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TMI Blog2023 (6) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... ld PCIT has not stated as to how the findings so recorded by the AO accepting the cash sales and resultant declaration of profits under the PMGKY Scheme are erroneous in so far as prejudicial to the interest of the Revenue. The order of the ld PCIT is accordingly set-aside and that of the AO is sustained. Appeal of the assessee is allowed. - SHRI. AAKASH DEEP JAIN, VP AND SHRI. VIKRAM SINGH YADAV, AM For the Assessee : Shri Swaran Singh, CA For the Revenue : Smt. Sheela Chopra, CIT(DR) ORDER PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. PCIT-1, Kanpur passed under section 263 of the Income Tax Act, 1961 (hereinafter referred to as Act ) pertaining to A.Y. 2017-18. Separately, the assessee has also moved a Stay Petition seeking stay of assessment proceedings initiated by the AO pursuant to the impugned revision order passed under section 263 of the Act. 2. At the outset, it is noted that subsequent to the filing of the appeal before the Tribunal, the assessee moved a writ petition before the Hon ble Allahabad High Court and the Hon ble High Court while disposing off the assessee s writ petition v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kalyan Yojana (PMGKY) Scheme 2016 and paid due taxes thereon. 6. It has been further stated by the Ld. PCIT that from the details of the assessment records, it is noticed that total sales during the period of 39 days i.e. 01/10/2016 to 08/11/2016 comes to Rs. 33,95,55,859/- and total sales in the preceding six months has been shown at Rs. 29,25,42,304/-. In view of the same, it was observed by the Ld. PCIT that the AO has failed to examine the issue of unexplained inflated sales post demonetization and therefore the order passed by the AO was prima facie held erroneous and prejudicial to the interest of the Revenue and an opportunity was given to the assessee to show cause as to why the assessment order passed by the AO dt. 29/12/2019 should not be set aside. 7. In response to the show cause, the assessee filed its submissions which were considered but not found acceptable to the Ld. PCIT and the assessment order passed by the AO was held as erroneous and prejudicial to the interest of the Revenue and same was set aside and restored to the file of the AO with direction to frame the assessment afresh after undertaking necessary inquiry and verification in respect of cash sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uashed. 6. That the Order passed under section 263 of the Income Tax Act, 1961, by the Ld. Pr. Commissioner of Income Tax-1, Kanpur is contrary to the principles of natural justice and equity arid liable to be quashed. 7. That the twin conditions that the impugned assessment is erroneous and prejudicial to the interest of revenue are totally absent in the facts of the present case hence the order under appeal is bad in law and desereves to be quashed. 8. That the Ld. Pr. C.I.T.-1, Kanpur has erred in law and on facts in not pointing out specifically and categorically as to how the assessment order was erroneous as well as prejudicial to the interest of the revenue, therefore the impugned revision order passed under section 263 of the Income Tax Act, 1961 is liable to be quashed. 9. That the Ld. Pr. C.I.T.-1, Kanpur has erred in law and on facts in not considering the 2 replies running over 700 pages, uploaded by the appellant company on 24.03.2022 and 28.03.2022 on the I.T.B.A. portal and again submitting hard copies on 29.03.2022 during hearing and passing a non speaking and bald order in haste, in an arbitrary, therefore, the order under appeal is unsustai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai Vs. M/s Universal Music India Pvt. Ltd. (ITA No. 238/2018 dt. 19/04/2022), decision of Hon ble Andhra Pradesh High Court in case of CIT Vs. G.K Kabra (1995) 211 ITR 336 and the decision of the Coordinate Mumbai Benches in the case of Synergy Entrepreneur Solutions Pvt. Ltd. Vs. DCIT (ITA No. 3076/Mumbai/2010). 12. It was further submitted that during the proceedings under section 131(1A) of the Act, the Ld. D.D.I.T.(INV.)-1, Kanpur enquired in detail about the sales, purchases, sundry creditors, inventory and cash deposit etc. In this regard the details of summons / notices issued by the DDIT(Inv)-1, Kanpur as well as relevant submissions filed by the assessee are as under: S.N Date P.B. No. of Notice P.B. No. of Reply 1. 6.2.2017 Summons to assessee/witness u/s 131(1A) of the Income Tax Act, 1961 dated 06.02.2017 in which the Ld. D.D.I.T.(INV.)-1, Kanpur enquired about: 1 (i) Cash Book for the period from 01.04.2016 to till date of Notice. ii) Month wise Summary of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Furnish copies of last three assessment order(s) passed under section 143(3), if any. 8. Furnish details of all bank accounts held during the year under consideration and furnish copy of statement(s). 17. Furnish the details of Sundry Creditors Reply dated 18.03.2019along with details of Sundry Creditors 465-466 467 19. Furnish comparative details of turnover, gross profit its % for three previous years along with reasons for fall/fluctuation in GP/ GP Rate, including justification for increase/ decrease in expenses debited in trading and P L Account. 33. Provide the copy of Service Tax Return filed with VAT Deptt. If there is any difference in the turnover reported in the ITR and as shown in VAT Return, please explain discrepancy along with supporting evidences. VAT Return for Sales filed 491-591 14. It was further submitted that subsequently, another notice under section 142(1) of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Purchases 474-476 783-827 7. Details of Other Expenses, it is noticed that though sales have been increased during the year under consideration, cost of packing material has decreased from Rs.29,92,605/- to Rs.18,91,609/-, please explain how this has become possible. Reply dated 01.11.2019 Point No.8 475 9. From the perusal of detail of Other Expenses, it is noticed that during the year under consideration Fabrication Charges have increased from Rs.62,18,325/- shown in the immediately preceding year to Rs.1,34,63,005/- though the sales almost remained the same in both the years. Please furnish copy of ledger account in respect of Fabrication charges for the period 01.04.2016 to 31.03.2017. Reply dated 01.11.2019 Ledger A/c of Fabrication Charges 474-476 828-833 11. Produce all the books of account and other relevant document for verification. During the Assessment Proceedings complete Books of Accounts, Stock Register, Bills and Vouchers, cash memo etc. produced f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration as against turnover of the immediately preceding year at Rs.1,03,31,20,315/- and it was found that GP Rate for the year under consideration has been shown at Rs.16.20% as against the G.P. Rate of Rs.16.41% in the immediately preceding year, explain the reason of Low G.P. Reply dated 28.12.2019 Refer Point No. 1 of aforesaid Reply. 1189-1190 2. The assessee was required to prove genuineness of following Sundry Creditors And produce relevant documentary evidences: Reply dated 28.12.2019 along with confirmation of Account of following Sundry Creditors: 1267-1268 1. Mool Chand Jain HUF Rs.12579380/- 1. Mool Chand Jain HUF Prop. of SankalpDiam Exports 1270 2. N.P. Diamond Pvt. Ltd.Rs. 4243240/- 2. N.P. Diamond Pvt. Ltd. 1269 *3. Ginger Realtors Pvt. Ltd. Rs. 4916868/- 3. S.M. Diamonds Pvt. Ltd. 1273 4. Saffron Gems Pvt. Ltd.Rs.20476105/- 4. Saffron Gem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mself to prove as to how the assessment order passed under section 143(3) of the Income Tax Act, 1961 is erroneous as well as prejudicial to the interest of the Revenue. 20. It was further submitted that subsequently, the ld. JCIT, Range-6, Kanpur also issued direction under section 144A of the Act dt. 26/12/2019 in relation to sales and cash deposit and which have been duly taken into consideration by the AO while passing the assessment order and nothing has been stated by the Ld. PCIT as to infirmity in the said directions so passed by the JCIT, Range-6, Kanpur and which has been followed by the AO while passing the assessment order. 21. It was further submitted that the assessee had disclosed profit of Rs. 4.00 Crores under the PMGKY Scheme 2016 and the same has been duly taken into consideration by the ld JCIT, Range-6, Kanpur while issuing directions under section 144A of the Act. It was submitted that while the said declaration under the PMGKY, Scheme 2016 has been accepted by the Department, a fact which is not disputed by the Ld. PCIT, at the same time, the Ld. PCIT has gone ahead and invoked his jurisdiction under Section 263 of the Act. It was submitted that once th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al cash (SBN deposit with banks) 21,91,86,000 2 Estimated profit on cash sales 7,54,87,658 3 G.P. Rate as per books of accounts 16.20% 4 Gross profit as per books of accounts as per (1) above (1 X 3) 