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TMI Blog2024 (9) TMI 1692X X X X Extracts X X X X X X X X Extracts X X X X ..... n the same modus operandi followed by the assessee has been accepted which is not subject matter of the appeal. We also note that the assessee has filed VAT return disclosing the entire turnover shown in the financial statements. Therefore, both the authorities are not justified in making addition u/s. 69A of the Act.
Rejection of books of accounts - As once the books of accounts are rejected by the ld. FAA, he should have applied income u/s. 144 of the Act, however he has accepted income disclosed by the assessee. It is also noted that the assessee is an eligible assessee u/s. 44AD and he has disclosed income @ 9.92% u/s. 44AD. The amount deposited in the bank account is less than the turnover declared by the assessee.
Both the authorities below are unable to substantiate the bank deposits are over and above the turnover declared by the assesse.
Cash deposits in the above three bank accounts were treated income u/s. 69A is not correct. Therefore income declared by the assessee under the head profits & gains of business or profession has to be accepted. Ground Nos.1 to 6 are allowed X X X X Extracts X X X X X X X X Extracts X X X X ..... hus no addition ought to have been made, on the facts and circumstances of the case. 7. The invocation of section 115BBE of the Act is also bad in law, since there was no instance of unexplained income, on the facts and circumstances of the case. 8. The appellant denies the liability to pay interest under section 234A, 234B and 234C of the Act in view of the fact that there is no liability to additional tax as determined by the learned assessing officer. Without prejudice the rate, period and on what quantum the interest has been levied are not in accordance with law and further are not discernible from the order and hence deserves to be cancelled on the facts and circumstances of the case. 9. The appellant craves to add, alter, amend, substitute, change and delete any of the grounds of appeal. 10. For the above and other grounds that may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed and justice rendered and the appellant shall be awarded cost in prosecuting the appeal and also order for the refund of institution fees as part of the cost." 2. Briefly stated the facts of the case are that the assessee filed return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before the ITAT. 5. The ld. AR reiterated the submissions made before the FAA and submitted that the AO has not considered the nature of business carried out by the assessee for the source of cash receipt which were entirely from the sale of jewellery. The appellant is a registered retailer in jewellery business and is carrying on business since October, 2016. The primary source of receipts are from business and loans taken. Sales are made to customers against money which is general and normal practice in the retail industry. Therefore it is hardly necessary for the seller to bother about the name and address of the purchaser. In this regard, he relied on the judgment of R.B. Jessaram Fatehch and (Sugar Deptt) VS. CIT (1970) 75 ITR 33 (Bom). He further submitted that each customer makes cash purchases and lifts the goods. There is no duty cast upon the seller to insist for address of the purchaser. Therefore treating the cash sales as bogus sales is not justified. In support of he relied on the judgment in the case of Kishore Jeram Bhai Khaniya, Prop. M/s Poonam Enterprises vs. ITO - ITA No. 1220/Del/2011 dt. 13.5.2014. The main composition of the customers of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the authorities below. The ld. CIT(A) has rightly invoked section 145(3) and rejected the books of accounts. It was the duty of the assessee to substantiate the source of cash deposits with cogent material. The assessee has issued sale bills, but there is no name and address or contact no., PAN of the prospective buyers. Therefore the sales shown by the assessee are doubtful and the ld. FAA has also doubted the purchases of the assessee. The business of the assessee started in the month of October. 2016, but there is a bill for prior period which also creates doubt that the purchase is bogus. He requested that the order of lower authorities should be upheld. 8. In the rejoinder, the ld. AR again reiterated the detailed written submissions supported by case law. He submitted that the assessee started business in the month of Oct. 2016 and previously it was carried out by his family members in the same name & style. Once the CIT(Appeals) has rejected the books of accounts, then income has to be estimated on the reasonable percentage of income along as prevailing in the industry as business income and income should be considered under Chapter IXD - profits & gains of business or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e out of sale proceeds and unsecured loans. Therefore it is evident that the assessee has deposited cash in the bank account from his business turnover on which assessee had declared business profit. Both the authorities below have not reduced the profit element involved in the business turnover and corresponding expenditure. Both the authorities have considered the income twice i.e., under the profits & gains of business or profession under Chapter IVD on the turnover and income from other sources u/s. 69A. Resultantly there is double taxation on the same income which is not permitted. Once the cash deposit out of the turnover is treated as unexplained investment u/s. 69A, the actual turnover which is not part of the bank deposits has to be calculated. It is also interesting to note that partial cash transaction on the same modus operandi followed by the assessee has been accepted which is not subject matter of the appeal. We also note that the assessee has filed VAT return disclosing the entire turnover shown in the financial statements. Therefore, both the authorities are not justified in making addition u/s. 69A of the Act. 12. We further note that once the books of accounts a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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