SHRAVAN KUMAR SHARMA,RAJNANDGAON V. .INCOME TAX OFFICER WARD-2, RAJNANDGAON

ITA 458/RPR/2024

AI Insights

The case involves Shravan Kumar Sharma, who appealed against the additions made to his income by the Income Tax Officer, which were upheld by the Commissioner of Income Tax (Appeals). The additions were based on unexplained cash deposits during the demonetization period and undisclosed opening capital. The Tribunal found that the assessee failed to provide satisfactory explanations or evidence to substantiate the sources of these deposits and capital. The Tribunal also noted discrepancies in the documents submitted by the assessee and observed that the books of account were manipulated to conceal the true nature of the transactions.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 106808 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Other Referred Cases: Chuharmal Vs CIT (1988) 172 ITR 250
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Keywords: Business income; Rejection of books of accounts; Salary income; Income from undisclosed sources; Gift
• Section: 143(3); 142(1); 143(2); 250; 133(6); 44AD; 69A; 2(A); 145(3); 20

Judgement Text

"आयकर अपीलीय अिधकरण, रायपुर Ɋायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR ŵी रिवश सूद, Ɋाियक सद˟ एवं ŵी अŜण खोड़िपया, लेखा सद˟ क े समƗ । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं. / ITA No: 458/RPR/2024 (िनधा[रण वष[ Assessment Year: 2017-18) Shravan Kumar Sharma, Near Agrasen Bhawan, Old Bus Stand, Post & Dist- Rajnandgaon, C.G.-491441 V s Income Tax Officer, Ward-2 Raipur Naka, Rajnandgaon, C.G.-491441 PAN: EMXPS8798N (अपीलाथŎ/Appellant) . . (ŮȑथŎ / Respondent) िनधाŊįरती की ओर से /Assessee by : None राजˢ की ओर से /Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई की तारीख / Date of Hearing : 16.12.2024 घोषणा की तारीख/Date of Pronouncement : 19.12.2024 आदेश / O R D E R Per Arun Khodpia, AM: The captioned appeal is instituted by the assessee, directed against the order of Commissioner of Income Tax (Appeal), NFAC [in short “Ld. CIT(A)”] u/s 250 of the Income Tax Act, 1961 (in short “the Act”), for the Assessment Year 2017-18, dated 21.08.2024, which in turn arises from the order by Income Tax Officer, Ward-2, Rajnandgaon u/s 143(3) dated 30.12.2019. 2. The grounds of appeal raised by the assessee reads as under: 2 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon 1. The learned AO erred in making addition u/s 69A of Rs. 30,00,000 towards cash deposited during demonetization period and the learned CIT(A) erred in upholding the same, based on suspicion and surmises. 2. The learned CIT(A) erred in not appreciating that, sources of cash deposited were out of sales made and opening cash balance which were disclosed in return of income filed and no defect has been found in documentary evidences submitted. 3. The learned AO erred in making addition u/s 69A o of Rs. 18,02,285 towards opening capital balance and the learned CIT(A) erred in upholding the same. 4. The learned CIT(A) erred in not appreciating that, the assessee has disclosed business income under section 44AD and hence, provisions of section 69A were not applicable. 5. The learned CIT(A) erred in not appreciating the submissions and documentary evidences filed by the assessee during appellate proceedings. 6. The Appellant prays leave of the Hon'ble Tribunal to add, amend, alter any of the Grounds of Appeal. 3. Briefly stated, the assessee has filed his return of income for AY 2017- 18, declaring total income of Rs. 1,92,720/-. Subsequently, the case of the assessee was selected for complete scrutiny through “CASS”, to examine the issue ‘large cash deposits during the demonetization period’. In process, statutory notices 143(2) and 142(1) were issued with certain queries for compliance. Further, a notice u/s 133(6) have been issued to UCO Bank and Bandhan Bank to enquire about the cash deposits, KYC and the details of deposits, withdrawals qua the transactions carried out by the assessee during the relevant period. Further, a notice u/s 272A(1)(d) for non-compliance was issued to the assessee. However, later on, the assessee filed a written 3 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon submission online, the same is placed on record and accordingly, the proceedings of assessment are taken forward. From the information received from Bank and information furnished by the assessee. It is observed that the assessee had income from trading of jewellery. As per SFT report, it is noticed that the assessee had deposited cash in Bandhan Bank and UCO Bank, the details of cash deposits are produced by the Ld. AO along with bifurcation of such details in para 2 of the assessment order, the same is culled out for the sake of completeness of the facts: 4 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon 4. Ld. AR, further observed that all the cash deposits by the assessee are directly transferred to M/s Berdia Textiles and Sapan Traders on the same