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TMI Blog2022 (8) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... t or accommodation made in the accounted data of the assessee. All these facts and explanations were placed before the lower authorities, copies of which are placed. The guess work adopted by AO in arriving at probable sales value and the judicial precedents relied upon, we find no reason to interfere with the factual findings given by the CIT(A) in deleting the addition made by the ld. AO. Accordingly, the appeal of the revenue stands dismissed. - ITA No.10/Kol/2021 - - - Dated:- 27-6-2022 - SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER Appellant by: Shri Subhas Agarwal, Advocate Respondent by: Smt. Ranu Biswas, Addl. CIT ORDER PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal by the Revenue is directed against the order of ld. CIT(A)-15, Kolkata Appeal No. CIT(A)-15/10317/19-20 dated 18.09.2020 for A.Y. 2017-18 passed against the assessment order u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) by ITO, Ward-50(3), Kolkata, dated 30.12.2019. 2. The sole ground of appeal of revenue is reproduced as under: 1. Whether the Learned Commissioner of Income-Tax (Appeal)-15, Kolkata wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available from 8.30 PM to 12 midnight. Ld. AO considered that a cash counter can handle a customer for at least five minutes to ten minutes considering the time required for preparation of bills, counting and checking of currency etc. On these considerations, Ld. AO arrived at a figure of maximum 42 customers which a cash counter could have handled till midnight by estimating minimum five minutes per customer. Further, ld. AO assumed a fixed bill value per customer of Rs.1.5 lacs since all the invoices raised during this time by the assessee were below Rs. 2 lacs. Ld. AO arrived at the implied effect of these two numbers i.e. the 42 customers in the time window available and Rs. 1.5 Lacs of sale value per customer during this time window that a cash counter could have generated maximum sale of Rs. 63 lacs and since there were three cash counters, the total sale value of jewellery from the time window from 8.30PM to 12 midnight on 08.11.2016 could have been of Rs.1,89,00,000/- [i.e. Rs.63,00,000 x 3 (cash counters)]. With this hypothesis, estimation and calculation, Ld. AO arrived at the maximum sale of Rs.1,92,66,509/- (Rs.1.89 Cr. + Rs.3,66,509/-) and compared this with the actua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd noted that business cannot be run on such hypothetical arithmetical proposition which have been arrived at, out of own imagination of the Ld. AO. Several judicial precedents were relied upon to buttress the contentions of the assessee and the findings given by the Ld. CIT(A) after which the addition of Rs.1,95,03,291/- made by the ld. AO was deleted by the Ld. CIT(A). Observations and findings of Ld. CIT(A) captured in para 5 are reproduced hereunder for ease of ready reference:- 5. Observations Findings The appellant-firm filed his return of income for the A.Y. 2017-18 on 14.09.2017 declaring total income of Rs. 19,17,667/-. The case was selected for scrutiny through CASS and notice u/s. 143(2) of the I T Act, 1961 was issued on 09.08.2018. 5.1 Ground Nos. 1 is general in nature. Hence, no adjudication is required. 5.2.1 In regard to Ground No. 2 and 4 , it is observed that the appellant firm is engaged in the business of manufacturing and retail trading of jewellery items. During assessment proceedings. the A.O. found that the assessee had deposited Rs. 3,87,69,800/- in the bank accounts during the 1 demonetization period i.e., from 08.11.2016 to 30.12.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions filed, disputed the basis of such estimation and has submitted that the maximum time taken per customer by the cash counter was not more than two minutes. In my view, the appellant's contention cannot be brushed aside, particularly when seen in the light of his further assertion that the appellant was using mechanised devices like computers and cash counting machines, which fact is also evident from the schedule of fixed assets annexed to the final accounts. The Ld. A/R has further bolstered his arguments by highlighting the fact that there are five working partners in the firm (this fact is also apparent from the final accounts available on record), who all manned and supervised the show rooms (two in number) apart from assisting the people at the cash counter. I, therefore, agree with the assertion of the Ld. A/R that taking the time consumption of two minutes per case in place of A.O.'s assumption of five minutes per customer, the assessee's reporting of sales during the said period of four hours cannot be said to be unreasonable. It is further observed that businesses cannot he run on mathematical precision. It may so happen that a particular transaction can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served that the appellant has reported a G.P. of 15.07% on sales. The appellant has placed reliance upon various court decisions for the proposition that no adverse inference can be drawn in case of unverifiable sales if proper books are maintained. I find the decisions referred to in the submissions viz., Kanpur Steel Co. Ltd. v. Commissioner of Income-tax [1957] 32 ITR 56 (ALL.), CIT v. Kailash Jewellery Mouse. ITA No. 613/2010 (Delhi High Court) decision dtd. 09.04.2010 and CIT v. Vishal Exports Overseas Ltd., Tax Appeal No. 2471 of 2009 (Gujarat High Court), decision dtd. 03.07.2012 applies on all fours to the appellant's case. 5.2.9 The A.O has observed that if the server is connected through internet and bills are raised using internet, there should have been time and date of generation of bills. But, in the bills enclosed by the A/R, no such timing was printed. So There is every possibility to manipulate the bill and accounts thereon. In my view, there cannot be a mandatory rule/practice that wherever a server is connected to internet and bills are raised, there should be time and date of generation of bills printed on the bills. 5.2.10 It is observed that the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to arrive at estimated probable sales value that could have been made on 08.11.2016 between the time window from 8.30PM to 12 midnight and the entire day. As discussed above, Ld. AO has made certain assumptions on the logistics and the conduct of business transactions/operations to arrive at this probable sale value estimation. We find that the assumptions so made by the Ld. AO are devoid of any scientific basis and third party comparable which gives credibility to such an estimation. All these assumptions and calculations carry AO s own figment of imagination. We note that the assessee has countered all the assertions and assumptions made by the AO by submitting the details from its audited books of accounts and stock registers by providing all the relevant details from time to time. We note that the assessee had given all the explanations which are reasonable and there is no other material except for the estimation of probable sales value done by the Ld. AO for the purpose of treating the deemed income as unexplained money in the hands of the assessee. We also note that assessee has duly recorded in its books of accounts all the sales made on the date of announcement of demonet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence that the profit in a single transaction or in a chain of transactions could exceed the amounts, involved in the high denomination noted, - this also was a pure conjecture or surmise on the part of the Income-tax Officer. It is, therefore, clear that the Tribunal in arriving at the conclusion it did in the present case indulged in suspicion, conjectures and surmises and acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, or the finding was, in other words, perverse and this court is entitled to interfere. 7.3 Ld. Counsel pointed out that assessee had all the capabilities, infrastructure, manpower, process and procedures to handle and deal with high volume of customers during small time window available to it. For comparability of the circumstances which existed on the day of demonetization announcement, he pointed to the occasion of Dhanteras which is a festival wherein similar kind of high traffic volume of customers happens for the purchase and sale of gold/bullion/jewellery, it being an auspicious ..... 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