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TMI Blog2024 (12) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... s that once the purchases are accepted as genuine and its sales cannot be taken as bogus until and unless books of account are rejected or found to be defective. One interesting fact is that even enforcement directorate has enquired into the issue and find no adverse circumstances or facts in this case against the assessee. Hence, we find no infirmity in the order of the CIT(A) the deleting of cash sales made by the AO u/s. 69C. Estimating the profit / commission on alleged cash sales @ 0.25% - CIT(A) has simply tried to balance the view expressed by him but there is no basis for such estimation because the assessee has already disclosed profit, which is part of the accounts of the assessee on cash sales recorded in the books of account. Hence, we delete this addition and allow assessee s appeal on this issue. As regards to the assessee s appeal, this issue of assessee s appeal is allowed and revenue s appeal is dismissed. Addition u/s 68 - HELD THAT:- We noticed that now the assessee for the first time before us filed bank statement of Pankaj Kapur from where this amount was advanced. Since, this document was produced before us for the first time, we admit this document and remand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted for scrutiny assessment by issuing notice u/s. 143(2) of the Act consequently, assessment proceedings were taken up. The assessee filed the required details. The AO during the course of assessment proceedings noticed from the books of accounts that the assessee has made total sales during the year amounting to Rs. 97,13,70,670/-. The AO noted that the assessee has made huge cash sales during the year on examination of sale register, stock register and cash book of the assessee. The AO on perusal of the sales register, stock register and cash book noted that the opening stock value as on 01.04.2013 as per balance sheet is Rs. 114,62,13,221/- and there is no sale made in the month of April, May, June, July and August, 2013. Thereafter, on 17.09.2012, the assessee sold diamond of Rs. 1,19,96,662/- in cash. This sale has been made through 79 cash sale vouchers. The AO examined the pattern of sale made in cash from books of account for the whole year. The cash sale transaction of single voucher never exceeded of Rs. 2 lacs and they are varying sales vouchers i.e. minimum 132 and maximum 270 on single day. In view of these peculiar facts, the AO required the assessee, vide show-cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prasad More (1971) 82 ITR 540 and CIT Vs. P. Mohanakala 291 ITR 278 genuineness of these cash sales has not been established and therefore source of receipt which the assessee claims from cash sales and which has been used for making purchases and other expenses, has not been established. Therefore, explanation filed by the assessee cannot be treated as satisfactory and therefore expenditure incurred by the assessee for making purchases and other expenses to the extent of cash sale shown in the books of Rs. 97,13,70,670/- is deemed to be the income of the assessee for A.Y.2013-14 u/s. 69C of the Act. Aggrieved assessee preferred appeal before the CIT(A). 8. The CIT(A) after considering the submissions of the assessee restricted the addition in the form of commission over and above the value of transaction and accordingly estimated the additional income @ 0.25% of total cash sales and deleted the addition of cash sales in para 4.3.2 as under :- 4.3.2. On perusal of the complete facts of the case and the documents obtained during the course of appellate proceedings, it is observed that the AO has taken adverse view of the large amount of cash sales of diamonds made by the appellant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellant in collusion with its customers for which the appellant might have been compensated by the customers by paying some amount in the form of commission over and above the value of the transaction. In the absence of any details, I am inclined to estimate the additional income earned by the appellant @ 0.25% of the total cash sales of Rs. 97,13,70,670/-, which comes toRs.24,28,427/-. Accordingly, the addition made by the AO is restricted toRs.24,28,427/- and the balance addition is deleted. The grounds of appeal are thus, partly allowed. 9. Aggrieved against the order of CIT(A) on deletion of addition of cash sales of Rs. 97,13,70,670/-, revenue came in appeal as against the addition of estimation of commission over and above value of transaction @ 0.25% assessee came in appeal. The relevant grounds here in above. 10. Before us the ld. Counsel for the assessee argued that the CIT(A) erred in estimating the commission over and above the value of transaction of cash sale by estimating @ 0.25% of the total cash sales. He stated that there is no basis for such addition and even AO has not made this addition. He also argued that the CIT(A) has rightly deleted the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the AO during the assessment proceedings including the sale register, stock register and cash register from where he noted various facts including purchases made/sales made and sale of rough diamonds. Admittedly, the assessee has explained the source of purchases of all the purchases are recorded in the books of accounts and has produced all the bills and vouchers, import bills, bill of entry, airline bills and custom documents etc. All purchases have been made through account payee cheque/RTGS. The assessee has recorded complete sales in the books of account and AO could not point out any defect in the books of account or even there is no finding in the Assessment Order about any deficiency in the books of account. The AO has not at all invoked the provision of section 145 for rejection of books of account of the assessee. 14. In view of the above facts, we are of the view that addition made by the AO is just based on assumptions and has ignored the facts of the case. Interesting point is that once the purchases are accepted as genuine and its sales cannot be taken as bogus until and unless books of account are rejected or found to be defective. One interesting fact is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osits in the bank account of the assessee u/s. 68 of the Act. For this the revenue has raised following ground No.2 :- 2. Whether the Ld. CIT(A) was correct on facts and in law, in deleting the addition made by the AO u/s. 68 of the IT Act in respect of the unexplained cash deposits in the bank accounts of the assessee as the assessee has not discharged its burden as required by law ? 22. Brief facts of the case are that the AO during the course of the assessment proceedings noticed that the assessee has made total cash on sales to the tune of Rs. 97,13,70,670/- but the cash deposited in the bank account is to the tune of Rs. 97,71,80,500/- and the assessee could not explain before the AO, the excess cash deposit of Rs. 58,09,830/- and hence, despite the AO giving various opportunities, assessee could not explained or could not provide source of income and accordingly the AO added the excess cash deposit u/s. 68 of the Act. Aggrieved assessee preferred appeal before the CIT(A). 23. The CIT(A) after going through the facts of the case and ground raised by the assessee deleted the addition by observing in para 5.3 as under:- 5.3 I have considered the facts of the case and the submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails are referred in assessee s paper book in pages 36 to 37 but when he was asked to correlate these entries of cash deposit in bank with cash in hand available or cash generated out of cash sales he could not properly explained. The Ld. CIT(DR) on the other hand requested the Bench to refer the matter back to the file of the AO for verification on this issue whether the cash deposit of Rs. 58,09,830/- is arising out of available cash in hand or out of cash sale made by the assessee. 25. After hearing both the sides and going through the facts of the case we are of the view that the issue of cash deposit in the bank account of Rs. 58,99,830/- i.e. over and above cash sale of Rs. 97,13,70,670/- needs proper verification and the assessee has to explain the source of cash. In view of the given facts of the case, we are of the view that the assessee is unable to explain this differential cash by any plausible explanation. Accordingly, we allow this issue of revenue. 26. Coming to revenue s appeal in ITA No.3201/Del/2018 for A.Y. 2014-15. Similar issue is arising in this appeal also regarding unexplained cash deposit in bank account of Rs. 1,97,45,038/-. This exactly identical issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chitKapur and also the genuineness of the transaction. The AR has not filed any document to explain the source of cash deposits and has also not filed any details of the income shown by Sh. SachitKapur in the Return of Income filed by him, if any. Merely stating that the cash deposits have been made by making withdrawals from other bank accounts cannot be accepted to explain the creditworthiness of the lender. In view of these facts, I don't have any reasons to interfere with the addition made by the AO and therefore, the said addition made u/s 68 of the Act is confirmed and the ground of appeal is dismissed. Aggrieved, assessee is in appeal before the Tribunal. 31. We have heard the rival contentions on this issue and gone through the facts and circumstances of the case. We noticed that now the assessee for the first time before us filed bank statement of Sachit Kapur and claimed that out of this bank statement of Axis Bank cheque No.747327 was issued on 01/07/2012 of Rs. 5,00,000/- and another cheque was also issued by Sh. Sachit Kapur from his bank account ING Vysys Bank cheque No.6551 on 21/03/2013 for an amount of Rs. 43,00,000/-. Since, these documents were produced befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmission made by the AR and the facts of the case, it is observed that the appellant has failed to prove the creditworthiness of Sh. Pankaj Kapur and also the genuineness of the transaction. The AR has not filed any document to explain the source of cash deposits keeping in view the meagre amount of income shown by Sh. Pankaj Kapur in the Return of Income filed by him. Merely stating that the cash deposits have been made by making withdrawals from other bank accounts cannot be accepted to explain the creditworthiness of the lender. In view of these facts, I don't have any reasons to interfere with the addition made by the AO and therefore, the said addition made u/s 68 of the Act is confirmed and the ground of appeal is dismissed. Aggrieved, the assessee is in appeal before the Tribunal. 35. We have heard the rival contention on this issue and gone through the facts and circumstances of the case. We noticed that now the assessee for the first time before us filed bank statement of Pankaj Kapur from where this amount was advanced. Since, this document was produced before us for the first time, we admit this document and remand this issue back to the file of AO. The AO will exam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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