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Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH
Before: SHRI A.D. JAIN & DR KRINWANT SAHAY
आयकर अपील�य अ�धकरण,च�डीगढ़ �यायपीठ, च�डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘A’, CHANDIGARH BEFORE SHRI A.D. JAIN, VICE PRESIDENT & DR KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ �नधा�रण वष� / Assessment Year : 2017-18 Gujranwala Jewels, Vs. The ITO, बनाम Ambala Whole Sale Cloth Ward-2, Market, Ambala Kalka Chowk, Ambala �थायी लेखा सं./PAN No: AAPFG8259G अपीलाथ� ./ Appellant ��यथ� / Respondent ( Virtual Hearing ) �नधा�रती क� ओर से/Assessee by : Sh. Rohit Goel, C.A. राज�व क� ओर से/ Revenue by : Smt. Amanpreet Kaur, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 06.05.2024 उदघोषणा क� तार�ख/Date of Pronouncement : 07.05.2024 आदेश/Order Per Dr. Krinwant Sahay, A.M.:
The appeal in this case has been filed by the Assessee against the order dated 17.10.2023 of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, on the following grounds: -
1. That the learned CIT(A)(NFAC) has erred in law and on facts in confirming the actions of learned AO of treating cash of Rs. 60,08,625/- deposited out of cash sales as 700-Chd-2023 – Gujranwala Jewels, Ambala City 2 unexplained income u/s 69A r.w. section 115BBE of the Act.
2. That the learned CIT(A) has erred in law and on facts in confirming the actions of AO of treating cash sales of Rs. 60,08,625/- as unexplained income without rejecting the audited books of accounts.
3. That the learned CIT(A) has erred in law and on facts in confirming the actions of AO of treating cash sales of Rs. 60,08,625/- as unexplained income ignoring that no discrepancy in the books of accounts and other accounting records were found.
4. That the learned CIT(A) has erred in law and on facts in confirming the actions of AO of treating cash sales of Rs. 60,08,625/- as higher simply on his whims and fancies.
5. That the appellant craves leave to add, alter, amend or to substitute the above grounds of appeal either before or at the time of hearing of case.
Brief facts of the case are that the Assessee is a partnership firm engaged in the purchase and sale of jewellery. It started its operation on 28.10.2016. During the assessment proceedings, the Assessing Officer found that during assessment year 2017-18, the Assessee had deposited cash of Rs. 91,00,000/- in its bank account between 9.11.2016 to 31.12.2016. Later on, it was brought to the notice of the Assessing Officer that out of Rs. 91,00,000/- cash deposited, Rs. 87,00,000/- was out of cash balance of Rs. 87,94,908/- on 8.11.2016 as per books of account. The balance cash of Rs. 4,00,000/-
700-Chd-2023 – Gujranwala Jewels, Ambala City 3 deposited during this period of 50 days was said to be out of cash sales in that period. The Assessee also explained that cash was deposited out of cash sales accounted in books. During the assessment proceedings all books of account such as sales register, Quantitative Trading account, cash book, audited balance sheet, VAT return, stock register and complete set of sales bills from 28.10.2016 to 8.11.2016 were produced before the Assessing Officer. It was also brought on record that the total sales as per produced books of account were accepted by the VAT authorities also without any modifications. However, the Assessing Officer prepared a comparative chart of sales of different years and allowed cash balance of only Rs. 18,08,967/- and made an addition of Rs. 72,91,033/- u/s 69A of the Income Tax Act, 1961 (in short 'the Act’) out of the total cash deposited of Rs. 91,00,000/-. Aggrieved by the order of the Assessing Officer, the Assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) also considered the chart prepared by the Assessing Officer and finally gave his finding as under:-
“4.3. Considering the all facts of the case and the fact that inauguration, Dhanteras and Deepawali was in the last week of October, 2016. I am of the view that sales may have been some higher in that period and therefore, in place of benefit of Rs. 17,17,592/- for the period 28.10.2016 to 08.11.2016 is taken as Rs.
700-Chd-2023 – Gujranwala Jewels, Ambala City 4 30,00,000/-. Thus the appellant gets a relief of Rs.12,82,408/-.”
Aggrieved with the order of the ld. CIT(A), the appeal has been filed before us. During the course of hearing, the ld. Counsel of the Assessee submitted as under:
a. Complete Books of accounts: Cash Book, Ledger, Stock Ledger, Sale/Purchase Bills and vouchers were maintained. The copy of sales bills was filed before the Assessing Officer which contains the name and address of each customer and entire sales were made to identified persons. b. Books of accounts were not rejected. c. Cash deposit post-demonetization was out of cash in hand on 8-11-2016 accumulated out of sales. d. There was sufficient stock available with assessee to make the sales and stock register was filed before AO along with complete sale bills. e. No evidence of any back dating of Sales was found by the lower authorities. f. Assessee was regular in filing VAT returns and the same were never revised. g. Cash Transaction Statement required by Income Tax Department was filed immediately post demonetization and nothing adverse is ever pointed out.
700-Chd-2023 – Gujranwala Jewels, Ambala City 5 h. Sales Tax department had accepted the Sales as per books of accounts for AY 2017-18 and copy of Assessment order was also placed.
In fact, in this case purchases are not doubted and neither closing stock is doubted. Purchases, sales and the Stock are interlinked and inseparable. Every purchase increases the stock and every sale decreases the stock. A.O./ CIT(A) accepted the opening stock, Purchases and Closing Stock but at the same time doubted or sales which is not justified. Moreover, receipt of cash represented by Sales booked as revenue in trading account cannot be considered as Unexplained Investment u/s 69A.
The ld. Counsel of the Assessee in his submissions has also brought on record some case laws in support of his arguments, which are as under:
NO ESTIMATION OF INCOME WITHOUT REJECTION OF BOOKS
6. The basic principle in the law relating to income-tax is that if there is no challenge to the transaction represented by the entries in books, then it is not open to the other side to contend that what is shown by the entries is not the real state of affairs. Kind attention is invited to : A. Supreme Court in the case of Mehta Parikh and Company vs. CIT (1956) 30 ITR 181 (SC)
700-Chd-2023 – Gujranwala Jewels, Ambala City 6 "To put the matter in a nut-shell, the accounts of the appellant have been accepted by the Tribunal as genuine, and it is impossible to say, having regard to the cash balance as shown therein, that the notes in question could not have been included therein."
B. P&H HC - M/s S.V. Auto Industries v. CIT, of 1999 "When the books of accounts including stock register etc. have neither been rejected nor are doubted, accounts could not be bye passed merely on the whims and fancies of the authorities."
C. ITAT Chandigarh "B" Bench in case of Madan Lai Aggarwal HUF vs DCIT Central Circle-2, Chandigarh, ITA 28/CHANDI/2023 dt 8.12.2023 "No defect has been pointed out by the AO in terms of availability of stock or in any of the documentation so submitted by the assessee or in the books of accounts. Therefore, merely the fact that certain cash deposits have been made by the assessee during the period of demonization and such deposits are on a higher side considering the past year figures cannot be basis to hold the explanation so made by the assessee as unsustainable and treat the cash sales as bogus and bringing the cash deposits to tax u/s 68 of the Act."
D. Similar ratios were also laid down in: a. [2022] 98 ITR (Trib) 419 (ITAT [Chand]) The DCIT Central Circle, Ludhiana Vs. M/s Roop Fashin and (Vice-Versa).
700-Chd-2023 – Gujranwala Jewels, Ambala City 7 b. 2023 (3) TMI 755 - ITAT Chandigarh, Shri Gulshan Kumar Vs. Dy. CIT, Ludhiana, dated 31.10.2022. c. ITAT Chandigarh [2022] 97 ITR (Trib) 389 (ITAT [Chand]) Smt. Tripta Rani Vs. The ACIT, Ludhiana. ITA No. 135/Chd/2021 dated 13-6-2022.
The ld. DR, relied on the orders of the Assessing Officer as well as that of the ld. CIT(A).
We have considered the arguments put forward by both the parties and perused the material available on record. We find that during the assessment proceedings, all the vouchers of cash sales were produced before the Assessing Officer. The Assessing Officer has not pointed out any lacuna or shortcoming in those vouchers nor any doubt has been raised regarding genuineness of any cash sales on such vouchers. The Assessing Officer has also accepted the corresponding entries in sale book and cash book. The stock register, sales and purchase registers etc. have also been accepted by the Assessing Officer without bringing any discrepancy therein. Complete set of audited books of account and auditor’s report were also accepted without pointing out any shortcoming. Therefore, we are of the view that once the complete set of books of account have been produced before the Assessing Officer and no question has been raised regarding genuineness of the entries therein by the Assessing Officer,
700-Chd-2023 – Gujranwala Jewels, Ambala City 8 there is no point in making disallowance of cash deposit based on the same set of books of account. The ld. CIT(A) has also not brought anything on record to question the correctness or genuineness of vouchers, ledgers, sales book, purchase book, stock register etc. of the Assessee, therefore, his action of giving partial relief to the Assessee is purely on estimate basis. We have also considered various case laws brought on record by the ld. Counsel of the Assessee. The Hon'ble jurisdictional High Court of Punjab & Haryana in of 1999 dated February 21, 2014 in the case of ‘M/s S.V. Auto Industries, Phagwara Vs. CIT, Jalandhar and Another’, has given a clear finding on this issue.
We have also considered the case law of the Hon'ble Supreme Court in the case of ‘Mehta Parikh and Company Vs. CIT’, (1956) 30 ITR 181 (SC). In both these orders, higher authorities have clearly and categorically brought out a case that any cash deposit or cash sales cannot be doubted unless short comings are pointed out in the books of account and unless all accounts, as such are rejected. Herein this case, we find that not only all the vouchers of cash sales, cash register and other ledgers and registers in the complete set of books of account have been accepted by both the Assessing Officer and CIT(A), authorities below have failed to bring any discrepancy whatsoever in the balance of cash as on 8.11.2016 and cash sales during the de-
700-Chd-2023 – Gujranwala Jewels, Ambala City 9 monetization period. Once, everything has been accepted by the Assessing Officer and the ld. CIT(A), there is no reason to make addition on estimate basis by the Assessing Officer and its partial confirmation by the ld. CIT(A). Accordingly, the appeal of the Assessee is allowed.
In the result, the appeal of the Assessee is allowed.
Order pronounced on 07.05.2024.