SHRI OM PRAKASH KARNANI, JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4, JAIPUR

ITA 1022/JPR/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 6324 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 07-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRISH BEDI
• Keywords: Rejection of books of accounts; Presumptive income; Business income; Opportunity of being heard; Reasonable cause; Corroborative evidences
• Section: 44AD; 153A; 234B; 69A; 13; 153; 153C; 131; 68; 15

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES, JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA- @ ITA NO. 1022/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2017-18 SHRI OM PRAKASH KARNANI S-1, KHATIPURA ROAD, GOVIND NAGAR JHOTWARA, JAIPUR CUKE VS. ACIT, CIRCLE-04, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ALMPK4407C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. ASHOK KUMAR GUPTA JKTLO DH VKSJ LS @ REVENUE BY : SH. AMRISH BEDI LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 09/11/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 28/01/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-4, JAIPUR DATED 24.06.2019 WHEREIN THE ASSES SEE HAS TAKEN THE FOLLOWING REVISED GROUNDS OF APPEAL:- 1. THE LEARNED CIT (A) AS WELL AS LD. AO HAS GROSS LY ERRED IN LAW AND FACTS IN MAKING THE ASSESSMENT UNDER SECTION 15 3A FOR THE ASSESSMENT YEAR WHILE FOR THE ASSESSMENT YEAR 2011- 12, 2012-13, 2013- 14, 2014-15, 2015-16 AND 2016-17 FROM INITIATION TO COMPLETION OF ASSESSMENT PROCEEDINGS HAVE BEEN CONDUCTED UNDER SE CTION 153C OF THE INCOME TAX ACT THEREFORE COMPLETE ASSESSMENT PROCEE DINGS FOR THE ASSESSMENT YEAR 2017-18 IS ILLEGAL AND VOID AB INIT IO. ITA NO. 1022/JP/2019 OM PRAKASH KARNANI, JAIPUR VS. ACIT, JAIPUR 2 2. THE LEARNED CIT (A) HAS GROSSLY ERRED IN LAW A ND FACTS IN CONFIRMING THE ASSESSMENT ORDER AS FRAMED BY LD. AO ON BEHALF OF ERRONEOUS FINDINGS THEREFORE DID NOT FOLLOW THE PROVISIONS OF SECTION 34 OF EVIDENCE ACT. (A) AS LD. AO HAS REJECTED THE BOOKS OF ACCOUNTS O F THE ASSESSEE THOUGH IT WAS REGULARLY KEPT IN THE COURSE OF BUSINESS, OR (B) WITHOUT ISSUING ANY SHOW CAUSE NOTICE FOR REJEC TING THE BOOKS OF ACCOUNTS, OR (C) WITHOUT MENTIONING THE REASONS OF REJECTION OF BOOKS OF ACCOUNT IN THE NOTICES, 3. THE LD. CIT(A) HAS GROSSLY ERRED IN LAW AND FAC TS IN CONFIRMING THE ASSESSMENT ORDER AS FRAMED BY LD. AO WHO MADE HUGE ADDITION WITHOUT ISSUING SHOW CAUSE NOTICE FOR MENTIONING SPECIFIC D EFECTS/REASONS THEREFORE IT HURTS FUNDAMENTAL RIGHTS OF THE ASSESS EE OF 'OPPORTUNITY OF BEING HEARD'. 4. THE LD. CIT(A) HAS GROSSLY ERRED IN LAW AND FAC TS IN CONFIRMING THE ASSESSMENT ORDER AS FRAMED BY LD. AO WHO INVOKED SE CTION 68 OF THE ACT AND MADE AN ADDITION UNDER SUCH SECTION AS UNDISCLO SED INCOME WHILE RIGHT FROM BEGINNING ASSESSEE HIMSELF CLAIMING THAT THE QUESTIONED CASH PERTAINED TO HIS BUSINESS AND PART OF HIS DAY TO DA Y BUSINESS TRANSACTION THEREFORE NOTHING WAS UNDISCLOSED AT THE TIME OF IN ITIATION OF THIS ASSESSMENT PROCEEDINGS. 5. THE LD. CIT (A) AS WELL AS LD. AO HAS GROSSLY ERRED IN LAW AND FACTS FOR NOT APPRECIATING THE BOOKS OF ACCOUNTS AND OTHE R RELATED DOCUMENTS OF THE ASSESSEE DULY SUBMITTED TO INVESTIGATION WING O F THE DEPARTMENT ON 02.11.2016 IN SUPPORT OF HIS CONTENTION. ITA NO. 1022/JP/2019 OM PRAKASH KARNANI, JAIPUR VS. ACIT, JAIPUR 3 6. THE LD. CIT (A) AS WELL AS LD. AO HAS GROSSLY ERRED IN LAW AND FACTS IN THE CIRCUMSTANCES OF THE CASE FOR NOT APPRECIATING THE AFFIDAVIT AS SUBMITTED BY THE ASSESSEE TO THE INVESTIGATION WING AS WELL AS BEFORE LD. AO. SUCH AFFIDAVIT CLEARED THE ASSESSEE'S CONTENTIO N ABOUT THE CASH SEIZED AS MADE BY THE DEPARTMENT. 7. THE LD. CIT (A) AS WELL AS LD. AO HAS GROSSLY ERRED FOR DENYING THE SUBMISSION OF THE ASSESSEE THAT HE HAD SUFFICIENT C ASH BALANCE AS ON 01.04.2016 BY SAYING THAT IN PRECEDING ITR THERE WA S NO CLOSING CASH BALANCE WHILE THAT ITR WAS FILED U/S 44AD VHERE THE RE IS NO PROVISION TO PROVIDE HIS PERSONAL CASH BALANCE. 8. THE CIT (A) HAS GROSSLY ERRED IN CONFIRMING TH E ACTION OF LD. AO FOR MAKING ADDITION FOR RS. 5,34,000/- WITHOUT APPRECIA TING AFFIDAVIT AS FILED BY OTHER PERSON IN SUPPORT OF ASSESSEE CONTENTION. 9. THE LD. CIT (A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF LD. AO IN MAKING THE ADDITION OF RS. 5,34,000/- WITHOUT AP PRECIATING SUFFICIENT CASH BALANCE AS AVAILABLE ON SAID DATE (I.E. 21.10. 2016) IN SUPPORT OF RS. 5,34,000/ - 10. THE LD. CIT (A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION AS MADE BY LD. AO ON THE BASIS OF FINDINGS THAT 'THERE IS N O WITHDRAWAL ENTRY IN THE CASH BOOK EITHER ON 20.10.2016 OR ON THE DAY OF SEI ZURE. ON THE DAY OF SEIZURE THE ENTRY IN CASH BOOK SHOWS INCOME TAX (AT TACHMENT).' BY IGNORING THE PRINCIPLE OF ACCOUNTING, 11. THE LD. CIT (A) AS WELL AS LD. AO HAS GROSSLY E RRED IN CHARGING INTEREST UNDER SECTION 234A & 234B OF I T ACT. ITA NO. 1022/JP/2019 OM PRAKASH KARNANI, JAIPUR VS. ACIT, JAIPUR 4 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT I N THIS CASE, ORIGINAL RETURN OF INCOME WAS FILED ON 26.03.2018 FOR THE A. Y 2017-18 IN THE OFFICE OF THE ITO, WARD-1(3), BIKANER DECLARING TOTAL INCO ME AT RS. 1,01,600/-. CASH OF RS. 5,34,000/- WAS SEIZED BY THE SHO POLICE STATION, SHASTRI NAGAR, JAIPUR, FROM THE POSSESSION OF SHRI NAND LAL JOSHI AND SHRI NAND LAL PANDYA ON 21.10.2016, WHICH BELONGS TO SHRI OM PRAKASH KARNANI. CONSEQUENTLY, A REQUISITION U/S 132A OF THE INCOME TAX ACT, WAS ISSUED BY THE PR. DIT(INV.), JAIPUR ON 27.10.2016 WHICH WAS E XECUTED ON 29.10.2016. THE CASH WAS SUBSEQUENTLY SEIZED ON 29. 10.2016. A SEARCH WAS CONDUCTED ON 29.10.2016 IN THE CASE OF SHRI NAN D LAL JOSHI AND SHRI NAND LAL PANDYA GROUP, JAIPUR TO WHICH THE ASSESSEE BELONGS. CASH OF RS. 5,34,000/- WERE FOUND AND SEIZED AS PER ANNEXURE PR EPARED DURING THE COURSE OF SEARCH. SHRI OM PRAKASH KARNANI ALSO IN H IS STATEMENT DATED 26.10.2016 RECORDED U/S 131 OF THE I.T. ACT, 1961 H AS ALSO ADMITTED THAT THE AFORESAID CASH BELONGS TO HIM. DURING THE ASSES SMENT PROCEEDING, A SHOW-CAUSE VIDE LETTER DT. 06/10/2018 WAS ISSUED TO THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH SEIZED. AFTER CONSIDERIN G THE SUBMISSION OF THE ASSESSEE, THE ASSESSING OFFICER HELD AS UNDER:- 9. THE ASSESSEE IS TRYING TO JUSTIFY THE CASH OF R S. 5,34,000/- SEIZED BY THE POLICE AUTHORITY FROM HIS PROPRIETORSHIP CONCERN