assessee's case. The Ld.DR also relied on the decision in Naresh Kumar Tulshanus. 5th ITO, ITAT Bombay (supra), the decision was related to the addition u/s 69A representing huge deposit of cash in bank for which the initial source was declared as past profits and subsequently explained as withdrawal from partnership firm without relevant matching entries in the banks, therefore, the coordinate bench of ITAT held that withdrawal of such huge amount in high denomination was not practicable. The Ld.DR also relied on the decision of J.M.J. Essential Oil Company Vs. ITO, 100 taxmann.com 181 in the cited case, the assessee effected large sales in one month of each year continuously for two years and the assessee i....
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....N OF RS. 92,00,000 INSPITE OF THE INCOME ALREADY SHOWN IN THE SALES TURNOVER OF THE APPELLANT. The learned CIT (APPEAL) did not consider the fact that the said sum was part of the Total Sales of the Company and hence it cannot be said to be unexplained. He also ignored the fact that the sum he is adding to the Total Income is already part of the Total Income. 2. THE LEARNED CIT (APPEAL) CONSIDERED THE ADDITION OF RS. 92,00,000 U/S 68 AND ACCORDINGLY LIABLE TO TAX 115BBE." 17. Ld. AR of the assessee brought to our notice relevant facts of the case and filed its written submissions. For the sake of clarity, it is reproduced below: - "The assessee has preferred an appeal too against the amount of Rs. 92,00,000 which was dismissed by the Ld. CIT (A) by raising the above mentioned grounds. Further, the Appellant hereby addresses issue highlighted in the Assessment Order. Extract of the same has been reproduced below. Addition made of cash deposits of around Rs. 92,00,000/- in his current account with Bombay Mercantile Co-op, Bank. Para 2.13 The Appellant's Director has made a category admission of Income representing the said amount a....
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....t order in this respect. Therefore, the provisions of Section 68, 69, 69A, 69B, 69C and 69D are not attracted on the surrendered amount of Rs. 92 lacs. However, in actual neither any unexplained investment nor any unexplained expenditure or otherwise any unexplained asset was found during the search action so far as the aforesaid surrender of Rs. 92 lacs was concerned. In view of this, since the aforesaid surrender is not covered under the provisions of Section 68, 69, 69A, 698, 69C and 69D, the provisions of Section 115BBE are not attracted in this case. In this regard, we submit the following From the chronology of the transactions, it is evident that the source of amount of Rs. 92,00,000/- is the cash sales. The same has been offered to tax by considering the cash sales while computing the computation of income and tax thereon. Also appropriate Income Tax has been paid on the same. Further the amount of Rs. 92,00,000/- was given to Shri. Mahendra Champalal Jain as on 01.11.2016 for purchase of goods. The cash amount given to Shri. Mahendra Champalal Jain is the proceeds from cash sales during the period. Since the goods wer....
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....period is from cash sales and such transaction is duly recorded in the books of the assessee but Ld. AO has not considered explanation of the assessee satisfactory and made addition u/s 68. Further, it has also been explained to the Ld. AO that the source of said amount of Rs. 92,00,000/- given to Shri. Mahendra Champalal Jain for purchase of material is the cash sales during the period. In such a situation addition is not tenable in the eyes of law because assessee had RECORDED such transaction in his books of accounts and offered to tax. Thus, the addition needs to be quashed. Cash sales cannot be ascribed to bogus sales without bringing evidence on record, when assessee had filed Sales & Purchase details like Sales Register, Purchase Register, Sales and Purchase Invoices, Stock Register and the Ld. AO had not made any further enquiry. When cash deposited is reflected as cash sales in books of accounts and the Ld. AO has not rejected the books of accounts u/s 145(3), he cannot make any separate addition for cash deposited. The assessee had also submitted following documentary evidences during assessment proceedings:- 1. C....
