SANDEEP KUMAR SONI,BHOPAL vs. THE ITO 4(3), BHOPAL

आदेश/ O R D E R

Per B.M. Biyani, AM:

The captioned two appeals are filed by two different assessees who are brothers. The details of these appeals are as under:

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Shri Deepak Soni ITA No.01 Ind/2023- AY 2017-18 & Shri Sandeep Kumar Soni ITA No.82/Ind/2023- AY 2017-18

(i) ITA No. 1/Ind/2023 is filed by assessee “Shri Deepak Soni” against

order of first-appeal dated 26.08.2022 passed by learned

Commissioner of Income-tax (Appeals), NFAC, Delhi [“CIT(A)”] which

in turn arise out of assessment-order dated 28.12.2019 passed by

ITO-4(3), Bhopal [“AO”] u/s 143(3) of the Income-tax Act, 1961 [“the

Act”] for AY 2017-18.

(ii) ITA No. 82/Ind/2023 is filed by assessee “Shri Sandeep Kumar

Soni” against order of first-appeal dated 12.01.2023 passed by same

CIT(A) which in turn arises out of assessment-order dated

28.12.2019 passed by same AO u/s 143(3) of the Act for AY 2017-18.

at the request of parties and are being disposed of by this consolidated order

for the sake of convenience.

ITA No. 1/Ind/2023 of Shri Deepak Soni:

assessee submitted that the assessee has filed a condonation-application

supported by an affidavit. Referring to contents of same, Ld. AR explained

that the delay has occurred due to the local counsel of assessee (Shri

Jitendra Jain) as well as presently arguing counsel (Shri Gagan Tiwari) who

were engaged for handling this appeal of assessee. To explain facts of delay,

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Shri Deepak Soni ITA No.01 Ind/2023- AY 2017-18 & Shri Sandeep Kumar Soni ITA No.82/Ind/2023- AY 2017-18

Ld. AR iterated Para No. 5 to 11 of condonation-application wherein it is

stated by assessee that he communicated the impugned order dated

26.08.2022 to his local counsel on the very same day and thereafter got

engaged in business activity due to forthcoming season of Diwali.

Subsequently, when he contacted local counsel in the month of December,

the local counsel informed that the appeal had not been filed and another

counsel had to be engaged. Thereafter on 07.12.2022, the local counsel

engaged the present counsel and transmitted papers to present counsel

through whatsapp, the screenshot of whatsapp is filed as Annexure (A/1) to

condonation-application. Thereafter, the present counsel prepared appeal-

papers and shared same to local counsel on 20.12.2022 through email, the

copy of email is filed as Annexure (A/2) to condonation-application.

Thereafter, the present counsel received hardcopies of appeal-papers from

Bhopal via bus service but due to intervening vacations of High Court and

non-working, the present counsel could not file appeal promptly. Ultimately,

this appeal could be filed on 02.01.2023 after delay. Affidavit of present

counsel, Shri Gagan Tiwari, confirming these very facts is also filed as

Annexure (A/3) to condonation-application. Thus, the delay in filing appeal

is attributable to counsels of assessee and the assessee has no role in

making delay. Ld. AR very humbly submitted that there is no lethargy,

negligence, mala fide intention or ulterior motive of assessee in making delay

and the assessee does not stand to derive any benefit because of delay. He

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Shri Deepak Soni ITA No.01 Ind/2023- AY 2017-18 & Shri Sandeep Kumar Soni ITA No.82/Ind/2023- AY 2017-18

further submitted that the sole reason of delay is as explained in the

condonation-application and affidavits. He prayed for condonation of delay.

