ITO, Jaipur V. RAKESH KUMAR SONI, Jaipur

ITA 62/JPR/2011

• Counselvise Citation: 6223114 RSA 2011
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 27-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Assessee Lawyers: S L PODDAR
• Keywords: Peak credit; Onus to prove
• Section: 143(3); 131; 68; 145; 148; 263

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L. KALRA) ITA NO.62/JP/2011 ASSESSMENT YEAR- 2005-2006 THE INCOME TAX OFFICER, VS. SHRI RAKESH KUMAR 5(1), JAIPUR. SONI, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBHASH CHANDRA RESPONDENT BY: SHRI S.L. PODDAR DATE OF HEARING: 13.10.2011 DATE OF PRONOUNCEMENT: 22.12.2011 ORDER PER SHRI N.L. KALRA, A.M. 1. THE REVENUE HAS FILED AN APPEAL AGAINST ORDER OF LD. CIT (A) II JAIPUR DATED 22.11.2010. THE GROUNDS OF APPEAL ARE AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AN D IN LAW THE LD. CIT (A) HAS ERRED- IN DELETING THE ADDITION OF RS.5,58,32,598/- MADE O N ACCOUNT OF UNEXPLAINED DEPOSIT IN THE BANK ACCOUNT. WITHOUT PREJUDICE TO ABOVE THE CIT (A) ERRED IN NOT MAKING ADDITION OF RS.2,19,50,000/- THE AMOUNT SHOWN AS OUTSTANDING LI ABILITY IN THE NAME OF SHRI VIMAL KUMAR SONI, AGENT OF THE ASSESSEE WHICH WAS NOT FOUND GENUINE. CIT (A) IS EMPOWERED TO DO SO AS PER EXPLA NATION TO SECTION 251 OF THE ACT IF THE FACTS OF THE CASE WARRANTS SO. 2 WITHOUT PREJUDICE TO ABOVE THE CIT (A) ERRED IN NOT APPRECIATING FACTS OF THE CASE AND IN NOT INVOKING PROVISIONS OF SECTION 145 (3) DESPITE VARIOUS DEFECTS IN BOOKS OF ACCOUNTS AS POINTED OUT BY THE AO. CIT (A) COULD HAVE INVOKED PROVISIONS OF SECTION 145(3) AND ESTIMATED PROFIT AS HE IS EMPOWERED UNDER THE ACT IN VIEW OF EXPLANATION TO S ECTION 251 OF THE ACT. 2. THE A.O. OBSERVED THAT ASSESSEE HAS MADE CASH SA LES AND THERE ARE HUGE DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE. ASSESSEE STATE D THAT CASH IS BEING DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE BY BROKERS. SALE BILLS DO NOT CONTAIN THE NAME & ADDRESS OF THE PARTIES TO WHOM CASH SALES MADE ASSESSEE COULD NOT ESTABLISH THAT CASH IS BEING DEPOSITED BY THE BROKER. CONTENTION OF THE ASSESSEE IS THAT CASH WAS BEING DEPOSITED BY BROKER FROM THE BUYERS IN THE ACCOUNT OF THE ASSESS EE. AT THE END OF YEAR CREDIT OF RS.2,19,50,000/- WAS SHOWN IN THE NAME OF SHRI VIMA L KUMAR SONI, THE BROKER. IT WAS CONTENDED THAT SUCH AMOUNT WAS AGAINST THE GOLD TO BE DELIVERED AND SUCH GOODS WERE DELIVERED IN THE MONTH OF APRIL. SINCE THE NAMES OF THE PARTIES WERE KNOWN TO SHRI VIMAL KUMAR SONI AND HENCE THE GOODS COULD HAVE BEEN DELI VERED TO SH. VIMAL KUMAR SONI. SIX AFFIDAVITS OF THE SO CALLED BUYERS WERE FILED T O SHOW THAT GOODS WERE TO BE DELIVERED TO THEM. 3. THE ASSESSEE VIDE LETTER DATED 26.9.2007 SUBMITT ED THE FOLLOWING MODUS OPERANDI OF THE BUSINESS: THE ASSESSEE IS DOING THE WORK OF PURCHASE AND SALE S OF GOLD TT BARS UNDER THE NAME AND STYLE OF M/S RAKESH EXPORTS, JAI PUR. THE ASSESSEE PURCHASES THE GOLD TT BARS FORM THE AUTHORIZED DEAL ERS NAMELY MMTC, CORPORATION BANK, HDFC BANK, NOVA SCOTIA ETC AND HA S SOLD THE IN LOSE IN THE OPEN MARKET. SINCE THIS BUSINESS OF THE ASSE SSEE IS BASED ON THE TRUST AND FAITH THEREFORE THE ASSESSEE HAD DONE THIS BUSI NESS THROUGH TWO BROKERS I.E. SHRI BENIGOPAL AND SHRI VIMAL KUMAR SO NI. EARLIER SOME TRANSACTIONS WERE TAKEN THROUGH BENIGOPAL VERMA BUT THEREAFTER THE ASSESSEE HAS DONE THE WORK THROUGH SHRI VIMAL KUMAR SONI. THESE BROKERS BOOKED THE ORDERS FORM THE VARIOUS PARTIES IN THE OPEN MARKET OF 3 INDIA AND COLLECTED FUNDS FORM THESE PARTIES AND DE POSITED THE CASH PAYMENT IN VARIOUS GLOBAL BANK ACCOUNTS TO THE FIRM . AFTER CONFIRMATION OF THE PAYMENTS IN THE BANK ACCOUNTS THE BROKER PROVID ED THE LIST OF VARIOUS BUYERS AND COLLECTED THE GOODS PHYSICALLY FORM JAIP UR OFFICE AND DELIVERED THE GOODS TO VARIOUS PARTIES FORM WHOM HE HAD COLLE CTED THE FUNDS. THESE PARTIES ARE KNOWN TO THE BROKER ONLY. IN THIS REGAR D AN AFFIDAVIT OF SHRI VIMAL KUMAR SONI IS ENCLOSED. IN CONSIDERATION OF T HE SERVICES RENDERED THE BROKERS HAVE BEEN PAID THE BROKERAGE COMMISSION OF RS.1,17,122/- TO SHRI VIMAL KUMAR SONI AND RS.5006 TO SHRI BENIGOPAL VERMA. APART FORM ABOVE THE ASSESSEE ALSO SOLD SOME GOODS DIRECTLY IN TO THE OPEN MARKET. BUT THE MAJOR SALES WERE TAKEN PLACE THROUGH THE BROKER S ONLY. IN THIS REGARD THE DETAILED AFFIDAVIT OF THE ASSESSEE IS ENCLOSED FOR YOUR RECORD AND REFERENCE. 4. THE A.O. ISSUED COMMISSION TO I.T.O. NAGAUR TO R ECORD THE STATEMENT OF SH. VIMAL KUMAR SONI. THE A.O. NAGAUR IN HIS REPORT STA TED THAT SH. VIMAL KUMAR SONI HAS NOT PRODUCED ANY BOOKS OF ACCOUNT, NO EVIDENCE IN T HE FORM OF PAY SLIPS OR MEMORANDUM BOOKS PRODUCED. IN THE RETURN OF INCOME, SH. VIMAL KUMAR SONI HAS SHOWN THE RECEIPT OF COMMISSION INCOME FROM THE ASSESSEE. 5. THE ASSESSEE IS TAKING DELIVERY OF GOODS AT JAIP UR WHILE THE AMOUNTS ARE BEING DEPOSITED IN THE VARIOUS BANK ACCOUNTS OF THE ASSES SEE ON THE SAME DAY. ON 14.8.2007, THE ASSESSEE DELIVERED THE GOODS AND SUM OF RS.1.34 CRORES DEPOSITED IN HIS BANK ACCOUNT. THE ASSESSEE IS GETTING THE SIGNATURE OF BROKER ON THE BILL BUT NO DETAILS OR CONFIRMATIONS OF BUYERS ARE AVAILABLE EITHER WITH THE ASSESSEE OR WITH SH. VIMAL KUMAR SONI. SINCE THE SOURCE OF CASH DEPOSITED IS NOT VERIFIABLE AND THER EFORE THE A.O. ISSUED A SHOW CAUSE NOTICE AS TO WHY PEAK DEPOSIT AS ON 27.11.2004 BE N OT ADDED AS UNEXPLAINED DEPOSIT AND BE TREATED AS UNDISCLOSED INCOME. 4 6. THE ASSESSEE FILED THE REPLY AND THE MAIN POINTS HAVE BEEN REFERRED TO BY THE A.O. IN HIS ORDER AS UNDER: THE MODUS OPERANDI OF ASSESSEE HAD ALREADY BEEN NAR RATED IN VARIOUS LETTER DURING THE ASSESSMENT PROCEEDINGS. HE ALSO S TATED THAT HE HAD SUBMITTED THE FOLLOWING DOCUMENTS RELATED TO SHRI V IMAL KUMAR SONI DURING THE ASSESSMENT PROCEEDINGS A) ASSESSEES PAN B) PROOF OF RETURN OF INCOME OF SHRI VIMAL KUMAR SONI C) SERVICE TAX REGISTRATION NUMBER OF SHRI VIMAL KUMAR SONI D) PHOTOCOPY OF THE NOTEBOOK OF THE SHRI VIMAL KUMA R SONI TO WHOM THE GOODS HAD BEEN DELIVERED IN THE MONTH OF APRIL 2005. E) AFFIDAVITS OF SVS SUSHANTA DATTA, DINESH CHANDRA SEN, D.DAS, VISHWANATH MANNA, SUPRIYO GUPTA, SUJIT KUMAR RAY. HE NARRATED THAT STATEMENT OF SHRI VIMAL KUMAR SONI HAD BEEN TAKE BY ITO WARD NAGAUR BY RECEIPT OF COMMISSION FROM A.O. OF ASSESSEE. I.E. ITO WARD 5(1) WHEREIN SHRI VIMAL KUMAR SONI HAD NAR RATED THE MODUS OPERANDI OF ASSESSE. THAT ENTIRE PURCHASE AND SALES ARE DULY RECORDED. IN PARA 3 OF HIS REPLY HE STATED THAT THE BROKERS H AD DONE SOME ARRANGEMENTS AT HIS OWN TO DEPOSIT THE CASH IN BANK ACCOUNTS OF THE ASSESSEE AND ASSESSEE HAD APPOINTED THE BROKERS TO OVERCOME THE DAY TO DAY PROBLEM IN GETTING THE CASH DEPOSITS IN DIFFERE NT BANK ACCOUNTS. FURTHER THE A.R. ALSO STATED THAT THE ASSESSEE WAS NOT CONCERNED WITH THE FACT THAT FROM WHOM THE CASH IS BEING DEPOSITED IN BANK ACCOUNTS. THE A.R. FURTHER STATED THAT SHRI VIMAL KUMAR SONI HAD FALLEN ILL AND HE HAD TAKEN REST FOR THREE MONTHS AND DELIVERED THE G OODS LYING IN CUSTODY OF THE ASSESSEE IN THE MONTH OF APRIL 2005. FURTHER HE PLACED RELIANCE ON THE CASES AS FOLLOW S I) KAILASH CHAND GUPTA V/S DCIT (35 TAX WORLD 36) II) HEMLATA PATNI V/S ITO (36 TAX WORLD 168) III) R.B. JESSARAM FATEHCHAND V/S CIT (75 ITR 33) IV) INDIRA DEVI GARG V/S ITO (32 TAX WORLD 245) V) CIT V/S METACHEM INDUSTRIES (245 ITR 160) VI) ITO V/S SANTOSH DEVI (30 TAX WORLD 187) VII) SENTHIL RAJA METAL V/S CTO (79 STC 38) 7. THE ABOVE REPLY WAS NOT FOUND TO BE SATISFACTORY BY THE A.O. AS PER THE FOLLOWING REASONS: 5 THOUGH THE A.R. HAS FURNISHED THE COPY OF THE ITR, PAN, SERVICE REGISTRATION NUMBER OF SHRI VIMAL KUMAR SONI, ETC B UT ALL THESE DOCUMENTS DO NOT GIVE EVIDENCE OF THE CASH DEPOSITS BEING MAD E IN THE BANK ACCOUNTS OF THE ASSESSEE. MODUS OPERANDI OF THE ASSESSEE AS NARRATED BY SHRI VIMAL KUMAR SONI IN HIS STATEMENTS IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE AND HENCE NOT VERIFIABLE. THE ASSESSEE HAS NOT MENTIONED COMPLETE NAME AND AD DRESS OF THE BUYERS AND SALE BILLS WERE ISSUED FOR CASH. HENCE THE CASH DEPOSITS OF THE ASSESSEE IN HIS BOOKS OF ACCOUNT WAS NOT SUBJECT TO VERIFICATION IN ABSENCE OF NAME AND ADDRESS OF SO CALLED BUYERS, EVEN THE S O CALLED AGENT OF THE ASSESSEE ALSO DID NOT MENTION ANY DETAILS OF SO CAL LED BUYERS. TO PROVE THE GENUINENESS AND SOURCES OF CASH DEPOSI T IN THE BANK ACCOUNTS OF ASSESSEE, THE ONUS LIES ON HIM. THE VERSION OF THE ASSESSEE IS ALSO NOT RELIABLE DU E TO THE FACT THAT THE PRICES IN THE GOLD PRICES ARE FLUCTUATING VERY MUCH IN INTRADAY AND INTERDAY TRANSACTION IN SUCH CASE THE SMALL KARIGAR S COULD NOT BE IN POSITION TO LEAVE HIS GOLD TO SUCH A LONG PERIOD OF TIME AS 3 MONTHS. ALL THE CITATIONS SUBMITTED BY THE A/R HAVE BEEN PE RUSED AND FOUND THAT THE FACTS OF THE CASE ARE DIFFERENT FROM THE FACTS IN THOSE CASES. 8. THEREAFTER THE A.O. HAS REFERRED TO THE CORROBOR ATIVE EVIDENCE GATHERED DURING THE COURSE OF ASSESSMENT. THE ASSESSEE FURNISHED FEW PA GES OF NOTEBOOK WHERE THE DETAILS OF THE SOCALLED BUYERS OF GOODS HAVE BEEN MENTIONED. T HOSE ARE THE PERSONS TO WHOM GOODS HAVE BEEN DELIVERED IN APRIL 2005 AND AMOUNT RECEIV ED WAS OF RS.2,25,25,475/- AGAINST GOLD WEIGHING 35056.097 TO BE GIVEN. SH. VIMAL KUMA R SONI FELL ILL AND HENCE THE GOLD WAS DELIVERED IN APRIL 2005. ACCORDING TO A.O., THE ADVANCES WERE RECEIVED IN DEC 2004 AND IT CAN NOT BE ACCEPTED THAT SUCH PERSON WILL WA IT FOR 4 MONTHS TO RECEIVE THE GOLD. THE CONTENTION OF THE ASSESSEE THAT GOLD WAS NOT DELIVE RED TO THE PERSONS FROM WHOM ADVANCES WERE RECEIVED FROM 28.11.2004 TO 5.12.2004 IS NOT ACCEPTABLE AS DELIVERY OF GOLD WEIGHING 5 KG WAS GIVEN TO SH. VIMAL KUMAR SON I ON 1.12.2004 AND GOLD IS 6 GENERALLY GIVEN AFTER THE NEXT DAY OF RECEIVING THE ADVANCE. THE A.O. NOTICED THAT ASSESSEE RECEIVED ADVANCE AT RATES OF GOLD VARYING FROM RS.626 TO RS.637.80 PER GM ON 1.12.2004 FROM 11 PERSONS TO THE EXTENT OF RS.7,95, 622/- AGAINST GOLD WEIGHING 1260 PER GM WHILE THE RATE OF GOLD PER GRAM AS ON 1.12.2004 AS PER SALE BILL IS RS.665 PER GM. THE A.O. THEREFORE CONCLUDED THAT THE LIST SUBMITTED AS ON AFTERTHOUGHT. 9. THE A.O. HAS REFERRED TO RULE 41 OF RAJASTHAN SA LES TAX RULES WHICH REQUIRE THAT IN CASE THE SALE PRICE EXCEEDS RS.1,000 THEN NAME AND ADDRESS OF THE BUYER AND REGISTERATION NUMBER SHOULD BE MENTIONED. 10. THE A.O. STATED THAT AN AFFIDAVIT OF THE ASSESS EE WAS FILED AS AGSINST HIS APPERANCE BEFORE HIM. ON THE DATE WHEN STAMP PAPER WAS PURCHA SED BY THE ASSESSEE FOR AFFIDAVIT, HE COULD HAVE ATTENDED THE PROCEEDINGS AS SUCH PROCEED INGS WERE CONDUCTED ON THAT DATE. 11. THE ASSESSEE IN HIS AFFIDAVIT STATED THAT CASH WAS COLLECTED FROM VARIOUS BUYERS BY MR. VIMAL KUMAR SONI AND WAS DEPOSITED BY HIM IN VA RIOUS BANK ACCOUNTS. WHILE SH. VIMAL KUMAR SONI STATED THAT HE BOOKED THE ORDER FO R SUPPLY OF GOLD ON THE MARKET RATE PREVAILING IN THE MONTH OF DEC, 2004 AND HE RECEIVE D THE CONSIDERATION OF THE GOODS IN ADVANCE IN CASH FROM THE PURCHASERS. THE ACCOUNT BO OKS SHOW THAT SH. VIMAL KUMAR SONI RECEIVED THE SUPPLY OF GOLD AND ON THE SAME DA TE CASH HAS BEEN DEPOSITED. THIS DISCREPANCY WAS BROUGHT TO THE KNOWLEDGE OF ASSESSE E AND THE ASSESSEE CHANGED HIS REPLY AND THE A.O. HAS REPRODUCED PARA 3 FROM THE LETTER FILED BY THE ASSESSEE AND SUCH PARA IS REPRODUCED AS UNDER: 7 THE BROKER HAD DONE SOME ARRANGEMENTS AT HIS OWN TO DEPOSIT THE CASH IN BANK ACCOUNTS. THE ASSESSEE HAD APPOINTED THE BROKE RS TO HAVE SMOOTH BUSINESS TRANSACTIONS AND OVERCOME THE DAY TO DAY P ROBLEM IN GETTING CASH DEPOSITS IN DIFFERENT BANK ACCOUNTS. 12. THE AFFIDAVITS OF SIX PERSONS FILED INDICATE TH AT THE BROKER COLLECTED THE CONSIDERATION OF THE GOODS AT THE MARKET RATE PREVA ILING IN THE MONTH OF DECEMBER 2004 IN ADVANCE AND PROMISED TO DELIVERY OF THE GOLD/TT BARS AT THE RATE SETTLED AT THE TIME OF BOOKING OF THE GOODS. 13. THE A.O. FURTHER NOTICED THAT SH. VIMAL KUMAR S ONI HAS DEBITED TRAVELING EXPENSES OF RS.10,000/- AND THESE AMOUNTS ARE NOT S UFFICIENT TO TAKE THE GOODS TO KOLKATTA BECAUSE ADVANCES DURING THE YEAR HAVE BEEN RECEIVED FROM THE PERSONS OF KOLKATTA. THE A.O. HAS NOTICED THAT ALL THE AFFIDAV ITS OF BUYERS ARE IN SIMILLER FORM AND HAVE BEEN DISPATCHED TOGETHER FROM KOLKATTA G.P.O. AT THE SAME TIME WHILE THE PERSONS BELONG TO DIFFERENT LOCALLATIES AT KOLKATTA. MOREOV ER THE PERSONS WERE NOT ABLE TO MAKE ADVANCES TO THE EXTENT MENTIONED AS SUCH PERSONS WE RE SMALL KARIGARS AND ARE NOT I.T. ASSESSES. 14. THE A.O. THEREAFTER REFERRED TO THE FOLLOWING I NFERENCES:- (A) ASSESSEE DID NOT GIVE THE NAMES AND ADDRESSES O F THE PERSONS ON WHOSE BEHALF THE DEPOSITS IN CASH WERE BEING MADE IN HIS BANK ACCOUNTS. (B) THE ASSESSEE RECEIVED ADVANCE IN CASH THROUGH H IS BROKER TO SUPPLY OF GOLD ON A LATER DATE. 8 (C) DEPOSITS IN BANK ACCOUNT OF THE ASSESSEE HAVE B EEN MADE AT DIFFERENT PLACES AND THE BROKERS COULD NOT HAVE DONE IT AT DI FFERENT PLACES AND THERE MAY BE ANOTHER PERSON DOING SUCH WORK. (D) AFFIDAVITS FILED IN RESPECT OF ADVANCE DO NOT C ONTAIN THE DATE OF ADVANCE AND THE QUALITY OF GOLD /TT ORDERED. (E) CONFIRMATION OF THE SOCALLED CUSTOMERS WERE REC EIVED AFTER DELAY OF MORE THAN ONE MONTH AND THE PERSONS ARE KARIGARS AND THE Y COULD NOT HAVE GIVEN A CASH OF RS.1.5 LAC TO 2 LACS. AFFIDAVITS ARE SELF SERVING. RELIANCE WAS PLACED ON DECISION OF APEX COURT IN CIT V DURGA PRA SAD MORE 82 ITR 540. (F) PAY IN SLIPS HAVE NOT BEEN PRODUCED. (G) SH. VIMAL KUMAR SONI IS NOT MAINTAINING BOOKS O F ACCOUNT AND HENCE SOURCE OF CASH IS NOT VERIFIABLE. (H) VIMAL KUMAR SONI HAS BEEN SHOWN CREDITOR OF RS. 2,19,50,000/- WHILE THE ADVANCE SHOWN IS RS.2,23,25,475/- AND CLOSING STOCK IS ALSO OF RS.2,23,25,475/-. (I) CASE LAWS RELIED ON BY THE ASSESSEE ARE NOT APP LICABLE. IN THE INSTANT CASE SOURCE OF CREDIT HAS NOT BEEN ESTABLISHED. (J) THE LD. A.O. RELIED ON THE FOLLOWING PARA FROM THE JUDGMENT OF HONBLE S.C. IN THE CASE OF ROSHAN DI HATTI 107 ITR 938 THE LAW IS WELL SETTLED THAT THE ONUS OF PROVING TH E SOURCE OF SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE IS ON HI M. WHERE THE NATURE AND SOURCE OF RECEIPT, WHETHER IT BE OF MONEY OR OT HER PROPERTY CANNOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE, IT IS OPE N TO THE REVENUE TO HOLD 9 THAT IT IS THE INCOME OF THE ASSESSEE AND NO FURTHE R BURDEN LIES ON THE REVENUE TO SHOW THAT THE INCOME IS FROM ANY PARTICU LAR SOURCE. ` FURTHER THE HONBLE RAJASTHAN HIGH COURT IN THE C ASE OF CIT V/S R.S. RATHORE (1995) (212 ITR 390) HAS HELD THAT EACH ENT RY MUST BE SEPARATELY EXPLAINED BY THE ASSESSEE THE HONBLE HIGH COURT HA S OBSERVED AS UNDER. WHILE EXPLAINING THE VARIOUS CREDITS AND INVESTMENT S, IT IS POSSIBLE THAT THE ASSESSEE MAY BE SUCCESSFUL IN EXPLAINING SOME OF TH EM, BUT THAT DOES NOT BY ITSELF MEAN THAT THE ENTIRE INVESTMENTS HAD TO B E CONSIDERED AS EXPLAINED. IT IS EACH AND INDIVIDUAL ENTRY ON WHICH MIND HAS TO BE APPLIED BY THE TAXING AUTHORITY WHEN AN EXPLANATION IS OFFE RED BY THE ASSESSEE. FURTHER RELIANCE IS ALSO PLACED ON THE HONBLE SUPR EME COURTS DECISION IN THE CASE OF CIT V/S M. GANPATHI MUDDALIAR (1964) (5 3 ITR 623) AND GOVINDA RAJULU MUDALIAR V/S CIT (1958) (34 ITR 807) HAS HELD THAT THE DEPARTMENT NEED NOT TO LOCATE SOURCE OF RECEIPT BY OBSERVING AS UNDER: WHERE THE ASSESSEE HAS FAILED TO PROVE SATISFACTORI LY THE SOURCE AND THE NATURE OF CREDIT ENTRY IN HIS BOOKS, AND IT IS HELD THAT THE RELEVANT AMOUNT IS THE INCOME OF THE ASSESSEE IT IS NOT NECESSARY F OR THE DEPARTMENT TO LOCATE ITS EXACT SOURCE. 15. THE A.O. NOTICED THAT A SUM OF RS.5,58,32,598/- HAS BEEN DEPOSITED IN VARIOUS BANK ACCOUNTS ON 27.11.2004 AND SUCH PEAK CASH DEPO SITED WAS ADDED TO THE INCOME. 16. BEFORE THE LD. CIT (A), THE ASSESSEE MADE THE S UBMISSIONS WHICH ARE SUMMARIESED AS UNDER: (I) GOLD WAS BEING PURCHASED FROM GOVT. OR SEMI GOV T. AGENCIES IN LOTS AND SOLD TO SMALL RETAILERS LOCATED IN DIFFERENT CITIES . THERE IS A TRADE PRACTICE THAT SALE PROCEEDS ARE COLLECTED IN ADVANCE AND THE REAFTER GOLD IS PURCHASED. SINCE THE ASSESSEE WAS NEW IN BUSINESS T HEREFORE APPOINTED 10 TWO BROKERS FOR BOOKING THE ORDERS AND GETTING THE CASH DEPOSITED IN BANK. THE ASSESSEE WAS BEING INFORMED OF THE AMOUNT BEING DEPOSITED. (II) THE A.O. WANTED TO GET THE DETAILS OF RETAILER S. THE ASSESSEE WAS GETTING THE SALE PRICE THROUGH BROKER AND GOODS WERE ALSO D ELIVERED TO HIM. SINCE THE ORDERS WERE BEING BOOKED BY BROKER AND THEREFOR E BROKER MAY NOT BE WILLING TO PART WITH SUCH INFORMATION AS THAT MAY B E AGAINST HIS INTEREST. (III) THE A.O. HAS ACCEPTED THE ROLE OF OTHER BROKE R I.E. BENI GOPAL VERMA. THE AGREEMENT BETWEEN THE ASSESSEE AND SONI WAS TO COLL ECT THE FUNDS AND THEN TAKE DELIVERY OF THE GOLD AND THEREAFTER TAKE ALL N ECESSARY ARRANGEMENTS FOR TRANSPORTATION, DELIVERY, SAFTY ETC AT HIS OWN LEVE L WITHOUT THE INTERFERENCE OF THE KNOWLEDGE OF THE ASSESSEE. (IV) DUE TO SUCH DISTRIBUTION OF WORK, THE ASSESSEE COULD MANAGE THE BUSINESS OF AROUND OF RS.250 CRORES AND EARNED GROSS PROFIT OF RS.21,18,735/-. (V) SH. VIMAL KUMAR SONI FILED INCOME TAX RETURN AN D HAS SHOWED RECEIPT OF COMMISSION FROM ASSESSEE. SH. VIMAL KUMAR SONI EXPL AINED THE MODUS OPERANDI OF THE BUSINESS. (VI) NON MAINTENANCE OF BOOKS OF ACCOUNT BY SH. VI MAL KUMAR SONI CAN NOT BE HELD AGAINST THE ASSESSEE. 11 (VII) THE A.O. HAS NOT INVOKED THE PROVISIONS OF SE CTION 145. CREDIT BALANCE OF RS.2,23,25,475/- HAS BEEN ACCEPTED. (VIII) NAMES OF BUYERS ARE NOT AVAILABLE EITHER WI TH ASSESSEE OR WITH BROKER. (IX) SH. VIMAL KUMAR SONI UNFORTUNATELY REMAINED CO NFINED TO BED AND WITHOUT HIS PRESENCE THE ASSESSEE DID NOT AGREE FOR DELIVERY TO BUYERS FROM WHOM ADVANCE WAS COLLECTED. THE DELIVERY HAS BEEN M ADE IN THE MONTH OF APRIL 2005. (X) THE A.O. TOOK EXCEPTION TO NON DELIVERY OF THE STOCK FOR A PERIOD OF ABOUT THREE MONTHS AND OBSERVED THAT NO ADVANCE PAYERS WO ULD WAIT FOR SUCH A LONG PERIOD. (XI) SALES ON 27.11.2004 HAVE BEEN ADMITTED. IN THE CASE OF MANOJ AGARWAL. THE TRIBUNAL ACCEPTED THE CASH SALES AS GENUINE ON THE BASIS OF SALES TAX ORDER. (XII) THERE CAN NOT BE ROTATION AND NO ADDITION ON ACCOUNT OF PEAK CAN BE ADDED. IF THE ASSESSEE HAS INVESTED AROUND RS.5.58 CRORES THEN SUCH SUM SHOULD HAVE COME BACK TO HIM IN ONE FORM OR THE OTH ER. 12 (XIII) FACTS IN THIS CASE ARE SIMILLER TO THE FACTS OF SH. MANOJ KUMAR AGGARWAL IN WHICH THE FIVE MEMBER BENCH HELD THAT THE PURCHASES & SALES AS GENUINE. (XIV) THE AFFIDAVIT OF THE ASSESSEE CAN NOT BE REJE CTED WITHOUT EXAMINING HIM. AFFIDAVIT IS NOT FOUND INCORRECT. (XV) AUDIT REPORT HAS NOT BEEN DOUBTED. (XVI) ADDITION OF RS.5.58 CRORE IS AGAINST THE FIND ING OF AMOUNT OF RS.2.23 CRORE PAYABLE TO VIMAL KUMAR SONI. 17. THE LD. A/R ALSO FILED THE COUNTER COMMENTS IN THE FINDING QUOTED BY THE A.O. AND THESE ARE REPRODUCED AS UNDER: QUOTE- SHRI VIMAL KUMAR SONI HAS DECLARED IN HIS RE TURN OF INCOME THAT INCOME DECLARED UNDER THE HEAD OTHER SOURCES IS THE COMMISSION INCOME RECEIVED FROM M/S. RAKESH EXPORTS JAIPUR (LAST LINE S OF PARA 1 OF PAGE 4 OF KTHE ASSESSMENT ORDER). UNQUOTE:- THIS HAS NOT BEEN FOUND TO BE UNTRUE OR I NCORRECT. ON THE CONTRARY THIS HAS BEEN ACCEPTED BY THE ASSISSING OF FICER SINCE HIS ASSESSMENT HAS BEEN COMPLETED AS RETURNED. NO ACTIO N U/S 148 OR 263 HAS BEEN TAKEN EVEN AFTER THE ASSESSMENT IN THE CASE OF RAKESH EXPORTS. THIS PROVES WITHOUT SAYING THAT VIMAL KUMAR SONI ADMITTE D WORKING AS AN AGENT OF RAKESH EXPORTS AND WAS ENGAGED IN SUCH BUS INESS ON BEHALF OF RAKESH EXPORTS. BESIDES ALL SUCH COMMISSION EXPENSE S HAVE BEEN ALLOWED. QUOTE:- SHRI VIMAL KUMAR SONI USED TO MERELY ACT AS AN AGENT TO THE PRINCIPLE SHRI RAKESH KUMAR SONI )LAST LINE OF PARA 2 OF THE SSESSMENT ORDER ON PAGE 4) 13 UNQUOTE:- THE ASSESSING OFFICER HIMSELF ADMITS ONCE AGAIN THAT VIMAL KUMAR SONI ACTING AS AN AGENT OF THE ASSESSEE. IT I S NEVER THE CASE OF THE ASSESSING OFFICER THAT VIMAL KUMAR SONI WAS AN AGEN T IN RESPECT OF CERTAIN TRANSACTIONS ONLY AND HE WAS NOT AN AGENT I N RESPECT OF 5.58 CRORES COLLECTION OF MONEY. QUOTE:- IT IS ESTABLISHED THAT THERE ARE SIGNATURES OF TWO BROKERS NAMELY SHRI VIMAL KUMAR SONI AND SHRI BENI GOPAL VERMA ON CASH BILLS (PARA NO.2 OA PAGE 5 OF THE ASSESSMENT ORDER). UNQUOTE:- THIS FURTHER PROVES THAT THE ASSESSEE HAD DELIVERED THE GOODS TO THE PERSONS FROM WHOM THE FUNDS HAVE BEEN RECEIVED FOR BUYING THE GOLD. THIS IS AN ADMITTED POSITION BY THE ASSESSING OFFIC ER HIMSELF AND HENCE PEAK OR ROTATION DOES NOT ARISE. QUOTE:- SHRI VIMAL KUMAR SONI EXPLAINED THE MODUS O PERANDI OF THE ASSESSEE. HE HAS GOT SERVICE TAX REGISTRATION NO IN HIS NAME. HE ALSO PRODUCED PHOTO COPY OF THE NOTE BOOK TO WHOM THE GO ODS WERE DELIVERED IN THE MONTH OF APRIL 2005 (PARA 1 PAGE 6 OF THE AS SESSMENT ORDER.) UNQUOTE:- ALL THESE FACTS HAVE NOT BEEN FOUND UNTRU E OR INCORRECT. THIS ALSO FURTHER PROVES THAT THE AMOUNT OF 5.58 CRORES IS THE SALE PROCEEDS ON ACCOUNT OF CASH COLLECTED BY SHRI VIMAL KUMAR SONI. QUOTE:- THE ASSESSEE FILED AN AFFIDAVIT REPEATING W HAT HAS BEEN STATED AT VARIOUS PLACES IN THE ASSESSMENT ORDER REGARDING CO LLECTION MONEY, PURCHASE OF GOODS AND DELIVERY OF THE SAME OF VIMAL KUMAR SONI. SHRI VIMAL KUMAR SONI ALSO FILED AN AFFIDAVIT REPEATING WHAT HAS BEEN STATED ABOVE (MIDDLE OF PAGE 11 OF THE ASSESSMENT ORDER). UNQUOTE:- BOTH THESE PERSONS WERE NEVER PERSONALLY EXAMINED BY THE ASSESSING OFFICER. THEIR AFFIDAVITS HAVE NOT BEEN F OUND TO BE INCORRECT OR NOT GENUINE. THE AFFIDAVITS CANNOT BE REJECTED WITH OUT THE STATEMENT OF THE EXECUTANTS AND ALSO WITHOUT FINDING ANYTHING CONTRA RY. THE CONTENTS OF BOTH AFFIDAVITS ARE EXACTLY MATCHING AND THE ASSESS ING OFFICER HAS NOT FOUND ANY THING PROVING THAT THE AFFIDAVITS ARE NOT GENUINE. QUOTE:- AS PER THE FACTS ON RECORD THE ASSESSING OF FICER ADMITS THAT SHRI VIMAL KUMAR SONI IN HIS STATEMENT AT NAGAUR AND ALS O THROUGH HIS AFFIDAVIT ADMITTED TO HAVE COLLECTED MONEY IN CASH FROM DIFFERENT KARIGARS AS ADVANCE AGAINST THE SUPPLY OF GOLD TO BE SUPPLIE D ON A LATER DATE (LAST PARA OF PAGE 15-CONTINUED ON PAGE 16 FIRST LINES.). UNQUOTE:- THIS IS A MAJOR ADMITTED FACT WHICH HAS N OT BEEN DENIED OR CONTROVERTED BY THE ASSESSING OFFICER. THIS IS ALSO SETTLES THE ISSUES THAT THE ASSESSEE CANNOT HAVE THE LIST OF BUYERS AND SEC ONDLY THE AMOUNT OF 14 EVEN 5.58 CRORES AS IN OTHER CASES HAVE BEEN COLLEC TED BY SH. VIMAL KUMAR SONI. QUOTE:- IT IS A FACT THAT SIX PERSONS FILED AFFIDAV ITS, ADMITTING THE ENTIRE FACTS OF THE CASE I.E. AMOUNT GIVEN IN ADVANCE TO S H. VIMAL KUMAR SONI AND ALSO THEIR REPLY CONFIRM THAT VIMAL WAS KNOWN P ERSON IN SARAFA MARKET AND MONEY WAS GIVEN AND THE DELIVERY RECEIVE D IN THE MONTH OF APRIL. (PAGE NO.16 PARA NO.5 OF THE ASSESSMENT ORDE R). UNQUOTE:-THE ASSESSING OFFICER DID NOT RELY ON THE AFFIDAVITS ON THE BASIS OF JUDGMENT OF THE HONBLE SUPREME COURT IN THE CAS E OF DURGA PRASAD MOREY ON THE GROUND THAT THESE WERE SELF SERVING ST ATEMENTS. BUT THE ASSESSING OFFICER HAS FORGOTTEN A VERY VITAL FACT T HAT HE HAS HIMSELF MADE ENQUIRIES. IT IS OTHER WAY THAT THE ASSESSEE HAD NO T MADE ANY SELF SERVING STATEMENT. THE PERSONS WHO HAVE GIVEN THE AFFIDAVIT S, ARE NOT KNOWN TO THE ASSESSEE. THEY HAVE RESPONDED TO THE ENQUIRES AND T HE ASSESSING OFFICER NOW CANNOT TURN AROUND AND REFUSE TO ACCEPT THE REP LY, SINCE THE ENQUIRY DOES NOT SUIT HIS PURPOSE. SELF SERVING STATEMENT A RE ONLY THOSE WHERE THE ASSESSEE HIMSELF GIVES IN WRITING AND THAT TOO WITH OUT EVIDENCE. QUOTE:- THE ASSESSING OFFICER STATES THAT VIMAL KUM AR SONI DID NOT HAVE CREDIT WORTHINESS TO HAVE DEPOSITED THE LARGE SUM O F MONEY IN THE BANK ACCOUNTS (LAST LINE OF PAGE 17 OF THE ASSESSMENT OR DER). UNQUOTE:- THIS IS TOTALLY OUT OF SCOPE OF THE ASSES SMENT ORDER AND ALSO AGAINST THE FACTS OF THE ASSESSEE SINCE IT IS NEITH ER THE CASE OF THE ASSESSING OFFICER NOR THE CASE OF THE ASSESSEE THAT SH. VIMAL KUMAR SONI HAD DEPOSITED HIS OWN MONEY IN THE BANK ACCOUNTS. SH. V IMAL KUMAR SONI IS ADMITTEDLY AN AGENT ONLY. HE HAS ALSO NEVER STATED THAT HE WAS DEPOSITING HIS OWN MONEY. THE AGENT ONLY WORKS ON BEHALF OF OT HERS AND HE DOES NOT HAVE HIS OWN FINANCIAL STANDING. 18. THE A.O. HAS SENT REMAND REPORT VIDE LETTERS DA TED 20.10.2008 AND THE LD. CIT (A) HAS REFERRED TO THE POINTS MENTIONED BY A.O. IN HIS ORDER AT PAGES 19 TO 21 OF THE ORDER. THE A.O. HAS REFERRED TO THE FINDINGS GIVEN IN THE ASSESSMENT ORDER BY A.O. 19. THE REMAND REPORT WAS PROVIDED TO ASSESSEE AND THE ASSESSEE SUBMITTED AS UNDER: KINDLY REFER TO THE REMAND REPORT DATED 21.10.2008, AND ALSO THE EARLIER REMAND REPORT DATES 23.09.2008, I HAVE SO FAR FILED MY DETAILED SUBMISSIONS FOLLOWED BY ANOTHER LETTER DATED 03.10. 2009. I HAVE EARLIER 15 RELIED VERY HEAVILY ON THE SPECIAL BENCH JUDGEMENT IN THE CASE OF BISHAN CHAND MUKESH KUMAR OF HONBLE DELHI TRIBUNAL OF FIV E MEMBERS WHEREIN THE HONBLE MEMBERS HELD THAT THE CASH SALES MADE B Y BISHAN CHAND MUKESH KUMAR OF JEWELLERY RUNNING INTO SEVERAL HUND RED CRORES OF RUPEES WERE GENUINE PARTICULARLY IN VIEW OF THE SALES TAX ASSESSMENT ORDER. I HAD RELIED VERY HEAVILY ON PARA 166 OF THIS JUDGEMENT A ND HAVE ACCORDINGLY SUBMITTED MY SALES TAX ASSESSMENT ORDER ONCE AGAIN IN THE PRESENT CASE ADMITTING SALES MADE BY THE ASSESSEE EVEN THOUGH TH IS IS NOT NECESSARY SINCE THE SALES TAX ASSESSMENT ORDER. I HAD RELIED VERY HEAVILY ON PARA 166 OF THIS JUDGMENT AND HAVE ACCORDINGLY SUBMITTED MY SALES TAX ASSESSMENT ORDER ONCE AGAINS IN THE PRESENT CASE ADMITTING SAL ES MADE BY THE ASSESSEE EVEN THOUGH THIS IS NOT NECESSARY SINCE TH E SALES HAVE BEEN ADMITTED BY THE AO HIMSELF AS PER THE ASSESSMENT OR DER PARTICULARLY AS PER THE COMPUTATION OF TAXABLE INCOME. IN THE CASE OF B ISHAN CHAND MUKESH KUMAR PURCHASES HAVE ALSO BEEN FOUND TO BE CORRECT AND GENUINE THOUGH THESE WERE MADE FORM GENERAL PUBLIC. THE ASSESSEES CASE IS RATHER ON A STRONG FOOTING SINCE PURCHASES HAVE BEEN MADE FROM GOVERNMENT AGENCIES. TO PUT IT OTHERWISE HIS PURCHASES HAVE BE EN ACCEPTED BY THE GOVERNMENT AND SALES HAVE ALSO BEEN ACCEPTED BY THE GOVERNMENT I.E. MMTC AND SALES TAX DEPARTMENT AND EVEN IT IS SUBMIT TED THAT THE AO HAS ALSO NOT DOUBTED HIS PURCHASES AND SALES WHEREAS IN THE CASE OF BIASHAN CHAND MUKESH KUMAR PURCHASES AND SALES WERE NOT ADM ITTED BY THE AO HIMSELF EVEN THEN THE HONBLE SPECIAL BENCH HAS SAI D THAT PURCHASES AND SALES OF JEWELLERY WERE CORRECT AND ACCEPTABLE. A) IT IS ALLEGED THAT THE AMOUNT OF RS.5.58 CRORES DEPOSITED IN THE BANK ON 27.11.04 IS THE ASSESSEES OWN UNDISCLOSED INCOME OR MONEY BUT IF IT IS SO, THEN WHERE THE SALE OF RS.5. 58 CRORES ON 27.11.2004 IN CASH HAD GONE. THE SALES ON THIS DAY ARE ADMITTED AS PER CASH BOOK. WHAT IS THE DESTINATION OF THE SALE PROCEEDS OF RS.5.58 CRORES ON THE SAME DAY I.E. ON 27.11.04. B) IT IS ALLEGED THAT THERE IS A PEAK DEPOSIT OF RS .5.58 CRORES, THEN LET THE AO EXPLAIN AS TO WHERE IS THIS PEAK DEPOSIT REF LECTED SINCE THERE IS NO PEAK DEPOSIT IN THE BALANCE SHEET OR IN THE LEDGER. THE BALANCE SHEET DOES NOT SHOW THAT THERE IS ANY PEAK DEPOSIT IN ANY NAME AND THE AO SHOULD DEMONSTRATE SUCH PEAK DEPOSI T IN THE BOOKS OF ACCOUNT OR IN THE BALANCE SHEET. C) IT IS SUBMITTED THAT IT IS THE CASE OF THE AO TH AT CREDIT WORTHINESS OF VIMAL KUMAR SONI HAS NOT BEEN PROVED. THIS IS ABSOL UTELY INCORRECT AND IT APPEARS THAT THE AO HAS NOT ANALYZ ED THE MATTER IN THE RIGHT PERSPECTIVE. THE BALANCE SHEET OF THE ASS ESSEE IS THE EVIDENCE. THERE IS A DEPOSIT OF MORE THAN RS.2 CROR ES IN HIS ACCOUNT AND THE SAME AO HAS ACCEPTED THE DEPOSIT IN HIS ACCOUNT AS TRUE CORRECT AND GENUINE. NOT ONLY THIS, THERE A RE SALES OF ABOUT 16 RS.250 CRORES AND MAJOR PART OF THE SALES IS ON ACC OUNT OF CASH RECEIVED AND DEPOSITED FROM VIMAL KUMAR SONI THUS T HERE IS NO POINT IN DOUBTING OR SUSPECTING THE CREDIT WORTHINE SS OF VIMAL KUMAR SONI. HE HAD BEEN EXAMINED AND HE HAS ADMITTE D ALL THE TRANSACTIONS. HIS STATEMENT HAS NOT BEEN FOUND TO B E UNTRUE. MOREOVER THIS IS NOT THE POINT INVOLVED IN APPEAL S INCE THE ONLY ISSUE IS OF PEAK DEPOSIT. D) IN THE REMAND REPORTS, THE FOLLOWING POINTS HA VE BEEN RAISED: I) WE HAVE GIVEN MISLEADING FACTS. II) DEPOSIT ON 27.11.04 OF RS.5,58,32,598/- HAS BEE N MADE OUT OF UNDISCLOSED CASH. III) THE ADDITION HAS BEEN RIGHTLY MADE. IV) THE ASSESSEE HAS NOT REPLIED TO THE JUDGEMENTS RELIED ON BY THE AO WHICH MEANS THE ASSESSEE HAD ACCEPTED THEIR APPLICA BILITY. V) CREDIT WORTHINESS OF VIMAL KUMAR SONI IS NOT P ROVED. VI) THE ADDRESS OF THE ASSESSEE IS NOT CORRECT. VII) THE ASSESSEE HAD CRORES OF UNACCOUNTED RUPEE S. VIII) THE ASSESSEE HAS FAILED TO EXPLAIN THE SOUR CE OF CASH CREDIT. WE ARE SUBMITTING OUR SUBMISSIONS TO THE VARIOUS QU ERIES AND GROUNDS RAISED IN THE REMAND REPORTS. (A) CREDIT-WORTHINESS OF VIMAL KUMAR SONI ALREADY S TANDS PROVED. HE HAS FILED AN AFFIDAVIT. HE IS ASSESSED TO TAX. HIS STATEMENT WAS ALSO RECORDED BY HIS INCOME TAX OFFICER AND DURING SUCH STATEMENT, SH. VIMAL KUMAR SONI HAD ACCEPTED TO HAVE SOLD GOLD ON BEHALF OF THE ASSESSEE AND RECEIVED THE COMMISSION WHICH IS ASSES SED IN HIS CASE AND COMMISSION PAID, HAS ALSO BEEN ALLOWED AS A DED UCTION BY THE INCOME TAX OFFICER WHILE COMPLETING THE ASSESSMENT OF THE ASSESSEE. HIS BALANCE OUTSTANDING AS PER BALANCE SH EET HAS BEEN ADMITTED AS EXPLAINED BY THE SAME AO. (B) THE ALLEGATION THAT THE ASSESSEE HAS GIVEN MISL EADING FACTS, HAS NOT BEEN FULLY EXPLAINED. THE ASSESSEE DOES NOT KNOW WH AT ARE THE MISLEADING FACTS GIVEN BY HIM. SO FAR HE UNDERSTAND S AND SUBMITS THAT HE HAS NOT GIVEN ANY MISLEADING FACTS AND IN C ASE THERE ARE ANY, HE MAY BE APPRAISED OF THE SAME AND HE WILL SU BMIT HIS EXPLANATION TO THE BEST OF HIS KNOWLEDGE AND BELIEF . THE AFFIDAVIT FILED BY THE ASSESSEE HAS NOT BEEN FOUND TO BE INCO RRECT OR UNTRUE. HENCE THERE IS NO QUESTION OF ANY MISLEADING FACTS. IF IT WAS SO, THE AO WAS FREE TO EXAMINE THE ASSESSEE DURING ASSESSME NT PROCEEDINGS FOR WHICH THE AO COMPLETELY FAILED. THE AO HAS ALSO EVEN COMPLETELY FAILED TO POINT OUT THE MISLEADING FACTS GIVEN BY THE ASSESSEE. 17 (C) IT IS NOT CORRECT THAT THE ASSESSEE HAS ACCEPTE D THE APPLICABILITY OF SUCH JUDGMENTS RELIED ON BY THE AO. AS A MATTER OF FACT, THERE IS NO QUESTION OF ANY JUDGMENT SINCE THE ASSESSEE HAS DIS PUTED THE EXISTENCE OF PEAK DEPOSIT AND WHEN IT IS SO WHERE I S THE QUESTION OF APPLICABILITY OF JUDGMENTS. THIS IS PURELY AND COMP LETELY A MATTER OF FACT. THE ASSESSEE HAS STATED THAT THERE IS NO P EAK DEPOSIT. BESIDES, THE DECISION OF JESSA RAM FATEH CHAND RELI ED ON BY THE AO ACTUALLY FAVOURS ASSESSEE. (D) THE ADDRESS IS NO POINT OF DISPUTE BECAUSE AS P ER THE ASSESSMENT ORDER, THE ASSESSEE ATTENDED THE PROCEEDINGS, THE A SSESSMENT HAS BEEN COMPLETED U/S 143(3). THE ASSESSEE HAS FILED A FFIDAVIT AND VARIOUS REPLIES WHICH THE AO HIMSELF HAS CONSIDERED AND PASSED ASSESSMENT ORDER AFTER CONSIDERING THE SAME. (E) IT IS NOT CORRECT TO SAY THAT THE ASSESSEE HAD CRORES OF UNACCOUNTED RUPEES. THIS GENERAL ALLEGATION IS NOT WARRANTED. T HE QUESTION INVOLVED IS ONLY OF RS.5.58 CRORES WHICH THE ASSESS EE HAS ALREADY EXPLAINED. IT IS NOT UNDERSTOOD AS TO WHY ADDITION OF ONLY RS.5.58 CRORES HAS BEEN MADE IF HE WAS HAVING CRORES OF RUP EES AND ON THE CONTRARY HAVING ACCEPTED CRORES OF RUPEES, THE AO M UST HAVE ACCEPTED RS.5.58 CRORES. (F) THE CASH CREDIT HAS BEEN EXPLAINED AND ACCEPTED ALSO BY THE AO HIMSELF IN HIS ASSESSMENT ORDER. AS A MATTER OF FAC T, THE AO HAD ALREADY ACCEPTED THE AVAILABILITY OF CAS OF RS.5.70 CRORES ON 08.11.04 PRIOR TO 27.11.04 WHICH IS MORE THAT RS.5. 58 CRORES. WHEN THE CASH OF RS.5.70 CRORES IS ALREADY ACCEPTED , IT IS NOT UNDERSTOOD AS TO WHY THE AO IS NOT ACCEPTING THE AM OUNT OF RS.5.58 CRORES WHICH IN ALL FAIRNESS AND JUSTICE, H E MUST ACCEPT. (G) AS A MATTER OF FACT, THE AO HAS NOT SAID ANYTHI NG CONTRARY TO HE JUDGMENTS CITED BY THE ASSESSEE DURING ASSESSMENT P ROCEEDINGS. THE RELIANCE IS ALSO PLACED ON THE DECISIONS IN THE CASES OF JAISSA RAM FATEH RAM AND METACHEM INDUSTRIES. THESE JUDGME NTS ARE DIRECTLY RELATED TO THE FACTS OF THE PRESENT CASE A ND EVEN THEN THE AO HAS NOT COMMENTED ON THE APPLICABILITY OF THESE JUDGMENTS SINCE THEY FAVOUR THE ASSESEE. (H) NOW COMING TO THE JUDGMENTS RELIED ON BY THE AO IN THE ASSESSMENT PROCEEDINGS, TWO IMPORTANT SUBMISSIONS A RE: FIRSTLY THE AO HAS MADE THE ADDITION U/S 68 WHEREAS 68 WOULD NO T BE APPLICABLE AT ALL SINCE 68 IS APPLICABLE ONLY WHEN THERE IS A CREDIT IN SOME ACCOUNT IN THE BOOKS OF ASSESSEE. THERE IS NO CREDIT ON ANY ACCOUNT OF THIS AMOUNT AND THEREFORE, SECTION 68 WO ULD NOT BE APPLICABLE. ALTERNATIVELY, THE AO HAS ALSO RELIED O N THE RAJASTHAN 18 HIGH COURT JUDGMENTS IN THE CASE OF R.S. RATHORE. T HE AO HIMSELF HAS NOT FOLLOWED THIS JUDGMENT. SECONDLY, THE AO HA S LAID STRESS ON THE HONBLE SUPREME COURT JUDGMENTS IN THE CASE OF GANPATI MUDDALIAR AND GOVINDA RAJULU MUDDALIER. THE AO HAS ALSO GIVEN THE GIST OF THESE JUDGMENTS. THE GIST ITSELF PROVES THAT THESE JUDGMENTS RATHER FAVOUR THE ASSESSEE IN AS MUCH AS THE ASSESSEE HAS DISCLOSED THE IDENTITY AND THE SOURCE OF THE DE POSIT AND NOT ONLY HE HAS DISCLOSED BUT HE HAS MADE SUCH DISCLOSU RE WHICH THE AO HIMSELF HAS ACCEPTED IN VARIOUS WAYS. HENCE EVEN THE JUDGMENTS RELIED ON BY THE AO DO NOT HELP HIM. 20. THE LD. CIT (A) HAS RECORDED HIS FINDINGS AT PA GES 27 TO 42 OF THE ORDER AND THESE ARE SUMMARIZED AS UNDER: (I) THE A.O. HAS NOT DOUBTED THE PURCHASE AND SALES . A.O. HAD ALREADY ACCEPTED THE CASH AVAILABILITY OF RS.5.7 CRORE ON 8 .11.2004 PRIOR TO 27.11.2004 THEN A.O. SHOULD HAVE ACCEPTED THE CASH DEPOSIT OF RS.5.7 CRORE ON 27.11.2004. DOCUMENT IS TO BE READ AS A WH OLE. REFERENCE IS MADE TO GLASS LINES EQUIPMENTS CO. 253 ITR 454 (GUJ .) ( II) THE BUSINESS OF TRADING OF BULLION WAS DONE I N ONE YEAR ONLY AND THE ASSESSEE IS OF 32 YEARS OLD. HENCE IT CAN NOT BE SA ID THAT THERE WAS UNEXPLAINED DEPOSIT OF CASH OF RS.5.57 CRORE. REF W AS MADE TO THE DECISION OF HONBLE APEXC COURT IN P.K. NOORJAHAN 2 37 ITR 570. (III) COMMISSION PAID TO VIMAL KUMAR SONI WAS SHOWN BY HIM IN HIS RETURN AND HAS BEEN ACCEPTED. CREDIT IN THE NAME OF SH. VI MAL KUMAR SONO HAS BEEN ACCEPTED TO THE EXTENT OF RS.2.19 CRORE. 19 (IV) SALES AS DECLARED BY THE ASSESSEE HAS BEEN ACC EPTED BY THE SALES TAX DEPARTMENT. THE HONBLE KARNATAKA HIGH COURT HELD T HAT ASSESSMENT ORDER PASSED BY SALES TAX AUTHORITIES IS RELEVANT IN INCO ME TAX PROCEEDINGS SRI SHANKAR KHANSANI SUGAR MILLS VS CIT 193 ITR 669. (V) THE INCOME AS SHOWN BY THE BOOKS OF ACCOUNT HAS BEEN ACCEPTED AND ONLY PEAK DEPOSIT HAS BEEN ADDED. ENTIRE CASH DEPOSITS W ERE UTILIZED TO MAKE PAYMENT FOR PURCHASES FROM GOVT. AND SEMI GOVT. AGE NCIES. THERE WAS NEITHER ANY ROTATION OF FUNDS NOR PEAK CREDIT. (VI) THE LD. CIT (A) RELIED ON THE FOLLOWING FINDIN G OF SPECIAL BENCH IN THE CASE OF MANOJ AGGARWAL 113 ITD 377. THEY ARE UNDER NO DUTY TO LEAD EVIDENCE TO SHOW THA T MONEY SHOWN AS SALE PROCEEDS REPRESENT THE UNDISCLOSED INCOME OF THE AS SESSEE BROUGHT INTO THE BOOKS IN THE GUISE OF SALES PROCEEDS. ON THIS B ASIS ALONE IT CAN BE SAID THAT WHEN THE SALES HAS BEEN ACCEPTED AS TRUE CORRE CT AND GENUINE BOTH BY THE INCOME TAX DEPARTMENT AND THE SALES TAX DEPARTM ENT ANY PART OF THE SALES CANNOT BE TREATED AS UNDISCLOSED INCOME. (VII) BOOKS OF ACCOUNT ARE AUDITED AND THE A.O. HAS NOT TAKE COGNIZANCE OR PROPER WEIGHTAGE TO AUDIT REF WAS MADE TO DECISION OF HONBLE DELHI HIGH COURT IN JAY ENGINEERING WORKS LTD. 113 ITR 38 9. (VIII) ENTRIES IN THE BOOKS OF ACCOUNT CAN NOT BE R EJECTED WITHOUT POINTING ANY DEFECT. RELIANCE IS PLACED TO DECISION OF DELHI TRI BUNAL IN CASE OF RACMANN SPRINGS LTD. 55 ITD 159. SECTION 34 OF EVID ENCE ACT PROVIDES 20 THAT ENTRIES IN BOOKS OF ACCOUNT ARE RELEVANT IN CA SE BOOKS OF ACCOUNT ARE KEPT REGULARLY. (IX) A.O. HAS HELD THAT SALES ARE NOT VERIFIABLE. T HE A.O. HAS STRAIGHT AWAY REJECTED THE EXPLANATION. THE CHANDIGARH BENCH IN T HE CASE OF BANSAL RICE MILLS V ITO 72 TTJ 1 HELD THAT EVEN IF SALES ARE TR EATED AS BOGUS BUT THE SOURCE OF DEPOSIT IS FROM THE MILLING OF PADDY. (X) IN CASE OF CASH TRANSACTION WHERE DELIVERY OF G OODS IS TAKEN THEN IT IS HARDLY NECESSARY FOR THE SELLER TO BOTHER ABOUT THE NAMES AND ADDRESSES OF THE PURCHASER. R.B. JESSARAM FATEHCHAND V CIT 75 IT R 33 (BOM) (XI) IN THE CASE OF ITO V JETHA RAM PREM CHAND (ITA NO.673 OF 1993), DELHI BENCH HELD THAT CASH SALES CAN NOT BE TREATED AS UN EXPLAINED INCOME ON THE GROUND THAT THESE BILLS DO NOT CONTAIN THE NAME & A DDRESSES. SINCE PURCHASES AND SALES ARE ESTABLISHED, ADDITION IS NO T PROPER. (XII) IF SALES OUTSIDE THE BOOKS OF ACCOUNT ARE ACC EPTED THEN DEPOSIT MADE BY THE SON OF THE ASSESSEE CAN NOT BE ADDED. THE HONB LE HIGH COURT IN THE CASE OF CIT V K.C. MALHOTRA 304 ITR 149 (P&H) OBSER VED AS UNDER: IN OUR VIEW, ONCE THE SALE OF GOODS IS ACCEPTED, TH ERE IS NO JUSTIFICATION TO REJECT THE CORRESPONDING SALES REALIZATION. SECONDL Y, IT IS NOTEWORTHY THAT THE STAND OF THE ASSESSEE HAS BEEN CONSISTENT ON TH IS ASPECT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE EXPLAINED THAT THE SALE OF THE PILFERED STOCK WAS CARRIED OUT BY HIS TWO SONS OUT OF WHICH HE HAD RECOVERED A SUM OF RS.13,56,000/- DURING THE YEAR A ND BALANCE WAS 21 OUTSTANDING. WE FIND THAT THE SAID EXPLANATION OF T HE ASSESSEE STANDS CORROBORATED BY THE STATEMENT OF HIS TWO SONS ALSO. AFTER QUOTING THE STATEMENTS OF ASHOK MALHOTRA, EMPLOYEE SON OF THE A SSESSEE, MADE DURING CROSS-EXAMINATION OF MARCH 28, 2005, BEFORE THE ASS ESSING OFFICER, THE TRIBUNAL HAS CONCLUDED THAT THE IDENTITY OF THE CRE DITORS, NATURE AND SOURCE OF THE CREDIT STOOD EXPLAINED. THE TRIBUNAL ALSO DISCUSSED THE REASONING WEIGHING WITH THE ASSESSING OFFICER FOR I NVOKING SECTION 68 OF THE ACT. THE TRIBUNAL AFTER PERUSING THE STATEMENTS OF THE SONS OF THE ASSESSEE REFUSED TO ENDORSE THE VIEW OF THE ASSESSI NG OFFICER WHO HAS DRAWN AN INFERENCE FROM THOSE STATEMENTS THAT THE T WO SONS OF THE ASSESSEE DID NOT PAY THE IMPUGNED AMOUNT TO HIM. THE TRIBUNA L HAS HELD THAT THE INFERENCE DRAWN BY THE ASSESSING OFFICER IS TOTALLY MISDIRECTED AND WAS IN FACT, CONTRARY TO WHAT EMERGES FROM THE READING OF THE STATEMENTS. THE TRIBUNAL RECORDED THE FINDING THAT THE ASSESSING OF FICER DID NOT IN TERMS PUT ANY QUESTION TO EITHER OF THE SONS OF THE ASSES SEE AS TO WHETHER OR NOT THEY HAVE PAID OVER TO THEIR FATHER ANY AMOUNT OUT OF THE SALE OF PILFERED GOODS. THE TRIBUNAL ALSO NOTICED THAT THE ENTIRE CA SE OF THE ASSESSING OFFICER WAS IN THE REALM OF CONJECTURES AND WAS BAS ED ON DOUBTS WITHOUT THERE BEING ANY EVIDENCE THAT THE HUGE AMOUNT OF RS .13,56,000/- WAS THE UNDISCLOSED INCOME OF THE ASSESSEE. THE TRIBUNAL AF TER COPIOUSLY REFERRING TO THE STATEMENTS OF THE SONS OF THE ASSESSEE PROCE EDED TO RECORD THE FINDING TOWARDS THE END OF PARAGRAPH 8, WHICH READS AS UNDER: THE ASSESSEE, IN OUR VIEW, HAS BEEN SUCCESSFUL IN P ROVING THAT THE CREDITS IN QUESTION REPRESENT AMOUNT RECEIVED BY HIM FROM H IS TWO EMPLOYEE SONS OUT OF THE PROCEEDS OF THE GOODS PILFERED AND SOLD OUTSIDE THE BOOKS OF ACCOUNT BY THEM, FURTHER, THE BONA FIDES OF THE CLA IM OF THE ASSESSEE ARE SUPPORTED BY THE STOCK FOUND SHORT AT THE TIME OF S URVEY AND THE ADMISSION AT THE TIME OF SURVEY ITSELF THAT GOODS HAVE BEEN S OLD OUTSIDE THE BOOKS OF ACCOUNT. THEREFORE, ON THIS ACCOUNT WE SET ASIDE THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS) AND DIRECT THE ASSESSING OFFIC ER TO DELETE THE ADDITION OF RS.13,56,000/-. 21. THE LD. CIT (A) ALSO RELIED ON THE FOLLOWING DE CISIONS: GURSHANT ROTARY COMPRESSIONS LTD. 315 ITR 337 AT ( DELHI) ITO V GIRISH MEHTA 105 ITD 585 (RAJKOT) M.DURAI RAY V CIT 83 ITR 484 (KER) ITO V NAVIN GUPTA (2006) 5 SOT 94 (DELHI) 22 22. THE LD. CIT (A) HAS REFERRED TO THE DECISIONS R ELIED ON BY THE LD. A.O. AND HELD THAT THESE ARE NOT APPLICABLE. IT WILL BE USEFUL TO REPRODUCE PARAS 5.11 & 5.12 OF THE ORDER OF LD. CIT (A). THE DECISION OF HONOURABLE RAJASTHAN HIGH COURT IN THE CASE OF R.S. RATHORE (212 ITR 390) RELIED UPON BY THE AO WAS REN DERED IN DIFFERENT CONTEXT. IT WAS HELD THAT THERE MAY BE A NUMBER OF CREDITORS OF SIMILAR NATURE, BUT THE ASSESSEE HAS TO DISCHARGE HIS BURDE N IN RESPECT OF ALL OF THEM. IT IS EACH AND EVERY INDIVIDUAL ENTRY ON WHIC H THE MIND HAS TO BE APPLIED BY THE TAX IN AUTHORITY WHEN AN EXPLANATION IS OFFERED BY THE ASSESSEE. THE RELIANCE PLACED BY THE AO ON THE DECI SION OF CIT VS DURGA PRASAD MORE (82 ITR 540) AND SUMATI DAYAL VS CIT (2 14 ITR 801) IS ALSO NOT APPROPRIATE. THE CIRCUMSTANCES SURROUNDING THE PRESENT CASE ARE NOT STRONG ENOUGH TO JUSTIFY THE REJECTION OF ASSESSEE S EXPLANATION AS OUTRAGEOUS OR ABSURD. THE DECISION OF HONOURABLE MU MBAI HIGH COURT IN THE CASE OF R B JESSARAM FATEHCHAND (75 ITR 33) REL IED ON BY THE AO ACTUALLY FAVOURS THE ASSESSEE. THE DECISIONS OF HON OURABLE SUPREME COURT IN THE CASE OF GOVINDRAJULU MUDALIAR VS CIT (34 ITR 807), ROSHAN DI HATTI VS CIT (107 ITR 398) AND KALEKHAN MOHD HANIF (50 ITR 1) ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE FOR THE REASON THAT IN THE CITED CASES, THE TRANSACTIONS WERE NOT OF INCOME NATURE. THESE WERE CASES OF CASE CREDIT SIMPLICITOR WHERE IT WAS HELD THAT DEPA RTMENT WAS NOT SUPPOSED TO POINT OUT THE SOURCE FROM WHICH THE ASS ESSEE MIGHT HAVE RECEIVED THE MONEYS AND IT WAS FOR THE ASSESSEE TO SHOW THE NATURE AND SOURCE OF HE CREDIT. THE DECISION OF HONOURABLE SUP REME COURT IN THE CASE OF MC DOWELL & CO (154 ITR 148) APPEARS TO BE APPLIED BY THE AO TO THE PRESENT CASE WITHOUT ANY RELEVANCY. I DONT THINK THAT THE AO HAS UNEARTHED ANY COLOURABLE DEVICE IN THE PRESENT CASE . WHEN THE APPELLANT HAD OFFERED THE CASH DEPOSITS IN THE BANK ACCOUNTS AS SALE RECEIPTS THEN IN SUCH CIRCUMSTANCES I FAIL TO UNDERSTAND AS TO HOW T HE AO HAS ENVISAGED THAT THE ASSESSEE HAD AVOIDED PAYMENT OF TAXES BY D UBIOUS METHODS. IT IS FOR THE DEPARTMENT TO PROVE THAT THE APPARENT IS NO T THE REAL STATE OF AFFAIRS AS HELD BY THE SUPREME COURT IN THE CASE OF CIT VS DAULATRAM RAWATMAL (87 ITR 349). IN THE PRESENT CASE, IT IS THE DEPART MENTS CASE THAT THE MONEYS HAVE MOVED FROM THE ASSESSEE HIMSELF AND HAV E APPEARED AS CASH DEPOSITS IN THE BANK ACCOUNTS. IT IS FOR THE DEPART MENT, THEREFORE, TO PRVE THAT THE MONEYS WERE UNACCOUNTED MONEYS AND THEY MO VED FROM THE ASSESSEE AND WERE BROUGHT IN AS SALE PROCEEDS OF GO LD TT BARS. IT IS ONLY WHERE SECTION 68 APPLIES THAT THE BURDEN IS ON THE ASSESSEE TO PROVE THE 23 NATURE AND SOURCE OF THE CREDIT. THE DISTINCTION BE TWEEN THE TWO HAS TO BE APPRECIATED AND GIVEN EFFECT TO. THE AO HAS FAILED TO UNDERSTAND THE NATURE OF BUSIN ESS OF THE ASSESSEE IN THE RIGHT PERSPECTIVE. THE ASSESSEE IS A TRADER WHO PURCHASES GOLD TT BARS FROM MMTC & VARIOUS BANKS WHICH ARE THEN SOLD TO VARIOUS CUSTOMERS ON THE PREVAILING MARKET RATE WHICH IS VE RIFIABLE FROM MCX RATE OF GOLD BULLION. THE ENTIRE PURCHASES OF GOLD BULLION ARE FULLY VERIFIABLE WHICH IS ALSO NOT DISPUTED BY THE AO. FU RTHER THE ASSESSEE IS MAINTAINING DAY TO DAY QUANTITATIVE DETAILS OF GOLD BULLION AND STOCK REGISTER ALSO. THERE IS NO INCRIMINATING EVIDENCE T O SHOW THAT THE PROFITS SHOWN BY THE ASSESSEE HAD BEEN CONCEALED OR UNDERST ATED. THERE IS NO REQUIREMENT UNDER GOLD CONTROL ACT OR CENTRAL EXCIS E ACT OR UNDER INCOME TAX ACT, ACCORDING TO WHICH, THE ASSESSEE CA NNOT MAKE THE CASH SALES AND IN CASE OF CASH SALES, FULL VERIFIABLE AD DRESSES OF THE BUYERS ARE REQUIRED TO BE MAINTAINED. THE ASSESSEE IS NOT REQU IRED TO INSIST FOR NECESSARY PROOF AND EVIDENCE REGARDING IDENTITY AND VERIFIABLE ADDRESSES OF THE BUYERS AND HE CANNOT BE REQUIRED TO PRODUCE SUCH BUYERS BEFORE THE AO FOR VERIFICATION OF SALES. THE SALE OF GOLD TT B ARS MADE BY THE ASSESSEE WERE NOT ONLY IN CASH BUT THERE WERE OTHER SALES MA DE TO REGISTERED DEALERS, PAYMENT FOR WHICH WAS RECEIVED BY CHEQUES. THE ASSESSEE HAD MADE SALES OF RS.8,71,63,739/- TO VARIOUS PARTIES F OR WHICH PAYMENTS WERE RECEIVED THROUGH CHEQUES. THE BOOKS OF ACCOUNT CANN OT BE HELD UNRELIABLE MERELY ON THE GROUND THAT THE ADDRESSES OF THE BUYE RS ARE NOT MENTIONED ON CASH MEMOS. THE GOLD IS SOLD ON RATES PREVAILING IN THE MARKET. IN THE CASE OF CASH SALES INSTEAD OF HANDLING CASH AT ITS BUSINESS PLACE, THE ASSESSEE ASKS ITS AGENTS OR THEIR CUSTOMERS TO DEPO SIT THE SALE PROCEEDS IN HIS DESIGNATED BANK ACCOUNTS. THE AO HAS FAILED TO TAKE NOTE OF THE FACT THAT EVEN AS PER CASH MEMOS, THE DELIVERY OF GOLD B ARS WAS TAKEN BY SH. VIMAL KUMAR SONI AS HIS SIGNATURE APPEARS ON THE CA SH MEMOS. THE EXISTENCE OF BUYERS WHO HAD GIVEN ADVANCES TO SH VI MAL KUMAR SONI IS PROVED BY THE FACT THAT ALL OF THEM HAD RESPONDED T O THE NOTICES ISSUED BY THE AO. I AM OF THE OPINION THAT THE INSISTENCE OF THE AO REQUIRING THE ASSESSEE TO PROVE CREDIT WORTHINESS OF ITS BUYERS W AS NOT WARRANTED. IN CASE OF CASH SALES OR EVEN FOR CREDIT SALES, THE AS SESSEE CAN NOT INSIST FOR PAN OF BUYERS OR ASK THEM OF PROVE THEIR SOURCES. T HE ASSESSEE HAD GLOBAL BANK ACCOUNTS AND AFTER CONFIRMATION OF PAYMENTS, T HE BROKERS COLLECTED GODS FROM THE ASSESSEE. ONCE THE ASSESSEE HAD RECEI VED THE SALE CONSIDERATION AND DELIVERY OF GOLD BARS HAD BEEN MA DE TO HIS AGENTS, THERE WAS NO NEED TO ASK THE COMMISSION AGENT TO SUBMIT D ELIVERY NOTE OF VARIOUS BUYERS. THE ASSESSEE CAN NOT BE ASKED TO PR OVE THE IMPOSSIBLE. IT DOES NOT MAKE ANY MATERIAL DIFFERENCE WHETHER THE A SSESSEE HAD GIVEN THE DELIVERY OF GOLD BARS EARLIER OR LATER AS LONG AS Q UANTITATIVE RECORDS MAINTAINED BY THE ASSESSEE WERE ACCEPTED AS RELIABL E BY THE A.O. SIMILARLY THE STAND OF THE AO THAT SH. VIMAL KUMAR SONI SHOUL D HAVE DONE BOOKING AT RATES HIGHER THAN THAT QUOTED BY THE ASSESSEE BE COMES INSIGNIFICANT 24 BECAUSE THE ASSESSEE HAS NOT SUFFERED ANY LOSS IN T HESE TRANSACTIONS. IT HARDLY MATTERS WHETHER CASH WAS DEPOSITED BY SH. VI MAL KUMAR SONI OR HIS REPRESENTATIVES OR ALLEGED BUYERS. THE SUSPICIO N HOWEVER STRONG IT MAY BE, CAN NOT BE SUBSTITUTE FOR EVIDENCE. IT IS THE A SSESSING OFFICER WHO HAS TO DEMONSTRATE THAT THE ASSESSEE HAD INCOME FROM UN DISCLOSED SOURCES AND IN THE PRESENT CASE, SHE HAS MISERABLY FAILED IN TH AT AREA. ACCORDINGLY IN THE FACTS AND IN THE CIRCUMSTANCES OF THE PRESENT C ASE, I HOLD THAT THE AO WAS NOT RIGHT IN HOLDING THAT CASH DEPOSITS IN BANK ACCOUNT OF THE ASSESSEE MADE ON 27.11.2004 WERE FROM THE UNDISCLOSED SOURCE S. THEREFORE I DIRECT THE AO TO DELETE ADDITION OF RS.5,58,32,598/-. THIS GROUND OF APPEAL IS ALLOWED. THE OTHER GROUNDS OF APPEAL ARE GENERAL IN NATURE AND THEREFORE NO SPECIFIC ADJUDICATION IS REQUIRED FROM ME. 23. DURING THE COURSE OF PROCEEDINGS BEFORE US THE LD. D/R HAS FILED THE FOLLOWING SUBMISSIONS: ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AN D IN LAW THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.5,58,32,59 8/- MADE ON ACCOUNT OF UNEXPLAINED DEPOSIT IN THE BAND ACCOUNT. THE ASSESSEE, MR. RAKESH KUMAR SONI, PROPRIETOR M/S RAKESH EXPORTS (TRADING IN BULLIONS), STARTED HIS BUSINESS IN THIS VERY YEAR, WITH A MERE CAPITAL OF RS.1.61 LACS, FIXED ASSET OF RS.26,000/- , HANDLED THE TOTAL TURNOVER OF RS.249.00 CRORE AGAINST TOTAL PURCHASE OF RS.251.00 CRORE (O.S. NIL-FIRST PURCHASE TOOK PLACE IN AUG. 2004, C .S 2.23 CRORE) AND CLAIM TO HAVE EARNED NET PROFIT OF RS.1.62 LACS. TH E ASSESSMENT U/S 143(3) WAS COMPLETED ON 31.12.07 AT TOTAL INCOME OF RS.5.6 0 CRORE AS AGAINST DECLARED INCOME OF RS.1.72 LACS, BY MAKING INTER AL IA AN ADDITION OF RS.5.58 CRORE I.E. PEAK UNEXPLAINED CASH DEPOSIT MA DE IN VARIOUS BANK ACCOUNTS ON 27.11.2004 (REFERENCE A.O ORDER PG. NO .15 TO 22). THE NET PROFIT DECLARED IS NEGLIGIBLE KEEPING IN VI EW THE NORMAL TREND OF THIS LINE OF BUSINESS. CASH DEPOSITS IN BAND A/CS ASSESSEE OPENED BANK A/CS IN ICICI BANK-KOLKATA, HD FC- DELHI, JAIPUR & KOLKATA, AND UCO BANK-JODHPUR, JAIPUR. THE PERUSA L OF BANK A/C REVEALS HUGE CASH DEPOSITS, MOSTLY IN ROUND FIGURES , CLAIMED TO HAVE BEEN DEPOSITED BY HIS AGENT/BROKER., MR. VIMAL KUMAR SON I, RESIDENT OF NAGAUR DIST. RAJ., AFTER COLLECTING THE SAME FROM PROSPECT US BUYERS (A.OS ORDER PG. NO.2 TO 9), AS ADVANCES AND DELIVERED GOODS IN FUTURE. THE ASSESSEE AS WELL AS BROKER HAS NOT MAINTAINED ANY SUPPORTING DO CUMENTARY EVIDENCE 25 SUCH AS NAME AND ADDRESS OF BUYERS, INCLUDING BANK SLIPS, FROM WHOM CASH IN LACS/CRORES COLLECTED AND DEPOSITED IN BANK . AS PER AN ARRANGEMENT THE BROKER USED TO COLLECT CASH IN ADVA NCE FROM VARIOUS PROSPECTUS BUYERS AND DEPOSIT THE SAME DIRECTLY IN THE BANK A/C OF THE ASSESSEE AT DIFFEENT STATIONS, ALL OVER INDIA AND C OLLECT THE DELIVERY OF GOLD BARS IN FUTURE DATES FROM JAIPUR AND DELIVERED THE SAME AT THEIR RESPECTIVE DESTINATION. FOR SUCH HUGE RISK, THE ASSESSEE HAS P AID MERE COMMISSION OF RS.1.17 LACS IN THE ENTIRE YEAR. IT IS DIFFICULT TO BELIEVE THAT THE BROKER HAS TAKEN THE RISK OF LOSS OF CASH/GOLDS IN LACS, FOR A MERE COMMISSION OF RS.1.17 LACS. ON THE OTHER HAND, IT IS AGAIN DIFFIC ULT TO BELIEVE THAT CUSTOMERS HAVE GIVEN HUGE ADVANCES IN CASH TO THE A SSESSEE WHO DOES NOT HAVE ANY STATUS, WORTH, REPUTATION IN THE LINE OF H IS BUSINESS, AS EXPLAINED ABOVE. IT IS PERTINENT TO MENTIONED HERE THAT THE A SSESSEE STARTED THE BUSINESS IN THE MONTH OF AUG. 2004 AND CLOSED ITS F IRM ON 30.4.2005 (NINE MONTHS). THE ASSESSEE HAS CARRIED OUT THE ABOVE BUS INESS AS PER RAJ. SALES TAX 1994 SECTION 76 READ WITH RULE 41 OF RAJ. SALES TAX RULES 1995 (A.O.S ORDER PAGE NO.10), HOWEVER FAILED TO MAINTA INED COMPLETE NAME AND ADDRESS OF BUYERS ON SALE BILLS, WHICH WAS MAND ATORY AS PER ABOVE SCHEME. THUS, NEITHER ASSESSEE NOR BROKER MAINTAINE D ANY RECORD WITH REFERENCE TO SOURCE OF CASH DEPOSITS OF RS.251 CROR E IN VARIOUS BANK A/CS VIS--VIS NAME AND ADDRESS OF PARTIES TO WHOM THE G OLD AMOUNTING RS.249 CRORE WAS SOLD. IT WAS EXPLAINED THAT SUCH DEPOSITS WERE OUT OF THE ADVANCES RECEIVED BY ASSESSEES BROKER SHRI VIMAL KUMAR SONI AGAINST SAL E OF GOLD. THAT THE BROKER USED TO RECEIVE ADVANCE AMOUNT FROM THE CUST OMERS AGAINST SALE ORDERS BOOKED BY HIM AND THIS AMOUNT WAS BEING DEPO SITED BY THE BROKER IN THE BANK ACCOUNTS OF M/S. RAKESH EXPORTS. INQUIR IES WERE GOT CONDUCTED THROUGH ITO, NAGAUR WHO HAPPENED TO BE THE ASSESSIN G OFFICER OF SHRI VIMAL KUMAR SONI. IN HIS STATEMENTS DATED 29.11.200 7 BEFORE THE ITO, NAGAUR, (PLACED AT ASSESSEES P.B. PAGE 26.29) SHRI VIMAL KUMAR SONI ADMITTED THAT HE WORKED AS COMMISSION AGENT FOR M/S . RAKESH EXPORTS AND RECEIVED COMMISSION @ 0.005% OF THE SALES. THAT HE USED TO RECEIVE ADVANCES AGAINST BOOKING OF GOLD WHICH WERE BEING D EPOSITED IN BANK ACCOUNTS OF M/S. RAKESH EXPORTS. THAT, HE TOOK THE DELIVERY OF GOODS FROM JAIPUR WITHIN ONE OR TWO DAYS AND HANDED OVER THE G OODS TO RESPECTIVE BUYERS. REGARDING THE CREDIT OF RS.2,19,50,000/- APPEARING IN HIS NAME IN THE BALANCE SHEET OF M/S. RAKESH EXPORTS AS ON 31.3.200 5, SHRI VIMAL KUMAR SONI STATED THAT THIS AMOUNT WAS NOTHING BUT THE AD VANCES RECEIVED BY HIM FROM CUSTOMERS IN THE MONTH OF NOV. & DEC., 2004 WH ICH HAD BEEN DEPOSITED IN BANK ACCOUNTS OF RAKESH EXPORTS. THAT HE FELL ILL AND TOOK REST ON THE ADVICE OF DOCTORS. THAT WHEN HE GAINED HIS H EALTH IN THE MONTH OF APRIL,2005 HE TOOK THE DELIVERY OF GOODS FROM M/S. RAKESH EXPORTS AND SUPPLIED THE SAME TO RESPECTIVE BUYERS FROM WHOM AD VANCES HAD BEEN 26 RECEIVED IN THE MONTH OF NOV. & DEC. 2004. THAT HE DID NOT MAINTAIN ANY BOOKS OF ACCOUNTS AND DID NOT PREPARE ANY BALANCE S HEET OR STATEMENT OF AFFAIRS. SHRI VIMAL KUMAR SONI FURTHER ADMITTED THAT HE WAS NOT HAVING ANY INCOME OTHER THAN BROKERAGE INCOME OF RS.1,01,739/- IN A.Y. 2005-06 RECEIVED FROM THE ASSESSEE. ON FURTHER ENQUIRY, SHR I VIMAL SONI HAD SENT A LETTER TO ITO, NAGAUR ON 31.3.2009 (ASSESSEES P.B. PAGE 30-31), STATING THAT HE DID NEITHER ISSUE ANY RECEIPT FOR THE ADVAN CE TAKEN FROM CUSTOMERS NOR OBTAINED ANY DELIVERY RECEIPT FROM SUCH CUSTOME RS. CONCLUSION THIS WAS 1 ST YEAR OF ASSESSEES BUSINESS. HE WAS NEW IN THE MAR KET AND WAS NOT WELL KNOWN IN THE BUSINESS COMMUNITY. HE DI D NOT EVEN HAVE A PERMANENT OFFICE. NO PRUDENT PERSON FROM DISTANT PL ACES VIZ. KOLKATA WOULD PAY ADVANCE AGAINST PURCHASES TO A PERSON LIK E THE ASSESSEE THAT TOO WITHOUT ANY RECEIPT. AS PER MARKET PRACTICE THE GOLD IS DELIVERED ON THE SAME DAY OF PAYMENT. EVEN THE ALLEGED BROKER IS NOT A RENOWNED NAME OF THIS BUSINESS. IN HIS STATEMENT RECORDED BY ITO, NA GAUR, SHRI VIMAL KUMAR SONI HAD STATED THAT HE WAS INTRODUCED TO THI S LINE BY SHRI RAKESH SONI I.E. THE ASSESSEE ONLY. IT IS STRANGE THAT NEI THER THE ASSESSEE NOR HIS ALLEGED BROKER IS IN POSSESSION OF ANY DETAILS REGA RDING THE SO CALLED BUYERS WHO HAD GIVEN THEM CASH IN ADVANCE. THE ASSE SSEE HAD OWN CAPITAL OF RS.2,50,525/- ONLY AS ON 31.3.2005 WHICH IS NEGL IGIBLE AND BY NO STRETCH OF IMAGINATION EXTRAORDINARY TURNOVER OF RS.249.86 CRORES COULD BE ACHIEVED WITH SUCH INVESTMENT. INVESTMENT TO THE EX TENT OF CRORES OF RUPEES FUNDS IS A MUST TO EFFECT TURNOVER TO SUCH HIGH EXT ENT. OBVIOUSLY, SUCH INVESTMENT HAS BEEN MADE BY WAY OF INTRODUCTION OF UNEXPLAINED CASH IN THE BANK ACCOUNTS. THEREFORE, THE AO HAS RIGHTLY MA DE THE ADDITION OF RS.5,58,32,598/- (INCLUDING RS.2.195 CRORES AS ABOV E) ON ACCOUNT OF PEAK UNEXPLAINED CASH DEPOSITS, MADE BY THE ASSESSEE ON 27.11.2004, IN VARIOUS BANK ACCOUNTS. FROM THE ABOVE FACTS, IT IS CLEAR THAT THE ASSESSEE COULD MANAGE HIS BUSINESS TURNOVER OF RS.249 CRORE WITH MERE CAPITAL OF RS.1.61 LACS, THAT TOO WITHOUT ANY BUSINESS SET-UP AND WITH NO ANY EXP ERIENCE IN THE LINE OF THE BUSINESS. ON THE OTHER HAND THE ASSESSEE APPOIN TED A BROKER, WHO ALSO HAS NO EXPERIENCE IN THE LINE TO HANDLE THE ABOVE B USINESS I.E. COLLECTION OF CASH AMOUNTING RS.251 CRORE AS ADVANCES FROM PROSPE CTUS BUYERS, FROM ALL OVER INDIA, DEPOSITING THE SAME IN THE VARIOUS BANK A/CS OF THE ASSESSEE, WITHOUT MAINTAINING EVEN A SINGLE RECORD AND DELIVERING THE GOLD AGAINST THE SAID ADVANCES TO THE BUYERS, WITHOUT AN Y WRITTEN AGREEMENTS. LIKE-WISE THE BUYERS FROM ALL OVER THE INDIA COULD BELIEVE THE BROKER BY ADVANCING THE CASH IN LACS WITHOUT ANY RECEIPT PROO F/UNDERTAKING TO A PERSON WHO IS NOT KNOWN IN THE LINE OF THE BUSINESS . THIS CLEARLY PROVE THE 27 FACT THAT THE ASSESSEE HAS INTRODUCED HIS UNACCOUNT ED CASH IN THE BANK A/C FOR BUYING THE GOLD IN THE GUISE OF THE CASH ADVANC ES RECEIVED FROM THE CUSTOMER. GROUND NO.2 WITHOUT PREJUDICE TO ABOVE THE CIT (A) ERRED IN NOT MAKING ADDITION OF RS.2,19,50,000/- THE AMOUNT SHOWN AS OUTSTANDING LI ABILITY IN THE NAME OF SH. VIMAL KUMAR SONI, AGENT OF THE ASSESSEE WHICH W AS NOT FOUND GENUINE. CIT (A) IS EMPOWERED TO DO SO AS PER EXPLANATION TO SECTION 251 OF THE ACT IF THE FACTS OF THE CASE WARRANTS SO. OUTSTANDING LIABILITY OF RS.2,19,50,000/- IN THE BA LANCE SHEET AS ON 31.3.2005 OF M/S. RAKESH EXPORTS, A SUM OF RS.2,19, 50,000/- HAD BEEN SHOWN PAYABLE TO SHRI VIMAL KUMAR SONI (ALLEGED BRO KER). DURING ASSESSMENT PROCEEDINGS, IT WAS EXPLAINED THAT THIS AMOUNT IS ON ACCOUNT OF ADVANCES RECEIVED BY SHRI VIMAL KUMAR SONI AGAINST SALE OF GOODS FROM VARIOUS CUSTOMERS IN THE MONTHS OF NOV. & DEC. 2004 , HOWEVER, THE GOODS COULD NOT BE SUPPLIED DUE TO ILLNESS OF THE BROKER. THAT AGAINST THESE ADVANCES, THE GOODS WERE SUPPLIED IN THE MONTH OF A PRIL, 2005. NO DETAILS OR EVIDENCE WHATSOEVER IN SUPPORT OF SUCH SO CALLED ADVANCES HAVE BEEN FILED BY THE ASSESSEE. EVEN THE ALLEGED BROKER SHRI VIMAL KUMAR SONI COULD NOT SUBMIT ANY DETAILS OR EVIDENCE TO SUBSTAN TIATE THESE ALLEGED ADVANCES. INQUIRES WERE CONDUCTED ON TWO OCCASIONS FROM THE ALLEGED BROKER BY THE ITO, NAGAUR I.E. ON 29.11.2007 AND AG AIN IN THE MONTH OF MARCH, 2009. HOWEVER ON BOTH THE OCCASIONS HE FAILE D TO SUBMIT ANY DETAILS OF THE SO CALLED CUSTOMERS FROM WHOM THE AD VANCES WERE RECEIVED AND THE GOODS SUPPLIED TO THEM. THE BURDEN OF ASSESSEE TO FURNISH NAMES AND ADDRESS ES OF THE CUSTOMER GIVING ADVANCE IS NOT THE SAME AS IN THE CASE OF CA SH SALES. IN THE CASE OF CASH SALES, THERE IS EXCHANGE OF GOODS WITH EQUIVAL ENT CASH RECEIPTS. HOWEVER, IN THE CASE OF ADVANCES THERE IS INFLOW OF FUNDS FOR WHICH THE ASSESSEE IS NOT RELINQUISHING ANYTHING FOR THE TIME BEING. THE ADVANCES RECEIVED AGAINST THE GOODS PARTAKE THE NATURE OF CR EDIT INTRODUCED IN BOOKS OF ACCOUNTS AND HENCE COMES WITHIN PURVIEW OF SECTION 68 OF THE I.T. ACT. THEREFORE, THE ONUS TO PROVE THE GENUINENESS O F SUCH ADVANCES LIES ON THE ASSESSEE ONLY WHICH HE CANNOT ESCAPE. IT IS NOT DISPUTED THAT SHRI VIMAL KUMAR SONI IS NOT A MAN OF MEANS. THE EXPLANA TION OF THE ASSESSEE AND THE ALLEGED BROKER REGARDING THIS AMOUNT TO BE THE ADVANCES RECEIVED AGAINST BOOKING OF GOODS IS A JUST A COOKED UP STOR Y. NO EFFORT HAS BEEN MADE TO PROVE THE RECEIPT OF THE ALLEGED ADVANCES O F RS.2,19,50,000/- AND HENCE THE SAME DESERVES TO BE TREATED UNEXPLAINED C REDIT U/S 68 OF THE I.T. ACT. HERE RELIANCE IS PLACED UPON THE DECISION GIVE N IN THE CASE OF GUMANI RAM SHRI RAM VS CIT (1975)98 ITR 337 (P&H). 28 AS REGARDS PROVISIONS OF SECTION 251 OF I.T. ACT, A TTENTION IS DRAWN TO PARA 3 ON PAGE 2 OF ASSESSMENT ORDER WHEREIN THE AO HAS STATED THAT THE ASSESSEE WAS ASKED TO EXPLAIN THE CREDIT OF RS.2,19 ,50,000/- SHOWN IN THE NAME OF SHRI VIMAL KUMAR SONI. THEREAFTER IN FOLLOW ING PAGES EXPLANATION GIVEN BY THE ASSESSEE AND THE FACTS GAT HERED ON ENQUIRY U/S 131 FROM SHRI VIMAL KUMAR SONI HAVE BEEN DISCUSSED IN DETAIL. IN THE ASSESSMENT ORDER, IT HAS BEEN HELD THAT SHRI VIMAL KUMAR SONI WAS NOT A MAN OF MEANS. IN VIEW OF THESE FACTS, THE LD. CIT ( A) OUGHT TO HAVE GIVEN HIS VERDICT ON THIS ISSUE. GROUND NO.3 WITHOUT PREJUDICE TO ABOVE THE CIT (A) ERRED IN NOT APPRECIATING FACTS OF THE CASE AND IN NOT INVOKING PROVISIONS OF SECTION 145(3) DESPITE VARIOUS DEFECTS IN BOOKS OF ACCOUNTS AS POINTED OUT BY THE AO. CIT(A) COULD HAVE INVOKED PROVISIONS OF SECTION 145(3) AND ESTIMATED PROFITS AS HE IS EMPOWERED UNDER THE ACT IN VIEW OF EXPLANATION TO S ECTION 251 OF THE I.T. ACT. SIMILARLY, IN THE ASSESSMENT ORDER, THE AO HAS POIN TED OUT VARIOUS DEFECTS IN BOOKS OF ACCOUNTS WHICH ARE SUFFICIENT FOR INVOK ING OF THE PROVISIONS OF SECTION 145(3) OF THE I.T. ACT AND THE LD. CIT (A) SHOULD HAVE GIVEN HIS FINDING AS PER PROVISIONS OF SECTION 251 OF THE I.T . ACT. 24. ON THE OTHER HAND, THE LD. A/R HAS ALSO FILED T HE WRITTEN SUBMISSIONS AND THE RELEVANT POSITIONS ARE REPRODUCED AS UNDER: QUOTE FROM PAGE 20 OF THE ASSESSMENT ORDER CONSIDE RING THE ABOVE FACTS AND THE INFERENCES DRAWN FROM THE FACTS AND CIRCUMS TANCES OF THE CASE IT WAS GATHERED THAT SHRI VIMAL KUMAR SONI WAS A PERSO N WHOS NAME HAD BEEN UTILIZED BY THE ASSESSEE TO DISGUISE THE ACTUA L TRADE ACTIVITY OF THE ASSESSEE. THE LEARNED ASSESSING OFFICER AFTER DOUBTING THE WO RKING OF SHRI VIMAL KUMAR SONI DID NOT STOP THEIR AND WENT A STEP FURTH ER BY DOUBTING THE BUSINESS ACTIVITY OF THE ASSESSEE ITSELF. THE LEARN ED ASSESSING OFFICER HAS HELD THAT SHRI VIMAL KUMAR SONI WAS USED TO DISGUIS E THE REAL ACTIVITY OF THE ASSESSEE. THE LEARNED ASSESSING OFFICER HAS NOT POINTED OUT AS WHAT IS THE REAL TRADE ACTIVITY OF THE ASSESSEE. HE HAS SIM PLY ACTED ON SHIMS AND SURMISES. THE FINDING OF THE LEARNED ASSESSING OFFI CER IS IN CONTRADICTION OF THE FOLLOWING FACTS- 29 (I) THE PURCHASES OF GOLD ARE FROM MMTC, HDFC BANK, CORPORATION BANK, NOVA SCOTIA ETC. THESE ARE BEYOND DOUBT. THE LEARNED ASSESSING OFFICER HAS ALSO NOT CHALLENGED THESE PUR CHASES OF GOLD. (II) ASSESSEE HAS MAINTAINED COMPLETE BOOKS OF ACCO UNTS DISCLOSING THE AFORESAID PURCHASES. THESE BOOKS OF ACCOUNTS ARE AU DITED U/S 44AB. THE LEARNED ASSESSING OFFICER HAS NOT REJECTE D THE BOOKS OF ACCOUNTS AND HAS NOT POINTED OUT ANY DEFECT IN THE AUDIT REPORT. HAVING ACCEPTED THE AUDIT REPORT THE TRADE ACTIVITY OF THE ASSESSEE CANNOT BE DOUBTED. (III) THE ASSESSEE HAS OPERATED VARIOUS BANK ACCOUNTS WHE RE MONEY WAS BEING DEPOSITED BY SHRI VIMAL KUMAR SONI AND SH RI BENI GOPAL VERMA. THE ACTIVITY OF THE SHRI BENI GOAPL VE RMA HAS NOT BEEN DOUBTED. WHEN THE WORKING OF ONE BROKER IS ACC EPTED AS GENUINE, IN THE SAME SET OF CIRCUMSTANCES THE GENUI NENESS OF ANOTHER BROKER DOES NOT REQUIRE TO BE DOUBTED. (IV) THE ASSESSEE HAD RAISED TEMPORARY LOANS (SQUAR ED UP ACCOUNTS) TO THE TUNE OF RS. 7,07,31,500/- FOR THE CONDUCT OF TH E BUSINESS. THE DETAILS OF THESE LOAN ACCOUNTS ARE PART OF THE AUDI T REPORT. THE LEARNED ASSESSING OFFICER DID NOT DOUBT ANY OF THES E LOAN ACCOUNTS. HAVING ACCEPTED THE LOAN ACCOUNTS IT WAS FOR THE LEARNED ASSESSING OFFICER TO POINT OUT WHERE THE MO NEY WAS UTILIZED IF NOT FOR THE CONDUCT OF THE GOLD BUSINES S. (V) THE ASSESSEE HAS DEPOSITED COMPOSITION FEES OF RS. 15,00,000/- TO THE GOVT. OF RAJASTHAN FOR DOING THE GOLD BUSINESS. THIS IN ITSELF IS A STRONG EVIDENCE OF CONDUCTING THE GOLD BUSINESS. (VI) THE ASSESSEE ALSO FURNISHED A COPY OF THE SALE TAX ORDER WHICH ESTABLISHED BEYOND DOUBT OF THE GOLD BUSINESS CONDU CTED BY THE ASSESSEE. THE SALE TAX ORDER IS A GOVERNMENT DOCUME NT AND CANNOT BE LIGHTLY REJECTED. (VII) THE ASSESSEE HAS PAID COMMISSION BOTH TO SHRI VIMAL KUMAR SONI AND TO SHRI BENI GOPAL VERMA OF RS. 1,17,122/- AND RS. 5006/- RESPECTIVELY. THE PAYMENT TO SHRI BENI GOPAL VERMA HAS REMAINED UNCHALLENGED. (VIII) ALTHOUGH ON THE ONE HAND THE LEARNED ASSESSI NG OFFICER HAS DOUBTED THE CREDITWORTHINESS OF SHRI VIMAL KUMAR SO NI BUT ON THE OTHER HAND HAS ACCEPTED THE CREDIT BALANCE IN HIS N AME WORTH RS. 2,19,50,000/- AS ON 31.03.2005. IN THE FACE OF THIS THE LEARNED ASSESSING OFFICER HAD NO CASE TO DOUBT THE WORKING OF SHRI VIMAL KUMAR SONI FOR THE ASSESSEE. 30 (IX) THE ASSESSEE HAS SOLD GOLD WORTH RS. 8,71,63,7 39/- AGAINST PAYMENT BY CHEQUES. THUS CONDUCT OF GOLD BUSINESS I S THERE. (X) THE LEARNED ASSESSING OFFICER HAS NOT POINTED O UT THAT IF THE REAL TRADE ACTIVITY OF THE ASSESSEE WAS NOT BUSINESS OF GOLD THEN THE GOLD PURCHASED BY THE ASSESSEE HAS GONE WHERE. (XI) AS PER THE SETTLED PRINCIPLE OF LAW THE APPARE NT IS REAL UNLESS PROVED OTHERWISE. IN THE CASE OF THE ASSESSEE THE A PPARENT BUSINESS IS OF GOLD. THE LEARNED ASSESSING OFFICER HAS NOT B ROUGHT ON RECORD ANY BUSINESS ACTIVITY OF THE ASSESSEE HENCE THERE WAS NO GROUND TO DOUBT THE SAME. (XII) THE LEARNED ASSESSING OFFICER HAS DOUBTED THE CASH SALES OF GOLD IN THE ABSENCE OF THE NAME AND ADDRESS OF BUYERS BU T THE LEARNED ASSESSING OFFICER SHOULD KNOW THAT THERE IS NO PROV ISION UNDER THE IT ACT FOR THE SAME, OTHERWISE ALSO IT IS USUAL PRA CTICE IN THIS LINE OF BUSINESS. IF FOR THAT MATTER ASSESSEE HAS VIOLAT ED THE PROVISIONS OF SALES TAX ACT, IT IS FOR THE SALE TAX AUTHORITIE S TO TAKE NOTE THEREOF WHICH THEY HAVE NOT DONE. THE SALE TAX ORDE R OF THE ASSESSEE IN THIS REGARD DOES NOT SPEAK ANYTHING ADV ERSE. CONSIDERING THE AFORESAID FACTS THE LEARNED CIT(A) RIGHTLY HELD THAT IT WAS NOT A CASE FOR APPLYING THE RATIO OF TH E SUPREME COURT DECISION IN THE CASE OF MCDOWELL AND CO. VS. CTO (1 985) 22 TAXMAN 11. THE LEARNED CIT(A) HAS CORRECTLY HELD TH AT THE ASSESSEE CONDUCTED THE BUSINESS OF GOLD AND ALSO AV AILED THE SERVICES OF SHRI VIMAL KUMAR SONI. THE LEARNED CIT( A) HAS RIGHTLY HELD THAT THE ASSESSEE WAS NOT CONCERNED WI TH THE RETAIL PURCHASES OR THE ACCOUNTS MAINTAINED BY SHRI VIMAL KUMAR SONI. THE ASSESSEE WAS ALSO NOT BOTHERED ABOUT THE RATES AT WHICH SHRI VIMAL KUMAR SONI WAS BOOKING THE SALE OF GOLD SO LO NG THE ASSESSEE WAS GETTING HIS SALE PRICE. IT ALSO DID NO T MATTER WHETHER SHRI VIMAL KUMAR SONI HIMSELF WAS DEPOSITING THE MO NEY IN THE BANK ACCOUNTS OF THE ASSESSEE OR ON HIS INSTRUCTION S THE BUYERS/OTHERS WERE DEPOSING THE MONEY IN THE BANK A CCOUNTS OF THE ASSESSEE. FOR THE PURPOSE OF THE BUSINESS CONDU CTED BY THE ASSESSEE THESE FACTS ARE IRRELEVANT. IN FACT THE LE ARNED ASSESSING OFFICER HAS GIVEN THE FINDING ON IRRELEVANT FACTS I GNORING THE VITAL DOCUMENTARY EVIDENCES. IT IS ESTABLISHED PRINCIPLE OF LAW THAT DOCUMENTARY EVIDENCE OUTWEIGHS ANY OTHER MATERIAL. THE LEARNED CIT(A) HAS CORRECTLY HELD THAT THE ASSESSEE CONDUCT ED THE BUSINESS OF GOLD AND THE DECISION OF THE LEARNED CIT(A) NEED S TO BE AFFIRMED. 31 PEAK THEORY IS NOT APPLICABLE AFTER MAKING THE AFORESAID OBSERVATIONS THE LEARNED ASSESSING OFFICER PROCEEDED TO TREAT THE SALE PROCEEDS DEPOSI TED THROUGH BROKER SHRI VIMAL KUMAR SONI IN VARIOUS BANK ACCOUN TS OF THE ASSESSEE ON 27.11.2004 TOTALING TO RS. 5,58,32,598/ - AS UNDISCLOSED CASH OF THE ASSESSEE HOLDING SAME TO BE THE PEAK AMOUNT . THUS THE LEARNED ASSESSING OFFICER MADE ADDITION OF RS. 5,58,32,598/- TO THE INCOME OF THE ASSESSEE WITHOUT MENTIONING ANY SECTION OF THE ACT SUCH AS 68 OF 69 ETC. THE ACTION OF THE LEARNED ASSESSING OFFICER IN DOUBTING THE WORK OF THE BROKE R SHRI VIMAL KUMAR SONI OR THE SALE PROCEEDS DEPOSITED BY HIM IN THE BANK ACCOUNT WAS WITHOUT ANY BASIS AND WAS UNLAWFUL AND ILLEGAL. THE LEARNED ASSESSING OFFICER AFTER DOUBTING THE WO RKING OF SHRI VIMAL KUMAR SONI AND ALSO AFTER DOUBTING THE REAL B USINESS OF THE ASSESSEE PROCEEDED FURTHER TO MAKE UNWARRANTED ADDI TION OF RS. 5,58,32,598/- CALCULATING PEAK AMOUNT DEPOSITED IN BANK AT HIS OWN SWEET WILL. THE LEARNED ASSESSING OFFICER HAS M ADE THE ADDITION WITHOUT QUOTING THE RELEVANT SECTION OF TH E INCOME TAX ACT, 1961. IT IS THE CASE OF THE LEARNED ASSESSING OFFICER THAT ON 27.11.2004 THERE ARE CASH DEPOSITS TO THE TUNE OF R S. 5,58,32,598/- IN THE VARIOUS BANK ACCOUNTS OF THE ASSESSEE WHICH HAPPENED TO BE THE PEAK AMOUNT. THE LEARNED ASSESSING OFFICER FURTHER HELD THAT 'ACTUALLY THIS WAS THE AMOUNT OF PEAK OF THE U NDISCLOSED MONEY WHICH HAS BEEN PUT IN BY THE ASSESSEE AND WHI CH HAS BEEN ROTATED IN THE BUSINESS BY HIM THUS CONSIDERI NG THE FACTS AND CIRCUMSTANCES OF THE CASE THE CASH DEPOSI TED IN THE BANK ACCOUNTS OF THE ASSESSEE ARE CONSIDERED TO BE MADE OUT OF UNDISCLOSED CASH AND ALLOWING THE FACILITY OF THE R OTATION OF THE AMOUNT THE PEAK SUM OF RS. 5,58,32,598/- IS TREATED AS HIS UNACCOUNTED CASH DEPOSITED IN HIS BANK ACCOUNTS AND THE SAME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. (LAST PARA OF THE ASSESSMENT ORDER) '. THE ACTION OF THE LEARNED ASSESSING OFFICER IS WITHOUT ANY GROUND AND UNLAWFUL AND ILLEGAL. HIS CA LCULATION OF PEAK AMOUNT HAS NO LEGS. HIS FINDING THAT THE PEAK AMOUNT WAS ROTATED BY THE ASSESSEE IS BASELESS. THE SAME IS CH ALLENGED AS UNDER DEPOSIT IN BANK ACCOUNTS IS OUT OF SALE PROCEEDS OF GOLD WHILE TREATING THE BANK DEPOSITS OF RS. 5,58,32,598 /- ON 27.11.2004 AS UNDISCLOSED INCOME OF THE ASSESSEE TH E LEARNED ASSESSING OFFICER HAS IGNORED THE FACT THAT ON THIS VERY DAY THERE IS SALE OF GOLD OF RS. 8,31,00,000/-.THE SALES OF GOLD HAVE REMAINED 32 UNCHALLENGED. THE DEPOSITS IN BANK WERE DIRECTLY OU T OF SALE PROCEEDS OF GOLD. IN THIS REGARD COPY OF BANK ACCOU NT IS AVAILABLE ON PAPER BOOK PAGE NO. 249 TO 273. THUS THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE DEPOSITS IN BANK UNEXPLAINED. WHEN THE SALES OF GOLD ARE NOT IN DOUB T, HOW CAN THE SALE PROCEEDS OF SUCH SALES DEPOSITED IN BANK BE TR EATED AS UNEXPLAINED. THE LEARNED CIT(A) HAS CORRECTLY HELD THAT THE LEARNED ASSESSING OFFICER WAS NOT RIGHT IN HOLDING THAT CASH DEPOSITS IN BANK ON 27.04.2004 WERE FROM THE UNDISC LOSED SOURCES. THE FINDING OF THE LEARNED CIT(A) DESERVES TO BE CONFIRMED. THE LEARNED CIT(A) HAS FURTHER OBSERVED THAT THE LEARNED ASSESSING OFFICER HAS NOT UNEARTHED ANY COL ORABLE DEVICE IN THE CASE OF THE ASSESSEE WHICH MAY JUSTIFY APPLI CATION OF THE RATIO OF THE CASE OF MC DOWELL & CO. 154 ITR 148. T HE LEARNED CIT(A) IS FURTHER JUSTIFIED IN STATING THAT THE LEA RNED ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO E STABLISH THAT MONEY HAS MOVED FROM THE ASSESSEE HIMSELF AND HAS A PPEARED AS CASH DEPOSITS IN THE BANK ACCOUNTS AND SHOWN AS SAL E PROCEEDS OF GOLD. THE FINDINGS OF THE LEARNED CIT(A) ARE BASED ON EVIDENCES AND FACTS OF THE CASE. THESE NEED TO BE AFFIRMED. ON EARLIER DATE I.E. 08.04.2004 HIGHER AMOUNT OF RS . 5,70,00,000/- STOOD DEPOSITED IN THE BANK THE LEARNED ASSESSING OFFICER HAS FURTHER ERRED IN HOLDING THAT DEPOSITS IN BANK ON 27.11.2004 OF RS. 5,58,32,598/- WERE THE PEAK AMOUNT AND WERE UNEXPLAINED. IN FACT ON EARLIER DAT E 08.11.2004 THERE ARE DEPOSITS OF RS. 5.70 CRORE IN THE BANK AC COUNTS OF THE ASSESSEE AND THIS AMOUNT HAS NOT BEEN DOUBTED BY TH E LEARNED ASSESSING OFFICER. THE AMOUNT ON 08.11.2004 IS HIGH ER AND IT COVERS THE SUBSEQUENT AMOUNT APPEARING ON 27.11.200 4. IN THE CIRCUMSTANCES THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE DEPOSITS ON 27.11.2004 AS PEAK AMOUNT AND IN HOLDING THE SAME AS UNEXPLAINED. THEREFORE THE ADDITION MAD E ON THE BASIS OF PEAK AMOUNT IS WITHOUT ANY GROUND. THE LEARNED C IT(A) WAS THEREFORE JUSTIFIED IN DELETING THE ADDITION. LOANS OBTAINED FOR BUSINESS STAND ACCEPTED IT IS FURTHER SUBMITTED THAT THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN DOUBTING THE BUSINESS ACTIVITY OF THE ASSESSEE. THE LEARNED ASSESSING OFFICER ALSO WAS NOT JUSTIFIED IN DOUBTING THE WORK DONE BY SHRI VIMAL KUMAR SONI ON THE GROUND TH AT HE WAS NOT A MAN OF MEANS. IT IS FURTHER SUBMITTED THAT TH E LEARNED ASSESSING OFFICER ALSO ERRED IN HOLDING THE DEPOSIT S IN THE BANK ACCOUNTS OF THE ASSESSEE OUT OF SALE PROCEEDS OF GO LD AS 33 UNDISCLOSED. THE LEARNED ASSESSING OFFICER LOST SIG HT OF THE FACT THAT FOR THE CONDUCT OF BUSINESS AS AND WHEN THERE WAS REQUIREMENT THE ASSESSEE OBTAINED MARKET LOANS TO T HE TUNE OF RS. 7,07,31,500/-. THIS FACT IS VERIFIABLE FROM THE AUD ITED ACCOUNTS OF THE ASSESSEE. THE LOANS WERE RAISED FROM AS MANY AS 10 PERSONS. A COPY OF THE DETAILS OF LOAN RAISED IS AVAILABLE WIT H THE AUDITED CITED SUPRA. THUS THE FACT OF OBTAINING OF LOAN REP UDIATES THE ALLEGATION THAT NO BUSINESS WAS CONDUCTED BY THE AS SESSEE. IT ALSO ESTABLISHES THE GENUINENESS OF THE BUSINESS CONDUCT ED BY THE ASSESSEE. THE ASSESSEE HAS ALSO PAID INTEREST OF RS . 6,38,840/-. THIS ALSO ESTABLISHES THAT THE LOANS WERE RAISED FO R CONDUCT OF BUSINESS WHICH THE LEARNED ASSESSING OFFICER FAILED TO TAKE NOT OFF. WITH THE AVAILABILITY OF FUNDS THERE WAS NO OCCASIO N FOR THE ASSESSEE FOR UTILIZING UNACCOUNTED MONEY AS ALLEGED BY THE LEARNED ASSESSING OFFICER. IN THESE CIRCUMSTANCES A DDITIONS MADE BY THE LEARNED ASSESSING OFFICER WAS MOST UNJUSTIFI ED AND THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE SAME. THE ORDER OF THE LEARNED CIT(A) DESERVES TO BE CONFIRMED. CASE LAWS IT IS SUBMITTED THAT THE LEARNED ASSESSING OFFICER HAS QUOTED A NUMBER OF CASE LAWS IN SUPPORT OF HIS FINDINGS. HOW EVER, THE LEARNED CIT(A) HAS CORRECTLY HELD THAT THE RATIO OF THE CASES CITED BY THE LEARNED ASSESSING OFFICER IS NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. THE MAIN CASE CITED BY TH E LEARNED ASSESSING OFFICER IS OF MC DOWELL & CO. 154 ITR 148 ON THE GROUND THAT THE ACTIVITY OF THE ASSESSEE OF BUSINES S OF GOLD WAS NOT REAL. IN THE VIEW OF THE LEARNED ASSESSING OFFICER THE NAME OF SHRI VIMAL KUMAR SONI WAS USED AS A COLOURABLE DEVICE. H OWEVER THE LEARNED ASSESSING OFFICER HAS NOT BROUGHT ON RECORD THAT WHAT DUBIOUS METHOD HAS BEEN ADOPTED BY THE ASSESSEE TO CONCEAL ANYTHING ANY REAL ACTIVITY AND IN WHAT MANNER THE A PPARENT BUSINESS ACTIVITY OF GOLD IS NOT REAL. IT IS SETTLE D PRINCIPLE OF LAW THAT UNLESS OTHERWISE PROVED THE APPARENT IS REAL. IN THE CASE OF THE ASSESSEE THE APPARENT BUSINESS ACTIVITY IS THAT OF GOLD. THE SAME IS TO BE TREATED AS REAL UNLESS OTHERWISE PROV ED. AFTER REPUDIATING THE RATIO OF CASES CITED BY THE L EARNED ASSESSING OFFICER THE LEARNED CIT(A) HAS CORRECTLY APPLIED TH E RATIO OF THE FOLLOWING CASE LAWS WHICH WERE BROUGHT TO HIS NOTIC E BY ASSESSEE AND HIS COUNSEL SR. NO. NAME OF CASE CITATION REMARK HOW RATIO IS APPLICA BLE IN THE CASE OF THE ASSESSEE 34 1 MANOJ AGGARWAL VS DCIT 113 ITD 377 (DELHI) (SB) (1) ON THE BASIS OF THE SALE TAX ORDER, THE SALES OF THE ASSESSEE WERE HELD AS GENUINE. (2) WHEN SALE HAVE BEEN ACCEPTED AS TRUE AND CORRECT, THE SALE PROCEEDS CANNOT BE TREATED AS UNDISCLOSED INCOME. IN THE CASE OF THE ASSESSEE ALSO SALE TAX ORDER HAS BEEN PRODUCED AND THEREFORE THE SALES OF GOLD COULD BE DOUBTED. FOR THAT REASON THE DEPOSITING OF THE SALE PROCEEDS IN THE BANK ACCOUNTS OF THE ASSESSEE ARE ALSO BEYOND DOUBT. 2 GLASS LINES EQUIPMENTS CO. 253 ITR 454 (GUJ) WHEN CASH DEPOSITS IN BANK THROUGH OUT THE YEAR HAVE BEEN ACCEPTED AS GENUINE, THE DEPOSITS ON A PARTICULAR DATE CANNOT BE DOUBTED. IN THE CASE OF THE ASSESSEE DEPOSITS OF RS. 5,70,00,000/- IN BANK ON 08.11.2004 EARLIER TO 27.11.2004 HAVE BEEN ACCEPTED AS GENUINE BY THE LEARNED A.O. AND THE SAME EXCEED THE AMOUNT OF RS. 5,58,32,598/- ON 27.11.04, THEREFORE THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFYING IN DOUBTING THE DEPOSITS IN 27.11.2004 AND TREATING THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. 3 CIT VS. BHARAT ENGG. CONSTRUCTION CO. 83 ITR 187 (ALL) HUGE PROFIT CANNOT BE EARNED WITH IN A SHORT TIME. THE BUSINESS HAS BEEN CONDUCTED FOR THE FIRST TIME. HENCE HE CANNOT BE EXPECTED TO EARN THE AMOUNT OF ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER. 4 P.K. NOORJAHAN 237 ITR 570 (SC) HUGE PROFIT CANNOT BE EARNED WITH IN A SHORT TIME. 5 SHANKAR KHANDASARI SUGAR MILLS VS. CIT 193 ITR 669 (KAR) ASSESSMENT ORDER PASSED BY SALES TAX AUTHORITY WAS RELEVANT IN INCOME TAX PROCEEDINGS THE ASSESSEE ALSO PRODUCED SALE TAX ORDER IN SUPPORT OF HIS BUSINESS ACTIVITY AND SALES WHICH THE LEARNED ASSESSING OFFICER HAS NOT CONSIDERED. 6 JAY ENGG. 113 ITR 389 AUDITED ACCOUNTS IN THE CAS E OF THE 35 WORKS LTD. (DEL) CAN BE TREATED AS LIABLE BY THE I.T. AUTHORITY. ASSESSEE AUDITED BOOKS OF ACCOUNTS WERE PRODUCED WHICH SHOULD HAVE BEEN RELIED UPON BY THE LEARNED ASSESSING OFFICER. 7 RACMANN SPRINGS P. LTD. 35 ITD 159 (DEL) SECTION 68 HAS NO APPLICATION TO CASH SALES. THE SALES CANNOT BE DOUBTED MERELY BEING IN CASH. THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN DOUBTING THE CASH SALES OF GOLD. 8 ITO VS. SURANA TRADERS 97 TTJ 875 (MUM) WHEN PURCHASES ARE HELD TO BE GENUINE, SALES COULD NOT BE DOUBTED. MERELY ON THE GROUND THAT THE SALE VOUCHERS WERE NOT PERFECT. IN THE CASE OF THE ASSESSEE PURCHASES ARE FROM GOVT. AGENCIES AND BANKS SUCH AS MMTC, CORPORATION BANK, HDFC BANK ETC. IN VIEW OF THIS THE SALE SHOULD HAVE NOT BEEN DOUBTED. 9 BANSAL RICE MILL VS. ITO 72 TTJ 1 (CHD) NO ADDITION CAN BE SUSTAINED EVEN IF SALES ARE TREATED AS BOGUS. IN THE CASE OF THE ASSESSEE SALES ARE GENUINE. 10 R.B. JESSAREM FATEHCHAND VS. CIT 75 ITR 33 (MUM) WHERE GOODS ARE SOLD AGAINST CASH PAYMENT IT IS HARDLY NECESSARY FOR THE SELLER TO BOTHER ABOUT THE NAME AND ADDRESS OF THE PURCHASER IN THE CASE OF THE ASSESSEE SALES ARE ALSO IN CASH AS SUCH HE WAS ALSO NOT REQUIRED TO RECORD THE NAME AND ADDRESS OF THE PURCHASERS. 11 METRO CYCLE OF INDIA 132 TAXMAN 148 (CHD) ASSESSEE IS NOT SUPPOSED TO KEEP TRACK OF THE PARTY TO WHOM THE SALE HAVE BEEN MADE EVEN ON CASH BASIS. SAME IS THE CASE OF THE ASSESSEE. 12 CIT VS. K.C. MALHYOTRA 304 ITR 149 (P&H) ONCE THE SALE OF GOODS IS ACCEPTED, THERE IS NO JUSTIFICATION TO REJECT THE CORRESPONDING SALES REALIZATION. SAME IS THE CASE OF THE ASSESSEE. 36 13 GURSHANT ROTARY COMPRESSORS LTD. 315 ITR 337 AT (DEL) ONCE THE ASSESSEE HAS SHOWN THE SALES IN ITS BOOKS OF ACCOUNTS THE AMOUNT IN QUESTION CANNOT BE ADDED BACK U/S 68. SAME IS THE CASE OF THE ASSESSEE. 14 ITO VS. GIRISH MEHTA 105 ITD 585 (RAJKOT) THE BOOKS OF ACCOUNTS CANNOT BE REJECTED ON THE GROUND THAT NAMES AND ADDRESS OF THE BUYERS WERE NOT AVAILABLE. SAME IS THE CASE OF THE ASSESSEE. 15 M DURAJ RAJ VS. CT 83 TR 484 (KER) THE BOOKS OF ACCOUNTS CANNOT BE REJECTED ON THE GROUND THAT NAMES AND ADDRESS OF THE BUYERS WERE NOT AVAILABLE. SAME IS THE CASE OF THE ASSESSEE. THUS THE AFORESAID CASE LAWS PLACE THE CASE OF THE ASSESSEE ON A STRONG FOOTING. IT IS FURTHER SUBMITTED THAT THE RATIO OF THE AFORESAID CASE LAWS IS FULLY APPLICABLE TO THE FACTS OF THE CASE AS SHOWN IN THE AFORESAID TABLE. IT IS FURTHER SUBMITTED THERE MAY BE DIVERGENT OPINION ON A ISSUE BUT IT IS SETTLED PRINCIPLE OF LAW THAT ONE WHICH IS FAVOURAB LE TO THE ASSESSEE HAS TO BE FOLLOWED. THE ABOVE CASE LAWS LEAVE NO GROUND FO R ANY ADDITION IN THE CASE OF THE ASSESSEE. THE LEARNED CIT(A) WAS THEREF ORE FULLY JUSTIFIED IN QUASHING THE ASSESSMENT ORDER PASSED BY THE ASSESSI NG OFFICER THE SAME DESERVES TO BE UPHELD. NO CASE FOR ADDITION OF RS. 2,19,50,000/- IN VIEW OF THE AFORESAID FACTS AND SUBMISSION OF T HE CASE THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER WERE CORRECTL Y DELETED BY THE LEARNED CIT(A). THE LEARNED ASSESSING OFFICER WAS N OT JUSTIFIED IN HOLDING THAT SHRI VIMAL KUMAR SONI WAS USED FOR DIS GUISING THE REAL BUSINESS ACTIVITY. THE LEARNED ASSESSING OFFICER IG NORED THE VITAL FACT THAT SHRI VIMAL KUMAR SONI WAS HOLDING PAN OF THE DEPART MENT, HAD DISCLOSED THE COMMISSION RECEIVED FROM THE ASSESSEE IN THE RETURN OF INCOME. THE LEARNED ASSESSING OFFICER WAS MISLED BY IRRELEVANT FACT THAT 37 SHRI VIMAL KUMAR SONI WAS NOT A MAN OF MEANS AND TH AT HE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNTS. THE LEARNED ASSESSING OFFICER FURTHER ERRED IN DOU BTING THE BUSINESS ACTIVITY OF THE ASSESSEE. THE LEARNED ASSESSING OFF ICER HAD NO EVIDENCE TO CONTROVERT THE SALES TAX ASSESSMENT ORDER PASSED IN THE CASE OF THE ASSESSEE WHICH WAS A GOVT. DOCUMENT. THE LEARNED AS SESSING OFFICER ALSO IGNORED THE VITAL FACT THAT THE ASSESSEE DEPOSITED RS. 15,00,000/- AS COMPOSITION FEES FOR THE CONDUCT OF BUSINESS. IN TH E FACE OF THESE EVIDENCES, THE CONDUCT OF THE BUSINESS OF THE ASSES SEE STOOD PROVED BEYOND DOUBT. THE LEARNED CIT(A) HAS HELD IN CLEAR CUT TERMS THA T SHRI VIMAL KUMAR SONI PERFORMED SERVICES FOR THE ASSESSEE WHICH ARE SUPPORTED BY VARIOUS DOCUMENTARY EVIDENCES DISCUSSED ABOVE. THE LEARNED CIT(A) HAS ALSO ACCEPTED THE FACT THAT THE WORK OF SHRI VIMAL KUMAR SONI INCLUDED COLLECTION OF MONEY IN ADVANCE FROM PURCHASERS OF G OLD, IN VIEW OF THIS THERE WAS NO OCCASION FOR THE LEARNED CIT(A) TO TRE AT THE BALANCE LYING TO THE CREDIT OF SHRI VIMAL KUMAR SONI IN THE BOOKS OF THE ASSESSEE. THE SAME WAS EXPLAINED BEFORE THE LEARNED CIT(A) THAT T HIS AMOUNT REMAIN LYING FOR A VERY BRIEF PERIOD BECAUSE SHRI VIMAL KU MAR SONI COULD NOT TAKE DELIVERY OF GOLD DUE TO ILLNESS. THE ENTIRE AM OUNT LYING TO THE CREDIT WAS ADJUSTED AGAINST DELIVERY OF GOLD IN THE MONTH OF APRIL 2005. THUS THE SUBSEQUENT SALES MAKE IS EVIDENT THAT THE AMOUNT WA S DEPOSITED WITH THE ASSESSEE AFTER COLLECTING THE SAME FROM THE PURCHAS ER OF GOLD TO WHOM GOLD WAS DELIVERED IN APRIL 2005. IT IS FURTHER SUBMITTED THAT THERE WAS NO CASE OF ENHANCEMENT OF INCOME IN VIEW OF THE AFORESAID FACTS DISCUSSED ABOVE. FURTHE R THE LEARNED ASSESSING OFFICER HAS GIVEN A FINDING THAT THE CRED IT SHOWN IN THE NAME OF SHRI VIMAL KUMAR SONI WERE PART OF THE CASH DEPOSIT S WHICH HAVE BEEN TREATED UNEXPLAINED AND ADDED TO THE INCOME OF THE ASSESSEE. THE SAME IS CLEAR FROM FIRST PARA APPEARING ON PAGE 22 OF THE A SSESSMENT ORDER WHICH READS AS UNDER 'ACTUALLY THIS WAS THE AMOUNT (5,58,32,598/-) OF P EAK OF THE UNDISCLOSED MONEY WHICH HAD BEEN PUT IN BY THE ASSESSES AND WHI CH HAD BEEN ROTATED IN THE BUSINESS BY HIM. THE SUNDRY CREDITS SHOWN TO BE IN THE NAME OF SHRI VIMAL KUMAR SONI WERE ACTUALLY A PART OF THESE CASH DEPOSITS. IT WAS THE ONUS OF THE ASSESSEE TO EXPLAIN THE SOURCES OF THESE CASH DEPOSITS MADE IN HIS BANK ACCOUNTS THROUGH OUT THE YEAR.' THE ABOVE PARA CLEARLY STIPULATES THE MIND SET OF THE LEARNED ASSESSING OFFICER. IN THE VIEW OF THE LEARNED ASSESSING OFFIC ER THE ADDITION OF RS. 5,58,32,598/- COVERS THE CREDIT OF RS. 2,19,50,000/ - STANDING IN THE NAME OF SHRI VIMAL KUMAR SONI. THE LEARNED ASSESSING OFF ICER HAS CLEARLY STATED THAT THE CASH DEPOSITS IN BANK AND THE CREDI T IN THE NAME OF SHRI 38 VIMAL KUMAR SONI ARE INTER-RELATED. IN VIEW OF THIS THERE WAS NO OCCASION WITH THE LEARNED CIT(A) FOR CONSIDERING/MAKING A SE PARATE ADDITION OF RS. 2,19,50,000/-. WHAT TO SPEAK OF MAKING A FURTHE R ENHANCEMENT OF INCOME BY WAY OF ADDITION OF RS. 2,19,50,000/-, THE LEARNED CIT(A) HAS EVEN STRUCK DOWN THE ADDITION OF RS. 5,58,32,598/- MADE BY THE LEARNED ASSESSING OFFICER. GROUND NO. 3 :- WITHOUT PREJUDICE TO ABOVE THE LEARNED CIT(A) ERRED IN NOT APPRECIATING FACTS OF THE CASE AND IN NOT INVOKING PROVISIONS OF SECTION 145(3) DESPITE VARIOUS DEFECTS IN BOOKS OF ACCOUNTS AS POINTED OUT BY THE ASSESSING OFFICER. CIT(A) COULD HAVE INVOKED PROVIS IONS OF SECTION 145(3) AND ESTIMATED PROFIT AS HE IS EMPOWERED UNDE R THE ACT IN VIEW OF EXPLANATION TO SECTION 251 OF THE ACT. THE GROUND RAISED BY THE REVENUE IS OF NO AVAIL. NO SERIOUS DEFECTS IN THE BOOKS OF ACCOUNTS HAS BEEN POINTED BY THE LEARNED A SSESSING OFFICER. THE ONLY ONE DEFECT OF TRIVIAL NATURE POINTED OUT BY TH E LEARNED ASSESSING OFFICER IS THAT THE SALES BEING IN CASH DID NOT CON TAIN THE NAME AND ADDRESS OF PURCHASERS. HOWEVER THE LEARNED ASSESSIN G OFFICER FAILED TO NOTICE THAT EVEN THE CASH SALE VOUCHERS CONTAINED T HE SIGNATURES OF THE PERSON MAINLY SHRI VIMAL KUMAR SONI WHO TOOK THE DE LIVERY OF GOLD. SUCH SIGNATURES ARE AVAILABLE ON EACH AND EVERY SALE VOU CHERS AT THE PLACE 'CUSTOMERS SIGNATURES'. THERE ARE VERIFIABLE FROM T HE COPIES OF SALE VOUCHERS/DELIVERY CHALLANS CITED SUPRA. IT IS FURTHER SUBMITTED THAT OTHERWISE ALSO ABSENCE OF THE NAME OF CUSTOMER IN CASH SALES IS NOT A MATERIAL DEFECT. TH E INCOME TAX ACT, 1961 NO WHERE STIPULATES THE MENTIONING OF THE PURCHASER S NAME IN THE CASE OF CASH SALES. THERE IS NO VIOLATION OF ANY PROVISIONS OF THE INCOME TAX ACT, 1961. FURTHER THE CASE LAWS CITED ABOVE AND WHICH A RE REPRODUCED AGAIN BELOW, BOOKS OF ACCOUNTS CANNOT BE REJECTED FOR THI S DEFECT 1 GURSHANT ROTARY COMPRESSORS LTD. 315 ITR 337 AT (DEL) ONCE THE ASSESSEE HAS SHOWN THE SALES IN ITS BOOKS OF ACCOUNTS THE AMOUNT IN QUESTION CANNOT BE ADDED BACK U/S 68. SAME IS THE CASE OF THE ASSESSEE. 2 ITO VS. GIRISH MEHTA 105 ITD 585 (RAJKOT) THE BOOKS OF ACCOUNTS CANNOT BE REJECTED ON THE SAME IS THE CASE OF THE ASSESSEE. 39 GROUND THAT NAMES AND ADDRESS OF THE BUYERS WERE NOT AVAILABLE. 3 R.B. JESSAREM FATEHCHAND VS. CIT 75 ITR 33 (MUM) WHERE GOODS ARE SOLD AGAINST CASH PAYMENT IT IS HARDLY NECESSARY FOR THE SELLER TO BOTHER ABOUT THE NAME AND ADDRESS OF THE PURCHASER IN THE CASE OF THE ASSESSEE SALES ARE ALSO IN CASH AS SUCH HE WAS ALSO NOT REQUIRED TO RECORD THE NAME AND ADDRESS OF THE PURCHASERS. 4 METRO CYCLE OF INDIA 132 TAXMAN 148 (CHD) ASSESSEE IS NOT SUPPOSED TO KEEP TRACK OF THE PARTY TO WHOM THE SALE HAVE BEEN MADE EVEN ON CASH BASIS. SAME IS THE CASE OF THE ASSESSEE. IT IS FURTHER SUBMITTED THAT THE ASSESSEE HAS MAINT AINED QUANTITATIVE DETAILS OF PURCHASES AND SALES. IN THESE CIRCUMSTAN CES THE BOOKS OF ACCOUNTS CANNOT BE REJECTED. THE GROUND TAKEN BY TH E REVENUE IS FOR THE SAKE OF GROUND, THE SAME DESERVES TO BE DISMISSED. 25. WE HAVE HEARD BOTH THE PARTIES. THE PAPER BOOK FILED BY THE ASSESSEE CONTAINS THE SALE BILLS FOR THE PERIOD OF NOVEMBER. ON A PARTICU LAR DATE THE ASSESSEE HAS ISSUED BILLS ON THE SAME RATE. DATE RATE PER GM IN THE BILL 30.11.2004 RS.665 29.11.2004 RS.665 27.11.2004 RS.665 25.11.2004 RS.665 24.11.2004 RS.665 23.11.2004 RS.660 40 22.11.2004 RS.660 20.11.2004 RS.655 26. IT IS AN ACCEPTED PROPOSITION THAT GOLD RATE VA RIES NOT FROM DAY TO DAY BUT ALSO DURING THE DAY. GOLD RATES ON THE ABOVE DATES WERE AS UNDER: 30.11.2004 RS.661 29.11.2004 RS.662 27.11.2004 RS.665 25.11.2004 RS.664 24.11.2004 RS.660 23.11.2004 RS.659.5 22.11.2004 INDIA CLOSE 20.11.2004 RS.659 27. THE ASSESSEE PURCHASED AT DIFFERENT RATE DURING A PARTICULAR DAY ON 22.11.2004, THE ASSESSEE HAS PURCHASED BULLION ON RATES VARYING FRO M RS.647.31 PER GM TO 656.91 PER GRAM. IT MEANS THAT THE ASSESSEE RECEIVES ADVANCE F ROM THE CUSTOMERS FOR THE PURCHASE OF BULLION AND THE RATE IS FIXED. IT IS NOT A CASE WHE RE THE ASSESSEE HAS EMPLOYED ITS FUNDS. 28. TAX AUDIT REPORTS SHOW THAT ASSESSEE RAISED LOA NS ALSO AND HAS DEBITED INTEREST TO THE EXTENT OF RS.6,38,840/-. THE A.O. REFERED TO TH E PEAK CREDIT AS ON 27.11.2004. WE HAVE SEEN THE CASH BOOK. IN THE CASH BOOK SALES HAV E BEEN DEBITED AND SALES HAVE BEEN CREDITED. SALES ARE CASH SALES. IF THE SALES ARE CR EDIT SALES THEN PARTY ACCOUNT IS TO BE CREDITED. THUS CASH RECEIVED ON 27.11.2004 IS AGAIN ST CASH SALES. ON THIS DATE THE CASH 41 SALES ARE TO THE EXTENT OF RS.8,31,32,595/- AND THE CASH RECEIVED IS RS.8,31,33,398/-. THE A.O. HAS ONLY REFERRED TO THE AMOUNTS DEPOSITED IN SOME BANKS. IT WILL BE USEFUL TO REPRODUCE THE CASH BOOK EXTRACT OF 27.11.2004. DATE PARTICULARS VCH TYPE VCH NO. DEBIT CREDIT 27.11.2004 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR. SONI VIDE INV NO. CM/B01121 BAR NO.459196 TO 459198 RECEIPT 19,95,000.00 27.11.2004 TO (AS PER DETAILS) SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01122 BAR NO.459192 (PART), 459199 TO 459200 & 485296 TO 485298 RECEIPT 34,52,242.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01123 BAR NO.485299 TO 485304 RECEIPT 39,90,000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01124 BAR NO. 485305 TO 485309 RECEIPT 33,25,000.00 TO SALES A/C BEING GOLD BAR SALED IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/501125 BAR RECEIPT 46,55,000.00 42 NO.185310 TO 485316 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO CM/B01126 BAR NO.485812 TO 485320 RECEIPT 26,60,000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01127 BAR NO.485240 TO 485251 RECEIPT 39,90,000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01128 BAR NO.485252 TO 485258 RECEIPT 40,55,000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01129 BAR NO.485259 TO 485283 RECEIPT 33,25,000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01130 BAR NO.485264 TO 485266 RECEIPT 19,95,000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO.CM/B01131 BAR NO.485267 TO 485270 RECEIPT 33,25,000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR. SONI VIDE INV RECEIPT 19,95,000.00 43 NO.CM/B01133 BAR NO.F435016 TO F435018 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01134 BAR NO.F435019 TO F435025 RECEIPT 46,55,000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01135 BAR NO. F435026 TO F435031 RECEIPT 39,90,000.00 TO (AS PER DETAILS) SALES A/C BEING GOLD BAR SALE IN CASH VIDE INV NO. CM/B01156 BAR NO.F435032 TO F435034 & F435035(PART) (DELIVERED TO MR. RASIKLAL PANWAR- JODHPUR). RECEIPT 23,34,289.00 TO ( AS PER DETAILS) SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01137 BAR NO.F435035(PART) RECEIPT 3,25,711.00 BY UCO BANK (JODHPUR-840) BEING CASH DEPOSITED INTO BANK. CONTRA 375 10314288.00 BY ICICI BANK (CAL) 4822 BEING CASH DEPOSITED INTO BANK CONTRA 376 4300000.00 BY ICICI BANK (CAL) 4822 BEING CASH DEPOSITED INTO CONTRA 377 4500000.00 44 BANK BY ICICI BANK (CAL) 4822 BEING CASH DEPOSITED INTO BANK CONTRA 378 6250000.00 BY HDFC BANK LTD (JAIPUR) 158 BEING CASH DEPOSITED INTO BANK CONTRA 379 15000000.00 BY HDFC BANK LTD (JAIPUR) 158 BEING CASH DEPOSITED INTO BANK CONTRA 380 5200000.00 BY HDFC BANK LTD (JAIPUR) 158 BEING CASH DEPOSITED INTO BANK CONTRA 381 3600000.00 BY HDFC BANK LTD (JAIPUR) 158 BEING CASH DEPOSITED INTO BANK CONTRA 382 3500000.00 27.11.2004 BY TRAVELLING EXP. BEING CASH PAID TO MR. VASU DEV SONI, FOR- TOUR & TRAVELLING EXP. DT.25.11.2004 TO 27.11.2004 PAYMENT 147 800.00 BY ICICI BANK (CAL) 4822 BEING CASH DEPOSITED INTO BANK CONTRA 383 2150000.00 BY ICICI BANK (CAL) 4822 BEING CASH DEPOSITED INTO BANK CONTRA 384 2400000.00 BY ICICI BANK (CAL) 4822 BEING CASH DEPOSITED INTO BANK CONTRA 385 218310.00 BY ICICI BANK (CAL) 4822 BEING CASH DEPOSITED INTO BANK CONTRA 386 695000.00 BY ICICI BANK CONTRA 387 2000000.00 45 (CAL) 4822 BEING CASH DEPOSITED INTO BANK BY ICICI BANK (CAL) 4822 BEING CASH DEPOSITED INTO BANK CONTRA 388 4935000.00 BY ICICI BANK (CAL) 4822 BEING CASH DEPOSITED INTO BANK CONTRA 389 4520000.00 BY ICICI BANK (CAL) 4822 BEING CASH DEPOSITED INTO BANK CONTRA 390 1000000.00 BY HDFC BANK LTD (JAIPUR) 158 BEING CASH DEPOSITED INTO BANK CONTRA 391 8300000.00 BY HDFC BANK LTD (JAIPUR) 158 BEING CASH DEPOSITED INTO BANK CONTRA 392 4250000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01136 BAR NO.485221 TO 485223 RECEIPT 19,95,000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR. SONI VIDE INV NO. CM/B01141 BAR NO.485224 TO 485228 RECEIPT 33,25,000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV. NO. CM/B01142 BAR NO.485229 TO 485232 RECEIPT 26,60,000.00 TO SALES A/C BEING GOLD BAR RECEIPT 1330000.00 46 SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01143 BAR NO.485233 & 485234 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO.CM/B01144 BAR NO.485235 TO 485237 RECEIPT 19,95,000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01145 BAR NO.485238 TO 485242 RECEIPT 33,25,000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01146 BAR NO.AC 67477 TO AC67480 RECEIPT 26,60,000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01147 BAR NO.AC67484 TO AC67487 RECEIPT 19,95,000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01140 BAR NO. AC69851TO AC69854 RECEIPT 26,60000.00 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01150 BAR NO. AC69855 RECEIPT 6,65,000.00 TO SALES A/C RECEIPT 13,30,000.00 47 BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01151 BAR NO. AC67506 TO AC87507 TO SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01152 BAR NO. AC67508 TO AC67510 RECEIPT 19,95,000.00 TO (AS PER DETAILS) SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01153 BAR NO. AC67511 & AC67512 (PART) RECEIPT 12,10,357.00 29.11.2004 TO (AS PER DETAILS) SALES A/C BEING GOLD BAR SALE IN CASH TH BROKER VIMAL KR SONI VIDE INV NO. CM/B01154 BAR NO. AC 67512 (PART) RECEIPT 8,31,398 29. IF THE A.O. IS NOT ACCEPTING THE SALES IN CASH AND IS ONLY CONSIDERING THE DEPOSITS IN BANK ACCOUNT. IF SUCH CASH SALES ARE NOT CONSIDE RED AS SOURCE THEN EITHER SUCH SALES SHOULD NOT BE ACCEPTED OR SUCH SALES SHOULD BE CRED IT SALES. THE STOCK LEFT AT THE END OF YEAR STANDS ACCEPTED WHICH MEANS THAT SALES ARE ACC EPTED. THERE IS NO MATERIAL ON RECORD THAT THE ASSESSEE HAS MADE CREDIT SALES. THE A.O. H AS NOT CONSIDERED THE CASH BOOK BUT HAS MADE ADDITION ON THE BASIS OF COPY OF BANK ACCO UNT OF ASSESSEE. IF THE EXPLANATION OF THE ASSESSEE IS CONSIDERED THEN THERE IS NO UNEXPLA INED DEPOSIT IN THE BANK. THE ASSESSEE HAS REVISED LOANS AND HAVE ALSO PAID THE INTEREST. IN CASE THE SALE VOUCHER DO NOT CONTAIN THE NAME OF THE PARTY THEN THE A.O. COULD HAVE REJE CTED THE BOOKS OF ACCOUNT. HENCE IT 48 WAS NOT A CASE OF MAKING A PEAK ADDITION. WE HAD AL READY NOTICED THAT ASSESSEE RECEIVES ADVANCE FOR PURCHASING THE GOLD AND ORDER IS BOOKED FOR A PARTICULAR RATE AND HENCE THE SALE BILLS DO NOT CONFORM TO THE PREVAILING MARKET RATE. SINCE THE GOODS WERE STILL NOT DELIVERED AND HENCE THERE WAS CLOSING STOCK. ONCE P URCHASE HAS BEEN MADE ON THE BASIS OF BOOKING THEN THE ASSESSEE CAN NOT SELL TO OTHERS AS SALES TO OTHER PARTIES WILL HAVE INVOLVED RISK OF INCURRING LOSS IF RATE OF GOLD INC REASES AS THE GOLD WILL HAVE TO BE SUPPLIED AT A PARTICULAR RATE AT WHICH ORDERS WERE BOOKED. 30. IF THE A.O. WAS MAKING A SUBSTANTIAL ADDITION O F FEW CRORES THEN A.O. COULD HAVE OBTAINED THE TOTAL WEALTH STATEMENT. THE WORD MAY I S USED IN SECTION 69 OF THE I.T. ACT. IF THE PERSON CONCERNED IS NOT IN A POSITION TO HAVE C ASH TO THE EXTENT DEPOSITED IN BANK AND THE ASSESSEE GIVES AN EXPLANATION THEN SUCH EXPLANA TION IS TO BE CONSIDERED AT THE TOUCHSTONE OF A PRUDENT PERSON. IT IS NOT THE CASE OF REVENUE THAT DEPOSIT TREATED AS UNEXPLAINED WERE NOT MENTIONED IN THE CASH BOOK. AG AINST SUCH DEPOSITS, THE ASSESSEE HAS SOLD THE GOLD AND STOCK SHOWN AT THE END OF YEAR HA S BEEN ACCEPTED. IT MEANS THAT IF DEPOSITS WERE THE UNEXPLAINED INCOME OF THE ASSESSE E THEN IT SHOULD BE AVAILABLE AT THE END OF YEAR AS CASH OR GOLD. IT IS A CASE WHERE PUR CHASES ARE NOT DOUBTED AND TRADING ACCOUNT HAS ALSO BEEN ACCEPTED. DEPOSIT IN BANK ACC OUNT ARE OUT OF CASH SALES AND ASSESSEE HAS EXPLAINED THAT NAMES OF PARTIES ARE NO T KNOWN BUT SALES ARE THROUGH BROKER. BROKER HAS NOT DENIED THE TRANSACTIONS. 31. THE LD. CIT (A) HAS RIGHTLY RELIED ON THE FOLLO WING JUDGEMENTS: GURUSHANT ROTARY COMPRESSORS LTD. (SUPRA) GIRISH MEHTA( SUPRA) M. DURAI RAJ (SUPRA) 49 32. WE, THEREFORE FEEL THAT LD. CIT (A) WAS JUSTIFI ED IN DELETING THE ADDITION. IN THE RESULT THE APPEAL OF REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED IN COURT ON 22.12.2011 SD/- SD/- (R.K.GUPTA) (N.L.KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22.12.2011 *S.KUMAR* COPY FORWARDED TO:- 1. THE INCOME TAX OFFICE, 5(1), JAIPUR. 2. SHRI RAKESH KUMAR SONI, JAIPUR. 3. THE CIT 4. THE CIT(A), 5. THE D/R, ITAT, JAIPUR 6. THE GUARD FILE IN ITA NO.62/JP/2011 BY ORDER ASSISTANT REGISTRAR