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TMI Blog2024 (11) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... akshmi, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Shri Pawan Kumar Garg (C.A.) For the Revenue : Smt. Monisha Choudhary (Addl.CIT) ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by the assessee aggrieved from the order of the Learned Commissioner of Income Tax (Appeals), Jaipur-4 dated 15.04.2024 [ for short CIT(A) ] for the assessment year 2017-18, which in turn arise from the order dated 31.12.2019 passed under section 143(3) of the Income Tax Act, [ for short Act ] by the ITO, Ward-1(1), Jaipur. 2. The assessee has marched the present appeal on the following grounds: - 1. That addition u/s 68 is not possible if no books of accounts are maintained. 2. That Ld. AO had erred in making addition u/s 68 on account of unexplained cash credit on the basis of suspicion and surmises. 3. That the appellant craves the right to add, amend or delete any of the grounds of appeal either before or at the time of hearing of appeal. 3. The fact as culled out from the record is that the assessee is an Individual. The assessee filed e-return of income on 31.03.2018 declaring total income of Rs. 8,98,600/-. The case was selected for scrutiny and thus, notice under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the four chapters of income heads and for the year under assessment/appeal (before application of provisions of section 68/69/69A etc.) in that case applicability of section 68/69/69A etc. is to be seen. If the sources, genuineness etc. are explained satisfactorily i.e. sources are out of genuine disclosed/taxed income in that case and section 68/69/69A etc. However if the asset/credit/expenditure is treated as income because of the applicability of section 68/69/69A etc. in that case that shall not get restricted by taxation under the head business income. Section 69C even clearly mentions that such unexplained expenditure will not be deductible under any head of income. Loans given / stock in hand / loan received etc. are otherwise not taxable as these are in the nature of asset/liability/capital nature in the hands of the taxpayer and not in the nature of revenue income. However when these are unexplained in terms of sections 68/69/69A etc. these become income and become taxable. Section 14 of the Income-tax Act, 1961 Heads of income Assessment year 1984- 85-Whether opening words of section 14, 'save as otherwise provided by this Act. clearly leave scope for 'deemed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the judgements it is also understood that sections 68/69/69A etc. are the deeming provisions and are different from the heads of income like the business income and income from other sources and income from house property etc. From the ratio of the judgements it is also understood that estimation of the business income after the rejection of the books of accounts or as per presumptive taxation or computing the exact business income as per the various sections of the chapter under the head business income, are different approaches to working out the business income of one taxpayer. Sections 68/69/69A etc. are applicable irrespective of the method of determination of business income. Further that the presumptive taxation scheme provides exemption from only the specific provisions as mentioned therein which pertain only to the chapter of business income. Accordingly the additional ground raised by the appellant is hereby dismissed. Ground No. 1 that Ld. AO had erred in making addition u/s 68 on account of unexplained cash credit on the basis of suspicion and surmises. Decision:- (v) The appellant deposited Rs. 58,00,000 in the old currency in his bank account during the period of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the explanation. If the explanation shows that the receipt was not of an income nature, the department cannot act unreasonably and reject that explanation to hold that it was income. If, however, the explanation is unconvincing and one which deserves to be rejected, the department can reject and draw the inference that the amount represents income either from the sources already disclosed by the assessee or from some undisclosed source. The department does not then proceed on no evidence, because the fact that there was receipt of money is itself evidence against the assessee. There is thus, prima facie, evidence against the assessee which he fails to rebut, and being unrebutted, that evidence can be used against him by holding that it was a receipt of an income nature. The very words 'an undisclosed source' show that the disclosure must come from the assessee and not from the department. (emphasis supplied) It is further observed in this case by the Hon'ble Supreme Court as under- In the present case, the assessee claimed that the high denomination notes were a part of the cash balance at the head-office. The Income-tax Office found that at first the cash on hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on hand whereas the facility of withdrawing cash was available at the time and place it was required. The above is from the observation failed to prove why such large sums were kept on hand in one place when at each of the places where work was carried on, there were banks with which he had accounts. In view of the above, the judgement of Hon'ble Supreme Court is squarely applicable to the facts of the case. (ix) It is observed by the Hon'ble ITAT in the case of Renu T Tharani vs Dy Commissioner of Income Tax in ITA No. 2333/Mum/2018 as under:- These evidences and statements cannot always be accepted at the face value without application of mind about their reliability. A conscious call is to be taken, in a fair and objective but a realistic, manner about reliability of such evidence. As observed by Hon'ble Supreme Court, in the case of CIT Vs Durga Prasad More [(1971) 82 ITR 540 (SC)], 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 . As Hon'ble Supreme Court has observed, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuine has not been established .. 12. In order to decide as to whether the impugned gifts in the present case are genuine or not, one has to look not only at the documents produced but also at the surrounding circumstances. In this connection, we may fruitfully notice and reproduce the following observations made by the Hon'ble Supreme Court in CIT v. Durga Prasad More [1971] 82 ITR 540. It is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing 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 wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee about the nature and source of the sums found credited in his books is not satisfactory, there is prima facie evidence against the assessee, viz., the receipt of money and that the burden is on the assessee to rebut the same, and, if he fails to rebut it, it can be held against the assessee that it was receipt of an income nature. The Hon'ble Court further observed: 'May be the money came by way of bank cheques and was paid through the process of banking transaction but that itself is of no consequence'. [CIT v. P. Mohankala [2007] 291 ITR 278 1 (SC)] (xi) In the case of Konathala Nooku Naidu v. Income-tax Officer, Ward- 1 [2024] 160 taxmann.com 758 (Visakhapatnam Trib.) [18-03-2024] [L.T.A. No.269 Viz/2023], Hon'ble ITAT upheld the addition and found the explanation as unacceptable when the source of cash deposited in the bank on 13-11-2016 was stated to be the loan which was further withdrawn in cash on 29-09-2016 in view of the fact that the assessee has not properly explained as to why the loan was availed by the assessee and for what purpose he has withdrawn the amount on 29- 09-2016 and deposited the same after one and half months. 6. Insofar as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sale in any period of the year and this argument of the appellant is contradictory to the regular business practices in the past history of the appellant himself and thus unreliable and a mere self-serving statement. Further it is also seen that the credit sales have not increased at all in this period and have rather gone down. A summary of the same is tabulated below Cash Sale (Rs.) Credit Sale (Rs.) October 2016 4,84,162 6,10,407 November 2016 32,22,668 5,81,653 The Id. AR during the hearing on 27.02.2024 sought time till 06-03- 2024 to file the original and revised VAT Returns. However such details have not been filed. Adverse inference is drawn against the appellant in this regard as it cannot be verified whether the VAT returns were revised to accommodate increase of retail sales in cash to accommodate the unaccounted cash in hand. Further the appellant has not given any plausible or cogent reasoning for the sudden spike in sales as noted in the assessment order. The appellant is also silent on the aspect of the sharply rising cash in hand which was just kept in hand and was not deposited in the bank account as against the regular business practices of the appellant himself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders and enhance business but the loan was delayed and was disbursed on 24/11/2016 for Rs. 22,22,213/-. As people start taking delivery 7 to 10 days before Dev Uthani Gyaras and sales occurred in first week of November 2016 and the whole amount was utilized to purchase raw material. On the one hand the assessee appellant was taking a loan from PNB Housing Finance, on the other hand he was having huge cash in hand which is lying idle and was not been deposited in the bank account and the appellant waited for several days(from September onwards) and a relatively smaller portion of Rs. 18 lacs was deposited in bank on 11/11/2016 and and the larger portion of Rs. 40 lacs was deposited only on 16/11/2016. The appellant has not explained issue and has maintained a complete silence. The explanations of the appellant are contradictory to the facts of his own case. It shows creation of back dated non- genuine sales bills to introduce cash in books. Further the learned AO has done a detailed analysis of the facts and reasoning which are referred to. In view of the above discussion the books of accounts of the appellant are not reliable and do not present a correct and fair view and the cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to be devoid of merit. Appellant has maintained the books of accounts. Section 68 is applicable as bank passbook can also be considered as the books of accounts for the purposes of section 68. There are judicial precedents as per which addition under section 68 of the Act can be made w.r.t. cash deposit in bank account. Hon'ble ITAT Delhi Bench in the case of Jagdish Prasad Sharma v. ITO [IT Appeal No. 104 (Delhi) of 2015, dated 13-1-2020), following the later decision of the Bombay High Court in Arunkumar J. Muchhala v. CIT [2017] 85 taxmann.com 306/250 Taxman 362/399 ITR 256 (Bom.), has held that bank passbook is also the books of the assessee within the meaning of section 2(12A) and, therefore, addition u/s 68 can also be made, irrespective of whether credit entries are made in the books of account of the assessee or not. Further alternatively such amount Rs. 12,90,178 having found its place in the bank account is also taxable as unexplained investment u/s 69 of the Act. Accordingly this ground of appeal is hereby dismissed. 5. Aggrieved from the order of the ld. CIT(A) the assessee has preferred this appeal on the grounds as reiterated in para 2 above. In support of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted on the basis of the supporting accounts, the ITO can process such profits by estimation after rejecting the books. That was not a case where interpretation of section 68 was called for. It is one thing to say that for separate heads of income such as profits, capital gains, etc, which would involve reporting of accounts maintained on an elaborate basis and also detailing expenditure etc, the Assessing officer may have the discretion to reject accounts and arrive at the income on the basis of estimation. However, in the case of section 68, there cannot be any estimate even if for the rest of the accounts, such an exercise is validly undertaken. This is for the simple reasons that the expression any sum refers to any specific amount and nothing more . In view of above, addition of Rs. 12,90,178/- deserves to be deleted. Ground No. 1: That addition u/s 68 is not possible if no books of accounts are maintained: As per Sec. 68 of the income tax act, 1961, Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has also held that a perusal of section 68 of the Act shows that in relation to expression books the emphasis is on the word Assessee meaning thereby that such books have to be books of the assessee himself and not of any other assessee. It is correct that since no books of accounts are maintained in the ordinary course of business of the assessee, no such addition u/s 68 of the Act is tenable. b. ITO Barabanki v. Kamal Kumar Mishra [2013] 33 taxmann.com 610 (Lucknow Trib.) c. Roopak Jain vs. ITO Ward-48(3), New Delhi, 2016 (10) TMI 692-ITAT DELHI d. Sh. Satbir Singh Bhullar Vs. ITO [ITA 258/ASR/2022] [ITAT AMRITSAR] Further, it has been held in various judgements that Bank pass book cannot be considered as Books of accounts for the purpose of section 68: a. Rameshbhai somabhai patel v. ITO [ITA NO. 1864/AHD/2014] b. Smt. Manasi Mahendra Pitkar v. ITO [2016] 73 taxmann.com 68/160 ITD 605 (Mum. Trib.) c. Smt. Ramilaben B. Patel v. ITO [2018] 100 taxmann.com 325 (Ahd.- Trib.) d. Amitabh Bansal v. ITO [2019] 102 taxmann.com 229 (Delhi-Trib.) e. Mehul v. vyas v. ITO [2017] 80 taxmann.com 311/164 ITD 296 (Mum.- Trib.) f. CIT v. Bhaichand N. Gandhi [1982] 11 Taxman 59/141 ITR 67 (B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y-wise opening stock, day-wise purchases, day-wise sales and day-wise closing stock along with other details like Comparative Chart of Cash Sale and Credit sale, Cash deposit in bank account in two different years and cash work done in two different years along with cash work done month-wise in two different years and the same was submitted to the Ld AO as and when demanded. ● Ld. AO never dissatisfied with the data supplied, Copy of Sales and Purchases Bills, Copy of Bank account and Narration of transactions, Copy of Purchases, Sales and Job Work account, Monthly Cash Account. However, issued SCN no. 1023025187 (1) on 24-12-2019 regarding justification of cash deposit and the same was replied as follows: - 1. Assessee is a manufacturer and work very marginally. As marriage season start from Dev Uthani Gyaras which was on 11-11-2016, so Assessee had huge orders in hand for this season hence assessee applied for a mortgage loan from PNB Housing Finance to fulfil orders and enhance business but the loan was delayed and was disbursed on 24-11-2016 for Rs. 22,22,213/-. As people start taking delivery 7 to 10 days before Dev Uthani Gyaras hence our sales occurred in first week of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2017, therefore, the addition deserves to be deleted as held in ACIT vs. M/s Hirapanna Jewellers [ITA 253/VIZ/2020]. Findings of the Tribunal in above judgement is as follows: [PB 26-43] [Page No. 10-12] In the instant case, the assessee has admitted the receipts as sales and offered for taxation. The assessing officer made the addition u/s 68 as unexplained cash credit of the same amount which was accounted in the books as sales. In this regard, it is worthwhile to look into section 68 which reads as under: 68. Where any sum is found credited in the books of an assessee .. From the perusal of section 68, the sum found credited in the books of accounts for which the assessee offers no explanation, the said sum is deemed to be income of the assessee. In the instant case the assessee had explained the source as sales, produced the sale bills and admitted the same as revenue receipt. The assessee is engaged in the jewellery business and maintaining the regular stock registers. Both the DDIT(Inv.) and the AO have conducted the surveys on different dates, independently and no difference was found in the stock register or the stocks of the assessee. Purchases, sales and the stock are i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Rs. 2 lakhs. Here we would like to state that most of the sales were below Rs. 2 lakhs. However, Ld AO did not raise any specified defects/ reasons for rejection of contention of the assessee and made addition of Rs. 12,90,178/- on the basis of suspicion and surmises which is illegal, bad in law and deserves to be deleted. In view of above submissions, whole of the addition deserves to be deleted. Ground No. 3: That the appellant craves the right to add, amend or alter any grounds of appeal before or at the time of disposal of this appeal: Not Pressed 5.1 To support the various grounds so raised by the ld. AR of the assessee and has relied upon the following evidences in support of the contentions so raised:- S. No. Particulars Page No. Authority before whom presented 1. Copy of ITR along with Computation and Balance sheet 1-3 AO 2. Copy of Judgement by Delhi High Court in D.C. Rastogi v. CIT [2014] 45 taxmann.com 489 4-6 Case Law 3. Copy of Judgement by Delhi ITAT in Babbal Bhatia vs. ITO [5430 5432/Del/2011] 7-20 Case law 4. Summary Sheet of day wise stock 21 AO CIT(A) 5. Copy of order passed by Ld AO for the AY 18-19 22-25 Judgment 6 Copy of Judgement in ACIT vs. M/s Hirapann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile doing so ld. AO noted that the assessee has not provided satisfactory explanation about the nature and source of cash deposits. Here we note that one the one hand ld. AO accepted the sales of Rs. 19,32,490/- and on the other hand on the same set of evidence placed before him he is not considered the other part of the sales and that too based on the estimation, presumption and assumption he has not placed on record failure on the part of the assessee as when the part of the sale is considered then why the other part is not considered. Looking to the overall facts of the case and material available on record we are of the considered view that the addition made by the ld. AO and sustained by the ld. CIT(A) merely based on the presumption and assumption. They did not deal to the fact of the case on the same set of evidence part of the sale is accepted and part of the same were not accepted. Considering that factum we do not find any reason to sustain the addition and therefore, we direct the ld. AO to delete that addition made in the hands of the assessee. In the result appeal filed by the assessee is allowed. Order pronounced in the open Court on 27/09/2024. - - TaxTMI - TMITa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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