9911796707
TMI Blog2023 (12) TMI 1348X X X X Extracts X X X X X X X X Extracts X X X X ..... such amount 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. X X X X Extracts X X X X X X X X Extracts X X X X ..... to the provision of law, 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 fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted that the assessee has made cash deposit of Rs. 15,39,33,476/- in the AY 2017-18 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 Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mobile/ Contact Numbers. f) In the stock register also, the assessee has not provided any 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 balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of details available on record in the form of Assessment order, Statement of facts & Grounds of appeal filed 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-à-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 assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .) Ltd [1991] 187 ITR 596 (Cal)], Hon'ble Calcutta High Court 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". 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 alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless (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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order by concluding that the Assessee mischievously and unscrupulously brought the demonetised currency into the network; 7.9.3 Discards Assessee's claim that money was received from the customers and upholds Revenue'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 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 ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de to such parties (for Verification) and iv) in case of bill amount exceeds Rs. 2 lacs, provide PAN of the purchaser. In response thereto the assessee submitted the reply admittedly. Thereafter the ld. AO has stated that the assessee has made cash deposit of Rs. 15,39,33,476/- in the AY 2017-18 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbers. 9). In the stock register also, the assessee has not provided any 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. 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 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vious year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year The ld. AO also invoked the provisions of Sec. 115BBE. 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 selectin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the show cause notice or without confronting to the assessee. 1.4 In the case of Shreyas Builders & Anr. vs. M.d. Kodnani & ors.* (2000) 161 CTR 0527 : (2000) 242 ITR 0320 it has been held that A perusal of the show-cause notice shows that it neither discloses the material nor the reasons. It is a cryptic notice. It does not indicate the material on the basis 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have stated above that just after the marriage season is started and in 2016 the Deepawali was on 30th Oct. 2016 and after 2-3 days gape the shopping of marriages is started. Hence the allegation of the ld. AO is absolutely wrong without seeing the same. Further when the ld. AO herself admitted that in the in the month of October and November (upto 8th Nov) (AY 2016-17) 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch has direct nexus with the sales. The movement of stock is directly linked to the purchase and the sales. Audit report u/s 44AB, the financial statements furnished in paper book clearly shows the reduction of stock position and matching with the sales which goes to say that the cash generated represent the sales. The assessee has furnished the trading account, P& L account (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 suspici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business in a pressure movement. He ignored that there was fourteen staff members with assessee there apart 4 directors and their family members. In support kindly see PB 46 where in the P&L account assessee has paid or shown salary of 51.91 Lakhs to employees and the ld. AO has not disputed any expenditure calimed in the P&L account nor trading account. For Example an AO not passed an assessment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be doubted for this reason. In the case of R.B. Jessaram Fatehchand Sugar ... vs CIT , ... on 30 March, 1969 Equivalent citations: 1970 75 ITR 33 Bom "4. In our opinion, the assessee's account books are to be accepted, unless, on verification, they disclosed any faults or defects, which cannot be reasonably and satisfactorily explained by the assessee. All the other transactions, except 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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).: - In 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be made in respect of the amount which was found to be cash receipts from the customers against which delivery of goods was made to them". (b) CIT vs Associated Transport Pvt. Ltd. on 4 January, 1994 Equivalent citations: 1995 212 ITR 417 Cal. "6. The Tribunal was of the view that the assessee had sufficient cash in hand. In the books of account of the assessee, cash balance was usually more than Rs. 81,000. There is no reason to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (h) In the case of Rameshwar Meena in CO No. 35/Jp/2017 A/o ITA No. 420/Jp/2017 dt. 30.04.2019 this Honble ITAT has held that Given the fact that such bank account maintained with the Axis Bank was not reported by the assessee at the time of filing of return of income and the fact that the assessee is engaged in the transportation business and in absence of any contrary findings by the lower authorities regarding any other source of income, such cash deposits are treated as undeclared 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 warrant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of account should not be rejected u/s 145(3) of the Act. It is further noted from the record that the assessee claimed that out of total claim of Rs. 12,17,48,500/- deposited into bank account in demonetized currency, the amount of Rs. 25,96,480/-was realized from its debtors and Rs. 11,86,250/- was received as advance from the customers and the ld. CIT(A) in her order treated the entire cash sales and corresponding cash deposit as genuine. Thus the amount received from debtors/ advance 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived at the conclusion with regard to correctness or completeness of the accounts of the assessee or the method of accounting employed by it. In the instant case, it was not the case that the assessee had not followed either cash or mercantile system of accounting. It was also not the case that the Central Government had notified any particular accounting standard not followed by assessee. Further the assessee maintains proper books of account audited by Chartered Accountant and the profit may 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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld.AO proceed only on assumption, presumption, suspicion guess work and invoked the provision section 68 of the act, this contention is fully backed because she has accepted the trading account and sales have sufficiently entered into such Books of Accounts under the head of Sales and the Net Profit as shown by the assessee in its Income Tax return has been culminated after taking consideration such sales in Financial figures on which assessee has paid the Tax too. 9.2 Here it is notable that once Ld. 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 Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in market and also that huge loss caused in particular transaction, neither the rejection of books of account was justified nor resort to substitution of estimated GP by rule of thumb merely for making certain additions. Therefore, the findings arrived at by the Tribunal suffers from basic defect of not applying its mind to the existing material which were relevant and went to the root of the matter. When all the data and entries made in the trading account were not found to be incorrect in any manner, there could 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 apposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. By perusing the Stock Register it is revealed that Quantitative details is being maintained on day to day basis, and the movement of Inventory describes that at the time of outward of Inventory sufficient balance was there and such balance was built up through valid Purchases which's payments have been made through Account Payee cheques and the ld. AO wrongly stated that purchase bogus without giving any example or evidence in a very lightly manner when purchases were made through valid Bills and there payments have been 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST and filling respective returns in due course without getting late even the assessee has deposited his latest return then for the month of February, 2018 in due time by showing the all transaction in the month of February which were described in here above. Copy of all Sales Tax Return viz. VAT and GST are attached as PB62-105). Hence Ld. AO's observation regarding Cash deposited is not tenable on many grounds as above and also because Ld. AO could not provide the satisfactory observation about Inventory position which is very 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 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act has also not been considered: Section 34 of the Indian Evidence Act says . 1[Entries in books of account including those maintained in an electronic form] when relevant.--1[Entries in books of accounts including those maintained in an electronic form], regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability. Illustration A sues B for Rs. 1,000, and shows entries in his account-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 deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l pay the costs of the Commissioner in this court and in the High Court." (b) Similarly the presumption as presumed by the Ld. AO regarding Cash of Rs. 1,78,08,630/- is purely vague in the air and without having any evidence should not be sustainable and well supported by the landmark judgment in the matter of CIT vs Shri Kulwant Rai on 13 February, 2007 Equivalent citations: 2007 291 ITR 36 Delhi "16. This cash flow statement furnished by the assessed was rejected by the Assessing Officer which is on the basis of suspicion that the assessed must have 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 foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Absence of vouchers, in the peculiar facts of this case did not give rise to any presumption that there was any non-disclosure of income inasmuch as there is no evidence to doubt the correctness of the entries made in the OPD register as also Indoor Patient register. Also, by an earlier order in this appeal a supplementary affidavit had been called for to bring on record the status of the past and later assessment order in the case of the assessee. In pursuance thereto the assessee has filed a supplementary affidavit wherein the income earned from different assessment 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( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) or accounting standards as notified under sub-section (2), have not been regularly followed by the assessee, the Assessing Officer may make an assessment in the manner provided in section 144." 8. Taking into considerations, the overall facts and circumstances of the case, we are of the opinion that the Tribunal while confirming the order passed by the Commissioner of Income-tax (Appeals) has not committed any error, therefore, the issue is answered in favour of the assessee and against the Department. The appeal 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here must be something more than bare suspicion to support the assessment under Section 23(3). The rule of law on this subject has been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh v. Commissioner of Income-Tax, Punjab (1944) 12 I.T.R. 393" Also refer DhirajlalGirdharilal v CIT (26 ITR 736 (SC), Omar Salary MohanmedSait v CIT (37 ITR 151) (SC), Lekchabnd Bhagat Ambica Ram v CIT (37 ITR 285) (SC), CIT v Nandini C. (1989) 230 ITR 679, 689 (Cal). 17. On perusal of the assessment order it is revealed that the Ld. AO did not disturb the Net Profit as deduced/declared by the Books of Accounts as followed by Audited 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/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he demonetization which is very much on higher side and the same is not acceptable on account of the detailed finding recorded in the order of the lower authority. The ld. DR also submitted that the bills raised on the date of demonetization there is no cell number recorded in the bills whereas in the others it is. At page 113 the cell number is written but it is not correct. The ld. DR also relied upon the decision cited by the ld. CIT(A). 9. The ld. DR in addition to the oral arguments also submitted a written submission dated 26.10.2023 and the same is also reproduced herein below : Sub:-Submission of written reply and copies of case law's relied by revenue in the case of M / 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of identical facts of abnormally huge cash deposits in the bank accounts by a jeweller, in the case of Assistant Commissioner of Income Vs M/s Vaishnavi Bullion Private Limited in ITA No. 560 & 561/Hyd/2020 and ITA 58 &59/Hed/2021, uphelds the addition of about Rs. 100 Cr. as unexplained in the batch of appeals involving two jewellery and bullion dealers in the context of post-demonetisation cash deposits. The Hon'ble ITAT rejected Assessee's submission of receiving cash from thousands of customers immediately after announcement of demonetization. ITAT remarked, "The assessee either deposited its undisclosed amount or otherwise helped undisclosed, unanimous and unidentifiable persons convert their undiselosed prohibited currency into bullion after notification 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 dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the 107 bills issued on 8 ^ (th) November, 2016 had address of purchasers and majority of them had no proper name and contact nos. In lack of which identity of customers and genuineness of transactions could not be ascertainable. This is against the general practice of asessee's entering mobile nos. of customers in each and every bill during the year except on 8th November. (vi) In stock register, assessee had not provided any number and description of different types of jewellery items purchased and kept as stock. It could not be verified whether assessee had stock of items claimed as sold by him. In purchase bills also there was no description of goods. It mentioned only "Gold jewellery 22K" and quantity in Grams only. (vii) Average Cash balance of assessee was between Rs. 20 lacs to 30 lacs from 1.04.2016 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion out of which the ld. AO has considered the cash to the tune of Rs. 16,00,000/- as explained and the balance amount of Rs. 1,78,08,630/- was added as income u/s. 68 of the Act. In first appeal the ld. CIT(A) has confirmed the action of the ld. AO holding as under 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n one day. The assessee's argument is that these sales were made after demonetization was declared at 8 pm. On this issue bench noted that the assessee has submitted the invoice. On this invoice only the date is written and the 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. Moreover, the sales already recorded is also not considered to be reduced as income of the assessee therefore, the action of the lower authority is not in correct. c) The assessee has sold goods to approx 107 People via separate bills. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee 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. This contention of the revenue is incorrect the cash book submitted by the assessee having the day to day cash balance and the sales is also not disputed the cash so generated cannot be considered as unexplained and regards the cash sales the jurisdictional high court has already held that when the cash sales is recorded the cash deposits becomes self explanatory and such amounts were received by the assessee from customer and the same is supported by the Value added tax paid invoice. 13. Thus, considering all the facets of the case the bench noted that the revenue did not pinpoint any defects in the books of accounts, quantitative records available with the assessee, 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 (Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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