TaxTMI 
TaxTMI 
2026 (6) TMI 820
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....dated 02.12.2019 through ITBA portal. 3. The assessee is running the business of jewellery in the name and style of M/s. R.V. Gold Hallmark. The Assessing Officer observed that assessee has deposited Rs. 5,60,29,500/- during demonetization period. The Assessing Officer observed from the records that assessee has deposited cash of Rs. 3,71,000/- during pre-demonetization period, during demonetization period Rs. 5,60,29,500/- and post demonetization Rs. 3,35,500/-. The Assessing Officer observed from the submissions made by the assessee in response to show-cause notice dated 21.12.2019 that assessee has deposited huge cash during demonetization period for which assessee has claimed to have received as advance from various customers before 08.11.2016. In order to verify the correctness of the statement, summons u/s 131 of the Act were issued to 8 parties to test check the assessee's claim but he noticed that none of them have appeared to record statement. Accordingly, assessee was showcased as to why the above cash deposit should not be treated as undisclosed income. Since none of the parties have responded to the notice u/s 131 and also assessee was asked whether VAT return was fi....
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....bullion, the same is sold to the customers from whom the advances were received. The AO has further stated the assessee was directed to submit the list of persons along with the addresses from whom huge cash advances were received. The AO further issued summons u/s 131 to eight such customers on test check basis but none of them appeared before the AO. As per AO, all the summons were returned back undelivered with remarks "left" and "incomplete address". The assessee further submitted that no VAT return has been filed by the assessee for the year under consideration. The AO further reported that the assessee has never entered into the sale of gold/bullion either in the past or after the demonetization period. The AO accordingly treated the cash deposited during the demonetization period as unexplained cash of the assessee u/s 69A of the Income Tax Act, 1961. During the appellate proceedings, the assessee reiterated the submissions filed before the AO. The appellant further stated that the assessee had purchased gold from M/s SS Bullion and the confirmation statement of the same was submitted before the AO. The appellant has acknowledged that the compliance with the VAT law....
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....ited in the bank account of the assessee. The AO investigated the said fact wherein, summons were issued to such persons but all remained un-complied. In above circumstances, the following evidences weigh heavily against the assessee: a. No regular business activity. b. No stock c. No details of buyers of gold d. No VAT Returns e. Absence of confirmations from the persons who had given advance in cash to the assessee In above circumstances, the modus operandi utilized by the assessee is just a colorable device to cover the unaccounted cash transactions in the garb of business activity, The said business activity could never be proved leading the A0 to make addition of the cash deposit u/s 69A of the Income Tax Act, 1961." 5. Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal :- "1. That the learned Commissioner of Income Tax (Appeals)-3, Noida has erred both in law and, on facts in upholding the determination of income made by the learned Income Tax Officer, Ward-58(6), Delhi of the appellant at Rs. 5,68,77,420/- in an order of assessment dated 26.12.2019 u/s 143(3) of....
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.... law and on facts in upholding the levy of interest of Rs. 34,63,936/- u/s 234A of the Act, interest of Rs. 1,42,88,736/- u/s 234B of the Act and interest of Rs. 18/- u/s 234C of the Act which is not leviable on the facts of the appellant. 5 That learned Commissioner of Income Tax (Appeals)-3, Noida failed to appreciate that even otherwise order of assessment is without jurisdiction 6. At the time of hearing, ld. AR of the assessee submitted that cash receipts bifurcation from 01.04.2016 to 08.11.2016 is as under :- "Cash Receipts Bifurcation from 1st April to 8th November 2016 Total cash received between 31st Oct to 8 Nov 2016 from Individual person 5,32,41,800 OPENING CASH BALANCE 10,50,665 DIAMOND SALE 19,72,262 F-30 CASH RECEIPTS 2,22,975 F-41 CASH RECEIPTS 12,51,795 LESS : EXPENSES - 10,98,084 TOTAL 5,66,41,413 7. He also filed sales register from 01.04.2016 to 08.11.2016. He further filed written submissions which read as under :- "The assessee is dealing in business of hallmarking from 2014, having Bureau of Indian Standards (BIS) no. CRO/RHMS/R-110065 dated 26.12.2014; and h....
