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TMI Blog2024 (2) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee then the cash deposit out of such sales cannot be doubted. The authority below had treated the normal transaction in respect of business receipt as something unusual and out of the ordinary only as undiscerningly which is against the principle of natural justice.We respectfully, relied on the order of Anand Metal Corporation [ 2004 (7) TMI 49 - MADRAS HIGH COURT] Assessee s books was rejected u/s 145(3) for non maintenance of stock register - The assessee claimed that the assessee is dealing with the items which are not possible for her to maintain stock register. The ld. AR respectfully relied in the order of the Hon ble Jurisdictional High Court in the case of Malani Ramjivan Jagannath [ 2006 (10) TMI 145 - RAJASTHAN HIGH COURT] We also respectfully followed the order of the Hon ble Jurisdictional High Court in the case of non maintenance of stock register cannot be the reason for rejection of books of account. The assessee was eligible to prove the stock, the purchased and the assessment order of the Sales Tax Authority. There are no discrepancies on purchase and stock of goods. On mere suspicion the sale of goods cannot be treated u/s 69A of the Act. The ld. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against principle of natural justice. 3 That on the facts and in the circumstances of the case the Ld CIT(A) grossly erred in upholding the provision of sec 145(3) of the Act applied by the Ld AO for rejection of books of accounts. 4. That on the facts and in the circumstances of the case, the ld CIT(A) grossly erred in upholding the findings recorded by the Ld AO that cash deposit in bank account during demonetization period out of cash sales as unexplained money being unexplained cash money available with the appellant which had tried to introduce in the books. 5. That on the facts and in the circumstances of the case the Ld CIT(A), grossly erred in sustaining the addition of Rs. 64,49,220/- in respect of cash deposit in bank account as unexplained money u/s 69A of the Act. 6. That on the facts and in the circumstances of the case the Ld CIT(A) grossly erred in disapproved the source of cash deposit in bank account represented sales realization which are duly recorded and supported from legal valid evidences. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 That on the facts and in the circumstances of the case, the ld CIT(A) erred in upholding the validity of the retracted statement under section 133A, particularly when such statement has no evidentiary value in the eyes of law. 4. That on the facts and in the circumstances of the case, the ld CIT(A) erred in deliberately and consciously not considering the legal valid documentary evidences furnished in support of retraction of statement immediately after the survey. 5. That on the facts and in the circumstances of the case the ld CIT(A) grossly erred in represented irrelevant, arbitrary and contrary facts and law while upholding the validity of addition made by ld AO. 6 . That on the facts and in the circumstances of the case the ld CIT(A) grossly erred in upholding the finding recorded by ld AO that the stock found at the time of survey was excess without taken to consider the valid legal documentary evidences and also no adverse material or evidence found as a result of investigation made by ld AO during the proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e books of account and the cash deposit in bank was taken as income from undisclosed source. Only, the opening cash balance amount to Rs.11,50,786/- dated 31.10.2016 was treated as genuine cash balance which was deducted from the cash deposit in bank. So, the balance amount Rs.64,49,220/- was added back u/s 69A by imposing tax u/s 115BBE of the Act for impugned assessment year 2018-19. The stock difference of the assessee with the survey team amount to Rs. 1.30.14.836/-. The physical stock calculated by survey team amount to Rs.7,15,00,000/-. After deduction of the approval, the revenue valued the closing stock amount of Rs.6,43,54,832/-. But as per the books of account the closing balance of the stock on 31.03.2018 was amount to Rs.5,18,17,873/-. So, the ld. AO added back the difference of closing stock as income. Accordingly, the Gross Profit of the date of survey was calculated by the revenue amount to Rs.3,91,88,467/- and the GP declared on dated 31.03.2018 by the assessee amount to Rs.2,97,60,771/-. Therefore, the difference amount of Rs.94,27,696/- was added back with the total income of the assessee. Being aggrieved assessee filed an appeal before the ld. CIT(A). The ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,59,120 4,37,500 15,24,600 13,85,972 12,13,680 8,90,380 14,11,315 1,23,806 1,03,10,983 Cash in hand on the last day of month 15,94,356 18,08,461 10,31,132 6,41,908 5,09,159 4,31,259 1,80,146 9,62,884 14,73,680 19,39,001 24,18,028 10,83,088 1,40,73,109 ForA.Y.2017-18 Item Apr-16 May-16 Jun-16 Jul-16 Aug16 Sep16 Oct-16 Nov-16 Dec16 Jan-17 Feb-17 Mar-17 Total Cash Sales 7,06,850 3,15,370 3,31,000 4,96,500 70,600 4,82,100 26,04,000 70,10,000 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving in villages, then other partner has to with draw small amount to run the business even after huge cash balance. 