9911796707
TMI Blog2025 (1) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... our of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... f cash available with the firm on account of cash sales and recovery from debtors with the support of copies of VAT returns, sale bills and purchase bills. However, the AO being not satisfied with the reply of the assessee observed that assessee has included unaccounted income of Rs. 57,32,048/- in his gross sales/turnover and accordingly conclude that cash deposit of Rs. 57,32,048/- made in the bank account during demonetization period as unexplained income of assessee u/s 69A of the Act to be taxed under provisions of section 115BBE of the Act. 5. Being aggrieved with the assessment order the assessee prefer an appeal before the Ld. NFAC/CIT(A) who has confirmed the finding of the AO by observing as under: 6.2 The main issue involved in this case pertains to addition of Rs. 57,32,048/- on account of unexplained cash deposits in the bank account during the demonetization period u/s 69A r.w.s 115BBE of the IT Act, 1961. Other grounds are therefore being dealt in hereunder together to decide the main issue involved 6.2.1 During the course of assessment proceedings, the Assessing Officer in his assessment order dated 30/12/2019 has stated that:- "3.2 In the present case, it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain no cash sale except a minor sale of Rs. 2,25,000/-, has been made in the remaining part of F.Y. 2016- 17 * The opening cash in hand as on 01.04.2016 is Rs. 3,04,068/- but due to the sudden cash sale in Oct. 2016 amounting to Rs. 50,81,760/- and in November, 2016 upto 8th, amount to Rs. 8,30,250/-, the cash in hand soared to Rs. 67,64,482/- as on 08.11.2016 which was deposited in the bank accounts during the demonetisation period. * The cash from the cash sales made in Oct.,2016 has been kept as cash in hand upto 08.11.2016 and not deposited into the bank accounts whereas there is daily activities of bank transactions made by the assessee which is also not normal business practice. * The comparative chart of bank deposits made revealed that in the F.Y. 2015-16, cash deposits of Rs. 22,000/- has been made between 01.04.2015 and 08.11.2015 and whereas in the F. Y.17, cash deposit of Rs. 5,49,221/- has been made in pre-demonetisation period and Rs. 67,62,000/- has been deposited in the demonetisation period. Apart from the above facts, it is also submitted that: * The purchase in the month of October, 2016 has been made from the sister concern M/s R. M. Exports. * T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for only the month of Oct., 2016 and upto 8th day of November, 2016 which has been done by the assessee. The assessee has submitted copies of VAT returns filed in support of his claim of sales made but the same does not hold water in view of the decision of Hon'ble Delhi High Court in CIT Vs. Nestle India Ltd. - 337 ITR 103 wherein it has been held that "we are of the view that the Tribunal is not correct in observing that since the permission is given by the Reserve Bank of India, the reasonableness and genuineness of the expenditure could not have been gone into by the Assessing Officer. The purpose for which such permission is given by the RBI is only concerned with the foreign exchange and therefore, would look into the matter from the point of view. The RBI at the time of giving such permission would not keep mind the provisions of the Income Tax Act and that is the function of the Income-tax authorities and, therefore, they can validly go into such an issue. '' The reliance is also placed on Gem Granites vs. CIT [2004] ITR 322(SC). 3.6 The above findings are supported by the following factual position and judicial pronouncements: (i) Section 69A gives a statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents." (vi) Hon'ble Apex Court in the case of McDowell & Co Ltd. v CTO (1985) 154 ITR 148 (Supreme Court) has held that:- "Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid payment of tax by resorting to dubious methods''. Tax planning should not be done with an intent to defraud the revenue; though all transactions entered into by an as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etization. 3.9 Since, the assessee has included the above unaccounted income of Rs. 57,32,048/- in his gross sales/turnover, therefore, the same has to be reduced from the declared gross sales/turnover of Rs. 85,98,563/- and corresponding G.P. @4.65% declared by the assessee which comes to Rs. 2,66,540/- is also reduced from the gross profit declared at Rs. 3,99,152/-. Therefore, the trading results are altered to the above extent and the books of accounts of the assessee are hereby rejected to the extent of Rs. 57,32,048/- only u/s 145( 3) of the Income Tax Act, 1961. 3.10. Therefore, in view of the discussion made above, the cash deposit of Rs. 57,32,048/- made in the bank account during demonetization period is held to be the unexplained income of the assessee as per section 69A of the Income Tax Act, 1961 to be taxed as per provisions of section 115BBE of the Income Tax Act, 1961. The assessee has unexplained income to the tune of Rs. 57,32,048/- to be assessed as per provisions of section 69A of the Income Tax Act, 1961." 6.22 I have carefully considered the AO's viewpoint contained in the Assessment Order and the submission made by the appellant including relevant ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case. In support of his case, the appellant's filed its reply has been considered and examined but the same has not been found satisfactory. Appellant was not able to satisfy AO with the explanation and also not able to explain the genuineness of the transaction at the appellate stage as well. 6.2.7 In view of the facts and circumstances borne out of the assessment order and legal precedents as discussed above, I am of the view that documents submitted as evidences to prove the genuineness of transaction are themselves found to serve as smoke screen to cover up the true nature of the transactions. 6.2.8 Keeping in view of the above and on the basis of the detailed findings and reasons given by the AO in his assessment order, the addition made by the Assessing Officer amounting to Rs 57,32,048/- u/s 69A r.w.s.155BBE of the IT Act is hereby confirmed and grounds of appeal raised by the appellant in this regard are hereby dismissed." 5. The ld. counsel for the submitted that the ld. CIT(A) has grossly erred in confirming the addition of Rs. 57,32,048/- u/s 69A of the Act in respect of cash deposits made in bank a/c during demonetization period, being out of sale proceeds wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during assessment proceedings otherwise assessee could have comfortably explained that there were no expenses since assessee was carrying on business in the adjoining building and M/s RM Exports supplied goods through their staff. 4. That observation of the Assessing Officer that no valid reasons for cash sales have been given when there has never been any history of cash sales has never been raised during assessment proceedings otherwise assessee could have comfortably explained that during this year only assessee purchased export surplus of M/s RM Exports and the same was sold to retail customers on cash basis. 5. That as regards allegation of the Assessing Officer that cash sales have been introduced in books of accounts is an attempt on the part of the assessee to have cash in hand just before demonetization to cover cash deposited in bank during demonetization and further allegation of the Assessing Officer that purchases and sales have been affected in books of accounts in the month October 2016 upto 08.11.2016only because there was scope to manipulate books of accounts of October 2016 and upto 08.11.2016 because last date for filing VAT return for the month of Septembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AGSON GLOBAL PVT. LTD. & ORS. HIGH COURT OF DELHI (2022) 441 ITR 0550 (Delhi(Page 149-181of case laws index) h) SMT. HARSHILA CHORDIA vs.-. INCOME TAX OFFICERHIGH COURT OF RAJASTHAN2008) 298 ITR 0349(Page 182-189 of case laws index) Ground of Anneal No. 3 & 4 Case of the A.O. That Assessing Officer concluded that Rs. 57,32,048/- represented bogus sales Para 3.9 page 6 of the assessment order) Case of the Ld. CIT(A) That Ld. CIT(A) has confirmed the addition with his observation in para 6.2.8 page 28 of the appellate order. Our Submissions 1. That during the year under consideration total sales of the assessee amounted to Rs. 85,98,563/- (page 34 of paper book) as detailed below: Sr. No. Period Sales VAT charged on sales VAT input VAT paid Paper Book page 1. 01.04.2016 to 30.06.2016 NIL NIL NIL NIL 47-49 2. 01.07.2016 to 30.09.2016 NIL NIL NIL NIL 50-53 3. 01.10.2016 to 31.12.2016 5912010 357677 270950 86727 54-57 4. 01.01.2017 to 31.03.2017 2686553 13613 11798 1815 58-61 Total 8598563 371290 282748 88542 2. That Assessing Officer has not provided bill wise details of sales alleged to be bogus. Total sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash book, ledger, stock register and sale bills, purchase bills and vouchers. The Books of accounts of the assessee have been audited and tax audit report has been filed with the Income Tax department. The Ld. AR contended that Cash deposited in the bank account stands explained as being made out of cash available in the books of accounts on account of cash sales and realization of debtors. He further argued that the purchases recorded in books of accounts have been accepted by the Assessing Officer and Profit on sales declared by the assessee was ar normal profit and not exorbitant profit. Again, the Sales made by the assessee have been declared in VAT returns with payment VAT amounting to Rs. 3,25,178/- to State Govt. where the sales declared in the VAT returns have been accepted by Punjab State Sales Tax Department. In our view, since the cash sales during the demonetization period constitute the basic foundation of the cash deposit in bank credited as per profit and loss account and hence such cash sales have already been offered to tax as income of the assessee and therefore, further no inference u/s 69A of the Act was unwarranted based on assumptions and presumptions, surmis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt have been accepted as such by VAT authorities while framing the VAT assessment. The assessee was having sufficient stock in hand for making the impugned sales during the demonetization period and it is not the case of the Assessing Officer that the assessee has shown bogus purchases to show bogus sales to cover up cash deposited during the demonetization period." 10. In the present case, Sales made by the assessee and shown in the regular books of account have been accepted as such by VAT authorities while framing the VAT assessment; that the assessee was having sufficient stock in hand for making the impugned sales during the demonetization period and that it is not the case of the Assessing Officer that the assessee has shown bogus purchases to show bogus sales to cover up cash deposited during the demonetization period. 11. In view of the factual matrix and judicial pronouncements, we hold that the Ld. CIT(A) decision in infirm and perverse to the facts on record in confirming the addition u/s 69A of the Act. Accordingly, the addition amounting to Rs. 57,32,048/- made by invoking provisions of section 69A of the Act is held to be illegal and bad in law and as such, same is ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
