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TMI Blog2024 (2) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer in these clinching evidences. Since the cash sales have already been offered as income, the same cannot be taxed in the garb of inflation sales to cover up demonetization currency. Allegation of non-mentioning of names of the purchasers - It is not only baseless but without any backing of law as the assessee is not required to keep the names of purchasers for cash sales less than Rs. 2 lakhs and not even one instance has been pointed out by the Assessing Officer where cash sales were more than Rs. 2 lakhs. No merit in the impugned addition made by the AO and also we do not find any merit in the part relief given by the ld. CIT(A). Therefore, we direct the AO to delete the addition - Accordingly, Ground No. 2 with all its sub-grounds is allowed. Disallowance on account of business promotion - HELD THAT:- On perusal of record, we find that business promotion expenses include amount incurred on providing free gifts to customers on purchase of large amount of jewellery items as it is general practice in this line of trade. It is a settled proposition of law that the Assessing Officer should not decide how a business man should do his business. Moreover, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2021 [Assessee s Appeal] 3. The grievances of the assessee read as under: 1 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in determining the income of the appellant company at Rs. 3.46.99,653/- as against declared income at Rs. 15,07,573/- in an appellate order passed dated 13.08.2021 us 250 of the Act. 2(i) That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming the addition of cash sales to the extent of Rs. 3,25,52.833/-made during the period 1.10.2016 to 8.11.2016 and erroneously held to be unexplained credit u/s 68 of the Act read with section 115BBE of the Act. (ii) That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the approach adopted to assume and hold that some part of the cash sales for the period 01.10.2016 to 08.11.2016 represent unexplained cash credits is illegal, invalid and untenable. (iii) That while making the above addition, the learned Commissioner of Income (Appeals) has failed to appreciate the factual substratum of the case, statutory provisions of law and as such, addition so made is highly misconceived, totally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wholly inapplicable to the income already offered as income by the appellant in the return of income. 3(i) That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming the disallowance of conveyance expenses to the extent of Rs. 1,54,671/- being expenditure incurred wholly and exclusively for the business of the appellant company. (ii) That the aforesaid disallowance has been confirmed without adjudicating the same and without giving any findings on its merits which is not a valid course of action in law. 4 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming the disallowance of car running maintenance expenses to the extent of Rs. 4,04,656/- being expenditure incurred wholly and exclusively for the business of the appellant company. 5 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in confirming the disallowance of Rs. 72,000 out of salary paid to the following persons: Sr. No. Name of Director Salary (i) Deepak Jain 25,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of hearing. It is therefore, prayed that the additions/disallowances confirmed by the learned Commissioner of Income Tax (Appeals) alongwith interest levied may kindly be deleted and appeal of the appellant company be allowed. 4. Substantive grievance of the assessee relates to the addition on account of cash sales amounting to Rs. 3,25,52,833/- made during the period 01.10.2016 to 08.11.2016 held to be unexplained credit u/s 68 r.w.s 115BBE of the Income-tax Act, 1961 [the Act, for short] 5. Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in the light of Rule 18(6) of the ITAT Rules. 6. Briefly stated, the facts of the case are that the assessee is into the business of trading and manufacturing of jewelry like gold and diamond, etc. Return for the year was electronically filed on 30.10.2017 declaring income of Rs. 15,07,573/-. Return was selected for scrutiny assessment and accordingly, statutory notices were issued and served upon the assessee. 7. During the course of assessment proceedings, the assessee was asked to provide month-wise comparative chart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk (Rs.) Cash withdrawal from bank Cash expenses Closing cash in hand (Rs.) i) April 2016 15,00,946 ---- 9,05,000 ---- 88,371 5,07,575 ii) May 2016 5,07,575 14,73,478 3,35,000 ---- 1,35,434 15,10,619 iii) June 2016 15,10,619 ---- ---- ---- 82,341 14,28,278 iv) July 2016 14,28,278 ---- 50,000 ---- 85,300 12,92,278 v) August 2016 12,92,978 2,41,885 3,75,000 ---- 66,430 10,93,433 vi) September 2016 10,93,433 --- 50, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... October 2016 46,29,546 3,38,11,665 3,84,41,211 viii) November 2016 12,46,53,252 1,35,46,934 13,82,00,186 ix) December 2016 3,21,40,903 ---- 3,21,40,903 x) January 2017 1,92,37,859 1,89,150 1,94,27,009 xi) February 2017 8,75,81,633 ---- 8,75,81,633 xii) March 2017 9,65,07,845 7,64,806 9,72,72,651 Total 49,64,15,930 5,00,27,918 54,64,43,848 17. The entire quarrel revolves around the period 01.10.2016 to 08.11.2016 and cash sales during this period have been held to be unexplained credit u/s 68 of the Act. We fail to understand how the cash sales for the period 01.10.2016 to 07.11.2016 be treated as inflated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 to 30.09.2016 in which period there was no question of anybody being aware of demonetization. 20. The most peculiar fact is that on 23.12.2016, a survey operation u/s 133A of the Act was carried out at the business premises of the assessee company and not a single defect/discrepancy was found in the physical stock vis a vis book stock of the assessee. 21. If the allegation of the Assessing Officer is accepted that the assessee has inflated its sales during 01.10.2016 to 08.11.2016, then there has to be some discrepancy in the book stock vis a vis physical stock, but no such discrepancy was found because no such sales were inflated by the assessee. 22. Merely because there was a minor variation in the cash sales during the alleged period compared to previous year would not mean that the assessee has inflated its sales to cover up demonetized currency. 23. During the year under consideration, diwali was on 31.10.2016 and it is common knowledge that in our society, festival runs 15 days after diwali and it is also a common fact that once the demonization was declared by the Hon'ble Prime Minister, there was frenzy in the market and people were purchasing goods they n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances of the case, LL. CIT(A) has erred in deleting disallowance of Rs. 1,62,347/-on account of business promotion expenses. 4. That on the facts and circumstances of the case, Ld. CIT(A) has erred in deleting disallowance of depreciation claimed en car under Income tax of Rs. 2,52,360/- and car running expenses of Rs. 2,09,747/ 5. That on the facts and circumstances of the case, Ld. CIT(A) has erred in deleting addition of Rs. 28,13,95,024/- on account of unaccounted stock due to difference in valuation of closing stock. 6. The appellant craves for leave to add, amend any/all the ground of appeal before or during the course of hearing of the appeal. 33. The underlying facts in the issue raised vide Ground No 2 are identical to facts considered by us in assessee s appeal hereinabove in ITA No. 1426/DEL/2021 qua Ground No. 2 with all its sub grounds. For our detailed discussion therein, this ground is dismissed. 34. Next ground relates to deletion of disallowance of Rs. 1,62,347/- on account of business promotion. 35. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has claimed business promoti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumption and sales of gold bars were mentioned without the decimal point in the tax audit report, due to which the quantity of closing stock of gold bars differed from the actual quantity of closing stock of gold bars appearing in the books of account. 47. The same can be understood from the following chart: Gold Bars Figures as appearing in Stock Register [Gms.] Figures as appearing in Tax audit report [Gms.] Opening Stock 1848627 1848 Add: Purchases 74115118 74115118 Less: Consumption 25038569 25038569 Less : Sales 39194889 39194889 Closing Stock 11730287 9883508 48. This non-mentioning of decimal value of gold was determined at Rs. 2813.95 crores, which has resulted into an absurd figure. The ld. CIT(A), after appreciating typographical error and after considering reconciliation, deleted the impugned addition. We do not find any error or infirmity ..... X X X X Extracts X X X X X X X X Extracts X X X X
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