AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 1543
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.... the evidences given by the assessee by filing an application u/s 46A of the IT Rules by the assessee without giving the Assessing Officer an opportunity to examine such additional evidences filed during the course of appellate proceeding and without controverting the finding of AO and therefore has erred by violating the procedure laid down in Rule No.46A of IT Rule, 1962. 3. Law and on facts of the case by ignoring the AO to examine such evidences and Ld. CIT(A) had accepted the additional evidence in the matter, the Ld. CIT(A) erred in deleting the addition without making any independent enquiry & merely relying on the documents submitted by the appellant and failing to collect corroborative evidence of the business activity of the appellant." (B) In this case, assessment order dated 29.12.2019 was passed by the Assessing Officer u/s 143(3) Income Tax Act, 1961 ("Act", for short) whereby the assessee's total income was determined at Rs. 2,92,21,369/- (Rounded off to Rs. 2,92,21,370/-) as against returned income of Rs. 9,71,570/-. In the aforesaid assessment order, separate additions of Rs. 1,28,00,000/- and Rs. 71,78,799/- were made u/s 68 of the Act. Further, additi....
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....-2019 Written submission, sundry creditors and sundry debtors, ITR of Shivam Gupta, Sales register 7. 28-12-2019 Personal balance sheet and Profit/Loss account of Shivam Gupta 29-12-2019 Bank statement and some purchase and sale bills till 08-11-2016 As per para no.2 of the body of the order, just after the chart the A.O. has mentioned assessee has adopted non cooperative attitude ever since the case was taken up for scrutiny but your honor may appreciate that the assessee has fully complied with all the notices except 1 to his fullest capacity and the contention of the A.O. in this regard is mala fide and not acceptable at all. Now my point wise submission against the additions made by the A.O. before your honor is as under -: 1. Cash deposit in bank Rs. 1,28,00,000/- u/s 68 (para 7.1 of the order) This ground of addition was that there was substantial increase in cash during the demonization as compared to the preceding vear. Now first of all I may bring to your kind notice that the assessee started the business on 27th October, 2015 i.e. during the financial year 2015-16. In the span of 5 months ....
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....e a sale of Rs. 73,60,799/- in span of 11 days (from 27-10-2015 to 08-11-2015), out of the sales of Rs. 73,60,799/- I had a cash in hand of Rs. 56,53,000/- (verified during the assessment proceedings) whereas in the current year from 01-04-2016 to 08-11-2016 I made a Sales of Rs. 2,68,24,838/- in the same period advances of Rs. 25,53,456/- was also received by the assessee. Not only this the withdrawal of Rs. 56,00,000/- was also made from bank on different dates. I have also deposited the cash of Rs. 1,71,94,000/- from 01-04-2016 to 08-11-2016 the balance of Rs. 1,64,53,190/- was available with me as cash in hand which has also been verified by the A.O. during the assessment proceedings. The same was deposited in my bank account on different dates. During the assessment proceedings and also in the body of the order a page no.6 para no. 2 and 3 (part of para no. 7.1) the A.O. has constantly insisted that why not the whole of the amount was deposited in one go. No where he has ever challenged my sales or my availability of cash in my cash book. He has accepted that the amount of Rs. 36,50.000/- out of 1,64,50,000/- was part of my sales and as this was deposited on a single ....
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....vidence to show that the amount belongs to some other person, the Assessing Officer should have power to assess the person. Therefore, the fact that the explanation offered by the assessee is not satisfactory should not invariably force the Assessing Officer to treat it as income of the assessee. As per the provision of section 68 it is well settled that in order to discharge the onus, the assessee must prove the following: 1. The identity of the creditor, 2. The capacity of the creditor to advance money, and 3. The genuineness of the transaction. After the assessee has adduced evidence to establish the prima facie the aforesaid, the onus shifts to the department. It is pertinent to mention here that it was not a credit entry taken from any creditor, rather it was my own cash generated out of my sales, which has been accounted for in my books of accounts and the same was deposited in my bank account. The cash was debited from my cash book and credited in the bank account. So, all the 3 points stated above has been proved by itself. 1. The identity of the creditor-that's me only, 2. The capacity of the credi....
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....ssessing Officer to be the income of the assessee, addition of the same amount once again under section 68 of the Act would tantamount to double taxation of the same income. 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. 1. DCIT Vs Senorita Enterprises Pvt. Ltd. (ITAT Delhi) [Appeal Number : I.T.A. No. 5388/DEL/2015] Addition under section 68 is not sustainable if there is a clear lack of inquiry on the part of AO. 1. Principal CIT Vs. Kulwinder Singh) (2018), 99 Taxmann.com 449 Provision of Sec. 68 is not attracted to amount representing purchase made on credits. In addition to the above, the assessee also submitted as under- Appellant further wish to bring your attention to the....
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....w Delhi vs Ito, Ward-43(7), New Delhi on 6 April, 2022 4. CIT vs., Jaora Flour and Foods (P.) Ltd., [2012] 344 ITR 294 (MP HC). 5. Vijay L. Bhawe vs., ACIT [2017] 81 taxmann.com 138 (Mumbai-Trib.). 6. Lalchand Bhagat Ambica Ram vs., CIT [1959] 37 ITR 288 (SC). 7. Shree Sanand Textile Industries Ltd., DCIT [ITA.No.995/Ahd/2014 dated 06.01.2020 ITAT- Ahmedabad]. 8. M/s. Singhal Exim P. Ltd., vs., ITO [ITA.No.6520/Del./2018 dated 12.04.2019 ITAT- Delhi.]. 9. ACIT vs., Dewas Soya Ltd., Appeal No.337/IND/2012. 10. Kishore Jeram Bhai Khaniya vs., ITO [ITA.No.980, 1220/Del./2011 dated 13.05.2014 ITAT-Delhi]. 6. The Ld. D.R. on the other hand relied on the order of the A.O. and the Ld. CIT(A) ITA.No.1185/Del./2021 Atish Singla, New Delhi. 1. Addition of Rs. 71,78,799/- U/s 68 on account of sundry creditors (Para 7.2 of the order) As Regards to the addition made on accounts of sundry creditors I may bring to your kind notice that, apart from the persons from whom advances were received, there were only two creditors from whom purchases were made during the year in consideration, their copy of account a....
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....s a real brother and the amount were taken and given to each other as interest free loan as and when required by each other. Now as regards to section 69B which says :- Amount of investment, not fully disclosed in books of accounts [69B] Where in any financial year, the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year. The copy of bank statement of Shivam Gupta for the financial years 2015-16 in which the amount of Rs. 48,95,000/- was taken and 2016-17 in which the amount of Rs. 83,36,000/- was debited to Shivam Gupta both are being filed as annexure No.'s 1 & 2. ....
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....ific onus provisions, to be correct unless he has in his possession some material to the contrary. 1. Cash Sales Delhi High Court - CIT Vs KAILASH JEWELLERY HOUSE (ITA 613/2010) * AO had doubted the cash sales as bogus and had made additions. * It is not in dispute that the sum of Rs 24,58,400/- was credited in the sale account and had been duly included in the profit disclosed by the assessee in its return. * It is in these circumstances that the Tribunal observed that the cash sales could not be treated as undisclosed income and no addition could be made once again in respect of the same. 1. R.B. Jessaram Fatehchand (Sugar Deptt.) v. CIT [1970] 75 ITR 33 (Bombay HC) * Not bound to maintain name and address of buyers in cash sale 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. * As to the cash transactions also, the quantity of sugar sold has not been disputed. The rates at which sugar was sold were not such as would excite suspicion by reason of being lower than the prevailing ....
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.... view that unless those authorities exercise the power in a manner most beneficial to the revenue and consequently most adverse to the assessee, they should be deemed not to have exercised it in a proper and judicious manner. * We do not find any reason to interfere with the Tribunal's order In view of the facts and circumstances of the case stated above, your honour may find that the additions made by the AO is arbitrary on facts and law of the case, hence needs to be deleted. 1. Before deciding upon the addition made by the AO, it is important to decide whether additional evidence submitted by the appellant should be accepted or not. In this regard, It needs to be emphasized here that the provisions of Rule 46A have been framed for the purpose of ensuring that a fair and reasonable opportunity is provided to the appellant for submitting additional documents & evidences at the appellate stage, which due to some valid reasons, could not be submitted earlier, during the course of assessment proceedings. Thus, during the course of the appellate proceedings, the appellants are entitled to invoke the provisions of Rule 46A in appropriate cases, for ensuri....
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....ustice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence. 2. In the case of CIT v. Virgin Securities & Credits (P) Ltd .: 332 ITR 396 (Del), the Hon'ble Delhi High Court held that the CIT(A) may admit additional evidence, after obtaining a remand report from the assessing officer, if the evidence sought to be adduced by the applicant is crucial to the disposal of the appeal. The Hon'ble ITAT Delhi have also held in the case of Plectra (Jaipur) (P) Ltd. vs. IAC (26 ITD 236) that if the evidence is genuine, reliable, proves the assessee's case, then the assessee should not be denied the opportunity. It is also seen that the additional evidence submitted by the appellant was never asked to be submitted during the appellant proceedings. Hence, relying on the above decisions by the various courts, the additional evidence submitted by the appellant falls in the purview of Rule 46A and thus accepted and considered for the decision for the present appeal. 5. Observations, Findings and Decision Ground No. 1: 5.1 I have carefully consider....
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....urchase register and particularly the stock summary was also (B.1) The total relief given by the Assessing Officer amounting to Rs. 2,82,49,799, by deleting the addition made by the Assessing Officer. In the present appeal filed by Revenue, the relief of the aforesaid amount of Rs. 2,82,49,799/- granted by Ld. CIT(A) is contested. (C) At the time of hearing, the Ld. Departmental Representative placed reliance on the aforesaid assessment order dated 29.12.2019 whereas the Ld. Authorized Representative for assessee placed reliance on the impugned order of the Ld. CIT(A). (D) We have heard both the sides. We have perused the materials on record. In respect of the aforesaid addition of Rs. 1,28,00,000/-, the Ld. CIT(A) deleted this, holding as under: - "5.3 I find that that reasons given by the AO for making the addition are not justifiable. First of all, the addition made by the AO under section 68 itself is not in accordance with the law. The cash deposits in bank do not represent any credit in the books of the appellant attracting the provisions of Section 68. The credit in respect of such cash deposits, if any, is in the books of the Bank. However as held by the B....
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....s a security risk in carrying the cash to bank in one Instance. To alienate such risk it is possible that the cash might have been deposited in instalments. 5.7 The various case laws relied upon by the appellant are also equally important and relevant as to the facts of the case in hand. In a recent decision in ACT VS Ramlal Jewellers Private Limited (ITA No. 1600/Mum/2023 AY 2017-18 has held as under: "Another important fact is that assessee has duly filed cash compliance report with respect to cash sales in Form 61A giving all the details with respect to cash sales. Nowhere, the Id. AO has pointed out that assessee did not have sufficient stocks in its possession or otherwise found any defect in the stock register. If that finding has not been given and no discrepancy has been pointed out, then how the corresponding sales of same stock and quantity can be treated as 'undisclosed income' of the assessee. Once, AO has accepted the sales and there is direct nexus with the closing stock and the sales along with movement of stock linked to purchases then such credit on account of sales cannot be added u/s.68. If the cash sales have been accepted, then deposit....
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....) In respect of the aforesaid addition of Rs. 82,71,000/-, the Ld. CIT(A) deleted the addition, holding as under: - "5.16 The appellant on its part submitted that the party Mr. Shivam Gupta is none else than the real brother of the appellant. He further submitted that all the transactions with his brother Mr. Shivam Gupta are through banking channel and are duly reflected in the books. Further the appellant brought on record the income tax return and balance sheet of Mr. Shivam Gupta and thus vehemently challenged the addition u/s 69B. 5.17 I am in agreement with the submission of the appellant. First of all, as per the version of the AO himself, the funds of Rs. 82,71,000/- have been transferred by the appellant to Mr Shivam Gupta as per the books. This clearly means that the transactions are duly recorded in the books and the entries are found in the bank account of the appellant. In such circumstances how the payments made (funds transferred) to Mr. Shivam Gupta become unexplained is not explained by the AO. Once the transactions are reflected in the books, provisions of section 69B have no application. Provisions of section 69B are attracted only in respect of....