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....thout even rejecting the books of account which is in our opinion is erroneous. We here pray that we have previously complied with all the notices and queries by department in this case and further assure our compliance with the Hon'ble ITAT bench and hereby request the bench that we have provided all the necessary documents we hereby request you to kindly decide our case on merit and provide the necessary relief by closing these assessment proceedings in the interest of natural justice. STATEMENT OF FACTS: The assessee is dealing in business of hallmarking from 2014, having Bureau of Indian Standards (BIS) no. CRO/RHMS/R-110065 dated 26.12.2014. As the assessee wish to start bullion business also, so he obtained VAT no. 0767692541 also, but due to low personal funds with assessee. Assessee was not able to start the bullion business in 2014 and thus his VAT no was cancelled w.e.f. 19-12-2014. From 2014 to 2016 assessee has achieved a goodwill and trust of more than 1500 customers who transact with assessee annually in the market. In two years from his hallmarking business assessee has received much funds to start his gold bullion trading business. In 2016....
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....ce has been issued on various dates under section 142 (1) and under section 143 (3) of Income Tax Act and reply has been filed electronically on 25.11.2019, 28.11.2019, 06.12.2019 and 25.12.2019 for above sections. The assessee has made audit report under section 44AB of income Tax Act where accounts are duly certified by chartered accountant declaring sales of Rs. 572,08,861/- and having net profit of Rs. 998513/- which is declared already in return of income and taxes are already paid on it at the time of filing of return of Income. The assessee has paid the taxes of Rs. 97424/- on above profits at the time of filing return of income. The assessee has started the business of hallmarking from December 2014 and has started business of bullion in October 2016; he had taken the advances from various persons in cash before 8 NOV 2016 and purchase the gold during the period of demonetization and had given delivery of gold to various customers on his shop by purchasing gold and making payment to SS BULLION (purchaser) through banking mode of RTGS. It is matter of coincidence that the assessee has taken cash and demonetization had started. The assessee had to deposit such cash in his cur....
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.... officer. The assessee has given all the documents to the best of his ability from time to time as demanded by assessing officer electronically at income tax portal. Hence, it is wrong to assume that assessee has not established the genuineness of his transactions and has provided proper proof to establish his business activity. He has discharged his onus as to prove genuineness of his transactions through all authentic documents time to time. The assessee has given sufficient explanation to establish his business activity. The assessee has submitted audit report, balance sheet, cash book. Other financials, ITR FORM, profit and loss account and other submissions on 26-11-2019 in reply to notice u/s 143 (3) of Income Tax Act. On other occasions he has given copy of submissions, sale and purchase, monthly summary, purchase confirmation report and details of gold sale in November and gold sale during December on 28.11.2019, 02.12.2019, 03.12.2019 in reply to notice u/s 142 (1) of Income Tax Act. He has also submitted month wise sales details from 1st April 2016 to 31 March 2017 along with various submissions on 06.12.2019. Thus, assessee has given replies on various dates to establish....
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....AN details. In the books, the assessee had declared the purchases which was purchased from SS Bullion and paid to them thru RTGS. At the same time, the assessee had declared the relevant sales in his books but failed to bring on record the details of collection of VAT or relevant sales bills. 11. In this regard, we observed that the Assessing Officer had considered the ROI filed by the assessee and also considered the income declared by the assessee in the head 'income from business'. One hand Assessing Officer accepts genuineness of the business income declared by the assessee and on the other hand, doubt the cash deposited by the assessee out of the same sales. 12. In our view, the assessee had declared the sales made out of cash memo as income from business and Assessing Officer had stated that the assessee had vitiated the provisions of VAT, and hence assessee is not carrying on any business. In our considered opinion, if at all, there is any violation of provisions of VAT, it is for the VAT authorities to look into the same and the Revenue herein need not be concerned about it for determination of total income of the assessee. 13. As far as income-tax is concerned, th....