PRIYANKA SURANA,JAIPUR vs. ITO WARD 5(1), JAIPUR, JAIPUR

3 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR 2.1 During the course of hearing, the ld. AR of the assessee has filed the written submission focusing on the ground No. 1 and 2 wherein the ground No. 1 is general in nature which does not require any adjudication. The Ground No. 2 is relating to addition of Rs.40.02 lacs u/s 68 on account of cash deposited in the bank account during the demonetization out of sales and personal account. Hence the Ground 2 is the main ground to adjudicate upon hereunder. 3.1 Apropos ground No. 2, the brief facts of the case are that the assessee is a regular income tax assessee who is engaged in the business of diamond trading. It is noted that the assessee has filed her return of income for the year under consideration declaring the total income of Rs.7,20,501/- on 29.10.2017. The turnover of the assessee for the year was of Rs 67,51,976/- as against the turnover of Rs. 46,11,800/- in A.Y. 2015-16( in the A.Y. 2016-17 no business was done by the assessee). The case of the assessee was selected for the scrutiny assessment. The AO issued the notice u/s 143(2) on 09.08.2018 in response thereto assessee has submitted the reply thereafter the AO has issued the notice u/s 142(1) on 05.09.2019 in response thereto assessee filed the reply with details as required vide page 1 para 3 of the assessment order. During the course of assessment proceedings, the AO noted that the assessee has deposited cash of Rs.40,02,000/- in the bank during the demonetization period. The AO required the assessee to file the information in the a particular format for cash deposit, cash sales and cash balance so as to compare the same with the figures of AY 2016-17. In response thereto the assessee has submitted the same vide PB 61-62. The AO asked the assessee

4 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR to explain the source of cash deposits in the bank account. In response thereto the assessee submitted that “the main source of cash deposit was cash sales made” The AO further asked the assessee to produce the (i) furnish the copy of sales bills, purchase bills, stock details, list of the persons to whom sales made and from the purchases was made, vide PB-92. In response thereto the assessee submitted the reply admittedly(PB2-5) and details PB 27-88. Thereafter the AO issued a show cause notice on 20.12.2019 (Friday delivered at the email of counsel at 5.25PM) and asked to file the reply till 11.A.M. dated 23.12.2019 in the Show cause notice wherein ld. AO has stated as under:-

During F.Y. 2015-16 there was no cash sales, hence, figures of F.Y. 2016-17 can’t be compared with F.Y. 2015-16. During F.Y. 2016-17, total cash sales is declared for Rs.36,09,719/-, which pertains to period from 03.10.2016 to 07.11.2016, i.e. there is no cash sales before 03.10.2016 and after 07.11.2016. As regards to cash deposit, total cash deposited during F.Y. 2015-16 is Rs.4,50,000/- during the period from 09.11.2015 to 31.12.2015. Thereafter, no cash was deposited for remaining period of F.Y. 2015-16. Whereas, during the F.Y. 2016-17 total cash deposit is Rs.35,62,000/-, out of which cash of Rs.60,000/- is deposited during 01.04.2016 to 08.11.2016 and cash deposited for Rs.35,02,000/- during the period 15.11.2016 to 21.11.2016. After 21.11.2016, no cash was deposited. The facts mentioned above clearly shows that you have shown the activity of business before demonetization period by manipulating the books of sales and arranged cash deposit during demonetization period. Therefore, you are show caused as to why the cash deposit during demonetization period may not be treated as your income from undisclosed sources and may not be added to your total income u/s 68 of act. In response thereto the assessee filed the reply (PB1) and also stated that almost 50-60% confirmations is already being given by the purchasers whom sales were made. However the AO did not feel satisfy with the reply and details and alleged that :-

2. The most of the sale bills do not bear address/the mobile numbers/contact number/landline number of the purchasers.

5. The cash sales were made from 03.10.2016 to 07.11.2016 by 23 bills only. No cash or credit sales were made before this period. No activity of trading in diamonds was reported in F.Y. 2015-16. Therefore, idea of trading in diamonds appears to be fabricated as most of the purchases are shown from related parties i.e. N.B. Diamonds (Prop. concern of Shri Manoj Surana) and S.S. Exports (Prop. concern of M/s Manoj Surana HUF).

6. As per cash book no cash balance was available with the assessee prior to 04.10.2016.

7. As per ITR filed by the assessee, cash deposit during demonetization period has been declare for Rs.40,02,000/-, whereas, in her reply during assessment proceedings, Rs.35,02,000/- cash deposited has been mentioned.’’ It is also noted that the AO made an addition of Rs. 40.02 lacs in the hands of the assessee by observing at para 6 of his order as under:-

‘’6. As per above discussion, the cash sales and cash deposits is abnormal and unreasonable in the case of the assessee. The sales from 03.10.2016 to 07.11.2016 has shown so abnormally in comparison to rest of the period of F.Y. 2016-17. The genuineness of the sale bills could not be verified and remains unverified by the undersigned. All the bills are fabricated. These have been prepared only to justify the undisclosed cash of the assessee of Rs.40,02,000/- and the explanation offered by the assessee in this regard is not satisfactory, hence, the cash deposited of Rs.40,02,000/- is held as the unexplained cash of the assessee, therefore, the addition is made u/s 68 of the Income tax act to the income of the assessee for taxation.’’

6 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR 3.2 Against the order of the AO assessee has filed the appeal before the ld. CIT(A) who confirmed the order of the AO meaning thereby dismissed the appeal of the assesse by observing as under:- ‘’4.1.5. In view of the facts of the appellant under consideration and various judicious decisions cited above, I am of the considered opinion that the appellant is not willing to pursue the appeal and reserve his rights only by the mere filing of the memo of the appeal. Since the appellant has chosen not to proceed with the hearing and does not want to pursue any seriousness, the appeal deserves to be dismissed on this ground only. 4.2. On merits the appellant has challenged the addition of Rs. 40,02,000/- without submitting any evidence or counter arguments in support of its claims. Mere claiming that the AO erred in making the additions does not give an edge to the appellant. During the assessment proceeding, the appellant was requested to furnish a written explanation in respect of the discrepancy, The assessee did not make any compliance to the various statutory non-statutory notices issued to him. In response, neither the appellant nor the authorized representative filed any submissions. In spite of numerous opportunities given to the assessee, the assessee did not make use of these opportunities giving the concrete impression to the undersigned that the assessee had nothing to say or no explanation whatsoever with regard to the unexplained cash deposits during the AY 2017-18. Hence, the AO has no option but to add the total discrepancy amount in the total income of the appellant. Further, during the course of appellate proceedings, no reply has been filed by the appellant. I find from the assessment order that the Ld AO has demonstrated the case of how the appellant has tried to mislead the department by showing sales for a specified period of demonetisation period and no sales were made before or after the said period. Keeping in view the findings of the Id AO and that no submission was made in support of the grounds of appeal, I find no reason in altering the additions made by the AO. In view of this, the grounds raised by the appellant are dismissed.

