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Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI ANADEE NATH MISSHRA & SHRI SUBHASH MALGURIA
This appeal has been filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 28.12.2023 for the assessment year 2017-18.
In this appeal, the assessee has raised the following grounds: - “Because on the facts and in the circumstances of the case the order of Ld. CIT(A) as also assessment is bad in law and deserves to be quashed being illegal. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad in law in confirming the addition u/s 69A without considering the submission and evidences of the assessee hence liable to be deleted. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) confirming the additions by Ld. Assessing Officer is bad in law as the Ld. Assessing Officer considered increased sale by 5% during dhanteras whereby there were Page 2 of 6 two showroms at the time of time of demonetization hence sales were increased. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) confirming the addition by Ld. Assessing Officer is further bad in law as increase in sales was justified and never been manipulated also the same has been accepted by VAT authorities hence addition deserves to be deleted. Because on the facts and in the circumstances of the case Ld. Assessing Officer rejected audited books of account u/s 145(3) of Income Tax Act, 1961 without giving any reason whereas entire sales made during demonetization was duly recorded in books hence the entire additions are bad in law and be deleted. Because on the facts and in the circumstances of the case the order of Assessment has been passed in absolute violation of the principles of Natural Justice, without providing adequate opportunity of being heard and therefore deserves to be declared a nullity.”
None appeared on behalf of the Assessee. However, finding that the matter can be decided in the absence of the Assessee/on behalf of the assessee, we have decided to dispose of the appeal after hearing the ld. CIT (D.R.) and after perusing the material on record.
Brief facts of the case are that the assessee is private company and carried out business of retail trade of gold PR, gold jewelery etc. The assessee filed its return of income for the AY. 2017-18 on 29/10/2017, declaring a total income of Rs.2,69,930/-. The Assessing Officer (“AO”) making an addition of Rs.64,00,000/- on account of unexplained money u/s 69A of the Income Tax Act, 1961 (hereinafter “the Act”) and assessing the total income of the assessee of Rs.66,69,930/-. The relevant portion of the assessment order reproduced as under: - “4. The assessee replies and documents furnished during the assessment proceedings are duly considered. From the analysis of various information furnished by the assessee certain interesting facts emerge. The assessee has made total sales of Rs.3,17,08,346/- during the year which gives average monthly sales of Rs.26,42,362/-. In comparison to this Page 3 of 6 assessee has made total sales of Rs.1,59,47,870/- during the months of October and November, 2016. This is 50.3% of the total sales. The assessee has claimed that he has made sales of 20-30% on a single day of Dhanteras. However no evidence has been produced by the assessee in support of this claim. No comparative figure for the earlier years has been furnished despite specifically asked during the assessment proceedings which may show that such bumper sales were also made during earlier years. It is true that sales increases on certain festivals and marriage season but it is not believable that almost 1/3rd sales were made only on a single day. The assessee has not furnished any cogent proof to justify this claim. its average sales excluding the sates for the month of October and November is only Rs.15,13,352/- were as the sales made in these two month is Rs.1,59,47,870/- which is more than 10 times the average sales. No prudent person will accept the assessee’s claim that it has made sales as high as six times of average monthly sales in a single day. From all these figure it can easily be concluded that assessee has manipulated its sales in the month of October and November,2016 to generate cash balance available before the date of demonetization and to justify the source of huge cash deposited in the bank in SBNs just after the demonetization i.e. 08‘ November,2016. Assessee had not furnished any plausible explanation regarding such huge increase in the sales in only two months of October and November,2016. It has claimed to have a business model of taking advances from persons and delivering them Gold ornaments door to door after 10-12 months. However no evidence have been furnished in this regard and no explanation is given regarding the fact that on which price people will purchase ornaments after given payment in advance especially in a situation when Gold prices fluctuate day to day. The onus