Shri Mathara Das Soni, Jodhpur V. ACIT, Circle, Barmer

ITA 33/JODH/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8579 (ITAT-JODHPUR)
• Duration Of Justice: 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-01-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 15-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Rejection of books of accounts; Capital asset; Business income; Principle of natural justice; Date of conversion; Fair market value; Wrong claim; Corroborative evidences; Bogus
• Section: 68; 145; 90; 143(3); 142(1); 143(2); 69A; 208; 73; 13; 145(3); 119; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 Mathara Das Soni Bhistiyo Ka Bass Ghora Ka Chowk, Inside Sojati Gate, Jodhpur [PAN: ADVPS 1315 A ] (Appellant) Vs. ACIT, Circle Barmer (Respondent) Appellant by Sh. Rajendra Jain, Adv. Respondent by Smt. Alka Rajvanshi Jain, CIT DR Date of Hearing 31.01.2024 Date of Pronouncement 22.02.2024 ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by assessee is arising out of the order of the Commissioner of Income Tax (Appeals) Jaipur-5 dated 08/01/2024 [here in after ld. CIT(A) ] for assessment year 2017-18 which in turn arise from the order dated 30.12.2019 passed under section 143(3) of the Income Tax Act, by ACIT, Barmer. I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 2 2. In this appeal, the assessee has raised following grounds: - “1. That on the facts and in the circumstances of the case, the order passed by ld. CIT(A) is bad in law and bad in facts. 2. That on the facts and in the circumstances of the case the CIT(A) grossly erred in not analyzing the submission of assessee supported from material evidence in right prospective and judicious manner and sustained the addition in a hypothetical way which is against principle of natural justice. 3. That on the facts and in the circumstances of the case the ld. CIT(A) grossly erred in upholding the provision of sec 145(3) of the Act applied by the ld. AO for rejection of books of accounts. 4. That on the facts and in the circumstances of the case the ld. CIT(A) grossly erred in sustaining addition of Rs. 8,95,23,633/- in respect of cash sales made on 08/11/2016 deposited in bank account as unexplained money u/s 69A of the Act. 5. That on the facts and in the circumstances of the case the ld. CIT(A) grossly erred in recording observation and finding in the appellate order contrary to the principle of law laid down by Hon’ble Courts and also against the principle of natural justice. 6. That on the facts and in the circumstances of the case the ld. CIT(A), grossly erred in treating the normal transaction in respect of business transaction as something unusual and out of the ordinary only as undiscernigiy which is against the principle of natural justice. 7. That on the facts and in the circumstances of the case the ld. CIT(A), grossly erred in upholding the difference of Rs. 1,09,57,300 in respect of valuation as adopted by assessee and actual market price while converting the gold in stock in trade. 8. That on the facts and in the circumstances of the case the ld. CIT(A), grossly erred in upholding the addition of Rs. 1,09,05,700/- as income from business not as a capital gain as disclosed by assessee. 9. That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing. 10. The petitioner prays for justice & relief.” I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 3 3. Succinctly, the fact as culled out from the records is that the return of income for Assessment Year 2017-18 was e-filed by the assessee on 07.11.2019 vide acknowledgement No. 296030511071117 at an income of Rs. 4,10,87,210/-. The case was subsequently selected for complete Scrutiny through CASS. Accordingly, notice u/s 143(2) was issued on 13.08.2018 through Income Tax Business Application (ITBA) platform and duly served on the assessee’s registered e-mail. Accordingly notices u/s 142(1) were issued to the assessee on 18.07.2019, 13.09.2019, 19.09.2019, 14.10.2019, 25.10.2019, 05.11.2019, 07.11.2019, 11.11.2019 and 22.11.2019 for getting information along with necessary documents required for the assessment proceeding. Accordingly, assessee complied on 03.09.2019, 12.09.2019, 19.09.2019, 24,09.2019, 17.10.2019, 11.11.2019, 17.11.2019, and 28.11.2019, through e-proceedings module. 3.1 During the year under consideration the assessee derives income from salary, income from house property, income from business profession which is only related to trading of silver and no profit is declared on the sale of Gold. Assessee has shown capital gain on the conversion of Gold in stock in trade of Rs. 2,86,81,817/- and income from other sources. In response to the notice u/s 142(1) of the IT Act I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 4 assessee submitted various details which was examined and placed on record. As per the submission and information available to ld. AO it was found that assessee has deposited huge cash during the demonetization period. Assessee was asked to explain vide various notices issued by this office to explain the source of the huge cash deposits made during the time of demonetization period. Assessee had claimed in ITR that he is doing a trading business in the year under consideration and over the year had sold silver and gold to various persons in cash. The ld. AO noted that assessee has changed his name and style of doing business in the instant year under consideration and the quantum of the turnover from AY 2015-16, AY 2016-17 and even in AY 2018-19 is much less that even the books of account are not audited. There is no business in the proprietorship concern M/s Shrinath Jewellers, which is evident from the Bank A/C which was came into operation on 28.07.2016 and there is no transaction before this date. Further, assessee has also not declared balance on date 31.03.2016 in the return filed by him for AY 2016-17. As per submission of assessee, he is running his business at ‘Bhistiyon Ka Bass, Patel Chowk, Jodhpur'. It is also pertinent to mention that assessee is a director in the Dwarika Jewellers Pvt. Ltd. which is also running its trade business on the same premise. As the assessee had deposited Rs. 9,38,64,808/- into bank account during the demonetization I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 5 period. On the perusal of above business profit of the assessee it is evident that these two facts does not commensurate with each other, further investigation was conducted on the purchase and sale of the goods traded during the year under consideration. Assessee has submitted that he had disclosed 44.90 Kgs of Gold under IDS scheme 2016. As per assessee's submission, assessee had declared gold of Rs. 12,76,81,150/- on date 15.09.2016 as capital asset. Assessee also claimed that the said gold pertains to AY 2011-12 and valuation was done by departmental valuer and the same was accepted. Further, assessee claimed that he had converted the same gold into stock in trade on various dates and long term capital gain was paid on it. Further, the chunk of gold which got converted in stock in trade was sold on the same day hence no business income arose. As per the submission of the assessee, gold disclosed under IDS, 2016 was of Rs. 12,76,81,150/- and after conversion into stock in trade on various dates the total sale proceed was Rs. 15,63,62,967/-. The assessee has deposited cash during the demonetization period of Rs. 9,38,64,808/- and sold exorbitantly high value of gold in one day that is 08.11.2016 which appears as an anomaly. The ld. AO noted that assessee never made any cash sale in previous year and the average cash balance in the previous years remains Rs. 171801/-. When the same stats are I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 6 compared with the current year, before November 2016, the average cash in hand balance is Rs. 994860/- which is abysmal low in the comparison of the cash deposited during the time of demonetization in the name of cash sale. The ld AO also noted that assessee has claimed that he had converted the gold declared in IDS, 2016 into stock in trade in the month of September and October. But the total cash sale received is only Rs. 70585/- and Rs. 148271/-. However, on date 08.11.2016 the cash sale from the gold is of Rs.8,95,23,633/- which is unfathomable under these circumstances. On the perusal of details illustration it is clear that assessee has raised total number of 504 cash sale invoices in the month of November 2016, which is exceptionally high. Further, all the cash sale of gold was made on the day of 8th November 2016 only. It was observed that no other cash sales were recorded before and after 8th November 2016 except on 15.09.2016 and Rs. 108975/- on 03.10.2016. This pattern of sale is highly suspicious and raises serious concerns about the books of account. In this regard, the assessee was show caused to substantiate this anomaly in his books of account but the submission received from assessee was not found acceptable on grounds that the assessee's plea that name of the concern mentioning Shri Nath Corporation and showing as income from service is not acceptable. As he has current bank account in the name of Shree Nath I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 7 Corporation A/C No. 200003147881 in Indusind Bank Ltd. Further, in the ITR for AY 2017-18 he has made claim of expenses of Rs. 2544581/- against receipt of Rs. 5793875/- and not shown any opening stock or closing stock. Even in his the revised return and his reply he has accepted that silver was seized by sales tax department and released in 2011, by the order of Hon'ble High Court. Further, High Court also imposed penalty of Rs. 4500000/- on the silver and as such the silver should have been sold then and there to deposit the penalty. There was no stock available with assessee is also proves from the return of AY 2011-12 in which no closing stock has been mentioned by the assessee. Notwithstanding