7 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR 5. In the result, the appeal filed by the appellant is treated as dismissed.’’ 3.3 During the course of hearing, the ld. AR of the assessee has filed following detailed written submission alongwith case laws with the prayer to delete the addition of Rs. 40.02 lacs so confirmed by the ld.CIT(A). ‘’SUBMISSIONS: 1. No Show cause notice issued before making the addition, invoking the provisions of Sec.115BBE, and before pointing out the various allegation: At the very outset it is submitted that the ld. AO has issued show cause notice on the different allegations and while making the additions he has made different observations for which no SCN was issued, ld. AO has also not issued any SCN before invoking the provisions of Sec. 115BBE and before making various allegations as made in the assessment order. As clearly appearing from the various cause notice. As under A. 143(2) Notice issued on 09.08.2018 3 of Annexure- A-1(Page1-2). This is a formal notice for selecting the case for Scrutiny, in this notice also nowhere it has been stated that whether the case is selected for limited scrutiny and complete scrutiny, which was mandatory as per CBDT circulars. B. Notice U/s 142(1)issued on 05.9.2019. pgae 4-8 of Annexure A-2(page3-6): In this notice the ld. AO has asked to the assessee various details which has been replied by the assesse admittedly. C. Notice U/s 142(1)issued on 25.11.2019(PB91-92):In this is notice the ld. AO has asked to the assessee to file some more information/details which has also been replied by the assesse admittedly. D. Show Cause Notice U/s 142(1)issued on 20.12.2019(PB94-95): In this notice the ld. AO has also asked to the assessee to file reply by observing vide para.4(of facts) as above some more information/details on next working day i.e on date 23.12.2019 which has also been replied by the assessee admittedly. Thereafter the ld. AO has completed the assessment on 24.12.2019. In support note sheet on portal is enclosed at Page 1 of Annexure A. 1.2 On perusal of above notices it is clear these nowhere the ld. AO has given or issued any show cause notice for the allegations made or invoking the provisions Sec. 115BBE. The ld. AO has 8 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR not brought any allegation in the notice to the assessee before making the same and It was mandatory on the part of the ld. AO to issue the specific show cause notice to this effect asking to the assessee as to why the income should not be taxed as above before doing so. It is very settled legal position that a person (assessee) is entitled to opportunity to show cause as to why not the income of the assessee is determined and charged or taxed in the manner as proposed by the Assessing Officer but in the instant case no such type of opportunity had been provided hence the addition so made may kindly be deleted . But the ld. AO has failed to do so, which is against the principal of natural justice and against the law. Thus how the ld. AO can make the addition of alleged unexplained cash of Rs.40,02,000/- and also cannot invoke the provisions of 115BBE. Hence the entire additions are liable to be deleted. in full kindly refer Sanghi Brothers (Indore)Limited v/s Inspecting ACIT 122 CTR 19(MP), Malik Packaging v/s CIT 284 ITR 374 (All), T.C.N. Menon v/s ITO 96 ITR 148(Ker). 1.3 Thus it is the settled law that no addition can be made without issuing the show cause notice or without confronting to the assessee. 1.4 In the case of Shreyas Builders & Anr. vs. M.d. Kodnani & ors.* (2000) 161 CTR 0527 : (2000) 242 ITR 0320 it has been held that A perusal of the show-cause notice shows that it neither discloses the material nor the reasons. It is a cryptic notice. It does not indicate the material on the basis of which the Appropriate Authority reached the tentative conclusion that the transaction is undervalued. It also does not disclose any reason why the Appropriate Authority has reached the tentative conclusion that the transaction has been undervalued. It is further to be seen here that in ground (b) of the petition a grievance in this regard has been made by the petitioners and in the affidavit in reply filed by the respondent/ competent authority, the competent authority does not state the reasons for non-disclosure of the material as also the reasons in the show-cause notice. The basic approach of the authority is erroneous. Unless the Appropriate Authority discloses the reasons why it prima facie finds that the transaction is under valued, the person to whom the show-cause notice is issued would not be able to put up a defence. Thus issuance of such show-cause notice would defeat the very purpose for which the show-cause notice is required to be issued. A show-cause notice which does not disclose the material on the basis of which the Appropriate Authority has reached the tentative conclusion that the transaction has been undervalued and the reasons for reaching that tentative conclusion is a defective show-cause notice and, therefore, an order made on the basis of that show-cause notice would be an incompetent order and, therefore, liable to be set aside.—Mrs. Nirmal Laxminarayan Grover vs. Appropriate Authority (1997) 139 CTR (Bom) 40 : 1995(2) Mh. L.J. 755 : TC S3.267 followed; C.B. Gautam vs. Union of India (1992) 108 CTR (SC) 304 r/w (1993) 110 CTR (SC) 179 : (1993) 199 ITR 530 (SC) : TC S3.142 relied on. Also refer recent decision of this honble Tribunal in the case of M/s Motisons Jewellers Ltd in ITA No. 161 & 178/Jp/2022 dt. 29.09.2022 and M/s Rukmani Jewellers in ITA No.539/Jp/2023 dt.20.12.2023. Copy enclosed. 1.6. No sufficient time is given in the SCN hence void-ab-initio: Further the ld. AO issued the SCN on dt. 20.12.219 Friday which was delivered at 5.25 PM on 20.1.20219 at the email ID of 9 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR counsel and asked to the assessee to file the reply on 23.12.2019 at 11.00PM while there was Saturday and Sunday on 21-22.12.2019, which is against the principal of natural justice hence the notice, additions as well as the assessment liable to be deleted in this regard kindly refer:- This Honble Tribunal in the case of Sh. Ashutosh Bhargav v/s Pr. CIT, Jaipur in ITA No.20/Jp/2021 dt.06.01.2022 the Honble ITAT it has been held that “After hearing the parties on this issue, we have perused the notice of hearing which is at page No. 46 of the paper book and according to the said notice of hearing which was issued by the office of the Pr.CIT to the assessee. The said notice is dated 18/03/2021 wherein the matter for final hearing was fixed on 24/03/2021 at 6.04 PM. However, on 24/03/2021, the assessee requested for seeking some more time for engaging and for submitting documents. However, the ld. Pr.CIT, did not consider the request of the assessee and passed order on 31/3/2021 itself. Thus, considering the said facts, we are of the view that right to fair hearing is guaranteed right to an assessee and thus granting of effective opportunity is sine qua non in Section 263 of the Act for setting aside a statutory order. Thus, in our view, it was the duty of the ld. Pr.CIT to provide the assessee an effective and reasonable opportunity of hearing so as to enable him to substantiate its claim. In any case, it is one of the fundamental principles of natural justice that no person can be condemned unheard i.e audi alteram partem, the impugned order was thus passed in violation of the principles of natural justice in absence of any effective/reasonable opportunity of hearing provided to the assessee. Although, the ld. CIT-DR has relied upon the decision in the case of Deniel Merchants P. ltd. & Anr. Vs ITO & Anr in Special Leave Petition No. 23976/2017 dated 29/11/2017, however, the facts of the present case are altogether different from the facts of case as relied by the ld. CIT-DR as in that case, the issue was receipt of share application money whereas the facts of the present case are altogether different. The said case, as relied by the ld. CIT- DR, is not found application in the facts of the case under consideration. In our view, it is mandatory to apply the principles of natural justice irrespective of the fact as to whether there is any statutory provision or not. As per facts of the present case, the assessee was not afforded opportunity much less sufficient opportunity to give the reply to the show cause notice. Therefore it is clear that the ld. Pr. CIT in a hurriedly manner without affording opportunity of hearing to the assessee, had passed impugned order by violating principles of audi alteram partem. Thus, keeping in view the principles laid down by the Coordinate Bench of Cuttak ITAT in the case of Jaidurga Minerals v/s Pr. CIT (supra) and in the case of Jagnnath Prasad Bhargva vs Lal Nathimal AIR 1943 All 17 and in view of the above factual position, the ld. Pr.CIT has committed a gross error in not providing effective/reasonable opportunity of being heard to the assessee before passing the order. Accordingly, the revisional proceedings framed U/s 263 of the Act by the ld. Pr.CIT stands quashed.”