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....(1969) 72 ITR 807 (SC) Held that "If the amount represented the income of the assessee of the previous year, it was liable to be included in the total income and an enquiry whether for the purpose of bringing the amount to tax it was from a business activity or from some other source was not relevant". 4. Lakshmi Rice Mills v. Commissioner of Income-tax [1974] 97 ITR 258 (PAT.) Section 69A of the Income-tax Act, 1961 - Unexplained moneys - Assessment year 1946-47 - Whether when books of accounts of assessee were accepted by revenue as genuine, and cash balance shown therein was sufficient to cover high denomination notes held by assessee, assessee was not required to prove source of receipt of said high denomination notes which were legal tender at that time - Held, yes. 5. Smt. Harshila Chordia vs ITO (2008) 298 ITR 349 (Raj.) Wherein it was "Addition u/s held that 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 them" 6. CIT v. Vishal Exports Overseas Limited (Gujarat High Court) Tax Appeal No. 2471 of 2009 The Tribunal however, upheld the deletion of....
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.... 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 considered; but then that is not the case of the AO. The assessee, apart from raising several other grounds, has challenged the legality of the addition being made under section 69A of the Act. In support of the assessee's contentions, the learned AR placed reliance on the decision of the ITAT Mumbai Bench in the case of DCIT Vs. Karthik Construction Co. in ITA No. 2292/Mum/2016 dated 23.02.2018, wherein the Bench at para 6 thereof has held that addition under section 69A of the Act cannot be made in respect of those assets / monies / entries which are recorded in the assessee's books of account. 9. DCIT VS. M/s. Karthik Construction CO. ITA no.2292/Mum./2016 Held that therefore, the only thing which requires to be examined in the present appeal is whether the addition made under section 69A of the Act can be sustained. A reading of s....
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.... 13. ITO v. Vishan Lal's ITA 634/LKW/2014; Subash Chand Sharma v. ITO -ITA No. 327/Agra/2017, dtd. 31.5.19 The assessee has no other sources of income The gross receipts and the income earned there from, as admitted in the assessee's Income Tax return under the head "business", are accepted by the Revenue 14. Regular Cash sale converted as unexplained credit AGONS GLOBAL P LTD v/s ACIT (Appeal No 3741 to 3746/Del/2019 has held that mere addition made on this ground that there is deviation in ratio is not proper. When the assessee had regular cash sale and deposit of cash in bank accounts and if nothing incrementing is found contrary then addition u/s 68 of such cash sale would tantamount to double taxation. 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 o....
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....oday we do not verify, we note down the address provided by the buyer. We rely on their truthfulness. 4. The Ld. DR is just trying to pressurize the assessee with baseless and fictitious accusations. 5. The Ld. DR has predetermined that the assessee has entered in to a bogus transaction. With such pre-set mind the LD. DR is unable to visualize and think beyond the parameter that the assessee in fact is saying the truth and has provided correct and genuine records before the court. 6. The Ld. DR is fixated on the circumstance that the sales to 701 parties in 3-4 hours of time is not possible. The fact is that it was an opportunity in disguise and the assessee took the advantage of such opportunity. 7. Further, the situation at that time when demonetization was announces was filled with panic. The public went in to their safe mode where the only instincts were to buy precious metals such as Gold and Silver. Sales of Gold was maximum as it is expensive and more appreciated across India. 8. Every day lakhs of people visit Mumbai from out of Maharashtra. Events occurring on the evening of 08/11/2016 led few of them to the assessee's busin....
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..... 92,00,000/- as cash sales which has been verified by the assessing officer. 16. The total sales as mentioned above including the cash sales also matches with the audited balance sheet and the VAT Audit Report and proper vat has also been paid on the sales. 17. The Ld. Commissioner of Income Tax (Appeal) in his order has stated that the undisclosed income of Rs. 92,00,000/- has been accounted as sales. When the income has been accounted as sales then how can the same be treated as undisclosed income. It was unbooked at the day of survey. The same was duly accounted in accordance with the accounting policies in the books of accounts. 18. Mr Pankaj Bhandari in his statement recorded under oath, has categorically stated that the Assessee has collected an average of 10% extra over and above the prices from its customers. The Ld. CIT (A) has conveniently ignored that part of the statement. 19. It is pertinent to note that the assessee has disclosed total cash sale for AY 2017- 18 as Rs. 11,64,35,000/-. The breakup the said sales have been tabulated below. Month Amount (Rs.) October 92,00,000 November 10,72,35,000 T....