9911796707
TMI Blog2024 (8) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... n 20.09.2018 by offering the discrepancy amount to tax as business income which is evident from the revised computation of income enclosed. The disclosure of additional income was made by the assessee at the time of search on 18.11.2016 while giving statement u/s 132(4) of the Act at 10 PM whereas the higher tax rate of 60% got introduced u/s 115BBE of the Act only pursuant to Taxation Laws (2nd Amendment) Act, 2016 which got notified in the official gazette only on 15.12.2016, being the date of receipt of accent of the Hon ble President of India which got further culminated as the Taxation Laws (2nd Amendment) Act, 2016. Hence, obviously the provisions of section 115BBE of the Act applying higher tax rate @ 60% cannot be applied at all in respect of search conducted prior to 15.12.2016 and incomes earned prior to 15.12.2016. Hence, the assessee is entitled for relief on this count also. We have no hesitation to hold that the additional income is to be brought to tax only as business income liable to tax at normal rate and not @60% provided u/s 115BBE. Decided in favour of assessee. Addition u/s 68 - cash deposits made during the demonetization period - HELD THAT:- No discrepancies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO by invoking the provisions of section 145(3) of the Act. Hence, there is no question of making any ad hoc disallowance @10% of total advertisement and exhibition expenses. The same is absolutely without any basis. As stated by the ld CIT(A), even the 3 vouchers which the AO stated in the assessment order were produced by the assessee before the CIT(A) from where it was found that payments were made to the respective parties by account payee cheques after due deduction of tax at source. Hence, we do not find any reason to interfere in the order of the ld CIT(A) granting relief to the assessee in this regard. - Shri M. Balaganesh, Accountant Member And Shri Vimal Kumar, Judicial Member For the Assessee : Shri K. Sampath, Adv., Shri Varun Kholi, CA For the Revenue : Ms. Anu Krishna Aggarwal, CIT DR ORDER PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.195/Del/2021 filed by the assessee and ITA No. 432/Del/2021 filed by the revenue for AY 2017-18, arise out of the order of the Commissioner of Income Tax (Appeals)-29, New Delhi [hereinafter referred to as ld. CIT(A) , in short] in Appeal No. 234/2018-19 dated 08.02.2021 against the order of assessment passed u/s 143(3) r.w.s. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... committed by the valuer. All these entries collectively contributed to erroneous adoption of valuation of jewellery on the date of search by the Govt appointed registered valuer. Obviously, the assessee did not have the luxury of time with it to go through the valuation report page by page during the course of search proceedings. Accordingly, the assessee was forced to make some surrender of additional income at the time of search which was duly made by the Director of the assessee company at the time of recording of statement on 18.11.2016 at 10 PM. 6. The original return of income was filed by the assessee for AY 2017-18 on 31.10.2017 u/s 139(1) of the Act disclosing total income of Rs. 3,96,75,690/-, wherein, the surrendered income during the search was not included by the assessee. Later a revised return was filed voluntarily by the assessee on 20.09.2018 declaring total income of Rs. 7,63,89,220/-. It is pertinent to note that this revised return was duly filed within the time limit prescribed u/s 139(5) of the Act. In the revised return, the surrender made by the assessee during the course of search to the tune of Rs. 3,67,13,530/- was duly included as business income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already dealt with the various discrepancies for the method of valuation adopted by the Govt. valuer which was narrated in the earlier part of this order. Hence, the valuation adopted by the Govt valuer deserves to be completely rejected. Hence, the additional income of Rs. 3,67,13,530/- which was offered by the assessee voluntarily in the revised return cannot be construed as undisclosed income or income in the nature referred to in Sections 68 to 69D of the Act and consequently, the provisions of section 115BBE of the Act cannot be applied at all in the facts and circumstances of the instant case. There was absolutely no difference in the item-wise number of stocks. There was neither any excess nor any shortage in the items counted for valuation during search. While valuing the Polki i.e. uncut and unpolished diamonds, diamond and other studded items of jewellery, it was submitted that the valuer was not in a position to decipher the weight of stones and the weight of precious metals in which the stones were embedded, whereas, the assessee had the full and complete break up of bills of the same based on the actual purchase price paid by it for such items to the supplier at