SWARAJYA LAKSHMI KOTA, Repalle V. Income Tax Officer, Ward-1, Tenali

ITA 102/VIZ/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0870 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-09-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 12-05-2022
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 144; 143(3); 143(2); 69A; 43; 73

Judgement Text

आयकरअपीलȣयअͬधकरण, ͪवशाखापटणमपीठ, ͪवशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM Įीदुåवूǽआरएलरेɬडी, ÛयाǓयकसदèयएवंĮीएसबालाकृçणन, लेखासदèयकेसम¢ BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./ I.T.A. No.102/Viz/2022 (Ǔनधा[रणवष[/ Assessment Year :2017-18) Swarajya Lakshmi Kota, Repalle, Guntur District, Andhra Pradesh. PAN: ACMPL 3592 N Vs. Income Tax Officer, Ward-1, Tenali, Guntur District, Andhra Pradesh. (अपीलाथȸ/ Appellant) (Ĥ×यथȸ/ Respondent) अपीलाथȸकȧओरसे/ Appellant by : Sri Siva Ram Kumar, CA Ĥ×याथȸकȧओरसे/ Respondent by : Sri ON Hari Prasada Rao, Sr. AR सुनवाईकȧतारȣख/ Date of Hearing : 06/09/2022 घोषणाकȧतारȣख/Date of Pronouncement : 13/10/2022 O R D E R PERS. BALAKRISHNAN, Accountant Member : This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [Ld. CIT (A)] vide DIN & Order No. ITBA/NFAC/S/250/2021-22/1041160480(1), dated 21/3/2022 2 arising out of the order passed U/s. 143(3) of the Income Tax Act, 1961 [the Act] for the AY 2017-18. 2. Briefly stated the facts of the case are that the assessee is an individual filed her return of income for the AY 2017-18 on 5/11/2017 admitting a total taxable income of Rs. 4,78,290/-. Assessee carries on the business in jewellery in the name and style of “Sri Lakshmi Jewellery”. The case was selected for scrutiny with respect to cash deposits during the demonetization period. Accordingly, notice u/s. 143(2) was issued and served on 10/08/2019. Subsequently, notice U/s. 142(1) dated 17/1/2019 and another notice on 16/09/2019 were issued and served on the assessee to comply with the notice on 20/09/2019. The assessee sought time for another two weeks and one more opportunity was provided on 19/10/2019 fixing the date of compliance on or before 23/10/2019. The Ld. AO finally gave one more opportunity on 2/11/2019 to comply with it by 7/11/2019. Since no compliance by the assessee to any of the notices issued during the course of assessment proceedings, a show cause notice was issued on 18/11/2019 fixing the date of hearing on 22/11/2019 requesting the assessee to show cause as to why the cash deposits made by her in her bank account during 3 the FY 2016-17 should not be taxed U/s. 69A of the Act and complete the assessment U/s. 144 of the Act. In response to the show cause notice, the assessee furnished e-reply on 22/11/2019. The assessee further submitted that the cash deposits in the bank accounts were made out of the business funds available arising out of the sales of gold bullion. The assessee further submitted that she also declared the sales in VAT returns. Considering the replies furnished by the assessee, the final opportunity was again provided by issue of summons u/s. 131 of the Act to attend on 3/12/2019 to produce the information as specified thereon. The assessee has failed to respond to the summons also. The Ld. AO considering the replies furnished through email, passed the assessment order U/s. 144 of the Act but erroneously mentioned in the assessment order U/s. 143(3) of the Act. The Ld. AO rejected the submissions and made addition of Rs. 73 lakhs being cash deposits during demonetization period U/s. 69A of the Act. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A), National Faceless Appeal Centre, Delhi. 3. The Ld. CIT(A), NFAC, Delhi observed that the assessee failed to prove that the transactions are genuine and has failed to 4 produce any other details that they were recorded in the books of account of the assessee and dismissed the appeal and confirmed the order of the Ld. AO. Aggrieved by the order of the Ld. CIT(A), the assessee carried the matter to Tribunal. 4. The assessee raised the following grounds of appeal: “1. On the facts and in the circumstan ces of the case an d in l aw, the Ld. CIT (A) erred in l aw and facts, in confirming the addi tion of Rs. 73 l akhs representing cash deposits in the appell ant’s b ank account in the demonetization period, which were expl ained and proved as sou rced from the s al es effected by her. 2. Ld. CIT(A) h as not adverte d to nor discussed the detail ed wri tten submissions fil ed by the appe ll ant on 4/3/2022 an d 5/3/2022 wi th seven sets of attachments in passing his order. 3. On the facts and in the circumstan ces of the case an d in l aw, the Ld. CIT( A) erred in confirming the addi tion of Rs. 73 l akhs when the books of account, the net profit from books, the VAT returns showing the purchases and s al es effected – were accepted rejecting onl y the cash deposits of sal es made by the appell ant in her bank account, which is opposed to l aw. Ld. CIT(A) ought to have considered the case l aws ci ted in support of the said proposition. 4. The Ld. CIT(A) erred in not considering the written submissions wherein the judgments rel ied on by the Ld. AO we re dis tinguished to show th at they we re not appl icabl e to her case. 5. The Ld. CIT(A) erred in not considering th at the appell an t discharged her primary onus of proving the sources for the cash deposits and in confirming the addition made by the Ld. AO wi thout disproving the appell ant’ s expl an ation. 6. The Ld. CIT(A) erred in confirming the addi tion made b y the Ld. AO merel y on suspicion and not founded on any evidence. 5 7. On the facts and in the circumstan ces of the case an d in l aw, the Ld. CIT(A) erred in l aw an d f acts, in confirming the addi tion wi thout considering the binding precedent of the jurisdiction al ITAT, cite d before him, in the appell ant’s favour on simil ar f acts. 8. Your appell ant craves l e ave to add an d or amend any of the above grounds of appe al .” 