Ld. DR for Revenue left the matter to the wisdom of Bench without raising

any objection. We have considered the explanation advanced by assessee

and in absence of any contrary fact or material on record, the assessee is

found to have a “sufficient cause” for delay in filing present appeal. We find

that section 253(5) of the Act empowers the ITAT to admit an appeal after

expiry of prescribed time, if there is a “sufficient cause” for not presenting

appeal within prescribed time. It is also a settled position by Hon’ble

Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others

1987 AIR 1353, 1987 2 SCC 387 that whenever substantial justice and

technical considerations are opposed to each other, the cause of substantial

justice must be preferred by adopting a justice-oriented approach. Thus,

taking into account the provision of section 253(5) and the decision of

Hon’ble Supreme Court, we take a judicious view, condone delay, admit

appeal and proceed with hearing.

individual is engaged in jewellery business the name of M/s Ambalika

Jewellers, Bhopal. For AY 2017-18 under consideration, the assessee filed

return declaring a total income of Rs. 8,73,380/-. The case was selected

under scrutiny for the reason of ‘abnormal increase in cash deposits during

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Shri Deepak Soni ITA No.01 Ind/2023- AY 2017-18 & Shri Sandeep Kumar Soni ITA No.82/Ind/2023- AY 2017-18

demonetisation period as compared to pre-demonetisation period’. The AO

issued notices u/s 143(2)/142(1) which were complied by assessee from

time to time. The assessee furnished copies of Computation of total income,

Bank statements, Cash-book, P&L A/c, Balance-Sheet, Audit Report, etc. to

AO (Para 5 of assessment-order). While conducting proceeding, the AO

observed that the assessee made cash-deposits of Rs. 49,00,000/- in a bank

a/c during demonetisation. When the AO show-caused assessee to explain

the source of deposit, the assessee submitted that he was engaged in

jewellery business as proprietor of M/s Ambalika Jewellers, Bhopal. The

assessee also submitted that he was having sufficient cash-balance in books

of business which was deposited in bank a/c due to declaration of

demonetisation. The AO, however, passed following order and treated the

impugned deposit as unexplained investment u/s 69 and made addition:

“7. On perusal of material available on record, it is seen that on 08/03/2017, the assessee had claimed to have received gift of Rs. 58,60,000/-through Cheque number 029446 from his father Shri Sheetal Prasad Soni. Relevant records along with copy of bank statement of the assessee and his father were also duly considered. It was observed that the above 'gift transaction' is in fact a 'circular transaction' being a colourable device to evade tax which is evident from following facts: 1. In the bank statement of Shri Sheetal Prasad Soni [father of the assessee] [bank account number 33206118835 with SBI, Chowk Bazar, Bhopal] there are following entries: Date Particulars Withdrawal [Rs.] Deposit [Rs.] 08/03/2017 Radha Devi 34,11,825 Soni Prop. New Ambika

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Jwellers [Mother of the assessee] 08/03/2017 Sandeep Soni 29,61,320 Prop. Ambey Jewellers (Brother of the assessee) 08/03/2017 Deepak Soni 47,35,262 Prop. Ambalika Jwellers [Assessee] 09/03/2017 Gift made to the 58,60,000 assessee 2. From the above, it is clear that there are transfers of sums from the bank account of the assessee/his brother & mother prior to making gift to the assessee. 3. The assessee had shown purchase of gold jewellery amounting to Rs. 47,35,262/- on 4/10/2016 vide invoice no. 37 dated 04/10/2016 from the proprietorship firm of his father namely M/s Ambika Jwelers, Bhopal. It is also evident that the purchase of jewellery was made @Rs. 2,941/- per grams which is much higher than average market rate @ Rs. 2341/- per gram arrived on the basis of the submission of the assessee. After the above purchases, the assessee had shown cash sales from 04/10/2016 to 08/11/2016 to make up the cash deposit in specified bank notes of Rs. 49,00,000/- during demonetization period. 4. The payment against above bill of Rs. 47,35,262/- was made to the proprietary firm of his father on 08/03/2017. On the very day, payment of Rs. 34,11,825 & Rs. 29,61,320/- was credited in bank account of his father from Radha Devi Soni Prop. New Ambika Jwellers [Mother of the assessee] & Sandeep Soni Prop. Ambey Jwellers [Brother of the assessee). The above accumulated bank balance was in turn transferred to the bank account of the assessee in garb of 'gift of Rs. 58,60,000/-. From the above discussion, it is apparent that the assessee through above 'circular transaction' has routed his own unaccounted money of Rs. 49,00,000/- which was deposited in the form of specified bank notes in his bank account number 03466238626 maintained with SBI, Chowk Bazar, Bhopal. Further, it is also noteworthy to mention here that reasons for the source of cash deposited in aforesaid bank account as submitted by assessee is not tenable as it is devoid of any merits and generally not depositing cash in

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Shri Deepak Soni ITA No.01 Ind/2023- AY 2017-18 & Shri Sandeep Kumar Soni ITA No.82/Ind/2023- AY 2017-18

his current account and subsequently keeping so huge cash in hand is quite suggestive of tax evasion which has also been duly applied in this case. Thus, the above sum of Rs. 49,00,000/- is added to the total income of the assessee as 'unexplained investment' u/s 69 of the Act.” 5. Aggrieved by AO’s order, the assessee carried matter in first-appeal.

During first-appeal, the assessee made a detailed submission before CIT(A).

The CIT(A), however, rejected assessee’s submission and upheld AO’s action.

Now, the assessee has come in next appeal before us assailing the orders of

lower-authorities.

documentary evidences filed in Paper-Book:

(i) That the assessee is engaged in business of gold and silver in

proprietorship concern named M/s Ambalika Jewellers, Bhopal.

(ii) That the assessee was having opening cash balance of Rs.

50,52,518/- as on 09.11.2016 (date of commencement of

demonetisation) in Cash-Book of business. The Cash-Book was filed

to AO during assessment-proceeding and also placed in Paper-Book-I

at Pages 8-21. Out of cash of Rs. 50,52,518/-, the assessee was

having demonetised/Specified Bank Notes (SBNs) of Rs. 49,00,000/-

which the assessee had to deposit in bank a/c due to declaration of

demonetisation by Govt. The assessee made deposit on 15.11.2016 in

one single shot immediately after declaration of demonetisation.

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Shri Deepak Soni ITA No.01 Ind/2023- AY 2017-18 & Shri Sandeep Kumar Soni ITA No.82/Ind/2023- AY 2017-18

(iii) That the above cash balance as on 09.11.2016 was accumulated from

sale of assessee’s jewellery business made prior to demonetisation.

The assessee filed following documents to AO during assessment-

proceedings to demonstrate the purchases and sales; these

documents are also placed in Paper-Book:

(a) Monthly summary of Opening stocks, Purchases, Sales and

Closing stocks in terms of quantities and values of gold/gold

ornaments (Page 23 of Paper-Book-I).

(b) Ledger A/cs of Purchases and Sales of gold/gold ornaments for

the entire previous year 2016-17 (Pages 24-35 of Paper-Book-I).

(c) Stock Register (Pages 36-39 of Paper-Book-I). This Register

clearly shows that the assessee was having sufficient stock of

gold/gold ornaments for making sales. There is no negative

balance of stock at any time.

above) and submitted that the AO has simply picked one purchase

transaction of Rs. 47,35,262/- made by assessee from his father’s

proprietorship concern “M/s Ambika Jewellers” on 04.10.2016; connected

the same with a gift of Rs. 58,60,000/- received by assessee from his father

on 09.03.2017 and thereby made an inference that the assessee has,

through circular transaction, routed his own unaccounted money of Rs.

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49,00,000/- for making deposit in Bank A/c. Ld. AR submitted that the

inference/conclusion taken by AO is self-made, baseless and devoid of any

worth as can be seen from followings:

(i) The assessee purchased gold from father’s proprietorship concern M/s

Ambika Jewellers on 04.10.2016 for Rs. 47,35,262/-. The gold was

taxable under VAT and the assessee has declared the transaction of

purchase in Quarterly Return filed to VAT department, copy of VAT

return was filed to AO and is also placed at Page No. 11 to 15 of

Paper-Book-III. The assessee claimed input credit of tax paid on

purchase and also paid output VAT on sales from time to time and

declared the same in VAT return. Thereafter, the assessee made

payment of Rs. 47,35,262/- to M/s Ambika Jewellers on 08.03.2017

through banking channel. The payment so made was debited in

assessee’s bank a/c and credited in father’s bank a/c.

(ii) Subsequently, the assessee’s father made a gift of Rs. 58,60,000/- on

09.03.2017 to assessee. The bank statement of father is partly

extracted in AO’s order (re-produced above) and partly not extracted

but from the available entries therein, it is clearly discernible that

assessee’s father was having much higher funds from different

sources (of course, including the payment of Rs. 47,35,262/- made by

assessee) for making gift to assessee. Ld. AR submitted that a gift-

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Shri Deepak Soni ITA No.01 Ind/2023- AY 2017-18 & Shri Sandeep Kumar Soni ITA No.82/Ind/2023- AY 2017-18

deed was also executed by father which was duly filed to AO, copy at

Page 107 of Paper-Book-I. In this gift-deed, assessee’s father has made

a clear-cut declaration that he made impugned gift to assessee due to

love and affection. Ld. AR submitted that the AO has not made any

addition in assessee’s hands qua the gift of Rs. 58,60,000/-, thus

there cannot be any doubt qua the genuineness of gift. Ld. AR

submitted that assessee’s father has made a gift of Rs. 58,60,000/- to

assessee whereas the purchase transaction from father’s

proprietorship concern was just Rs. 47,35,262/-. He strongly

contended that the purchase transaction was altogether different from

gift transaction and the AO has unnecessarily as well as baselessly

connected the two transactions just to draw an adverse inference and

make addition in the hands of assessee.

found a single deficiency in the purchases, stocks, sales, books of accounts

and financial transactions of assessee. Further, there is no connection of

purchases made by assessee from father’s proprietorship concern and the

gift received from father and yet the AO has wrongly termed the same as

circular transaction and made addition. He submitted that the AO’s action

is based on mere surmise, suspicion and presumption.

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Shri Deepak Soni ITA No.01 Ind/2023- AY 2017-18 & Shri Sandeep Kumar Soni ITA No.82/Ind/2023- AY 2017-18

rejected assessee’s books of account and there is no flaw, fallacy or

deficiency pointed out by AO in books of assessee. Therefore also, there

cannot be any case for treating the impugned deposit in bank account as

unexplained when the same stand duly recorded in Cash-Book of assessee

accepted by AO. To support his stand, Ld. AR relied upon ITAT, Delhi in

Fine Gujarwala Jewellers Vs. ITO (2023) 151 taxmann.com 340:

“19. In the present case, the department has not rejected the books of accounts of the Assessee accepted in VAT. The regular books of accounts were maintained in the normal course of business in which no flaw, fallacy or deficiency was pointed out by the AO. It is well settled law that once the assessing officer accepts the books of accounts and the entries in the books of accounts are matched, there is no case for making the addition as unexplained. In the assessee case of R S Diamond India Pvt. ltd. Vs. ACIT, I.T.A. No. 2017/Mum/2021 (A.Y. 2017-18) the Income Tax Tribunal Bench at Mumbai has held as under:-

"4. I have heard the parties and perused the record. The facts that the deposit made into the bank account is from out of the books of accounts and the said deposits have been duly recorded in the books of account are not disputed. It is the submission of the assessee that it had received advance money from walk in customers for sale of jewellery over the counter and the amount so received was duly recorded in the books of account. The said amount alongwith other cash balance available with the assessee was deposited into the bank account after announcement of demonetization by the Government of India. He also submitted that the assessee has raised sale bills against the said advances in the name of respective customers. Since the transaction was less than Rs.2.00 lakhs, it was stated that the assessee did not collect complete details of the customers. Thus, it is seen that the advance amount collected from customers, the sales bill raised against them etc., have been duly recorded in the books of account. The impugned deposits have been made from cash balance available with books of account. I also notice that the Assessing Officer has not rejected the books of account. When cash deposits have been made from the cash balance available in the books of account, in my view,

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there is no question of treating the said deposits as unexplained cash deposit as opined by the Assessing Officer.

"It is, in my view, a fundamental principle governing the taxation of any undisclosed income or secreted profits that the income or the profits as such must find sufficient explanation at the hands of the assessee. If the balance at hand on the relevant date is sufficient to cover the value of the high denomination notes subsequently demonetised and even more, in the absence of any finding that the books of account of the assessee were not genuine, the source of income is well disclosed and it cannot amount to any secreted profits within the meaning of the law."

Thus, considering the above ratio, when the Assessee's books of account were not rejected, the Lower authorities ought not to have made additions.”

has already taxed the transactions of purchases and sales of assessee which

have given rise to accumulation of cash that was deposited in Bank A/c.

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When it is so, the impugned addition made by AO has resulted in double

taxation which is not sustainable. To support his stand, Ld. AR relied upon

ACIT Vs. Dewas Soya Ltd. [IT Appeal No. 336/Ind/2012], a decision given

by ITAT, Indore holding as under:

“6.20 The claim of the appellant that such addition resulted into double taxation of the same income in the same year is also acceptable because on one hand cost of the sales has been taxed (after deducting gross profit from same price ultimately credited to profit & loss account) and on the other hand amounts received from above parties has also been added u/s. 68 of the Act.

6.21 This view has been held by the Hon'ble Supreme Court in the case of CIT vs Devi Prasad Vishwnath Prasad (1969) 72ITR194 (SC) that "It is for the assessee to prove that even if the cash credit represents income, it is income from a source, which has already been taxed". The assessee has already offered the sales for taxation hence the onus has been discharged by it and the same income cannot be taxed again.”

the submissions of Ld. AR:

(i) Each case has its own facts, therefore the decisions relied by Ld. AR

are not relevant.

(ii) The AO has very well narrated in assessment-order about the

colourable device of purchase from father and ultimate receipt by way

of gift.

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(iii) The assessee made purchase from father on 04.10.2016 against which

payment was made on 08.03.2017. Why the assessee consumed more

than 6 months in making payment to his father? Further, the

assessee did not pay any interest to his father. Why so?

(iv) Pages 1 and 7 of Paper-Book-I filed by assessee show that there was

an outstanding loan of Rs. 18,14,615/- as on 31.03.2017 receivable

by assessee from father’s proprietorship concern M/s Ambika

Jewellers and the assessee received interest of Rs. 1,34,090/- from

same concern. The question here arises as to why the assessee did not

set off loan receivable against purchase price payable? Why father

made gift to assessee instead of re-paying loan taken from assessee?

orders of lower-authorities as also the documents filed in Paper-Book to

which our attention has been drawn. The dispute in present case is qua the

addition of Rs. 49,00,000/- made by AO on account of unexplained cash

deposit in Bank A/c. Admittedly, the assessee made deposit on 15.11.2016

immediately after declaration of demonetisation on 08.11.2016. The

assessee is claiming that the impugned deposit was made from cash balance

available in books of his business at the time of declaration of

demonetisation. To show this factual aspect, the assessee filed Cash-Book

and other documents to AO during assessment-proceeding and the same are

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also placed in Paper-Book and referred by Ld. AR during hearing. On

perusal of assessment-order, one thing is clear-cut that the AO has not

rejected asessees’ books of account, even the AO has not pointed out a

single flaw or deficiency in assessee’s books. However, the AO has picked a

purchase transaction of Rs. 47,35,262/- made by assessee from his father’s

proprietorship concern and another transaction of gift received by assessee

from his father; connected these two transactions and inferred that the

money deposited by assessee in bank a/c was assessee’s own money.

However, the assessee has adduced complete documentary evidences to

show that the purchase transaction was of gold which was a taxable

commodity under VAT and the assessee paid VAT in purchase bill which

was claimed as input credit. Further, the assessee paid VAT on sale of such

gold. The impugned purchase transaction of gold from father and

subsequent sale thereof were duly informed to VAT authorities in VAT

return and the same were accepted. Then, the assessee made payment of

purchase price of Rs. 47,35,262/- to his father through banking channel

and not in cash. It is subsequent to completion of purchase transaction in

all respect that the assessee’s father made a gift of Rs. 58,60,000/- to

assessee and that too from the funds available to him from various sources

(including the payment received from assessee). Notably, the gift of Rs.

58,60,000/- made by father far exceeds the purchase price of Rs.

47,35,262/- and has been made out of funds generated from various

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sources. The gift was made due to love and affection and a gift-deed

executed by father was also filed to AO and the same is a part of Paper-Book

as well. Therefore, the assessee is very correct in claiming that the gift

transaction is nothing to do with purchase transaction and the two

transactions are altogether independent of each other. The AO has made a

wrong notion that there is a circular transaction by way of gift. It is also

noteworthy that the AO has neither disallowed the purchase made from

father nor made any addition qua the gift received from father. Thus, the

transactions of purchase and receipt of gift are not disturbed by AO. The AO

has, however, made addition treating the deposit in bank a/c as

unexplained whereas the source of deposit in bank a/c is very much

available in Cash-Book of assessee and the same Cash-Book is not even

rejected by AO. It is also noteworthy that the AO has made addition u/s 69

even while accepting the books of account of assessee, the books of account

in which the impugned cash deposit in bank a/c is recorded. Nobody can

dispute that the section 69 applies only when a sum is not recorded in

books of account whereas the position of present case is just opposite in as

much as the impugned deposit is already recorded in cash-book accepted by

AO. Therefore, in the light of decisions relied by Ld. AR as cited in foregoing

para, the addition made by AO is not sustainable. Although we have noted

the arguments of Ld. DR for revenue in foregoing para but those arguments

are only to support the case made out by AO but do not have any merit and

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not acceptable. Consequently, we delete the addition made by AO. The

assessee succeeds in this appeal.

ITA No. 82/Ind/2023 of Shri Sandeep Kumar Soni:

filed a condonation-application supported by an affidavit stating that the

delay of 3 days was caused by present counsel in filing appeal. The present

counsel accepts his fault and prays to condone the delay so that no harm is

caused to assessee. Ld. DR for Revenue left the matter to the wisdom of

Bench without rejecting any objection. Taking a justice oriented approach,

we condone the small delay of 3 days, admit appeal and proceed with

hearing.

ITA No. 1/Ind/2023 of Shri Deepak Soni decided in earlier part of this

order except that there is a change in figures. In this case, the assessee

made purchase of Rs. 29,61,320/- from father’s concern on 01.10.2016;

made payment of Rs. 29,61,320/- to father on 08.03.2017 through banking

channel and thereafter received a gift of Rs. 88,00,000/- from father on

09.03.2017. The assessee made cash deposit of Rs. 45,50,000/- in bank a/c

during demonetisation period which the AO treated as unexplained and

made addition u/s 69. Since the underlying facts and controversy are same,

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the adjudication made by us in ITA No. 1/Ind/2023 of Shri Deepak Soni

shall apply mutadis mutandis. Applying same, we delete the addition made

by AO. The assessee succeeds in this appeal.

Order pronounced in open court / by putting on notice board as per Rule 34 of ITAT Rules, 1963 on 24/02/2025

Sd/- Sd/- (DINESH MOHAN SINHA) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Indore

िदनांक/ Dated : 24/02/2025

Dev/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPYAssistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore

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