to the shop timings and without prejudice to the assessee's claim it is accepted that on the date of demonetization his shop was not closed at 8.00 PM as mentioned in his reply. In this regard it is worth to mention here that the Hon'ble Prime Minister has announced the demonetization in a live National Televised Address at 20.15 IST. Thus, it is presumed, unless otherwise, the assessee himself came to know the news of announcement of demonetization after the shop closing timing. In short even if shop was not closed at 8.00 PM, the announcement of demonetization was made at 8.15 PM on 08-11-2016. Importantly, the live speech of Hon'ble Prime Minister is of 25 minutes started at 8.15 PM to 8.40 PM on 08-11-2016. After hearing the speech I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 8 of announcement of demonetization people realized that the legal tender character of the bank notes in denominations of Rs. 500 and Rs. 1000 issued by the Reserve Bank of India was to be withdrawn after Midnight of November 8, 2016. Considering the fact that the assessee has not closed its business hours on 08.00 PM on 08-11-2016, on a very highly optimistic estimate the first customer would visit the shop / show room of the assessee for purchase of gold / ornament would be at 9.00 PM which is just 20 minutes after completion of speech of announcement of demonetization. Further, it goes without saying that assessee can accept SBNs till Midnight (12.00PM) of 08-11-2016 only. In the records the assessee has reported cash sale of only gold 995, say, till 12.00 PM on 08-11-2016 of 510 customers. Moreover, it has reported cash sale to 510 customers by accepting SBNs with the cash bill value ranging from Rs. 1,47,739/- to Rs.1.95.960/-. On the perusal of profit and loss account it was also noticed that assesse has not shown any expense regarding the salary or wages. Which means that assessee himself manages all the works ranging from attending the customer, managing stock, cutting the required metal, weighing the metal, acceptance of cash, counting the cash? This is a time consuming process, which should be considered while taking the disposal of customer attended in an hour. Total time available to sale the Gold during 9 PM to 12 PM which is 180 minutes. If I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 9 the number of customers attended during this period is to be accepted as per the submission of assessee that is 510. Then total time available to dispose off one customer is 21 seconds. Which cannot be accepted by the undersigned as the same is humanly impossible. Therefore, the argument of the assessee that from 9.00 pm to 12.00 pm it has sold gold ornaments to 510 customers is unreasonable and far from reality as the customers have come to purchase the gold ornament, which involves certain checks and balances i.e., weight, rate and the actual weight in the weighing machine, preparing bill, giving cash and checking the cash by the self either by physical counting or through cash counting machine and delivering the jewellery in a proper packed condition. It is also pertinent to mention here that there is also need to cut the raw gold in the pieces as per the requirement of the purchaser. Moreover, from the details of cash sales and invoices raised there is no proper mention of complete address of the parties to whom such cash sales were made. The action of the assessee, clearly establishes the fact that the assessee intentionally made such arrangement of manufacturing artificial bills. Further, during the assessment proceeding assessee had provided invoices/bills generated from tally software which is signed by the assessee. As it is clear that assessee was the sole person handling all the affairs of the shop. The counter sign is also substantiating it. I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 10 Further, as per the signature of the assessee it is clear that he was not in hurry and took his sweet time to put it on the bills, which is a time consuming process in itself. It is also important to note here that even the simple exercise of feeding data related to type, weight and rate of gold purchased by a customer in computer, counting the cash paid, retuning the change balance and printing the bills would take more than 1 minute per bill. It is stressed here that assessee has 510 such cash bills raised within 180 minutes. It is undoubtedly exceptionally high and next to impossible. On the perusal of sales bills for the date 08.11.2016, it was observed that rate of gold has been mentioned at Rs. 3810.15, 3810.10, 3810.40, 3810.95, 3811.10, 3811.15, 3811.20...... The series continues till 3882.15 per g mint he last bill of the date. It shows that there was not a fixed price for the sale of Gold. If there were high number of purchases occurring on a day, the sale price would have been in the multiple of 100 or 50, it is not clear to the undersigned that how the negotiation was fixed for the two digits after the decimal for each sale bill. There was no time available for buyer to bargain of such small range. Further, all the sales bills were in the range of Rs. 1500000/- to 200000/-. If any customer has only such small amount, what was the need of purchase the gold in haste while he can deposit the same in his bank account, as it was assured that there will be no I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 11 enquiry if the deposit is below 2.5 lacs. Even if it is considered that sales were made in whole days, which cannot be accepted as statistically it is proved in the previous Para's that the event of sale on date 8.1.2016 was an exceptional event and only justification to occur such event, is announcement of demonetization. However, even if the same is accepted that assessee made the whole sale during the day, even then assessee had working hours of 11 AM to 12 PM per customer time comes as 1.5 minutes which is approx. 90 seconds. The same cannot be accepted as discussed in above Para's. In view of the above, it is clear that the assessee has its own unaccounted cash of SBNs which have been introduced in its books way of cash sales for which has no proper records or justification. The cash in hand balance on date 09.11.2016 was Rs. 9,38,64,808/- but it was noticed that assessee deposited the same on date 07.12.2016. The explanation of the assessee in this regard was considered but is not acceptable as the assessee is indulged into trading of gold and in this business line persons are habitual of large cash handling and security of the same is ensured by the various methods and skills developed over the time. Further, the action of the assessee in relation to late cash deposit on 07.12.2016 also supports the aforesaid view. Assessee has not given any valid reply with proper supporting documents in relation to restriction I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 12 by bank and safety purpose. Thus, out of total cash deposit, amount claimed to be received on date 08.11.2016 of Rs. 8,95.23,633, being the cash sale on 08-11-2019 reported by the is nothing but the unaccounted cash of the assessee routed through books as cash sales. The Human probability Test” could be applied when the Assessee makes the Officer to believe his/her story as a valid event. The false claims of the assessee cannot sustain before the test of Human Probabilities. As enumerated in the decision of the Hon’ble Supreme Court in the case of Roshan Di Hatti vs. CIT (1977) 107 ITR 938 (SC), Kale Khan Mohammed Hanif vs. CIT(1963) 50 ITR 1 (SC), it has been held in various judicial pronouncement that where the nature and source of any receipt/investment, whether it be a money or other property, cannot be satisfactorily explained by the assessee, it is open for the revenue to hold that it is the income of the assessee and no further burden lies on the revenue to show that the income is from any particular source. In the case of the assessee, the assessee could not explain the sources for making deposit of cash in SBN notes to the extent of Rs. 8,95,23,633/-. In the view of above discussion, the amount entered in the cash book on date 08.11.2016 cannot be considered for the receipt from sale. The assessee has tried to bring his unaccounted money in the shadow of cash sales. Hence, the books of account of the assessee for AY 2017- I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 13 18 are being rejected to this extent, u/s 145(3) as per the defects mentioned and discussed in above Para's. So the amount of Rs. 8,95,23,633/- is held to be unexplained money u/s 69A of the I.T. Act, 1961 and will be taxed in accordance with provisions of 115BBE of the I.T. Act, 1961. 3.2 As assessee claimed that he had converted the gold into stock in trade on various dates and long term capital gain was paid on it. Further, the chunk of gold which got converted in stock in trade was sold on the same day hence no business income arose. As per the submission of the assessee, gold disclosed under IDS, 2016 was of Rs. 12,76,81,150/- and after conversion into stock in trade on various dates the total sale proceed was Rs.15,63,62,967/-. Assessee was asked to submit the value taken by him as fair market value on the date of conversion of capital into stock in trade. It was observed that the per gram rate taken by assessee as fair market value was higher than the per gram value of prevailing market rate. Here, assessee is trying to divert the difference of amount between as long term capital gain. However, the same amount shall be considered as business income. Thus the difference between the sale value taken by assessee and fair market sale value of Rs. I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 14 10957300.14/- is being treated as income from business and not as capital gain. 4. Aggrieved from the above order of the assessment the assessee preferred and appeal before the ld. CIT(A). Apropos to the grounds so raised by the assessee in first appeal, the relevant finding of the ld. CIT(A) is reiterated here in below: 7.2 I have considered the facts of the case and written submission of the appellant as against the observations/ findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under.