ITO, WARD-1(2)(1), AHMEDABAD, AHMEDABAD vs. ALPA JAYMIN SONI, AHMEDABAD
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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Department and the Cross Objection filed the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order 16.08.2023 passed for Assessment Year 2017-18.
The Department has taken the following grounds of appeal:-
“1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,60,86,000/- so made u/s 69A on account of cash deposits in SBN currency during demonetization period? 2. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. 3. It is, therefore, prayed that the order of Ld. CIT(A) may be set aside and that of the Assessing Officer be restored.”
ITA No.812/Ahd/2023 & C.O. No. 18/Ahd/2023 ITO vs. Alpa Jaymin Soni Asst.Year –2017-18 - 2–
At the outset, the Counsel for the assessee submitted that the assessee shall not be pressing the Cross Objection filed by her. Accordingly, the Cross Objection filed by the assessee are dismissed as not pressed.
Now we shall come to the Department’s appeal in ITA No. 812/Ahd/2023
The brief facts of the case are that the assessee is an individual and e- filed his return of income on 15.09.2017 declaring total income of Rs.6,12,720/-. Subsequently, the case was selected for scrutiny under CASS for complete scrutiny. The assessee is doing business under the name and style of M/s. A. J. Sales and is a trader of Diamond Jewellery, Gold Bar, Gold ornaments with Pearl & Diamond and Silver Bar. During the course of assessment proceedings, the Ld. Assessing Officer observed that on perusal of bank statement for the year under consideration and the assossee's reply dated 10.09.2016, it is seen that the assessee has deposited cash amounting to Rs. 37,59,000/-in bank account no. 3061989433 held with Central Bank of India and Rs.80,36,000/- in bank account No. 8311586558 held with Kotak Mahindra Bank and Rs. 43.00,000/- in bank account no. 912020001828524 held with AXIS Bank during the demonetization period i.e. 09.11.2016 to 30.12.2016. On analysis of cash book filed by the assessee, the Ld. Assessing Officer observed that the assessee is engaged in the business of retail purchase and sale of jewellery/bullion and the assessee has made huge cash deposits during the demonetization period i.e. 09.11.2016 to 30.12.2016. The assessee's case was selected for complete scrutiny for the reason to verify the source of the large amount of cash deposit made during the demonetization period. To verify the source of the said cash deposit, details were called for from the assessee and the assessee stated before the Ld. Assessing Officer that the source of the cash deposit is cash received from customers in lieu of cash sales
ITA No.812/Ahd/2023 & C.O. No. 18/Ahd/2023 ITO vs. Alpa Jaymin Soni Asst.Year –2017-18 - 3–
before the demonetization. On verification of cash books for the F.Y.2016-17, the Ld. Assessing Officer observed that the assessee is running its business since so many years and part of cash sales is very less i.e. average around Rs.6 lacs to Rs.7 lacs per month. However, on perusal of cash books for the month of October-2016, it is observed that the assessee has shown huge cash receipts amounting to Rs.2,08,70,001/- in October 2016 and Rs.71,39,389/- during 01.11.2016 to 08.11.2016 from customers in lieu of cash sales, which is an abnormal trend in assessee's line of business since the cash sales as compared to other months of this financial year increased by an abnormal percentage and the assessee has shown the bogus cash sales to justify the cash deposit made during the demonetization period. The Ld. Assessing Officer observed that the assessee has shown all the cash sales below Rs.2 lacs so as there is no need to provide the details of customers PAN, correspondence address of customers etc. to the Income Tax Department. Therefore, the Ld. Assessing Officer was of the view that the assessee has routed their unaccounted money in cash in the garb of claiming bogus purchase and sales and made tax evasion. The Ld. Assessing Officer further noted that in the assessee's case, it is surprising that the assessee has no idea about their customers identity and other details. It is not an acceptable fact as the assessee has sold jewellery/ornaments/bullion to a number of customers in cash at a range of Rs.0.7 lacs to Rs. 1 lacs and was not having any details about the said customers. This proves that the assessee has created these documents of fake sales as an afterthought to prove the source of the cash deposit made during the demonetization. Accordingly, the Assessing Officer made an addition of Rs. 1,60, 86,000/- on account of unexplained money under section 69A of the Act.
ITA No.812/Ahd/2023 & C.O. No. 18/Ahd/2023 ITO vs. Alpa Jaymin Soni Asst.Year –2017-18 - 4–
In appeal, the assessee submitted the below chart giving details of cash deposited by the assessee in various bank account held by him during the demonetisation period:
Sr. Name of Bank and Account No. Cash Deposited during Cash Deposited during No. 09.11.2016 to 09.11.2016 to 30.12.2016 30.12.2016 (Actual Rs.) (Rs. as per Assessment Order) 1 Central Bank of India A/c No. 32,50,000 37,50,000 3061989433 2. Kotak Mahindra Bank A/c No. 72,36,000 80,36,000 8311586558 3. Axis Bank A/c No. 34,00,000 43,00,000 912020001828524 Total 1,38,86,000 1,60,86,000(**) (**) The Learned Assessing Officer included cash deposit for the date 08.11.2016 also.
