SANJAY SUMERMAL SONI,THANE vs. ITO, WARD-2(2), THANE

This appeal is filed by Mr. Sanjay Sumermal Soni for assessment year 2017 – 18 in ITA number 183/M/2023 against the appellate order passed by National faceless appeal Centre, Delhi (the learned CIT – A) dated 24/11/2022 wherein the appeal filed by the assessee against the assessment order passed under section 143 (3) of the income tax act, 1961 (the act) dated 24/12/2019 passed by the income tax officer Ward 2 (2) Thane was dismissed. Therefore, the assessee is aggrieved and has preferred this appeal.

The brief fact shows that assessee is an individual engaged in the trading activity of gold ornaments in the name and style of M/s Nirosha Jewels. Assessee filed his return of income on 30/10/2017 declaring a total income of ₹ 942,610. This return was picked up for scrutiny. Necessary notices under section one 43 (2) of the act were issued to the assessee. The learned AO on analysis of the bank statements submitted by the assessee found that assessee has made cash deposit of ₹ 15,990,000 in old currency (specified banknotes) during the demonetization period in his Axis bank, Fort, Mumbai’s account in account number 914XXXXXXXX8776. The learned assessing officer questioned the assessee and asked to submit information. The assessee submitted that identical question has been asked by The Deputy Director of Income Tax (Investigation), Thane as per letter dated 6/12/2016 wherein the assessee submitted that he has deposited cash in his current account maintained with that bank account out of the cash sale proceeds generated on 8/11/2016 at midnight. He submitted that after the announcement of demonetization there was panic buying of the gold and bullion. He submitted that only requirement was to obtain permanent account number

The learned assessing officer held that the assessee submissions are not reliable as assessee has not stated the reasons for having such a cash sale on single day as assessee sold within 3 Hours 25 minutes. Further he prepared the bills within two minutes for each bill. Assessee sale exactly at the midnight of 8/11/2016 and collected cash from customers within the time in specified banknotes. In the sales bill assessee did not collect making charges. The sales bill was prepared all of 22 carat gold based on this the learned assessing officer passed an assessment order under section 143 (3) of the act on 24/12,019 determining the total assessed income

Aggrieved assessee preferred an appeal before the learned CIT – A wherein as per Para number 11 the learned CIT – A, the addition holding that the assessee failed to prove the real identity of the customers and genuineness of the transaction in respect of assets transaction. The onus was on the assessee to furnish satisfactory condition of the transactions with proper documentary evidences. The learned CIT – A further noted that assessee has prepared cash memo all below the limit of rupees to lakhs avoid the provisions of rule 114D. Further the claim of the question is an afterthought to justify huge cash deposits in the bank account during demonetization period. The learned CIT – F for the project reliance on several judicial precedents placed before him. Accordingly, the addition of ₹ 15,691,401/– made under section 68 of the income tax act was confirmed.

The assessee is in appeal before us. The assessee submitted that he maintains the stock of register of gold bar, gold annulment for the respective period which have shown the transaction of gold. We stock statements were available before the lower authorities however none of them disputed this fact but has not considered that the amount of quantity of gold sale has been reduced from the closing stock. He further referred to the business of purchase of gold prior to the demonetization period. He submitted that the purchase gold was found from genuine

The learned departmental representative supported the orders of the lower authorities.

It is not the case of the learned assessing officer that assessee was asked to produced the buyers. The learned AO also did not show that assessee was further statutory required to give more information than what has been already submitted. Even the learned assessing officer has not recorded the statement of the assessee to examine the situation prevalent on that date. The close circuit camera recording would also have substantiated or proved the claim of the assessee otherwise. It is also important that in response to someone by the investigation wing, the stand of the assessee is same. Therefore, no fault can be found with the claim of the assessee, unless the assessing officer further makes an investigation on that issue. In

Assessee has relied upon several judicial precedents wherein on identical facts and circumstances the addition made in the hands of a jeweller on disproportionate sale shown on the date of demonetisation and deposit of cash in the bank account of such jeweller in specified

In the result, respectfully following the judicial precedents cited before us, we reverse the order of the lower authorities and direct the learned assessing officer to delete the addition of ₹ 15,691,401/– towards cash deposit made during demonetization period. Accordingly ground number 2 of the appeal is allowed.

Ground number 1 is challenging the observation of the principles of natural justice, no arguments were advanced before us, and therefore same is dismissed.

In the result appeal of the assessee is partly allowed.