day or a different day. The assessee was queried to substantiate source of income and to give reasons for genuineness of the transaction, that why the deposits are made in his Bank account and, thereafter transferred to Sapan Traders / Berdia Textiles. Ld. AO further discussed modus operandi of transactions carried out by the assessee, and queried the assessee to furnish his response towards such doubts. However, the assessee was unable to submit any document to substantiate and to justify that the cash deposits of Rs. 30,00,000/- was out of sale of gold. Ld. AO also narrated in the assessment order that as per material on records available with him prior to the selection of the case under scrutiny u/s 143(3), he had conducted the local enquiries, which are taken into cognizance, accordingly, it is revealed that assessee is working in the Berdia group and is filing his ITR in his individual capacity. Further, the summon u/s 131(1A) was also issued to the assessee to produce the evidence, books of accounts and other related documents in support of nature and source of cash deposits during the demonetization period. In response, the assessee had submitted Balance sheet of Shravan Kumar Sharma (Firm) for the demonetization period from 01.04.2016 to 31.12.2016 showing balance of assessee’s capital in the said firm at Rs. 5 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon 25,91,574/-. Assessee also furnished ledger account of Shravan Kumar Sharma (Capital) for the period from 01.04.2016 to 31.03.2017 showing balance of Rs. 27,47,197/- on 31.12.2016. The Profit & Loss Account of the firm for the period from 01.04.2016 to 31.12.2016 was produced, showing a profit of Rs. 1,86,263/-. Assessee furnished cash book for the period from 01.04.2016 to 31.12.2016 showing cash balance of Rs. 95,942/- on 31.12.2016. It is noted by the Ld. AO that there was no transaction in cash book of the assessee after 26.12.2016. Copy of passbook of Bandhan Bank Limited, Rajnandgaon was also furnished before the Ld. AO. 5. Based on aforesaid information, Ld. AO observed that assessee was maintaining two set of books namely: (i) Shravan Kumar Sharma and (ii) Shravan Kumar Sharma (Firm). The firm in the name of Shravan Kumar Sharma was started on 01.04.2016 only. Ld. AO further analysed various transactions including cash sales, making charges receipts etc. from the period from April, 2016 to December, 2016, thereafter he arrived at the conclusion that as per books, details of purchase of Gold, Bullion and Jewellery including making charges in Profit and Loss Account up to 31.12.2016 was for Rs. 38,79,539/-, whereas, the total expenditure debited in P & L Account are Rs. 32,718/-. The net profit of the assessee for the Firm was Rs. 1,86,263/-. After deliberation and through the comparative analysis 6 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon exercised by the Ld. AO, he finally observed in detail about cash transactions by the assessee, have rejected the books of accounts of the assessee u/s 145(3) of the Act and have made an addition of Rs. 30,00,000/- u/s 69A on account of income of the assessee from undisclosed source. 6. Ld. AO also made an addition of Rs.18,02,285/- disregarding claim of assessee that there was an opening capital of Rs. 18,02,285/- as on 01.04.2016 for the reason that the assessee had not filed any IT returns for the earlier years i.e., AY 2013-15 and 2014-15. 7. Ld. AO further have made an addition of Rs.1,04,650/- u/s 69A as income from undisclosed sources for the FY 2012-13, rejecting the claim of assessee regarding that he had received gifts of jewellery and diamonds at time of marriage, as there were no supporting documents could be furnished by the assessee. 8. Another addition was made under head ‘Income from long-term capital gain’ for Rs.9,33,392/-, for the reason that the assessee had claimed long-term capital loss of Rs.1,05,739/- (gain from sale of jewellery Rs. 1,20,761/- and loss from sale of diamonds Rs. 2,26,500/-), however, such claim of assessee was rejected for the reason that the assessee had claimed 7 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon the benefit of indexation, whereas the jewellery in diamonds are held as purchased from undisclosed income of the assessee during the FY 2012-13. 9. While making the aforesaid additions, the relevant observations of the Ld. AO, from the assessment order are culled out as under: It is clear that there is a variation and difference on comparison of documents as submitted during the recording of the statement and that submitted during the scrutiny assessment. In the cash book submitted at the time of recording of statement the Total cash sales up to 31.12.2016 was 16,68,719/- and the total making charges was at 28,310/- but now he has submitted the cash book wherein the Total cash sales up to 31.12.2016 is Rs. 16,29,450/- and the total making charges is Rs. 32,310/-. So, it is clear that the cash book has been prepared just to show that the Income is generated from sale of Gold, but actually there is no shop, nor any workshop, nor any workshop at home. By the local enquiry it has been known that the assessee is the employee of the Berdia jewellers from the past 10 years. So, it is apparent that the cash book is fabricated one and merely prepared for routing out Income of someone else. The assessee is submitting ledgers, cash book, balance sheet etc wherein figures are changed every time. The 1st cash book, balance sheet, P&L A/c submitted does not match with the cash book and other ledgers submitted the 2nd time. So, the assessee is frequently changing her stand which is apparent from records submitted online and offline. Some of the documents were submitted offline, saying that huge papers are not able to be uploaded online as it is taking much space in GB and time taking. 8 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon More over the cash sales has been done only in September, October and November. How come this can happen when a goldsmith or a trader sitting idle the year around and doing business just before the month when the demonetization was declared and difficult to believe. 5. The assessee is a individual, and I strongly believe that for routing out the Income of some other person/firm the file has been created and just to fool the Department and conceal revenue in large scale the Tax Planning (Modes Operendi) has been done. In the Instant case, For the reason why the Income is not believed to be from the individual is due to the following reasons:- 1. The Assessee started filling income tax return from A.Y.2013-14 showing Income from other sources. 2. The assessee had submitted various documents as per point I(c) and 2(a) above, which includes Cash Book, Profit & Loss account etc. While comparing it is noticed that there is variation in cash sales, making charges receipts, expenses debited in P & L account, Net profit as per P & L account and daily cash balance etc„ hence it is concluded that the cash book and other accounts have been manipulated with bad intention to manage the cash deposited during the demonetization. Therefore this is a sufficient reason for rejection of books of account. 3. The Individual is maintaining Cash book, capital account, Balance sheet etc ledgers in the capacity of Shravan Kumar Sharma and Shravan Kumar Sharma (Firm), and the PAN is same and the entity is also same but just to confuse the authority. From the above discussion in para 1 to 5 above it is concluded that the assessee has submitted two different sets of cash book and other documents on different occasions i.e. on 31.03.2017 and secondly during 9 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon the current assessment proceedings and therefore books of accounts are rejected u/s 145(3) of the Act. Assessee has failed to prove the cash deposited during the demonetization period. Hence the cash deposited during the demonetization period Rs. 30,00,000/- is added to the total income of the assessee as income from undisclosed source u/s. 69A. 6. Assessee has started filing income tax return from A. Y. 2013-14 and showing Income from salary and other sources and at a stretch started filing ITR, showing Income from salary and Income from Business in A.Y 2014-15. To know the genuineness, the Inspector of this office was deputed to make a discrete enquiry about the livelihood, address, shop of the jewellery and the job. The Inspector reported, that the house was 1 bedroom hall, in a very low standard locality, no shop as such, or any other equipment's or tools of making gold etc. I have of the strong opinion, that the entire Income pertains to the Berdia Family, as the assessee is lending money to them but not purchasing any gold from them. The Inspectors Report is as under:- Since no IT returns filed for earlier years i.e. AY 2013-14 & 2014-15 as discussed above, opening capital of Rs. Rs. 18,02,285/- as on 01.04.2016 cannot be accepted. Therefore, Rs. 18,02,285/- is added to the total income of the assessee as income from undisclosed source u/s.69A. 7. There is contradicting statement of assessee on the same question. The assessee had herself accepted that she has no any other asset except the share in ancestral house. The assessee also failed to produce any supporting documents showing that the gifts were given to her 'on the occasion of marriage and the same has been accepted as per his written submission as above. In the absence of any supporting documents the marriage gifts cannot be treated as her property. Hence it seems that the jewellery and diamonds shown is Balance Sheet of assessee is acquired from investing undisclosed income during the FY 2012-13. Therefore, the value of Rs. 10 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon (Diamond - 20 ct- Rs. 46,800/- and Gold Ornaments - 291.600 gm - Rs. 57,850/-) is added to the total income of the assessee as income from undisclosed source u/s.69A. 8. In the income tax return of the year under consideration AY 2017-2018, the assessee had claimed long term capital loss of Rs. 1,05,739/- (Gain from sale of Jewellery Rs. 1,20,761/-P & Loss from sale of Diamonds — Rs 2,26,500/-) under the head Income from Capital Gain. As per the capital account and computation of total income these Jewellery and diamonds were converted into stock in trade. The capital gain has been calculated by taking the index of 1981 i.e. 100, which is absolutely wrong. It shows the mala-fide intention of the assessee to save the long term capital gain tax. Index cost should be opted as per the year of acquisition. It was already discussed above that the jewellery and diamonds were purchased from investing undisclosed income of the year 2012-2013. Therefore, the correct calculation of Long-Term Capital Gain is as under: Sales Consideration of Jewellery Rs. 7,71574/- (291.600 gm) Less: Indexed Cost of acquisition Rs. 76,386/- (Cost *57,850*1125/852) Long Term Capital Gain Rs. 6,95,188/- Sales Consideration of diamond (20 Ct) Rs. 3,00,000/- Less: Indexed Cost of acquisition Rs. 61,796/- (Cost *46,800*1125/852) 11 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon Long Term Capital Gain Rs. 2,38,204/- INCOME FROM LONG TERM CAPITAL GAIN Rs. 9,33,392/- Therefore, the long-term capital gain Rs.9,33,392/- as calculated above is added to the total income of the assessee and tax accordingly. 9. Subject to the above discussion, the total income of the assessee is assessed as under:- Income as per return Rs. 1,92,720/- Add- Addition as per Para 5 above Rs. 30,00,000/- Add- Addition as per Para 6 above Rs.18,02,285/- Add- Addition as per Para 7 above Rs. 1,04,650/- Add- Addition as per Para 8 above Rs. 9,33,392/- Assessed Total Income Rs. 60,33,047/- Rounded off to Rs. 60,33,047/- As discussed, I am of the opinion that the cash deposited is unexplained in the eyes of law and since 14 months of issue of the notice, the assessee was given proper opportunity to prove his onus but he did not so am treating the cash deposit as unexplained and here the provisions of 69A clearly attracts. Relying on some of the Case Laws such as The Hon'ble Supreme Court in the case of Chuharmal Vs CIT (1988) 172 ITR 250. I hereby assess the Income. Therefore, the above amount of Rs. 30,00,000/- credited into assessee's bank account, is herewith treated as Unexplained Money under Section 69A read with Section 115BBE of the Income Tax Act, 1961, for the year under consideration. 12 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon 10. Being aggrieved with the aforesaid addition in the assessment order by the Ld. AO, assessee preferred an appeal before the Ld. CIT(A), however, the contentions of assessee could not find favour from the Ld. CIT(A), who deliberated on the issues at length in consideration with the submissions of the appellant and the assessment order passed by the Ld. AO, and have decided the appeal partly in favour of the assessee. The observations of the Ld. CIT(A) qua each of the ground of appeals before him are extracted as under for the sake of clarity and completeness: 13 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon 14 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon 15 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon 16 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon 17 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon 11. Aggrieved again, the assessee carried the matter qua the disallowances, to the extent confirmed by the Ld. CIT(A), before us in the present case for our consideration. 12. At the outset, it is informed by the registry that the appeal in the present case is fixed for hearing on 04 occasions, however, there was no representation on behalf of the assessee, except on 01 occasion i.e., on 19.11.2024, the assessee had made a request of adjournment for 30 days and the case was 18 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon permitted to be adjourned. Thereafter, the case was fixed for hearing on 21.11.2024, 10.12.2024 and again on 16.12.2024. In view of such conduct of the assessee, as there was no representation, we are of the view that the assessee has nothing to say in his defense or have no further explanation other than the explanations already offered before the revenue authorities. Under such facts and circumstances, we deem it fit to decide the issues raised by the assessee, without any further adjournments so as to rest the litigation in the interest of justice, on the basis of material available on record inter alia the submissions of the assessee before the tax authorities and the orders passed by them. 13. Ground no. 1: Addition u/s 69A for Rs. 30,00,000/- towards cash deposited during the demonetization period. 13.1 On account of no representation by the assessee, the facts of the issue are reiterated by the Ld. Sr. DR from the orders of Ld. AO and Ld. CIT(A). We find that Ld. CIT(A) had decided the issue on the basis of certain observations, viz, (i) that cash deposited by the assessee have been transferred to M/s Berdia Textile and M/s Sapan Traders, (ii) the appellant have deposited the cash during the demonetization period only, there was no evidence that the appellant was regularly depositing the cash in normal course of business, (iii) the cash deposits 19 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon are made in an account which was opened on 15.11.2016, i.e., during the demonetization period, (iv) it is revealed in the local enquiries that the appellant has been working in the Berdia Group for past 10 years, though had filed returns in the individuals capacity, (v) the appellant does not possess any shop of equipment for making of gold ornaments, etc. Based on such observations, it was apprehended by the Ld. CIT(A), that the books of accounts are prepared just to show that income is generated from sale of gold, but actually there is no shop, no workshop or no working facilities at home, so it is apparent that the books of accounts are fabricated merely for routing out income of someone else, therefore, the books are correctly rejected and the addition made by the Ld. AO treating the investment of assessee from undisclosed sources u/s 69A, merits confirmation. Accordingly, the ground of appeal by the assessee is dismissed. 13.2 We find substance in the observations of the Ld. CIT(A), which could not be refuted by the assessee either before the Ld. CIT(A) or before us by way of substantiating the same through any explanation, evidence or clarification to dislodge the same, we, thus, are of the opinion that there was no infirmity in the order of Ld. CIT(A) to modify or interfere with the same. In result, ground no. 1 of the appeal of assessee stands dismissed. 20 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon 14. Ground No. 2, 3 & 4: Regarding addition of opening cash balance of Rs. 18,02,285/- by the Ld. AO by treating the same as income from undisclosed sources u/s 69A. 14.1 On perusal of the assessment order, assessee’s submissions before the revenue authorities and the order of First Appellate Authority, the issue is decided on the basis of the fact that the assessee did not file his IT returns for the earlier years i.e., AY 2013-14 and 2014-15, further considering the other aspects as conferred upon while deciding the ground no. 1 of present appeal that the assessee does not own any shop of equipment, assessee is not regularly filing the ITRs, the amounts are transferred to M/s Berdia Textiles and M/s Sapan Traders, that the books of account of the assessee are held to be fabricated and rejected, therefore, the contentions raised by the assessee merely by submitting the details of deposits made in bank accounts are not sufficient enough to substantiate that the assessee is actually dealing or transacting in the business of gold/ gold jewellery. On a perusal of ground of appeal No. 4, we observed that the assessee has raised the contention before the Ld. CIT(A), with the assertion that he had offered income u/s 44AD, therefore, was not required to maintain books of account and hence no addition u/s 69A can be made. We observed that as the assessee himself has furnished his books of accounts before the revenue authorities, the claim of assessee that books of accounts are not maintained cannot be accepted further section 69A 21 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon refers to books of accounts suffixed with word “if any”, therefore, the books of accounts maintained otherwise than as mandated under the statutes are also form the basis for invoking the provisions of section 69A. We, therefore, find merits in the decision of Ld. CIT(A), which could not be dislodged by the assessee by way of any contrary fact / material or evidence placed on record before the revenue authorities as well before us. Therefore, we approve the decision of Ld. CIT(A) and reject ground no. 2, 3 & 4 of the assessee in present appeal. 15. Ground No. 5 & 6: These grounds are general and academic in nature, which in absence of any further advancement of argument or assailed with any additional fact or contention, are rendered as infructuous, therefore, stands dismissed. 16. In result, the appeal of the assessee being bereft of merits, has been rendered as dismissed in terms of our aforesaid observations. Order pronounced in the open court on 19/12/2024. Sd/- (RAVISH SOOD) Sd/- (ARUN KHODPIA) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 19/12/2024 Vaibhav Shrivastav 22 ITA No. 458/RPR/2024 Shravan Kumar Sharma vs ITO, Ward-2, Rajnandgaon आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur 1. अपीलाथŎ / The Appellant- Shravan Kumar Sharma 2. ŮȑथŎ / The Respondent- ITO, Ward-2, Rajnandgaon 3. आयकर आयुƅ(अपील) / The CIT(A), 4. The Pr. CIT, Raipur (C.G.) 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 6. गाडŊ फाईल / Guard file. // स×याǒपत Ĥित True copy // "