TaxTMI 
TaxTMI 
2026 (5) TMI 992
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....ddition of Rs. 2,48,14,793/- was made by virtue of Para 4.3 of the aforesaid assessment order. Further addition of Rs. 24,40,000/- was made by virtue of para 5 of the aforesaid assessment order. That the aforesaid assessment order bears No. ITBA/ AST/S/143(3)/2019-20/ 1023028566(1) and that the same is dated 24.12.2019 which is herein after referred to as the "Impugned assessment order". 2.2 That the assessee is a proprietor of "M/s Boot com system" which is involved in the business of purchasing, selling of computer hardware & peripheral devices etc. The assessee filed it's e-return of income on 14.10.2017 declaring total income of Rs. 30,17,550/-. The Case was selected through CASS for scrutiny and accordingly a notice u/s. 143(2) of the Act was issued on 22.09.2018 which was served by mail on the assessee. A questionnaire u/s. 142(1) was issued on 16.11.2019. 2.3 The assessee has shown total turnover of Rs. 36,99,13,633/- on which gross profit shown is at Rs. 77,20,387/- which is about 2.09% & the net profit of Rs. 31,67,274/- i.e. 0.86%. 2.4 In the assessee's case monthly average sales is about 3 crore & most of the sales were in cash. 2.5 That the assessee in respo....
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.... it is appear that cash sales were pre-pond and booked accordingly and thereby increased cash balance. "Assessee vide show cause notice u/s. 142(1) dated 15/12/2019 was asked to explain the reason for high maintenance of cash balance on the facts that no quantitative stock details produced neither it was mentioned in ITR or audit report. In view of this facts why cash deposited during the demonetized period should not be treated as unexplained. 2.20 Assessee has filed reply but not convincing. Now considering the above facts and increase of turnover during the year average cash balance is estimated at Rs. 50 lakhs and excess cash shown by adjustment of cash sales and increased cash balance as on 8/11/ 2016 at Rs. 2,98,14,793/-, Therefore difference amount of Rs. 2,48,14,793/- is treated as unexplained cash credit u/s. 68 of the Act and taxed as per provision of section 115BBE of the Act. Assessee has misreported the income to the extent of Rs. 2,48,14,793/- on which penalty proceeding u/s. 271AAC/270A is separately initiated. 2.21 In capital account the assessee has introduced the capital of Rs. 24,40,000/-, the assessee was asked to explain the sources of capital addition bu....
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....l Indore ITAT in the case of Dewas Soya Ltd. v. 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 v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 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. Similiar decision of the Delhi Tribunal in the case of Agson Global Pvt. Ltd. vs. ACIT was affirmed by the Delhi High Court in the case of PCIT vs. Agson Global Pvt. Ltd. (441 ITR 550), wherein the Hon'ble High Court held that considering the trend of cash sales and corresponding cash deposited by the assessee ....
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....d 24.12.2019?" 2. "Whether on the facts and circumstances of the case, the CIT(A) has erred in deleting the a portion amounting to Rs. 10,00,000/- out of the addition amounting to Rs. 24,40,000/- made in the assessment order on account of unexplained cash credit u/s. 68 of the Act towards capital introduction in the firm of the assessee as per the assessment order u/s. 143(3) of the Act dated 24.12.2019?" 5. Record of hearing 5.1 The hearing in the matter took place before this Tribunal on 19.03.2026 when the Ld. DR for & on behalf of the revenue appeared before us & interalia contended that the "Impugned order" is bad in law illegal & not proper. It therefore deserves to be set aside. It was next contended that there is a delay of 11 days in filling the instant appeal & that same should be condoned. The Ld. AR submitted that the assessee has no objection. Accordingly we condone the delay as "sufficient cause" is shown in condonation of delay application & an affidavit in the support thereof. Appeal is admitted & taken up for the hearing. 5.2 The Ld. DR for and on behalf of the Revenue then contended that in the sum & the substance there are two issues in the pres....
