DCIT, CENTRAL CIRCLE -17 , NEW DELHI V. DIAMOND TRADEX COMPANY LTD , NEW DELHI

ITA 2630/DEL/2022

AI Insights

The case involves the Revenue's appeal against the order of the CIT(A) which had deleted additions made by the Assessing Officer following a search and seizure operation under section 132 of the Income Tax Act at the premises of Diamond Tradex Company Ltd. The additions pertained to disallowances of expenses, unsecured loans, sundry creditors, and unaccounted cash sales. The Tribunal examined the evidence and arguments presented by both the Revenue and the assessee, ultimately agreeing with the CIT(A)'s findings and dismissing the Revenue's appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 43607 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-07-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 01-11-2022
• Other Referred Cases: CIT Vs. Kailash Jewellery House, ACIT Vs. Heera Panna Jewellers
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T JAMES SINGSON
• Assessee Lawyers: NIRBHAY MEHTA
• Keywords: Business income; Additional evidence; Search and seizure

Judgement Text

"I.T.A. No. 2630/Del/2022 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER आ.अ.सं/.I.T.A No.2630/Del/2022 िनधा\tरणवष\t/Assessment Year: 2017-18 DCIT, Central Circle-17, Room No.244A, 2nd Floor, ARA Central E-2, Jhandewalan, New Delhi. बनाम Vs. Diamond Tradex Company Ltd. 2656, 2nd Floor, Ajmal Khan Road, Karol Bagh, Bank Street, Central, New Delhi. PAN No.AACCD3460E अपीलाथ\u0012 Appellant \u0014\u0015यथ\u0012/Respondent Assessee by Shri Nirbhay Mehta, Adv. Revenue by Shri T James Singson, CIT DR सुनवाईक तारीख/ Date of hearing: 29.07.2024 उ\u0010ोषणाक तारीख/Pronouncement on 25.10.2024 आदेश /O R D E R PER C.N. PRASAD, J.M. This appeal is filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-27, New Delhi dated 18.08.2022 for the AY 2017-18. The Revenue raised the following grounds: - I.T.A. No. 2630/Del/2022 2 2. Briefly stated the facts are that the assessee company is in the business of trading in diamonds. A search and seizure operation u/s 132 of the Act was conducted at various residential and business premises of the assessee by the Investigation Wing of the Department on 14.12.2016. The assessee filed its return of income declaring return of income on 30.03.2018 declaring income of Rs.8,47,55,540/-. The assessment was completed on 24.12.2018 determining the income of the assessee at Rs.46,01,57,480/- I.T.A. No. 2630/Del/2022 3 observing that the assessee could not attend the hearings on the dates issue. The additions have been made on account of disallowance of expenses, unsecured loans, sundry creditors, cash, unaccounted cash sales. 3. On appeal the Ld.CIT(A) deleted the additions made on account of cash deposit of Rs.16.29 crores, cash sales to the tune of Rs.1.75 crores. 4. Aggrieved by the order of the Ld.CIT(A) the Revenue filed appeal before the Tribunal. 5. Before us the Ld. DR strongly supported the orders of the Assessing Officer (AO) and on the other hand, the Ld. Counsel for the assessee supported the order of the Ld.CIT(Appeals). 6. We observe that during the assessment proceedings the assessee failed to appear before the AO and the AO made the addition of Rs.16,23,99,500/- on account of cash deposited during demonetization. The assessee company during appellate proceedings filed additional evidences before the Ld.CIT(Appeals) under Rule 46A and the Ld.CIT(A) duly accepted and considered the additional evidences filed before him. The Ld.CIT(A) deleted the addition on the ground that the AO has accepted the stock as per I.T.A. No. 2630/Del/2022 4 the books of accounts while arriving the undisclosed stock and accepted the profit earned thereof. Therefore, the Ld.CIT(A) held that the AO cannot blow hot and cold and thus, the addition was deleted. We have gone through the entire material placed before us. The data of the total sales, cash sales and cash deposits in the bank account are as under: 7. The comparative data of cash sales to total sales is also examined and the same is tabulated as under: - 8. From the examination of the above data the following emanates: I.T.A. No. 2630/Del/2022 5 9. In the case of CIT Vs. Kailash Jewellery House in ITA No.613/2010 the Hon’ble Delhi High Court held as under: - I.T.A. No. 2630/Del/2022 6 10. Similar issue has been considered by the coordinate bench of the Tribunal in the case of ACIT Vs. Heera Panna Jewellers in ITA No.253/Viz/2020 and the Tribunal held as under: - I.T.A. No. 2630/Del/2022 7 I.T.A. No. 2630/Del/2022 8 I.T.A. No. 2630/Del/2022 9 I.T.A. No. 2630/Del/2022 10 I.T.A. No. 2630/Del/2022 11 I.T.A. No. 2630/Del/2022 12 11. From the above, it can be held that as per data the assessee had sufficient stock which is being sold in cash regularly and the stock available and the sales in cash during the year has not been in dispute. All the cash sales have duly been reflected in the regular books of account. The cash sales do not show any abnormal trend when compared month-wise cash sales during the period of three years. The allegations of higher cash sales is neutralized by the same level of cash sales in the month of April, May, August and it is a fact on record that the VAT returns have been filed even before the date of search. It is not in dispute that the AO has accepted the I.T.A. No. 2630/Del/2022 13 stock as per books of account while arriving the undisclosed stock and applied same GP as declared by the assessee while calculating the profit element on the sales which have already been part of the books of account. No defects have been identified in the books of accounts and no rationale has been given by the AO. 12. Therefore, keeping in view the entire facts and circumstances in this case. We hold that the Ld.CIT(A) gave a finding rightly that the assessee company had been making regular cash sales in preceding as well as succeeding assessment years. Furthermore, the assessee company is also depositing all these cash sales in its regular bank accounts. 13. In the result, the order of the Ld.CIT(Appeals) is affirmed on this issue and the grounds 1 to 5 raised by the Revenue are dismissed. 14. Coming to ground nos. 6 & 7 i.e. in respect of unaccounted cash sales. The AO made addition of Rs.1.19 crores on the basis of seized material. The AO treated the amounts mentioned in the seized material as unaccounted sales. The Ld.CIT(A) duly considered the remand report and determined gross profit at 8.51% on the unaccounted sales. The ratio of the Ld.CIT(A) was that when the assessee sold goods/jewellery which is unaccounted there must I.T.A. No. 2630/Del/2022 14 have been unaccounted purchases also. Hence, the profit derived by the assessee on the transaction is only to be taxed. We find the ratio of the Ld.CIT(A) is acceptable as no sales can be affected without corresponding purchases. Thus, we decline to interfere with the order of the Ld.CIT(A) on this issue and reject ground no.6 & 7 of the Revenue. 15. Coming to ground no. 8 of the grounds of appeal of the Revenue which is in respect of unsecured loans of Rs.11,08,000/- taken from M/s Annie Apparels Pvt. Ltd. We observe that the AO made addition owning to non-compliance of the assessee on this issue. The Ld.CIT(A) has called for a remand report from the AO and found that the loan has been duly repaid on 01.07.2018. Since the amounts have been repaid and even in the remand report no adverse finding has been given by the AO and since no other contention has been brought to our notice, we decline to interfere with the order of the Ld.CIT(A) on this issue and the grounds raised by the Revenue on this issue is rejected. I.T.A. No. 2630/Del/2022 15 16. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on 25/10/2024 Sd/- Sd/- (DR. BRR KUMAR) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 25/10/2024 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi "