NITIN GOEL,GHAZIABAD V. INCOME TAX OFFICER, WARD 2(2)(5), GHAZIABAD

ITA 3142/DEL/2024

AI Insights

The case involves B L & Sons Jewellers, a partnership firm engaged in the business of manufacturing and retail trading of gold, gems, and diamond jewelry. The firm appealed against the order of the National Faceless Appeal Centre (NFAC), which had confirmed the addition of Rs. 35,40,660 to the firm's income for the Assessment Year 2017-18 under section 68 of the Income-tax Act, 1961. The addition was initially made by the Assessing Officer, who questioned the source of cash deposits made during the demonetization period. The Tribunal examined the submissions and evidence presented, including a comparison with a similar case, New Gujranwala Jewellers, and found that the Assessing Officer had not adequately substantiated the additions with direct evidence.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 33661 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-01-2025
• Assessment Year: 2012-2013
• Appeal Filed On: 29-06-2024
• Other Referred Cases: New Gujranwala Jewellers ITA No. 140/DEL/2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR
• Assessee Lawyers: M. K. BHATT
• Keywords: Income from undisclosed sources
• Section: 142(1); 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘SMC’ BENCH, NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 3142/DEL/2023 [A.Y 2017-18] B L & Sons Jewellers Vs. The Income-tax Officer C/o M.K. Bhatt & Co. G-7 Ward – 51(1), Delhi Preet Vihar, New Delhi PAN: AAAAFB 6811 G (Applicant) (Respondent) Assessee By : Shri M.K. Bhatt, CA Shri Malav Goswami, Adv Department By : Shri Sanjay Kumar, Sr. DR Date of Hearing : 07.10.2024 Date of Pronouncement : 11.10.2024 ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:- This appeal by the assessee is preferred against the order of the NFAC, Delhi dated 27.09.2023 pertaining to A.Y 2017-18. 2 2. The assessee has raised as many as 7 grounds of appeal. However, the solitary issue pertains to the addition of Rs. 35,40,660/- made by the Assessing Officer under the deeming section 68 of the Income-tax Act, 1961 [the Act, for short]. 3. Briefly stated, the facts of the case are that the assessee is a partnership firm, engaged in the business of manufacturing and retail trading of gold, gems and diamond jewellery. Return of income was filed by the assessee on 16.08.2017. The case was selected for full scrutiny under Briefly stated, the facts of the case are that the assessee electronically filed her Return of Income on 31.07.2014 declaring an income of Rs. 27,20,900/-. Return was selected for scrutiny assessment through CASS and accordingly, statutory notices were is to examine the issue ‘Cash deposited during demonetization period’. 4. Notices were issued u/s 142(1) of the Act asking the assessee to show cause as to why the sum of Rs. 65,00,000/- deposited in the bank account of the assessee during the demonetization period not be added as income from undisclosed sources u/s 68 of the Act. The Assessing Officer was of the opinion that the sum was not deposited in 3 the bank in one go, rather it was deposited in piece-meals in the months of November and December 2016. 5. In response, the assessee submitted before the Assessing Officer that there were no sales during the F.Y. 2015-16 as the retail counter was opened by the assessee in June 2016 after taking the current retail shop on rent in November 2015. Sales in the month of November and December were higher due to the festival season. Thereafter, sales decreased due to demonetization and subsequent unavailability of cash in the market. 6. The ld. counsel for the assessee further submitted that copies of invoices alongwith details of identifiable persons were furnished for the sales of Rs. 10,69,340/- during the month of October and November. No sales had been done in excess of Rs. 2,00,000/- and it is not possible for a business to keep track of each and every buyer. However, details of some of the buyers were also furnished. Out of the amount of Rs. 6,00,000/-, the amount of Rs. 3,92,127/- was the opening cash in hand as on 01.10.2016. Stock amounting to Rs. 40.7 lakhs was lying with the assessee as on 01.10.2016 and cash sales were in the normal course of business. 4 7. Not satisfied with the explanation offered by the assessee, the Assessing Officer assessed the income of the assessee at Rs. 49,61,390/-. 8. Aggrieved, the assessee went in appeal before the ld. CIT(A) who gave relief of Rs. 10.69,340/- on account of cash sales to the identifiable persons with PAN. 9. Still aggrieved, the assessee is in appeal before us. 10. We have heard the rival submissions and have perused the relevant material on record. At the very outset, the ld. counsel for the assessee has furnished a chart at page 4 of his written submissions wherein he has distinguished the case of the present assessee with the decision of the co-ordinate bench in the matter of New Gujranwala Jewellers ITA No. 140/DEL/2022 order dated 27.03.2023 and vehemently contended that the present appeal is squarely covered in favour of the assessee and against the revenue. 5 11. A careful perusal of the chart furnished by the ld. counsel for the assessee clearly shows that the facts of the case in hand are identical to the facts of the case in New Gujaranwala Jewellers [supra]. The Assessing Officer was of the view that cash deposit in every transaction was below Rs. 2 lakhs which was done to avoid application of provisions of section 258BA r.w.r. 114E of the Act, which has no legs to stand as there is nothing on record to prove the same. Moreover, the Assessing Officer has not pointed out any flaw, fallacy or deficiency in the regular books of account maintained during the normal course of his business. It is a settled principle of law that once the Assessing Officer accepts the books of account and the entries in the books of account are matched, there is no case for making the addition as unexplained. 12. Further, the submission of the ld. counsel for the assessee that income of the assessee has to be computed by the Assessing Officer on the basis of available material on record and it is very important to have direct evidence to make an addition rather than circumstantial evidence. The Assessing Officer as well as the ld. CIT(A) have based their findings on surmises and conjectures. Moreover, the Assessing Officer has not examined any party to whom the goods were sold by 6 the assessee and has come to the conclusion that the sales are not genuine, without rejecting the books of account, which is bad in law. 13. In that view of the matter, we are of the considered opinion that the Assessing Officer disbelieved the explanation of the assessee on the basis of presumptions and assumptions and has acted arbitrarily. Therefore, we allow the grounds of appeal raised by the assessee. 14. In the result, the appeal of the assessee in ITA No. 3142/DEL/2023 is allowed. The order is pronounced in the open court on11.10.2024. Sd/- Sd/- [ANUBHAV SHARMA] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 11th OCTOBER, 2024. VL/ 7 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) Asst. Registrar, 5. DR ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order "