10 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR In the case of Inderpal Singh Sayan v/s Assessment Unit Income Tax Department & Ors 293 Taxman 0731(DelHC). Held as under “ 11.2 In this context, Ms Bansal has drawn our attention to Annexure-P appended on page 123 of the case file. A perusal of the said Annexure shows that a show cause notice was issued on 17.02.2023, which required a response to be filed by 23.02.2023. 11.3 The petitioner, evidently, made a request for accommodation on 23.02.2023 to seek time up until 07.03.2023. We are told that the reason given for seeking accommodation was that the petitioner had to gather the material relevant for his defence.

13. Clearly, the petitioner was not heard in support of his stand. There is, therefore, if nothing else, a breach of principles of natural justice, as the AO, without dealing with the request for accommodation, proceeded to pass the impugned assessment order dated 03.03.2023.

14. Therefore, on this singular ground, we are inclined to set aside the impugned assessment order dated 03.03.2023 and the order dated 31.03.2022 passed under Section 148A(d) of the Act. It is ordered accordingly.” Here also the same position and liable to be quashed the assessment order. Further the case of the assessee is on much strong footing because in the notice the time is given only 3.00 hour as the notice digitally signed at 11.06 AM on dt. 17.12.2019 and the time is given for reply at 02.36PM on dt.17.12.2019 on same date and there is time gap only about three hour which also take the time in uploading seeing etc. Here even one day time not given hence how it is possible to make an request. The allegation of the ld. AO has also wrong that no details filed when we had already filed all the details as required. In support we are enclosing herewith full e-proceedings vide annexure-2 and also furnishing the details and reply filed to the ld. AO. Also refer Zenith Processing Mills v/s CIT 219 ITR 721(Guj.) a In this notice the ld. AO has also asked to the assessee to file reply by observing vide para.4(of facts) as above some more information/details on next working day i.e on date 23.12.2019 which has also been replied by the assessee admittedly.

12 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR Gems and maintain the books of this firm. Assessee is bank account of firm in the Axis Bank, in which she has deposited Rs.60,000/- before demonetization period and Rs.35,02,000/- during the demonetization. The rest of amount of Rs.4,40,000/- was deposited from the personal account an in the personal saving bank account, which has been ignored by the ld.AO copy of bank statements are enclosed(PB74-81 & Annexure-A-3) 3. The observation of the ld. AO that “the cash sales and cash deposits is abnormal and unreasonable in the case of the assessee. The sales from 03.10.2016 to 07.11.2016 has shown so abnormally in comparison to rest of the period of F.Y. 2016-17. The genuineness of the sale bills could not be verified and remains unverified by the undersigned. All the bills are fabricated. These have been prepared only to justify the undisclosed cash of the assessee of Rs.40,02,000/-“ are based on the assumption, presumption and suspicion which is not allowable in the law or purely of assumption, presumption and suspicion, the ld. AO has ignored the facts, there was Deepawali Season and thereafter the marriage season had started and in the marriage session the sale of diamond increased. And the items in which assessee deals based on demand. 4.1 In the instant case the assessee had explained the source as sales, produced the sale bills and admitted the same as revenue receipt. The assessee is engaged in the diamond business and maintaining the regular stock registers and no differences were found in the stock register or the stocks of the assessee. Purchases, sales and the Stock are interlinked and inseparable. Every purchase increases the stock and every sale decreases the stock. To disbelieve the sales either the assessee should not have the sufficient stocks in their possession or there must be defects in the stock registers/ stocks. Once there is no defect in the purchases and sales and the same are matching with inflow and the outflow of stock, there is no reason to disbelieve the sales. The AO accepted the sales and the stocks. He has not disturbed the closing stock which has direct nexus with the sales. The movement of stock is directly linked to the purchase and the sales. Audit report u/s 44AB, the financial statements furnished in paper book clearly shows the reduction of stock position and matching with the sales which goes to say that the cash generated represent the sales. The assessee has furnished the trading account, P& L account (PB22) and we observe that the reduction of stock is matching with the corresponding sales and the assessee has not declared the exorbitant profits nor the ld. AO made any allegation for the same. Though certain suspicious features were noticed by the lower authority, both the authorities did not find any defects in the books of accounts and trading account, P&L account and the financial statements and failed to disprove the condition of the assessee. Suspicion may be strong however cannot take the place of reality, are the settled principles kindly refer Dhakeshwari Cotton Mills 26 ITR 775 (SC) also refer R.B.N.J. Naidu v/s CIT 29 ITR 194 (Nag), Kanpur Steel Co. Ltd. v/s CIT 32 ITR 56 (All).Also refer CIT v/s KulwantRai 291 ITR 36( Del). In CIT v/s Shalimar Buildwell Pvt Ltd 86 CCH 250(All) it has been held that the AO made the addition merely on suspicion which was not desirable in the eye of law. Kindly refer (a) Reliance is placed on same and identical matter where Hon’ble VISAKHAPATNAM ITAT Bench (DB) in the matter of M/s Hirapanna Jewellers, Visakhapatnam ITA No. 253/2020 for AY 2017-18 has very well supported the view of assesse as follows; 13 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR “9. In view of the foregoing discussion and taking into consideration of all the facts and the circumstances of the case, we have no hesitation to hold that the cash receipts represent the sales which the assessee has rightly offered for taxation. We have gone through the trading account and find that there was sufficient stock to effect the sales and we do not find any defect in the stock as well as the sales. Since, the assessee has already admitted the sales as revenue receipt, there is no case for making the addition u/s 68 or tax the same u/s 115BBE again. This view is also supported by the decision of Hon’ble Delhi High Court in the case of Kailash Jewellery House (Supra) and the Hon’ble Gujarat High Court in the case of Vishal Exports Overseas Ltd. (supra),Hence, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld.” 4.2 Further assessee admittedly produced sales bills, cash book and all books of account which have not been rejected. The sales was not only 4 hours as presumed by the ld. AO but the same was also for earlier and this month. Further the sale of before 8th November cannot be denied was valid and allowed in old notes. 4.3 The assessee was asked to produce the bills for such sales. The same were produced but the AO presumed these bill, when the confirmation of all most case were filed and not made further inquiry nor rejected the books of accounts. And in the IT act it is not required to maintain the data base of the clients and the assessee cannot compel to the customers to provide all the details at that time in the permissible limit. 4.4 It is not compulsory or mandatory under the I. Tax Act, 1961 to collect the collect the information related to full name, address and PAN of the customer to whom goods were sold in cash during the course of business below to the prescribed limit. It is voluntary to the customer to provide their personal information to the assessee while goods being sold. The assessee cannot enforce or compel to their customer to give their personal information and if the assessee would do it ruined to the business of the assessee. Further in the preceding financial year 2014-15 or earlier the same practice being followed by the assessee where no details of name, address and PAN of customer was available with the assessee, however in the case assessee most of purchaser filed their confirmation. Therefore, only the sales made and utilized for depositing the demonetized currency cannot be doubted for this reason. In the case of R.B. Jessaram Fatehchand Sugar ... vs CIT , ... on 30 March, 1969 Equivalent citations: 1970 75 ITR 33 Bom “4. In our opinion, the assessee's account books are to be accepted, unless, on verification, they disclosed any faults or defects, which cannot be reasonably and satisfactorily explained by the assessee. All the other transactions, except the cash transaction, which were verifiable, have been verified and scrutinised by the Income-tax Officer and there is nothing wrong whatsoever found with them. As to the cash transactions also, the quantity of sugar sold has not been disputed. The rates at which sugar was sold were not such as would excite suspicion by reason of being lower than the prevailing market rates. The names of the customers are also entered in respect of the transaction. All that is not done is that the addresses are not entered and on enquiry the assessee was unable to supply the addresses. Since, having regard to the nature of the 14 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR transaction and the manner in which they had been effected, there was no necessity whatsoever for the assessee to have maintained the addresses of cash customers, the failure to maintain the same or to supply them as and when called for cannot be regarded as a circumstance giving rise to a suspicion with regard to the genuineness of the transactions. The Tribunal, therefore, was not right, in our opinion, in setting aside the order of the Appellate Assistant Commissioner and restoring that of the Income-tax Officer. There are no circumstances disclosed in the case nor is there any evidence or material on record which would justify the rejection of the book results.