3,55,08,132 5 Difference (2-4) Additional profit Rs.3,99,79,526 Or say Rs.4 crore 8. The aforesaid Rs.4 crore was declared by the assessee under PMGKY Scheme 2016 hence no further addition was required on cash sales. During the assessment proceedings the AO in his office note dated 29.12.2019 (copy enclosed) has remarked that the entire sale and purchases were fully verifiable and stock register is also maintained transaction wise and the trading results deserve to be accepted. During the course of assessment proceedings, on examination of books of accounts on test check basis, purchases, sales were found vouched. Hence no adverse inference has been drawn 23. It was accordingly submitted that the impugned revision order on the issue of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of above Sundry Creditors were paid by the assessee and the same is evident from the copy of List of Sundry Creditors filed along with Audited Balance Sheet for the Financial Year ended on 31.03.2018. This Balance Sheet as on 31.03.2018 was filed before the completion of assessment proceedings for the Assessment Year 2017-18 along with return of income for the Assessment Year 2018-19 on 10.09.2018. The details in respect of five Sundry Creditors is reproduced as under:- S.N. Name of the Sundry Creditors for purchase of Goods Balance as on31.03.2018 Balance as on31.03.2017 Copy of Confirmation at P.B. No. 1. M/s. S.M. Diamonds Pvt. Ltd. ₹ 3,22,330.38 49,16,868.38 1273 2. M/s. Sankalp Diam Exports Nil 1,25,79,380.00 1270 3. M/s. Saffron Gems Pvt. Ltd. Nil 2,04,76,105.00 1272 4. M/s. N.P. Diamonds Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law . 30. Reliance was also placed on the Judgment of Hon ble Delhi High Court in the case of Income Tax Officer Vs. D.G. Housing Projects Ltd. [2012] 20 taxmann.com 587 (Delhi), wherein the Hon ble Delhi High Court held as under: 19. In the present case, the findings recorded by the Tribunal are correct as the CIT has not gone into and has not given any reason for observing that the order passed by the Assessing Officer was erroneous. The finding recorded by the CIT is that order passed by the Assessing Officer may be erroneous . The CIT had doubts about the valuation and sale consideration received but the CIT should have examined the said aspect himself and given a finding that the order passed by the Assessing Officer was erroneous. He came to the conclusion and finding that the Assessing Officer had examined the said aspect and accepted the respondent s computation figures but he had reservations. The CIT in the order has recorded that the considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned Commissioner of Income Tax himself has not given any concrete finding as to the merits of the case and has directed the Assessing Officer to make further enquiry. In view of this, we hold that the assumption of jurisdiction under section 263 of the Act by the learned Commissioner of Income Tax is not as per law . 33. Per contra, the Ld. CIT DR relied on the findings of the Ld. PCIT and our reference was drawn to the findings contained at para 7 to 10 of the impugned order which read as under: 7. The date fixed for compliance was 25.03.2022. The assessee filed part reply on 25.03.2022. On the request of the assessee, the case was adjourned to 29.03.2022 on which date more written submissions were filed. The gist of the assessee's submissions are as follows: a. The unilateral comparison of sales from 01.04.2016 to 30.09.2016 and from 01.10.2016 to 08.11.2016 done in the show cause notice by the AO dated 09.12.2019 was not correct and was explained in details by the assessee in its reply dated 17.12.2019. It is common knowledge that around Deepawali festival, sale of gold, silver and diamond jewellery is exponentially higher compared to any other period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 28.12.2019 the assessee was informed about the non-compliance by the remaining five creditors. On the same date the assessee submitted copies of account by the concerned parties. The AO did not press for independent verification nor was further effort made to verify other creditors. The submission of details of assessee's account in the books of creditors cannot be accepted as meeting the yardstick of independent verification of creditors as envisaged in the I T Act, 1961. d. The failure of the Assessing Officer to verify the genuineness of cash sales and to seek independent proof of business transaction from creditors to whom notices were issued leads the undersigned to conclude that the assessment order for A.Y. 2017-18 is erroneous and prejudicial to the interest of revenue as it has resulted in loss of revenue which was legally due to the exchequer. 9. I have gone through the judgements placed by the assessee company. It is noticed that the facts and circumstances of the case of the assessee is different from the cases decided by the above judgements. 10. In the light of the discussion above I am of the considered view that the assessment order passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue. More so, where the principle of natural justice has been ingrained in the statue itself while providing such powers to the ld PCIT where she intends to unsettle a settled position emerging out of tax filings of the assessee which have been examined by the Assessing officer. It is equally a settled position that the powers of the ld PCIT are not limited to the matters contained in the initial show-cause notice, and therefore, during the course of revisionary proceedings, where she come across other matters, she is equally empowered to enquire about the same and pass appropriate orders. All that is required is that before recording any findings where are adversial in nature and which result in unsettling the position which has been accepted in the past, the assessee be put to notice and be allowed a reasonable opportunity of being heard and to put forward its defence/submissions. 37. In the instant case, on perusal of the show-cause notice dated 21/03/2022, we find that the matter relating to sundry creditors has not been raised by the ld PCIT. Further, as regards allowing an opportunity during the course of the revisionary proceedings, there is nothing on record and further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Please refer to replies furnished earlier. From the perusal of month-wise cash-in-hand position for the period F.Y. 2015-16 and F.Y. 2016-17, a peculiar thing has been noticed that cash-in-hand in the month of October, 2016 is abnormally increased at Rs. 15,68,13,615/- whereas in almost all the months of F.Y. 2016-17, cash-in-hand was ranging between Rs.20 lakh to Rs.60 lakh except in March, 2017 in which cash in hand was shown at Rs.4,43,72,372/-. Similar was the position in F.Y. 2015-16 wherein in none of the months cash-in-hand was exceeded Rs.1 crore except in Feb. 2016 wherein cash in hand was shown at Rs. 1,64,27,213/-. For the sake of convenience, month-wise cash-in-hand position for F.Y. 2015-16 and F.Y. 2016-17 is reproduced hereunder:- Further vide notice u/s 142(1) of the Act dated 16.10.2019, the assessee was required to furnish the details of cash sales, payment made in cash, cash deposited in bank, closing cash in hand, etc.. The assessee vide its reply dated 01.11.2019 submitted details as under:- Keeping in view the abnormal increase in sales during the month October 2016 and upto 8th November 2016, copy of ledger accounts of sales made d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te cash-in-hand by fabricating Cash Book and shown the sale proceeds under the head 'Revenue from Operation' and filed VAT returns by including receipt from alleged cash sales so that' unaccounted cash can-be reflected as genuine . ..In view of the discussion made above, you are required to explain such a huge alleged cash sales of Rs.33,95,55,850/- during the period 01.10.2016 to 08.11.2016 (Kanpur + Noida Unit) along with corroborative evidences. Since, as asked vide various notices u/s 142(1), you failed to substantiate such a huge inflated sale dunng:,01.10.2016 to 08.11.2016 by producing cogent documentary evidences as compared to sale shown in other months, you are hereby accorded one more opportunity to prove the genuineness of such an inflated cash sale of Rs.33,95,55,859/-during the period 01.10.2016 to 08.11.2016 Here it is made clear that in case your explanation is not found satisfactory and supported by corroborative cogent documentary evidences, the sales to the extent, working of which is given below shall be considered as bogus cash sates introduced by generating bogus sale invoices to accommodate unaccounted cash and give it a legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as nongenuine/ bogus sales and why the same should not be brought to tax u/s 68 r/w section 115BBE of the Act. Further, the assessee has been asked to provide information where the assessee seeks to avail benefit of any Scheme such as IDS, 2016 or PMGKY. 40. We further note that the assessee in response to the aforesaid show-cause notice filed its submissions dated 17/12/2019 before the AO and the contents thereof read as under: RE: Notice No. ITBA/AST/F/142(1)/2019-20/1021983754(1) dated 09.12.2019 of M/s. Kays Jewels Pvt Ltd. [PAN AABCK3178R1 for the Assessment Year 2017-18 - Explanation regarding. Kindly refer to your Notice issued under section 142(1) of the Income Tax Act, 1961, along with Annexure dated 09.12.2019 for the Assessment Year 2017-18, requiring the assessee to furnish the details and information. In this regard your humble assessee wishes to submit point-wise reply as under: l)It is significant to point out that Domestic sales are under 4 categories, which have different characteristics: i)Cash Sales (without name address) ii)Sales, partly in cash and partly through cheque/credit card/on credit. iii)Cash Sales with ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r silver items on the first floor of the Show Room to Gold Jewellery petty items sale counters. iii) The average sales during 10 days, before and after Deepawali is different from the average sale of remaining days in any year, therefore, Deepawali festival sales are not comparable to other days and normal sales. 4) After close of the period for deposit of SBN in Bank post demonetization on 08.11,2016, the Unit No.l, of D.I. Wing at Kanpur started making enquiry(ies) relating to sales, purchase, stock register etc. for the period from 01.04.2016 to 06.02.2017. In continuation to the said proceedings the assessee submitted detailed reply vide its letter dated 28.02.2017, in the office of the DDI (INV)-l at Kanpur, on 28.02.2017, hence there cannot be any presumption relating to any type of adjustment in sales as alleged on page No. 7 of Annexure to the subject notice: (Quote) ....Here, I would like to bring on record that due date for filing of VAT return for the month October, 2016 was 20 ' November, 2016. Thus, it appears that to legalize unaccounted cash lying with you in Specified Bank Notes, prior to demonetization, you have issued Cash Memos during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 43,19,431/- 2015-16 20 02.11.2015 to 22.11.2015 57,29,118/- 2016-17 20 21.10.2016 to 08.11.2016 1,12,75,477/- 2017-18 20 10.10.2017 to 30.10.2017 67,52,475/- 10) ln the last para on page 7 of Annexure to the subject notice your goodself has mentioned as follows: (Quote) . Total cash sale during 01.10.2016 to 08.11.2016 Rs. 33,95,55,859/- Less: Regular sales of 39 days (from 01.10.2016 to 08.11.2016) on the basis of average per day sale of preceding six months. Total sale in preceding six month Rs,. 29,25,42,304/- / 183 days = Rs. 15,98,591 per day x 39 Rs. 6,23,45,081/- Add: Increased sale @ 15% as compared to sale shown in the month of September 2016, on account of Diwali festival fall in October 2016 Rs. Rs. 82,25,407/- 7,05,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of Account 3,55,08,132.00 5. Difference (2-4) (Additional profits) Declared 3,99,79,526.00 or say Rs.4,00,00,000/- The assessee company disclosed the super profits, rounded off to Rs. 4,00,00,000/- on the aforesaid cash sales vide its declaration filed on prescribed Form No, I on 31.03.2012 before the Pr. C.I.T.-I1, Kanpur. The amount of additional profits worked out as above, was mentioned in column No. 7(a) of Form No. 1 (prescribed Form for declaration). The details of payment of tax (Rs. 1,20,00,000/-) + Surcharge (Rs.39,60,000/-) + Penalty (Rs. 40,00,000) aggregating to Rs. 1,99.60,000/- was made on 24.03.2017. Further, a sum of Rs. 1,00,00,000/- was deposited in Pradhan Mantri Garib Kalyan Yojana, 2016 on 30.03.2017. The details of which are mentioned on page no. 2 of aforesaid Form No. 1. A complete set of declaration, as above, is attached for your ready reference and record The additional profits declared amounting to Rs.4,00,00,000/- had taken care of any possibility of extra profits. iv)the working of alleged high abnormal inflated cash sales (Rs.22,54,09,741/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade and it will create high pitch, illegal and illogical demand. The main issue which are under consideration are a) Abnormal increase in cash in hand of Rs. 15,68,13,615/- in the month of October. 2016. b) Abnormal increase in cash sales of Rs. 25,58,81,602/- in the month of October,2016. c) Abnormal increase in cash sales of 8 days (01.11.2016 to 08.11.2016) to Rs. 8,36,74,257/- d) The cash sales have bills ranging between 1,70,000 to 1.90,000 and on the other hand the cheque sales are in normal range, e) Disclosure of Profits on the cash sales and corresponding cash deposit during demonetization period under PMGKY Scheme 2016. Alongwith the application for directions the assessee submitted the reply of show cause notice filed before the assessing officer. On perusal of same, the main contention of the assessee area) The assessee is a jeweller and is engaged in manufacturing and trading of gold, silver, diamond and ornaments etc. b) Out of total sales of Rs. 38,52,24,513/-, sales of Rs. 6,21,13,161/- is fully verifiable. c) The A.O. has compared the normal sales of other months with the Deepawali season sales which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready scrutinized by the department and no adverse view is found as per records available. 3. The assessee had submitted the VAT order for the year in which the total sales are reported along with the stock position and turnover of the assessee. It will not be possible to accept the part sales of the assessee during a period and reject the other part especially when they have the same nature and source. 4. The assessee's stock was not found short by the VAT authorities during the survey conducted on 07.02.2017 and so issuing fictitious bills to enhance cash in hand is ruled out. There is corresponding purchases and reduction of stocks which are not challenged by the AO as per the show cause notice nor any fault was found with the books results of the assessee. 5. As per the Hon'ble High Court Order in the case of Ms N. K, Industries Ltd. of 2016 and Agson Global Pvt. Ltd which is relied upon by the assessee it is held that the entire sales which are treated as bogus cannot be added u/s 68 of the I. T. Act and the addition can be made u/s 68 to the extent of gross profit on such bogus sales. There is prima facie no proof that sales to the tune of Rs. 22,54, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, notice u/s. 143(2) of the I.T. Act, 1961 dated 24.09.2018 was Issued and duly served upon the assessee within time and manner prescribed under the Act Further notices u/s 142(1) of the Act dated 11.04.2019, 24 11.2019 and 04.12.2019 along with detailed I specific questionnaires were issued to the assessee. In response to this notice, the assessee furnished relevant details/explanations, etc. from time to time, which have been looked Into. The assesses Company is private limited company, was engaged in the business of manufacturing, trading, sales arid export sales in gold and diamond jewellery. From the perusal of Audit Report In Form No.3CD, it has been noticed that during the year under consideration, revenue from operation has been shown at Rs. 1,17,21,03,124/- as against the preceding years revenue from operation at Rs.1,03,31,20,315/-. In response to the notices issued u/s 142(1) from lime to lime, the assessee furnished reply/explanation along with relevant details/documents, etc, which have been looked into During the course of assessment proceedings, it was noticed that the assessee had deposited a sum of Rs.24,75,80,000/- in cash in its bank account(s) durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed to make addition of Rs 22,54,09,741/- as non-genuine/bogus sales and the AO was asked to submit his report and in his report to the ld PCIT Kanpur dated 5/10/21, the AO has reiterated the fact that the presumption of 15% increase in sales during the Deepawali season as considered by the audit party is without any basis given that scrutiny assessment has been completed for the earlier two years and no adverse view has been taken, that there were specific directions issued by the Additional CIT u/s 144A which were followed, that the assessee had offered Rs 4 crores profit under the PMGKY Scheme 2016 and the fact that during the course of assessment proceedings, the books of accounts were examined, the entire sales and purchases were fully verifiable and stock register is duly maintained and trading results deserve to be accepted and the audit objections therefore need not be accepted. Apparently, the Ld. PCIT has not agreed with the AO report and has gone ahead and invoked the jurisdiction u/s 263 by issuing the show cause dt. 21/03/2022. Given the nature and extent of enquiry conducted by the AO, the direction issued by Addl. CIT and the fact that the assessee has declared inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of ZCB Bonds (PMGKDS) on 31.03.2021 for Rs. 1,00,00,000/- (Annexure-7). Your humble appellant trusts that the above details will meet the direction given by the Hon ble Bench. 