9911796707
TMI Blog2023 (12) TMI 1348X X X X Extracts X X X X X X X X Extracts X X X X ..... mount standing in the books of account of the assessee would not attract section 68 because the cash deposits becomes self-explanatory and such amounts were received by the assessee from the customers against which the delivery of the vehicle was made to the customers. The question of sustaining the addition would not arise. We, therefore, hold that no addition was required to be made nwhich was found to be the cash receipts from the customers and against which delivery of vehicle was made to them. When the revenue partly considered the sales on the same invoice for an amount of Rs. 16,00,000/- why not on the balance. Thus, the facts of the case are different considering the finding recorded here in above. Therefore, the contention of the revenue based on the facts and circumstance of the case is not accepted and we direct to delete the addition - Decided in favour of assessee. - DR. S. SEETHALAKSHMI, JM AND SHRI RATHOD KAMLESH JAYANTBHAI, AM For the Assessee : Shri Shrawan Kumar Gupta (Adv.), Shri S. L. Jain (Adv.) Shri Shyam Sundar Goyal For the Revenue : Shri A. S. Nehra (Addl. CIT) ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal is filed by assessee and is arising out of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, hence the same may kindly be deleted in full. 3. The ld. AO has also grossly erred in law as well as on the facts of the case invoking the provisions of Sec. 115BBE for taxing the income at the higher rate, without issue any show cause notice and also not applicable in the present case. The Ld. AO has also erred in not considering the vital facts and material available on record in their true perspective and sense. Hence the provisions of Sec. 115BBE so invoked by the ld. AO and confirmed by the ld. CIT(A) are also being contrary to the real facts of the case and not according to the provision of law, hence the same is illegal, bad in law, against the principle of natural justice the same may kindly be deleted in full. 4. The ld. AO has grossly erred in law as well as on the facts of the case in charging the interest u/s 234A, B,C. The interest so charged is being totally contrary to the provision of law and on facts of the case and hence same may kindly be deleted in full. 5. That the appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing. 3. The fact as culled out from the records is that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-18 out of which Rs. 2,28,20,447/-pertains to 09.11.2016 to 31.12.2016 which is 14.82% of the total deposits. The assessee has claimed that the major source of cash deposit was sale proceeds. From the details so kept on record ld. AO noticed that the assessee has claimed goods of Rs. 4,29,08,725/- were sold in the month of October and November (upto 8th) which is unprecedented. Whereas total cash sales for AY 2017-18 is Rs. 10,74,41,749/-. It means that the assessee made 40% of the total cash sales in these 39 days. If we compare these sales to the rest of the months, average monthly sales is Rs. 60 lacs only. Thus sale recorded in October and November (upto 8th Nov) is purely adjustment and sounds abnormal. And therefore, it is also not justified. The ld. AO further noted that the cash sales for the same period i.e. in the month of October and November (upto 8th Nov) (AY 2016-17) are Rs. 1,74,51,293/- only. So, there is no any seasonal factor (like Festival etc) is affecting the sales of the assessee every year. The assessee is simply making a story of cash sales as a source of cash deposits. The Product dealt with by the assessee i.e. silver and gold ornaments is not a daily usa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... description of the items purchased and kept as stock in trade. The assessee maintains stock register in Qty in Grams only having columns of Qty Inward, Qty Outward, Closing Qty. In such case, it becomes unverifiable whether the assessee had a stock of the goods or not which has been claimed as sales by him. e.g. We do not know if the assessee had stock of 20 pcs of chains or earnings which has been claimed by it as sales on 8th November, 2016. g) Similarly, on verification of the purchase bills also it was noticed that such bills also do not have any description of the goods. The bills mention Gold Jewellery 22K and Qty in Gms only. Therefore, what has been purchased and entered into stock register remains unverifiable and so it cannot be accepted that the assessee has sold the same goods. h) Moreover, the average cash balance of the assessee is much lower ranging between 20 lac to 30 lac from 01.04.2016 to 30.09.2016 whereas the assessee has shown cash balance of Rs. 34 lac in October and Rs. 1.82 Cr as on 08.11.2016. Thus, it is clear that the assessee enhanced his cash balance in the graft of cash sales to unverifiable persons. Main reason for such huge increase in cash balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the appellant. 