SH. PARAMJIT SINGH MITTU,PANCHKULA vs. ITO, WARD -3, PANCHKULA

The assessee filed return of income at Rs.4.57 Lacs which was scrutinized to examine the sources of cash deposit during demonetization period. The assessee was engaged in trading of jewellery under his proprietorship concern by the name M/s Mittu Jewellers. The assessee was found deposited a sum of Rs.66 Lacs in one of his bank account. The assessee stated that the cash was sourced out of cash sales. However, Ld AO observed that there was abnormal sale of Rs.66 Lacs in November, 2016 as against average monthly turnover of Rs.5.33 Lacs. The assessee was subjected to survey on 09-03-2017 wherein stock of Rs.123.16 Lacs was found. On these facts, Ld. AO alleged that the assessee manipulated his books of accounts to adjust the cash sales in the month of October, 2016 and the deposits were out of unaccounted income. Finally, the cash deposits of Rs.66 Lacs was held to be out of unexplained sources and added to assessee’s income.

During first appeal, the assessee reiterated that cash deposits were derived out of cash sales only. The sales were accepted by VAT authorities. During assessment proceedings, the sales and purchases were duly explained and the sales were made out of trading stock as available with the assessee. However, Ld. CIT(A) endorsed the findings of Ld. AO and confirmed the addition against which the assessee is in further appeal before us.

It emerges that the assessee is engaged in trading activities. Apparently, the assessee does not have any other source of income. In fact, survey findings revealed that the assessee was having stock of Rs.123.16 Lacs for which no adverse view has been taken by Ld. AO. From assessee’s paper-book, it is quite clear that the books of the assessee have duly been audited. The assessee has reflected turnover of Rs.133.59 Lacs which is evident from Trading Account. The sales turnover has duly been accepted by Ld. AO. The sales turnover is further evidenced by VAT returns of the assessee. No discrepancy in the stock has been pointed out by Ld. AO. Simply because the turnover was high in one month, the same would not be a good ground to reach a conclusion that the sales were not genuine unless evidence to that effect was brought on record. The assessee has maintained cash book and all the deposits have duly been reported therein. No shortage of cash has been noted. The assessee has furnished sales and purchase register. It is trite law that no addition can be made on mere assumptions and presumptions. On the given facts, the impugned addition is not sustainable. Finding substantial merits in the arguments and documentary evidences as furnished by Ld. AR, we delete the impugned addition. The Ld. AO is directed to re-compute the income of the assessee.