M/S VINAYAK ENTERPRISES. IN SUPPORT OF HIS CLAIM HE FURNISHED COPY OF HIS BANK ACCOUNT AND CASH BOOK OF M/S VINAYAK ENTERPRISES. HE CLAIMED THE CASH FROM THE C ASH SALES FROM M/S VINAYAK ENTERPRISES. THE CASH BOOK FURNISH ED BY HIM SHOWING OPENING CASH BALANCE OF RS.5,95,790/- FOR W HICH NO SUPPORTING EVIDENCE HAS BEEN PRODUCED. THEREAFTER, THE CASH BOOK REFLECTING CASH SALES BUT THE ASSESSEE FAILED TO PRODUCED ANY SUPPORTING EVIDENCE SUCH AS SALE BILLS ETC TO S UBSTANTIATE THE ITA NO. 1022/JP/2019 OM PRAKASH KARNANI, JAIPUR VS. ACIT, JAIPUR 5 CASH SALES. MOREOVER, THE BOOKS OF THE ASSESSEE IS ALSO NOT AN AUDITED ONE AS HE FILED RETURN U/S 44AD ON THE BASI S OF PRESUMPTIVE INCOME, THEREFORE, WITHOUT ANY SUPPORTI NG DOCUMENTS IN RESPECT OF THE CLAIMED CASH SALES THE CASH BOOKS PRODUCED BY THE ASSESSEE CANNOT BE RELIED UPON. FURTHER, IT IS NOTED THAT THE ASSESSEE HAS SHOWN CA SH BALANCE AS ZERO IN RETURN OF INCOME FILED IN EARLIER YEARS PRIOR TO SEARCH. IN VIEW OF THE ABOVE, THE EXPLANATION OF THE ASSESS EE HAVE NOT FOUND TENABLE AS THE ASSESSEE HAS FAILED TO PRODUCE THE SOURCE OF THE ABOVE SAID CASH DEPOSIT. THEREFORE, IT IS HE LD THAT THE AMOUNT IN QUESTION IS THE ASSESSEE'S UNEXPLAINED MO NEY WITHIN THE MEANING OF SECTION 69A OF THE I.T. ACT, 1961. T HE PROVISIONS OF SECTION 115BBE ARE ALSO APPLICABLE IN THE CASE O F THE ASSESSEE FOR THE PURPOSE OF CHARGING OF RATE OF TAXES AS PER I.T. ACT, 1961 TO THE TOTAL INCOME OF THE ASSESSEE AND TAX IN TO B E CHARGED U/S 115BBE ON THE AMOUNT. ACCORDINGLY PENALTY PROCEEDIN G U/S 271AAB(1)(C) OF THE INCOME-TAX ACT, 1961 IS ALSO BE ING INITIATED. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND HIS FINDINGS ARE CONTAINED AT PA RA 5 AND 5.2 OF HIS ORDER WHICH IS REPRODUCED BELOW:- 5. I HAVE PERUSED THE WRITTEN SUBMISSIONS SUBMITTE D BY THE AR AND THE ORDER OF AO. I HAVE ALSO GONE THROUGH VARIO US JUDGMENTS CITED BY THE LD. A/R AND THOSE CONTAINED IN THE ORD ER OF AO. 5.2 I AM IN AGREEMENT WITH THE LD. AO IN MAKING AN ADDITION OF RS. 5,34,000/- AS THE CASH SEIZED U/S 132A OF THE A CT. THOUGH THE ITA NO. 1022/JP/2019 OM PRAKASH KARNANI, JAIPUR VS. ACIT, JAIPUR 6 LD. A/R SUBMITTED THAT HIS CASH BOOK HAS SUFFICIENT CASH BALANCE (OF RS. 5,69,878/- ON 20.10.2016 JUST A DAY BEFORE THE DATE ON WHICH THE CASH WAS SEIZED, THERE IS NO WITHDRAWAL ENTRY I N THE CASH BOOK EITHER ON 20.10.2016 OR ON THE DAY OF SEIZURE. ON T HE DAY OF SEIZURE THE ENTRY IN CASH BOOKS SHOWS INCOME TAX (ATTACHMEN T). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ADD ITION MADE BY THE LD. AO IS CONFIRMED. AGAINST THE SAID FINDING, THE ASSESSEE IS IN APPEAL BEFORE US. 4. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THE ASSESSEE SHRI OM PRAKASH KARNANI IS A REGULAR TAX PAYER AND ORIGINALLY FILED HIS ITR FOR THE ASSESSMENT YEAR 2017-18 ON 26.03.2018 BY DI SCLOSING THE INCOME FROM BUSINESS & PROFESSION AND INTEREST FROM SAVING BANK. THE MATTER IS TRIGGERED WITH A SEARCH AND SEIZER PROCEEDINGS AS C ONDUCTED BY POLICE THANA SHASTRI NAGAR UNDER THEIR TERRITORIAL JURISDI CTION UPON NAND LAL JOSHI AND NAND LAL PANDYA TWO PERSONS, WHO WERE CARRYING CASH OF RS. 5,34,000/- FROM ASSESSEES SHOP M/S VINAYAK ENTERPR