ITO ward -14(2), New Delhi V. Kapur Gems Pvt. Ltd., New Delhi

ITA 8235/DEL/2019

AI Insights

The case involves the Income Tax Department (Revenue) appealing against the order of the Commissioner of Income Tax (Appeals)-5, New Delhi, which had deleted the additions made by the Assessing Officer (AO) regarding unexplained cash deposits and unverifiable purchases by M/s. Kapur Gems Pvt. Ltd. The AO had made these additions following a scrutiny assessment, suspecting that the cash sales reported in Surat were being deposited in Delhi without any plausible explanation. The CIT(A) found that the AO had misapprehended the facts, as the sales and deposits were actually in Delhi, not Surat. The Tribunal agreed with the CIT(A)'s findings, dismissing the Revenue's appeal.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 115612 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-12-2022
• Assessment Year: misc
• Appeal Filed On: 16-08-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 68; 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘C’ : NEW DELHI) BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SH. ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.8235/Del/2019, A.Y. 2014-15 ITO, Ward-14(2), New Delhi Vs. M/s. Kapur Gems Pvt. Ltd. B-45/47, Connaught Place, New Delhi PAN : AACCK8256B (APPELLANT) (RESPONDENT) Assessee by Sh. M.P.Rastogi, Adv. & Sh. Deepak Malik, Adv. Revenue by Sh. Arvind Kumar Bansal, Sr. DR Date of hearing: 08.12.2022 Date of Pronouncement: 15.12.2022 ORDER PER ANUBHAV SHARMA, JM: The appeal has been filed by the Revenue against order dated 26.07.2019 passed in appeal no. Del/CIT(A)-5/0483/16-17 for assessment year 2014-15, by the Commissioner of Income Tax (Appeals)-5, New Delhi (hereinafter referred to as the First Appellate Authority or in short ‘Ld. F.A.A.’) in regard to the appeal before it arising out of assessment order dated 29.12.2016 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by ITO, ITA No. 8235./Del/2019 Kanpur Gems P. Ltd. 2 Ward 14(2), New Delhi (hereinafter referred as assessing officer or in short ‘Ld. AO). 2. The facts in brief are Assessee filed return of income of loss of Rs. 66,900/- and the case was selected for scrutiny. Ld. AO observed that the assessee company engaged in business of import and sales of diamonds has shown sales of Rs. 33.08 lakhs with the cost of material consumed of Rs. 50.02 lakh. The party wise details of sales and purchase was called along with Name, Address and PAN. Ld. AO observed that in spite of opportunity assessee failed to explain the sale transactions and discussing the modus operandi of the assessee observed in para 6.1 and 6.2 as follows and addition of Rs. 33,08,396/- was made:- “6.1 Notwithstanding to the above, another important fact to note is the pattern and place of both cash source and cash deposit in its bank accounts. Annexure 1, enclosed with this order, gives the details of place of source of cash and place of cash deposit. All the cash sales which is the source of cash as per assessee, is in Surat and cash deposit has been made in Delhi on all the days without any exception. This itself is hard to believe as to why the assessee could not deposit the cash in Surat. 6.2 Perusal of annexure 1 clearly tells that as per assessee, source of cash is in Surat whereas the same cash is being deposited in Delhi. So, assessee is transporting crores of cash from Surat to Delhi only to deposit the money in Delhi. Is there no cash deposit facility in Surat? There is nothing on record to show that the assessee had got the cash insured for transition period. There is no evidence in form of rail ticket/ air ticket of the persons who transported the cash. And why a person of sound mind will take such a huge risk of transporting the huge amount of cash only to deposit in Delhi?” 2.1 Further in regard to unexplained bank deposit in cash of Rs 1,45,31,604/- addition was made u/s 68 of the Act and a sum of Rs. 7,98,38,822/- credit in books of accounts on account of loan advances received from related parties as well as from public were added u/s 68 of the Act. ITA No. 8235./Del/2019 Kanpur Gems P. Ltd. 3 3. However, in appeal Ld. CIT(A) after taking into consdieratin certain facts as not appreciated by Ld. AO, had deleted the additions and therefore Revenue is in appeal raising following grounds :- “1. Whether on the facts and circumstances of the case & law, the Ld. CIT(A) is correct in deleting the addition of Rs. 33,08,396/- made by the AO u/s 69C of the I.T.Act on account of unverifiable purchases made by the assessee company ? 2. Whether on the facts and circumstances of the case & law, the Ld. CIT(A) is correct in deleting the addition of Rs. 1,45,31,604/- made by the AO u/s 68 of the I.T.Act on account of unexplained credits/loans received during the F.Y. 2013-14 relevant to AY 2014-15. 3. Whether on the facts and circumstances of the case & Laws, the ld. CIT(A) is correct in deleting the addition of Rs. 7,98,38,822/- made by the AO u/s 68 of the I.T.Act on account of unexplained credits/loans received during the F.Y. 2013-14 relevant to AY 2014-15.” 4. Heard and perused the record. 5. Ld. DR submitted that there was no error in the well reasoned findings of Ld. AO and Ld. CIT(A) has considered extraneous evidences. On the other hand Ld AR took the Bench across the facts in detail as discussed by Ld. CIT(A) and allegedly left out of consideration by Ld. AO, inspite of putting them across in written submissions dated 28/12/16 and 5/9/2016, which are also filed here in PB at Pg no. 49-51. 6. Giving thoughtful consideration to the matter on record and the submissions the ground wise findings are as below. 6.1 Ground no. 1; In regard to this ground it can be observed that Ld. AO seems to have apparently fallen in error on facts in observing that cash was deposited in Delhi while the cash sales were made in Surat. On the contrary the matter of fact as rightly appreciated by Ld. CIT(A) is that the sales were at ITA No. 8235./Del/2019 Kanpur Gems P. Ltd. 4 Delhi and the amount was also deposited at Delhi. At page no. 35 of the paper book details of sales to two parties, P.C. Jeweller Ltd. and Attamprakash kausik is given and both the parties are shown to be of Delhi. So the grounds on which Ld. AO considered these sales and deposits to be suspicious have been rightly discarded by ld. CIT(A) and no interference is required. The ground is decided against the revenue. 6.2 Ground no. 2; In regard to this ground it can be observed that Ld. CIT(A) has duly taken into consideration the fact that there was an opening balance of cash in hand of Rs. 6,36,65,207/- and Ld. AO without examining this aspect of cash in hand and the claim of assessee that some part of cash in hand was deposited in the bank account, made the addition u/s 69. So there is no substance in the ground raised by the revenue. The same is decided against the revenue. 6.3 Ground no. 3; In regard to addition of Rs. 7,98,38,822/- by the Ld. AO on the basis of failure of assessee to prove identity and creditworthiness of the parties. The appreciation of the matter on record shows that the opening credit balance of 4 parties and debit balance of one party were ignored by Ld. AO. In regard to account of Pankaj Kapur, the matter of fact is that he is the promoter of assessee company and Ld. CIT(A) appreciated that there have been various entries in the account and there can be no doubt about identity of the party. There was higher opening balance then added by Ld. AO. In case of Satchita Kapur there is no dispute of identity as he is Director of the assessee company and had a credit opening balances of Rs. 85,65,000/- and there is only repayment during the year. In case of Mr. O.P.Katyal and Mr. Rajesh Katyal these are opening balances and there is no movement of funds. In case of Suchita Kapur there was a debit opening balance of Rs. 23,65,000/- and received Rs. 26,50,000/- , leaving a credit balance of Rs. 2,85,000/-. The ITA No. 8235./Del/2019 Kanpur Gems P. Ltd. 5 repayment was by cheque, so there is no dispute with regard to identity of party. Ld. CIT(A) in para no. 7.7 of its order has rightly observed as follows :- “7.7 With regard to the contention of AO that these amounts are not reflected in the earlier years, it is seen from the balance sheet of the appellant that appellant has shown total loans and advances (liability) of Rs. 7,78,08,694/- as on 31.03.2013, which is reduced to 5,30,10,398/- on 31.03.2014. This amount includes the unsecured loans, as received from various parties who are subjected to addition. Therefore, the contention of AO in this regard is not substantiated.” In the light of aforesaid, there is no error in the findings of ld. CIT(A) deleting the addition. The ground no. 3 is decided against the revenue. 7. As three grounds are decided against the revenue. The appeal of revenue is dismissed. Order pronounced in the open court on 15 th December, 2022. Sd/- Sd/- (N.K.BILLAIYA) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 15 .12.2022 *Binita, SR.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI