TaxTMI 
TaxTMI 
2023 (4) TMI 1491
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....cts and circumstances of the case. 2. That the learned CIT(A) erred in sustaining the invoking of provisions of section 69A r.w.s. 115BBE of the I.T. Act whereby the learned AO levied tax @ 60% plus 25% S.C., etc. on the additions made by the A.O., which sustaining by the learned CIT(A) of invoking of provisions of section 69A r.w.s. 115BBE of the I.T. Act by the AO and levying tax @ 60% plus 25% S.C., etc. on the additions of Rs. 32,71,000/- made by him is most arbitrary, unjust and untenable in fact and in law. 3. That the learned CIT(A) ought to have appreciated that the learned AO failed to discharge the burden of proof which squarely lay upon him for not treating the cash sales made by the assessee during the period 01.10.2016 to 08.11.2016 at Rs. 29,65,000/- as genuine and consequentially treating the cash deposited at Rs. 32,71,000/- in the bank accounts during the period of demonetization as undisclosed income in the shape of SBNs. 4. That the action of the learned CIT(A) while sustaining addition of Rs. 32,71,000/- is not justified because he (the learned CIT(A)) failed to appreciate that the AO in one side is not rejecting books of accounts mean....
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....arious details. The assessee filed online reply on 22.11.2019 and 28.11.2019. On scrutiny of information filed assessing officer noted that the assessee has deposited cash of Rs. 1,30,000/- and Rs. 4,56,000/- before demonetization period and after demonetization period respectively. Whereas, during the demonetization period Rs. 33,71,000/ has been deposited that too on 15.11.2016, 01.12.2016 and 06.12.2016. Against the cash deposit, the analysis of cash sales is that before demonetization period, cash sales is Rs. 29,65,226/- and out of which Rs. 29,65,226/- is in 01.10.2016 to 08.11.2016 during demonetization period is Rs. 55,580/- and after demonetization period is Rs. 3,15,340/-, it clearly shown that sales have been inflated more than many times in 01.10.2016 to 08.11.2016 in comparison to sales from 09.11.2016 to 31.03.2017, which is highly abnormal and unreasonable. In view of these observation the assessee asked to explain the discrepancy with documentary evidence to explain the reason of unreasonable and unjustified cash deposit of Rs. 33,71,000/- in three days on 15.112016 and 01.12.2016 and 06.12.2016 during demonetization period, whereas during pre-demonetization period ....
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....make addition as proposed in the notice and oblige. It is also not out of place to state that during the previous year 2015-16 the assessee had declared cash sales of Rs 24.98 Lacs and during this relevant previous year such cash sales are to the tune of Rs. 35.76 lacs which is slightly high as compared to immediately preceeding years and hence no doubts as raised by your good self are sustainable. Further in response to your allegation of depositing cash for Rs 33,71,000.00 during the demonetization period it is submitted that such cash has been deposited out of available cash balance in book of accounts and as explained already in previous replies that assessee is into trading of gold ornaments and bullion where in majorly cash has been preferred for obtaining the consideration of sale of goods. That except wholesalers it is practically not possible to demand for cheques from customer on account of sale of gold ornaments and bullions. That aforementioned cash has been deposited in banks out from sale proceeds of gold ornaments and Bullion Sale and opening cash in hand kept out of pas earnings which can be verified from cash book already submitted by us in reply dated 30/11/2019. ....
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.....04.2016 at Rs. 26,64,640/- and hectic sale staring from October 20,2016 is a make-belief story. According to the AO, there was hardly any cash sale before October, 2020 and after demonetization was announced. On examination of banks statements, it is seen that there was cash deposit of Rs.32,00,000/- in HDFC accounts on 15.11.2016. The deposit was followed by cheque payment of Rs. 50,000/- on the same day and RTGS transfer of Rs. 30,75,000/- on 16.11.2016. The cash deposit and immediate transfer to other party gives an indication that the claim of bullion trading receipt being deposit in bank account is not plausible. In the return of income, job work receipt was mentioned to be Rs. 3,30,800/- In the written submission dated 28.11.2019 filed before the AO, Job work expenses was stated to be Rs. 80,900/- only. It is not possible to earn job work receipt of Rs. 3,30,800/- by incurring expenses of Rs. 80,900/- only. Assessee also claimed that cash in hand as on 31.03.2015 was NIL and that as on 31.03.2016 was Rs. 4,09,177/-. It is not understood how assessee generated that much of cash in hand and also having opening stock of gold in excess of 25 lakh when his income was barely above....
