Appeal details
Counselvise Citation
[2024] 139 COUNSELVISE.COM (IT) 7682 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-10-2024
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
24-09-2024
Assessment Year
2017-2018
Appeal Filed On
05-03-2024
Judgement Text
" आयकर अपील\nय अ\u000bधकरण,च\u0010डीगढ़ \u0014यायपीठ , च\u0010डीगढ़ \nIN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH \nBENCH ‘B’ CHANDIGARH \n \nBEFORE: SHRI A. D. JAIN, VICE PRESIDENT AND \nSHRI KRINWANT SAHAY, ACCOUNTANT MEMBER \n \n आयकर अपील सं./ ITA No. 222/CHD/2024 \n \u0001नधा\u0005रण वष\u0005 / Assessment Year : 2017-18 \n \n \nNational \nJewels \nNear \nNew \nMarket, Jagadhri Road, Yamuna \nNagar, Haryana \n \nबनाम \nVS \nThe Income Tax Officer, \nWard 5, Yamuna Nagar, \nHaryana \n \n\u000eथायी लेखा सं./PAN /TAN No: AAEFN 1455E \nअपीलाथ\u001c/Appellant \n \n\u001d\u001eयथ\u001c/Respondent \n \n \n\u0001नधा\u0005\u0017रती क\u001a ओर से/Assessee by : Shri Sudhir Sehgal, Adv. \nराज\u000eव क\u001a ओर से/ Revenue by : Smt. Kusum Bansal, CIT, DR \n \n \nतार\u001dख/Date of Hearing : 24.09.2024 \n उदघोषणा क\u001a तार\u001dख/Date of Pronouncement : 22.10.2024 \n \n \nPHYSICAL HEARING \n \n आदेश/ORDER \n \nPER KRINWANT SAHAY, ACCOUNTANT MEMBER: \n \nThe appeal in this case has been filed by the \nassessee against the order dated 27.02.2024 passed by \nthe Ld. CIT(A), NFAC, Delhi. The grounds of appeal are \nas under: \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n2 \n \n“1. That the Ld. Commissioner of Income Tax (Appeals), \nNFAC, Delhi has erred in confirming the order of Assessing \nOfficer in assessing the income of the assessee, at Rs. \n6,67,49,380/- \nand \nalso \nconfirming \nthe \naddition \nat \nRs.6,57,05,000/- (Le. Rs. 4,14,40,000/- + 2,42,65,000/-) u/s \n68 of the Income Tax Act and taxing the same in the ambit of \nsection 115BBE of the Income Tax Act. \n \n2. That the Ld. Commissioner of Income Tax (Appeals), NFAC, \nDelhi \nhas \nerred \nin \nconfirming \nthe \naddition \nof \nRs. \n4,14,40,000/-on \naccount of amount received from \nM/s \nHemant Jewels Pvt. Ltd. on account of sale of gold jewellery \nand the said addition have been made without considering \nthe evidence put forth by the assessee during the course of \nassessment/appellate proceedings. \n \n3. That the Ld. Commissioner of Income Tax (Appeals), NFAC, \nDelhi has erred in making the addition of Rs. 2,42,60,000/- \non account of cash deposit out of sale of gold jewellery made \nduring the year consideration and which have been recorded \nin the regular books of accounts of the assessee. \n \n4. That the Ld. Commissioner of Income Tax (Appeals), has \nfailed to appreciate that the appellant had requisite stock for \nthe purposes of making the sales to M/s Hemant Jewels Pvt. \nLtd. and also for making the cash sales and, as such, when \nno doubt have been made of the requisite stock available \nwith the assessee as, opening stock plus purchases and sold \nclosing stock as on 31.03.2017, for the F.Y 2014-2015, 2015-\n2016 and 2016-2017 there was no justification in making the \naddition. \n \n5. That the Ld. Commissioner of Income Tax (Appeals), NFAC, \nDelhi has erred in confirming the action of the Assessing \nOfficer in rejecting the books of accounts u/s 145(3). \n \n6. That the Ld. CIT(A) has failed to consider the judgment of \nHon'ble Delhi in the cases of Pr. CIT Vs Agson Global Pvt Ltd \nin \nITA no. 68-73/2021 \ndated 19.02.2022 and in \nthe \nJudgment of Hon'ble Delhi High Court in the case of Pr. CIT \nVs Akshit Kumar in ITA No. 348 of 2019 as reported in 197 \nDTR 121 vide our submissions, dated 11.03.2021, in which, \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n3 \n \nit has been held that if requisite stocks are available and \nwhich have been sold, there is no justification in making the \naddition. \n \n7. That the Ld. CIT(A) has erred in not accepting the cash \nsales duly recorded in the books of accounts and not \nconsidering the judgment of Hon'ble Punjab & Haryana High \nCourt in the case of PCIT Vs Rajeev Aggarwal, reported in \n[2024] PHHC 004380 DB, in which, it has been held that for \nthe cash sales (bullion/Gold business) names of buyers not \nmentioned, no adverse view can be drawn. \n \n8. Notwithstanding the above said ground of appeal, the \nprovisions of section 68 read with section 115BBE have \nwrongly been invoked. \n \n9. Notwithstanding the above said ground of appeal, the \nsales to M/s Hemant Jewels Pvt. Ltd. and other cash sales \nhave already been reflected in the sales as disclosed in the \ntrading account and further the addition of the same amount \nas confirmed by the CIT(A) is misconceived since it amounts \nto double addition as per the judgment of Hon'ble Gujarat \nHigh Court in the case of President Industries, reported in \n258 ITR 654.” \n \n10. That the appellant craves leave to add or amend the \ngrounds of appeal before the appeal is finally heard or \ndisposed-off. \n \n \n2. \nThe facts, in brief, are that the assessee is engaged in \nmanufacturing and trading in jewellery and trading in \nbullion i.e. gold bar and gold coins and as per the \nassessment order, most of the purchases of bullions are from \nGovernment Agencies likes MMTC, PNB and other agencies. \nThe assessee is maintaining regular books of accounts, \nwhich have duly audited and the returns have been filed on \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n4 \n \nthe basis of such audited Balance Sheet and Profit & Loss \naccount. The case was taken up under scrutiny on account \nof the fact that the assessee had received a sum of \nRs.4,14,40,000/- from M/s. Hemant Jewels Pvt. Ltd., Delhi \nthrough their bank account with Bank of India and ICICI \nBank and against which, the sales of the bullion have been \nmade by the partnership firm. But, it has been reported by \nthe Investigation Wing that the said party namely M/s. \nHemant Jewels Pvt. Ltd. do not have any business premises, \nhas not filed Income tax return and not even filed return \nwith ROC and further it was noticed that the assessee had \ndeposited a sum of Rs. 2,42,65,000/- by way of cash in their \nregular bank account during demonetization period and, \naccordingly, \na \nshow-cause \nnotice \nwas \nissued \nby \nthe \nAssessing Officer that why the above said amount of Rs. \n4,14,40,000/- and Rs. 2,42,65,000/- may not be added to \nthe returned income. \n \n3. \nThe assessee gave a detailed reply. The assessee has \nsubmitted that M/s. Hemant Jewels Pvt. Ltd. has PAN, \nVAT Nos. and the payment for sale of the jewellery had \nbeen received by the assessee, through banking channels \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n5 \n \nfrom Hemant Jewels which has either been received in \nadvance or on the same day the sale has been made. It \nhas also been contended by the assessee that it had \nmade the sales out of the available stocks, which has not \nbeen doubted by the Department. The assessee is also \nmaintaining complete stock records of jewellery items \nand bullion and other gold items. Even the cash \ndeposited during the mainly demonetization period is \nmainly out of the sales of the jewellery. Similar sales \nhave also been made in the entire year and such sales of \nthe assessee have not been doubted at all. However, the \nAssessing Officer stated that the sale proceeds have been \nmade to the defunct company. M/s. Hemant Jewels Pvt. \nLtd. It had made the payments to the assessee for \npurchases of the bullion, by depositing the cash in their \nbank account and then immediately, thereafter, the \namount have been remitted to the assessee through \nbanking channels. The AO stated that the assessee do \nnot maintain stock register. The assessee has replied \nthat daily stock account depicting the quantity of pure \ngold and jewellery issued, received and closing balance \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n6 \n \nwas submitted to the Assessing Officer, which have been \nplaced in the paper book also. The same details was \nfurnished for FY 2014-15 & 2015-16. The Assessing \nOfficer also stated in his order that the sales in October \n& November, 2016 has increased substantially and, \naccordingly rejected the books of accounts u/s 145(3) of \nthe Act and also, on the basis of the non-compliances to \nthe ROC by M/s. Hemant Jewels, made an addition of Rs. \n4,14,40,000/- and Rs. 2,42,65,000/- as 'unexplained \ncash credit. \n \n \n \n4. \nDuring the course of appeal before CIT(A) the \nassessee furnished various submissions before the CIT(A) \nwhich have been produced before us also and made \ndetailed submissions, that complete quantitative tally is \nthere and the amount received from M/s. Hemant Jewels \nthrough banking channel is on account of the sale of \ngold bullions, similarly, the cash deposits are majorly \nout of sale proceeds of the gold jewellery and the Ld. \nCIT(A) \nstated \nthat \nthe \nsale \nbills \nare \nself-serving \ndocument and the assessee is not maintaining stock \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n7 \n \nregister. He confirmed the finding for rejection of books \nof \naccounts \nand \nrelied \nupon \nthe \nreport \nof \nthe \nInvestigation Wing, regarding the fact that Hemant \nJewels Pvt. Ltd. is a defunct entity and also the cash \nsales during the demonetization period have increased \nsubstantially. Accordingly he has dismissed the appeal of \nthe assessee. \n \n5. \nDuring proceedings before us. Though the assessee \nhas raised various grounds of appeal, the Ld. Counsel \npointed out that the two main grounds are with regard to \nthe addition of Rs. 4,14,40,000/- on account of amount \nreceived on account of sale proceeds of gold the bullion \nthrough banking channel from M/s. Hemant Jewels Pvt. \nLtd. And second, the addition of Rs. 2,42,65,000/- on \naccount of cash sales out of the existing stock of gold \njewellery. The Ld. Counsel argued that the sales to \nHemant Jewels Pvt. Ltd. (HJPL) is during the regular \ncourse of business and the said concern is very much in \nexistence as per the ROC records and even as per the \nAO's order, where he has reproduced the company \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n8 \n \nMaster Data of HJPL, the status of the company in the \nrecords of ROC have been mentioned as \"Active\" and \nassessee is not concerned about the fact of HJPL for not \nfiling Income Tax Return or the earlier shop at the given \naddress had been taken over by the PNB on account of \ndefault of loan. It was further argued that HJPL has a \nbank account from which, the payments have been \nreceived by the assessee of the sales of bullions/gold and \nthe assessee is not concerned about the affairs of HJPL, \nsince the assessee is only concerned with regard to the \nrecovery of the amount of bullion sold to HJPL. Even \nsome payments had been received in advance from the \nsaid party initially while the other payments have been \nreceived on the same date on which the sales were made \nto the Company. The counsel relied upon the following \ndocuments to prove the genuineness of the sales made to \nHJPL and the cash sales during demonetization period as \nunder: \n \n“a. \nCopies of invoices issued to HJPL. \n \nb. Copy of account of HJPL in the books of assessee depicting \nthe payment received in advance or received on the same \ndate of making sales to the party. \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n9 \n \n \nc. \nThe copy of the relevant extract of the bank account of the \nassessee depicting the amount being received via regular \nbanking channels. \n \nd. \nThe purchase ledger of Delhi Branch (from which goods \nwere supplied to H.JPL) showing the date wise purchase \nof bullion made from the supplier namely MMTC PAMP \nIndia \nPvt. \nLtd. \nwhich \nis \na \nGovernment \nregulated \nundertaking. \n \ne. \nThe \nrecord \nof \nHJPL \nupdated \nwith \nthe \nregistrar \nof \ncompanies depicting the 'active' status of the Company. \n \nf. \nMonth wise branch wise details of cash deposited in A.Y \n2015-16 to 2017-18 depicting that the assessee has \nregularly being making cash sales to the tune of 2 crore to \n2.3 crore in the earlier years as well. \n \ng. \nThe details of the parties from whom purchase above 5 \nlakh has been made along with the confirmed copy of \nledger accounts. \n \nh. \nCopies of quarterly VAT returns evidencing the sales made \nby the assessee during the year. \n \ni. \nThe quantitative summary of every kind of stock traded by \nthe assessee depicting the opening balances, quantity \npurchased, quantity sold and closing balances for F.Y \n2015-16 to 2017-18. \n \nj. \nThe daily quantitative stock of pure gold depicting the \nquantity of said stock received and issued during the \nrelevant A.Y. \n \nk. \nThe daily stock account of gold jewellery depicting the \nquantity of said stock received and issued during the \nrelevant A.Y. \n \nl. \nThe above set of documents duly justifies the genuineness \nof sales made to HJPL and the genuineness of cash sales \nmade by the assessee during the demonetization period.” \n \n \n6. \nIt was vehemently argued on the basis of the tabular \nchart submitted during the course of hearing, that no \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n10 \n \ncase could be made of the alleged unexplained credit \nbecause, there has been reduction of stock, which have \nnot \nbeen \ndoubted \nas \nper \nthe \nstock \ntally/register \nsubmitted during the course of hearings before the \nAO/CIT(A) and the sales have been accepted as reflected \nin the audited trading account and the resultant profits \nrising out of such transactions have been disclosed. They \nhave \nalso \nbeen \naccepted \nand, \nthus, \nunder \nsuch \ncircumstances, it is not a case of unexplained credit at \nall. \n \n7. \nIt was further argued that the sale invoices have \nbeen issued in the regular course of business and the \nfinding of CIT(A) that the HJPL did not have resources to \npay the amount for the purchase of jewellery by the said \nconcern is none of the concern of the assessee. The Ld. \nCounsel relied upon judgments on account of cash sales \nmade to the customers, during demonetization period \nwherein, it was held that the assessee is not bound to \ngive the details of cash sales to its customers as per the \njudgment of the Hon'ble Bombay High Court in the case \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n11 \n \nof 'RB Jessaram Fatehchand vs. CIT as reported in 75 \nITR 33 and \"ITO vs. Sunny Jewellery House\" in ITA No. \n196/Chd/2014 vide order dated 06.05.2016 and \"ITO vs. \nJethu Ram Prem Chand as reported in (2001) 114 \nTaxman 219 (Delhi)\". \n \n8. \nThe Ld. counsel of the assessee also argued that the \nCIT(A) is correct in holding that the assessee has sold \ngold jewellery to HJPL, while as per the stock registers, \ninvoices and other documents filed by the assessee, \nreflect that the assessee has actually sold gold gold \nbullion to the said concern. It was further argued that \neven the AO and CIT(A) were incorrect when they stated \nthat the assessee had only made purchases of bullion \nduring the year. It was argued that the jewellery was also \npurchased for which the evidence in the form of ledger \naccounts and stock register had been submitted before \nthe AO/CIT(A) alongwith the invoices of purchase. \n \n9. \nIt was further argued by the Ld. Counsel that no \ndefects have been pointed by the Assessing Officer as \nrecorded in the Audited Books of accounts and confirmed \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n12 \n \ncopies of the accounts of the parties, from whom, \npurchases have been made. He further submitted that \nthere is a availability of stocks with the assessee and \nwithout pointing out any specific defects, the books of \naccounts have been rejected, without any reason and \nconsequent addition have been made against the facts & \ncircumstances of the case. \n \n10. The Ld. Counsel also relied