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TMI Blog2018 (7) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is held to be owner of the said cash and in absence of any explained source of said cash in the hand of the assessee, it is held to be unexplained. - Decided against assessee. Addition on cheque sized no name of the drawee was mentioned in the said cheque and the same has not been in encashed by the assessee, the cheque has remained merely a piece of paper without any monetary value . In view of the no monetary value of the said cheque, no addition can be made in the hands of the assessee. Accordingly, we direct the Assessing Officer to delete the said addition - Decided in favour of assessee. - ITA No.4905/Del/2014 - - - Dated:- 3-7-2018 - SH. BHAVNESH SAINI , JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Appellant : Sh. R.K. Malhotra, CA For The Respondent : Sh. Sanjeet Singh, CIT(DR) ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 02/06/2014 passed by the Ld. Commissioner of Income Tax (Appeals)-XXV, New Delhi [in short the Ld. CIT(A) ] for assessment year 2011-12. The assessee filed revised grounds vide letter dated 25/04/2018, which are reproduced as under: 1. Unjustified and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statement of Sh. Vijay Nishal was also recorded and it was found that M/s. Lakshit Jewellers was operated from a rented shop owned by Sh. Vijay Nishal. According to the Assessing Officer, no outsider can purchase property in the state of Jammu and Kashmir and, thus, the explanation of the assessee was against the normal human conduct and probability. (3) that in the said statement, source of cash was explained by him as ₹ 46,50,000.00 out of the cash-in-hand of the Delhi head office of the firm M/s Lakshit Jewellers and ₹ 7,40,000 out of cash-in-hand of the Jammu branch office of the firm M/s Lakshit Jewellers. But the documents supporting the above contention including copy of balance sheet and cash book of the head office and branch office of the firm were provided to the DDIT (Inv.) on 13/05/2010, i.e., after a period of almost one month from his statement. According to the Assessing Officer, the period of one month provided the assessee ample time to manipulate the books of accounts. (4) that in the books of accounts of the firm M/s Lakshit Jewellers Produced before the DDIT, the cash Sales have been raised on 2nd and 3rd April, 2010, i.e., just before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re submitted after a month i.e. on 13/5/2010 to the DIT (Inv.), Ludhiana. The late submission made the Id.AO cast doubt on the genuineness and the reliability of the above documents. ( ii) The appellant s failure to produce the copy of the statements recorded from him by the SSP, Jammu on 6/4/2010 was with a design and upon a system to prevent the incriminating facts from coming to surface. ( iii) The books of account of M/s Lakshit Jewellers, in which the appellant was a partner, reflected abnormal hike in sales on 2nd and 3rd April, 2010 just before the date of seizure of cash of ₹ 53,90,000/-. ( iv) Just before the day of the seizure of cash the appellant was noticed to have purchased gold, and silver ornaments from M/s Mittal Brothers on credit in spite of having ( v) The recording of the travelling expenditure of the appellant on 10/4/2010 in the books of account of his firm was an afterthought only to demonstrate that the appellant was even otherwise scheduled to visit Jammu. ( vi) The books of account of the firm, M/s Lakshit Jewellers, in which the appellant was a partner, revealed sale of ₹ 1.46 crores only for the entire impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 276551.00, 402/02.04.2010/Rs.331343.00,403/03.04.2010/Rs.31231 4.00 and 404/03.04.2010/Rs.350389.00,submitted showing the deposit of Vat 1% of ₹ 12580.00 in these bills. c. Copy of Vat Return for the period 01.04.2010 to 30.06.2010 showing the sale of these bills. d. Copy of tax Audit Report for the Financial Years 2008-09, 2009-10 and 2010-11 duly signed by Chartered Accountants Firm V.Jain Co. and certifying the above said transactions. e. Copy of Purchase Bills of M/S Mittal Bros, certifying the Purchase of above bullion. 3.2 The Ld. counsel further submitted that the assessee is being penalized by double taxation, firstly pay tax on those transaction in the firm, as this cash was generated in firm books through turnover after paying the due tax and when the assessee was utilizing his accumulated capital/income through imprest, he is again being compelled to pay income tax as unexplained income, whereas as per the provisions of the section 10(2A) of the Act, even share of the profit from the firm is tax-free income. 3.3 Regarding the cheque amount of ₹ 2,50,000/-, the Ld. counsel submitted that name of drawee was not mentioned an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty and, therefore, this explanation was not justified. The assessee explained the source of cash as withdrawn from the partnership firm M/s Lakshit Jewellers, but the copy of capital account and balance sheet of the head office and branch office of the said firm were produced after almost one month from the date of the seizure of the cash. According to the Assessing Officer, the assessee took period of one month in producing the documents so that he could manipulate the books of accounts of the said firm. In the books of accounts of the said firm produced, abnormal amount of cash sales have been shown on 2/04/2010 and 3/04/2010 service to generate the cash for explanation of the cash found in the possession of the assessee. The Assessing Officer in the case of the firm has reproduced the comparative figure of purchase and sales for the month of March and April. The Assessing Officer in the case of the said firm has also pointed out, the unusual manner of business affairs. The order of the firm was produced by the Ld. counsel before us. The relevant extract from the said order is reproduced as under: Apart from above while examining the details, books and ITR s filed by M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14633417 1261080 15894497 Details of Monthly Purchase for for A.Y. 2010-11 Month Delhi(A) Jammu(B) Total(A+B) Apr-09 277,044 277,044 May-09 124,642 124,642 Jun-09 583,^85 583,685 Jul-09 469,525 469,525 Aug-09 311,525 311,525 Spp:09 2,623,035 2,623,035 Oct-09 1,219,679 992,504 3,615,539 Nov-09 981,250 981,250 Dec-09 872,578 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale Purchase: April, 2009 April, 2010 SALE 6,76,410/- 18,56,505/- PURCHASE 2,77,044/- 58,98,545/- March, 2010 March, 2011 SALE 44,88,842/- 11,18,807/- PURCHASE 29,76,971/- 6,99,902/- Actually by inflating the sale purchase for the month of March 2010 and April 2010, assessee tried to explain the cash of ₹ 53,90,000/- seized from him on 05-04-2010. It is also interesting to note that the total sale for the entire F.Y. 2009-10 is only ₹ 1.46 Crores, out of which the assessee has been trying to explain the source of cash of ₹ 53 Lacs in April, 2010. It is highly improbable that the entire amount of cash on account of sale of gold ornaments would be kept as cash in hand. Moreover for jewellery business, months of March and April are known to be lean period. Generally, Je ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bill No Description of Goods Weight Amount 401 dt. 02.04.2010 Gold Ornaments 180.140 grms ₹ 2,76,551/- 402 dt. 02.04.2010 Gold Ornaments 215.830 grms ₹ 3,31,343/- 403 dt. 03.04.2010 Silver Ornaments 25.140 Kgs ₹ 3,12,314/- 404 dt. 03.04.2010 Silver Ornaments 28.320 Kgs ₹ 3,50,389/- Only Silver Ornaments/Gold Ornaments and cash have been mentioned on the bills. No further description of ornament pieces such as chain, Kangan, Ring etc. has been mentioned on the bills. This practice is also quite unusual . D) During the A.Y. 2010-11, assessee has shown purchases from two parties namely Shri Jain Jewellers amounting to ₹ 16,50,000/- on 17.03.2010 ₹ 7,20,351/- on 15.03.2010 and from M/s Royal Jewellers on 26.03.2010 am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le/purchase booked by the assessee and assessee has tried to temper with the purchase and sale in order to create the cash and otherwise also. E) Comparison of GROSS NET PROFIT Ratio for last two years and for A.Y. 2010-11 '2011-12 is as under:- Fin. Year Turnover Gross Profit Net Profit GP Ratio NP Ratio 2007-08 5416762 465014 10986 8.58% 0.20% 2008-09 6042599 481408 (-)24676 7.96% - 2009-10 15894498 1471917 216332 9.26% 1.36% 2010-11 22548663 943397 (-)496546 4.18% (-)2.20 From above, it is apparent that since assessee firm has booked cash sales during the month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... until it is shown that there are reasons to believe that the apparent is not the real and the tax authorities are entitled to look at the surrounding circumstances to find out the realities and the matter as to be considered by applying the test of human probabilities. 5.3 In the case of Sumati Dayal Vs CIT (1995) 214 ITR 801 (SC), the assessee shown winning from the horse races. The assessee stated that she started going to the races in 1969 and she won her jackpot on 12/12/1969, i.e., the 1st day on which she went to the races. She also stated that she worked out the combination of the winning horses on the basis of what her husband advised her but she used to add some horses of her own, however she knew nothing about the performance of those horses. She suddenly lost interest in the horseracing in 1972 (i.e. coincidently after race winning become taxable). The Hon ble Supreme Court in the circumstances held that winning of the races was against human probabilities and it would not be unreasonable to infer that the taxpayer had not really participated in any of the races except to extent of purchasing the winning ticket after the event presumably with unaccounted funds. 5.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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