ACIT., CENTRAL CIRCLE , ALIGARH V. M/S BELON WALE DINESH JEWELLERS PVT. LTD., ALIGARH

ITA 22/AGR/2022

AI Insights

The case involves M/s Belon Wale Dinesh Jewellers P. Ltd., a company engaged in the trading of jewelry, which faced scrutiny during the assessment year 2017-18 for substantial cash deposits made during the demonetization period in India. The Assessing Officer (AO) suspected these deposits to be unaccounted income, leading to additions under section 68 of the Income Tax Act. The assessee contested these additions, providing extensive documentation to substantiate the legitimacy of the deposits and the corresponding sales. The Commissioner of Income Tax (Appeals) and subsequently the Tribunal found in favor of the assessee, noting that the AO's conclusions were based on statistical inferences rather than concrete evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473839 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Other Referred Cases: Dhirajlal Girdahrilal vs CIT, ACIT vs. Hirapanna Jewelers, CIT vs. Anandha Metal Corp.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN KUMAR YADAV LD.
• Assessee Lawyers: PANKAJ GARGH LD
• Keywords: Business income; Bogus
• Section: 143(3); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, AGRA BEFORE HON’BLE SHRI SATBEER SINGH GODARA, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं. / ITA No.22/Agr/2022 (िनधाŊरणवषŊ / Assessment Year: 2017-18) ACIT (Central Circle) Aligarh बनाम/ Vs. M/s Belon Wale Dinesh Jewellers P. Ltd. 17-19 Indira Market Railway Raod Aligarh – 202 001 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AAFCB-4333-H (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Dr. Arun Kumar Yadav – Ld. CIT-DR ŮȑथŎकीओरसे/Respondent by : Shri Pankaj Gargh (Advocate) – Ld. AR सुनवाईकीतारीख/Date of Hearing : 19-02-2025 घोषणाकीतारीख /Date of Pronouncement : 28-03-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year (AY) 2017-18 arises out of an order of Commissioner of Income Tax (Appeals), Kanpur [CIT(A)] dated 23-12-2021 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 31-12-2019. Having heard vehement arguments of both the sides and upon perusal of case records, the appeal is disposed-off as under. During the year, the assessee being resident corporate assessee is stated to be engaged in trading of jewellery. Assessment Proceedings 2. During assessment proceedings, the assessee was required to explain the source of cash deposited by it during demonetization period. The assessee furnished various documents and replies. It was observed 2 by Ld. AO that the assessee deposited huge cash of Rs.757.87 Lacs on a single day which was not commensurate with the past trends. The sales also revealed abnormal trend in comparison to earlier year. The Ld. AO, drawing various statistical inferences, alleged that the cash deposit was nothing but unaccounted cash by issuing false sales invoices on 08- 11-2016. Going by the ratio for October and November, 2015, the assessee was in the habit of holding cash-in-hand to the extent of 1.225 times of cash sales. Applying the same ratio to October and November, 2016, Ld. AO worked out excess cash sales of Rs.803.76 Lacs and added the same to the income of the assessee u/s 68 r.w.s. 1155BE. Quite clearly, the working of Ld. AO was based on a statistical formula. Appellate Proceedings 3.1 During appellate proceedings, the assessee assailed the impugned additions by way of elaborate written submissions which are already extracted in the impugned order. The assessee also relied on various case laws holding the field. It was submitted by the assessee that it had filed all the relevant documents viz. Audited financial statements, confirmed copy of accounts of sundry creditors, monthly cash sales, copy of cash books, sales ledger, stock register, details of purchase / sales, bill books, VAT returns etc. which duly substantiate the sales made by the assessee and the additions made by Ld. AO was on mere presumption and suspicion. The substantial adjudication of Ld. CIT(A) is contained in para 6.4 onwards. 3.2 The Ld. CIT(A) noted that books of accounts were duly furnished by the assessee which were accepted by Ld. AO without any qualification. The books were duly audited by a Chartered Accountant without any adverse remarks. The purchase and sales bills were produced and the 3 valuation of stock was accepted. The books were not rejected u/s 145(3). The cash sales as allegedly termed as bogus sales already stood included in total sales and profit arising there-from stood included in the profits already disclosed by the assessee in the return of income. The entire sales on 08-11-2016 was out of stock-in-hand. The opening stock as on 01-04-2016 was Rs.17.23 Crores and Ld. AO could not establish that alleged cash sales were made out of books or out of stock which was not available with the assessee. The assessee submitted plethora of documents to support its claim. The sales in October, 2016 were more due to festival season. The abnormal sales on 08-11-2016 were due to announcement of demonetization and panic situation as prevailing at that point of time. The excess cash sales were estimated by Ld. AO on the basis of a statistical formula which run contrary to the decision of Hon’ble Apex Court in Dhirajlal Girdahrilal vs CIT (26 ITR 736). The Ld. AO merely relied on circumstantial evidences and it was based on considerations not borne from records. It is settled position of law that the suspicion howsoever strong could not be allowed to replace evidences. Further, each of the sales invoices was less than the prescribed limit of Rs.2 Lacs and in such a case, the assessee was under no legal obligation to maintain the record of purchasers in respect of such sales. Applying the ratio of various decisions including the decision of Vizag Tribunal in the case of ACIT vs. Hirapanna Jewelers (128 Taxmann.com 291), the impugned addition so made u/s 68 was deleted against which the revenue is in further appeal before us. Our findings and Adjudication 4. From the records, it emerges that the assessee is engaged in trading of jewellery. Considering the volume of business, the assessee is 4 required to maintain proper books of accounts as well as quantitative details of stock etc. which, in fact, has been done by the assessee. The assessee’s books of accounts have duly been audited under law and the same were furnished to Ld. AO during the course of assessment proceedings. The books have not been rejected and no single effect has been pointed out in the same. The assessee has duly furnished stock register as well as cash book which would show that corresponding entry of purchase and sales was made therein and the same were duly recorded in the books of accounts. The assessee had sufficient closing cash-in-hand as on 08-11-2016 to make impugned deposits in the bank accounts. The sales are supported by sales invoices. The sales made by the assessee were duly credited in the Profit & Loss Account and sales were duly reflected in the VAT returns. A separate addition thereof without reducing purchases would amount to double taxation which is impermissible. 5. It could also be seen that the assessee has furnished plethora of documents in support of its submissions. The same include Tax Audit Report, Audited financial statements, monthly cash sales for this year, copy of cash book, sales ledger along with copies of bills / invoices, stock register, details of sales, month wise sales, purchase and stock details, returns filed under VAT disclosing such sales and various other documents. The cash-in-hand as on 08-11-2016 was sufficient enough to make the impugned deposits. On all these facts, it could very well be said that the assessee had duly discharged the initial onus of establishing the source of cash deposit and the onus was on revenue to controvert the same. However, this onus, in our considered opinion, has remained to be discharged by the revenue by bringing on record adverse 5 evidences to disprove the claim of the assessee. The Ld. AO has merely applied a mathematical formula to arrive at alleged excess sales without there being any single evidence to show that any of the sales as made by the assessee was not genuine. The said estimation, in our considered opinion, is wholly erroneous and the same could not be sustained in the eyes of law. The Hon’ble High Court of Madras in the case of CIT vs. Anandha Metal Corp. (152 Taxman 300) has held that return accepted by commercial tax department is binding on Income Tax Authorities. 6. In the light of all these facts and circumstances of the case, we would hold that Ld. CIT(A) has clinched the issue in correct respective and arrived at correct conclusion. Therefore, we find no reason to interfere in the impugned order. 7. The appeal stands dismissed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (SATBEER SINGH GODARA) (MANOJ KUMAR AGGARWAL) Ɋाियक सद˟ /JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER Dated: आदेश की Ůितिलिप अŤेिषत / Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT AGRA "