6.2 The brief facts of the case are that the case of the assessee was selected for scrutiny under CASS. The appellant is in the business of manufacturing and trading of gold ornaments and trading of watches and filed their ITR for A.Y.2017-18 at an income of Rs. 29,09,080/-. During the course of assessment proceedings, it was noted that there were abnormally high cash deposits into the bank account of the assessee which were claimed to be out of cash sales. The AO analysed the sales trend and cash deposits for the immediately preceding year 2015-16 vis- -vis the current financial year 2016-17 and concluded that huge cash sales shown by the appellant in his books of accounts is nothing but merely an attempt by the assessee to make an attempt to bring the unaccounted income in the form of cash sales and deposited the same in the bank account. The detailed reasoning for the conclusion is elaborated by the AO at page No.6, 7 and 8 of his order. Holding the credits to the extent of Rs. 1,78,08,630/- as unexplained, the AO completed the assessment by making an addition of impugned unexplained credits u/s.68 of the Act. Aggrieved by the addition, the appellant has fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to prove prima facie the identity of creditors, the capacity of such creditors and lastly the genuineness of transactions . 7.4 Similarly, in the case of CIT v. Precision Finance (P.) Ltd [1994] 208 ITR 465 (Cal)], it was observed that it is for the assessee to prove the identity of creditors, their creditworthiness and genuineness of transactions . 7.5 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 . 7.6 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: 36 [Provided also] that nothing contained in the first proviso 37 [or second proviso] shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10. 7.8 That a bare perusal of the aforesaid deeming section therein reveals there has to be credit of amounts in the books of accounts maintained by the assessee, such credit has to be of a sum during the previous year, and the assessee offered no explanation about the nature and source of such credit found in the book, or the explanation offered by the assessee in the opinion of the Assessing Officer is not satisfactory, it is only then the sum so credited may be charged to income-tax as income of the assessee for that previous year. The expression the assessee offers no explanation means where the assessee offers no proper, reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be made with use of prohibited currency; the Hon'ble ITAT takes a stern view on Assessee's conduct by observing that, The persons like assessee have given a setback to well-intended and well-thought policy of Government of India and they have used this as an opportunity to convert their or others' ill-gotten money into bullions....The above said act of the assessee is not only against the law but also against the interests of the nation. ; 7.10 Thus, the judicial authorities have taken an extremely adverse view of such practises adopted by various assessees to make an attempt of aggregating their books and trying to explain the huge cash deposits by making bogus sales entries in their books of accounts. 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 AO 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. 1,78,08,630/- is confirmed. As a result, the appeal is dismissed. 8. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 out of which Rs. 2,28,20,447/-pertains to 09.11.2016 to 31.12.2016 which is14.82% of the total deposits. The ld AO has further stated that 1). It has also been noted that the cash sales in the month of October and November(upto 8th Nov) is Rs. 4,29,08,725/- whereas total cash sales for AY 2017-18 is Rs. 10,74,41,749/-. It means that the assessee made 40% of the total cash sales in these 39 days, If we compare these sales to the rest of the months, average monthly sales for Rs. 60 lacs only. Thus sale recorded in October and November(upto 8th Nov) is purely adjustment and sounds abnormal. And therefore, it is also not justified. 2). The cash sales for the same period i.e. in the month of October and November (upto 8th Nov) (AY 2016-17) are Rs. 1,74,51,293/- only. So, there is no any seasonal factor (like Festival etc) is affecting the sales of the assessee every year. The assessee is simply making a story of cash sales as a source of cash deposits. 3). Product dealt with by the assessee i.e. silver and gold ornaments is not a daily use product. It is a luxury product which is mainly used by the limited class of the society. So, its not that the demand for assessee s goods suddenl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a stock of the goods or not which has been claimed as sales by him.e.g. We do not know if the assessee had stock of 20 pcs of chains or earnings which has been claimed by it as sales on 8th November, 2016. 10). Similarly, on verification of the purchase bills also it was noticed that such bills also do not have any description of the goods. The bills mention Gold Jewellery 22K and Qty in Gms only. Therefore, what has been purchased and entered into stock register remains unverifiable and so it cannot be accepted that the assessee has sold the same goods. 