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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI PAVAN KUMAR GADALE, HONBLE & SHRI S. RIFAUR RAHMAN, HONBLE
Date of conclusion of Hearing : 14.06.2023 Date of Pronouncement : 23.08.2023 O R D E R PER S. RIFAUR RAHMAN (AM)
This appeal is filed by assessee against order of Learned Commissioner of Income Tax (Appeals)-51, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 16.01.2023 for the A.Y.2020-21. (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd 2. Brief facts of the case are, assessee has filed its original return of Income for the assessment year 2020-21 on 06.11.2020 declaring loss of ₹.26,13,619/-. A search and seizure action u/s. 132 of Income-tax Act, 1961 (in short “Act”) was conducted upon Mr. Ashish Sisodiya. During search, cash belonging to assessee was seized. Accordingly, the case of the assessee was centralized for proceedings u/s. 153C of the Act was initiated and the case was selected for compulsory scrutiny and accordingly, notices u/s. 143(2) and 142(1) of the Act along with questionnaire were issued and served on the assessee.
In response, assessee has submitted its submissions. During the assessment proceedings, assessee was show caused as to explain the cash of ₹.10 Lakhs found and seized from locker in name of Mr.Ashish Sisodiya. As per the statement of Mr.Ashish Sisodiya that he is working as sales manager in M/s Manasi Jewellers Pvt Ltd and the cash found belongs to M/s Manasi Jewellers Pvt Ltd. In the search proceedings, Mr.Ashish Sisodiya could not explain the source of the cash found. During the post search proceedings, assesse M/s Manasi Jewellers Pvt Ltd., owned up the cash of ₹.10,00,000/- found and seized during search proceedings and assessee has accepted that the cash was generated from cash sales made by it. Page No. | 2 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd 4. The assessee was asked to explain the source of cash from cash sales, it was also asked to submit monthly cash sales details from April 2018 to March 2021, asked to submit Name/PAN/Address/Contact number of the parties to whom cash sales were made, Details of cash withdrawal from bank accounts and was asked to explain why the cash was kept in locker of Assessee’s employee.
In response to the above, it was submitted that source of cash is from cash sales and employee is trustworthy hence cash was kept in his locker.
After considering the submissions and the Assessing Officer observed that the assessee has submitted month wise cash sale details from April 2018 to March 2021. He observed that, assessee has cash sales in October, 2019 of ₹.6,92,015/- and January 2020 of ₹.1,33,750/-. Assessing Officer further observed that assessee has not made any cash sales during the 01.04.2019 to 11.10.2019. During the period 12.10.2019 to 14.10.2019 assessee has sold total cash sales of ₹.6,92,015/- and there is no cash sales till December 2019 and as per the cash withdrawal from bank he observed that assessee has Page No. | 3 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd withdrawn only ₹.2,96,500/- during March 2019 and ₹.99,500/- was withdrawn during January, 2019.
With the above observation, the Assessing Officer rejected the submissions made by the assessee that the cash found is out of cash sales nor cash withdrawn from bank account and accordingly, he proceeded to make the addition u/s. 69 of the Act.
Aggrieved with the above order, assessee preferred an appeal before the Ld.CIT(A) and before Ld.CIT(A) assessee made the following submissions, for the sake of clarity it is reproduced below: - “Ground: On the facts and circumstances of the case and in Law, the Ld. Assessing Officer erred in making an addition of Rs. 10,00,000/- as undisclosed money although complete details of cash sales and cash in hand was submitted as unexplained money u/s 69A of the Act, as per the grounds contained in the assessment order or otherwise.. 1. Contention No. 1: Based on the facts and merits of the case:
1. 1. Being also in retail trading of jewellery, the Appellant's business involves walk-in customers who purchase the jewellery and pay the sale consideration either in cash or by cheque.