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....0/- being the "capital introduced" the assessee was asked to explain the sources of "capital addition" during the course of the assessment proceedings but no explanation was offered which fact is recorded in para 5 of the "Impugned assessment order". Hence Ld. AO has correctly treated Rs. 24,40,000/- being capital addition as unexplained u/s. 68 and has correctly invoked 115 BBE of the Act on account of failure to offer any explanation despite opportunity in this regard. The Ld. DR emphatically submitted that for the first time the assessee submitted an explanation about the source of Rs. 24,40,000/- as a gift from the maternal uncle which was as and by way of an additional evidence. However, there is no application of additional evidence on record. The Ld. CIT(A) in response there to did not call for the remand report from the Ld. AO. No gift deed is on record. The Ld. CIT(A) has not done any verification on this aspect. No reasons are given in the impugned order in the para 4 in this regard. No verification is done by Ld. CIT(A) from the maternal uncle. Name of maternal uncle is not stated nor any PAN details in the impugned order. There is thus total non-application of mind on t....
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....ures, gross Profit & net profit figures. Our attention was invited to the page 14 of the PB [balance sheet] capital A/C to demonstrate the addition of Rs. 24,40,000/- as addition to capital. Comparison was shown basis PB[P/L A/C as on 31.3.2016] & the Page 15 PB [P/L A/C as on 31.03.2017]. The Ld. AO has not rejected the books of accounts & has accepted the sales. It was submitted that all the records were before the Ld. CIT(A). 5.10 In so far as second issue/ground was concerned the Ld. AR submitted that the addition on capital A/C of Rs. 24,40,000/- was made during the year under consideration. The "sources" of such addition was gift by the maternal uncle. Our attention was invited to page 16 of PB [confirmation & declaration of gift] letter dated 27.01.2024 were in on 02.08.2016 & 08.08.2016 the amount of Rs. 5 lakh each aggregating to Rs. 10 lakh was paid to assessee by cheque/RTGS. It was submitted that payment of Rs. 50,000/- on 11.08.2016 & of Rs. 50,000/- on 16.08.2016 as reflected in letter are cash entries not reflecting in the bank statement. All other remaining payments from 11.8.16 to 03.09.2016 are by cash only. Letter of donor shri Shanti Sagar Gupta is dated 27.0....
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....assed before us, are of the considered opinion that the impugned order of the Ld. CIT(A), in so far as the addition of Rs. 2,48,14,793/- is concerned which is made by the Ld. AO basis para 4.3 of the "impugned assessment order" is concerned the same has been made by virtue of para 4, 4.1, 4.2 of the "impugned assessment order" the said basis has been rightly tarnished by the Ld. CIT(A) basis para 3.2,3.2.1 of the "impugned order". The Revenue during the course of the hearing has not been able to tarnish the said findings by any cogent material on record. The Revenue has failed to being any credible evidence, material & documents basis which above finding can be said to be illegal & wrong. The sheet-anchor of the Revenue's argument throughout has been that the assessee has failed to produce the quantitative stock details & in the absence of stock/inventory details the purchase & sales register loses all it's importance. We cannot subscribe to this contention of the Revenue. We observe that in para 3.2 the Ld. CIT(A) has rightly held that there is submission of the purchase & sales register before the Ld. AO. No specific discrepancy was mentioned in sales, purchases or even on the st....
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....t appellate stage but he is mandated to at least give a notice to the Ld. Assessing Officer in this regard, in order to meet the ends of justice & so also the principles of natural justice. The grievance of the revenue is all genuine & correct in law. Further Ld. CIT(A) has not made any inquiry with the donor & no gift deed is on record. The material particulars of donor are totally absent. Increase in capital by 24,40,000/- for the year under consideration requires full & credible material which assessee has failed to do so. We notice that even before the Ld. Assessing Officer the assessee had failed to offer any explanation [para 5 of the impugned assessment order] & that for the first time an explanation was offered by assessee before the CIT(A) basis material discussed (supra) the Ld. CIT(A) in such circumstances ought to have examined the entire issue of Rs. 24,40,000/- has allowed the amount of Rs. 10 lakh without even ascertaining the full & complete identity of the donor the nature of transaction of gift. Nothing is reflected in the impugned order. The details & the due diligence is required as to how the capital was an enhanced, & what was the purpose & reason for such enh....