ISES SITUATED AT F-1, JAI MATADI COMPLEX, SIKAR HOUSE, JAIPUR DATED 21.10 .2016. AFTER HAVING INTIMATION OF SUCH PROCEEDING, THE INCOME TAX DEPAR TMENT HAD TAKEN THE STATEMENT OF SUCH PERSONS UNDER SECTION 131 OF INCO ME TAX ACT, 1961 ON 22.10.2016 OF NAND LAL JOSHI AND OF NAND LAL PANDYA . IN ORDER TO VERIFY THE ANSWER OF NAND LAL JOSHI AS STATED IN QUESTION NO. 3 AND 4 OF SUCH STATEMENT AND QUESTION NO. 4 & 5 IN CASE OF NAND LA L PANDYA THE INCOME TAX DEPARTMENT HAD TAKEN THE STATEMENT OF OM PRAKAS H KARNANI ON 26.10.2016 AND OF RAJENDRA PRASAD KARNANI ON 27.10. 2016 AND AFTER HAVING ASSURED THE FACTS AND CIRCUMSTANCES REQUISIT ION HAD BEEN ISSUED AND PANCHNAMA HAD BEEN SUBMITTED BY THE INCOME TAX DEPARTMENT ON DATED 29.10.2016 IN THE NAME OF NAND LAL JOSHI AND NAND LAL PANDYA. ITA NO. 1022/JP/2019 OM PRAKASH KARNANI, JAIPUR VS. ACIT, JAIPUR 7 5. IN SUPPORT OF AFOREMENTIONED STATEMENTS AS GIVEN UNDER SECTION 131, NAND LAL JOSHI, NAND LAL PANDYA, RAJENDRA PRAS AD KARNANI AND OM PRAKASH KARNANI PRODUCED SEPARATE AFFIDAVITS ON 02. 11.2016 STATING THE SOURCE OF SUCH SEIZED CASH OF RS. 5,34,000/- ALONG WITH THE SOURCE DOCUMENTS COMPRISES CASH BOOK OF M/S VINAYAK ENTERP RISES (PROPRIETORSHIP FIRM OF OM PRAKASH KARNANI) UP DATE D UP TO 21.10.2016 SHOWING CASH BALANCE OF RS. 5,69,878/- AND IN SUPPO RT OF OPENING CASH BALANCE OF CASH BOOK OF VINAYAK ENTERPRISES AS ON 0 1.04.2016 WITH OTHER SUPPORTING DOCUMENTS VIZ. BANK BOOK, SHOP ACT REGIS TRATION OF VINAYAK ENTERPRISES AND OTHER DOCUMENTS IN SUPPORT OF CASH INTRODUCED IN CASH BOOK AND SUBMITTED COPIES OF INCOME TAX RETURN WITH COMPUTATION AND BALANCE SHEETS (AS AVAILABLE) OF OM PRAKASH KARNANI . BUT WITHOUT CONSIDERING THE FACTUAL CIRCUMSTANCES BASED ON UNCH ALLENGED MANIFESTLY EVIDENCES THE INCOME TAX DEPARTMENT HAD FINISHED TH EIR SEARCH AND SEIZER PROCEEDINGS UPON NAND LAL JOSHI AND NAND LAL PANDYA AND STARTED ASSESSMENT PROCEEDINGS ACCORDINGLY UNDER SECTION 15 3A UPON THEM AND UNDER SECTION 153C UPON OM PRAKASH KARNANI TREATED AS OTHER PERSON. THEREFORE, NECESSARY NOTICES WERE ISSUED UNDER SECT ION 153 OF INCOME TAX ACT ON NAND LAL JOSHI, NAND LAL PANDYA AND OM P RAKASH KARNANI IN DUE COURSE AND SAME WERE REPLIED TIME TO TIME BY TH E APPELLANT, DESIRED INFORMATION, DOCUMENTS AND COMPLETE BOOKS OF ACCOUN TS WERE PRODUCED BEFORE INVESTIGATION WING AS WELL AS THE LD. AO, CA SE DISCUSSED AND ASSESSMENT MADE BY MAKING ADDITIONS OF RS. 534000/- IN THE HANDS OF OM PRAKASH KARNANI BY TREATED AS UNDISCLOSED INCOME U/ S 68 OF IT ACT. FURTHER ASSESSMENT COMPLETED UPON NAND LAL JOSHI AN D NAND LAL PANDYA AS ON RETURNED INCOME ACCEPTED. BEING AGGRIEVED WIT H THE ORDER OF LD. AO, ASSESSE FILED APPEAL BEFORE LD. CIT(A) AND THE ACTI ON OF LD. AO WAS CONFIRMED BY LD. CIT(A) AND THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE THE TRIBUNAL. ITA NO. 1022/JP/2019 OM PRAKASH KARNANI, JAIPUR VS. ACIT, JAIPUR 8 6. IT WAS SUBMITTED THAT THE ASSESSMENT PROCEEDINGS WERE CONDUCTED FOR THE ASSESSMENT YEAR FROM A.Y. 2011-12 TO 2016-1 7 IN PURSUANCE TO NOTICE AS ISSUED UNDER SECTION153C OF THE INCOME TA X ACT, 1961 WHILE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2017 -18 HAD BEEN CONDUCTED UNDER SECTION 153A (ACCORDING TO THE SHOW CAUSE NOTICE ISSUED ON 13.11.2018) OF THE INCOME TAX ACT, 1961 WHICH SH OULD HAVE BEEN CONDUCTED UNDER SECTION 153C IN CONSONANCE WITH THE OTHER ASSESSMENT YEARS THEREFORE ASSESSMENT PROCEEDINGS FOR THE AY 2 017-18 IS BAD IN LAW AND LIABLE TO BE NULL AND VOID. IN SUPPORT, RELIANC E WAS PLACED ON DECISION OF CO-ORDINATE BENCHS IN THE MATTER OF SH. NAVRATT AN KOTHARI VS. ACIT (425/JP/17 DT. 31.12.2017). 7. IT WAS FURTHER SUBMITTED THAT THE BOOKS OF ACCOU NTS WHICH ARE KEPT IN REGULAR COURSE OF BUSINESS SHOULD BE TREATED AS AN EVIDENCE. WE WOULD LIKE TO QUOTE THE PROVISION OF SECTION 34 OF EVIDEN CE ACT; 34. ENTRIES IN BOOKS OF ACCOUNTS INCLUDING THOSE MAINTAINED IN AN ELECTRONIC FORM], WHEN RELEVANT. [ENTRIES IN BOOKS OF ACCOUNTS, INCLUDING THOSE MAINTAINED IN AN ELECTRONIC FORM] , REGULARLY KEPT IN THE COURSE OF BUSINESS, ARE REL EVANT WHENEVER THEY REFER TO A MATTER INTO WHICH THE COUR T HAS TO INQUIRE, BUT SUCH STATEMENTS SHALL NOT ALONE BE SUFFICIENT EVIDE NCE TO CHARGE ANY PERSON WITH LIABILITY. 8. IT IS VERY MUCH APPRECIABLE THAT THE QUESTIONED CASH OF RS. 5,34,000/- WAS SUFFICIENTLY MENTIONED IN CASH BOOKS AS BEING MAINTAINED REGULARLY DURING THE COURSE OF DAY TO DAY BUSINESS TRANSACTION AND SUBMITTED BEFORE EACH AND EVERY STAGE OF PROCEEDING S VIZ. INVESTIGATION WING ON DATED 02.11.2016, DURING THE COURSE OF ASSE SSMENT PROCEEDINGS AND BEFORE LD. CIT(A) DURING FIRST APPEAL, IGNORING THEIR AUTHENTICITY AND RELEVANT PROVISION OF EVIDENCE ACT THEY JUST ADDED THIS SUM OF RS. ITA NO. 1022/JP/2019 OM PRAKASH KARNANI, JAIPUR VS. ACIT, JAIPUR 9 5,34,000/- INTO ASSESSEES TOTAL INCOME. IT IS ALSO IMPORTANT TO MENTION HERE THAT THE AUTHORITIES BELOW DID NOT SUBSTANTIAT E SUCH CASH BOOK AND WITH HAVING PRE CONCEIVED NOTION JUST IGNORED SUCH STRONG PIECE OF EVIDENCE AND VIOLATE THE JUSTICE OF ADMINISTRATION. RELIANCE IS PLACED ON JAIN DIARY MATTER WHERE THE HONORABLE APEX COURT ST RONGLY BELIEVED THE AUTHENTICITY OF BOOKS OF ACCOUNT WHICH ARE KEPT IN REGULAR COURSE OF DAY TO DAY BUSINESS TRANSACTION. 9. IT WAS FURTHER SUBMITTED THAT WITHOUT ISSUING SP ECIFIC SHOW CAUSE NOTICE, NO ADDITION CAN BE SUSTAINABLE. CERTAINLY, THIS ACT OF AUTHORITIES BELOW LEAD TO VIOLATION OF FUNDAMENTAL RIGHT OF NAT URAL JUSTICE. THE LD. AO WITHOUT ISSUING SPECIFIC SHOW CAUSE NOTICE AND WITH OUT MENTIONING SPECIFIC DEFECT IN SHOW CAUSE NOTICE JUST IGNORED THE BOOKS OF ACCOUNTS AND ADDED A HUGE ADDITION IN TOTAL INCOME OF THE ASSESSEE CAN NOT BE SUSTAINED UNDER LAW. 10. REGARDING GROUND NO. 5 TO 9, IT WAS SUBMITTED A S UNDER:- (A) THE LD. AO ALLEGED FOR REJECTING THE SUCH CASH BOOKS THAT OPENING CASH BALANCE AS SHOWN IN CASH BOOKS AS ON 01.04.201 6 FOR RS. 5,95,790/- IS NOT SUPPORTED BY AN EVIDENCE, AS THE CASH IS GEN ERATED THROUGH CASH SALES BUT NO SALES BILLS WERE PRODUCED BEFORE THE T HEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HE FURTHER ALLEGED THAT CLO SING CASH BALANCE AS SHOWN BY THE ASSESSE IN HIS PRECEDING TWO PREVIOUS YEARS INCOME TAX RETURN WAS ZERO. (B) THE COMPLETE FINDINGS OF LD. AO IS BASED ON SUR MISES AND CONJECTURE AND VAGUE AS ASSESSEE SUBMITTED THEIR CA SH BOOKS SINCE INCEPTION OF SEARCH PROCEEDINGS WITH ALL LEDGERS AN D BANK STATEMENT WHICH SHOWS THE INTENTION OF THE ASSESSEE AND FAIRNESS OF HIS MIND, DESPITE OF IT LD. AO DID NOT ASK A SINGLE QUESTION ABOUT SALES BI LL DURING THE COURSE OF ITA NO. 1022/JP/2019 OM PRAKASH KARNANI, JAIPUR VS. ACIT, JAIPUR 10 ASSESSMENT PROCEEDINGS EVEN WHEN THE ASSESSEE PRODU CED ALL SALES AND PURCHASE BILLS DURING THE COURSE OF PROCEEDING. (C) SO FAR AS CONCERN ABOUT OPENING CASH BALANCE OF RS. 595790/- AS ON 01.04.2016 WHICH WAS QUESTIONED BY LD. AO WAS SUFFI CIENTLY BACKED WITH THE STATEMENT OF AFFAIRS OF THE ASSESSEE FOR THE FY 2015-16 WHERE IN THE SAME CASH BALANCE IS BEING SHOWN AS ON 31.03.2016 A LONG WITH CASH FLOW STATEMENT FOR THE FINANCIAL YEAR 2015-16 AS SUBMITT ED BEFORE LD. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS SUFFICI ENTLY DESCRIBED THE TRANSACTIONS AND GIVE THE STRENGTHENING THE OPENING CASH BALANCE OF RS. 595790/-. IT IS ALSO IMPORTANT TO MENTION HERE THE LD. AO DID NOT DISPUTE THIS DOCUMENT WHICH IS CLEARLY INDICATION OF ACCEPT ANCE AT HIS LEVEL. (D) IT IS ALSO IMPORTANT TO MENTION HERE THAT THE LD. AO HAS MADE SIX ASSESSMENT PRECEDING TO THE PREVIOUS YEAR PERTAINED TO THE AY 2017-18, UNDER WHICH DURING ASSESSMENT PROCEEDING OF AY 2016 -17 HE HAS ACCEPTED ALL THE FINANCIAL STATEMENT AND COMPUTATIO N OF INCOME WHICH WAS SUBMITTED BY THE ASSESSEE AND WHICH IS EXPLICITLY M ENTIONED CASH IN HAND AS ON 31.03.2016 A SUM OF RS. 5,95,790/-. (E) THE CASH BALANCE OF THE ASSESSEE AS SHOWN BY HI M IN HIS INCOME TAX RETURN AS WELL AS IN STATEMENT OF AFFAIRS IN LA ST SEVEN YEARS ARE BEING TABULATED HERE WHICH SHOWS THE PREVIOUS PATTERN OF THE ASSESSEE FOR MAINTAINING CASH BALANCE; ASSESSMENT YEAR ITR FILING DATE PB-1 PAGE NO. KEY DETAILS OF STATEMENT OF AFFAIRS CAPITAL CASH OTHER ASSETS REMARK 2011-12 24.03.2012 99-102 994511 106876 887635 # 2012-13 17.08.2012 108-112 1127918 64358 1063560 # 2013-14 21.07.2013 118-122 1304542 491254 813288 # 2014-15 29.07.2014 129-133 NIL (##) 2015-16 17.08.2015 140-144 NIL (##) 2016-17 21.03.2017 150-154 - 335240 350397 ## 2017-18 26.03.2012 155-157 1054078 112931 941147 #### ITA NO. 1022/JP/2019 OM PRAKASH KARNANI, JAIPUR VS. ACIT, JAIPUR 11 NOTE; # COMPLETE FINANCIAL STATEMENT HAVE BEEN FIGURED OU T IN INCOME TAX RETURN FORM AS SUBMITTED ORIGINALLY ON THEIR OLD DA TES AS MENTIONED IN TABLE, ## AS ASSESSE FILED HIS ITR UNDER SECTION 44AD HENC E NO NEED TO MENTIONED FINANCIAL FIGURES THEREFORE SAME ARE NOT BEEN PROVIDED IN ITR, ### AS ASSESSE FILED HIS ITR UNDER SECTION 44AD THE REFORE ONLY BUSINESS BALANCE HAVE BEEN MENTIONED BY HIM IN HIS INCOME TA X RETURN FORM WHICH ARE PART OF HIS STATEMENT OF AFFAIR AS SUBMIT TED BEFORE YOUR HONORS, #### THOUGH ASSESSE FILED HIS ITR UNDER SECTION 44A D BUT ACCORDING TO NEW INSTRUCTIONS FOR FILLING OF ITR FORM HE HAD TO FILLED RELEVANT COLUMN OF BALANCE SHEET OF ITR FORM, (F) THEREFORE WITH THE CONSIDERING ALL THESE FACTS AND CIRCUMSTANCES THE OPENING BALANCE AS TAKEN BY THE ASSESSE IN HIS CASH BOOKS FOR RS. 5.95.790/- WAS FULLY PROPER AND GENUINE. (G) LD. AO ALLEGED THAT OPENING CASH BALANCE AS TAK EN IN CASH BOOKS IS RS. 5,95,790/- WAS NOT SUPPORTED WITH THE EVIDENCES AND CASH BALANCE WAS ZERO JUST AT THE END OF YEAR PRIOR TO SEARCH, B OTH THE ALLEGATION ARE BASED ON SURMISES AND PERVERSE FINDINGS. (H) HERE THE LD. AO MADE ADDITION WITHOUT ANY FURTH ER ENQUIRY ABOUT THE DOCUMENTS AND BOOKS OF ACCOUNTS SUBMITTED. THUS THE LD. AO WAS NOT JUSTIFIED IN PROPERLY CONSIDERING AND APPRECIATING EXPLANATIONS FILED TIME TO TIME AND IGNORING DOCUMENTS AND BOOKS OF ACCOUNTS W ITHOUT ANY REASONABLE CAUSE AND THEREFORE MAKING ADDITION IS B ASED MERELY ON ARBITRARY MANNER. (I) AT THE TIME OF INVESTIGATION ASSESSEE HAS ALREA DY ACCEPTED THAT THE SEIZED CASH BELONGS TO HIS FIRM M/S VINAYAK ENTERPR ISES AND THE CASH WAS GENERATED FROM THE DAY TO DAY TRANSACTIONS OF HIS B USINESS. ITA NO. 1022/JP/2019 OM PRAKASH KARNANI, JAIPUR VS. ACIT, JAIPUR 12 (J) IT IS WELL SETTLED PRINCIPLE THAT THE AFFIDAVIT IS AN STRONG PIECE OF EVIDENCE IF IT IS IGNORED WITHOUT MAKING NECESSARY ENQUIRY, HERE IN THIS CASE INVESTIGATION WING AND LD. ACIT BOTH DID NOT C OMPLY NECESSARY ACTION FOR REJECTING THE AFFIDAVIT THEREFORE CONTEN TION AS CONTENDED BY THE ASSESSE IN THE AFFIDAVIT WHICH IS ON OATH MUST HAVE BEEN RELIED BY THE LD. ACIT. (K) THIS CONTENTION IS WELL EXPLAINED AND SUPPORTED IN FAVOR OF ASSESSEE IN A LANDMARK JUDGMENT OF HONORABLE APEX COURT IN T HE MATTER OF M/S MEHTA PARIKH AND COMPANY VS. THE COMMISSIONER O F INCOME TAX 1956 AIR 556, 1956 SCR 626. 11. PER CONTRA, THE DR SUBMITTED THAT DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE SPECIFIC NOTICE WAS ISSUED U/S 142 (1) DATED 06.10.2018 WHEREIN THE ASSESSEE WAS ASKED TO FURNISH JUSTIFICA TION OF CASH AMOUNTING TO RS. 5,34,000/- SEIZED FROM THE POSSESSION OF SH. NAND LAL JOSHI AND SH. NAND LAL PANDYA WHICH UNDISPUTEDLY BELONGS TO THE A SSESSEE. HOWEVER, SINCE THE ASSESSEE FAILED TO SUBMIT APPROPRIATE EXP LANATION ALONG WITH DOCUMENTARY EVIDENCE, THE ADDITION WAS MADE BY THE ASSESSING OFFICER U/S 69A OF THE ACT WHICH HAS BEEN RIGHTLY CONFIRMED BY THE LD. CIT(A). HE ACCORDINGLY SUPPORTED THE FINDINGS OF THE LOWER AUT HORITIES. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY, THE CASH AMOUNTI NG TO RS. 5,34,000/- SEIZED FROM THE POSSESSION OF SH. NAND LAL JOSHI AN D SH. NAND LAL PANDYA BELONGS TO THE ASSESSEE. THE LIMITED QUESTION THERE FORE IS SOURCE OF SUCH CASH FOUND AND SEIZED FROM THE POSSESSION OF THESE TWO PERSONS WHICH BELONGS TO THE ASSESSEE. THE ASSESSEE HAS SUBMITTED THAT THE SAME REPRESENTS BUSINESS RECEIPTS AND WITHDRAWAL OF CASH FROM ITS BOOKS OF ACCOUNTS AND IN SUPPORT, THE ASSESSEE FURNISHED COP Y OF HIS CASH BOOK AND ITA NO. 1022/JP/2019 OM PRAKASH KARNANI, JAIPUR VS. ACIT, JAIPUR 13 OTHER DETAILS. HOWEVER, THE SAME WAS NOT FOUND ACCE PTABLE TO THE ASSESSING OFFICER FOR THE REASON THAT THERE IS NO S UPPORTING EVIDENCE IN RESPECT OF OPENING CASH BALANCE OF RS. 5,95,790/- I N THE CASH BOOK. SECONDLY, THE ASSESSEE HAS FAILED TO PRODUCE ANY SU PPORTING EVIDENCE TO SUBSTANTIATE CASH SALES DURING THE YEAR WHICH JUSTI FIES THE CASH IN HAND OF RS 534,000/-. THE CONTENTION OF THE ASSESSEE IS TH AT THE OPENING CASH BALANCE OF RS. 5,95,790/- IS DULY SUPPORTED BY THE RETURN OF INCOME FOR A.Y 2016-17 ALONG WITH COPY OF STATEMENT OF AFFAIRS AND THE CASH FLOW STATEMENT. IT WAS SUBMITTED THAT THE RETURN OF INCO ME FOR A.Y 2016-17 WAS ALSO TAKEN UP FOR SCRUTINY ASSESSMENT AND SPECI FIC QUESTIONS WERE RAISED REGARDING THE CASH SALES, CASH DEPOSITED AND OTHER DETAILS REGARDING SUNDRY DEBTORS AND AFTER CONSIDERING DETA IL/SUBMISSIONS FILED BY THE ASSESSEE ALONG WITH COPY OF CASH FLOW STATEMENT AND THE STATEMENT OF AFFAIRS, THE RETURN OF INCOME WAS ACCEPTED. IT WAS ACCORDINGLY SUBMITTED THAT ONCE THE RETURN OF INCOME FOR A.Y 2016-17 HAS BEEN ACCEPTED BY THE SAME ASSESSING OFFICER WHO HAS PASSED THE IMPUGNED ORDER AND THAT TO, ON THE SAME DATE AND NO ADVERSE FINDING HAS BEEN RE CORDED BY THE ASSESSING OFFICER, AS FAR AS OPENING CASH BALANCE O F RS. 5,95,790/- IS CONCERNED, THE SAME HAS BEEN DULY SUBSTANTIATED AND EXAMINED BY THE ASSESSING OFFICER AND IN ABSENCE OF ANY ADVERSE FIN DING IN A.Y 2016-17, NO ADVERSE FINDING CAN BE RECORDED FOR SUCH OPENING CA SH BALANCE IN A.Y 2017-18. REGARDING CASH SALES EXECUTED DURING THE Y EAR UNDER CONSIDERATION, IT WAS SUBMITTED THAT THE SAME ARE D ULY SUPPORTED BY THE SALES AND PURCHASE BILLS IN RESPECT OF WHICH NO ADV ERSE FINDING HAS BEEN RECORDED BY THE ASSESSING OFFICER. IT WAS ACCORDING LY SUBMITTED THAT WHEN THE GROSS RECEIPT FROM THE BUSINESS AMOUNTING TO RS . 17,88,365/- AND NET PROFIT OF RS. 2,51,604/- HAVE BEEN DULY ACCEPTED BY THE ASSESSING OFFICER, CASH SALES EXECUTED DURING THE YEAR HAVE NOT BEEN D ISPUTED AND THEREFORE, IN ABSENCE OF ANY ADVERSE FINDING REGARD ING SALES AND ITA NO. 1022/JP/2019 OM PRAKASH KARNANI, JAIPUR VS. ACIT, JAIPUR 14 CONSEQUENT PROFIT SO DECLARED BY THE ASSESSEE, THE SOURCE OF CASH IS DULY EXPLAINED IN TERMS OF CASH SALES AND OPENING BALANC E AT THE BEGINNING OF THE YEAR. IT WAS FURTHER SUBMITTED THAT FROM THE P ERUSAL OF THE CASH BOOK, IT CAN BE SEEN THAT THERE WAS SUFFICIENT CASH BALAN CE OF RS. 5,69,878/- BEFORE THE DATE OF SEIZURE OF CASH. THEREFORE, THE CASH SEIZED IS DULY EXPLAINED FROM THE ENTRIES SO RECORDED IN THE CASH BOOK AND WHICH FORMS PART OF HIS BOOK OF ACCOUNTS. WE FIND FORCE IN THE CONTENTIONS SO ADVANCED BY THE LD. AR. THE CASH SO SEIZED ADMITTEDLY BELONG S TO THE ASSESSEE AND THROUGH RETURN OF INCOME, THE STATEMENT OF AFFAIRS, CASH FLOW STATEMENT FOR THE PREVIOUS YEAR AND CASH BOOK FOR THE YEAR UNDER CONSIDERATION, THE SOURCE OF CASH SO SEIZED HAS BEEN DULY EXPLAINED IN FORM OF SALES AND OPENING CASH BALANCE DULY RECORDED IN THE BOOKS OF ACCOUNTS. WE THEREFORE, FIND THAT THERE IS NO BASIS FOR MAKING T HE IMPUGNED ADDITION IN THE HANDS OF THE ASSESSEE AND THE SAME IS HEREBY DI RECTED TO BE DELETED. 13. IN VIEW OF THE ABOVE, WE DO NOT THINK IT IS NEC ESSARY TO EXAMINE THE OTHER CONTENTIONS SO RAISED BY THE ASSESSEE REGARDI NG THE LEGALITY OF PROCEEDINGS. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/01/2021. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 28/01/2021 * GANESH KR. ITA NO. 1022/JP/2019 OM PRAKASH KARNANI, JAIPUR VS. ACIT, JAIPUR 15 VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- OM PRAKASH KARNANI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE-04, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 1022/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR