TaxTMI 
TaxTMI 
2026 (7) TMI 1472
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....sake of convenience and brevity. The ITA No. -909/Del/2025 for A.Y. 2017-18 is taken as the lead case. 2. Brief facts of the case: The original return of income declaring income of Rs. 7,97,310/- was filed on 01.11.2017. The case was selected under CASS for scrutiny in the 'Complete Category'. Subsequently, notice u/s. 143(2) was issued on 27.09.2018 and served electronically as well as through speed post upon the assessee. The case was selected for scrutiny for examination on the following reasons: "Cash deposit during demonetization period" 2.1. The AO had information that the assessee had deposited cash of Rs. 5,28,35,000/-during the demonetization period/during the year. The assessee was asked by the AO to explain the nature and source of cash deposit. However, according to the AO, the notices issued remained uncompiled with. Subsequently, the assessee was show-cause vide letter dated 05.12.2019. The assessee submitted reply as under- "The cash was deposited out of the cash sales during the year. The cash book for the year under consideration is already submitted." 2.2 The above reply of the assessee was considered by the AO in light of the detail....
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.... explanation of source of cash deposit and that there was no trend for cash sale as was evident as discussed in the assessment order. Based on these facts, the AO noted that the trend of sale shown in the cash book was not genuine but it was an attempt to explain the unaccounted/bogus cash deposits. The AO also noted that from the details in respect sales which was mainly in cash the sale could not be verified. The Ld. AO also noted that the Assessee also did not provide the details of entities to whom cash sale has been made during the period and therefore, the cash available with assessee could not be regarded as cash received out of sales but that the said cash was unexplained. The AO further noted that the trend of sale in prior year and in subsequent year made it clear that the cash deposits was acquired by the assessee through unexplained sources for which assessee had no explanation. The AO also observed that cash book did not stand before the test of circumstantial evidences of the case and did not match with the prior years /subsequent years trend. 2.5 The AO further noted that another factor in this case was that the said cash was not deposited by the assessee in its r....
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...., this reply of the assessee was also not accepted by the AO and added the sum of Rs. 5,26,07,671/- u/s. 68 of the Act r.w.s. 115BE of the Act. The relevant extract of the order of the AO is reproduced as under: "The reply filed by assessee as above is not acceptable for the fact that Assessee can not stay away from its legitimate liabilities which is to be paid to the authority which may be any government department. If plea of the assessee is to be accepted can we say that he was also purchasing goods for its business activity in cash. In the time of demonetization he has deposited cash in different bank namely Axis Bank and if his claim is to be accepted, he must to have deposited in this bank from the beginning so that the business could run smoothly. If the cash deposited in the bank during the demonetization period was out of his cash sale the same must to been deposited from beginning as was done during the demonetization period by depositing in another bank account. 4.2. In view of above it is concluded that the transaction which resulted abnormal sale and abnormal cash in the hands of assessee, as being claimed by the assessee, he has no explanation for t....
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....ppeal are dismissed." (emphasis supplied by us) 4. Aggrieved with the said order, the assessee is in appeal before us on the following ground of appeal: "1. That the order passed by the assessing officer is bad in law and against the facts of the case. 2. The ld. AO erred in law and on facts of the case in making the addition of Rs. 5,26,07,671 being cash deposited in bank account during demonetization period as unexplained source of income under section 68 despite being explaining the source of income from own business activity 3. The ld. AO erred in law and on facts of the case by levying interest under section 234B and 234C." 5. Ground no. 1 of the appeal was not pressed by the assessee. Hence, this ground of appeal was dismissed as not pressed. 6. Regarding ground no. 2 of the appeal, the assessee filed a written submission and relied upon the same. The relevant extract of the written submission of the assessee is reproduced a under: "In brief the argument of the assessee was as under: • Addition u/s. 68 can be made only if the assessee was unable to explain the source of the same. • The assessee ha....
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....2016 A/c No. '911020065131683, Axis Bank, NFC New Delhi 677,500.00 677,500,00 15.11.2016 A/c No. '911020065131683, Axis Bank, NFC New Delhi 6,000,000.00 6,000,000.00 15.11.2016 A/c No. 911020065131683, Axis Bank, NFC New Delhi 6,681,000.00 6,681,000.00 18.11.2016 A/c No. 911020065131683, Axis Bank, NFC New Delhi 4,273,000.00 4,273,000.00 19.11.2016 A/c No. '911020065131683, Axis Bank, NFC New Delhi 2,000,000.00 2,000,000.00 19.11.2016 A/c No. 911020065131683, Axis Bank, NFC New Delhi 3,666,500.00 3,666,500.00 21.11.2016 A/c No. 911020065131683, Axis Bank, NFC New Delhi 3,795,000.00 3,795,000.00 22.11.2016 A/c No. '911020055131683, Axis Bank, NFC New Delhi 4,100,000.00 4,100,000.00 27.12.2016 A/c No. '911020065131683, Axis Bank, NFC New Delhi 45,000.00 - 45000.00 28.12.2016 A/c No. 911020065131683, Axis Bank, NFC New Delhi 24,000.00 - 24000.00 TOTAL 52,835,000.00 52,766,000.00 69,000.00 8.1 Similarly, the details of month wis....
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.... paper book) and screenshot of the same is reproduced as under: 8.3 Therefore, the claim of the assessee that the assessee cleared the old stock at discount and sold the jewellery in cash due to the lease of premises expiring on 20.12.2016 needs verification as no supporting facts are on record regarding the claim of the assessee. 8.4 Further, the claim of huge increase in the sales for the period August 2016 to November 2016 also requires verification before accepting the claim of the assessee that the source of cash deposits in its bank account was on account of sales of the jewellery. 8.5 Therefore, in order to give one more opportunity to the assessee and in the interest of justice, we set aside the order of the Ld. CIT (A) and restore the matter to the file of the AO for fresh adjudication keeping in view our above observations and after giving reasonable opportunity of being heard to the assessee and in accordance with law. The grounds of appeal filed by the assessee are allowed for statistical purposes. 8.4 Further, the assessee will also be at liberty to submit any evidence/details in support of its claim. 8.5 In the result, the appeal of the assessee is allo....
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....s of the customers etc. The AO observed that the assessee had not furnished any satisfactory reply on the merits of the case and also noted that the assessee had no stock of good as on 31.03.2017 and no sale during the F.Y. 2017-18 as stated by Tarun Bagga, (Partner of the assessee Firm) in his statement on oath and observed that the statements recorded on oath have great evidentiary value. Accordingly, the AO held that, in any case the cash receipts of Rs. 9,05,200/- are not justified on account of sales and the entire amount received by the assessee Firm is nothing but its unaccounted cash receipts. Accordingly, the AO added a sum of Rs. 9,05,200/- u/s. 69A of the Act. The relevant extract of the order of the AO is reproduced as under: "10. Hence, considering the facts of the case, statement of the partners and improper reply of the assessee, it is clear that the assessee has received unaccounted cash of Rs. 9,05,200/-during the relevant previous year. Thus, an amount of Rs. 9,05,200/-is hereby added to the total income of the assessee for the relevant period as per the provisions of the Section 69A of the I.T. Act, 1961 being unexplained money. ...." 10. Aggrieved wi....
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....ion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year." 7.2 1 have perused the submission of the appellant filed during the appellate proceedings and found that on the top of the copies of a few invoices related to the firm named PADMA KRITI on the same dates as tabulated in the order book found at the time of survey. But nowhere on these invoices the name of Ms. Rita Bagga, appears and it is hard to believe that these invoices related to the tailoring and garment business of Ms. Rita Bagga. The appellant firm has also not furnished any explanation for this. Also, total amount of these invoices is different. Therefore, these invoices failed to substantiate the reply of the appellant firm and its claim of the order book fo....
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.... the assessee. The income determined is wrong and bad in law. The tax determined as a consequence wrong and bad in law. The levy of interest is wrong and bad in law. All have to be cancelled 5. The appellant contends that the provisions of section 69A can only be invoked if the assessee is found to be owner of money, jewellery etc. and the same is not recorded in the books of accounts. No such money alleged has been found in the premises of the assessee surveyed u/s. 133A of the Income Tax Act. Thus, no addition can be made u/s. 69A." 12. During the course of hearing before us, the Ld. Sr. AR relied upon the written submission filed before the Ld. CIT(A). The relevant extract of the same, is reproduced as under: "This appeal is directed against the assessment order u/s. 143(3) Id. ACIT Central circle 28, Delhi dated 30.09.2021 in which the addition of Rs. 9,05,200 on account of unaccounted cash under section 69A of the Income Tax Act, 1961. Brief Facts of the case are as under: 1. The Assessee is a partnership Firm engaged in the business of trading & Manufacturing of gold, diamond jewellery & garments. The firm which is having three partners,....
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....roceeding, Rita Bagga, (Partner) has stated that "Order Book" impound during the survey was sales made by her in her individual capacity and all the "Order Book" was in her own handwriting. There is a direct nexus between the amount of post discount in the order book and turnover mentioned in her individual return, both were amounting to Rs. 8,30,000. 7. Notice u/s. 143(2) was issued by ITO of ward 28(1) without questionaries based on issue "Survey u/s. 133A". Further, notice u/s. 142(1) with questionaries was issued by Ld. ACIT of the central circle 28, followed by SCN. 8. The Ld. ACIT was relying on the statement of Mr Tarun Bagga drawn during the survey as mentioned in the SCN and made an addition of 9,05,200 u/s. 69A in the name of the Partnership firm based on pre discount order book as unaccounted cash not giving any reason for not accepting appellant plea." In the assessment order on para 9, Ld. AO has rejected the submissions of assessee without providing any cogent reasons or explanations. It is a trite law that Burden of proof the income is on the department. Assessment Order Para Assessment Order Appellant Remarks Para 9 (First Line....
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.... (d) Since, the survey conducted during the previous year i.e. 18.08.2017, had it been the income of assessee, it would have been more conscious of showing in the return of income as already income tax department has surveyed them, but in order to present the true picture, the firm has not done that. (e) The handwriting of Rita Bagga on bills, taking of the order, providing the customized designs, communicating to tailors, explaining them the specification, and collecting of money, all were duly performed by Rita Bagga in her personal capacity. Hence, there was no way to show the income in the name of firm. The customers directly know them as well and well versed with her. From the above, it is clear that Firm (Family Business) and partner has not done any tax evasion, in fact, partner individually has paid much more than, they would have paid in firm (Which was a family business firm). 2. The order book contain the serial no. name of the customer, mode of payment, date of order. The business was not registered under GST. As the turnover was very well below the statutory limits. The partner being lady and senior citizen was not versed with the taxation provisions (Being in....