upon judgments of \nHon'ble Delhi High Court in the case of CIT vs. Akshit \nKumar reported in 197 DTR 121, Agson Global Pvt. Ltd. \nin ITA No. 68 to 71/2021 vide order dated 19.01.2022 \nand also the judgments of the Chandigarh Bench of ITAT \nin the case of Akriti Jain in ITA No. 481/Chd/2023, \nFashion Zone in ITA No. 331/Chd/2023, Charu Aggarwal \nof Chandigarh Bench reported in 96 ITR (Trib.) 66 and \nother judgments of the co-ordinate Bench i.e. of 'Jaipur \nBench' for the preposition that if the requisite stock is \navailable with the assessee and sales are made during \nthe demonetization period and the stock have been \nreduced \ncorrespondingly. \nThe \naddition \ncannot \nbe \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n13 \n \nsustained and all such judgments are on account of the \ndeposits of the cash in the bank account during the \ndemonetization period. \n \n11. The Ld. DR took us to the assessment order as \npassed by the AO and argued that, since HJPL did not \nhave requisite capacity to buy such substantial jewellery. \nIt was not filing any returns of income and there has \nbeen cash deposits in the accounts of HJPL, from where, \nthe remittances of the amount of the sales made by the \nassessee concern, have been made. It causes a doubt and \nsuspicion about the capacity of the HJPL. Further, there \nis no name & address of the person to whom the cash \nsales \nhave \nbeen \nmade \nand, \nthus, \nunder \nsuch \ncircumstances, the books of accounts have rightly been \nrejected by the AO and the addition as confirmed by the \nCIT(A) be sustained. \n \n12. We have considered the arguments of the Ld. \nCounsel of the assessee and we also heard the CIT (DR), \nwe have also gone through the assessment order and the \norder of the CIT(A) and \"brief synopsis' and the paper \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n14 \n \nbooks submitted by the Ld. Counsel. The Ld. Counsel \nhas explained the source of the cash deposit of Rs. \n2,42,65,000/- \nand \nas \nalso \nthe \namount \nof \nRs. \n4,14,40,000/- as received from HJPL through banking \nchannel and the said amount is on account of the sale \nproceeds of available stock with the assessee concern, for \nwhich, no doubt have been raised by the AO and the \nCIT(A). The assessee had realized its sale proceeds of the \nbullion to HJPL and for making the sales, the assessee is \nnot concerned about the identity, creditworthiness of the \nparty. Since it is not unexplained credit and such \nprovisions of section 68 are not applicable. All the sales \nare subject to VAT and VAT has been collected and \ndeposited with the Government Treasury and copy of the \nVAT returns and inter-state sales have been placed on \nrecord before the Authorities below and before us also. \nNo defects have been pointed out in the regular books of \naccounts maintained by the assessee and remittance by \nthe HJPL on account of purchase of bullion, made by \nthat concern, is through banking channel and the sales \nhave been accepted by the Assessing Officer and CIT(A). \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n15 \n \nFor making such sales, the requisite stock is available \nsupported by day to day stock register and, as such, \nunder such circumstances, when the corresponding stock \nhave been reduced as per the day to day quantitative \ndetails furnished before the AO/CIT(A).The corresponding \nsale realization is there, under such circumstances, the \nvery basis of confirming the addition by the CIT(A) is not \nin order and under such circumstances. The CIT(A) was \nnot justified in rejecting the books of accounts u/s \n145(3) as complete records in respect of the purchases \nand sales of gold bullion have been maintained and all \nsuch purchases & sales are backed by all the invoices. \nThe judgments as relied upon by the assessee of 'Delhi \nHigh Court and of the co-ordinate benches are fully \napplicable to the facts and circumstances of the case. \nThere is no material with