The assessee further submitted that the Assessing Officer also included cash deposited for the date of 08.11.2016, while making addition in the hands of the assessee. Further, the assessee submitted that the books of the assessee are audited as per the Income Tax Act, the books of the assessee are audited under VAT and such sales in cash is a routine practice of the industry as well as in the assessee’s business also. To support the same, the assessee provided a chart giving details of figures of cash sales and cash deposits for the previous years as well. The same produced at page 10 of the order passed by Ld. CIT(Appeals):
Sr. No. Financial Year Cash Sales (Rs.) Cash Deposit (Rs.) 1 2014-2015 12,12,92,078 12,22,17,000 2 2015-16 16,22,08,871 16,12,71,000 3 2016-17 2,98,59,503 2,94,01,000
Sr. Description Amount deposited in Amount Amount No. AY 2015-16 (Rs.) deposited in AY deposited in AY 2016-17 (Rs.) 2017-18 (Rs.) 1 Total Cash Deposit in 5,24,87,000 12,05,05,000 1,55,15,000 bank from 1st April to 8th November 2 Total Cash Deposit I 2,98,80,000 2,30,31,000 1,38,86,000
ITA No.812/Ahd/2023 & C.O. No. 18/Ahd/2023 ITO vs. Alpa Jaymin Soni Asst.Year –2017-18 - 5–
bank from 9th November to 31st December 3 Total Cash Deposit I 3,98,50,000 1,77,35,000 NIL bank from 1st January to 31st March Total 12,22,17,000 16,12,71,000 2,94,01,000
Accordingly, the assessee submitted before CIT(A) that from the comparative figures, it may be observed that cash sales and cash deposit is not an abnormal transaction is in assessee’s line of business and also it is not an afterthought of the assessee as mentioned by the Assessing Officer in the assessment order.
Considering the details filed by the assessee before Ld. CIT(Appeals), he allowed the appeal of the assessee with the following observations:
“6. I have gone through the assessment order, submission made by the assessee then and now. It was noticed that no discrepancy was pointed out by the AO in the statutory records, as maintained by appellant for sales-tax department and audited books of accounts etc. Once the AO accepted cash book, opening stock, closing stock, purchases, sundry debtors, sundry creditors, GP Ratio, expenses etc., cash deposits out of cash in hand could not be added u/s 69A of the Act. The AO also could not eclectically contradict comparative figures of cash sales etc. pertaining to earlier and current years, presented by the appellant to explain impugned cash deposits. 7. Consequently, I do not find addition u/s 69A of the Act reasonable merely because of some routine observation of suspicious nature, such as making sales of numerous bills in the span of short space of time, non-availability of KYC documents for sales, non-writing of tag of the jewellery to the sale bills etc. 8. In result, the appeal succeeds. Addition made by the AO is deleted.”
The Department is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals), allowing the appeal of the assessee. The Ld. DR placed reliance on the observations made by the Assessing Officer in the assessment order. The Learned DR submitted that notices under section 133 (6) were issued to various parties from whom purchases were made by the assessee, but the parties did not respond to notices issued by the Department. Further, in
ITA No.812/Ahd/2023 & C.O. No. 18/Ahd/2023 ITO vs. Alpa Jaymin Soni Asst.Year –2017-18 - 6–
respect of cash sales, the assessee had deliberately kept the figure of cash sales below Rs. 2 lakhs so as to avoid giving details of PAN, addresses etc. of various parties to whom the cash sales were made. Accordingly, the Learned DR submitted that looking into the instant facts, Ld. CIT(Appeals) has erred in facts and in law in allowing the appeal of the assessee.
In response, the Counsel for the assessee drew our attention to page 10 of Ld. CIT(Appeals) order. The Counsel for the assessee submitted that in the immediately to preceding financial years, both the cash sales and cash deposits were far in excess of the cash sales and cash deposits made by the assessee during the impugned year under consideration. Further, the Counsel for the assessee pointed out that even if one were to take the period of demonetisation from 9th November 2016 to 31st December, 2016, even then from the chart reproduced at page 10 of the order passed by Ld. CIT(Appeals), it is evident that the figure of cash deposit for the impugned year under consideration was much lower for the same period, as compared to the previous two assessment years. Accordingly, it was submitted that in the instant case, looking into the instant facts, Ld. CIT(Appeals) has correctly observed that the aforesaid transaction is not an afterthought, and has correctly allowed the appeal of the assessee.
We have heard the rival contentions and perused the material on record. On going to the facts of the instant case, we are of the considered view that the Ld. CIT(Appeals) has not erred in facts and in law in allowing the appeal of the assessee, looking into the facts of the assessee’s case. From the table produced at page 10 of the order passed by Ld. CIT(Appeals), it is evident that both the cash sales and cash deposits in the preceding two assessment years, were far in excess of the cash sales and cash deposits made by the assessee
ITA No.812/Ahd/2023 & C.O. No. 18/Ahd/2023 ITO vs. Alpa Jaymin Soni Asst.Year –2017-18 - 7–
during the impugned year under consideration for the same period under consdieration. Further, even if one were to take the period of demonetisation from 9th November to 31st December, 2016, from the chart reproduced at page 10 of the order passed by Ld. CIT(Appeals), it is evident that the figure of cash deposit was much lower for the same period during the impugned year under consideration, as compared to the previous two assessment years. Further, the Counsel for the assessee submitted that the books of accounts of the assessee are duly audited under the Income Tax Act and are audited under the VAT laws as well. The Assessing Officer has not rejected books of accounts of the assessee and has found no infirmity in the same as well. Accordingly, looking into the instant facts, we are of the considered view that Ld. CIT(Appeals) has not erred in facts and in law in allowing the appeal of the assessee.
In the result, the appeal of the Department is dismissed and the cross objection filed by the assessee are dismissed as not pressed.
This Order pronounced in Open Court on 24/07/2024
Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 24/07/2024 TANMAY, Sr. PS TRUE COPY आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad
