DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3, AMRITSAR V. SH. NIKHIL NISCHAL, AMRITSAR

ITA 604/ASR/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4239 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 19-09-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MANPREET SINGH DUGGAL
• Keywords: Business income
• Section: 68; 145; 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 604/Asr/2017 Assessment Year: 2014-15 Deputy Commissioner of Income Tax, Circle-3, Amritsar Vs. Sh. Nikhil Nischal, 221/X-2, Chowk Katra Sufaid, Amritsar [PAN: AEUPN 1209E] (Appellant) (Respondent) Appellant by : None Respondent by: Sh. Manpreet Singh Duggal, Sr. DR Date of Hearing: 09.05.2022 Date of Pronouncement: 23.06.2022 ORDER Per Anikesh Banerjee, JM: The instant appeal was filed by the Revenue against the order passed by the Ld. Commissioner of Income Tax (Appeals)-1, Amritsar [in brevity the CIT(A)], bearing Appeal No. 10126/2016-17 dated 14.06.2017 u/s 250(6) of the Income Tax Act, 1961 [in brevity the Act], in respect of Assessment Year 2013-14. The instant appeal was generated as per the order of the Dy. CIT, Circle-3, Amritsar passed u/s 143(3) dated 18.11.2016. 2. Brief fact is that the addition was made an amount of Rs.2,01,18,843/- on account of the addition, all gross profit @ of 5% on turnover of Rs.41,42,53,606/-. The amount was added u/s 68 for unverifiable cash sales of Rs. 41,42,53,606/-. ITA No. 604/Asr/2017 DCIT v. Nikhil Nischal 2 The assessee is a trader of gold and bullion, the cash sale was made below 50,000. The said sale was unverifiable by the ld. AO accordingly the books was rejected and the addition was made 5% of the GP. 3. Aggrieved, the assessee filed an appeal before the ld. CIT(A) and the ld. CIT(A) has deleted the addition on the basis of the factual matrix in different that the referred the judgment of Hon’ble Apex Court in case of Zaveri Diamond Vs. CIT (2012) 25 taxmann.com 552 (SC). The observation of the ld. AO is reproduced as under: “3. Conclusion:- Accordingly the amount of cash sales of Rs 41.82.53.606/- in found to be unexplained and unverifiable and liable to be added u/s 68 of the Act. However as per the particulars facts and circumstances of the case that purchases verifiable and even accepting the submission of the assessee regarding retails cash sales (below Rs 50000/- each bill) by investing about Rs.30 lacs for one piece of bullion and selling by splitting it into more than 50pieces to various person below Rs50000/-(fifty thousand) , profit margin is found absolutely self determined in respect of cash sales(retail sales ) gross profit margin @5% in respect of cash sales is found very much reasonable, otherwise accepting the gross profit rate of previous years will encourage the assessee to do the same unfair practice to show cash sales and profit margin as per his convenience. (ii) Even otherwise assessee was required to collect tax at sources @1% of cash sales on bullion sales exceeding 2 lacs and jewelry sales exceeding Rs 5 lacs (vide section 206C(ID) of the Act and by issuing fictitious bills below 50,000/- has avoided collection of tax at sources and is found to have introduced unaccounted cash of regular dealers against unaccounted sales to them and showing that against fictitious small cash bills below Rs 50000/- Accordingly the gross profit is applied @5% in respect of cash sales as income is computed as under and accounts of the assessee are treated accordingly and profit decaled are not accepted as correct. ITA No. 604/Asr/2017 DCIT v. Nikhil Nischal 3 Gross Profit on retails cash sales (@5% of retails cash sales 44,02,66,953/- taken (including profit margin of 5% ) 2,20,13,347/- Gross profit shown on cash sales Difference to be added to income Total Income 18,94,504 2,01,18,843/- (Addition of Rs 2,01,18,843/-)” 4. The ld. DR vehemently argued and relied on the assessment order further persuaded that the appellate authority deleted the addition on the basis of the observation of the factual matrix. The observation of the ld. CIT(A) is reproduced as under: “During current assessment against which the assessee has filed the appeal the AO has not rejected the books of account u/s 145 (3) and has gone ahead and made estimated addition by calculating the G.P. at 5 % of cash sales. The AO has relied on the decision of Supreme Court in Javeri Diamond vs CIT 25 taxman. Com 552 (SC). In that case SC & HC had held “that assessee was not doing any trading in diamonds 8s gold jewellery and was engaged in issuing bills for 2-3 % commission to persons who were VDIS declarant of VDIS 1997 scheme.” It is clear from this that facts of present case are absolutely different as Gold has been purchased from State bank of India, so there is no doubt about the genuineness of purchases & sales. In CIT vs KS Bhatia 269 ITR 577 (Punjab) it was held “In the absence of a definite finding that the case of assessee comes within the purview of first provision to section 145 (1), it is not possible for the assessing officer to reject the books of account results and made addition to Gross profit. The mere fact that the profits are low compared to the earlier years is not a circumstances or material which could justify an estimate in the circulatory circumstances.” 5. We have considered the rival submission and also the documents available on the record. It is a fact that the ld. AO was unable to verify the cash sales from the books. All the sales bills are below of Rs.50,000/-. In this respect, the Revenue filed a submission which is extracted as follows: ITA No. 604/Asr/2017 DCIT v. Nikhil Nischal 4 “(ii) He ignored the finding of assessing officer that almost entire cash sales of Rs 41.73 crore (37.69% of total sales ) has been shown in the first 4 months that too in the peak off seasons which is not probable ,possible and extremely unsusual. (para 2 and 3 of assessment order) (iii). He ignored that by issuing ficticious bills below Rs 50000/- assessee also avoided collection of tax at source @1% vide section 206C(ID) (para 3(ii) of assessment order) (iv). He ignored that even accepting the submissionof the assessee regarding retail cash sales (below Rs 50000) per bi11 by investing Rs 30 lac for one piece of bullion and selling by splitting it into more than 50 pieces to various persons that too below Rs 50000/ - profit margin absolutely found self determined in respect of cash retail sales . Gross profit margin @5% is very much reaosnsable.. Otherwise accepting the gross profit of previous years will encourage the assessee to do same unfair practice and showing lower profits and even net profit of 8% is applicable u/s 44AD of the Act. (Page 6 last para and para 3)” 6. The ld. CIT(A) only delivered his order on the basis of factual difference that the order of Hon’ble Apex Court. The only reasons are that the assessee is not being the trading of diamonds and gold jewellery. The proper book was not verified. Even the ld. AO was not allowed to get opportunity to submit its documents before the ld CIT(A). The reasonable opportunity was denied in respect of the ld. Assessing Officer. Accordingly, the matter is setting aside before the ld. CIT(A) denavo for fresh adjudication. 7. On other hand, the assessee & revenue should be allowed reasonable opportunity for redressed their documents. 8. In the result, the appeal of the Revenue is allowed for statistical purposes. ITA No. 604/Asr/2017 DCIT v. Nikhil Nischal 5 Order pronounced in the open court on 23.06.2022 Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order