- I. The appellant is engaged in the business of trading and had sold silver and gold to various person in cash. In last two AY, his total turnover is 25.30 lakh and 57.93 Ikah. It is pertinent to mention here that in the year under consideration the total turnover is Rs 16.92 cr which is exorbitant high and that too sale in cash. It is again important to mention here that books of accounts are not audited. 30 - 30m ^ 2 * 3 Book of MC me andred II. The AO specified in the assessment order that the assessee had not furnished the correct position of opening and closing stock in the ITR of previous year and subsequent year. It shows that the assessee was not having such stock. The AO had doubted that there was no opening stock or no such stock was available for such huge cash sale of stock. III. The assessee had disclosed 44.90 kg of gold under IDS scheme 2016 valued at 12.76 Cr. The assessee converted the same into stock in trade on various date and claimed LTCG as the gold was pertains to AY 2011-12.It is noticed that the assessee had sold such stock on various dates starting from 15 September 2016. Out of total sale of Rs 15.63 cr, the assessee had shown cash sale of Rs 8,95,23,633/- on the day of demonetization. The same cash was the bone of contention as the AO had made the addition of this amount u/s 69A. IV. The AO had compared month wise, year wise and day wise analysis which shows huge anomaly on the availability of stock, excess rate of gold price etc. The source of the cash being a cash sale cannot I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 15 be accepted and it proved that the appellant has introduced his unaccounted cash during the period of demonetization in the books in the guise of cash sales. Thus, the AO had rightly rejected the books of accounts by invoking the provisions of section 145(3). V. In the present case, the AO had prepared moth wise chart for sale, cash sale and cash available as per books. The AO had noticed that there is sudden jump to a very high percentage of cash sales just on the day of demonetization announcement which is very abnormal in compare to previous months as well as previous years. VI. The appellant had also argued that the sales made are also reported before VAT This argument does not have merit. The VAT department had not done scrutiny assessment of such sale. There is a process of reporting for sale which the appellant had complied. It does not mean that it is cogent evidences. The VAT department had not any scrutiny of such sale and had not asked day to day stock register and the appellant had not submitted their day to day stock register before VAT authorities. Therefore this argument is not just sufficient to prove the correctness of books of accounts. VII. The appellant had argued that the AO had wrongly applied the section 69A. The stock had already declared in IDS. During the course of assessment proceeding, the AO had disproved the source of the cash deposited in bank being a cash sale from IDS declared stock and it proved that the appellant has introduced his unaccounted cash during the period of demonetization in the books in the guise of cash sales. Thus, the AO had rightly applied the section 69A of unexplained money being unexplained cash money available with the appellant which had tried to introduce in books. The AO had not added back the stock of gold which had declared in IDS scheme. The AO had proved that the appellant was also having unaccounted cash which he tried to introduced in bank on the day of demonetization in the guise of IDS stock. VIII. The appellant had relied upon various judgments. The facts of the present case are different from other cases which are as under a. The day to day stock register was not maintained in the present case whereas in the case laws replied upon by the appellant, the stock register was maintained on day to day basis and the same were produced before AO as well before appellate proceedings. In the present case the AO had unearthed the stock anomalies, b. In the present case the AO had proved and doubted the availability of stock on the day of cash sale whereas in the case I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 16 laws replied upon by the appellant the stock availability was not doubted C. In the present case the books of accounts were rejected u/s 145(3) of the Act whereas in some case laws replied upon by the appellant the books of accounts were accepted by the AO. d. The case laws relied by the appellant in the case of Smit Harshila Chordia vs. ITO, the matter was related to section 68 but in the present case the AO had proved that the appellant had unaccounted cash money which he had deposited in bank and added u/s 69A. e. In various case laws, the appellant argued that it is matter of double taxation. But the same is not true. The appellant had disclosed stock of gold and paid taxes. But the present matter is huge cash deposit on one day for which the appellant failed to prove that it is out of such stock, thus it is a separate addition of unaccounted cash available with the appellant. The AO had not doubted previous sale which was out of stock declared in IDS. Thus the facts of this case are different. f. The case laws relied by the appellant in the case of Hon'ble ITAT Delhi Bench in the case of AGONS GLOBAL P LTD v/s ACIT, it was held that there was regular cash sale and deposit of cash in bank accounts and if nothing incrementing is found contrary then addition u/s 68 of such cash sale would tantamount to double taxation. But, the matter in the present case is different. The AO had proved that there were no such regular cash sale and deposit in bank. The AO had made chart of last 2 years in this regard. The AO had given clear findings that there is sudden cash sale on the day of demonetization and had deposited such cash in bank account which is not normal. Thus the facts of this case are different. g. The case laws relied by the appellant of Hon'ble ITAT Bangalore Smt. Teena Bethalav/s ITO, it was held that when cash deposited out of sale in bank account is part of books thus section 69A is not applicable as it says "not recorded in books. But in the present case the AO had proved that the cash sale were not genuine and the cash deposited in bank was unexplained thus the AO had correctly applied section 69A. h. Further the appellant had also relied on various other case laws for which facts of the present case are completely different. In the present case the appellant had offered capital gain on sale of alleged cash sale for stock of gold whereas in other case I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 17 it is normal business income and on many other facts. Thus the same are not applicable. 7.3 In view of the facts and circumstances discussed above, the AO had correctly made the addition of Rs. 8,95,23,633/- u/s 69A of the Act and accordingly the same is hereby upheld. Grounds of appeals from 4 to 10 are hereby dismissed. On the second addition the observation of the ld. CIT(A): 8.2 I have considered the facts of the case and written submission of the appellant as against the observations/ findings of the AO in the assessment order for the year under consideration. The appellant had claimed that he had converted the gold into stock in trade on various dates and LTCG was paid on it. The gold stock declared in IDS was of Rs 12,76,81,150/- and after conversion into stock in trade the total sale proceeds was Rs 15,63,62,967/- the AO had observed that the per gram rate taken by the appellant was higher than the per gram value of prevailing rate. The AO concluded that the assessee was trying to diver the difference of amount between as LTCG; however the same should be considered as business income. The AO had given detailed chart in which date wise rate taken by appellant, stock converted in gm and rate as per prevailing market was there and accordingly calculated that the Appellant had taken excess value of Rs 1,09,57,300/- in underline LTCG rather than it should be taxed as business income. The appellant argued that the addition was based merely on assumption. This argument is not on merit. The AO had taken rate per gram as per prevailing market rate on which the appellant had not taken any objection. The prevailing market rate taken by the AO was factually correct. Thus, it is proved that the appellant had shown excess LTCG instead of showing such sale amount in business income. In view of the facts and circumstances discussed above, the AO had correctly made the addition of Rs. 1,09,57,300/- under business income and accordingly the same is hereby upheld. Grounds of appeals from 11 to 13 are hereby dismissed.” 5. As the assessee did not find any favour from the appeal so filed before the ld. CIT(A), the assessee has preferred present appeal on the grounds as stated hereinabove. The ld. AR of the assessee submitted that the assessee has made Disclosure of 44.9 kg gold in the IDS scheme and has paid due tax thereon. The said gold lying as investment was converted into stock in trade. The assessee has paid the long-term I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 18 capital gain tax on it. The said gold converted into stock in trade is sold by the assessee and availability of stock is not disputed by the lower authority. The ld. AO has not reduced the sales. The sale made is duly supported by stock and from that stock sales is made cannot be again considered as income of the assessee. The assessee has paid the value added state tax on the sales recorded by the assessee. The ld. AR of the assessee relied upon various judgment including the coordinate bench of Jodhpur in ITA no. 353 & 354/Jodh/2023. The sales made by the assessee is already accepted by the VAT authorities. Once the IDS stock and assets is accepted and that stock is already accepted as converted from capital assets to stock and trade and that stock in trade sold by payment of VAT cannot be considered as non-genuine. As regards the capital gain sale rate is shown being higher then online platform is considered as higher because that was for online mode and physical present delivery rate is always higher and that fact has not been appreciated by the ld. AO. The ld. AR of the assessee vehemently argued that the assessee has made income of more than 4 cr and the paid IDS tax on 12 crore asset disclosed by him again he cannot be called upon to pay the tax again. So he strongly relied upon the fact that once the assessee has based on the rate already converted the capital asset into stock in trade the same cannot be doubted for merely rate I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 19 adopted by the assessee and that stock sold by the assessee cannot be again be taxed when the same stock is converted by sale into cash. Here the revenue is trying to tax the same income thrice, one at the time the asset declared, then at the time of conversion and when the same is ultimately sold, so the contention raised by the lower authority is not tenable. 5.1 To support, contentions so raised the ld. AR of the assessee relied upon the written submission made before the CIT(A) and the same is reproduced herein below: Submission in respect of sales considered as unexplained cash “a) It is an admitted fact that assessee has declared the sales of stock of gold amounting to Rs. 156362967/- out of stock of gold held him on conversion. The complete documentary evidence in support of sales transaction are fumished before the Ld. AO and also disclosed in VAT Return however only on the basis of statistical analysis and assumption & presumption the Ld. AO had made arbitrary allegation "that amount entered in the cash book on date 08/11/2016 ie Rs. 8,95,23,633/- cannot be considered for receipt of sale. However out of total sales made of Rs. 156362967/-, the cash deposited out of cash sales made on 08/11/2016 is treated as not genuine and sales made on earlier dates as genuine. The act done by Id AO against the principal of natural justice and also contrary to provision of law. b] It is submitted that to understand the real nature of the transaction, has to look at the entire transaction as a whole and not to adopt a dissecting approach. Further also the meaning and intent of the transaction cannot be at variance with the actual intent. Further also that cash deposits in bank account out of business transaction as non-existent and treated the same as unexplained and addition of 8,95,23,633/- was accordingly made by Id AO without any attempt by making independent enquiry to strengthen his I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 20 suspicion into sound fact, nor he accepted the explanation of the assessee but simply proceeded to make the addition to unnecessary harassment. c) Further the documentary evidence was on record of Id AO which also proved beyond doubts that the cash deposited in the bank accounts out of genuine sales made by the assessee as it is admitted and acceptable facts that assessee is having stock of gold and such stock was sold by him and amount realized from such sales in cash which is deposited in bank account during the demonetization period. The entire stock, sales, cash received and cash deposited in bank account are duly recorded in books of accounts and supported from documentary evidence which has been duly verified & examined by the Id AO which had not been disapproved or controverted by furnishing any tangible or credible material evidence which suggest that such transaction are made out of the books of accounts & not genuine. d] It is further relevant to mention that when the Ld AO had accepted the stock of gold lying with assessee then how the sales made from such stock can be treated as bogus as only because the assessee has made the high sales of Rs 89523633/- on the date of demoralization ie 08/11/2016 and deposited such sales realization in bank account cannot be ground to reject the genuine claim of assessee supported from legal & valid documentary evidence. The cash deposited in bank account out of legal & valid business receipt which has been duly recorded in the audited financial statement. E) The Ld. AO had treated the normal transaction in respect of business receipt as something unusual and out of the ordinary only as un- discerningly which is against the principal of natural justice. The Hon'ble Rajasthan High Court in the case of Smit Harshila Chordia vs, ITO (2007) 208 CTR 208 (Raj) Held - "Cash credit - Cash received from customers - Tribunal has found as a fact that the assessee was receiving money from the customers against which delivery of vehicles was made- Such cash deposits are self-explanatory and would not attract sec 68- Therefore, no addition could be made F ] It is further submitted that the Id. AO made addition in respect of cash deposited in bank account as unexplained money u's 69A which is double taxation on same income as on one hand the Ld. AO had taxed the profit on sale made by assessee and on the other hand Id. AO taxed the cash received from sales realization which was deposited in bank as unexplained money also been added u/s. 69A of the Act. The Hon'ble Supreme Court in the case of CIT vs Devi Prasad Vishwnath Prasad (1969) 721TR194 (SC) that "It is for the assessee to prove that even if the cash credit represents income, it is income from a source, which has already been taxed" The assessee has already offered the sales for taxation hence the onus has been discharged by it and the same income cannot be taxed again, Reliance is also placed on the decision of Hon'ble Supreme Court in the case of CIT vs Durga Prasad More (1969) 721TR807 (SC) in which it was held "If the amount represented the income of the assessee of the previous year, it was liable to be included in the I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 21 total income and an enquiry whether for the purpose of bringing the amount to tax it was from a business activity or from some other source was not relevant" i. The Hon'ble ITAT Delhi Bench in the case of AGONS GLOBAL P LTD v/s ACIT (Appeal No 3741 to 1 is not proper. When 3746/Del/2019 has held that mere addition made on this ground that there is deviation in ratio the assessee had regular cash sale and deposit of cash in bank accounts and if nothing incrementing is found contrary then addition u/s 68 of such cash sale would tantamount to double taxation. ii. Similar view has been taken by the Hon'ble ITAT. Indore Bench in the case of DEWAS SOYA LTD, UJJAIN vs Income Tax (Appeal No 336/Ind/2012 has held that "The claim of the appellant that such addition resulted into double taxation of the same income in the same year is also acceptable because on one hand cost of the sales has been tarted (after deducting gross profit from same price ultimately credited to profit & loss account) and on the other hand amounts received from above parties has also been added u/s 68 of the Act. This view has been held by the Hon'ble Supreme Court in the case of CIT vs Devi Prasad Vishwnath Prasad (1969) 721TR194 (SC) that "It is for the assessed to prove that even if the cash credit represents income, it is income from a source which has already been taxed". The assessee has already offered the sales for taxation hence the onus has been discharged by it and the same income cannot be taxed again. iii. The Hon'ble ITAT. Ahmedabad Bench in the case of Shree Sanand Textiles Industries Ltd. Vs DCIT, ITA No. 995/Ahd/2014 where the Hon'ble ITAT held that "The amount of sale as claimed by the assessee was already offered to tax by the assessee by reflecting the same in its trading and profit and loss account. This fact had not been doubted by the authorities below. The Tribunal further noted that the impugned amount had been taxed twice firstly the same was treated as sales and secondly the same was treated as unexplained cash credit under section 68 of the Act. The Tribunal observed that the provisions of section 68 of the Act can be attracted where there is a credit found in the books of accounts and the assessee failed to offer any explanation or the offer made by the assessee is not satisfactory in the opinion of the assessing officer. Whereas in the instant case, the assessee had explained that the impugned amount represented the sale which had not been doubted by the authorities below. Therefore, the impugned amount could not be treated as unexplained cash credit under section 68 of the Act merely on the ground that the assessee failed to furnish the details of the existence of the parties. The Tribunal also opined that the provisions of section 68 could not be applied in relation to the sales receipt shown by the assessee in its books of accounts. It was because the sales receipt had already been shown in the books of accounts as income at the time of sale only and once the purchases had been accepted by the authorities, then the corresponding sales could not be disturbed without giving any conclusive evidence/finding" I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 22 iv. CIT v. Vishal Exports Overseas Limited (Gujarat High Court) Tax Appeal No. 2471 of 2009. Revenue carried the matter in appeal before the Tribunal. The Tribunal did not address the question of correctness of the CIT. (Appeals)'s conclusion that amount of Rs.70 lakhs represented the genuine export sale of the assessee. The Tribunal however, upheld the deletion of Rs.70 lakhs under section 68 of the Act observing that when the assessee had already offered sales realisation and such co accepted by the Assessing Officer to be the income of the wav addition of the same amount once again under suction of the Act would tenant to double taxation of the same income. GJ Further the opening para of provision under section 69A clearly says "Where in any financial year the assessor is found to be the owner of any money, bullion, Jewellery or other valuable article and such money. bullion, jewellery or valuable article is not recorded in the books of account if any, maintained by him for any source of income. However, in the present case the cash deposit in bank account represents the business receipt of assesse which is duly supported and recorded in the books of accounts therefore the addition made by invoking the provision of sec 69A is only on the basis of assumption & presumptions which is not legally valid and also not sustainable in eye of law. The Hon'ble ITAT Bangalore Bench in the case of Smt. Teena Bethalav/s ITO (ITA No 1383/Bang/2019) dated 28/08/2019 has held that: "14.3.3 On a reading of section 69A ( supra), it is clear that the onus is upon the AO to find the assessee to be the owner of any money, bullion, jewellery or valuable article and such money, bullion, jewellery or valuable article was not recorded in the books of account, if any, maintained by the assessee for any source of income. In these circumstances, the AO can resort to making an addition under section 69A of the Act only in respect of such monies /assets/articles or things which are not recorded Intech assessee's books of account. In the case on hand. the cash deposits are recorded in the books of account and are reportedly made on the receipt from a creditor Further, the PAN and address of the creditor as well as ledger account copies of the creditor in the assessee's books of account have also been field before the AO. In these circumstances, it is evident that the AO has not made out a case calling for an addition under section 69A of the Act. Probably, an addition under section 68 of the Act could have been considered: but then that is not the case of the AO The assessee, apart from raising several other grounds, has challenged the legality of the addition being made under section 69A of the Act. In support of the assessee's contentions, the leamed AR placed reliance on the decision of the ITAT-Mumbai Bench in the case of DCIT VS Karthik Construction Co. in ITA No. 2292/Mum/2016 dated 23.02.2018, wherein the Bench at para 6 thereof has held that addition under section 69A of the Act cannot be made in respect of those assets/ monies/entries which are recorded in the assessee's books of account. In my considered view, the aforesaid decision of the ITAT Mumbai Bench (supra) is squarely applicable to the facts of the case an hand, where the entries are recorded in the assessee's books of account in this view of the matter, I am of the opinion that the addition of Rs 33,23,425/- made under section 69A of the Act is bad in law ITA Nos. 1383 and 1384/Bang/2019 in the facts and circumstances of the I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 23 case on hand and therefore delete the addition of Rs. 33,23,425/-made there under. The AO is accordingly directed" As regards for invoking the provision of section 145 of the Act a] It is submitted before the Id AO that the cash deposits in the bank account during the period of demonetization out of sales realization. The complete details along with supporting evidences had been produced before the Id AO which established beyond doubt that the sales made by the assessee are duly recorded and supported from the VAT bills and out of such realization, he had deposited the cash in the bank account. The audited books of accounts as well as bills & vouchers are also furnished before the Id AO to justification of claim of the assessee b] That once the books of account of the assessee are rejected and invoked the provision of section 145 by the Ld. AO no further addition can be made on the basis of entries made therein, therefore addition made by Id. AO is void. Further also it is submitted that addition cannot be made on account of bogus sale under section 69A of the act as the provisions of section 69A cannot be applied in relation to the sales receipt shown by the assessee in its books of accounts because the sales receipt has already been shown in the books of accounts as income at the time of sale only. It is further submitted that the addition made by Ld. AO has been taxed twice i.e. firstly same has been treated as sale and secondly same has been treated as unexplained sale u/s 69A of the act. That in Shree Sanand Textiles Industries Ltd. Vs DCIT, ITA No. 995/Adh/2014 where the Hon'ble ITAT held that "The amount of sale as claimed by the assessee was already offered to tax by the assessee by reflecting the same in its trading and profit and loss account. This fact had not been doubted by the authorities below. The Tribunal further noted that the impugned amount had been taxed twice firstly the same was treated as sales and secondly the same was treated as unexplained cash credit under section 68 of the Act. The Tribunal observed that the provisions of section 68 of the Act can be attracted where there is a credit found in the books of accounts and the assessee failed to offer any explanation or the offer made by the assessee is not satisfactory in the opinion of the assessing officer. Whereas in the instant case, the assessee had explained that the impugned amount represented the sale which had not been doubted by the authorities below. Therefore, the impugned amount could not be treated as unexplained cash credit under section 68 of the Act merely on the ground that the assessee failed to fumish the details of the existence of the parties. The Tribunal also opined that the provisions of section 68 could not be applied in relation to the sales receipt shown by the assessee in its books of accounts. It was because the sales receipt had already been shown in the books of accounts as income at the time of sale only and once the purchases had been accepted by the authorities, then the corresponding sales could not be disturbed without giving any conclusive evidence/finding." I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 24 c) That the id AO in his order had rejected the books of accounts for the sole reason that the sales made by assessee were bogus. However, the addition has been made & based on these very books of accounts only. It is settled law that once, the books of account had been rejected thereafter no addition can be made on the basis of books of account as held by Hon'ble ITAT Kolkata Bench in the case of Kabra Brothers ITA No 2022/Kol/2017 dated 08.07.2020. Further also the Hon'ble Jurisdictional High Court [Rajasthan High Court) in the case of CIT VS. G.K. Contractors, 19 DTR 305 has held that if the books of accounts are rejected then no separate addition can be made on account of cash credit under section 68 of the Act even though the assessee has failed to discharge its onus of proof in explaining the amount shown in the books of accounts as market outstanding. d] Further also [TS-5139-ITAT-2010(Ahmedabad)-O]-ITAT: AO found no correlation between entries in books of accounts with vouchers/supporting documents, hence rejected books of account and applied see. 69. Subsequently, AO made additions based on differences in creditors' account balances, and credits in bank accounts. HC stated since assessment is based on "best judgement', differences in account balances is an application of the income, and does not warrant another addition. Deposits into bank tantamount to application of income. Hence, separate addition is not called for. Further, once AO has rejected the books of account, he cannot take recourse to them to find out income therefrom and make addition/ disallowance; e] The Hon'ble Calcutta High Court in the case of Dabros Industries Company (P) Ltd Vs CIT (1977) 108 ITR 424 (Cal) as under- "Accounts-rejection-ITO applied s. 145 and made certain additions on the basis of past performance in absence of proper accounts to arrive at a correct profit -rejection and estimation on the basis of available material justified- once the books of accounts of an assessee are rejected then profit has to be estimated on the basis of available material. f) Similar decisions have been given by Hon'ble ITAT, Jaipur bench in the case of Navneet R Jhanwar Vs ITO (2004) 1 SOT 541 and Jodhpur Bench in the case of ITO Vs Kundanmal Surana (2004)3 SOT 632 g] I would like to further submits that the issue involved in the case of assessee is squarely covered in favour of assessee by the decision of Hon'ble ITAT Jaipur Bench in the case of Nawal Kishore Soni vs, ACTI ITA No. 1256, 1257, & 1258/JP/2019 Date of Pronouncement: 15/09/2020. h] The observation made by Id AO in the is clear that assessee has raised total number of 504 cash sale invoices in the month of November 2016, which is exceptionally high. Further, all the cash sale of gold was made on the day of 8th November 2016 only. It was observed that no other cash sales were recorded before and after 8 November 2016 except on 15.09.2016 and Rs. 108975/-on 03.10.2016. This pattern of sale is highly suspicious und raises I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 25 serious concerns about the books of account. In this regard, the assessee was show caused to substantiate this anomaly in his books of account hut the submission received from assessee was not found acceptable" The observation made by Id AO is not only against the principle of natural justice but also contrary to law decided by Hon'ble Courts. Further also it is settled principle that no additions can be made on own guess work, assumption. presumption and suspicion. An allegation remains a mere allegation unless proved. Suspicion may be strong however cannot take the place of reality. In this regards I rely on the decision of Hon'ble ITAT Visakhapatnam bench in the case of M/s Hirapanna Jewellers in ITA No 253/Viz/2020 dated 12/05/2021. On the identical issue the Hon'ble Bench." On the issue of capital gain considered partly as business income “That the addition so made by Id AO only on the basis of assumption & presumption and also against the principle of natural justice. It is further submitted that once the capital assets had been converted in the stock in trade and paid capital gain on such transaction as per provisions of the law. The Id AO should have treated subsequent transaction as business transaction as the gold is part of business assets and which was converted as per provisions of the law. Further it is expected of the Officers of the State is to apply the law equally to all and not be overzealous in seeking to make arbitrarily finding ignoring the statutory provisions as well as the binding decisions of this Court. The conduct as adopted in the case of assessee is not expected of the Officers of the State as in a hypothetical way putting the assessee to enormous harassment and inconvenience is against the principle of natural justice. The Hon'ble Supreme Court in the case of CIT v/s Associated Industrial Development Co. (P) Ltd. reported in 82 ITR 586 held as under:- "Whether a particular holding of share is by way of investment or forms part of the stock in trade is a matter which is within the knowledge of the assessee who hold the share and he should in normal circumstances, be in a position to produce evidence from his records as to whether he has maintained any distinction between those shares which are his stock in trade and those which are held by way of investment." I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 26 5.2 To support the various contentions in the written as well as the oral arguments made the ld. AR of the assessee also filed a paper book containing following documents / records: ,_ S. No. Particulars Page No. 1. Copy of ITR along with computation of income 1-10 2. Copy of audited report along with financial statement. 11 -29 29 3. Copy of ledger account of gold in the books of Shri Nath Jewellers. 30 - 40 4. Copy of letter to AO dated 17/11/2019. 41 - 68 4. Copy of VAT order in which complete details of sales & purchases for year under consideration. 69 - 73 5. Copy of written submission before CIT(A). 74 - 87 6. Copy of decisions of Hon'ble ITAT, Jodhpur Bench in the case of M/s Gems & Art Plaza v/s DCIT, Jodhpur in ITA No. 353 & 354/Jodh/2023 dt. 05/01/2024. 88 - 109 7. Copy of decision of Hon'ble ITAT, Amritsar Bench in the case of Balwinder Kumar v/s ITO, Jalandhar in ITA No. 256/Asr/2022 dt. 31/01/2023. 110 - 119 8. Copy of decision of Hon'ble Madras High Court T/CIVIL Application No. 1526 of 2007 dt. 27/07/2007. 120 - 128 6. The ld DR is heard who has relied on the findings of the lower authorities and has relied upon the following case laws : Sr. No. Name Citation Date of judgment/order 1 Sunil Jain vs. Income Tax Department 154taxmann.com14(SC) 04/08/2023 2 Sapta Panchait Kirshk Seva Swablambi Sahkari Samit Ltd. vs. Union of India (2020) 121taxmann.com 332 (Patna) 3 Bharat Krishi Kendra vs. Union of India 136 taxmann.com 245 (Chhattisgarh) 15/03/2022 I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 27 The ld. DR argued that ld. AO by giving the chart explained that in the earlier year the assessee was not liable for audit and has declared much less turnover and ultimately in the year under consideration directly recorded sales of Rs. 16,92,11,685/-. The assessee has not disclosed the correct position of stock of business in the earlier return of income filed by the assessee. The bank account of Shrinath Jewellers, came into operation on 28.07.2016 and there is no transaction before that date. The ld. DR reiterated the chart made in the order of the assessment wherein deposited of cash before in Nov. 2015 with that of Nov. 2016 were compared and demonstrated that they are giving the absorbed results. The ld. DR referring to chart made at page 8 of the assessment order reported that the chart is bell shape and it is only shows higher on November 2016 and therefore the sales reported and thereby the cash deposited is all an afterthought by the assessee. The cash sales were made by raising more then 500 bills on single day which is also not human probability of sales. All the bills are with signature and that too typical for which the same is not possible to be made on the same day and therefore, the bills are not correct. The ld. DR being lady argued that in the cash book there is no purchase being lady and all the names are written are that of the gents and the same is also not free from doubt. Therefore, she relied upon the judgment of Srilekha Banerjee as referred I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 28 by AO where in it is held that the source of money not having been satisfactory proved by the assessee. As regards the shifting of income from under the capital gain to profit of business and profession she relied upon the detailed finding of the ld. AO and that of the ld. CIT(A). 7. We have heard the rival contentions, perused the material placed on record and gone through the judicial precedent cited by both the parties to drive home their respective contentions. The apple of discord raised by the assessee in ground no. 7 & 8 in the matter is that for the year under consideration the assessee has shown capital gain on the conversion of Gold in stock in trade of Rs. 2,86,81,817/- and income from other sources. As per the information available to ld. AO it was found that assessee has deposited huge cash during the demonetization period. Assessee was asked to explain the source of the huge cash deposits made during the time of demonetization period. Assessee claimed that he is doing a trading business in the year under consideration and over the year had sold silver and gold to various persons in cash. The ld. AO noted that assessee has changed his name and style of doing business in the instant year under consideration and the quantum of the turnover from AY 2015-16, AY 2016-17 and even in AY 2018-19 is much less that even the books of account are not audited. There is no business in the I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 29 proprietorship concern M/s Shrinath Jewellers, which is evident from the Bank A/C which was came into operation on 28.07.2016 and there is no transaction before this date. Further, assessee has also not declared balance on date 31.03.2016 in the return filed by him for AY 2016-17. As the assessee had deposited Rs. 9,38,64,808/- into bank account during the demonetization period. Assessee has submitted that he had disclosed 44.90 Kgs of Gold under IDS scheme 2016. As per assessee's submission, assessee had declared gold of Rs. 12,76,81,150/- on date 15.09.2016 as capital asset. Assessee also claimed that the said gold pertains to year 2011 and that IDS was considered, and form no. 4 was issued. Further, the assessee claimed that he had converted the said disclosed gold into stock in trade on various dates 19 dates referred in the computation of income starting from 15.09.2016 to 08.11.2016. The said conversion was accepted by the revenue but the rate adopted was disputed by the ld. AO and on that count the ld. AO noted that the assessee has shown capital gain higher side for an amount of Rs. 1,09,57,300/- and business income less to that extent. So on this issue once the assessee has converted the capital asset into stock in trade, the revenue sum moto cannot changed the value adopted by the assessee on the ground that income under one head shown higher and on the other head less. Here we note that once the conversion of capital I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 30 asset converted into stock in trade is not disputed by the revenue and the rate adopted by the assessee which is higher then what is reflected in the online platform. The contention of the assessee that online platform rate is for buying and sell online without physical delivery whereas the rate of physical delivery always remain higher side and therefore, he has take the higher rate as the capital assets on conversion immediately forms part of stock in trade and that conversion is accepted by the revenue and only disputed the rate. The same cannot be done when there is no loss to the revenue in terms of the income to be offered in the year under consideration. It only matter the rate of tax for capital gain and that of the business income. In terms of this observation we found merits in the arguments of the ld. AR of the assessee that the rate of gold is higher for physical delivery and considering the facet of that matter we do not found any merits in the contentions of the revenue in disturbing gold disclosed under IDS, 2016 which was for an amount of Rs. 12,76,81,150/- and after conversion into stock in trade on various dates the total sale proceed was Rs. 15,63,62,967/- is to be considered as correct sale price considering the arguments of the assessee that the rate of gold for physical delivery is higher. Not only that when there is no disputed regarding the overall income of the assessee in the year under consideration, the only difference disputed by the ld. AO and CIT(A) the I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 31 head under which is to be calculated. Considering the material available on record and based on the arguments advanced before us we are of the considered view that the assessee has correctly computed the capital gain. Based on these observations ground no. 7 & 8 raised by the assessee is allowed. 8. The assessee in ground no. 4 raised the issue of cash sales recorded in the books of the assessee considered as unexplained money u/s. 69A of the Act. The assessee has deposited cash during the demonetization period of Rs. 9,38,64,808/- and sold exorbitantly high value of gold in one day that is 08.11.2016 which appears as an anomaly. The ld. AO noted that assessee never made any cash sale in previous year and the average cash balance in the previous year’s remains Rs. 1,71,801/-. When the same stats are compared with the current year, before November 2016, the average cash in hand balance is Rs. 9,94,860/- which is abysmal low in the comparison of the cash deposited during the time of demonetization in the name of cash sale. The ld. AO also noted that assessee has claimed that he had converted the gold declared in IDS, 2016 into stock in trade in the month of September and October. But the total cash sale received is only Rs. 70,585/- and Rs. 1,48,271/-. However, on date 08.11.2016 the assessee I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 32 recorded cash sale from the gold for an amount of Rs.8,95,23,633/- which is unusual. On the perusal of details filed by the assessee the ld. AO noted that assessee has raised total number of 504 cash sale invoices in the month of November 2016, which is exceptionally high. Further, all the cash sale of gold was made on the day of 8th November 2016 only. It was observed that no other cash sales were recorded before and after 8th November 2016 except on 15.09.2016 and on 03.10.2016. This pattern of sale is highly suspicious and raises serious concerns about the books of account. In this regard, the assessee was show caused as to substantiate this anomaly in his books of account but the submission received from assessee was not found acceptable. The ld. AO also noted that bills were generated from tally software which is signed by the assessee meticulously which is not possible to do all these work on 8the November night when the demonetisation announced, as it is clear that assessee was the sole person handling all the affairs of the shop. The counter sign is also substantiating it. Further, as per the signature of the assessee it is clear that he was not in hurry and took his sweet time to put it on the bills, which is a time-consuming process in itself creates doubt about the veracity of the records produced. As It is also important to note here that even the simple exercise of feeding data related to type, weight and rate of gold purchased by a customer in I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 33 computer, counting the cash paid, retuning the change balance and printing the bills would take more than 1 minute per bill. It is stressed here that assessee has 510 such cash bills raised within 180 minutes. It is undoubtedly exceptionally high and next to impossible task. On the perusal of sales bills for the date 08.11.2016, it was observed that rate of gold has been mentioned at Rs. 3810.15, 3810.10, 3810.40, 3810.95, 3811.10, 3811.15, 3811.20.. and so on. The series continues till 3882.15 per gram rate of the last bill on that date. It shows that there was not a fixed price for the sale of Gold. If there were high number of purchases occurring on a day, the sale price would have been in the multiple of 100 or 50, it is not clear to the ld. AO that how the negotiation was fixed for the two digits after the decimal for each sale bill. There was no time available for buyer to bargain of such small range. Further, all the sales bills were in the range of Rs. 1,50,000/- to 2,00,000/-. If any customer has only such small amount, what was the need of purchase the gold in haste while he can deposit the same in his bank account, as it was assured that there will be no enquiry if the cash deposit is below 2.5 lacs. Even if it is considered that sales were made in whole days, which cannot be accepted as statistically it is proved in the previous Para's that the event of sale on date 8.1.2016 was an exceptional event and only justification to occur such event, is announcement of demonetization. I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 34 However, even if the same is accepted that assessee made the whole sale during the day, even then assessee had working hours of 11 AM to 12 PM per customer time comes as 1.5 minutes which is approx. 90 seconds. The same cannot be accepted as genuine. Based on that finding it was hold that assessee has its own unaccounted cash of SBNs which have been introduced in its books way of cash sales for which has no proper records or justification and therefore, the cash in hand balance on date 09.11.2016 was Rs. 9,38,64,808/- but it was noticed that assessee deposited the same on date 07.12.2016. The explanation of the assessee in this regard was considered but is not acceptable as the assessee is indulged into trading of gold and in this business line persons are habitual of large cash handling and security of the same is ensured by the various methods and skills developed over the time. Further, the action of the assessee in relation to late cash deposit on 07.12.2016 also supports the aforesaid view. Assessee has not given any valid reply with proper supporting documents in relation to restriction by bank and safety purpose. Thus, the ld. AO considered that out of total cash deposit, amount claimed to be received on date 08.11.2016 of Rs. 8,95.23,633, being the cash sale on 08-11-2019 reported by the assessee is nothing but the unaccounted cash of the assessee routed through books as cash sales. The ld. AO also discussed the Human I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 35 probability Test” could be applied when the Assessee makes the Officer to believe his/her story as a valid event. The false claims of the assessee cannot sustain before the test of Human Probabilities as enumerated in the decision of the Hon’ble Supreme Court in the case of Roshan Di Hatti vs. CIT (1977) 107 ITR 938 (SC), Kale Khan Mohammed Hanif vs. CIT(1963) 50 ITR 1 (SC), it has been held in various judicial pronouncement that where the nature and source of any receipt/investment, whether it be a money or other property, cannot be satisfactorily explained by the assessee, it is open for the revenue to hold that it is the income of the assessee and no further burden lies on the revenue to show that the income is from any particular source. In the case of the assessee, the assessee could not explain the sources for making deposit of cash in SBN notes to the extent of Rs. 8,95,23,633/- and therefore, the same was added u/s. 69A of the Act. The non disputed fact that the ld. AO accepted the capital stock converted into stock in trade and has already not disputed the availability of stock with the assessee, not only that tax on the converted stock is duly paid by the assessee. The source of this stock being IDS disclosure is also not under dispute about available quantity of Gold with the assessee. The assessee has paid the value added tax on the sales recorded in the regular books of account. As per the submission of the assessee, gold I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 36 disclosed under IDS, 2016 was of Rs. 12,76,81,150/- and after conversion into stock in trade on various dates the total sale proceed was Rs.15,63,62,967/-. Even the ld. AO accepted the fact that the value adopted by the assessee on the date of conversion being higher he has taken the fair market value on the date of conversion of capital into stock in trade and the balance amount considered as business income of the assessee. As regards the observation of per gram rate taken by assessee as fair market value was higher than the per gram value of prevailing market rate, we found force in the argument that rate of physical delivery of gold and the rate of online trading of gold will be different and when the assessee has offered the higher rate there is no loss to the revenue. From the records it is admitted fact that the assessee has declared the sales of stock of gold amounting to Rs. 15,63,62,967/- out of stock of gold held by him on conversion. The complete documentary evidence in support of sales transactions were furnished to the ld. AO. The assessee also supported that the sale made by him is in accordance with the disclosure of turnover in the VAT return. The only dispute is that whether the assessee’s source of cash on account of available gold stock be considered as from the explained source of sales recorded in books or not. In support of the sales assessee has submitted VAT return, in support of the sales made by the I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 37 assessee he has placed on record the date of sales, voucher number / sale bill number, name of persons to whom sale is made, weight of the gold sold, rate at which the same is sold, and the amount received from each customer. None of these details disputed and found incorrect by the ld. AO. He has merely stated that the sales recorded by the assessee is not possible to be made on 08.11.2016. The assessee has submitted all the details for sales of gold of Rs. 15,63,62,967/- out of it the ld. AO disputed the cash receipt of 8,95,23,633/- so the revenue has not found fault in the other sales recorded in the same set of books and only disputed part of the sale recorded in the books. The action of the ld. AO is purely based on the presumption and assumption on account of the demonetisation declared and sales made by the assessee as on that date is not believed without doing any independent inquiry, the action of the ld. AO is not correct when he has already accepted part of the sales on the same set of record out of the total sales of Rs.15,63,62,967/- recorded by the assessee. The entire stock, sales, cash received and cash deposited into bank account are duly recorded in the books of accounts and supported from the documentary evidence which has been duly verified and examined by the assessing officer and ld. AO has not disproved or controverted by bringing on record any tangible or credible material so as to disprove the records produced by the assessee. Thus, I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 38 merely the assessee has reported the case sales on the date of demonetization the same cannot be considered as not genuine transaction recorded in the books of account and supported by the invoices which are duly recorded in the value added tax return filed by the assessee. As regards the contention that all the invoices are ranging below Rs. 2,00,000 not having full name and the contention of the ld. DR that all the name of written are of the male and not a lady name shows that the sales is not correctly recorded. As regards the receipt of cash from the customer the jurisdiction high court has held in the case of Smt. Harshil Chordia Vs. ITO reported at 298 ITR 349 (Rajasthan-HC) that So far as question No. 2 is concerned, apparently when the Tribunal has found as a fact that the assessee was receiving money from the customers in hands against the payment on delivery of the vehicles on receipt from the dealer the question of such amount standing in the books of account of the assessee would not attract section 68 because the cash deposits becomes self-explanatory and such amounts were received by the assessee from the customers against which the delivery of the vehicle was made to the customers. The question of sustaining the addition of Rs. 6,98,000 would not arise. We, therefore, hold that no addition was required to be made in respect of Rs. 6,98,000, which was found to be the cash receipts from the customers and against which delivery of vehicle was made to them. Thus, when in this case delivery of gold is not doubted supported by the stock and payment of cash the consequential receipt of the cash cannot be doubted and respectfully following that finding the receipt of the cash cannot be doubted merely the same has been received on the day of I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 39 demonetization. The ld. AR of the assessee also relied upon the co- ordinate bench Jodhpur case decision in the case of Gems & Art Plaza Vs. DCIT wherein the co-ordinate bench held as under : "We heard the rival submission and considered the documents available in the record. First, we are adjudicating the appeal ITA No. 353/Jodh/2023. The assessee deposited cash by claiming that the amount was originated from the sale of stock. It is never a question that the assessee has never controverted that assessee has in sufficient stock and purchased on the date of announcement of demonetisation on dated 08.11.2016. The assessee sold goods from his shop. Before that date, the assessee was sufficiently covered by the stock. The assessment was completed by the Sales Tax Authority and the turnover and purchased was duly accepted. It is further submitted that from the documentary evidence the source, purpose and sequence of event duly established that there was direct nexus of cash deposit in bank account out of sales realization in cash. It is settled position of law that when the Id. AO had not doubted the sales, purchases, stock and gross profit declared by the assessee then the cash deposit out of such sales cannot be doubted. The authority below had treated the normal transaction in respect of business receipt as something unusual and out of the ordinary only as un- discerningly which is against the principle of natural justice. 12.1 We respectfully, relied on the order of the Anand Metal Corporation (supra). Further, the assessee's books was rejected u/s 145(3) for non maintenance of stock register. The assessee claimed that the assessee is dealing with the items which are not possible for her to maintain stock register. The ld. AR respectfully relied in the order of the Hon'ble Jurisdictional High Court in the case of Malani Ramjivan Jagannath (supra). 12.2 We also respectfully followed the order of the Hon'ble Jurisdictional High Court in the case of non maintenance of stock register cannot be the reason for rejection of books of account. The assessee was eligible to prove the stock, the purchased and the assessment order of the Sales Tax Authority. There are no discrepancies on purchase and stock of goods. On mere suspicion the sale of goods cannot be treated u/s 69A of the Act. The ld. DR was unable to submit any contradictory orders / judgments before the bench. Accordingly, the ground of the appeal bearing ITA 353/Jodh/2023 is allowed.” I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 40 9. On being consistent to that finding recorded the bench of the considered view that when revenue not proved that the sale made by the assessee which is executed after giving the goods to the customer, duly supported by the invoice issued, assessee having sufficient stock in the books, sales is duly reflected in the books of accounts supported by payment of VAT. Therefore, the contention of the revenue based on the facts and circumstance of the case is not accepted and we see no reason to dispute the sales recorded in the books. Moreover, in the turnover this sales is already recorded and there is no finding in the order of the lower authority when out of total sales of Rs. 15,63,62,967/- only sales of Rs. 8,95,25,633/- without bringing anything contrary to the records proved and therefore, even the same income cannot be taxed twice once by accepting the income recorded in the books on account of sales and other by taxing the cash generated out of the cash sales reported in the books of account. As regards the human probability it is not contended the these sales were only made after demonetization declared at 8 pm. The assessee in support of sales submitted the invoice paid the VAT on it. On this invoice only the date is written and the it is not finding recorded on oath that sales is only after 8PM. Considering the stock available with the assessee and when the part of the sales is accepted there is no reasons to disbelieve the sales which is I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 41 recorded on the date of demonetization. Therefore, once the goods is supported by the Invoice recorded in the books and no defects found merely the same is recorded on the date of demonetization addition of cash receipt cannot be made in the hands of the assessee as undisclosed money u/s 69A of the Act. The provision of section 69A of the Act reads as under : Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. 10. On perusal of the above provision of the Act it is clear that the assessee has recorded the cash in their books of account and the source of the said cash being the sale of goods is duly recorded in the books of account and when there is no contrary material brought on recorded for the sales recorded by the assessee for an amount of Rs. 15,63,62,967/- the action of the lower authority considered the cash sales of Rs. 8,95,25,633/- as not genuine is against the evidence placed on record. Moreover, the bench noted that the sales already recorded in the books is also not considered to be reduced as income of the I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 42 assessee and in addition the cash sales to the tune of Rs. 8,95,25,633/- is disbelieved. As regards the number of invoices generated for each separate sales bills on this issue bench noted that the assessee has submitted the invoice. On this invoice only the date is written and it is not finding recorded on oath that sales is only after 8PM. Since it was not under dispute that the assessee not sold the goods. Therefore, once the goods is supported by the Invoice recorded in the books and no defects found merely the same is recorded on the date of demonetization addition of cash receipt cannot be made in the hands of the assessee. 11. Thus, considering all the facets of the case the bench noted that the revenue did not pinpoint any defects in the books of accounts, quantitative records available with the assessee, cash book and invoice presented in the assessment proceedings. Merely the assessee has sold the gold on the date of demonetization it does not make the sale as non-genuine and we find support of this contention from the decision of the jurisdictional high court in the case of Smt. Harshil Chordia Vs. ITO reported at 298 ITR 349 (Rajasthan-HC)(supra) holding that once the cash receipt is supported by invoice supported by the delivery of goods the source of that cash cannot be in doubt. Considering the above Judgment of the jurisdictional high court in the case of Smt. Harshil I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 43 Chordia (supra) we do not find any merits on the finding of the ld. AO and that of the ld. CIT(A) in disbelieving the sales recorded by the assessee as the sales is in regular course of business which is duly supported by the invoice and delivery of the goods recorded in the books of the assessee. The cash is generated out of the stock already on record and thus the sales made by the assessee is genuine sales recorded in the books of account. All the details required to prove the sales made by the assessee were provided in the assessment proceedings. Based on the discussion so recorded herein above we consider the ground no. 4 of the assessee and hold that the cash receipt from the cash sales cannot be added as income u/s. 69A of the Act and based on these observation ground no. 4 raised by the assessee is allowed. 12. Since we have allowed the ground no. 4 on merits the ground no. 3, ground no. 2, ground no. 5,ground no. 6 becomes educative in nature and ground no. 1, 9 & 10 being general in nature does not require any adjudication. 13. In the result, the appeal of the assessee is allowed. I.T.A. No. 33/Jodh/2024 Assessment Year: 2017-18 44 Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) Judicial Member Accountant Member Ganesh Kumar, PS Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order Date Initial 1. Draft dictated on Sr.PS/PS 2. Draft placed before author Sr.PS/PS 3. Draft proposed & placed before the Second Member JM/AM 4. Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr. P.S./P.S. Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8. Date on which file goes to the Head Clerk 9. Date on which file goes to the AR 10. Date of dispatch of Order