Loading judgment…
Facts
The assessee's appeal for assessment year 2017-18 arises against an order related to proceedings under section 143(3) of the Income-tax Act. The assessee was proceeded ex-parte as no representative appeared. The lower authorities treated cash deposits and unsecured loans of Rs.92 lakhs and Rs.17 lakhs under sections 69A and 68 of the Act. The assessee declared substantial turnover in jewellery sales.
Held
The Tribunal considered the assessee's declared turnover and noted that the cash deposits could prima facie be part of jewellery sales. However, the explanation for the Rs.17 lakhs addition from Sh. Ankit Gupta via banking route raised doubts about its genuineness. The Tribunal held that both additions should be assessed as part of the assessee's regular business turnover with a 6% GP estimation, but this should not be treated as a precedent.
Key Issues
Whether the cash deposits and unsecured loans are to be treated as undisclosed income or part of the declared business turnover? Whether section 115BBE is applicable given the timing of the transactions?
Sections Cited
143(3), 69A, 68, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI S RIFAUR RAHMAN
ORDER
PER SATBEER SINGH GODARA, JM
This assessee’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2024-25/1067013650(1), dated 25.07.2024 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
Case called twice. None appears at the assessee’s behest. He is accordingly proceeded ex-parte.
Learned departmental representative vehemently argues that both the learned lower authorities have rightly treated the assessee’s cash deposits and unsecured loans of Rs.92 lakhs and Rs.17 lakhs; respectively, under section 69A and section 68 of the Act; in assessment order dated 18.11.2019 as upheld in the lower appellate discussion.
We have given our thoughtful consideration to the assesseee’s and the Revenue’s respective pleadings. The Revenue could hardly dispute that even going by the Assessing Officer’s assessment discussion, the assessee had admitted total sales in jewellery wholesale and retail business activity, as the case may be, amounting to Rs.8.69 crores, Rs.9.16 crores and Rs.14.99 crores for F.Y. 2015-16, 2016-17 and 2017-18, respectively. Necessary inference which would prima facie arise in the assessee’s favour in this backdrop is that the impugned cash deposits form part of his jewellery sales only; although not reconciled and verified to the entire satisfaction of both the learned lower authorities.
So far as the remaining addition amount of Rs.17 lakhs is concerned, we note that although the assessee has tried to explain the source thereof that it had come from one Sh. Ankit Gupta via banking route, the same admittedly preceded cash deposits in the other parties’ account thereby raising serious doubt of genuineness in the entire explanation. We thus find merit in both the learned lower authorities’ respective findings invoking section 68 of the Act in principle.
5. Next comes the third and final issue of quantification of the impugned twin additions in the assessee’s hands. We are of the considered view that given the fact that the assessee has already declared the foregoing huge turnover, the impugned latter sum of Rs.17 lakhs could indeed be held that arising from cash sales only though routed via Mr. Ankit Gupta. Be that as it may, we deem it appropriate in this factual backdrop that both the impugned additions of Rs. 92 lakhs and Rs.17 lakhs ought to be assessed as part of the assessee’s regular business turnover and a lumpsum GP estimation thereupon @ 6% would be just and proper with a rider that the same shall not be treated as precedent. Necessary computation shall follow as per law.
So far as assessee’s assessment under section 115BBE is concerned, we quote S.M.I.L.E. Microfinance Ltd. Vs. ACIT, W.P. (MD) No.2078 of 2020 & 1742 of 2020, dated 19.11.2024 (Madras) that the impugned statutory provision would come into effect on the transaction done on or after 01.04.2017 only. The assessee is accordingly directed to be assessed under the normal provision as per law.