48. Further on perusal of the PMGKY Scheme 2016 as brought in by the Taxation Law Second Amendment Act, 2016, the relevant provision read as under: 199A. (1) This Scheme may be called the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016. (2) It shall come into force on such date as the Central Government may, by notification, in the Official Gazette, appoint. 199B. In this Scheme, unless the context otherwise requires, {a) declarant means a person making the declaration under sub-section ( I ) of section 199C; (b) Income-tax Act means the Income-tax Act, 1961; (c) Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 (hereinafter in this Chapter referred to as the Deposit Scheme ) means a scheme notified by the Central Government in consultation with the Reserve Bank of India in the Official Gazette; and (d) all other words and expressions used in this Scheme but not defined and defined in the Income-tax Act shall have the mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than twenty-five per cent, of the undisclosed income in the Pradhan Mantri Garib Kalyan Deposit Scheme. 2016. (2) The deposit shall bear no interest and the amount deposited shall be allowed to be withdrawn after four years from the date of deposit and shall also fulfil such other conditions as may be specified in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. 199G A declaration under sub-section (1) of section 199C shall be made by a person competent to verify the return of income under section 140 of the Income-tax Act, to the Principal Commissioner or the Commissioner notified in the Official Gazette for this purpose and shall be in such form and verified in such manner, as may be prescribed. 199H. (1) The tax and surcharge payable under section 199D and penalty payable under section 199E in respect of the undisclosed income, shall be paid before filing of declaration under sub-section (1) of section 199C. (2) The amount referred to in sub-section ( 1 ) of section 199F shall be deposited before the filing of declaration under sub-section ( 1 ) of section 199C. (3) The declaration under sub-section (1) of section 199C shall be accompanied by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year. 51. Further, during the course of hearing, the ld AR was directed to file reconciliation between different figures as appearing in the show-cause notices issued by the AO and then by the ld PCIT and the declaration under the PMGKY Scheme and in response, it was submitted as under: 3. Explanation on following figures :- (a) Rs 24,75, 00, 000/- is mentioned in para 2 of the Notice for hearing under section 263dated 21/03/2022 (PB No. 1213-1214). The relevant para of said notice is reproduced as under :- (Quote) 2. In course of review of assessment record for AY 2017-18, it has been observed that during demonetization period the assessee company had deposited a sum of Rs 24, 75,00,000/- and declared source of the same as receipts from sale of goods in cash before demonetization... (Unquote) There is typographical error, and the correct figure is 24,75,80000/-. The figure represents the Cash Deposited by the assessee in bank during the demonetization period. During the assessment proceedings vide notice issued under section 142(1) of the Income Tax Act, 1961, dated 24/11/2019 (PB-1080 tol081) the Ld AO enquired about the cash of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slips at PB 1110 1134 and Bank statement at PB-1135 to1162 TOTAL 21,91,86,000.00 2,83,94,000.00 Total of Rs 21,91,86,000.00 + 2,83,94,000.00 = 24,75,80,000.00) (b) Figure of Rs 21,91,86000.00 represents amount of Cash Deposited in SBNs during demonetization period as explained in detail above in point 3(a) above. This amount was also referred/mentioned at Status Report on Audit Objection for AY 2017-18 submitted by Ld AO to Pr.CIT-I, Kanpur at Point no.7 .(refer PB 1389 to 1393). (c) Figure of 22,54,09,741.00 is calculated on estimated basis by Ld AO in notice issued under section 142(1) of the Income Tax Act, 1961 dated 09/12/2019 (refer paper book page no. 1170 to 1177) at page number 1176 (last para) to page 1177. The appellant/ assessee comprehensively replied to aforesaid notice under section 142(1) dated 09/12/2019 vide reply dated 17/12/2019 (refer Paper book page number 1178 to 1184) in said reply, the calculation of Ld AO was reproduced by assessee (refer PB No. 1180). The said estimated figure of 22,54,09,741.00 also finds mention in following documents :- (i) Direction u/s 144A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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