6.2 The ld. AR argued that that the appellant is a partnership firm and engaged in the business of trading in Gems, diamond, gold silver jewellery studded with precious semi precious stones. The appellant had maintained day to day purchase register sales register showing quantitative details of each item of stock, cash book, bank book etc supported from documentary evidence. The entire business transaction is duly recorded and supported from credible evidence. The books of account so maintained by appellant are subject to audit u/s 44AB of the Act. Further the profit rate declared by the appellant firm is not only better but also reasonable as compared to previous year. 6.3. That during the assessment proceeding, the issue before the ld. AO was cash deposits of Rs. 76,00,000/- in bank account during demonetization period and accordingly the ld. AO had issued query letter required details information regarding the same. That in response to such questions, the appellant firm had explained the cash deposit in bank account was represents realization o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit sale, cash deposits in bank etc had been furnished before the ld AO during the assessment proceeding as required by him. Since no defect in respect of maintenance of books of accounts and information furnished by the assessee on the basis of books of accounts, therefore the rejection of the books of accounts against the principle of natural justice and also contrary to the law laid down by Hon'ble Courts. b] It is further relevant to mention that the cash sales which are deposited in the bank account is the part of total turnover disclosed in the trading account against which the purchases had not been doubted, neither the opening and closing stock has been doubted. The profit declared by the appellant firm had also been accepted as genuine. Further looking to nature of business items in which assessee firm is dealing, it is not practically possible to maintain stock register on day to day basis. However the quantity of purchase and sales of stock are duly recorded and verifiable from invoices bills etc. Therefore very basis of addition is unjustifiable and also contrary to principal of accountancy. c] Further the Hon ble Rajasthan High Court and other Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lower GP may not ipso facto amount to incorrectness/incompleteness of accounts in terms of section 145(3) of the Act. But the case would be different where the above-mentioned mistakes are coupled with other findings. In the given case, AO has rejected the book results because the assessee has not provided the details of quality wise quantity of the stock asked for during assessment and on account cash deposits in the bank. In this connection, we find that the assessee has maintained proper books of account and furnished details as required by the A.O. except the details of the stock in the desired format. The details submitted by the assessee include audited financial statement, details of the purchases, gold stock summery and other information about the sales, GP of different years which are available in the paper book filed before us. In these documentary evidence no defect was pointed out by the AO except non-maintenance of stock register in the desired format. Therefore, without bringing any corroborative material on record suggesting specific defect in the books of account the book result cannot be rejected merely for not providing certain detail which the AO requires to ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Estimation A.O. has to record a dear and definite satisfaction in the body of assessment order, that He is satisfied that the accounts are not correct or complete and true profit cannot be deduced from such accounts. If, there is no finding that there was material before the AO to lead him to the conclusion that a proper statement of income, profits and gains could not be deduced from the material placed before him, in that event he is not entitled to estimate the profit The above principle was also affirmed by the supreme court in the case of ChhabildasTribhuvandas Shah v. CIT [1966] 59 ITR 733 (SC) wherein it was held What we have to see is whether there is any finding that the income, profits and gains cannot properly be deduced. We are not concerned with the correctness of the conclusion and we are only concerned with the question whether there is any material in support of the finding or not . 