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2024 (9) TMI 1448 - AT - Income TaxApplication of provision of sec. 69A - cash deposit in the bank during the demonetization period - additions are out of regular books as maintained - HELD THAT - The provisions of section 69A provides to make the addition if the assessee is found to be the owner of any money bullion jewellery and other valuable articles and such money bullion jewellery or valuable is not recorded in the books of the account of the assessee. When the sale has been duly recorded and supported by the books of account produced by the assessee the addition cannot be made u/s. 69A. But since the books of account of the assessee has already been rejected and the profit is estimated @ 10 % on the money so deposited into the bank account where we note that since this addition being trading addition made by the AO he has not given the credit of the profit already reflected in the books of account and therefore while doing so the ld. AO has not reduced that profit which we considered is required to be given credit to the assessee while making the addition therefore we direct the ld. AO to reduce the profit already declared by the assessee @ 5.74 % and balance amount 4.26 % can be considered as trading addition in the hands of the assessee. Application of provision of sec. 145(3) without rejecting method of accounting and stock valuation - HELD THAT - We note that the assessee is not challenging the rejection of the books based on the detailed observation made by the ld. AO but contend that the method of accounting as well as the stock valuation was not rejected. We note that once the books of account is rejected based on detailed 6 reasons by the ld. AO it may not be a particular part of the record but once the same is rejected on various reasons we do not find any infirmity in the finding recorded by the ld. CIT(A) and that of the ld. AO. Therefore ground no 1 raised by the assessee stands dismissed.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Application of Section 145(3) without rejecting the method of accounting and stock valuation. 3. Application of Section 69A for cash deposit in the bank during the demonetization period. Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The assessee filed an appeal with a delay of 124 days, supported by an affidavit stating the reasons for the delay. The Revenue objected, arguing that the notice was sufficiently served. The Tribunal, after hearing both parties, found that the delay was due to a different email ID being used, which resulted in the delay. The Tribunal condoned the delay, citing the Supreme Court case of Collector, Land Acquisition vs. Mst. Katiji and Others, which held that refusing to condone delay could result in a meritorious matter being dismissed at the threshold. 2. Application of Section 145(3) Without Rejecting Method of Accounting and Stock Valuation: The assessee argued that the CIT(A) confirmed the application of Section 145(3) without rejecting the method of accounting and stock valuation. The AO had rejected the books of accounts under Section 145(3) due to discrepancies such as: - Significant cash deposits during the demonetization period. - Cash sales without proper documentation. - Inconsistent opening and closing stock figures. The CIT(A) upheld the AO's decision, noting that the AO had identified specific defects in the books of accounts and had followed the due process. The Tribunal found no infirmity in the AO's and CIT(A)'s findings, stating that the AO had valid grounds to reject the books of accounts under Section 145(3). Therefore, this ground was dismissed. 3. Application of Section 69A for Cash Deposit in Bank During Demonetization Period: The assessee contended that the cash deposits were out of regular books and should not be treated as unexplained money under Section 69A. The AO had rejected the books of accounts and estimated 10% of the cash deposited during the demonetization period as unexplained money under Section 69A, adding Rs. 3,65,000 to the assessee's income. The Tribunal noted that since the books of accounts were rejected, the AO should have considered the profit already declared by the assessee. The Tribunal directed the AO to reduce the profit already declared by the assessee (5.74%) from the estimated profit (10%), and consider the balance (4.26%) as trading addition. Thus, this ground was partly allowed. Conclusion: - The delay in filing the appeal was condoned. - The application of Section 145(3) was upheld. - The addition under Section 69A was partly allowed, with directions to adjust for the already declared profit. Order pronounced in the open court on 02/09/2024.
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