to proof its various ambitious and interesting claim were on the assessee. However instead of furnishing documentary evidences in support its claim, assessee has made irrelevant and journalized submission in its reply in which did not through any light on the genuineness of assessee's claim. in view of this situation, I am left with no alternative but to conclude that the assessee company has manipulated sales to generate cash in its books of account and deposited the same in its bank account during the demonetization period. The reply of the assessee has been duly examined but not tenable on the light of observation made above. From the above discussion, it is clear that assessee company has claimed to have received from third parties SBN of Rs.1,09,67,000/- during the demonetization period on account of sales and got the same to be deposited in the bank account no. account 9037000100001601, Karnataka Bank, Bareilly. Thus, the explanation offered by the assessee company to justify SBN deposited of Rs.1,09,67,000/- in the aforesaid bank account is not acceptable. The assessee company has failed to furnish complete name & address, invoice of sales, item wise details of stock holding and stock sold. As discussed Page 4 of 6 above the unaccounted cash deposited in SBN work out to Rs.80,00,000/- by going with trend of cash deposit, trend of stock holding, trend of purchase after demonetization in SBN. However, the claim of the assessee that he has made higher sale on Dhanteras can not be ruled out altogether and going by the trend on jewelry industry the Dhanteras day sale is estimated at 5% of the total sale of the entire year. in order to meet the end of justice an increase of 5% of total sale of the year is estimated to have been made on account of Dhanteras i.e Rs.15,85,417/- (5% of Rs.3,17,08,346/-) or say Rs.16,00,000/-. Further, the assessee company has failed to produce its books of account like cash book, ledger and supporting documents/invoice etc to justify sales. It is therefore treated that the assessee company has not maintained books of account and the same is rejected u/s 145(3) of the IT. Act, 1961. Under such circumstances, | am left with no option but to consider cash deposited during demonetization amounting to Rs.64,00,000/- (8000000 less 1600000) as unexplained money u/s 69A of the I.T. Act, 1961 in respect of which assessee company failed to offer any explanation about the nature and source of acquisition of the money. Accordingly, the amount of Rs.64,00,000/- is added u/s 69A of the Act to the income declared by the assessee company in its ITR. This income is taxable at the rate of 60% (plus surcharge @ 25% on such tax and cess, as applicable) as per provisions of section 115BBE of the Act, 1961. Addition: Rs.64,00,000/.”
In the appeal before the Ld. CIT(A), NFAC, despite various notices being issued, no reply/submission was filed on behalf of the assessee. Accordingly, vide impugned ex-parte order dated 12/01/2024, the Ld. CIT(A), NFAC dismissed the appeal filed by the assessee. The assessee is in appeal before us against the aforesaid impugned order of Ld. CIT(A).
The ld. DR, per contra, relying on the orders of the authorities below, submitted that the ld. CIT(A), NFAC afforded various opportunities to the assessee to represent its case, but the assessee failed to contest its case before the Ld. CIT(A), NFAC. Therefore, the Ld. CIT(A), NFAC was justified in dismissing the appeal preferred by the assessee and no interference is called for in his order.
Page 5 of 6 7. We have heard the Ld. Departmental Representative (“DR”) considered the rival submissions and perused the material available on record. At the outset, the Ld. DR submitted that assessee has not appeared before Ld. CIT(A) as well as the AO at the time of assessment proceedings even several notices were sent to assessee on the given address. Subsequently, the assessee filed the appeal before Ld. CIT(A) and even before him, assessee was not appeared before Ld. CIT(A) after sending notices on the given address in Form 36, and the Assessing Officer has passed detailed and speaking order in respect of the various additions made. The assessee has not brought any material during the appellate proceedings in ITAT or, earlier, during appellate proceedings in the order of the Ld. CIT(A). As discussed elaborately, sufficient opportunities have been provided and the assessee chose not to furnish evidences. To conclude on the above discussion, in the instance case, the assessee has failed to discharge the initial onus of explaining the source and nature of the assessee u/s 69A r.w.s. 115BBE of the Act. Neither side has brought any materials for our consideration to persuade us to interfere with the orders passed by the Assessing Officer and the Ld. CIT(A), therefore, the orders of Ld. CIT(A)/Assessing Officer is upheld.
In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on 22/08/2024.