1. During the relevant Assessment Year, the festival of Dhan-teras (i.e., Diwali) was in the last week of October which also marks the beginning of the wedding season. As well known that this is the period which is considered as auspicious and people make considerable amount of investments in precious metals and jewellery. The Appellant was also able to achieve considerable amount of sales during this period of festival. MENT Page No. | 4 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd 1. The cash received as sale consideration during this festive season was accumulated. Further, because the festival season was on full swing and there could be high requirement of cash liquidity, the Appellant had also withdrawn cash Rs. 99,500/- from its bank Because the number of outsiders visiting the premises of the Appellant was going to increase on account of the auspicious day of Dhanteras and upcoming wedding season, the Appellant considered it prudent to keep the cash in the locker. However, on 17.10.2019 the search and seizure action was undertaken and the entire cash of Rs. 10,00,000/- was seized by the income tax department 1. The Appellant, on 06 11 2019 a detailed submission before the Deputy Commissioner of Income tax (investigation), Unit 2(4), Mumbai whereby it was explained along with the documentary evidences that the source of Rs. 10,00,000/- which was seized was nothing but the recent cash sales made by the Appellant, the past cash withdrawals and the opening cash on hand. It was duly brought to the notice of the Ld DCIT that as on the date of seizure a total cash of Rs 10,14,204/ was available with the Appellant, out of which Rs. 10,00,000/- was deposited in the locker 1. Further, during the course of Assessment Proceedings before the Ld. Assessing Officer the Appellant had submitted the following documentary evidences to substantiate the source of cash vide submission dated 29.07 2019 vide e-submission made on 30.07.2021 1. Monthly summary of cash sales 2. Date wise details of cash sale.
3. Details of Cash Withdrawn 4. Invoices of cash sales made 5. Stock register for the entire relevant Assessment Year 6. Cash Book for the entire relevant Assessment Year.
7. Bank statement reflecting the past cash withdrawals.
8. Computation of Total Income for Assessment Year 2020-21. Page No. | 5 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd 9. Audited Financial Statement for FY 2019-20 10. Tax Audit Report in From 3CA3CD 1. Despite submitting the above documentary evidences; the Ld. Assessing Officer has made addition u/s 69A considering the source of said deposit as unexplained.
1. Pertinent to note that the Appellant has duly reflected every sale invoice in the GSTR-1 and GSTR-3B returns filed by it for every month. From the sale invoices and the cash book it is evident that cash balance on the date of seizure was Rs. 10,14,204/- The cash sales made duly forms part of the turnover of the Appellant which is also offered to tax by the Appellant 1. In this scenario the Appellant faced severe prejudice when Ld. Assessing Officer added the entire amount of Cash of Rs. 10,00,000/- as income of the Appellant. This has resulted into double jeopardy as the same amount of receipts is taxed twice in the hands of the Appellant.
1. It is pertinent to note that the sales reported and offered to tax in the return of income is duly accepted by the Ld. Assessing Officer, however, has again taxed the entire amount of cash kept in locker of Rs. 10,00,000/- which includes Rs. 6,92,015/- on account of cash sales and Rs. 99,500/- which was cash withdrawn from bank. The balance cash was out of the opening cash in hand balance.
1. Disregarding the above listed documentary evidences; the Ld Assessing Officer has merely on surmises and conjectures had added Rs 10,00,000/- under section 69A as unexplained money 1. It is not the case where the Ld. Assessing Officer has pointed out any defect in the above listed documentary evidences. Moreover, the books of accounts of the Appellant are subjected to Audit and no adverse averment has been given by the Auditor.
1. The Addition is made by the Ld. Assessing Officer purely on his guess work by alleging that since during the entire year no cash sales were made except in the month of October and January, hence the same are non-genuine.
Page No. | 6 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd 1. The addition made by the Ld. Assessing Officer is based merely on the following whimsical grounds:
1. 1. No cash sales was made between April to October, 2019.
2. Details of bills/invoices are not verifiable because the PAN/address/contact of the buyer is not mentioned 3. The Ld. Assessing Officer has questioned the need for withdrawing cash. Only based on the above surmises and conjectures the Ld. Assessing Officer has made addition under section 69A of Rs. 10,00,000/- Firstly, the Ld. Assessing Officer has no-were rebutted the documentary evidences furnished by the Appellant. The Ld. Assessing Officer can resort to the concept of "preponderance of probabilities" only when direct evidences are not available. In the instant case, direct irrefutable evidences were provided to the Ld Assessing Officer and hence he cannot directly base his conclusions based on his whimsical circumstantial situations by disregarding and without rebutting the direct corroborative evidences. Absence of cash sales between April - September by itself cannot make the cash sales made in October as non-genuine. The auspicious festival of Diwali does not fall within the month of April to September. The Appellant is engaged in carrying on business; which is always dynamic. It is not open for the Ld. Assessing Officer to punish or prohibit the Appellant for/from making cash sales during the festival of Diwali. Regarding, the non availability of details like PAN/contact we wish to state as under: There is no requirement or obligation on the Appellant by law to obtain details like PAN or Address from its customers Pertinent to note that there is no credit period allowed in retail business, the sale consideration is paid by the customer there and there. The provisions of section 285BA read with Rule 114E as applicable to the relevant Assessment Year also did not require the Appellant to maintain and report KYC/specified financial transaction details w.r.t cash sales made when the sales are below Rs. 2,00,000/- Accordingly, there was no mandate for the Appellant to collect details of the customer In the present case the cash sales are made to Page No. | 7 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd household customers. Thus, even by law the Appellant was not obligated to collect PAN/Address of its customers as the sales were below Rs 2,00,000/- Accordingly, making addition of the cash deposits merely for the reason of non-famishing of PAN/Address/ledger is absurd and unreasonable Regarding address also, the Appellant has mentioned the address of the customers in the invoice as provided by them. It is not within the authority of the Appellant to compel the customers to provide complete address or to provide address proof when the sales are less then Rs 2,00,000/- Moreover, it is also possible that because the customer are now aware of the stringent actions taken by income tax department for dealing in cash, they themselves preferred buying gold for less than Rs. 2,00,000/- so that they are not mandated to provide the identification proof The Appellant can in no way be blamed for this. Bombay High Court R B JessaramFatehchand (Sugar Dept.) v CIT (1970) 75 ITR 33 (Bom HC)] held that in the case of a cash transaction where delivery of goods is taken against cash payment, it is hardly necessary for the seller to bother about the name and address of the purchaser there was no necessity whatsoever for the Appellant to have maintained the addresses of cash customers, the failure to maintain the same or to supply them as and when called for cannot be regarded as a circumstance giving rise to a suspicion with regard to the genuineness of the transactions. We also rely on: Hon'ble Rajasthan High Court in the case of Smt. Harshila Chordia vs ITO (2008) 298 ITR 349 Thirdly, the Ld. Assessing Officer states that if the cash withdrawn were not used for business expenses then what was the need for withdrawing the cash. In this respect the Appellant states that it was not open for the Ld. Assessing Officer to step into the shoe of a business men and question his business acumen or prudency of the decision taken it is beyond the power of the Ld. Assessing Officer to question the reasonableness of business expediency as held by several judicial forums including Hon'ble Supreme Court in the case of Shiv Raj Gupta vs. CIT [Civil Appeal No. 12044/2016, order dated 22.07.2020)
Page No. | 8 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd Most importantly, an amount of Rs. 99,500/- was withdrawn on 16.10.2019 which was also lying in the said locker. The Ld. Assessing Officer has nowhere refuted these facts 1. Hon'ble Supreme Court in the case of Sreelekha Banerjee vs. CIT (1963) 49 ITR 112 (SC) held that The Department cannot by merely rejecting unreasonably a good explanation, convert good proof into no proof.
1. Hon'ble Bombay High Court in the case of Narendra G. Goradia vs. CIT [1998] 234 ITR 571 (Bombay) relying on the decision of Hon'ble apex court in the case of Lalchand Bhagat Ambica Ram vs CIT (1959) 37 ITR 288 (SC) and Sreelekha Banerjee vs CIT (1963) 49 ITR 112 (SC) held that where the business, the state of accounts and dealings of the Appellant justify a reasonable inference that he might have for convenience kept the whole or a part of particular sum in high denomination notes, the Appellant, prima facie, discharges his initial burden when he proves the cash balance and that it might have been kept in high denomination notes. Before the department rejects such evidence, it must either show an inherent weakness in the explanation or rebut it by putting to the Appellant some information or evidence which it has in its possession. The department cannot by merely rejecting unreasonably a good explanation convert good proof into no proof.
1. Recently, Hon'ble ITAT, Visakhapatnam in the matter of ACIT vs. Hirapanna Jewellers [ITA No.: 253/Viz/2020; order dated 12.05.2021) under identical facts held as follows:
1. 1. It was undisputed that Assessee had duly recorded cash sales in its books and was also offered to tax.
2. The sales and Stock were accepted and there was no defect pointed by the AO, therefore the corresponding sale cannot be disbelieved.
3. The AO failed to disprove the evidences and explanation of Assessee; addition cannot be made merely upon suspicion, unless sales were disproved with tangible evidence.
4. Once the AO accepts books of accounts and the entries thereof, the AO cannot make addition considering it to be unexplained Reliance was placed on: - Lalchand Bhagat Ambica Ram v. CIT (1959) 37 ITR 288(SC) Page No. | 9 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd -CIT v. Associated Transport (P) Ltd [1996] 84 Taxman 146 (Cal) - Lakshmi Rice Mills v CIT [1974] 97 ITR 258 (Pat) 1. Since the sales and other records were in order, and because the cash sales were already offered to tax by Assessee, no separate addition u/s 68 can be made for depositing the cash which was realized from such sales. Reliance was placed on: - CIT Vs. Vishal Exports Overseas Ltd [ITA No.2471 of 2009- Guj HC] CIT VS Kailash Jewellery House [ITA No.613/2010- Delhi HC] 1. Accordingly, the entire addition of cash deposit made u/s. 68 was deleted.
1. The above judicial precedents supports the case of the Appellant and following the same, impugned addition made u/s. 69A ought to be deleted. From the above it is evident that the cash of Rs. 10,00,000/- found in the locker is sourced from business receipts and the addition made by LD. Assessing officer under section 69A is only based on surmises and conjectures: without even pointing out any defect in the corroborative documentary evidences. Accordingly, the addition of Rs. 10,00,000/- is itself bad in law 1. Contention No. 2: Business receipts cannot be taxed under section 69A: 1. The Appellant has substantiated beyond any reasonable doubt that out of the total cash seized, an amount of Rs. 6,92,015/- relates to cash sales made which is already forming part of the taxable turnover This fact is supported by the corroborative evidences as listed in para 1.1.5. Accordingly, this amount can in no circumstances be added under section 69A as the same are business receipts (which in fact, was already offered to tax by the Appellant) 1. Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills vs CIT 1954 26 ITR 775 (SC) has held thatin making the assessment the Income tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment.
Page No. | 10 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd 1. The Hon'ble Supreme Court in the case of LakhmichandBaijnath V. CIT [1959] 35 ITR 416 (SC) has held that, when an amount is credited in business books, it is not an unreasonable inference to draw that it is a receipt from business. This inference also applies in the present case of the Appellant where he is into wholesale and retail business of gold jewellery and accordingly since the impugned cash sales were already offered to tax, the realization amount which was kept in the locker cannot be brought to tax in the guise of section 69A 1. The Hon'ble Supreme Court in the case of Mehta Parikh & Co. v. CIT [1956] 30 ITR 181 (SC)has held that, if the accounts of assessee had been accepted as genuine then it was impossible to say that high denomination notes could not be included in the cash balance. Similarly, in the present case, when the Ld. Assessing Officer has accepted the amount of sales as disclosed in the Return of Income. Thus, he cannot say that the proceeds of such sales, in cash, remained unexplained.
