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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
This is the appeal preferred by the Revenue and Cross-Objection by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 29/12/2023for the AY 2017-18.
The facts in brief are that the assessee filed the original return of income on 28.10.2017, declaring total income as Nil. The case of the assessee was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS). The statutory notices were duly issued and served upon the assessee along with questionnaire. The assessee is manufacturer and dealer in jewellery and precious stones. The AO on the basis of details/ evidences furnished during the course of assessment proceedings observed that the assessee has several bank accounts in which assessee has deposited huge cash . Accordingly, the assessee was issued show cause notice which was replied by the assessee submitting the details of month wise cash sales and also details of deposits into the bank accounts of current year vis a vis of preceding year. The assessee submitted before the ld. AO that cash sales between 1st November to 8th November, 2015, were ₹22,000/-, whereas total cash sales for the period of 1st November ,2016 to 8th November,2016 were ₹3,60,50,926/-. It was also mentioned that the cash sales between 9th November,2016 to 13th November,2016, were ₹15,000/-. Finally, the ld. AO rejected the reply of the assessee and treated the same as unexplained cash credit and added to the total income of the assessee u/s 68 of the Act by making an addition of ₹3,79,37,000/- in the assessment framed u/s 143 of the Act dated 13.12.2019.
“Observation and Decision: Grounds No. 1 to 4: Relates to the addition of Rs.3,79,37,000/- made by the AO in the assessment order. The appellant has submitted that the AO has disregarded its submissions and overlooking the facts and evidence submitted by them. It is also contended that the addition made merely on presumption ignoring the said evidences. In support of its claim the appellant has submitted the evidences in the form of VAT Return, Sales Bills, Copy of Stock Register, Copy of Bank Statement and also Certificate from Bank to justify its case. I have carefully considered the submission of the appellant (supra) and the aforesaid grounds are adjudicated as under.
1. AO has made such addition primarily on the grounds that:- 2. Cash sales during such period are abnormally high in comparison to earlier period.
3. Cash sales were made at Delhi whereas such deposit has happened in Jaipur.
Around 17% of sales are in cash and the same is irrational.
Whereas the appellant’s submission is mainly that :- Cash so deposited was required to be deposited in Home Branch of the concerned Bank i.e. HDFC Bank whereas in Delhi it had only margin a/c, with HDFC Bank and Bank as per it’s internal requirement asked it to deposit at Jaipur Branch which customers’ Home Branch a/c. Appellant submitted relevant bank certificate as well.
Such sales were already part of sales credited in the Profit & Loss account and the addition thereof u/s 68 without reducing it from the same and without rejecting books of account would amount to double taxation which is not permissible.
The Ld.AO has disputed the genuineness of sales related to the period from 01.11.2016 to 08.11.2016 i.e. just prior to demonetization, but never rejected the stock register and to disbelieve the sales. The Ld. AO should’ve proved that appellant did not sufficient stock since sales and stock are inseparable. Hence sales cannot be doubted only because it is abnormally high during a particular period.
3. Ld. AO merely made statistical comparison with previous period without bringing any evidence as to back dating of entries or evidence of bogus purchase etc.
The ld. AR on the other hand, submitted that the assessee has in fact made the sales during the aforesaid period, which were duly recorded in the books of account and the sale bills along with PANs, addresses of the buyers were also available and placed before the authorities below. Similarly, the purchases and sales register were also duly maintained which also evidenced the said sales by the assessee during the demonetization period. The ld. AR submitted that the ld. AO has accepted the stock register, purchase register, sales register and has not rejected the books of accounts. The AR even submitted that the VAT returns filed by the assessee were also accepted by the excise department meaning thereby that the sales made during the above said period were accepted. The ld. AR finally prayed that since the assessee has genuinely made these cash sales which were banked into HDFC Bank, Jaipur and reflected in the books of account which were duly audited and accepted by the ld. AO, then it is not open to the ld. AO to pick a figure of cash sales and made the addition u/s 68 of the Act without rejecting the books of accounts as it would amount to double taxation of the same amount. In defense of his arguments the ld. AR relied on the decisions of co-ordinate Benches in the case of ACIT vs. M/s Ramlal Jewellers Pvt. Ltd. in vide order dated 26.07.2023 and ITO Vs. Zee Bangles Pvt. Ltd. in vide order dated 18.07.2023. The ld. AR therefore, prayed that the appeal of the Revenue may kindly be dismissed by upholding the order of ld. CIT (A).
“10. We have heard both the parties at length and also perused the relevant finding given in the impugned orders as well as the documents submitted in the paper book. The case of the ld. DR is that, here in this case it is clearly evident that immediately after the demonetization assessee had shown inflated cash sales and also made deposits in the bank account which is completely abnormal compared to the earlier year and also subsequent year. Apart from that, assessee could not substantiate cash sales made to different parties and some of them could not be identified. Even those persons who responded to notice u/s. 133(6) could not substantiate the source of funds. Therefore, the cash sales made during the demonetization period cannot be accepted and ld. AO has rightly taxed the cash deposits u/s.68.
“6. Heard both the sides and perused the material on record. The assessee is engaged in the business of gold bullion and gold jewellery on wholesale and retail basis. During the year under consideration the assessee has made total sale less VAT at Rs.241,79,75,146/-. Out of total sale of more than Rs.241 crores, the assessee has reported cash sale to the amount of Rs.832,34,729/- which was about 3.44% of the total sale effected during the year under consideration. The AO has treated the cash sale amount deposited in the bank account as undisclosed amount deposited during demonetization period and added to its total income u/s 69A of the Act. The assessee has filed sale and purchase bill like sale register, purchase register, sales and purchase invoices, stock register etc. The assessee has maintained the books of account in the form of computerized ledger, cash book, bank book, sale register, purchase register and stock book. The assessee also explained that the cash deposited was out of sales/counter sales of less than of Rs.2,00,000/- from one person/party wherein in detail of address supported with documentary evidences and PAN were not required to be maintained by the assessee company. The assessee has maintained the complete detail along with PAN of the transaction exceeding Rs.2,00,000/- as per the detail placed on the paper book at page no. 73 to 76 of the paper book. The assessee has also placed before the authority below the month wise purchase details along with the purchase register from April 2016 to March 2017 out of which the assessee has made month wise sale from April 2016 to March 2017. The assessee has also placed on record as per page 63 of the paper book monthly stock statement showing month wise opening stock, in word because of purchases and outward because of sale along with closing stock. The assessee has substantiated by giving evidences on the basis of its books of accounts, stock register, and other relevant record that amount deposited by assessee was out of the sale proceeds. We have also noticed as mentioned in the finding of ld. CIT(A) that during the immediately preceding assessment year 2016-17 assessee has made total sales of Rs.169.29 crores out of which Rs.6.95 crores was made in cash and during the assessment year 2017-18 out of total sale of Rs.241.79
Coming to CO of the assessee, as we have already dismissed the appeal of Revenue, hence, the CO of the assessee becomes infructuous and is accordingly dismissed.
In the result, the appeal of the Revenue as well as CO of the assessee are dismissed.
Order pronounced in the open court on 16.12.2024.