5. The Ld. Authorized Representative [Ld. AR] argued that the assessee was trading in bullion till the AY 2016-17. During the AY 2017-18 due to various circumstances the assessee could not carry the trade between April to October, 2016. The Ld. AR further submitted that the assessee started continuing her business from November, 2016 onwards and has regularly discharged the VAT obligations. The Ld. AR further submitted that the purchases of the bullion were made through the bank accounts and the copies of the purchases are submitted in the paper book. The Ld. AR further submitted that the copies of VAT returns also submitted in the paper book to prove the genuinity of the transactions. The Ld. AR relied on the following case laws: (i) ITAT Visakhapatnam Bench decision in the case of ACIT vs. Hirappana Jewellers reported in [2021] 128 taxmann.com 291 (Visakhapatnam – Trib.). 6 (ii) ITAT Bangalore Bench decision in the case of Anantpur Kalpana vs. ITO reported in [2022] 138 taxmann.com 141 (Bangalore – Trib.) 6. The Ld. AR placed heavy reliance on the jurisdictional Tribunal decision in the case of ITO vs. Sri Tatiparti Satyanarayana in ITA No. 76/Viz/2021,dated 16/03/2022. Per contra, the Ld. DR submitted that the assessee is a bullion trader and not a retail trader. The Ld. DR further submitted that the assessee has not made any sales from April to October, 2016 and hence the sales shown by the assessee during the demonetization period cannot be considered as genuine sales. The Ld. DR relied on the orders of the Ld. Revenue Authorities. 7. We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. The only issue raised by the assessee in its grounds of appeal is with respect to addition of Rs. 73 lakhs being the cash deposits made during the demonetization period. Admittedly, the Ld. AR failed to produce the books of accounts before the Ld. Revenue Authorities or before us with respect to sales made during the demonetization period. Inspite of several 7 opportunities by the Ld. AO, the assessee has not complied with the notices in presenting her case before the Ld. AO. Further, it is admitted by the Ld. AR that the cash deposits arose out of the cash sales of bullion which were property disclosed in the VAT returns. We find in the paper book page 38, the assessee has not made any sales for the period April-2016 to October-2016. The assessee has made a huge sales of Rs. 78,02,226/- in the month of November-2016 and claimed the sales were genuine. From the trading account submitted by the assessee which is placed at page 43 of the paper book, we find that there is no opening stock to the assessee for effecting the sales during November-2016. The assessee claimed to have purchased Gold Bullion from various parties as detailed in page 63 of the paper book to effect the sales made during the demonetization period. However, the assessee failed to produce the sales invoice copies supporting the sales effected by the assessee. It is imperative to note here the assessee is not a retail trader to claim that the sales have been made through cash. The assessee has also submitted in her paper book that the payments have been made by cheques to the suppliers. Reliance placed by the Ld. AR on the case of ACIT vs. Hirappana Jewellers (supra) is distinguishable on facts that the assessee in this case is a retail trader in jewellery and has made 8 regular sales during the entire year. Similarly, reliance place by the assessee in the case of ITO vs. Sri Tatiparti Satyanarayana (supra) is distinguishable on facts that the assessee had sufficient opening balance of cash to deposit during the demonetization period. Hence, both the cases cannot be applied to the instant appeal. Even the assessee’s claim that she is maintaining books of account as per clause 11(b) of Form 3CD nothing is produced before us or before the Ld. Revenue Authorities to substantiate the claim of cash sales. 8. We observed from the way that the sales have taken place from November-2016 onwards that the assessee has attempted to record his unaccounted cash in the form sale of bullion. It is seen from the bank book submitted in the paper book page 20 that the assessee does not have a sufficient bank balance to make the purchase of bullion. The assessee deposited cash and then made purchase of bullion which is contradicting the claim of the assessee that the cash deposits are made out of cash sales. Bank book place at page 20 of the paper books extracted herein below for reference: 9 9. In view of the above findings, we are of the considered view that there is no error in the order of the Ld. Revenue Authorities 10 and therefore no interference is required in the order of the Ld. CIT(A). 10. In the result, appeal of the assessee is dismissed. Pronounced in the open Court on the 13 th October , 2022. Sd/- Sd/- (दुåवूǽआर.एलरेɬडी) (एसबालाकृçणन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) ÛयाǓयकसदèय/JUDICIAL MEMBER लेखासदèय/ACCOUNTANT MEMBER Dated : 13/10/2022 OKK - SPS आदेशकȧĤǓतͧलͪपअĒेͪषत/Copy of the order forwarded to:- 1. Ǔनधा[ǐरती/ The Assessee–Swarajya Lakshmi Kota, 11-16-146/1, 9 th Ward, Main Road, Railpet, Repalle, Guntur District, Andhra Pradesh-522265. 2. राजèव/The Revenue – Income Tax Officer, Ward-1, Aayakar Bhavan, Ramalingeswara Peta, Tenali, Guntur District. 3. The Principal Commissioner of Income Tax, 4. आयकरआयुÈत (अपील)/ The Commissioner of Income Tax (A), National Faceless Appeal Centre [NFAC], Delhi. 5. ͪवभागीयĤǓतǓनͬध, आयकरअपीलȣयअͬधकरण, ͪवशाखापटणम/ DR,ITAT, Visakhapatnam 6. गाड[फ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam