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TMI Blog2022 (7) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... ation the Surrender Letter dated 22.03.2017 filed by the assessee. It is a matter of fact that the surrender has been honoured and has not been retracted by the assessee. On a careful reading of the specific reasons for surrendering the income wherein very clearly the assessee states that; it is submitted that certain discrepancies were observed related to cash deposit/income etc. However, is, order to by peace of mind and to avoid any litigation and is order to settle the group cases of the persons covered - The wordings are very clear and categoric. We have taken into consideration the PMGKY Scheme 2016 and have also taken into consideration two Circulars which clarify those i.e. Circular No. 2/2017 and 9/2017. We have also taken into consideration the specific questions put to Shri Sachin Aggarwal, Partner. We have taken into consideration the Circular No. 2/2017 and 9/2017 and Paper Book page 59. On a careful consideration of the facts and evidences on record, we find that the addition cannot be sustained. Accordingly, on a consideration of facts on record, the specific Scheme, Surrender letter and case law relied upon, we are of the view that the addition cannot be susta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd agreed to make a disclosure of Rs. 3 Crores under PM Garib Kalyan Yojana and accordingly, has paid tax of Rs. 1.50 Crores for this disclosure and had deposited an amount of Rs. 75,000/- to the Government account as per the Scheme. It was submitted that the AO, however, in the course of the assessment proceedings, required the assessee to explain the excess of 24.104 Kg of silver which already stood noticed in the Survey. The explanation of the assessee that it was covered under the declaration of Rs. 3 Crores was discarded. The AO treated it as an addition maintainable u/s 69A. The allegation of the AO that Section 69A was attracted was also assailed. It was submitted that it had been argued that the said provision was not attracted as the source of the same was from the very same business of the assessee and was from the profit from the unaccounted sale, if any which stood disclosed in the disclosure by the assessee. Carrying the Bench through para 4, para 6 to para 6.3 of the assessment order, attention was invited to the submissions made before the CIT(A). The submissions, it was submitted, have been extracted in para 3 to 3.8 at page 5 6 of the impugned order. It was submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts. 2.3. Attention was also invited to the copy of the PMGKY Deposit Scheme, 2016. Copy of the said scheme is available at pages 30 to 35. Specific attention was invited to Section 199C(1) in Chapter IXA, Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 introduced vide The Taxation Law (Second) Amendment Act, 2016 which reads as under: 199C. (1) Subject to the provisions of this Scheme, any person may make, on or after the date of commencement of this Scheme but on or before a date to be notified by the Central Government in the Official Gazette, a declaration in respect of any income, in the form of cash or deposit in an account maintained by the person with a specified entity, chargeable to tax under the Income-tax Act for any assessment year commencing on or before the 1st day of April, 2017. 2.4. Attention was also invited to the copy of the statement of Shri Sachin Aggarwal, Partner of the assessee company recorded on 22.03.2017 during the survey available at pages 36 to 44. English translation of the said submissions, it was submitted, is available at pages 45 to 48. Attention was invited to specific questions 8 and 9 at page 47. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 addressing the background addressed in para 3 by the CBDT to clarify the doubts was heavily relied upon. For the sake of completeness, it is reproduced hereunder: 2. Subsequent to issuance of the said circular, representations have been received from various stakeholders seeking clarification as to whether the deposits made in bank account or cash in hand which are eligible for being declared under the Scheme should exist on the date of filing of declaration under die Scheme. 3. In this context, it is clarified that where the undisclosed income is represented in the form of deposits in an account maintained with a specified entity, it is not necessary that the said deposits should exist on the date of making payments under the Scheme or furnishing a declaration under the Scheme. However, where the undisclosed income is represented in the form of cash, it is clarified that such cash should exist on die date of making payment of tax, surcharge and penalty under the Scheme or on die date of making deposit under the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016, whichever is earlier. 2.6. Attention was also invited to Paper Book page 49 to 59 to show the entries pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Specific attention was invited by him to the assessment order para 4 which addressed the background of the deposit. It was stated that it was due to cash deposited in the bank during the specific demonetization period. Para 6.1 and 6.2 referring to the present addition made on account of excess in silver stock, it was submitted, elaborates this. Accordingly, heavy reliance was also placed upon the impugned order in support of the addition. The case law relied upon by the assessee, it was submitted, is not applicable. The issue, it was submitted, is very fact specific. The decision of the Chandigarh Bench in the case of Famina Knit Fabs (supra) it was submitted, has been considered in M/s. Arora Alloys (supra) which also has been relied upon by the ld. AR. The decisions are distinguishable as therein the sources stood explained. However, in the facts of the present case, those decisions have no role to play. Similarly in the case of M/s. Marshal Machines (supra), it was submitted that the source stood explained as it was coming from the business. Similar was the position in the case of Gaurish Steels P. Ltd. V ACIT 2015(11) TMI 631 at pages 75 to 81 of the Paper Book wherein at p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ausible reason. It was argued that no other source exists even as per the Department. The source is business. In the circumstances, in the facts as they are, it was his prayer that the addition may kindly be deleted. 5. We have heard the rival submissions and perused the material available on record. In the facts of the present case, search seizure operation as well as survey operation was carried on at the business and residential premises of the assessee u/s 132(1) and 133A on 21.03.2017. Admittedly in the course of the Survey, certain shortcomings were noticed and the assessee was also required to explain the deposits made in specific bank account with HDFC during the demonetization period of 09.11.2016 to 30.12.2016. For ready reference, para 4 of the assessment order heavily relied upon by the ld. Sr. DR and referred to by the ld. AR is extracted hereunder for completeness: 3. The assessee firm has deposited cash amount of Rs. 7,61,70,000/- in its bank account No. 50200014437341 with HDFC Bank during the demonetization period of 09.11.2016 to 30.12.2016. During the course of survey as well as during assessment proceedings, the assessee firm was required to explain the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that an it has offered an amount of Rs. 3,00,00,000/- under the PMGKY scheme and due taxes on same have been paid in order to cover such discrepancies. 6.1 The reply of the assessee has been considered and the same is not found convincing. The declaration of Rs. 3,00,00,000/- made by the assessee firm under PMGKY to cover up the discrepancies found in the books of accounts of assessee firm during demonetization period of 09.11.2016 to 30.12.2016 i.e. the discrepancies observed in the cash sales shown by the assessee firm and huge amount of cash deposit of Rs. 7,61,70,000/- during demonetization period. Such declaration does not provide a blanket umbrella to the assessee firm against each and every discrepancy find out during survey operation during and after the demonetization period. Hence, plea of the assessee that the discrepancies found during the survey proceedings are also covered under PMGKY scheme is hereby rejected. 6.2 Further, in its response, the assessee has also submitted that regarding additions u/s 69A which deals with unexplained money, the silver found during survey was the trading item of the assessee firm, who is a jeweller. Being stock of the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny other discrepancies which is not the correct position of law. As per section 199C of Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojna, 2016 Declaration of undisclosed Income and assessee is eligible to declare income for AY 2017-18 and earlier assessment year. As such, the declaration under the scheme was not confined to the deposit under demonetization as observed by learned AO. 5.4. The decision of the AO for invoking Section 69A of the Act was assailed on the following reasons on facts: 3.5 Further, regarding additions u/s 69A which deals with unexplained moneys, it is submitted that the silver found during survey was the trading item of the assessee who is a jeweler. As such, being stock of business of assessee, any difference on account of same forms part of business income of assessee and not as unexplained income. 5.5. It is also seen that before the CIT(A) also, the decisions of the ITAT in the case of Famina Knit Fabs (supra), Arora Alloys Ltd. (supra) and Marshal Machines Pvt. Ltd. (supra) were relied upon. On a consideration of the same on going through the PMGKY Scheme alongwith the Circular No. 2 and 9 of 2017 which clarify the Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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