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....ble taxes during the period 01.04.2015 to31.03.2016 and 01.04.2016 to 31.03.2017 k) Copy of accounts of expenses under each head claimed in trading & profit & loss account for the previous year ended on 31.03.2017. 2. That, both the lower authorities also erred in not taking into consideration following facts and circumstances of the case :- a) All the books of accounts are duly audited by a Chartered Accountant and there is no adverse observation of the auditors at any stage. b) There is no change in the method of accounting nor in the method of valuation of closing stock. c) That each and every entry in the books of accounts is supported by bills & vouchers. d) The assessee has regularly kept and maintained books of accounts consisting of Cash Book, ledger, stock register, bills and vouchers, purchase and sales registers, bank statements and other relevant records. 3. That, this action of the A.O. as well as of the learned CIT(A) are in utter disregard of law and particularly against the CBDT instructions No. 03/2017 dated- 21/02/2017 which clearly say that the assessing officer is required to take into consideration ....
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....in the books of accounts of the assessee in the name of the buyer which could be termed as cash credit and it is quite evident from the books of accounts particularly cash book of the assessee. Further the SBN's were received against sale of gold ornaments and/or bullion, opening cash balance, income from job work and cash withdrawn from the bank. 8. That by making cash sales, doing income from job work, withdrawing money from the bank and having opening cash balance and deposit of these sale proceeds etc. in bank as per details filed during assessment proceedings the assessee has not made infringement of any provision of Income tax Act, 1961 including the Demonetization law. 9. That in compliance to various notices issued during assessment proceedings to assessee u/s 142(1) or 143(2) the assessee inter alia filed details of opening stock of each month, purchases and sales made in each month, closing stock remaining at the end of each month; details of month wise cash sale and cash deposit in bank. 10. Further both the lower authorities failed to appreciate that the assessee has regularly maintained stock register for every item dealt by him on day to....
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....turns filed by the assessee online in RVAT Act stood filed before the A.O. The Hon'ble bench will kindly appreciate that there is no difference between the turnover as per RVAT returns/assessment order and the books of accounts of the assessee. In other words total sales including cash sales made by the assessee as per his books of accounts duly tallies with the turnover assessed by the VAT authorities of state Govt. 12. That as regards adverse observations of the AO in the assessment order particularly in page 5 of the assessment order that there has been abnormal increase in cash sales during the period from 01/10/2016 to 02/11/2016 (demonetization provisions came into effect on 08/11/2016) in comparison to cash sales during the period from 01/04/2016 to 30/09/2016 and for the period from 01/01/2017 to 31/03/2017 the assessee craves leave to submit as under :- i) That increase or decrease of sales depends on various factors including behaviour of the customers coming to the shop of the assessee and specific time prevailing at the time of visit of the customer to the assessee shop i.e. time of festivals like Navratri, Diwali etc. It is respectfully submitted ....
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.... the same is disclosed by the assessee in its return of income filed u/s 139(1) of the IT Act. As against this correct factual position the AO has arbitrarily and wrongly subjected to tax u/s 68 of the IT Act total amount of cash deposit of Rs. 32,71,000 in bank accounts during 09/11/2016 to 31/12/2016 and thus it amounts to double additions once as sale duly forming part of assessee's regular book of accounts and again as unexplained cash credit u/s 68. Under such facts and circumstances amount of cash sales cannot be treated as undisclosed income because no duplicate addition can be made in law in respect of the same transaction once as sales forming part of trading account and again as disallowance/ addition u/s 68 of the IT Act. Reliance is placed in this regard on various judgments mentioned in the annexed list forming part of judicial pronouncements herewith :- 14. . It is respectfully submitted that it is an established fact that only cash credits can be considered u/s. 68 and not trade receipts. In this regard the appellant craves leave to refer to and rely upon the judgment of Hyderabad Bench "A", of income tax appellate Tribunal, Hyderabad in ITA No. 264/Hyd/....
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..... 2017-18 in the case of ACIT, Central Circle- 2,Jaipur Vs. M/s Motisons Jewellers Ltd. and ITA No. 178/JP/2022 for A.Y. 2017-18 in the case of M/s Motisons Jewellers Ltd. Vs. ACIT, Central Circle-2,Jaipur vide the common appellate order dated 29/09/2022 dismissed the department appeal no. 161/JP/2022 by concluding vide para no. 15 and 16 at page no. 94, 95 and initial three lines of page 96 that we sustain the order of the ld. CIT(A) and based on these observations the appeal of the revenue in ITA NO. 161/JPR/2022 stands dismissed. (pg 95 and 96). Vide the above mentioned common appellate order dated- 29/09/2022 the Co-ordinate bench, namely ITAT Jaipur Bench, Jaipur in IT Appeal No. 178/JP/2022 for A.Y. 2017-18 in the case of Motisons Jewellers Ltd. versus the ACIT, Central Circle-2, Jaipur appeal of the appellant was allowed. The humble appellant craves leave to refer to and rely upon the above mentioned appellate order passed by the Co-ordinate bench in ITANo. 161/JP/2022 and ITA No. 178/JP/2022. GROUND OF APPEAL NO. 2 This ground of appeal is against invoking of provisions of section 68 r.w.s 115BBE of the IT Act and levying income tax at the rate of 60% [as ....
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....f job works. 6. That The provisions of section 115BBE are applicable only on the income taxable u/s. 68, 69, 69A, 69B, 69C or 69D of the Act. But in the present case source of cash deposit of Rs. 33,71,000 in Bank is income from business of trading of gold ornaments and bullion Reliance is placed in this regard on various judgments forming part of judicial pronouncements annexed herewith. 7. The appellant also craves leave to refer to and rely upon the submissions made by him in these written submission earlier under Ground of appeal No. 1 and 4. GROUND OF APPEAL NO. 3 1. That the learned AO failed to discharge the burden of proof which squarely lay upon him for describing the genuine cash sales of Rs. 29,65,226 made during the period 01/04/2016 to 08/11/2016 as an afterthought act of the assessee to introduce his unaccounted money 2. That the burden of proof of not accepting the apparent as real lies on the AO but he has failed to discharge this burden of proof. So much so the AO has not given a single instance of issuing in genuine sales invoice. 3. The appellant has given necessary evidence on the basis of its books of accoun....
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....no purchases and sales has been returned by the assessee. Details has been attached as per Annexure-3. 7. Details of Cash work done including taxes made during the below mentioned period :- S.NO DESCRIPTION AMOUNT A (a) TOTAL CASH WORK DONE IN F.Y. 2015-2016 2,498,757.00 (b) TOTAL CASH WORK DONE IN 1-4-2015 TO 8-11- 2015 2,272,729.00 (c) TOTAL CASH WORK DONE IN 9-11-2015 TO 31- 12-2015 226,028.00 B (a) TOTAL CASH WORK DONE IN F.Y. 2016-2017 3,576,276.00 (b) TOTAL CASH WORK DONE IN 1-4-2016 TO 8-11-2016 3,205,356.00 (c) TOTAL CASH WORK DONE IN 9-11-2016 TO 31- 12-2016 55,580.00 C (a) Percentage increase between B(a) andA(a) 43.12 (b) Percentage increase between B(b) and A(b) 41.04 8. Details of month wise cash sales and cash deposits from 01.04.2015 to 08.11.2015. S.no Month wise Opening balance cash in hand Cash sales Income from job work Cash deposited in bank Cash withdrawal from the bank Closing balance cash in hand 1 Apr-15 126,037.00 ....
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.... 11. Detailed reason for increasing cash in hand in FY 2016-17 till 08-11-2016. That increase in cash balance in the FY 2016-2017 till 08-11-2016 is due to sales of goods and sale is dependent of various factor like diwali season, marriages etc. That assessee does not have any control over the sale as the same is driven by the demand and supply. 12. Details of Opening and Closing stock inventory in Quantity and value with method of valuation. That for your kind consideration we hereby provide details of opening and closing stock in quantity and value. Details have been provided herein below :- S. No. Particulars Quantity Value Method 1 Opening Stock 977.425 gms 26,64,640.67 2 Closing Stock 1017.360 gms 29,80,131.84 Stock has been valued at cost FIFO Basis 13. Maintenance of Stock register and copy of stock statement. That it is submitted that the quantitative detail of stock is maintained by the assessee and for your kind verification we hereby enclose stock statement as per Annexure-4. 14. Copy of Sales tax assessment orders/VAT returns etc for the year consideration. ....
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....Y. 2015-16 & 2016-17 the same is comparable in terms of percentage 41.04 & 43.12 respectively for these two years. All these information even though placed on record of the ld. CIT(A). The order of the ld. CIT(A) does not deal with the records and the various legal judicial precedent cited by the assessee in the proceeding before the first appellate authority. The bench noted that it is not in disputed that cash sales of Rs. 29,65,226/- is credited in the sales register produced before the ld. AO. The resultant profit considering this sales has already been form part of net profit so arrived in the profit and loss account so submitted and same is disclosed by the assessee in its return of income filed u/s. 139(1) of the Act. Without disputing these facts and without disproving the said sales and profit subjected to tax the amount u/s. 68 of the Act. Based on these set of facts once the sales recorded in the books is not disputed ignoring that sales recorded in regular books of account making a separate addition is duplication of the same amount recorded in the books and for the same amount the assessee cannot be subjected to twice as the provision of section 4 of the Act empower th....
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....ssessment the AO vide his order dated 29-12-2019 assessed the income of the assessee at Rs. 16,45,24,988/- as against return income of Rs. 5,37,53,418/- . During the course of assessment proceedings, the AO rejected the books of account of the assessee by applying the provisions of Section 145(3) and estimated the net profit rate of 2.59% being average Net Profit of last three years and applied the same on the sales of Rs. 1,96,92,45,899/- i.e. to say Rs.2,09,09,94,399 - Sales as per books and Rs. 12,17,48,500 - Cash deposited in Bank. It is further noted that the AO reduced the amount of Rs. 12,17,48,500/- deposited in the demonetization currency which was against sales, realization from debtors and advances against sales, out of total sales of Rs. 2,09,09,94,399- declared by the assessee. Hence, the AO computed the net profit of the assessee at Rs.5,10,03,468/- as against Rs. 5,19,80,398/- declared by the assessee. It is also noted that the assessee had deposited the amount of Rs.12,17,48,500/- in the demonetized currency which was out of cash balance available with the assessee from sales made by it, amount realized from sundry debtors and advance received against sales which th....
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....s. ITO reported at 298 ITR 349 (Rajasthan-HC). In this case the Jurisdictional Hon'ble High Court have held that So far as question No. 2 is concerned, apparently when the Tribunal has found as a fact that the assessee was receiving money from the customers in hands against the payment on delivery of the vehicles on receipt from the dealer the question of such amount standing in the books of account of the assessee would not attract section 68 because the cash deposits becomes self-explanatory and such amounts were received by the assessee from the customers against which the delivery of the vehicle was made to the customers. The question of sustaining the addition of Rs. 6,98,000 would not arise. We, therefore, hold that no addition was required to be made in respect of Rs. 6,98,000, which was found to be the cash receipts from the customers and against which delivery of vehicle was made to them. 16. Thus, the fact of the case on hand is similar to the jurisdictional high court decision cited by the Id. AR of the assessee. The Id. AR of the assessee also relied upon the coordinate Jaipur ITAT decision also on the issue and the revenue not prove the s....