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TMI Blog2024 (10) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... ned money. Here the preponderance of probabilities as held by the apex court in the case of Durga Prasad More [ 1971 (8) TMI 17 - SUPREME COURT] come to the rescue of the assessee. The books of accounts were duly audited, purchase and sales are duly supported by invoices. There is no iota of doubt on the records so produced by the assessee. Merely the assessee has taken the advances for purchase of gold by those parties and that too on the eve of demonetization, cannot be doubted when the assessee has provided all the details related to the advances so received and the same were verified on majority cases. Thus, source for the sales is already considered and assessed as such as income and the profit from that has already been considered and not objected by placing any contrary evidence. The assessee shifted the burden casted upon him to the revenue to establish that the amount that the assessee has received is the unaccounted income of the assessee. Nothing contrary to the records were proved in even though all the details were placed on record by the assessee regarding the receipt of the advances, sales, and purchases from the said source of money. The assessment has been complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee, as he was dissatisfied with the finding recorded in the order of the National Faceless Appeal Centre, (NFAC) Delhi [ for short CIT(A) ]. The order under challenge was passed on 06/12/2023 and relates to the assessment year 2017-18. The ld. CIT(A) passed that order because the assessee has challenged the assessment order passed by the Income Tax Officer, Ward 2(4), Jaipur [ for short AO ]. Ld. AO passed an order against the assessee on 23.12.2019 as per provisions of section 143(3) of the Income Tax Act [ for short Act ]. 2. In this appeal, the assessee has raised following grounds: - 1. In the facts and circumstances of the case and in law, National Faceless Appeal Center/ld. CIT(A) erred in confirming the action of ld. AO making addition of cash advance received from customers amounting to Rs. 1,71,28,000/- as unexplained cash credit u/s 68 of the Act. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the addition of Rs. 1,71,28,000/-. 2. In the facts and circumstances of the case in law, National Faceless Appeal Center/ld. CIT(A) erred in invoking the provisions of section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreover, the details of Daily stock register, cash book etc. was also asked from the assessee in specified format. The assessee submitted reply on various dates through ITBA portal which were examined and verified by AO. Upon verification of information documents furnished by the assessee he revealed that sole source of cash deposited into bank accounts to the tune of Rs. 1,73,56,000/- is claimed as advance received from customers which were contended by the assessee to have been received just prior to evening of demonetization between 17.10.2016 to 08.11.2016. The detailed scrutiny of the details submitted by the assessee revealed certain material discrepancies, abnormal variations, illogical hard to digest non real/illusory facts. Ld. AO thus examined the submission of the assessee and appraised very carefully but found not acceptable, in as much, same is far-fetched from reality has no tangible basis / rationale and thus was rejected on account of the following observations: 1. That the assessee has commenced the business in FY 2014 but till 08.11.2016 there were no sales or sales were so negligible, which itself casts doubt about the existence of operation of any business activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... रण वर्ष 2017-18 में दिनांक 17-10-16 से 08-11-2016 में मुझसे गोल्ड के विरुद्ध अग्रिम प्राप्त करने का क्लेम किया है, जबकि मैंने कोई अग्रिम नहीं दिया है। जिसमें आप द्वारा चाही गई जानकारी का विन्दुवार विवरण निम्न प्रकार से है - 1. दिनां&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e te below the parawise reply of the said notice. 1. No advance was given by me to Shiri Nitin Vijay against gold during the period from 17.10.2016 to 08.11.2016 2. No advance was given, thius the question of mode of payment do not anse 3. Yes I am taxpayer but not assessed to fax My PAN No is ASTPJ3481H. From the above, it is evident that both the above persons have specifically denied for the any such transaction of advances with assessee. 1. Therefore, the identity of the person from whom, assessee alleged to have received advances for sale of jewellery is still unproved, what to say of genuineness creditworthiness. 2. That the verification of Audited balance sheet Profit loss A/c details of purchases sale etc. revealed that, neither there was opening stock of gold ornaments available with the assessee nor there were purchases of gold ornaments prior to 09.11.2016 by the assessee The Ist purchase made by the assessee was on 12.11.2016 le. after demonetization was announced Therefore, without any ounce of doubt, it can very well be stated that the assessee did not possess any stock whatsoever, when the alleged whopping advances of Rs. 1,73,56,000/- were received by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Valid legal backing and nothing more thus same is without any base and no reliance on same can be placed. 6. On verification of bank statement, it is revealed that the assessee has deposited casn of Rs. 2.32.327/-only into his bank account in pre-demonetization period. The claim of the assessee is farfetched from reality attempt to cover up his unexplained money under the garb of cash deposit out of advance from customers. Therefore, in the backdrop of the above observations, it is evident that the assessee has failed to prove or explain the credit into books of accounts. The assessee has emphatically failed to prove even the identity of the person from whom advances alleged to have been received, what to say of genuineness or credit worthiness of the advance giving parties. As the assessee did not discharge the initial burden casted upon him the case of the assessee falls within the parameters of section 68 of the Act in as much, the assessee maintains the books of accounts, there are credits into these books of account on account of advance from parties and the assessee failed to prove the nature and source of credit the advance receipts vouchers, sale bills etc., are self s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e explanation given by the appellant and on how acceptable is the explanation so given by the appellant. 3.4.3 As held by Hon'ble Kolkata High Court in the case of CIT v. United Commercial and Industrial Co (P) Ltd (1991) 187 ITR 596 (Cal)], that under the scheme of Section 68 t was necessary for the appellant to prove prima facie the identity of creditors, the capacity of such creditors and lastly the genuineness of transactions. Similarly, in the case of CIT v. Precision Finance (P.) Ltd [1994] 208 ITR 465 (Cal)] it was observed that it is for the appellant to prove the identity of creditors, their creditworthiness and genuineness of transactions . It is thus also a settled legal position that the onus of the appellant, of explaining nature and source of cash advance received, does not get discharged merely by filing self generated documents and without any other third party evidence or authentic documentary evidences The genuineness of the transaction as a whole is thus a very important and critical factor in the examination of explanation of the appellant, as required under section 68 of the I. T. Act. 3.4.4 It is also important that when we examine the genuineness of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents 3.4.6 Thus the genuineness of a transaction is one of the most important, fundamental and critical factor in determining whether explanation given by the appellant is acceptable or not is its genuineness and this genuineness is to be examined in the light of ground realities, rather than random extracts from judicial precedents isolated from their true context as an exposition of law on a standalone basis 3.4.7 Keeping in mind that above legal position, briefly the facts of the case as stated is that the appellant filed the return of income on 30.10.2017 declaring total income of Rs. 3,50,470/-. During the course of assessment proceedings the AO found that appellant has deposited cash of Rs. 1,71,28,000/- in the bank account no. 200999903652 maintain with Indusind Bank and Rs. 2.28.000/- in the bank account no. 677101500312 maintain with ICICI Bank during the demoneti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terestingly there is no Sign Board etc., which may resemble that no business of what so ever nature is being carried out from such premise. 3.4.9 Further, on verification of cash book, it is noticed by the A.O. that the opening cash balance as on 08.11.2016 stood at Rs. 50,80,806/- and the appellant received Rs. 1,20,13,101/- from 93 persons as advances on 08.11.2016 which results into available cash balance of Rs. 1,70,93,907/- as at the end of 08.11.2016 out of which the appellant made deposit of Rs 1,73,56,000/- into bank account on various subsequent dates. Thus the A.O. was of the opinion that cash book furnished by the appellant is merely self serving document prepared with sole intent to cloth the unexplained income with valid legal backing and nothing more thus same is without any base and hence n_ reliance on same can be placed. 3.4.10 Considering the above facts of the case, the A.O. held that the appellant has failed to prove and explain the nature and source of credit appearing in books of accounts on account of said cash deposits. It is held by the A.O. that the appellant failed to prove even the identity of the person from whom cash advances is alleged to have been re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of demonetization. Therefore considering the overall facts of the case, I am of the view that the appellant can have accumulated savings of earlier years amounting to Rs. 2.28,000/- Therefore the source of cash deposit of Rs. 2.28,000/- made during the demonetization period is held as explained The A.O is therefore directed to delete this addition of Rs. 2,28,000/- 3.4.15 With regard to the balance cash deposit of Rs 1,71,28,000/- the appellant alleged that the same is advance received from 112 customers towards purchase of gold bars which was deposited in two of the bank accounts and such deposits in bank, were utilized for making payments against purchases of gold bars. The appellant furnished details of purchase of gold bars as under:- Particulars Amount in Rs. Kahndelwal Impex 1,96,24,625/- Shrinath Enterprises 17,82, 180/- Sita Ram Sons 84,165/- Mansa Enterprises 4,43,698/- SN Enterprises 12,46,068/- Total purchases 2,31,80,736/- 3.4.16 Copies of sample purchase invoices are enclosed by the appellant in the written submission made. It is submitted that the appellant used to sale the gold bars only on order based and hence, there was no opening stock available with the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant that the total number of gold bars purchased by the appellant is not sufficient to supply it to 112 persons from whom cash advance is alleged to have been taken. It is further to be noted that the appellant has alleged to have taken cash advance of different amount from different persons then it is not known/explained by the appellant as to how he was going to supply gold bars to each individual of different weights especially considering that the appellant is selling the gold bars as it is, as purchased by him and the weight of gold bar is of fixed standard. Also the total weight of gold bar as per the bills provided by the appellant do not show that the appellant has purchased at least 112 pieces of gold bars so that the same can be supplied to the persons giving advance. It is further noted that gold rate of 24 carat on 08.11.2016 in Rajasthan was in the range of Rs. 3000/- per gram. Therefore wherever the appellant has received the exact amount of cash advance of approximate Rs. 3,00,000/- he can supply gold bar of 100 grams to such person, but where the cash advance received do not commensurate with the value of gold bar, the appellant will not be in a position to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c not genuine transaction. Therefore it is not free from doubt that the appellant is accommodating these so called gold bar suppliers from whom cash received is deposited in the appellant's bank account against which cheques are issued to these so called gold bar suppliers and to give it a colour of genuine purchase bils are obtained from such suppliers giving vague description of gold bars purchased and to show the source of cash deposit the list of 112 persons is prepared showing cash advance received. As stated by the AO in the assessment order in majority of the cases, the appellant has not given proper identification of the person from whom cash advance is received and wherever name and address is given or PAN is given, in majority of the cases, enquiry made by the A.O did not establish the genuineness of the transaction of acutance received from such persons. The appellant even do not have any documentary evidences which can authenticate that against each advance received by the appellant, appropriate weight and value of gold bar is supplied to such person. It is not a case that the AO has accepted the genuineness of purchases made by the appellant. Nowhere in the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant are correct and the source of cash deposited in bank is advances received against sales and such sales are forming part of trading account of the appellant and the appellant has already offered income on the same as revenue receipt in this regard, as stated earlier the A.O. in the assessment order has held that the appellant failed to discharge onus cast upon him of proving the identity of the persons from whom cash advance is alleged to have been received and genuineness of transaction of receipt of advance and supply of gold bars. Therefore it is not the case that the A.O. has doubted the trading results of the appellant emanating from the books of accounts maintained. The A.O's scope of verification was limited to the issue of the genuineness of the transaction of receipt of cash advance from 112 persons against proposed supply of gold bars in future which is alleged to be the source of cash deposit of Rs. 1,71,28,000/- found deposited in the appellant's bank account in the form of SBNs during the demonetization period. 3.4.24 The appellant's last contention is that provisions of section 68 are not applicable to his case for the reason that credits by way of sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early missing. The burden is thus on the appellant to prove the nature and source of credits in his books of accounts, to the satisfaction of the Assessing Officer which the appellant failed. 3.4.27 In view of the above facts of the case and in law, I am of the considered opinion that the appellant has failed to discharge the onus cast upon it by provision u/s 68 of the I. T. Act to establish the genuineness of transaction of receipt of cash advance amounting to Rs 1,71,28,000/- I therefore concur with the view of the AO. that the amount of Rs. 1,71,28,000/- found credited in the books of accounts of the appellant during the relevant previous year is unexplained and therefore required to be brought to tax as unexplained cash credit u/s. 68 of the IT. Act. The action of the A.O in making addition of this amount of Rs. 1,71,28,000/- is therefore confirmed. This ground of appeal raised by the appellant is thus dismissed. 4.1 The second ground of appeal raised by the appellant read as under:- In the facts and circumstances of the case an d'in law, the id. AO has erred in making addition of cash advance received from customers a mounting to Rs. 1,73,56,000 as unexplained ca sh credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to be unexplained. Additions made by the ld. AO were upheld by the NFAC. 2. SUBMISSIONS 2.1. Assessee is engaged in the business of retail trade of gems jewellery. During the relevant year assessee had received advance of 1,71,28,000 against sales of gold bars before the period of demonetization. Balance of Rs 2,28,000 (1,73,56,000-1,71,28,000) deposited in bank was out of the accumulated savings of the assessee. 2.2. Advance so received from the customers was then deposited in two of the bank accounts and such deposits in bank, were utilized for making payments against purchases of gold bars. The said gold bars were purchased from the following parties Particulars Amount in Rs Khandelwal Impex 1,96,24,625 Shrinath Enterprises 17,82,180 Sita Ram Sons 84,165 Mansa Enterprises 4,43,698 S N Enterprises 12,46,068 Total Purchases 2,31,80,736 Sample purchase invoices are enclosed from Paper Book Pages 1 to 14 which were submitted to the lower authorities. 2.3. It is submitted that the assessee used to sale the gold bars only on order basis and hence, there was no opening stock available with the assessee. The gold bars are sold in the same condition in which they are purchased and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 2.12. The assessee maintains regular books of accounts and the same are audited under the provisions of section 44AB of the Income Tax Act, 1961. Also, there are no adverse remarks of the auditors regarding cash sales recorded in the books of accounts. 2.13. The assessee had submitted details of sales, purchase, stock register before ld. AO but ld. AO only on the basis of mentioning nature of business as legal profession in ITR Form has assumed that turnover of the assessee is unverifiable. Ld. AO has erred in ignoring the material facts which clearly indicate that the assessee is engaged in retail trade of gem and jewellery. It is submitted that assessee had inadvertently mentioned the nature of business as legal profession but all the actual evidences placed on record make it evident that the assessee is engaged in retail trade of gems and Jewellery. 2.14. It is submitted that for the relevant year accounts of the assessee are audited u/s 44AB of the Act and nature of business has been mentioned as retail trade in the audit report [Form 3CD]. Ld. AO has ignored the same and also stated that the assessee had filed return of income u/s 44AD instead of 44AB for the relevant ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 as advances which resulted in increase in cash balance of the assessee. It is submitted that on the eve of sudden announcement of demonetization i.e., 08.11.2016, there was huge rush for buying of gold. The assessee took the same as business opportunity and took advances for selling the gold bars. The assessee made all the purchases in the month of November-2016 itself and simultaneously made sales as well. 2.22. It is also incorrect assumption of ld. AO that if the business premises of the assessee is not situated in posh area or on main road, the business cannot be run from that premises. 2.23. Reliance is placed on following judgements of jurisdictional ITAT: 2.23.i. Mahesh Kumar Gupta vs. ACIT [2023] 151 taxmann.com 339 (Jaipur Trib) [CLC: 316-335] Respectfully following the consistent view and after considering the factual matrix of the cash on hand in our considered view the addition made cannot sustain and therefore, we vacate the addition of Rs. 80,00,000/- made under section 68 of the Act as the same cannot be made without rejecting the books of account of the assessee regularly maintained by the assessee and the said cash deposited is duly supported by the entries passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count and find that there was sufficient stock to effect the sales and we do not find any defect in the stock as well as the sales. Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. This view is also supported by the decision of Hon'ble Delhi High Court in the case of Kailash Jewellery House (supra) and the Hon'ble Gujarat High Court in the case of Vishal Exports Overseas Ltd. (supra), Hence, we do not see any reason to interfere with the order of the Ld. CIT(A) and the same is upheld. 2.25. Attention is drawn towards Hon ble ITAT, Delhi Bench in the case of Agson Global Pvt. Ltd vs ACIT (2020) 115 taxmann.com 342 [CLC Pages 206 to 279]. The facts in this case are assessee company was engaged in purchase and sale of dry fruits and other grocery items. It deposited Rs. 180.53 crore post-demonetization in its Bank accounts, out of sale proceeds. During the course of assessment proceedings, assessee submitted details of closing stock, list of debtors, details of purchases and sales party-wise for year, VAT returns etc. However, AO made an addition of Rs. 150.53 crore as incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Commissioner and restoring that of the Income-tax Officer. There are no circumstances disclosed in the case nor is there any evidence or material on record which would justify the rejection of the book results. 2.27. Ld. AO, unnecessarily emphasising the need of complete identity of buyers in respect of cash sales, held the same to be non-genuine (contrary to the legal provisions) and further erred in invoking the provisions of Section 68 in respect of such cash sales. Attention is drawn towards the judgment of the Hon ble Jurisdictional High Court in the case of Smt. Harshila Chordia v. ITO (2008) 298 ITR 349 [CLC Pages 310 to 315] wherein the Hon ble High Court held as under: 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 on delivery of the vehicles on receipt from the dealer the question of 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of M/s. Hirapanna Jewellers (ITA No. 253/Viz/2020 dated 12.5.2021), it was held that when the cash receipts represented the sales which has been duly offered for taxation, there is no scope for making any addition under section 68 of the Act in respect of deposits made into the bank account . 2.29. Reliance is placed on the judgment of the Hon ble Supreme Court in the case of Lalchand Bhagat Ambica Ram v. CIT (1959) 37 ITR 288 [PB 198-213] in which judgment is delivered in the background of promulgation of High Demonetization Bank Notes (Demonetization) Ordinance, 1946, with effect from January 12, 1946. The Hon ble Apex Court laid down a ratio that accepting an explanation or books in part and rejecting the same for the remaining part is not justified. It is submitted that in the present appeal, same explanation was accepted for cash sales of Rs15,00,000/- and remaining amount of Rs 72,25,000/- was held to be non-genuine sales rejecting the same explanation. The Hon ble Apex Court, in the case of LalchandBhagat (supra) further laid down a ratio that various probabilities on a macro level should not influence the decision of the AO in believing that on those macro reasons, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the credits by way of sales were already offered for tax. Hence, Section 68 per se cannot be invoked. Provisions of Section 68 can only be invoked in cases where an assessee is unable to explain the source of a particular receipt to the satisfaction of the Assessing Officer. These provisions have no application in case where an amount already disclosed by the assessee as his income, while filing the Return of Income on which no further addition has been made by the ld. AO, during the course of assessment proceedings. 2.31. Section 68 creates deeming fictions, whereby certain amounts which are not considered as income by the assessee, are deemed to be income of the assessee. A deeming fiction of income cannot apply to an item which is already treated as income by the assessee himself. The question of deeming an item to be income can only arise if the item is not otherwise an income. Section 68 converts non-income into income and has no application where income is already offered for tax. 2.32. Hon ble Delhi High Court, in the case of Keshav Social and Charitable Foundation (2005) 278 ITR 152, considered a situation where the assessee, a charitable trust, had disclosed donatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than High Court in the case of Smt. Harshil Chordia Vs. ITO reported at MANU/RH/0851/2006 : 298 ITR 349 (Rajasthan-HC) and held as under:- Thus, the fact of the case on hand is similar to the jurisdictional high court decision cited by the Ld. AR of the assessee. The Ld. AR of the assessee also relied upon the coordinate Jaipur ITAT decision also on the issue and the revenue not prove the sale made by the assessee which is executed after giving the goods to the customer, duly reflected in the invoice issued, assessee having sufficient stock in the books, sales is duly reflected in the books of accounts supported by payment of VAT. Therefore, the contention of the revenue based on the facts and circumstance of the case is not accepted and we see no reason to find any fault in the detailed reasoned finding in the order of the Ld. CIT(A). Thus, we sustain the order of the Ld. CIT(A) and based on these observations the appeal of the revenue in ITA No. 161/JPR/2022 stands dismissed 2.34.iii. ITAT, Jaipur Bench, in Chandra Surana, ITA No. 166/JP/2022 [CLC Page 94-105] held that It is also observed from the assessment order that the AO had not rejected the books of account of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed such donations as its income. 2.38. In view of the above, since section 68 is not applicable in the instant case, the very invoking of the provisions of section 115BBE is illegal and deserves to be quashed. 2.39. It is also pertinent to note that the books of accounts have not been rejected by the ld. AO or NFAC under Section 145(3). Under such circumstance, no addition can be made to the income of the assessee under Section 68. 2.40. The aforementioned legal and factual position was submitted to the NFAC during the course of first appellant proceedings, however without any cogent basis were not accepted by the NFAC. 2.41. Rebuttal to certain contentions raised by NFAC in its order from Page 21 to 28 are set out hereunder: - Contentions of NFAC Rebuttal Weight and number of gold bars are not mentioned in the purchase bills. Therefore, it is not known as to how many pieces of gold bars are purchased by the assessee. [NFAC Order, Page 23] Purchase invoices were submitted to the lower authorities. The details of the suppliers were mentioned in such invoices. Lower authorities did not carry out any enquiry directly from such sellers and simply raised allegations against the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of ITAT, Jaipur Bench in the case of Raj Kumar Nowal, ITA No. 165/JP/2022 144-182 181-182 5. Copy of the order of ITAT, Chandigarh Bench in the case of Roop Square Pvt Ltd, ITA No. 198 and 249/Chand/2021 183-190 188-189 6. Copy of the order of ITAT, Kolkata Bench in the case of Senco Alankar, ITA No. 10/Kol/2021 191-197 196-197 7. Copy of the order of ITAT, Visakhapatnam Bench in the case of Hirapanna Jewellers ITA No. 253/Viz/2020 and C.O. No. 02/Viz/2021 198-205 205 8. Copy of the order of ITAT, Delhi Bench in the case of Agson Global (P) Ltd. 115 taxmann.com 342 (Delhi-Trib.) 206-279 275 9. Copy of the order of High Court of Delhi in the case of PCIT vs. Agson Global (P.) Ltd,134 Taxamann.com 256 (Delhi) 280-309 280 10. Copy of the order of High Court of Rajasthan in the case of Smt. Harshita Chordia 298 ITR 349 (Rajasthan) 310-315 314-315 11. Copy of the order of ITAT, Jaipur Bench in the case of Mahesh Kumar Gupta, ITA No. 149/JP/2022 316-335 316 S. No. Particulars Page No. 1. Copy of Purchase Invoices for AY 2017-18 1-14 2. Copy of Written Submissions filed by the assessee company before ld. CIT(A) in the first appellate proceedings 15-28 7. In addition to the writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht on account of announcement of demonetization. The assessee supplied all the details of customers. The ld. AO did not issue summon to any of the parties and have not verified the contention of the assessee. Since the assessee dealing in gold bar there is no need to have the opening and closing stock by the assessee. The spike in the sales is on account of Diwali and marriage seasons. This aspect has not been appreciated by the lower authorities. As regards the contention of the business place of the assessee, ld AR submitted that it should not be decisive factor of the sales made by the assessee. Ld. AO should have appreciated the fact that out of 58 notices so issued, 40 notices were served itself shows the genuine of the transactions recorded in the books of account of the assessee. 8. Per contra, Ld. DR vehemently argued that this case of the assessee is required to be seen differently as the assessee has deposited heavy amount of cash of the demonetized currency into his bank account. The intention of the announcement of demonetization was to unearth the unaccounted money. As is evident from the record that the assessee has deposited huge amount of money of demonetized curren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d produce by the assessee and therefore, the same are not reliable when the assessee has received the advances without any material sold on the date of advances received. Subsequent, theory of sales made by the assessee cannot prove the unexplained receipt money by the assessee. The decision cited by the ld. AR of the assessee are on different on fact and therefore, in the absence of onus costed upon the provisions invoked by this section 68 of the Act is correct and required to be sustained. 9. In the rejoinder, the ld. AR of the assessee stated that the principles of probabilities falls enquiry of the assessee, the assessee has received advances and notices issued in majority of the cases have been served and replies were also received and therefore, the decision of Durga Prasad More (supra) cited by the ld. DR in fact in support of the case of the assessee. The Revenue authority has not debited purchased made by the assessee, every seller on his own selling silent of the case when the assessee has received the money in advance and thereby thereafter delivery of goods for which there is not contrary material placed on record by the Revenue even though the details of parties from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Income-tax, Delhi-V N.R. Portfolio (P.) Ltd 15 [2011] 43 SOT 544 (Delhi) IN THE ITAT DELHI BENCH 'B' Hersh W. Chadha v. Deputy Director of Income-tax, Circle-1(1), International Taxation 10. The ld. AR of the assessee filed a detailed distinguishing note on the decisions relied by the revenue and the same is reiterated herein below: During the course of hearing before the Hon'ble Bench of the captioned appeal, Id. DR relied upon certain judicial pronouncements. The same are not applicable in the instant case. The same are distinguished hereunder for the sake of ready reference 1. Swati Bajaj [2022] 139 taxmann.com 352 (Calcutta) The decision of Hon'ble High Court is not applicable to the facts of the present case. The above decision involves the transaction of long-term capital gains in which the price of the shares were inflated. However, the facts of the assessee's case are altogether different and, therefore, the case law is not applicable. 2. Sumati Dayal vs. CIT [1995] 80 Taxmann 89 (SC) The decision of the Hon'ble Supreme Court is not applicable to the facts of the present case, as the transactions, involved in the present case before the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s can be taxed and same would not amount to double taxation. No such issue is involved in the present appeal. This decision of the Hon'ble Supreme Court rather supports the case of the assessee because Hon'ble Supreme Court has held: We concede that the question as to the source from which a particular income is derived is one which has to be decided on all the facts of the case. 8. Roshan Di Hatti [1977] 107 ITR 938 (SC) The aforementioned case deals with the source of capital introduced by the assessee, The source of such capital was in question and factors did not justify the Tribunal's inference of calculating the value of the assets held by the assessee. The courts ruled in the favour of the assessee. The fact of sales and capital of the assessee are two different aspects and, therefore, the facts are contrary to the case of the assessee. 9. Securities and Exchange Board of India v. Kishore R. Ajmera [2016] 66 taxmann.com 288 (SC) The present decision of the Hon'ble Supreme Court is with reference to the following Acts and has no bearing on the proceedings under the IT Act, 1961: Securities and Exchange Board of India Act, 1992, Securities and Exchange Board of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the facts are entirely different. The issue is with respect to the cash deposit which are generated out of cash sales. Therefore, both the cases are altogether different. 14. N.R. Portfolio (P.) Ltd. [2013] 29 taxmann.com 291 (Delhi) This decision of Hon'ble Delhi High Court is delivered under different set of facts and context. The sole issue was of share application money received. However, the present case involves the issue of cash deposits which are generated out of cash sales. Therefore, both the cases are delivered in different context. 15. Hersh W. Chadha [2011] 43 SOT 544 (Delhi) The decision of Hon'ble Delhi High Court is on different set of facts. The issue under consideration was of commission received from Govt of India which was not declared in return of income by the assessee. The same was credited in foreign bank accounts. However, the facts of this case do not apply to the case of the assessee. 11. We have heard the rival contentions, perused the material placed on record and judicial precedent cited by both the parties to drive home to the contentions raised. In this appeal effectively assessee has raised two grounds of appeal. Ground no. 1 relates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails submitted by the assessee revealed certain material discrepancies, abnormal variations, illogical hard to digest non real/illusory facts. Ld. AO thus examined the submission of the assessee and appraised very carefully but found not acceptable, in as much, same is far-fetched from reality has no tangible basis / rationale and thus was rejected the contention of the assessee by observing that the assessee has commenced the business in Financial Year 2014 but till 08.11.2016 there were no sales if there it was very negligible amount. While filling the ITR for earlier year the assessee has shown the nature of business as legal profession and not the legal profession. To verify the contentions of the assessee about the receipt of the advance for supply of Gold Ornaments notices were issued u/s. 133(6) of the Act to 58 cases of which the ld. AO received the reply of 20 parties. Out of 58 notices so issued 18 received back and thus 40 notices issued were served upon the details given by the assessee. Thus, ld. AO taken a view that the assessee failed to prove the identity of the parties from whom the monies were received and therefore, he has not considered the genuineness and credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails of the purchasers were given. Only two purchasers denied the purchases having been made from the assessee directly to the ld. AO. No opportunity of cross examination given of such persons to the assessee. Assessee was not well known to be able to make sale of such huge amount. [NFAC Order, Page 25] On the eve of demonetisation many jewellers all across the country could register huge sales. Assessee also being one of them could make sales to different persons. Now the assessee is before us on the facts as narrated herein above. The bench noted that out of the 93 parties ld. AO choose the 58 parties and served the notices. Out of the notices so issued 69 % notices were duly served upon the address and the details submitted by the assessee. Therefore, the contentions of the revenue that the assessee fails in proving the identity of the parties has no merits because out of the selection the assessee details were correct to the extent of 69 %. Even out of the notices so issued confirmation were filed and the parities have expressed their willingness to confirm the said facts in persons and ld. AO did not went to verify the reals facts by issuing the summons. He merely relied upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ota of doubt on the records so produced by the assessee. Merely the assessee has taken the advances for purchase of gold by those parties and that too on the eve of demonetization, cannot be doubted when the assessee has provided all the details related to the advances so received and the same were verified on majority cases. Thus, source for the sales is already considered and assessed as such as income and the profit from that has already been considered and not objected by placing any contrary evidence. The assessee shifted the burden casted upon him to the revenue to establish that the amount that the assessee has received is the unaccounted income of the assessee. Nothing contrary to the records were proved in even though all the details were placed on record by the assessee regarding the receipt of the advances, sales, and purchases from the said source of money. The assessment has been completed in the case of the assessee u/s. 143(3) of the Act without rejecting the book results. Therefore, once the sales is accepted the source of making that sales again cannot be added as unexplained receipt in the hands of the assessee as per provision of section 68 of the Act. We get str ..... X X X X Extracts X X X X X X X X Extracts X X X X
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