JINIT SHAH,MUMBAI vs. ITO24.(1)(1), MUMBAI

The case of the assessee was selected for scrutiny under CASS for the issue „cash deposit during the demonetization period „. Perusing the bank details, the Assessing Officer observed Jinit Shah

The assessee somehow did not submit any response to such show cause and therefore, the AO proceeded further to decide the case/assessment on the basis of material/evidence available during the assessment proceedings. The AO observed that it is clear from the above two tables that there is discrepancy in cash sales as per cash book and month-wise sales register. In cash book, the assessee has shown cash sales of Rs.31,89,990/- from 01.11.2016 to 07.11.2016, whereas in sales register cash sales during 01.11.2016 to 07.11.2016 are of Rs.16,11,240/-. Further, as per cash book sales in the month of December, 2016 and January, 2017 are NIL, whereas as per month-wise details of sales are Rs.9,32,000/- and Rs.6,00,000/- respectively. Therefore, there is visible difference in the submission of the assessee as in the cash book the receipts for the period of 01/11/2016 to 07/11/2019 (7 days) is of Rs.31,43,240/- but in the month wise cash sales, the same amount was divided into cash sales of three months i.e. November, December and January.

1 The AO further observed that the above facts clearly show that there are no actual cash sales done by the assessee, but the same are afterthought of the assessee and the same is not reliable and it was fabricated to misguide the revenue to show the cash Jinit Shah

2 The AO ultimately made the addition of Rs.35,81,636/- as unexplained money u/s.69A r.w.s. Section 115 BBE of the Act, by observing and holding as under: -

The assessee being aggrieved challenged the said addition by filing first appeal before the Ld. Commissioner and at the outset has submitted as under: (a) That AO has not rejected the books of accounts of the Assessee. (b) Further, sales are not disputed and have been offered for taxation as per books of accounts. (c) The purchases are not disputed and have vouched with details, as recorded in books of accounts. Jinit Shah

The Ld. Commissioner though considered the aforesaid aspects/grounds raised by the assessee, disputing the assessment order however, by observing that there is a discrepancy in cash sales, cash balance, opening cash balance, which remained unexplained and there was lack of evidence for cash sales, upheld the addition made by the AO.

Thus, the Assessee being aggrieved has challenged the impugned order, on various aspects/grounds including legal in nature. On being asked specifically by this Court “as to whether the assessee has filed the relevant documents before the Ld. Commissioner, the Ld. Counsel for the Assessee by drawing attention of this Court to acknowledgment no. 801709811131122 issued by the E-proceeding response, demonstrated that it has already filed the following relevant documents on dated 13.11.2022. (a) Chart showing month wise cash sales and purchase, (b) Date wise cash deposits in bank, (c) Copy of submissions, (d) Period wise purchase and sales (e) Copy of ROI (f) VAT return etc.

1 The Assessee further claimed that by filing relevant documents, he has substantiated the purchase and sale verifiable from the month wise purchase and sale and VAT return forms etc. and thus has duly discharged its prima facie onus cast under Section 69 of the Act. Jinit Shah

Heard the parties and perused the material available on record. Though the Assessee has argued on various aspect of the case, however, at last submitted that addition if any would be made then the same would be subjected to the gross profit and or profit element embedded in the purchase and sale, but not 100% of the sales being cash amount deposited in the bank account from the sales, as the authorities below have not made any allegations and /or established that the Assessee was doing any other business than as specified by the Assessee.

Admittedly, the Assessee before both the authorities below has submitted the relevant documents as observed above, as also acknowledged by the AO in para 4.6 of the assessment order and by the Ld. Commissioner at page 17 of the impugned order for filing of various documents. Further, it is a fact that the AO failed to reject the books of accounts of the Assessee and therefore, eventually accepted the purchase and sales of the items and this fact strengthens the case of the Assessee indirectly. However, considering the peculiar facts and circumstances in totality, as the Assessee also alternately prayed for estimating the reasonable GP, in order to cut short the litigation, thus this Court is of the considered opinion that substantial justice would be met by sustaining the addition to the extent @ 8% of the total cash sales, being Gross Profit (GP), which include the GP already disclosed, if any and thus, the AO is directed to consider the GP as directed and by subtracting the GP shown already, if any, re-compute the tax liability accordingly. Jinit Shah

In the result, Assessee‟s appeal is partly allowed, in the above terms.