the AO/Ld. CIT(A) to hold that \nit is 'unexplained credit' as the sales have been recorded \nin the regular books of accounts and, as such, such \nsales would have already be a part of the profit & loss \naccount \nand \nthe \nAO \nhave \nalready \naccepted \nthe \navailability of cash in the hands of the assessee and then \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n16 \n \nthe deposit of such cash in the bank account cannot be \nrejected. \n \n13. We rely on the finding under similar circumstances \nbeing given in identical facts & circumstances in the case \nAakriti Jain in ITA No. 481/Chd/2023 for AY 2018- 19 \nvide order dated 14.06.2024, in which, it has been held \nas under: \n \n\"9. We have also heard the rival submissions of the \nparties and perused the material available on record. The \nId. Counsel for the Assessee has explained the source of \nsuch cash deposits and it has also explained that such \ncash sales are subject to VAT where VAT has been \ncollected and deposited with the Government treasury. In \nsupport of her explanation, the Assessee has furnished \nthe documents of the relevant period of VAT returns, copy \nof trading and profit and loss accounts and balance \nsheets, which are duly audited. We find that the \nAssessing Officer has accepted the cash sales and the \nAssessing Officer has also accepted the VAT collected \nand deposited in the Government account. Even the \nAssessing Officer has accepted the VAT returns filed by \nthe \nAssessee and \naccepted \nby \nthe \nIndirect Taxes \nDepartment. \nTherefore, \nit \nclearly \nshows \nthat \nthe \nAssessing Officer has not doubted the availability of \ncash in the hands of the Assessee. Once availability of \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n17 \n \ncash in the hands of the Assessee is accepted, then \ndeposit of such cash in bank account cannot be rejected. \n \n10. Lastly, we find that accepting the cash sale by the \nAssessee offered to tax, and then addition of same cash \ndeposited in the bank, will amount of double taxation \nand the same is clearly unsustainable in the law and \ncannot \nbe \njustified. \nTherefore, \nwe \nfind \nthat \nthe \nexplanation \noffered \nby \nthe \nAssessee \nis \ngenuine, \nreasonable and duly supported by the documentation, \nbooks of account and audited accounts of the Assessee. \nTherefore, we find no reason to disturb the findings of \nthe Id. CIT(A). Accordingly, Departmental appeal on this \nissue is dismissed.\" \n \n \n14. We have considered the findings given by the AO in the \nAssessment Order and by the ld. CIT(A) in the appeal order. \nWe have also considered the brief submissions filed by the \nld. counsel of the assessee and his arguments made during \nproceedings before us. We have considered the arguments \nmade by the ld. AR and we find that the ld. DR mostly relied \nupon the findings given by the ld. CIT(A). We find that as per \nthe facts and legal positions discussed above, the ld. CIT(A)’s \naction of sustaining addition of Rs.4,14,40,000/- as received \non account of sales made to M/s. Hemant Jewels Pvt. Ltd. \n\nITA 222/CHD/2024 \nA.Y.2017-18 \n18 \n \nand cash sales made by the assessee to the tune of Rs. \n2,42,65,000/- \ncannot \nbe \nsustained. \nAccordingly, \nthe \nassessee’s appeal on both these grounds of appeal are \nallowed. \n \n \n15. In the result, the appeal filed by the assessee is \nallowed. \n \n \nOrder pronounced as on 22.10.2024. \n \n Sd/- Sd/- \n(A. \n D. JAIN) (KRINWANT SAHAY) \n VICE PRESIDENT ACCOUNTANT MEMBER \n \n \n \n \n \n \n“GP-Sr. PS” \n \nआदेश क\u0002 \u0003ितिलिप अ\tेिषत/ Copy of the order forwarded to : \n \n1. \nअपीलाथ\u000f/ The Appellant \n2. \n.\u0003\u0010यथ\u000f/ The Respondent \n3. \nआयकर आयु\u0014/ CIT \n4. \nिवभागीय \u0003ितिनिध, आयकर अपीलीय आिधकरण, च\u0018डीगढ़/ DR, ITAT, CHANDIGARH \n5. \nगाड\u001c फाईल/ Guard File \n \n \n \n \n \n \n \n \n \n \n \n \nआदेशानुसार/ By order, \nसहायक पंजीकार/ Assistant Registrar \n \n \n \n \n \n"
Mehul