11). Moreover, the average cash balance of the assessee is much lower ranging between 20 lac to 30 lac from 01.04.2016 to 30.09.2016 whereas the assessee has shown cash balance of Rs. 34 lac in October and Rs. 1.82 Cr as on 08.11.2016. Thus, it is clear that the assessee enhanced his cash balance in the graft of cash sales to unverifiable persons. Main reason for such huge increase in cash balance is fake cash sales booked by the assessee in the month of October and November (upto 8th). The ld. AO on the basis of above allegation and observation has held that the assessee has booked such sales during these 39 days part of which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15BBE. Against the order of the ld. AO assessee has filed the appeal before the ld. CIT(A) who has confirmed the order of the ld. AO vide 3 to 8 of CIT(A) order. The ld. CIT(A) has referred some judgments but the same are not applicable in the present case. Hence this appeal. SUBMISSIONS: 1. No Show cause notice issued before making the addition, invoking the provisions of Sec. 68, Sec. 115BBE, and before pointing out the various allegation: At the very outset it is submitted that the ld. AO has not issued any show cause notice before making the addition of Rs. 1,78,08,630/-, before invoking the provisions of Sec. 68 and 115BBE and before making various allegations as made in the assessment order. As clearly appearing from the various cause notice. As under A. 143(2) Notice issued on 22.09.2018 pgae 2-3 of A. This is a form notice for selecting the case for Scrutiny, in this notice also nowhere it has been stated that whether the case is selected for limited scrutiny and complete scrutiny, which was mandatory as per CBDT circulars. B. Notice U/s 142(1) issued on 05.10.2019. pgae 4-8 of Annexure A: in the is notice the ld. AO has asked to the assessee various details which has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which the Appropriate Authority reached the tentative conclusion that the transaction is undervalued. It also does not disclose any reason why the Appropriate Authority has reached the tentative conclusion that the transaction has been undervalued. It is further to be seen here that in ground (b) of the petition a grievance in this regard has been made by the petitioners and in the affidavit in reply filed by the respondent/ competent authority, the competent authority does not state the reasons for non-disclosure of the material as also the reasons in the show-cause notice. The basic approach of the authority is erroneous. Unless the Appropriate Authority discloses the reasons why it prima facie finds that the transaction is under valued, the person to whom the show-cause notice is issued would not be able to put up a defence. Thus issuance of such show-cause notice would defeat the very purpose for which the show-cause notice is required to be issued. A showcause notice which does not disclose the material on the basis of which the Appropriate Authority has reached the tentative conclusion that the transaction has been undervalued and the reasons for reaching that tentative c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are Rs. 1,74,51,293/- only i.e for 5,63,000/- per days in last year. Thus to this extent also the ld. AO has not accepted the sales, in this ratio the ld. AO has also failed to consider the rate of gold as in the last year the average rate of gold was about 26000/- (24KT) and 24000(22KT) and in this year the rate of gold 31000/- and 29000/- thus there was increase of 20% which is to be added, in support we are enclosing herewith rate comparison chart of two years As annexure B, further the sale of 4 hours of 8th November cannot be denied and the sale of from 8.00 PM to 12.00 PM was valid and allowed in old notes and the ld. AO herself admitted the same, this demand also cannot be denied. And a businessmen or any person would not like to loss opportunity if allowable as per law. 2. 3). Product dealt with by the assessee i.e. silver and gold ornaments is not a daily use product. It is a luxury product which is mainly used by the limited class of the society. So, its not that the demand for assessee s goods suddenly increased which resulted into a huge cash sales of Rs. 4,29,08,725/- in October and November(upto 8th Nov). The assessee did not attempt to explain the reasons for such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PB34-47) and we observe that the reduction of stock is matching with the corresponding sales and the assessee has not declared the exorbitant profits. Though certain suspicious features were noticed by the lower authority, both the authorities did not find any defects in the books of accounts and trading account, P L account and the financial statements and failed to disprove the condition of the assessee. Suspicion may be strong however cannot take the place of reality, are the settled principles kindly refer Dhakeshwari Cotton Mills 26 ITR 775 (SC) also refer R.B.N.J. Naidu v/s CIT 29 ITR 194 (Nag), Kanpur Steel Co. Ltd. v/s CIT 32 ITR 56 (All).Also refer CIT v/s KulwantRai 291 ITR 36( Del). In CIT v/s Shalimar Buildwell Pvt Ltd 86 CCH 250(All) it has been held that the AO made the addition merely on suspicion which was not desirable in the eye of law. 1.4 Kindly refer (a) Reliance is placed on same and identical matter where Hon ble VISAKHAPATNAM ITAT Bench (DB) in the matter of M/s Hirapanna Jewellers, Visakhapatnam ITA No. 253/2020 for AY 2017-18 has very well supported the view of assessee as follows; 9. In view of the foregoing discussion and taking into consideration of all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order in days in starting of years and when the time limit is going to expired they passed so many assessment orders in a days or weeks. Thus every person is expert their own field. 2. 7). The assessee was asked to produce the bills for such sales. The same were produced but such bills are not verifiable. Generally jwellers maintain a database of their customers with their complete address and contact number but here the bills do not contain proper name and address of the purchaser. In such case, the transaction is genuine or not cannot be ascertained.:- In this regard it is submitted that the ld. AO has not stated how the sales bills is not verifiable, when she has not made any inquiry nor rejected the books of accounts. And in the IT act it is not required to maintain the data base of the clients and the assessee cannot compel to the customers to provide all the details at that time in the permissible limit. At the business premises there is systematic arrangement as sales man, cash counter, note/rupees counting machine, bills checking, computer, tally etc.. The doubt may be raised where the shop is running by one or two persons. And in the crowed some data is left then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cash transaction, which were verifiable, have been verified and scrutinised by the Income-tax Officer and there is nothing wrong whatsoever found with them. As to the cash transactions also, the quantity of sugar sold has not been disputed. The rates at which sugar was sold were not such as would excite suspicion by reason of being lower than the prevailing market rates. The names of the customers are also entered in respect of the transaction. All that is not done is that the addresses are not entered and on enquiry the assessee was unable to supply the addresses. Since, having regard to the nature of the transaction and the manner in which they had been effected, there was no necessity whatsoever for the assessee to have maintained the addresses of cash customers, the failure to maintain the same or to supply them as and when called for cannot be regarded as a circumstance giving rise to a suspicion with regard to the genuineness of the transactions. The Tribunal, therefore, was not right, in our opinion, in setting aside the order of the Appellate Assistant Commissioner and restoring that of the Income-tax Officer. There are no circumstances disclosed in the case nor is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard it is submitted that it is on the businessmen how to maintain the cash and when cash to be deposited in the bank, there may be so many reason not to deposit cash daily in the bank, when the cash was as per the cash book which is the part of books of account and has not been rejected, the cash was supported with cash books sales, ledger etc. then how the ld. AO can doubted on her accepted action. 3. The ld. AO on the basis of above allegation and observation has held that the assessee has booked such sales during these 39 days part of which is not found genuine as it is not verifiable and neither sales nor purchases for such sales are found verifiable during the course of assessment. The assessee has already deposited cash of Rs. 3.25 Cr in the month of October. So, sale for the month of October will not have effect on cash balance on 8th November which is claimed to be the source of cash deposited during demonetization.:- vide entire para 2 as above. The ld. AO has not brought any evidence on record that the sales is not genuine, the ld. AO has not proved that the purchase was bogus, otherwise she could have rejected the books of accounts or made the addition on that ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o treat this amount as income from undisclosed sources. It is not a fit case for treating the amount of Rs. 81,000 as concealed income of the assessee and consequently imposition of penalty was also not justified in this case. 7. Basically, the Tribunal has come to the decision after a review of the entire facts. The Tribunal does not appear to have failed to consider any relevant material and whether the Tribunal has appreciated the facts correctly or not cannot be gone into in the reference jurisdiction. It is the appraisal of facts by the Tribunal which is the final fact finding body. No question of perversity has been raised. 8. Therefore, questions Nos. 1 and 2 in Matter No. 1865 of 1991 are answered in the affirmative and in favour of the assessee. 9. The question in Matter No. 1863 of 1991 is also answered in the affirmative and in favour of the assessee. 10. There will be no order as to costs. Also on the decision of Hon ble ITAT, Nagpur Bench in the case of M/s Heera Steel Limited vs ITO (2005) 4 ITJ 437in which it was held that cash sales cannot be equated with cash credit under section 68. (d) The AO has made addition by invoking the provision of section 68. The precondi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndeclared receipts from the assessee s transportation business and net profit on such undeclared business receipts is directed to be applied. Given that the assessee has declared net profit of 2.39% which has been accepted by us while adjudicating earlier grounds, the same net profit is directed to be applied on such business receipts of Rs 13,55,000. In the result, the assessee s cross objection is partly allowed. Thus alternatively and without prejudice at the worst the ld. AO could have applied the Net profit rate on such alleged non geneuine sales of Rs. 1,78,08,630/- as declared by the assessee at bthe rate of 0.96% which is also higher in comparison to earlier years. 5 Addition u/s 68 is not warranted: As the ld. AO has made the addition by invoking the provisions of Sec. 68 which is not applicable, because the cash deposited in the bank account is not a credit entries taken from anywhere or from others it is the assessee s self money received from sales. And if the ld. AO was of the view that it was the undisclosed or unexplained money then at the worst addition was to be made u/s 69A not u/s 68. The ld. AO one side accepted the books of accounts and other side he made the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from customers cannot be treated as unverifiable and this cannot be a ground for rejection of books of account. We noted from PB Page 163 of the paper book i.e. the list of debtors where total sales to such debtors was amounting to Rs. 41,75,995/- against which Rs. 13,30,000/- was received at the time of sales and balance Rs. 28,45,995/- was outstanding which was receivable from the debtors. It is also observed from the records that lower authorities considered the sale of Rs. 41,75,955/- made to the parties as genuine and while computing the total sales of the assessee and even for estimating the net profit, the lower authorities had considered these sales as part of turnover and thus treated the cash received from the debtors immediately at the time of Sales of Rs. 13,30,000/- and Rs. 2,49,515/- received after 8-11-2016 as genuine and verified. We feel that out of total amount of Rs. 12,17,48,500/- deposited into bank account, the cash realized from debtors was of Rs. 25,96,480/- which is a meager amount looking to the quantum of sales of the assessee and this cannot be treated as nongenuine. It is also noted from the record that the AO made the telephonic enquiry / verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be derived from the audited books of account therefore there is no justification in estimation of income by applying NP rate and accordingly the lower authorities are directed to delete the addition of Rs. 47,72,297/- sustained by ld CIT(A). The case of the assessee is much more strong footing because in the case of assesee the ld. AO ha neither invoked sec. 145(3), nor rejected the books of accounts nor estimated the profit rather made entire amount as addition, nor issued any show cause notice nor made any inquiry. 7. Having huge cash sales is not new for assessee's business looking to the nature of business and past history: As we have been already described in our submission that the nature of business of assessee is trading of gold, silver jewellery and watches. A big portion of sale is done in cash in this business that is why having the huge cash in safe is not unprecedentedly, in support of this contention we are being produced a detail statement of sales comprises cash sales and cash deposited into bank account year wise; vide page 2-3 4 assessment order and Annxure-C The above Figures of sales /cash sales /cash deposits into bank are indicating that the cash sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO presumed such Cash sales of Rs. 1,78,08,630/- as Unexplained Income rather not Sales than first she should eliminate such Rs. 1,78,08,630/- from books of accounts and (particularly from Sales account) then calculate the Net Profit otherwise this receipts of Rs. 1,78,08,630/- is being added twice one under the head of Sales Account, itself and other as Unexplained Income u/s 68 of the act, which is clearly adverse of the Rule of law, which is nurtured through Article 265 of the constitution. 9.3 Here it is appreciable that assessee hammering this facts in assessment Proceedings also and to till date that cash sales is duly entered into Books of Accounts under the head of Sales and whatever Profit calculated in his Income Tax Return it is based on such Sales which includes such Questioned Cash sales of Rs. 1,78,08,630/-. 10. Addition made without corroborative material and without rebutting produced evidences: The ld. AO as well as the ld. CIT(A) have grossly erred in law as well as on the facts of the case in making addition of Rs. 1,78,08,630/- on account of alleged Undisclosed Income U/s 68 alleging that cash sale is not genuine, but without bringing any cogent material in supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not have been any other result except what has been shown by the assessee in the books of accounts. Therefore, the order of the Tribunal cannot be sustained 11. The Assessee is a law abiding person and do their business within the limitation as provided by the legislature therefore what he could do in following law of land, he did. It is registered with Income Tax Department filling their Income Tax Return continuously and regularly after getting audited their Books of Accounts from Qualified Chartered Accountants and paid the Tax as due. Similarly Registered under VAT/GST and filling their monthly as well as Annual returns after depositing due Tax. It is also apposite mention here that whatever transactions are being shown by the books of accounts of the assessee have been submitted GST department also and the complete GST Returns also have been submitted before Ld. AO as well as Investigation team for their verification and it is also appreciable that GST department has accepted such Sales and Purchase Transaction in same manner without making any adverse comments. Therefore it is also thinkable that if one Central Government Revenue department accepts the results of Books o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een made through account payee cheque up to that date. In support for example we are producing 3month stock inventory register. As annexure-C 12.3 As the assessee maintaining Purchase /sales and other documents In this year the Deepawali was on 30.10.2016, Annkut on 31.10.2016 and on 01.11.2016 there was Bhaiya Duj and before Deepwali there were heavy rush or pressure on the shops. Hence the cash in hands in the Months of Oct. 2016 has increased day by day and accumulated till the first week of Nov.2016. And after Deepwali about one week every business men live in easily mood and feel free for some time. However on 10th /11th November the marriages were going to be started, as on Ekadahsi being the abhooj Muharat there were so many marriages in Rajasthan or India and due to this marriage season the sale of jewellery has increased drastically and it is very know facts and the Cash has been accumulated and deposited in the bank and the assessee was not known that there shall be Demonetization from 08.11.2016. 12.3 Thus cash deposited by assessee was part of business and generated during day to day business transaction and was fully disclosed and explained in books of accounts includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery important to rebut assesse s contention, if for a while we follow the contention of the Ld. AO than we are not able to provide an amicable reply regarding Inventory or stock position because if the cash was not from the sale then there should be excess stocks to that extent, and the ld. AO has failed to state where the stock has gone has gone to that extent. These facts support our case and against the case of the lower authorities. In this regard we placed our reliance on Jurisdictional High Court order in the matter of CIT Vs. M/s Ceramic Industries and M/s Ceramic Tableware (P) Ltd. ITA No. 117/2008, 65/2009,44 and 56 of 2010, 83/2011,63 and 65 of 2014, 124,135 and 198 of 2016 dated 25/05/2017. Where it has been held We agree with the arguments of the ld. AR that the main objection raised by the AO was that input/output ratio in various months has the inconsistency which has been duly explained by the assessee vide letter dated 26.03.2004 and the second objection by the AO was that the sister concern M/s. Bharat Potteries Ltd. has declared more yield and more gross profit, has also been explained by the assessee vide the same letter dated 26.03.2004. Therefore, the inconsist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount-books showing B to be indebted to him to this amount. The entries are relevant, but are not sufficient, without other evidence, to prove the debt. COMMENTS Admissibility Entries in account books regularly kept in the course of business are admissible though they by themselves cannot create any liability; Ishwar Dass v. Sohan Lal, AIR 2000 SC 426. Unbound sheets of paper are not books of account and cannot be relied upon; Dharam Chand Joshi v. Satya Narayan Bazaz, AIR 1993 Gau 35. Books of account being only corroborative evidence must be supported by other evidence; Dharam Chand Joshi v. Satya Narayan Bazaz, AIR 1993 Gau 35. Here cash deposited by the is supported with the cash book and the cash books is also supported with the books of accounts maintained by the assessee which is also supported with sales/cash sales, purchase, stock register, ledger, bank accounts, bills, vouchers and other documents. And the ld. AO has not rejected all these or not invoked provision of section 145(3), otherwise she could have invoked the same. Thus cold and hot breath cannot blow together. 15. Addition made without bringing any cogent material on record; Simultaneously Ld. AO could not bring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e spent the amount for some other purposes. The orders of Assessing Officer as well as Commissioner of Income Tax are completely silent as to for what purpose the earlier withdrawals would have been spent. As per the cash book maintained by the assessed, a sum of Rs. 10,000/- was being spent for household expenses every month and the assessed has withdrawn from bank a sum of Rs. 2 lacs on 4th December, 2000 and there was no material with the Department that this money was not available with the assessed. It has been held by the Tribunal that in the instant case the withdrawals shown by the assessed are far in excess of the cash found during the course of search proceedings. No material has been relied upon by the Assessing Officer or Commissioner Income Tax(A) to support their view that the entire cash withdrawals must have been spent by the assessed and accordingly, the Tribunal rightly held that the assessment of Rs. 2.5 lacs is legally not sustainable under Section 158BC of the Act and the same was rightly ordered to be deleted. 17. The above being the position, no fault can be found with the view taken by the Tribunal. Thus, the order of Tribunal does not give rise to a questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year and assessment has been disclosed as below: Asst. Year Income from profession as per return Remarks, if any 2002-03 1,95,150 Assessed u/s. 143(1) Year under appeal u/s. 260A before this 2003-04 2,34,540 Hon'ble High Court 2004-05 2,24,820 Assessed u/s. 143(1) 2005-06 1,89,000 Assessed u/s. 143(1) 2006-07 2,51,346 Assessed u/s. 143(1) 2007-08 2,07,702 Assessed u/s. 143(1) Assessed u/s. 143(3) by ITO, W-II, 2008-09 2,64,311 Azamgarh dated 31.12.2009. 