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TMI Blog2024 (7) TMI 1426X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and in law, the notice u/s. 143(2) of the Act was not issued within the stipulated statutory time and therefore, the assessment order passed by the assessing officer is liable to be quashed and CIT(A) erred in not holding so. 3. On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is bad-in-law, without jurisdiction and barred by limitation and CIT(A) erred in not holding so. 4. On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is illegal and non-est as the order has been passed without valid DIN and CIT(A) erred in not holding so. 5. On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is liable to be quashed as it is contrary to the provisions of section 153D of the Income Tax Act, 1961 and CIT(A) erred in not holding so. 6. On the facts circumstances of the case and in law, the CIT(A) erred in confirming the addition made by assessing officer of Rs. 1,32,61,467/- u/s. 69A of the Act." 3. Briefly stated, the assessee is engaged in the wholesale and retail business of Kiryana items at Delhi and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serted that the legal grounds raised by the assessee has been arbitrarily rejected by the CIT(A) despite long line of judicial precedents. It was contended that the assessment has been completed based on mechanical approval under Section 153D of the Act. Likewise, the assessment order passed without DIN was not held to be non-est. However, on inquiry from the Bench, the ld. counsel submitted that the grounds taken in this regard as per Ground No.4 may be treated as not pressed. 8. Ground No.4 is thus dismissed as not pressed. 9. Continuing further, the ld. counsel for the assessee addressed case on merits broadly as under: (a) The assessee is engaged in the wholesale and retail business of Kiryana items in Delhi and Haryana. The assessee has no other source of income other than business income from aforesaid business. Search and seizure operations were carried out on 04.12.2018 at the locker of the assessee maintained with M/s. Faqir Chand Lockers and Vaults Pvt. Ltd. and an amount of Rs. 1,70,00,000/- was found from the above locker. During the course of assessment proceedings, the assessee explained before the AO that the cash found in the locker was duly recorded from the bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce while assessing the balance amount of Rs. 1,32,61,467/- as unexplained income. In this regard, the ld. counsel for the assessee contends that there is no logic or rationality in the action of the AO in adopting average balance of cash in hand. The balance of cash in hand has to be seen on the date of search and giving credit for average cash balance disregarding the actual cash in hand is incomprehensible. (f) The AO himself in paragraph 7.4 of the assessment order has recorded that assessee has started business in the name of new proprietary concern M/s. Sambhav Trading Company in Bahadurgarh, Haryana wherein cash in hand of Rs. 1,22,22,497/- was shown on 25.10.2018. It was further observed by the AO that assessee has shown total turnover of Rs. 7.46 crore during the F.Y. 2018-19 relevant to A.Y. 2019-20 in question as against Rs. 2.02 crore for F.Y. 2017-18 relevant to A.Y. 2018-19 and during the current period cash sales of the assessee has increased substantially. It was thus contended that adverse inference could not have been drawn on such facts. 10. The ld. counsel thus submitted that where the turnover has increased and business operations have started in new place, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 13 (Del); ITO vs. Surana Traders (2005) 92 ITD 212 (ITAT Mum); Shree Sanad Textile Industries Ltd. vs. DCIT, ITA No.1166/Ahd/2014 (ITAT Ahd). The ld. counsel thus submitted that impugned addition is devoid of any rational basis both on facts and on law. 11. Without prejudice and in the alternative, the ld. counsel submitted that the action of the AO has resulted in double addition to the extent of Rs. 1,32,61,467/- one by way of cash sales and second by way of cash found. Thus, both debit and credit has been assessed simultaneously contrary to the principles of double entry system of accounting which is yet again unsustainable in law. For this proposition, the judgment rendered by the Hon'ble Delhi High Court in the case of CIT vs. Vishal Exports Overseas Ltd. in Tax Appeal No.2471/2009 order dated 3.07.2012 was referred. The ld. counsel thus urged for reversal of the impugned additions and restoration of the income declared. 12. The ld. DR for the Revenue, on the other hand, relied upon the assessment order and the first appellate order. The ld. DR also referred to the statement made by the assessee under Section 131(1A) of the Act wherein the assessee himself admitted to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO has not adversely commented on the details of sales, purchases and stocks both in terms of quantity and amount and the party-wise sales/purchase etc. The AO has also accepted the sales declared by the assessee. As a sequel to such undisputed facts, we are compelled to think that cash in hand declared in the books is backed by documentary evidences. The assessee being in Kiryana business where large cash transactions are generally involved, the source of cash in hand draws considerable strength. The purchases made are stated to be through banking channel which further strengthens the audited financial accounts. Besides, we see no semblance in the view taken by the AO that only average balance of cash in hand needs to be given credit. For doing so the cash book necessarily has to be discarded. The books of account are admittedly not rejected. The sales, purchases and stocks have been accepted. Thus, the prerequisites of Section 69A do not appear to have been fulfilled. Several judgments have been quoted on behalf of the assessee to contend that rejection of books is necessary to indulge in such addition. The action of the AO in our view, as rightly contended on behalf of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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