the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld AO sought to examine the veracity of the source of such cash deposits. The assessee explained the source to be out of cash sales made by it and advances received against the sales and filed complete details of the same from 24.10.2016 to 08.11.2016 as under:- CASH SALES ADVANCES CASH TOTAL CASH COLLECTIONS FOR 24/10/2016 27,20,700.00 10,000.00 27,30,700.00 25/10/2016 76,18,050.00 2,35,000.00 78,53,050.00 26/10/2016 5,21,650.00 4,10,000.00 9,31,650.00 27/10/2016 1,07,50,565.00 20,20,350.00 1,27,70,915.00 28/10/2016 2,00,53,122.00 42,49,750.00 2,43,02,872.00 29/10/2016 1,25/11,694.00 42,52,450.00 1,67,94,144.00 30/10/2016 61,63,000.00 16,37,000.00 78,00,000.00 31/10/2016 01/11/2016 28,49,000.00 28,49,000.00 02/11/2016 1,17,74,410.00 28,56,000.00 1,46,30,410.00 03/11/2016 1,68,08,500.00 26,96,000.00 1,95,04,500.00 04/11/2016 1,55,06,920.00 2,51,850.00 1,57,58,770.00 05/11/2016 1,26,54,650.00 50,000.00 1,27,04,650.00 06/11/2016 1,98,86,650.00 19,74,500.00 2,18,61,150.00 07/11/2016 4,69,10,550.00 44,85,000.00 5,13,95,550.00 08/11/2016 7,49,52,501.00 7,49,52,501.00 TOTAL 25,88,62,962.00 2,79,76,900.00 28,68,39,862.00 15. The assessee also supported its contention by enclosing VAT/ G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same but did not materlize during the relevant period on the relevant date of purchase. The assessee of course on its part provided the details of expenditure incurred towards those repair bills before the authorities to justify its claim that CCTV system had indeed broken during the relevant period. Further, Shri Sandeep Narang, Director of the assessee company had also deposed that billing software had collapsed and consequentially the assessee s staff had taken advance from customers on the estimated chits issued by them to the customers for specific items of jewellery. The supply of the said items of jewellery were made afterwards. However, the bills raised and the estimated chits of advance bills were of below two lakhs from a single customer and hence, there was no obligation on the part of the assessee to insist for the PAN of the customers while effecting the trade. The ld AO however, did not heed to the aforesaid contentions of the assessee and proceeded to treat the cash sales made during 07.11.2016 and 08.11.2016 as bogus by comparing the vouchers related to advance and retail invoices for the different periods and concluded without any basis, that the vouchers of cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade during 2016 compared well with the years 2015 . Sales during Qtr. Ending December for the year 2015 and 2016 are as under. Dec. 2015 80,42,73,485.09 Dec 2016 84,41,69,300.00 The appellant has also stated that the copies of the sales register as well as sales bill were provided to the search team on the 18/11/2016. Regarding the backdating of the bills the appellant has stated that due to the festive seasons followed by demonetization wherein the showrooms remained open till midnight, reporting large footfall and human constraint in generating proper sale bills on the same day there was no option but to generate them on the following days that is from 09/11/2016 till 11/11/2016. The appellant further mentioned that the IT in charge Sh. Rajesh Somani in his statement recorded during the search had stated that sale bills generated and saved on the server cannot be edited nor can the sequence be altered once a bill had been entered. All sale bills even though generated on 09/11/2016 till 11/11/2016 pertaining to 07/11/2016 08/11/2016 were serially numbered and not tampered with. 9.2 I have also gone through the standard operating procedures laid down by the CBDT regarding verificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regular feature of the assessee company s business and that the cash sales are incurred in all the years, since the inception of business . The percentage of cash sales to the total turnover which was 55.13 % for the period ended 31.03.2016 have actually come down to 38% for the period ended 31.03.2017 i.e. in the current AY 2017-18. Chart No. 2 Total turnover for the quarter ended Dec. 2015 and Dec. 2016. Particulars Amount Sales during Oct to Dec 2015 80,42,73,485.09 Sales during Oct to Dec 2016 84,41,69,300.00 These figures match with the VAT / GST returns filed by the appellant. Further the figures are comparable from year to year during the same period. The increase in the quarter October to December in the year 2016 is a small 4.9% as compared to the same quarter of 2015 Chart No. 3 : Comparative figures of sales for the month of Nov. 2014, 2015 2016. Particulars Amount Sales during Nov 2014 * * 1,66,14,800.00 Sales during Nov 2015 22,19,17,646.00 Sales during Nov 2016 29,17,66,881.00 * Business commenced in August 2014 It may be noted that the turnover of the appellant increased from Rs. 216.88 Cr. in FY 2015-16 to Rs. 283.69 Cr. in FY 2016-17 leading to corresponding incre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... touch Rs. 3 Crores even without there being exceptional circumstance, as were due to an announcement of demonetization. The above figures extracted from the immediately previous year suggest that sales do touch Rs. 3 Crores even without there being exceptional circumstances as were due to an announcement of demonetization. 9.4 From the analysis of the above charts it is observed that cash sales are a normal part of business in the assessee's trade, that in the assessee's trade there are both lean and peak periods therefore comparison of per day sales gives misleading results, that quarter ending December every year sees a lot of festivals as well as mahurat's and marriages and the assessee's business gets almost 40% of its business during this period, that comparative data of cash sales / collections during similar periods / dates compares favourably from year to year with normal business fluctuations and that the assessee company's account properly record and reflect these sales. The charts reflect that the appellant is regularly incurring cash sales. It is a normal business practice in the business of jewellery that part sales are done in cash. The percentage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence is available, it cannot be discarded to prefer an estimate. In this case, the primary evidence as banked upon by the Assessee to support his entries is not contradicted. No evidence or inaccuracy has been brought on record by the Assessing Officer before rejecting the same. It is a matter of fact that the transactions of sales which are a part of the returns submitted by the appellant to the other taxation authorities. 9.6 The Hon'ble ITAT Delhi in the case of Agson Global (P.) Ltd. Vs Assistant Commissioner of Income Tax, Central Circle-28, New Delhi [2020] as reported in 115 taxmann.com 342 has dealt with the similar facts and has pronounced that where cash was deposited by the assessee, who was engaged in purchase and sale of dry fruits etc., in the bank post demonetization, which was treated by the AO as unaccounted income, on the basis of comparative sales with earlier years, no discrepancy in stock, details of purchases and sales, filing of VAT returns etc. the said deposit cannot be added u/s 68 of the Act. 9.7 The appellant has rightly submitted that notwithstanding the announcement of demonetization effective from midnight of 08.11.2016, the government had not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inspected, valued and tagged by the assessee before 17.09.2016 (Valuation report dated 18/09/2016) to facilitate a true and a full declaration under the IDS 2016 Scheme. All these tags stood attached to each and every item of unsold jewellery at the time of the search on 17.11.2016. It would be important to note that the sales were properly recorded in the accounts, duly supported by sales bills, when the search took place on the appellant on the 17.11.2016. The assessee has maintained the stock register which was found during the course of the search and was tallied with the stock found. The assessee had maintained the complete stock details in its accounting software. The said books of accounts are audited by the tax auditor. No evidence of bogus sales or bogus purchases or non existing cash in the books of accounts was found during the course of search. Merely because the cash holding as on 7.11.2016 was not deposited immediately on 8.11.2016 cannot lead to the conclusion that the assessee did not have the said cash. It can merely lead to a suspicion but based on this addition cannot be made without evidence that assessee did not have that kind of cash available. 9.9 In this cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year had indeed increased to Rs. 283.69 crores when compared to Rs. 216.88 crores in the immediately preceding year. The assessee had given adequate justification for huge increase in sales during the fag end of October 2016 till the first fortnight of November 2016 quoting the reasons of festivals season which fact cannot be disputed at all. There is absolutely no basis for the ld AO to arrive at the daily average sales of a particular day and arriving at the availability of cash sales as on 08.11.2016. Further, the very same transactions of Rs. 11.99 crores, being the addition made by the ld AO is already part of actual sales already disclosed by the assessee in its return of income and in the books of account. We hold that adding this sum of Rs. 11.99 crores will only result in double addition. The entire sales made by the assessee had been duly reflected in the VAT/ GST returns and no infirmity in any manner whatsoever was found by the concerned authorities. These facts were duly appreciated by the ld CIT(A) by giving elaborate reasons which are already reproduced hereinabove. None of the factual observations made by the ld CIT(A) were controverted by the ld DR before us excep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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