10. A bare perusal of the aforesaid chart indicates that for the A.Y. 2008-09 the assessee had been assessed under Section 143(3) of the Act at a total income of Rs. 2,84,371/-. In that assessment the books of account of the assessee were also accepted. It clearly appears that the income disclosed by the assessee in the present year is similar or comparable to the income which the department assessed at the hands of the assessee five years later. This fact itself indicates that the rejection of books of account and the consequential best judgment assessment made by the assessing officer in the present year is wholly excessive, arbitrary and unfounded. 11. In view of the above, we answer question no.1 in favour of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stands dismissed. pay the costs of the assesse. 16.1 Invocation of Section 115BBE is illegal: The invocation of the provision of Section 115BBE of the act, by the ld. AO is illegal, bad in law, against the principle of natural justice. Because firstly the ld. AO has not issued any show cause notice for that we have already stated in above para 1 and also as under Recently the Honble ITAT Jodhpur Bench Jodhpur in the case of Smt. Suraj Kanwar Devra vs ITO ITA 50/Jodh/2021 dt. 23.11.2021 It has been held that The AO has not issued any show cause notice before invoking the provision of Sec. 115BBE for taxing the income on higher rate. It was mandatory on the part of the AO to issue the specific show cause notice to this effect asking to the assessee as to why the income should not be taxed under sec. 115BBE before doing so. It is very settled legal position that a person (assessee) is entitled to opportunity to show cause as to why not the income of the assessee is determined and charged or taxed in the manner as proposed by the A.O. but in the instant case no such type of opportunity had been provided but the AO has failed to do so, which is against the principal of natural justice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Financial statement but making addition on the basis of Cash deposited to that extent and duly recorded in the Books of Accounts therefore this act of the Ld. AO many Questions left unanswered which are mainly what would be Sales as recorded in the books of account for Rs. 1,78,08,630/- and similarly what would be of Inventory as sold out in support of such Cash of Rs. 1,78,08,630/-. If we follow the presumption of the Ld. AO then many figures will have to be fixed on reveres angle such as Sales would be reduced by Rs. 1,78,08,630/- resulted Net Profit would have been converted into Loss by Rs. 1,78,08,630/- and ultimately total income comes same as being shown by the assessee in their Return. 18. We also would like to submit that the judgments and WS given in the Honble ITAT order in the case of M/s Motisons Jewellers Ltd.(Supra), may kindly be treated as part of our WS and also consider here. 19. Hence the disallowance so made by the AO may kindly be deleted in full and oblige. 6. To support this various contentions recorded in the written submission the ld. AR of the assessee relied upon the paper book wherein the evidence / decision were placed before us the same are as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / s Rukmani Jewellers Pvt. Ltd. ITA No. 539/JPR/2023, A.Y. 2017-18-reg Respected Sir/Madam, Kindly refer to today's hearing in the above case today. In addition to my arguments, I had relied on following case laws in favour of revenue. The copies of same are submitted herewith in duplicate alongwith my written submission. 1. Hon'ble Delhi High Court held in the context of issuance of share capital and in the case of PCIT Vs Youth Construction Pvt. Ltd. [(2013) 357 ITR 197 (Del)] it involves three ingredients, namely, the proof regarding the identity of the applicants, their creditworthiness to purchase the shares and the genuineness of the transaction as a whole . This approach has been adopted by Hon'ble Court above all along. (Page No. 1 to 6) 2. Hon'ble Calcutta High Court in the case of CIT vs. United Commercial and Industrial Co(P) Ltd. [1991] 187 ITR 596(Cal)], has held that under the scheme of Section 68 it was necessary for the assessee to prove prima facie the identity of creditors, the capacity of such creditors and lastly the genuineness of transactions . (Page No. 7 to 9) 3. Hon'ble Calcutta High Court in the case of CIT vs Precision Finance (P) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of demonetization. In both circumstances, the action of the assessee was not permissible in the eyes of the law . (Page No. 27 to 91) The Hon'ble ITAT holds the addition to be sustainable under Section 68, relies on SC ruling in Apex Labs to reject Assesses's submission that even though the transactions are held illegal by the Revenue only the income can be taxed under the Act which does not differentiate between legal and illegal incomes. Also holds that demmonetised currency was received by the Assessee and was wrongfully deposited with the bank, thus, upholds the assessment order by concluding that the Assessee mischievously and unscrupulously brought the demonetized currency into the network. Discards Asessee's claim that money was received from the customers and upholds Revenure's stand that no legal sale of gold could be made with use of prohibited currency: the Hon'ble ITAT takes a stern view on Assessee's conduct by observing that, The persons like assessee have given as setback to well-intented and well-thought policy of Government of India and they have used this as an opportunity to convert their or others ill-gotten money into bullion. The above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 to 30.09.2016 which suddenly increased to 1.82 Cr as on 08.11.2016. (viii) AO has rightly adopted sale of Rs. 16 lacs in 8 days from 1 November to 8 ^ a November, 2016 (Rs. 2 Lac per day which is average daily annual sale) as against claimed sale of Rs. 1.94 lac and had rightly added excess sale of Rs. 1.78 Cr as un- explained credits. 8. In view of the facts submitted above and the relied court decisions AO has rightly held and ld. CIT(A) has rightly rejected the appeal of the assessee holding that assessee failed to prove satisfactorily the amounts credited in its books of accounts and in holding that assessee has made an attempt of aggregating its books and trying to explain the huge cash deposits by making bogus sales entries in its books of Accounts. 10. In the rejoinder the ld. AR of the assessee submitted that the assessee has filed the details of the stock even the sales recorded and thereby reduction of the stock is also not considered by the ld. AO and has merely based on surmises and conjectures added the cash sales which supported by the bills, value added tax and is made out of the stock already recorded in the books cannot be denied merely the sales is made during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , I find no infirmity in the order of AO. Accordingly, the addition made of Rs. 1,78,08,630/- is confirmed. As a result, the appeal is dismissed. 12. The bench noted that the points or allegation noted by the ld. AO in his order is that a) the assessee claimed to have sales of Rs. 1,00,33,680/- for only one day i.e.8th November 2016. Against this contention the bench noted that the assessee has provided the stock details, bills and cash book. No defect whatsoever found in these primary records of the assessee. There is not doubt about the sales or that of the purchase with the stock of goods sold. All the details required to prove the sales made by the assessee were provided and both the lower authorities have not found any defects. As regards the receipt of cash from the customer the ld. AR of the assessee relied upon the findings of jurisdiction high court judgement in the case of Smt. Harshil Chordia Vs. ITO reported at 298 ITR 349 (Rajasthan-HC). In this case the Jurisdictional Hon ble High Court held that So far as question No. 2 is concerned, apparently when the Tribunal has found as a fact that the assessee was receiving money from the customers in hands against the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls. How it is possible that amidst such rush in the shop, the assessee could enter amount and weight and took a print out and got it signed by these 107 purchasers. Even On this issue bench noted that the assessee has submitted the invoice. On this invoice only the date is written and it is not finding recorded on oath that sales is only after 8PM. Since the period was of marriage seasons it was not under dispute that the assessee not sold the goods. Therefore, once the goods is supported by the Invoice recorded in the books and no defects found merely the same is recorded on the date of demonetization addition of cash receipt cannot be made in the hands of the assessee. d) The assessee was asked to produce the bills for such sales. The same were produced but such bills are not verifiable. Generally, jewelers maintain a database of their customers with their complete address and contact number but here the bills do not contain proper name and address of the purchaser. On this issue since there is binding judgment of jurisdictional high court in the case of Smt. Harshil Chordia Vs. ITO reported at 298 ITR 349 (Rajasthan-HC) we do not find merits in the arguments of the revenue. e) F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, cash book and invoice presented in the assessment proceedings. Merely the assessee unable to record the mobile number it does not make the sale as non-genuine and we find support of this contention from the decision of the jurisdictional high court in the case of Smt. Harshil Chordia Vs. ITO reported at 298 ITR 349 (Rajasthan-HC)(supra) we do not find any merits on the finding of the ld. AO and that of the ld. CIT(A) in disbelieving the sales recorded by the assessee as the sales is in course of business is duly supported by the invoice and delivery of the goods recorded in the books of the assessee. The cash is generated out of the stock already on record and thus the sales made by the assessee company is genuine sales recorded in the books of account. All the details required to prove the sales made by the assessee were provided in the assessment proceedings. Now on the part of the receipt of the cash from the customer the jurisdiction high court judgement in the case of Smt. Harshil Chordia Vs. ITO reported at 298 ITR 349 (Rajasthan-HC) held that So far as question No. 2 is concerned, apparently when the Tribunal has found as a fact that the assessee was receiving money ..... X X X X Extracts X X X X X X X X Extracts X X X X
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