CIT vs. BHAGWATI AGENCIES PVT LTD

IN THE HIGH COURT OF DELHI AT NEW DELHI . 25.05.2011 . Present: Ms.Prem Lata Bansal, Sr. Advocate with Mr.Ruchir Bhatia, Advocate for the appellant. . +ITA No.773/2011 . . The Assessing Officer had made additions on two counts which are as under: 1. The AO found that the assessee had deposited cash of `1.00 crore on 28th January, 2005 in the bank account. The explanation of the assessee was that this amount was received from cash sales totaling to `1,28,46,200/- of gold bars on 28th January, 2005. The explanation was not found justified by the Assessing Officer, who made additions to the extent of `1.00 crore in the income of the assessee. The CIT(A) deleted this addition and the order of the CIT(A) is upheld by the Income Tax Appellate Tribunal (ITAT). The explanation given by the assessee has been considered by these two authorities below along with other attendance circumstances and shown to be correct and plausible. The order of the ITAT would demonstrate that following explanation was furnished by the assessee in this behalf. ?4. ?. It was submitted that chronology of events happened on any business day are as under:- . ITA No.773/2011 Page 1 of 3 i. Assessee receives demand from the customers via informal communication links e.g. telephone or, by personal meetings. ii. Assessee raises the bills to the customers and receives cash from them. iii. The aforesaid cash is received in the bank premises. iv. He deposits the cash in his bank account. v. Bank marks lien on the said money and issues a Delivery Order. . . vi. Bank delivers the gold to the assessee. vii. Assessee simultaneously delivers the gold to the buyers in the bank premises on the same day. . 5. It was further submitted that the assessee derives the following advantages of the above strategy adopted for a transaction:- . i. Security to the Buyers because they pay money in the bank. ii. Safe for both the buyer and seller because it is a guarded atmosphere. iii. Safe for seller because issue of Counterfeit Currency is taken care off ? bad notes returned there and then. iv. Buyers fee secure about quality of Gold because the assessee gets delivery of sealed units of Gold in the bank and these are immediately delivered to the buyers. There is absolutely no possibility of tampering with the quality of Gold. v. There is no holding risk for Both Buyer and Seller in terms of price fluctuation etc. . 6. It was further submitted that there is no requirement in the law to state the name and address of the purchaser on the sale bill for cash sale and the requirement, if any, put by Section 50(5) of VAT Act, 2005 is with regard to transaction which are made in the course of inter-State trade or commerce. The CIT(A) has accepted the said submission of the assessee and has deleted the addition. The department is aggrieved, hence, in appeal.? . ITA No.773/2011 Page 2 of 3 This is a pure finding of fact and no question of law arises. 2. The Assessing Officer also rejected the books of account of the assessee invoking the provisions of Section 145(3) of the Income Tax Act and thereafter worked out income of the assessee at 0.5% of the total turnover, i.e. `11,22,30,544/- and on that basis added a sum of `5,61,152/- to the income of the assessee. This addition was also deleted by the CIT(A) on the ground that the Assessing Officer had not shown any comparable case to arrive at the rate of 0.5% of the total turnover, which view of the CIT(A) is accepted by the ITAT also. Again, we find there is nothing wrong with the aforesaid approach of the two authorities below. . This appeal is thus without any merit and is therefore dismissed. . . A.K. SIKRI, J. . . . . MAY 25, 2011 M.L. MEHTA, J. Dev . . . . ITA No.773/2011 Page 3 of 3 . #52 . .