15 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR “6. The Tribunal was of the view that the assessee had sufficient cash in hand. In the books of account of the assessee, cash balance was usually more than Rs. 81,000. There is no reason to treat this amount as income from undisclosed sources. It is not a fit case for treating the amount of Rs. 81,000 as concealed income of the assessee and consequently imposition of penalty was also not justified in this case.

10. There will be no order as to costs.” © Also on the decision of Hon’ble ITAT, Nagpur Bench in the case of M/s Heera Steel Limited vs ITO (2005) 4 ITJ 437 in which it was held that cash sales cannot be equated with cash credit under section 68. (d) The AO has made addition by invoking the provision of section 68. The precondition for invoking section 68 is that there has to be credit of amount in the books maintained by the assessee. [CIT vs P. Mohanakala (2007) 291 ITR 278 (SC)].

(e) The section is applicable only when a sum is found credited in the books of the assessee [Rakesh Kalia v. CIT, (2006) 286 ITR 357 (Dei.)]. In the case of assessee neither any sum has been credited in the books of accounts or in the bank account even for a single day throughout the year which is evident from the peak analysis of bank account is submitted here with. As evident from the bank account, sale proceeds realized was deposited in the bank are utilized in the same day for making payments of purchases. The sale proceeds realized was not lying as credit in the books of accounts of the assessee even for a single day. Hence by any stretch of imagination, payments received from the trade debtors cannot be covered within the meaning of credits under section 68.

(f) In the case of "Dewas Soya Ltd. Vs ITO Hon'ble ITAT has also held just because the amounts were received from the buyers in cash, the assessee cannot be penalized because the restriction placed for payment u/s 40A(3) of the Act applies to buyer and not the seller. There being no restriction under the Act to accept cash against sales, the assessee Company cannot be penalized.

16 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR (g) Hon'ble supreme court in the case of CIT v. P. Mohan Kala 291 ITR 278 (SC) has clearly explain that the primary condition for invocation of section 68 is that there has to credit of amount in the books of the assessee and such credit shall be sum of money emphasis is placed on the physiology used in the section wherein the phrase any sum is found credited has been used and the legislation has not used the word deposited. In other word the balancing effect of the transaction has to be credit account in the books of accounts which is not the case with the assessee.

(h) In the case of Rameshwar Meena in CO No. 35/Jp/2017 A/o dt. 30.04.2019 this Honble ITAT has held that Given the fact that such bank account maintained with the Axis Bank was not reported by the assessee at the time of filing of return of income and the fact that the assessee is engaged in the transportation business and in absence of any contrary findings by the lower authorities regarding any other source of income, such cash deposits are treated as undeclared receipts from the assessee’s transportation business and net profit on such undeclared business receipts is directed to be applied. Given that the assessee has declared net profit of 2.39% which has been accepted by us while adjudicating earlier grounds, the same net profit is directed to be applied on such business receipts of Rs 13,55,000. In the result, the assessee’s cross objection is partly allowed. Thus alternatively and without prejudice at the worst the ld. AO could have applied the Net profit rate on such alleged non genuine sales of Rs.35,62,000/- as declared by the assessee at the rate of 14.86% after excluding the sales on the account already declared in the ITR.

5 Addition u/s 68 is not warranted: As the ld. AO has made the addition by invoking the provisions of Sec. 68 which is not applicable, because the cash deposited in the bank account is not a credit entries taken from anywhere or from others it is the assessee’s self money received from sales. And if the ld. AO was of the view that it was the undisclosed or unexplained money then at the worst addition was to be made u/s 69A not u/s 68. The ld. AO one side accepted the books of accounts and other side he made the addition u/s 68 which is not permissible, once the ld. AO herself admitted books then how on the same books addition can be made u/s 68.

6. Directly covered matter : As under the same fats This Honble bench in the case of M/s Motisons Jewellers Ltd in & 178/Jp/2022 dt. 29.09.2022 has held as under: “20. We have considered the rival contention and perused the orders of the authorities and the material available on record arguments advanced by both the parties and also gone through the judicial decision relied upon by both the parties to drive home to their contentions. We find from the records that show cause notice so as to rejection of books of account u/s 145(3) of the Act was not given by the AO and the assessment completed in the manner provided u/s 144 of the Act. It is also noteworthy to mention that that the AO has not given any show cause notices as required u/s 144/145 of the Act before estimation of income by applying the N.P. Rate. It is also 17 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR ridiculous to note that AO had rejected the books of account u/s 145(3) of the Act which has been confirmed by the ld. CIT(A) but assessment has been framed u/s 143(3) and not u/s 144 as required u/s 145(3) of the Act which indicates that the assessment is bad in the eyes of law. From the order of the ld. CIT(A) it is seen that the ld. CIT(A) had examined the genuiness of purchases from M/s. Paras Gems and Jewellers, M/s. Girdhar Jewellers (P) Ltd. and M/s. Girdhar Jewellers and held the same as genuine on the basis of her detailed findings in para 6.2 (x) for which the Department has not challenged the findings of the ld. CIT(A) as to the issue of genuineness of the purchases and thus the books of account cannot be rejected on the ground of genuineness of purchases. It is essential to indicate that when all the purchases are genuine and correctly recorded in the books of account as well as stock register then the books of account should not be rejected u/s 145(3) of the Act. It is further noted from the record that the assessee claimed that out of total claim of Rs.12,17,48,500/- deposited into bank account in demonetized currency, the amount of Rs.25,96,480/-was realized from its debtors and Rs.11,86,250/- was received as advance from the customers and the ld. CIT(A) in her order treated the entire cash sales and corresponding cash deposit as genuine. Thus the amount received from debtors/ advance from customers cannot be treated as unverifiable and this cannot be a ground for rejection of books of account. We noted from PB Page 163 of the paper book i.e. the list of debtors where total sales to such debtors was amounting to Rs.41,75,995/- against which Rs.13,30,000/- was received at the time of sales and balance Rs.28,45,995/- was outstanding which was receivable from the debtors. It is also observed from the records that lower authorities considered the sale of Rs.41,75,955/- made to the parties as genuine and while computing the total sales of the assessee and even for estimating the net profit, the lower authorities had considered these sales as part of turnover and thus treated the cash received from the debtors immediately at the time of Sales of Rs.13,30,000/- and Rs.2,49,515/- received after 8-11-2016 as genuine and verified. We feel that out of total amount of Rs.12,17,48,500/- deposited into bank account, the cash realized from debtors was of Rs.25,96,480/- which is a meager amount looking to the quantum of sales of the assessee and this cannot be treated as nongenuine. It is also noted from the record that the AO made the telephonic enquiry / verification from the debtors on test check basis for 6 cases only where the list contains more then 250 names, however, in case of discrepancy the opportunity of cross examination was required to be made by the assessee but it was not made by the AO. Therefore, it can be said that the assessee was deprived of cross examining the parties due to lapse on the part of the AO. As regards the genuineness of advance from customers, the assessee received advance of Rs.11,86,250/- from the customers which the lower authorities considered the corresponding sales made to these customers as genuine and it happens in such business that receiving of advance from customer is regular feature and the same was also prior and after the period 03-11-2016 to 8-11-2016 and advances made during this period cannot be treated as non-genuine. Such advances are adjusted against sales made to the parties. It is also noted that the ld.CIT(A) sustained the addition of Rs.47,72,297/- on account of N.P and ground against such addition is unverifiable amount of Rs.37,82,730/- (i.e. on account of realization Rs.25,96,480/- from debtors and Rs.11,86,250/- from advances). It is apparent from records that all the amounts realized from debtors and received as advance from customers during the period 03-11-2016 to 8-11-2016 was genuine and verifiable from the accounts then there is no cogent reason by the lower authorities to treat the same as non genuine. Hence, looking into the entirety of the facts, circumstances of the case and the case laws cited by the AR of the assessee (supra), we allow the appeal of the assessee by holding that the rejection 18 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR of books of account on the basis of insignificant defects in all respect, is not justified and books of account deserves to be accepted. Before invoking the provisions of Section 145(3) of the Act, the AO has to bring on record material on the basis of which he has arrived at the conclusion with regard to correctness or completeness of the accounts of the assessee or the method of accounting employed by it. In the instant case, it was not the case that the assessee had not followed either cash or mercantile system of accounting. It was also not the case that the Central Government had notified any particular accounting standard not followed by assessee. Further the assessee maintains proper books of account audited by Chartered Accountant and the profit may be derived from the audited books of account therefore there is no justification in estimation of income by applying NP rate and accordingly the lower authorities are directed to delete the addition of Rs. 47,72,297/- sustained by ld CIT(A).” The case of the assessee is much more strong footing because in the case of assesee the ld. AO ha neither invoked sec. 145(3), nor rejected the books of accounts nor estimated the profit rather made entire amount as addition, nor issued any show cause notice nor made any inquiry.

