TaxTMI 
TaxTMI 
2025 (6) TMI 2157
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....,340/- against which net profit had been shown at Rs. 2,79,82,015/- and also that there was a substantial increase in cash sales during the period October & November, 2016. The AO further noticed that out of the total cash sales of Rs. 39,63,18,783/- for the entire year of 2016-17, the assessee had shown cash sale of Rs. 23,36,82,272/- only for the period from October, 2016 till 8th November, 2016, i.e., the assessee had shown cash sales of Rs. 23,36,82,272/- in 38 days. After considering the submissions made on behalf of the assessee and the materials placed on record, he treated Rs. 17,50,26,651/- as being unexplained cash deposit out of bogus cash receipts in the following manner: S. No. Particulars Amount (Rs.) A Average per day sale from April to September 1,83,461.00 B Accounting for percentage increase of around 100% on account of festivals, per day sale for festival month 3,66,922.00 C Average sale for 39 days on the basis of above per day sale (C*39) 1,43,09,958.00 D Total cash sale shown from 01.10.2016 to 08.11.2016 21,18,46,609.00 E Excess cash sale treated as bogus receipts (D minus C) 19,75,36,651.00 F Less: ....
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....much as whatever profit has been earned the same forms part of the profit & loss account; the addition ordered to be made is bad in law, unsustainable, be deleted. 05. Because there being no discrepancy or defects in the books of account, nor there having being pointed out any, the addition directed to be made based on mere conjectures, surmises and suspicion, be deleted being totally unjustified and unwarranted. 06. Because the CIT(A) has erred on facts and in law in partly upholding the order passed by the AO, making the addition of Rs.17,50,26,650/- u/s.68 read with section 115BBE which order passed by the AO and CIT(A) are bad in law, the addition made by the AO and partly upheld by the CIT(A) be deleted. 2.6 The grounds of appeal raised by the Revenue in ITANo.351/LKW/2020 are as under: 1. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.17,50,26,651/- made u/s 68 of the I.T. Act r.w.s 115BBE made on account of unexplained cash deposit during demonetization period due to sales credited to its books of account to extent unsupported by past trend. 2. Appellant craves leave to add as amend any one or more of the gr....
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....the books of account were also not rejected by the AO, which would imply that the sales and purchases made by the assessee were not in doubt. It was further submitted that the assessee had duly filed VAT Returns in time and even the VAT Department had not pointed out any discrepancy in the VAT Returns. Our attention was drawn to the copy of monthly VAT Return for October, 2016 and it was pointed out that this Return had been filed on 21.11.2016, i.e., on the due date of filing of the Return, which would demonstrate that the bona fide of the assessee was not in doubt. Our attention was also drawn to the assessment order passed by the VAT Department in respect of assessment year 2016-17 and it was submitted that the VAT Assessing Officer also had accepted the sales and purchases as disclosed in the VAT Returns for assessment year 2016-17. The Ld. A.R. also invited our attention to the Charts appearing at pages 5, 6 and 7 of the assessment order and pointed out that the opening cash in hand as on 01.04.2016 was Rs.1,10,74,812/- and as on 01.10.2016, it stood at Rs.9,62,84,327/-. It was submitted that the assessee had duly submitted cash-in-hand position during the year under considera....
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....pta vs. ACIT in ITA No. 149/Jp/2022, order dated 23.03.2023, ITAT, Jaipur. 9 Mukesh Soni, Jaipur vs. ITO in ITA No. 46/Jp/2023, order dated 26.04.2023, ITAT, Jaipur. 10 ACIT-3(1)(1) vs. Ramlal Jewellers Pvt. Ltd. in ITA No. 1600/Mum/2023, order dated 26.07.2023, ITAT, Mumbai. 11 ITO-23(3)(6), Mumbai vs. Swarnnsarita Jewellers in ITA No. 1420/Mum/2023, order dated 23.08.2023, ITAT, Mumbai. 12 Neeraj Camellia Private Limited vs. DCIT in ITA No. 14/Rpr/2024, order dated 18.03.2024, ITAT, Raipur. 13 Diwan Sahib fashions Private Limited vs. ACIT in ITA No. 3247/Del/2023, order dated 01.05.2024, ITAT, Delhi. 14 Anil Champalal Jain vs. ITO in ITA No. 213/Mum/2024, order dated 09.07.2024, ITAT, Mumbai. 15 Agsons Global Private Limited vs. ACIT, 115 Taxman.com 342 (Delhi Tribunal). Order of the Tribunal has been upheld by the Hon'ble Delhi High Court in the case of PCIT vs. Agson Global Pvt. Ltd. in ITA No. 68-73/2021, order dated 19.01.2022. 16 Mehta Parikh & Co. vs. CIT, 30 ITR 181 (SC). 17 Laxmi Rice Mills vs. CIT, 97 ITR 258 (Patna). 18 Chunnilal Tikam Chand Coal C....
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....and no discrepancy, whatsoever, had been pointed either in the Audit Report nor has there been any other allegation by the AO with respect to the undisclosed profits having been earned by the assessee and, therefore, this action of the ld. CIT(A) was entirely baseless and without any substance. 6.0 In response, Ld. CIT(DR) placed reliance on the observations of the ld. CIT(A), in this regard, and submitted that since the entire sale proceeds were deemed to be bogus by the AO and added under section 68 of the Act, the ld. CIT(A) was perfectly justified in treating part of the sales as having been made on a premium and the assessee having earned undisclosed profit on the same. 7.0 We have heard both the parties and have also perused the material on record. First we take up the appeal of the Department, which is against the relief allowed to the assessee by deletion of addition of Rs. 17,50,26,651/- made under section 68 of the Act. 7.1 The facts of the case are not in dispute. There was substantial increase in the sales of the assessee during the period of demonetization and it was the contention of the AO that these sales were bogus sales, which had been introduced in the b....
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.... 10,441,312 12,717,792 50,000 2,627,722 309,538 13,072,300 February, 2017 March, 2017 13,072,300 11,108,353 10,378,239 16,218,325 425,000 1,937,037 (629,066) 17,457,596 17,457,596 23,346,256 12,157,218 25,737,187 50,000 8,137,462 (1,723,424) 20,859,846 7.2 Apart from this, the assessee had substantial stock with him even on the first day of the financial year, which is evident from the observation of the AO at 16 of the assessment order, wherein, it has been stated that the assessee had opening stock of Rs.23 crores whereas the entire turnover of previous year was only Rs.13.66 crores, which, according to AO, was not digestible. Thus, the AO found it hard to believe that the assessee had stock of Rs.23 crores in its books. However, this suspicion of the AO is again without any basis, as no defects have been pointed out either in the books of account or in the stock details, which were submitted by the assessee during the course of assessment proceedings. It is also worthwhile to mention here that the book results declared by the asses....
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....egards either. the sales are properly vouched and reflected in the books of accounts of the appellant. The appellant has submitted that he maintains a cash balance of around Rs. five crore a cash balance of Rs 49521133/- was available on 31/03/2016 is verifiable from audited balance sheet filed. The A.O. has not considered the aforesaid facts and instead compared the sales from 01/04/2016 to 30/09/2016 i.e sale of 183 days with sales of 39 days ie from 01/ 10/2016 to 08/11/2016.The assessment order does not mention reason for the same. The appellant has submitted that there is always a sharp rise in sales during the months of October and November as these are the months of festive season and marriage. It is pertinent to note here that no two years are identical or same due to a variety of reasons, which are beyond the control of any businessman. The AO has not compared the sale of same period last year. The A.O failed to justify incremental upward revision of100%. The AO has not considered the rise in price of gold and silver, which is a major component of the appellant's turnover. The average price of gold increased from Rs.25,000/1....
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....or section 69D, if such income is not covered under clause (a), the income-tax payable shall be the aggregate of- (i) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i).] (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance [or set off of any loss] shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) and clause (b) of sub-section (1). Section 68 of the Act provides inter alia that if where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of Assessing Officer, then such sum can be taxed as his income for such financial year. Under such circumstances, it is clear that the Assessing Officer may now apply the provisions of....
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....e ld. CIT(A) has rubbished the theory of the AO on the following counts: (1) Since the books of account of the assessee were audited, manipulation, if any, could not have been made in any of the previous year and, therefore, the opening stock of this year could not have been manipulated, as it was the closing stock of the previous year's audited financial statement. (2) The AO had not made any worthwhile enquiry before disbelieving the contention of the assessee regarding sales. (3) No discrepancies have been pointed out in the Stock Register. (4) There is no mandatory requirement to maintain details of customers where the value of cash sales is less than Rs.2 lakhs. (5) Cash balance of around Rs.4,95,21,133/- was available in the books as on 31.03.2016, which was verifiable from the audited balance sheet. (6) There is no basis for adding a markup of 100% on sales by the AO. (7) The sales disclosed before the VAT Department are also tallied with the sales as per the financial statement and the same has also been accepted by the VAT Department. (8) The cash sales of Rs. 21,18,46,609/- was already part of the....
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....ove the contention of the assessee and further observed that suspicion howsoever strong, it should not be decided against the assessee without disproving the sales with tangible evidence. The Vishakhapatnam Bench further observed that once the AO accepts the books of account and the entries in the books of account are matched, there is no case for making addition as unexplained. In this regard, the Vishakhapatnam Bench placed reliance on the judgement of the Hon'ble Patna High Court in the case of Lakshmi Rice Mills vs. CCIT [1974] 97 ITR 258 (Patna) and another judgement of the Hon'ble Delhi High Court in the case of PCIT vs. Akshit Kumar [2021] 124 taxmann.com 123 (Delhi). It was also observed by the ITAT, Vishakhapatnam Bench that the sales could not be suspected merely because of some routine observation of suspicious nature such as making sales through 270 bills in the span of four hours, non-availability of KYC documents for sales, non-writing of tag of the jewellery on the sale bills, non-availability of CCTV footage to establish rush of public, etc. The ITAT, Vishakhapatnam Bench also did not accept the reliance placed by the Department in the case of Sumati Dayal v....