9911796707
TMI Blog2023 (10) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... sel/Petrol Price and on which there is no adverse finding of the ld. AO. Therefore, since the GP is derived from the purchase and sale price difference and are frequent fluctuating, we see no reasons to reject the books merely on this observation. Not only that the bench also noted that the accounts of the assessee are audited and before estimating the GP the book result declared by the assessee is required to be found but the fault mentioned in the show cause notice is not a defect to be sufficient to invoke the provision of section 145(3) of the Act based on the set of facts made available on records. We find from the records that the assessee was given the specific shows cause notice for rejection of the books and even though the order is passed u/s. 143(3) of the Act and not u/s. 144 of the Act. The assessee has already advanced the reasons for low profit and has submitted the details called, ld. AO only requires the books of account which the assessee submitted that not requirement when the assessment is going on in ITBA and the books are audited. The assessment of the assessee completed u/s. 143(3) of the Act. No specific information was called for and ld. AO only insisted up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) of the Income tax Act, 1961 (in short 'the Act') dated 09.12.2019. 2. The assessee has marched this appeal on the following grounds:- "1. That action of Ld AO in doing addition while passing the assessment order is bad in law, perverse and against the facts and law. Further action of Ld CIT(Appeal), NFAC in so far as confirming addition as made by Ld AO is absolutely illegal and unjustified in the facts & circumstances of the case. 2. That the Ld AO has grossly erred in doing addition of Rs. 8690500/- of cash deposited in his bank account during demonetization period whereas same is arising out of sale of diesel/ petrol and thus Ld AO has grossly erred in appreciating facts of the case by wrongly treating the same as unexplained cash and which may please be please be deleted. 3. That AO has erred in doing trading addition @ 0.90% based on the comparative Gross Profit of preceding year which may please be directed to be deleted. 4. That Ld AO has grossly erred in determination of tax @ 60% by applying the provisions of section 115BBE for the AY 2017-18 whereas substantial provision of section 115BBE has come into statute book w.e.f. 1.4.2017 i.e. after getting a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss profit declared by the assessee is decline therefore, the necessary explanation called for from the assessee and asked to produce the same. In absence of the books of account being not presented, trading result declared by the assessee in the opinion of the ld. AO cannot be accepted and therefore, the assessee was given the show cause notice on 01.12.2019 for the case of the assessee for hearing on 04.12.2019. As the assessee did not complied with the notices so issued and did not produced the books of accounts, bills/vouchers for verification and thus the trading result submitted by the assessee not accepted and the books of accounts rejected invoking the provisions of section 145(3) of the Act. Considering the interest of the justice and the past trend ld. AO applied Gross profit @ 2.8 % as shown in A. Y. 2016-17. Based on this the addition on account of the lower G.P. to the extent of Rs. 4,60,052/- was made in the total income of the assessee. 3.3 Further, as per information available on record, the assessee has deposited cash of Rs. 74,35,500/- in the bank account no. 3420787121 maintained with the State Bank of India and Rs. 12,55,000/- in the account no. 3241071566 maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 1 of the assessment order. The AO also required the assessee to produce complete books of accounts along with bills and vouchers which were not produced. 6.2.1 The AO under para 3 of his order observed that the GP for the AY 2017-18 @ 2.3 % was less in comparison to preceding year GO of 2.8 %, thereby the assessee was required once again to produce the complete books of account but assessee did not complied. In the absence of books of account for verification the AO rejected the trading result submitted by the assessee by invoking the provisions of section 145(3) of the Act and applied a GP @ 2.8% as shown by the assessee for the preceding AY 2016-17. Further, in the absence of any explanation in respect of source cash deposit in bank accounts, the AO added the cash credit of Rs. 80,90,500/- u/s 68 of the Act Aggrieved by the order the assessee has filed this appeal. 6.3 Ground no.1 of the appeal is on the issue of addition of Rs. 86,90,500/-. Since the only issue involved is of addition made u/s 68 on account of unexplained money found credited in the bank account of appellant. It is imperative to look upon the ratios laid down by the various Hon'ble Courts in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of transactions." 6.8 While examining the issue of genuineness of the transactions entered into by the assessee, it is also important to keep in mind Hon'ble Supreme Court's observation, in the case of CIT v. Durga Prasad More [(1971) 82 ITR 540 (SC)]. to the effect that "Science has not yet invented any instrument to test the reliability of the evidence placed before a court or tribunal. Therefore, the courts and Tribunals have to judge the evidence before them by applying the test of human probabilities". 6.9 Similarly, in a later decision in the case of Sumati Dayal v. CIT [(1995) 214 ITR 801 (SC)]. Hon'ble Supreme Court rejected the theory that it is for alleger to prove that the apparent and not real, and observed that, This, in our opinion, is a superficial approach to the problem. The matter has to be considered in the light of human probabilities............Similarly the observation..........that if it is alleged that these tickets were obtained through fraudulent means, it is upon the alleger to prove that it is so, ignores the reality. The transaction about purchase of winning ticket takes place in secret and direct evidence about such purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y previous year. Thus, the very sine qua non for making of an addition under Section 68 pre supposes a credit of the aforesaid amount in the books / bank account held for the previous year. This is the settled position of law that a statutory provision has to be strictly construed and interpreted as per its plain literal interpretation, and no word howsoever meaningful it may so appear can be allowed to be read into a statutory provision in the garb of giving effect to the underlying intent of the legislature. 6.12 Having considered entire facts of the case, and the case laws cited above, it is apparent that the appellant has completely failed to offer any explanation either before the AC during assessment proceedings or before me during appellate proceedings, despite affording sufficient number of opportunities and hence, I find no infirmity in the order of AO. Accordingly, the addition made of Rs. 86,90,500/- is confirmed. As a result, appeal is dismissed. 7. Ground no. 2 is in respect of rejection of books of accounts. As can be seen the AO has rejected the books of accounts after observing a fall in the GP results of assessee for the instant year in comparison to last year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexplained credit u/s.68 of IT Act whereas there is no iota of evidence have been brought on record by Ld AO to treat the same as unexplained and further provision of section 115BBE is also invoked and which is absolutely illegal and unjustified in the facts & circumstances of the case. That summary position of cash deposit during demonetization period is given as below:- PARTICULARS Amount (In Rs. ) f/year 2015-16 Amount (In Rs. ) f/year 2016-17 Opening cash balance as on 8.11.2016 825001.00 5206068.00 Add: Cash received on sale of petrol/ diesel in November, 2016 5614520.00 6960972.00 Add: Cash received on sale of petrol/ diesel in December, 2016 3955328.00 5033603.00 Less: Cash deposited in bank in November, 2016 5164990.00 9788800.00 Less: Cash deposited in bank in December, 2016 5444850.00 4729113.00 That by going through with above chart it is clear and explicit that there is opening cash in hand as on 8.11.2016 of Rs. 5206068/- and which is cash sale collection of previous months and further on comparison analysis it comes out that lower cash is deposited in the month of December, 2016 than cash as deposited in December, 2015. That during f/year 2016-17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sale price and further more the books and stock record are under regular check by D.S.O. and by HPCL. Thus action of Ld AO in contending about deposition of cash during demonetization period does not stands any where. That monthwise chart of stock received and out during f/year 2016-17 of Petrol/diesel is enclosed as Annexure-D. 3. That Ministry of Finance vide F.No.10/3/2016-Cy.I dated 8.11.2016 has issued Notification whereby exemption was given for acceptance of old currency notes having denomination of Rs. 500/- & Rs. 1000/- during the period of 9.11.2016 to 15.12.2016 and which is further extended by Notification no.:2774 dt.24.11.2016 and wherein exemption were given "for purchase of petrol, diesel and gas at the stations operating under the authorization of Public Sector Oil Marketing Companies." Copy of all these Notification are enclosed as Annexure-E. Thus the appellant was allowed to accept old SBN notes during demonetization period. 4. That appellant has filed all relevant documents and these were submitted before Ld AO vide letter dated 27.11.2019 and wherein parawise reply to the queries raised by AO were submitted (annexed as Annexure-C). That against the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nline system of HPCL and is available publicly on HPCL portal. Further books of accounts of assessee are audited and has filed return of income alongwith audit report in form 3CD alongwith all enclosures wherein quantitative details of petrol/diesel received, supplied alongwith opening and closing balance quantities are written and thus accordingly despite of having availability of stock record on public domain, finding about non submission of stock record is erroneous finding of Ld. AO. Copy of IT return and audit report for AY 2017-18 and AY 2016-17 are annexed herewith as Annexure-G. That in below cases it is held by Hon'ble Courts that when proper books of account along with duly audited by Form 3CD, requisite details are before Ld. AO then there is no justification for rejecting the books of account and making estimated addition on gross profit:- (a) CIT vs. Gotan Lime Khanij Udyog, 256 ITR 243 (Raj. High Court) (b) Ajay Goyal vs. ITO, 99 TTJ 164 (copy of judgments are attached) Thus when there is no basis with both the lower authorities in doing GP addition and under these circumstances action of Ld AO and Ld CIT(A) may please be held erroneous and GP addition made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Screen Shot of adjournment application filed before CIT(A) on dt. 7.11.2023 (annexure -F) 190-191 12. Copy of Income tax return for assessment year 2017-18, 2016-17 with trading and P & L a/c for showing of GP ratio (annexure-G) 192-218 13. Judgments relied upon 5.2 The ld. AR of the assessee made an application u/r 29 of ITAT Rules, 1963 praying to allow the submission of the additional evidence: "APPLICATION U/RULE 29 OF ITAT RULES, 1963 FOR ALLOWING TO SUBMIT ADDITIONAL EVIDENCES MAY IT PLEASE BE YOUR HONOURS, 1. Most respectfully the humble appellant do hereby seeks leave of the Hon'ble Bench for allow to submit Additional Evidences in support of the case which are quiet essential and crucial for decide of the case. That additional evidences which are being submitted are consisting of below documents:- (i) M.S. Petrol and HSD stock record inward and outward during financial year 2015-16 and 2016-17 maintained as per requirement of HPCL (ii) Copy of Purchase Invoices of material inward from Hindustan Petroleum Corporation Limited That stock register was filed before Ld AO during the course of assessment vide submission dt. 27.11.2019 and all these d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cument filed are quiet relevant for purpose of deciding this issue arising before, it would be well within its powers to admit the evidence, consider the same or remit the matter to the lower authorities for such consideration." The Hon'ble Delhi High Court has referred and relied upon the various decisions of the difference High Courts and have also relied upon the decision of the Hon'ble decision of Supreme Court reported in K. Venkatramaiah Vs. A. Seetharam Reedy, AIR-1963-S.C.-1526. This judgment of the Hon'ble Supreme Court is placed by the Hon'ble Delhi High Court in their judgment in para 12. (iii) National Thermal Power Co. Ltd. Vs. Commrr. of Income tax (1998-229- ITR-page 383) Supreme Court That in the case it has been held by Hon'ble Supreme Court that "Undoubtedly, the Tribunal will have the discretion to allow or not a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Less: Cash deposit in bank during 1.4.2016 to 8.11.2016 -49157000 Less: Salary, office & other expense (in cash) -314585 Closing balance as on 8.11.2016 5116867 That detailed ledger account of cash sales, cash collection from buyers/debtors, cash withdrawal and deposit from bank during the period of 1.4.2016 to 8.11.2016 are enclosed as Annexure-B" 5.5 The ld. AR of the assessee in addition to the written submission so filed also argued that the assessee is registered petroleum product dealer. During the period of demonetization the assessee was permitted to accept the SBN notes against the sale of petroleum products as per notification no. 2653 dated 8.11.2016 (APB-188) and thereby the date was extended till 15.12.2016. As the assessee permitted to accept the SBN he has deposited the same till 15.12.2016 and therefore, the cash so received by the assessee is against the sale proceeding of the petroleum product by the assessee. The ld. AR of the assessee further submitted that the assessee objects to the figure of the addition of Rs. 86,90,500/- . As the assessee has cash sales during the demonetization period from 09.11.2016 to 30.11.2016 and 01.12.2016 to 15.12.2016 Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... most all records and instead of finding fault on its merely contended that books of accounts are not produce. The assessee has already filed the cash book, sales and month wise stock details, on these records no defects is pointed out. 5.6 The ld. AR of the assessee also submitted that the assessee requested for an adjournment on 07.01.2023 and sought and adjournment upto 24.01.2023 (APB-190) but ultimately the order was passed on 09.01.2023 without dealing with the adjournment application of the assessee. The judicial decision cited by the ld. CIT(A) are clearly not applicable based on the facts already on record. The monthly stock summary was given and there is no adverse remark even the stock is daily maintained the same is given just to confirm and satisfy that the assessee is covered by the essential commodity Act and the assessee without purchase cannot sale the goods and the assessee purchase the goods from HPCL which is not under dispute. The assessee has filed the cash book which is also not disputed by the ld. AO. As regards the addition of GP the ld. AO has not rejected the book results by invoking the provision of section 145(3) and thereby pinpointing the defects in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch in the form of written submission & oral arguments during the course of hearing by the assessee. 6. It was reiterated by the undesigned during the course of hearing that the issue of cash deposit during the demonetisation period needs to be scrutinised holistically. The assessee willfully did not produce the books of account (including the stock register) before the AO & the CIT(A). 7. In view of the above, it is seen that the assessee, despite being provided the sufficient time to submit the details by the AO as well as Id. CIT(A), has not furnished the requisite details viz. books of account, bills and vouchers including stock register. Therefore the AO has rightly rejected the books of account in absence of the aforesaid details. The Id. CIT (A) has also concurred with the finding of the AO taking into account the non-compliance of the assessee. In the absence of details such as stock register, cash credit u/s 68 was added to the income of assessee & upheld by the Ld. CIT(A). 8. The Hon'ble bench is therefore requested to dismiss the appeal of the assessee for mis- reporting, non-compliance and providing false information before the Hon'ble bench and take right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee submitted online reply and furnished the copy of cash book from 09.11.2016 to 30.12.2016, GP. Comparison chart, copy of bank statement, month wise cash sales and cash deposit chart for A.Y 2017-18 and copy of VAT return. The ld. AO noted that the comparative chart for gross profit / net profit ratio of last two years shown by the assessee is in lower side in comparison to preceding year. As the gross profit declared by the assessee is declining and the assessee did not comply with the notices so issued and not produced the books of accounts, bills/vouchers for verification the trading result submitted by the assessee not accepted by the ld. AO. Hence the books of accounts were rejected invoking the provisions of section 145(3) of the Act and applied Gross profit @ 2.8 % as shown in A. Y. 2016-17. Based on this observation the addition on account of the lower G.P. to the extent of Rs. 4,60,052/- was made in the total income of the assessee. Against this action of the ld. AO assessee is in appeal raising ground no. 3. Since the issue of books of account is required to be examined first, we deal with this ground no 3 of appeal first. On this account the bench observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 145 of the I. T. Act 1961 and addition made accordingly." The assessee has already advanced the reasons for low profit and has submitted the details called, ld. AO only requires the books of account which the assessee submitted that not requirement when the assessment is going on in ITBA and the books are audited. The assessment of the assessee completed u/s. 143(3) of the Act. No specific information was called for and ld. AO only insisted upon the producing of the books of accounts. Since, there is no specific defects observed in the books of accounts the addition made by the ld. AO on account of the low G.P. we see no reason to sustain the same. Hence, the addition made by the ld. AO for an amount of Rs. 4,60,052/- on account of the low G. P. is deleted and the finding of the ld. AO rejecting the book result is not correct. Based on these observations the ground no. 3 raised by the assessee is allowed. 9. As regards the ground of appeal no. 2 raised by the assessee, the bench noted that as per the information available with the ld. AO that the assessee deposited cash of Rs. 74,35,500/- in the bank account no. 3420787121 maintained with the State Bank of India and Rs. 12,55,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The bench also noted that a show cause notice dated 23.11.2019 fixing the hearing on 27.11.2019 upon which the above information was submitted by the assessee, the assessee in this notice directed nowhere to submit the books of accounts. Based on the rival arguments bench noted that it is not under dispute that the assessee is dealer of petroleum product. It is also not under dispute that these petroleum dealers were permitted to accept the demonetized currency and the extension was done for two different periods. The assessee submitted the copy of the cash book for the said period and the cash deposited into the bank account is also emanate from the sale of the petroleum product. The grievance of the revenue that the assessee failed to establish the source of the cash so deposited into the bank account with that of the availability of stock by the assessee. On this aspect of the case, we note the following submission of the ld. DR: In this connection it is respectfully submitted that during the hearing of the said case before the Hon'ble bench, the AR of the assessee, vide his paper book dated 06.07.2023 submitted (in para 2 at page no 2 of the paper book) "that Id AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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