7. Double Taxation is Unconstitutional therefore Illegal: The Ld. AO has grossly erred in law and facts in making addition on account of Undisclosed Income u/s 68 of the act, of Rs. 40,02,000/- alleging that Cash sales is unexplained amount, though it is very much included(Rs.36,09,719/- + saving) in the Sales of the assessee of concerned period and profit has been offered for Tax on such amount (Rs.36,09,719/-) too and similarly accepted by the Ld. AO during the course of assessment proceedings, therefore such allegation is evasive, conjecture, surmises and vague in the air, therefore deserve to be deleted. It is fundamental rule of taxation that unless provided, same income cannot be taxed twice. In this preposition kindly refer the decision of this Honble Bench in the case of Sh. Avdesh Dangayach V/s ACIT Cir.6 in ITA No. 464/Jp/2016 dt. 23.02.2017 vide page 10. Also Kindly refer Laxmipat Singhania v/s CIT 72 ITR 291(SC), CIT v/s M.P. JayaRam 100 Taxman 544(Kar), Gyan Chand Jain v/s ITO 73 TTJ 859(Jd). Gem Palace v/s CIT 168 ITR 543(Raj.)., Ramanlal Madan Lal v/s CIT 116 ITR 657(Cal.), Jain Brothers v/s UOI 77 ITR 107(SC), Further the Honble ITAT in the group case of M/s Gowadia Jewellers in ITA No. 776/Ju/05 at page 8-para 15 dt. 30.09.2008 deleted certain additions, mainly on the reasoning that such income was already disclosed in the hands of the working partner and as such same income cannot be brought to tax as undisclosed income of the firm. 8.1 By perusal of the assessment order the ld.AO proceed only on assumption, presumption, suspicion guess work and invoked the provision section 68 of the act, this contention is fully backed because she has accepted the trading account and sales have sufficiently entered into such Books of Accounts under the head of Sales and the Net Profit as shown by the assessee in its Income Tax return has been culminated after taking consideration such sales in Financial figures on which assesse has paid the Tax too. 8.2 Here it is notable that once Ld. AO presumed such Cash sales of Rs. 36,09,719/- as Unexplained Income rather not Sales than first he should eliminate such Rs.36,09,719/- from books of accounts and (particularly from Sales account) then calculate the Net Profit otherwise this receipts of Rs.36,09,719/- is being added twice one under the head of Sales Account, itself 19 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR and other as Unexplained Income u/s 68 of the act, which is clearly adverse of the Rule of law, which is nurtured through Article 265 of the constitution. 8.3 Here it is appreciable that assessee hammering this facts in assessment Proceedings also and to till date that cash sales is duly entered into Books of Accounts under the head of Sales and whatever Profit calculated in his Income Tax Return it is based on such Sales which includes such Questioned Cash sales of Rs.36,09,719/-.

9. Addition made without corroborative material and without rebutting produced evidences: The ld. AO as well as the ld. CIT(A) have grossly erred in law as well as on the facts of the case in making addition of Rs.40,02,000/- on account of alleged Undisclosed Income U/s 68 alleging that cash sale is not genuine, but without bringing any cogent material in support of her contention and without bringing corroborative evidence and without considering the materials and explanations available on records in their true perspective and sense, therefore addition is illegal and such addition should be deleted in toto, The Honble Raj. High Court in the case of Malani Ramjivan Jagannath vs. ACIT 316 ITR 120(Raj.) it has been held that In each trading account, only four entries were there of opening stock, purchase on debit side, sales and closing stock on credit side. The quantum and value of purchases and sales had not been in dispute inasmuch as they were held to be fully vouched. Value of opening stock also cannot be disputed as it came from closing stock of previous year. The inventories of closing stock was also not found to be incorrect. That is to say actual stock position was not in dispute. The previous year's books of account were not found to be incorrect. In the face of these undisputed facts and circumstances, the Tribunal could not have interfered with the order of CIT(A). In doing so, it had ignored all admitted facts in the face of which there was no occasion for the AO to have resorted to estimate method. There being no dispute about the sales and purchases, non-maintenance of stock register lost its significance so far as arriving at GP is concerned. Therefore, the CIT(A) was right in his reasoning about admitted state of affairs. Resorting to estimate of GP rate was founded on no material. Mere deviation in GP rate cannot be a ground for rejecting books of account and entering realm of estimate and guesswork. Lower GP rate shown in the books of account during current year and fall in GP rate was justified and also admitted by the AO as well as CIT(A) as well as the Tribunal. Therefore, fall in GP rate lost its significance. Having accepted the reason for fall in GP rate, namely, stiff competition in market and also that huge loss caused in particular transaction, neither the rejection of books of account was justified nor resort to substitution of estimated GP by rule of thumb merely for making certain additions. Therefore, the findings arrived at by the Tribunal suffers from basic defect of not applying its mind to the existing material which were relevant and went to the root of the matter. When all the data and entries made in the trading account were not found to be incorrect in any manner, there could not have been any other result except what has been shown by the assessee in the books of accounts. Therefore, the order of the Tribunal cannot be sustained 10. The Assessee is a law abiding person and do their business within the limitation as provided by the legislature therefore what she could do in following law of land, she did. It is registered with Income Tax Department filling their Income Tax Return continuously and regularly after getting audited their Books of Accounts from Qualified Chartered Accountants and paid the Tax 20 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR as due. Similarly Registered under VAT/GST and filling their Annual returns after depositing due Tax being registered in composition scheme. It is also apposite mention here that whatever transactions are being shown by the books of accounts of the assesse have been submitted GST department also and the complete GST Returns also have been submitted before Ld. AO and it is also appreciable that GST department has accepted such Sales and Purchase Transaction in same manner without making any adverse comments. Therefore it is also thinkable that if one Central Government Revenue department accepts the results of Books of Accounts as shown by the assesse how other can reject without pointing out any cogent mistake on record or without bringing any corroborative material on record. The ld. AO has also not doubted the other Govt. Agencies i.e VAT/GST which is also equal to income tax. And in these days are so many penal provision in the GST on wrong sales/purchase, hence the same cannot be ignored. Commercial Tax Deptt., or GST were directly concerned with the collection of tax on sales and hence, the with correctness thereof. The sales, having accepted by them, there was no reason to make a further enhancement in the declared sales Kindly refer Shree Shankar Khandsari Sugar Mills v. CIT 193 ITR 669 (Kar). More particularly, when no evidence of suppression of sale is found nor alleged so. 11.1 We have already stated that that the cash in hand is supported with the cash book, sales book, purchase book, inventory register and ledgers which are duly maintained during the course of day to day business transaction, which also duly audited by the qualified chartered accountant and accepted by the ld. AO as the ld. AO nowhere invoked the provisions of sc. 145(3). Cash is maintained on daily/periodic basis and supported with the sufficient evidences which were duly audited and filed the audited accounts we produced a complete set of Cash book from 01.04.2016 to 31.03.2017. The cash was generated through Cash Sales as made during the course of day to day business transaction supported with the availability of inventory can be verified with the inventory record. The cash as retained by the assessee was quite reasonable looking to the turnover of the company 11.2. Inventory Register: It is further submitted that the inventory register is being maintained during the course of day to day business transaction and fully supported by valid Purchase Bills. By perusing the Stock Register it is revealed that Quantitative details is being maintained, and the movement of Inventory describes that at the time of outward of Inventory sufficient balance was there and such balance was built up through valid Purchases which’s payments have been made through Account Payee cheques and the ld. AO wrongly stated that purchase bogus without giving any example or evidence in a very lightly manner when purchases were made through valid Bills and there payments have been made through account payee cheque up to that date. 11.3 As the assessee maintaining Purchase /sales and other documents in this year the Deepawali was on 30.10.2016, Annkut on 31.10.2016 and on 01.11.2016 there was Bhaiya Duj and before Deepwali there were busyness due to Deppawali Season. Hence the cash in hands in the Months of Oct. 2016 has increased day by day and accumulated till the first week of Nov.2016. And after Deepwali about one week every business men live in easily mood and feel free for some time. Thus the Cash has been accumulated and deposited in the bank and the assessee was not known that there shall be Demonetization from 08.11.2016.

21 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR 11.3 Thus cash deposited by assessee was part of business and generated during day to day business transaction and was fully disclosed and explained in books of accounts including cash book as maintained during day to day business transaction or generated through sales of diamonds as fully supported by valid sales bill by charging/collecting GST and also part of books of accounts, Copy of sales bills or ledger was submitted before lower authorities. On perusal of the sales registered it is revealed that all the details minutely have been mentioned. All Purchase bills were presented before Ld. AO, 12.1 GST Department has accepted such Sales of without raising any Question: As we have already submitted that the assessee is registered under various laws which are as follows; (a) GST earlier under VAT. The items in which assessee trades are liable to taxable under Good and Service Tax, earlier it was Value added Tax. Since incorporation of firm, assessee is depositing the VAT and thereafter GST and filling respective return in due course. Copy of Sales Tax Return viz. VAT and GST are attached as PB 87-88). Hence Ld. AO’s observation regarding Cash deposited is not tenable on many grounds as above and also because Ld. AO could not provide the satisfactory observation about Inventory position which is very important to rebut assesse’s contention, if for a while we follow the contention of the Ld. AO than we are not able to provide an amicable reply regarding Inventory or stock position because if the cash was not from the sale then there should be excess stocks to that extent, and the ld. AO has failed to state where the stock has gone has gone to that extent. These facts support our case and against the case of the lower authorities. In this regard we placed our reliance on Jurisdictional High Court order in the matter of CIT Vs. M/s Ceramic Industries and M/s Ceramic Tableware (P) Ltd. ITA No. 117/2008, 65/2009,44 and 56 of 2010, 83/2011,63 and 65 of 2014, 124,135 and 198 of 2016 dated 25/05/2017.Where it has been held “We agree with the arguments of the ld. AR that the main objection raised by the AO was that input/output ratio in various months has the inconsistency which has been duly explained by the assessee vide letter dated 26.03.2004 and the second objection by the AO was that the sister concern M/s. Bharat Potteries Ltd. has declared more yield and more gross profit, has also been explained by the assessee vide the same letter dated 26.03.2004. Therefore, the inconsistency in the input/out ratio in various months the reasons for which has been explained by the assessee, cannot be the basis for rejection of books of account. The yield and gross profit rate declared by the assessee can also not be the basis for rejection of books of account since M/s. Bharat Potteries Ltd. is manufacturing maximum of stoneware crockery and for many other reasons which were explained by the assessee vide its letter dated 26.03.04 which was ignored by the AO and the AO has not pointed out any specific defects in the purchases, sales, opening stock and closing stock of the assessee and the AO has not brought on record any cogent material to prove that the assessee has sold the under-production out of the books of account. Therefore, in such circumstances and facts of the case, the AO is not justified in rejecting the books of account by invoking Provisions of Section 145(3) of the Act and the additions made by the AO are liable to the deleted. The objection of the ld. DR that the ld. CIT(A) has not relied upon the CGCRI Report, Calcutta, the ld. AR has pointed 22 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR out that the in the same report it has been mentioned that the said organization is not involved production practice and the are not sure to what extent their opinion will be useful for the purpose of the assesseeand in such circumstances and facts of the case, the report of CGCRI, Calcutta alone cannot be the basis for rejection of books of account and making an estimation of wastage and the ld. CIT(A) was not justified in ignoring other material which was placed before him as mentioned hereinbefore. Therefore, the ld. CIT9A) was not justified in sustaining the applicability of Section 145(3) of the Act and addition of Rs. 11,15,087/-. Thus Ground No.1 of the assessee is allowed and the solitary ground of the Revenue is dismissed.”

14. Addition made without bringing any cogent material on record; Simultaneously Ld. AO could not bring any cogent material in support of his allegation that such founded Cash of Rs. 40,02,000/- is Unexplained Income, except suspicion for that we have already stated above. It is very settled position of law that any contrary view as is being taken by the Assessing authority as well as assesse should bring some corroborative material on record through which it can be proved, (a) In similar matter Honourable Supreme court has propounded in the matter of; CIT , ... vs Devi Prasad Vishwanath Prasad on 1 August, 1968 Equivalent citations: 1969 72 ITR 194 SC “9. The High Court, in disposing of the application under section 66(2), expressed the view that because the amount of Rs. 20,000 was entered in the books of account of the business, there was some material to hold that the amount was income of the assessee from the business and not from some other source. But it was not open to the High Court 23 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR to direct the Tribunal to state a case on a question which was never raised before or decided by the Tribunal at the hearing of the appeal. The question again assumes that it was for the Income-tax Officer to indicate the source of the income before the income could be held taxable and unless he did so, the assessee was entitled to succeed. That is not, in our judgment, the correct legal position. Where there is an explained cash credit, it is open to the Income-tax Officer to hold that it is income of the assessee and no further burden lies on the Income-tax Officer to show that that income is from any particular source. 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.

10. We discharge the order recorded by the High Court and allow the appeal. We decline to answer the question did not arise out of the order of the Tribunal. The assessee will pay the costs of the Commissioner in this court and in the High Court.” (b) Similarly the presumption as presumed by the Ld. AO regarding Cash of Rs.1,78,08,630/- is purely vague in the air and without having any evidence should not be sustainable and well supported by the landmark judgment in the matter of CIT vs Shri Kulwant Rai on 13 February, 2007 Equivalent citations: 2007 291 ITR 36 Delhi “16. This cash flow statement furnished by the assessed was rejected by the Assessing Officer which is on the basis of suspicion that the assessed must have spent the amount for some other purposes. The orders of Assessing Officer as well as Commissioner of Income Tax are completely silent as to for what purpose the earlier withdrawals would have been spent. As per the cash book maintained by the assessed, a sum of Rs. 10,000/- was being spent for household expenses every month and the assessed has withdrawn from bank a sum of Rs. 2 lacs on 4th December, 2000 and there was no material with the Department that this money was not available with the assessed. It has been held by the Tribunal that in the instant case the withdrawals shown by the assessed are far in excess of the cash found during the course of search proceedings. No material has been relied upon by the Assessing Officer or Commissioner Income Tax(A) to support their view that the entire cash withdrawals must have been spent by the assessed and accordingly, the Tribunal rightly held that the assessment of Rs. 2.5 lacs is legally not sustainable under Section 158BC of the Act and the same was rightly ordered to be deleted.

25 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR 2007-08 2,07,702 Assessed u/s. 143(1) Assessed u/s. 143(3) by ITO, W-II, Azamgarh 2008-09 2,64,311 dated 31.12.2009.

8. Taking into considerations, the overall facts and circumstances of the case, we are of the opinion that the Tribunal while confirming the order passed by the Commissioner of Income-tax (Appeals) has not committed any error, therefore, the issue is answered in favour of the assessee and against the Department. The appeal stands dismissed.” pay the costs of the assesse.” 15.1 Invocation of Section 115BBE is illegal: The invocation of the provision of Section 115BBE of the act, by the ld. AO is illegal, bad in law, against the principle of natural justice. Because firstly the ld. AO has not issued any show cause notice for that we have already stated in above para 1 and also as under Recently the Honble ITAT Jodhpur Bench Jodhpur in the case of Smt. Suraj Kanwar Devra vs ITO ITA 50/Jodh/2021 dt. 23.11.2021 It has been held that “The AO has not issued any show cause notice before invoking the provision of Sec. 115BBE for taxing the income on higher rate. It was mandatory on the part of the AO to issue the specific show cause notice to this effect asking to the assessee as to why the income should not be taxed under sec. 115BBE before doing so. It is very settled legal position that a person (assessee) is entitled to opportunity to show cause as to why not the income of the assessee is determined and charged or taxed in the manner as proposed by the A.O. but in the instant case no such type of opportunity had been provided but the AO has failed to do so, which is against the principal of natural justice and against the law. This sec. 115BBE is charging of tax a the higher rate and it cannot be applied directly without giving any show cause notice when the issue are disputed that whether the higher rate of tax applicable or not on the alleged income or the nature of income falls u/s 68/69 and 115BBE. Hence it was mandatory on the part of the AO to issue show cause before invoking the provisions u/s 115BBE, in absence of the same the rate cannot be charged more than to normal rate of tax, the addition if any sustained.” Copy of order is enclosed. 15.2. Invalid invocation of Provision of Sec. 115BBE: When the cash was deposited out of the business receipts neither addition can be made nor provisions of Sec. 115BBE can be invoked. Because it is not unaccounted income u/s 68/69 rather it is the business receipts and the ld. AO has never brought on record any evidence that the assessee is having others sources of unaccounted income other than to business. He is only assumed, guess work and made the addition on assumption, presumption and suspicion by ignoring the evidences filed which has never been controverted by bringing any material evidences. And it is also settled legal position that suspicion may be strong, however cannot take place of reality kindly refer Dhakehswari Cotton Mills Ltd. v CIT (261 ITR 775(SC), in which held: “In making an assessment under Section 23(3) of the Indian Income tax Act, the Income- tax Officer is not fettered by technical rules of evidence and pleadings, and he is entitled 27 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR to act on material which may not be accepted as evidence in a court of law, but the Income-tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under Section 23(3). The rule of law on this subject has been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh v. Commissioner of Income-Tax, Punjab (1944) 12 I.T.R. 393” Also refer DhirajlalGirdharilal v CIT (26 ITR 736 (SC), Omar Salary MohanmedSait v CIT (37 ITR 151) (SC), Lekchabnd Bhagat Ambica Ram v CIT (37 ITR 285) (SC), CIT v Nandini C. (1989) 230 ITR 679, 689 (Cal).

17. We also would like to submit that the judgments and WS given in the Honble ITAT order in the case of M/s Motisons Jewellers Ltd.(Supra), and Rukmani Jewellers(Supra)may kindly be treated as part of our WS and also consider here.

18. Personal Income of this year and earlier years has been ignored: Further there-apart cash deposited from the business, the cash was also deposited from the personal a/c to in the personal bank account which were out of past saving, rental income and income from other sources for this year(vide computation of total income PB6-7) and earlier years(AnnexaureA-4 page 9-17) have been ignored by the ld. AO despite accepted and assessed, and also being a lady and doing the business as also having income from rental and other sources and is filling the ITR last so many years can easily have the Rs.4,40,000/- for personal bank account deposits. Hence there was also sufficient sources for rest of cash deposited. Prayer: therefore in view of the above facts and circumstances the addition so made by the AO may kindly be deleted in full and oblige.’’ 3.4 On the other hand, the ld. DR supported the order of the ld. CIT(A). 3.5 The Bench has heard both the parties and perused the materials available on record including the case laws cited by the ld. AR of the assessee (supra). In this case, it is noted that the AO made addition of Rs.40.02 lacs in the hands of the 28 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR assessee u/s 68 of the Act for the reason that the assessee had failed to explain the source of cash deposits which has been confirmed by the ld. CIT(A) by holding that ‘’Keeping in view the findings of the ld. AO and that no submission was made in support of the grounds of appeal, I find no reason in altering the additions made by the AO. In view of this, the grounds raised by the appellant are dismissed. The Bench considered the written submission of the assessee which has been explicitly discussed on the issue in question and the written submission advanced by the ld AR of the assessee has merit. The Bench also noticed that the similar type of issue was decided by the Coordinate Bench in the case of Rukmani Jewellers Private Ltd. vs DCIT (ITA No. 539/JP/2023 dated 20-12-2023) wherein the Coordinate Bench allowed the appeal of the assessee by observing as under:- ‘’11. We have considered the rival contention and perused the orders of the authorities and the material available on record arguments advanced by both the parties and also gone through the judicial decision relied upon by both the parties to drive home to their contentions. The assessee is a private limited company deriving income from manufacturing and trading of Gold ornaments, trading of watches etc. The books of assessee’s are audited by the independent Chartered Accountant under the companies act as well as in accordance with the provision of the income tax act. Copies of the audit report and statement of profit and loss account is filed by the assessee company. It is noted from the record that the case of the assessee was taken up for scrutiny assessment u/s 143(3) on the basis of CASS on complete scrutiny. The details called for by the AO were submitted by the assessee from time to time. Vide order dated 21.12.2019 assessed the income of the assessee at Rs.2,07,17,710/- where by making an addition of 29 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR Rs. 1,78,08,630/- being the amount of cash sales made as unexplained credit as per provision of section 68 of the Act. The bench noted that while doing so the ld. AO has not issued any show cause notice for making the addition nor the books results declared by the assessee was rejected, no defects in the records produced. The bench noted that the apple of discord in this case of the deposit of the cash for an amount of Rs. 1,94,08,630/- during the 01.11.2016 to 8.11.206 till the date of demonetization out of which the ld. AO has considered the cash to the tune of Rs. 16,00,000/- as explained and the balance amount of Rs. 1,78,08,630/- was added as income u/s. 68 of the Act. In first appeal the ld. CIT(A) has confirmed the action of the ld. AO holding as under 7.10 Thus, the judicial authorities have taken an extremely adverse view of such practises adopted by various assessees to make an attempt of aggregating their books and trying to explain the huge cash deposits by making bogus sales entries in their books of accounts. Having considered entire facts of the case, and the case laws cited above, it is apparent that the appellant has completely failed to offer any explanation either before the AO during assessment proceedings or before me during appellate proceedings, despite affording sufficient number of opportunities and hence, I find no infirmity in the order of AO. Accordingly, the addition made of Rs. 1,78,08,630/- is confirmed. As a result, the appeal is dismissed.

12. The bench noted that the points or allegation noted by the ld. AO in his order is that a) the assessee claimed to have sales of Rs. 1,00,33,680/- for only one day i.e.8th November 2016. Against this contention the bench noted that the assessee has provided the stock details, bills and cash book. No defect whatsoever found in these primary records of the assessee. There is not doubt about the sales or that of the purchase with the stock of goods sold. All the details required to prove the sales made by the assessee were provided and both the lower authorities have not found 30 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR any defects. As regards the receipt of cash from the customer the ld. AR of the assessee relied upon the findings of jurisdiction high court judgement in the case of Smt. Harshil Chordia Vs. ITO reported at 298 ITR 349 (Rajasthan-HC). In this case the Jurisdictional Hon’ble High Court held that So far as question No. 2 is concerned, apparently when the Tribunal has found as a fact that the assessee was receiving money from the customers in hands against the payment on delivery of the vehicles on receipt from the dealer the question of such amount standing in the books of account of the assessee would not attract section 68 because the cash deposits becomes self-explanatory and such amounts were received by the assessee from the customers against which the delivery of the vehicle was made to the customers. The question of sustaining the addition of Rs. 6,98,000 would not arise. We, therefore, hold that no addition was required to be made in respect of Rs. 6,98,000, which was found to be the cash receipts from the customers and against which delivery of vehicle was made to them.

Thus, the fact of the case on hand is similar to the jurisdictional high court decision cited by the ld. AR of the assessee. The ld. AR of the assessee also relied upon the co-ordinate Jaipur ITAT decision also on the issue and the revenue not proved that the sale made by the assessee which is executed after giving the goods to the customer, duly supported by the invoice issued, assessee having sufficient stock in the books, sales is duly reflected in the books of accounts supported by payment of VAT. Therefore, the contention of the revenue based on the facts and circumstance of the case is not accepted and we see no reason to dispute the sales recorded in the books. Moreover in the turnover this sales is already recorded and there is no finding in the order of the lower authority and therefore, even the same income cannot be taxed twice.

31 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR b) It is humanly impossible to sell goods worth Rs. 1,00,33,680/- in one day. The assessee's argument is that these sales were made after demonetization was declared at 8 pm. On this issue bench noted that the assessee has submitted the invoice. On this invoice only the date is written and the it is not finding recorded on oath that sales is only after 8PM. Since the period was of marriage seasons it was not under dispute that the assessee not sold the goods. Therefore, once the goods is supported by the Invoice recorded in the books and no defects found merely the same is recorded on the date of demonetization addition of cash receipt cannot be made in the hands of the assessee. Moreover, the sales already recorded is also not considered to be reduced as income of the assessee therefore, the action of the lower authority is not in correct. c) The assessee has sold goods to approx 107 People via separate bills. How it is possible that amidst such rush in the shop, the assessee could enter amount and weight and took a print out and got it signed by these 107 purchasers. Even On this issue bench noted that the assessee has submitted the invoice. On this invoice only the date is written and it is not finding recorded on oath that sales is only after 8PM. Since the period was of marriage seasons it was not under dispute that the assessee not sold the goods. Therefore, once the goods is supported by the Invoice recorded in the books and no defects found merely the same is recorded on the date of demonetization addition of cash receipt cannot be made in the hands of the assessee. d) The assessee was asked to produce the bills for such sales. The same were produced but such bills are not verifiable. Generally, jewelers maintain a database of their customers with their complete address and contact number but here the bills do not contain proper name and 32 ITA NO. 102/JP/2024 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR address of the purchaser. On this issue since there is binding judgment of jurisdictional high court in the case of Smt. Harshil Chordia Vs. ITO reported at 298 ITR 349 (Rajasthan-HC) we do not find merits in the arguments of the revenue. e) Further, during the bill verification, it was marked out that the assessee has not entered mobile no of the persons to whom goods were sold on 8th November. However, the number is available on almost each and every bill except this date. Even on this issue since there is binding judgment of jurisdictional high court in the case of Smt. Harshil Chordia Vs. ITO reported at 298 ITR 349 (Rajasthan-HC) we do not find merits in the arguments of the revenue. f) In the stock register also, the assessee has not provided any description of the items purchased and kept as stock in trade. The assessee maintains stock register in Qty in Grams only having columns of Qty Inward, Qty Outward,Closing Qty. The bench noted that the ld. AO has accepted the facts that the assessee maintained the stock quantity in grams and the same is not found defective. The quantitative information was provided column no. 35bB of the Tax Audit Report already on record and the same is not disputed. g) Similarly, on verification of the purchase bills also it was noticed that such bills also do not have any description of the goods. The bills mention "Gold Jewellery 22K and Qty in Gms only. As discussed herein above once the ld. AO accepted that the assessee maintained the stock in Grams and the same is not disputed the merely the description not mentioned will not hold the goods sold as non-genuine.

33 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR h) Moreover, the average cash balance of the assessee is much lower ranging between 20 lac to 30 lac from 01.04.2016 to 30.09.2016 whereas the assessee has shown cash balance of Rs. 34 lac in October and Rs. 1.82 Cr as on 08.11.2016. Thus, it is clear that the assessee enhanced his cash balance in the graft of cash sales to unverifiable persons. This contention of the revenue is incorrect the cash book submitted by the assessee having the day to day cash balance and the sales is also not disputed the cash so generated cannot be considered as unexplained and regards the cash sales the jurisdictional high court has already held that when the cash sales is recorded the cash deposits becomes self explanatory and such amounts were received by the assessee from customer and the same is supported by the Value added tax paid invoice.

13. Thus, considering all the facets of the case the bench noted that the revenue did not pinpoint any defects in the books of accounts, quantitative records available with the assessee, cash book and invoice presented in the assessment proceedings. Merely the assessee unable to record the mobile number it does not make the sale as non-genuine and we find support of this contention from the decision of the jurisdictional high court in the case of Smt. Harshil Chordia Vs. ITO reported at 298 ITR 349 (Rajasthan-HC)(supra) we do not find any merits on the finding of the ld. AO and that of the ld. CIT(A) in disbelieving the sales recorded by the assessee as the sales is in course of business is duly supported by the invoice and delivery of the goods recorded in the books of the assessee. The cash is generated out of the stock already on record and thus the sales made by the assessee company is genuine sales recorded in the books of account. All the details required to prove the sales made by the assessee were provided in the assessment proceedings. Now on the part of the receipt of the cash from the customer the jurisdiction high court 34 MS. PRIYANKA SURANA VS ITO, WARD 5(1), JAIPUR judgement in the case of Smt. Harshil Chordia Vs. ITO reported at 298 ITR 349 (Rajasthan-HC) held that So far as question No. 2 is concerned, apparently when the Tribunal has found as a fact that the assessee was receiving money from the customers in hands against the payment on delivery of the vehicles on receipt from the dealer the question of such amount standing in the books of account of the assessee would not attract section 68 because the cash deposits becomes self-explanatory and such amounts were received by the assessee from the customers against which the delivery of the vehicle was made to the customers. The question of sustaining the addition of Rs. 6,98,000 would not arise. We, therefore, hold that no addition was required to be made in respect of Rs. 6,98,000, which was found to be the cash receipts from the customers and against which delivery of vehicle was made to them.