8. The ld. AR in argument placed that the Sales Tax Department as completed the assessment in favour of the assessee and accepted the turnover. The ld. AR fully relied on the order of the Hon ble Madras High Court and placed that. Once it is an admitted facts that the sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (2007) 158 Taxman 74(SC) and other decisions in support of the proposition that the ld. AO should not seek to conduct business by sitting on the armchair of the businessmen and the businessmen knows best how to do his business. That the allegation on the basis of which the Ld AO CIT(A) had not accepted the source of cash deposit out of cash sales as genuine is non availability of stock as such allegation is incorrect false only on the basis of assumption and presumption without considering the material record in right perspective judicious which established beyond the doubt the sufficient stock available with firm. Therefore, the addition made by the authority below on the basis suspicion and surmises is totally contrary to the settled position of law decided by the Hon ble Supreme Court in which it was held that Suspicion however great cannot take the place of evidence SC in Umacharan 37 ITR 27. Burden to Prove apparent is not real lies on the shoulders of the revenue SC in 125 ITR 713 Kishanch and Chellaram; SC in 26 ITR 775 Dhakeshwari Cotton Mills; SC in 87 ITR 349. Addition cannot be made merely on the basis of conjectures and surmises. The department canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady reflected in the books of the assessee. So, the addition amount of Rs 2,74,00,000/-is quashed. The Hon ble ITAT Amritsar Bench in the case of Shri Balwinder Kumar V/s ITO, ITA No. 256/Asr/2022 dated 31.01.2023 held that 8.1 In our view, the Ld. A.O cannot blow hot and cold at the same time by partly rejecting the books of accounts and partly accepted the books of accounts, which is bad-in-law. If the AO rejected the books of accounts, then he can't rely on the same books of accounts for opening stock, closing stock, purchases, sundry debtors, sundry creditors, GP Ratio and expenses etc. etc., which are based on same books of accounts which have been accepted. 9. It is settled law that the A.O cannot sit on the chair of the assessee to decide the sales, as per his choice to categorize into so called bogus sales and non-bogus sale. In the case of S. A. builders Ltd. Vs. CIT(A) , (Supra) It is held that: it is for the assessee to take care his business exigency and assessee is on his free will to do business, as per his wisdom and his arm cannot be twisted to do the business, as per the choice of anybody else. In our case A.O tried to twist the arm of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crore by taking stock of Rs. 6.43 crore gave misleading results. The assessee submitted following chart (Annexure M ): - Total stock as per your Valuer 7,15,00,000 Stock received on Approval Less SolitaireJewelleryApprovalMemoNo.1042 15/02/2018 47,42,616 Less SolitaireJewelleryApprovalMemoNo.1047 21/02/2018 24,05,552 Total 6,43,54,832 Stock received on Approval but not deducted Less SolitaireJewelleryApprovalMemoNo.1008 17/08/2017 38,97,997 Less SolitaireJewelleryApprovalMemoNo.1016 19/09/2017 18,58,785 Less KGKCreations(India)Pvt.Ltd.App.No.KCI- FASILD171368 13/12/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r non maintenance of stock register. The assessee claimed that the assessee is dealing with the items which are not possible for her to maintain stock register. The ld. AR respectfully relied in the order of the Hon ble Jurisdictional High Court in the case of Malani Ramjivan Jagannath (supra). 12.2 We also respectfully followed the order of the Hon ble Jurisdictional High Court in the case of non maintenance of stock register cannot be the reason for rejection of books of account. The assessee was eligible to prove the stock, the purchased and the assessment order of the Sales Tax Authority. There are no discrepancies on purchase and stock of goods. On mere suspicion the sale of goods cannot be treated u/s 69A of the Act. The ld. DR was unable to submit any contradictory orders / judgments before the bench. Accordingly, the ground of the appeal bearing ITA 353/Jodh/2023 is allowed. ITA No. 354/Jodh/2023 13. In case of ITA No.354/Jodh/2023, there is a discrepancy of the stock valuation in survey team with the declared in the books of accounts. The assessee filed a retraction letter on dated 26.03.2018 for non-accepted the valuation of the revenue. The assessee in reco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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