1. The Hon'ble Bombay High Court in the case of R B JessaramFatehchand (Sugar Dept.) v CIT [(1970) 75 ITR 33 (Bom. HC)] has held that, in the case of a cash transaction where delivery of goods is taken against cash payment, it is hardly necessary for the seller to bother about the name and address of the purchaser. There was no necessity whatsoever for the assessee to have maintained the addresses of cash customers, the failure to maintain the same or to supply them as and when called for cannot be regarded as a circumstance giving rise to a suspicion with regard to the genuineness of the transactions.
1. Hon'ble Gujarat High Court in the case of CIT v. Vishal Exports Overseas Limited [Tax Appeal No 2471 of 2009] held that when the assessee had already offered sales realization and such income is accepted by the Assessing Officer to be the income of the assessee, addition of the same amount once again under section 68 of the Act would tantamount to double taxation of the same income. We also rely upon: Hon'ble Indore Bench of the Income Tax Appellate Tribunal in the case of Dewas Soya Limited vs. ITO [ITA No. 336/Indore/2012]
Page No. | 11 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd 1. Hon'ble High Court of Delhi in the case of J.M. Wire Inds. Vs. CIT [2012] 18 taxmann.com 297 (Delhi): In this case the assessee had made sales of Rs. 3.00 Lakh to one M/s Sandeep Wire Industries and the same was included in sales. On making enquiries it was gathered that no such entity M/s Sandeep Wire Industries existed hence sale was not accepted as genuine and the said amount was treated as undisclosed income. On appeal before CIT(A) it was demonstrated that even if the said sale was treated as undisclosed income there can't be any addition in undisclosed income, since the said amount has already been included in sales and hence in total income. The honorable Delhi High Court accepted the contention if Reliance is also placed on the decision of Hon'ble Delhi High Court in the case of CIT v. Kailash Jewellery House in Appeal No. ITA 613/2010 (Delhi High Court) 1. Considering the above judicial precedents it can be said that no addition under section 69A was warranted in the present facts of the case as the same is already offered to tax as business receipts.
1. Contention No.3: Provisions of section 69A not applicable.
1. The provisions of section 69A reads as follows: "Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion. jewellery or valuable article is not recorded in the books of account, if any. maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year 1. As per language of Section 69A, it can be invoked only when the all following conditions have been cumulatively satisfied
Page No. | 12 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd 1. Assessee must be found to be the owner of money, bullion, jewellery or other valuable article (hereinafter referred to as 'specified assets') 1. Assessee has not recorded these assets in his books of accounts, if any. As can be seen from the facts of the present case, the Appellant has duly maintained books of accounts which is also audited. The cash sales made by the Appellant were also reported in the GST returns. Addition u/s 69A is meant in a scenario where the specified assets are intentionally kept out of records (i.e. books of accounts). In the present case, since the Appellant has already declared the cash sales in GST returns and Income Tax Returns; thus it cannot be said that Appellant had not recorded the cash receipts. There needs to be finding and unearthing of an asset which has been purposefully withheld from the Authorities for the purpose of making addition u/s. 69; which is absent in the present case.
1. Assessee offers no explanation about the nature and source of acquisition of such assets or explanation provided by his is unsatisfactory in the eyes of Assessing Officer. Further, the explanation offered through this submission along with documentary evidences clearly explains the source of the cash found in the locker. The explanation as offered in Para 1.1, above, cannot be considered as unsatisfactory From the above it can be concluded that none of the pre-conditions for invoking provisions of section 69A are satisfied in the present case and hence no addition can be made under section 69A of the Act.
1. Hon'ble Mumbai of Income Tax Appellate Tribunal in the case of ACIT vs. Smt. Kusum Ramniklal Sanghani [2010] 4 ITR(TRIB) 582 (MUM) held that "use of expression 'may in section 69A shows that it is a matter within discretion of officer to make or not to make an addition in a given case, unsatisfactory explanation does not and need not, automatically, result in deeming money found to be income of assessee."
Page No. | 13 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd 1. It is not the case where there was any search or survey action upon the assessee during which any incriminating material depicting the deliberate concealment of the specified assets by the Appellant, on the contrary, in the present case Appellant has himself recorded and offered the cash sales to tax. Accordingly, addition as per the provisions of section 69A is unwarranted in the present facts of the case 1. Further, in the impugned Assessment Order the Ld. Assessing officer has not assigned any reason for making addition u/s 69A. The Addition is made purely on the basis of surmises and conjecture without pointing out any defect in the documentary evidences The Ld. Assessing Officer has merely concluded the assessment by merely writing that submissions of Appellant were not found tenable. The Hon'ble Supreme Court in case of Raj Kishore Jha vs State Of Bihar And Ors [Appeal (crl.) 2000-2001 of 1996] has observed that "Reason is the heartbeat of every conclusion. Without the same, it becomes lifeless. There is no premises based on which Ld. Assessing Officer has rejected Appellant's submission, thus the addition is merely on the basis of surmises and conjecture in the guise of section 69A of the Act, hence bad in law. Considering the above factual and legal submission we Request your good-self to kindly delete the impugned addition of Rs. 10,00,000/- made under section 69A of the Act. Kindly let us know if any further details or explanation is required; however, if your good-self are not satisfied with the above submission then we request you to kindly grant us further opportunity of being personally heard.”
After considering the submissions of the assessee, Ld.CIT(A) discussed the issues at Para No. 6.5 and 6.6 and he partly allowed the appeal filed by the assessee by allowing to the extent of opening cash balances held by the assessee of ₹.4,03,570/- and reduced the Page No. | 14 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd disallowance of ₹.10,00,000/- to ₹.6,92,015/- being the amount of bogus cash sales.
Aggrieved with the above order, assessee is in appeal before us raising following grounds in its appeal: -
1. ADDITION U/S 69A- Rs. 6,92,015/- 2. On the facts and circumstances of the case and in Law, the Ld. Commissioner of Income Tax (Appeals) have erred in confirming an addition of Rs. 6,92,015/- as undisclosed money although complete details of cash sales and cash in hand was submitted as unexplained money u/s 69A of the Act, as per the grounds contained in the assessment order or otherwise. 3. The Appellant craves leave to add, to amend, alter, modify and / or withdraw any or all of the above grounds of appeal, each of which are without prejudice to one another.
11. At the time of hearing, Ld. AR of the assessee submitted that in search cash of ₹.10,00,000/- was found in the locker of which was in the name of the assessee’s employee and he submitted that assessee has kept the money with the trusted employee and the source of such cash is out of jewellery business. He submitted that assessee maintaining the quantity details and during the period when the cash was found which is Diwali season. Ld. AR submitted that when the value of the sales is less than ₹.2,00,000/- there is no requirement for assessee to maintain PAN details of the customers and he prayed that the addition made u/s. 69 of Page No. | 15 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd the Act may be deleted and he further, submitted that no addition can be made for cash deposit which is made out of recorded cash sales and relied on the following case law: - a) R. S. Diamonds India (P.) Ltd. Vs. ACIT [2022] 145 taxmann.com 545 (Mumbai - Trib.) b) Hon'ble ITAT, Visakhapatnam in the matter of ACIT vs. Hirapanna Jewellers [ITA No.: 253/Viz/2020; order dated 12.05.2021] c) Ramesh Kochar v. ITO ITA 171/Del/2022; order dated 26.04.2022 (ITAT Delhi) d) ACIT vs. Chandra Surana (2023] 149 taxmann.com 379 (Jaipur - Trib.) e) Smt. Charu Aggarwal vs. DCIT (2022] 140 taxmann.com 588 (Chandigarh Trib.) f) DCIT vs. Roop Fashions (2022) 145 taxmann.com 216 (Chandigarh –Trib) g) CIT VS. Vishal Exports Overseas Ltd [ITA No.2471 of 2009-Guj, HC] h) CIT VS. Kailash Jewellery House [ITA No.613/2010- Delhi HC] i) Hon'ble Indore Bench of the Income Tax Appellate Tribunal in the case of Dewas Soya Limited vs. ITO [ITA No.: 336/Indore/2012] j) ITO vs. Rajesh kumar C Patel [ITA 2159/Adh/2016] (ITAT, Ahmadabad)
12. Further, he submitted that once the Assessing Officer accepts books of accounts and the entries thereof; the Assessing Officer cannot make addition considering it to be unexplained. Assessing Officer cannot just brush aside substantiating evidences without pointing out any Page No. | 16 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd defect in the same or in the books of accounts. In support of the above contentions, Ld. AR of the assessee relied on the following case law: - a) Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288(SC) b) Hon'ble Supreme Court in the case of Sreelekha Banerjee vs. CIT (1963) 49 ITR 112 (SC) held that The Department cannot by merely rejecting unreasonably a good explanation, convert good proof into no proof. c) Hon'ble Bombay High Court in the case of Narendra G. Goradia us. CIT (1998) 234 ITR 571 (Bombay) relying on the decision of Hon'ble apex court in the case of Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC) and Sreelekha Banerjee vs. CIT [1963] 49 ITR 112 (SC) held that where the business, the state of accounts and dealings of the Appellant justify a reasonable inference that he might have for convenience kept the whole or a part of particular sum in high denomination notes, the Appellant, prima facie, discharges his initial burden when he proves the cash balance and that it might have been kept in high denomination notes. Before the department rejects such evidence, it must either show an inherent weakness in the explanation or rebut it by putting to the Appellant some information or evidence which it has in its possession. The department cannot by merely rejecting unreasonably a good explanation convert good proof into no proof. d) CIT v. Associated Transport (P.) Ltd. [1996] 84 Taxman 146 (Cal.) e) Lakshmi Rice Mills v. CIT [1974] 97 ITR 258 (Pat.)
13. Further, Ld. AR of the assessee submitted that no mandate to collect customer personal KYC when the sales are below threshold, and he relied on the following case law: - a) Bombay High Court R B Jessaram Fatehchand (Sugar Dept.) v CIT [(1970) 75 ITR 33 (Bom. HC)] b) Hon'ble Rajasthan High Court in the case of Smt. Harshila Chordia vs ITO (2008) 298 ITR 349 Page No. | 17 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd c) Hon'ble ITAT, Visakhapatnam in the matter of ACIT vs. Hirapanna Jewellers [ITA No.: 253/Viz/2020; order dated 12.05.2021].
14. On the other hand, Ld. DR relied on the orders of the Ld.CIT(A).
15. Considered the rival submissions and material placed on record, we observe that in search proceedings conducted on 17.10.2019, the officers found cash in the custody of employee Mr. Ashish Sisodiya and the assessee has accepted that it is belongs to them. The source of above cash was explained that this is out of cash sales. On enquiry, the assessee has submitted the sources for the above cash holdings with supporting documents that this is out of opening cash balance and cash sales during the Deepavali period. We observe that Ld CIT(A) has considered the opening cash balance to partly allow the appeal filed by the assessee before him however, he failed to consider the cash sales declared by the assessee during the period. The Assessing officer himself confirmed that the assessee has sold total cash sales of ₹.6,92,015/- during 12.10.2019 to 14.10.2019. We are unable to understand why Ld CIT(A) has not considered the above cash sales while adjudicating the cash holding of ₹.10 lakhs in the business. When we consider the cash available in the business with the opening cash
Page No. | 18 (A.Y: 2020-21) Manasi Jewellers Pvt. Ltd balance and cash sales put together, it comes to Rs.10,95,585/- (₹.692,015/- + ₹.403,570/-). In our view, the assessee has already explained the cash found during the search. Therefore, there is no need to make any addition particularly by invoking the provisions of section 69 of the Act. Accordingly, the grounds raised by the assessee is allowed.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 23rd August, 2023.