Income Tax Appellate Tribunal - Delhi
Neha Jewellers Pvt. Ltd., New Delhi vs Acit, Central Circle-6, New Delhi on 9 August, 2023
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'E', NEW DELHI
Before Dr. B. R. R. Kumar, Accountant Member
Sh. Yogesh Kumar US, Judicial Member
ITA No. 9615/Del/2019 : Asstt. Year: 2010-11
ITA No. 9616/Del/2019 : Asstt. Year: 2011-12
ITA No. 9617/Del/2019 : Asstt. Year: 2012-13
ITA No. 9618/Del/2019 : Asstt. Year: 2013-14
ITA No. 1026/Del/2021 : Asstt. Year: 2017-18
Neha Jewellers Pvt. Ltd., Vs. ACIT,
1170, Kucha Nahajani, Chandni Chowk, Central Circle-6,
New Delhi-110006 New Delhi
(APPELLANT) (RESPONDENT)
PAN No. AAACN7129G
ITA No. 883/Del/2020 : Asstt. Year: 2010-11
ITA No. 884/Del/2020 : Asstt. Year: 2013-14
ITA No. 1949/Del/2021 : Asstt. Year: 2017-18
ACIT, Vs. Neha Jewellers Pvt. Ltd.,
Central Circle-14, 1170, Kucha Nahajani, Chandni Chowk,
New Delhi New Delhi-110006
(APPELLANT) (RESPONDENT)
PAN No. AAACN7129G
Assessee by : Sh. Ved Jain, Adv.
Revenue by : Sh. Arvind K. Bansal, Sr. DR
Date of Hearing: 08.06.2023 Date of Pronouncement: 09.08.2023
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeals have been filed by the assessee and the Revenue against the orders of ld. CIT(A)-24, New Delhi dated 19.11.2019 and the orders of ld. CIT(A)-26, New Delhi dated 26.07.2021.
2 ITA Nos. 9615 to 9618/Del/2019ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
2. Since, the issues invo lved in ITA Nos. 9615 to 9618/Del/2019 are similar, they were heard toge ther and being adjudicated by a common order.
3. In ITA No. 9615/Del/2019 , following grounds have been raised by the assessee:
"1. O n the facts and circumstances of the case , the order passed by the learned CIT(A) is bad both in the eye of law and on facts.
2. On the facts and circumstances of the case, learned CIT(A) has erred bo th on facts and in la w in confirming the order of the AD rejecting the contention of the assessee that reopening the assessment under Section 147 of the Act and consequent reassessment witho ut complying with the statutory conditions and the procedure presc ribed under the law are bad and liable to be quashed.
3. On the facts and circumstances of the case, learned CIT(A) has erred bo th on facts and in la w in confirming the order of the AO rejecting the contention of the assessee that the reasons reco rded for reopening the assessment does not meet the requirements under se ction 147 of the Act, bad in law and are contrary to the facts.
4. On the facts and circumstances of the case, learned CIT(A) has erred bo th on facts and in la w in confirming the reopening ignor ing the fact that there is no live nexus betwee n the reasons recorded and the belie f formed by the assessing officer. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming action of the AO despite that assessme nt order having been framed on the basis o f material collecte d at the back of the assessee, without providing ade quate opportunity to the assessee to rebut the same in 3 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
violation of statutory provision of section 142(3) of the Act.
6 (i) On the facts and circumstances of the case , the order passed by learned A.O. is bad both in the eye of law and on facts as the same has been reopened witho ut there being any whisper that the income has escaped due to the failure on part of the assessee to disclo se fully and truly all material facts , as the same has been reo pened after a per iod of fo ur years from the end of relevant assessment year.
(ii) On the fa cts and circumstances of the case , the order passed by learned A.O. is bad bath in the e ye of law and on facts, despite that assessee had already disclo sed fully and truly all material fa cts nece ssary for the assessment.
7. O n the facts and circumstances of the case , the learned CIT(A) has erred, both on facts and in law in confirming the order passed by the AO despite the fact that reopening the assessment proceedings as well as re-assessment order passed under section 148 of the Act are illega l, as the same have been made without assumption of valid jur isdiction.
8. O n the facts and circumstances of the case , the learned CIT(A) has erred, both on facts and in law in confirming the actio n of the AO despite that reassessment proceedings Initiated by the learne d AO witho ut valid approval of the prescribed authority under the Act is bad in law and liable to be quashed.
9 (i) On the facts and circumstances of the case , the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs.42 ,46,330/- made by the AO on account of purchases made by the ass essee treating the same as not genuine/bogus.
(i) T hat the addition has been confirmed at an arbitrary rate of 20% of purchases made without there being any basis for the same.4 ITA Nos. 9615 to 9618/Del/2019
ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
(iii) That the addition has been confir med rejecting the e xplanatio n and evidences brought on recor d by the a ssessee.
10. O n the facts and circumstances of the case , the learned CIT(A) has erred, both on facts and in law in confirming the action of the AO ignoring the fact that the quantity purchased and sold being completely tallying, the a llegation that the assessee has not made purchases cannot be sustained.
11. O n the facts and circumstances of the case , the learned CIT(A) has erred, both on facts and in law in confirming the addition on account of bogus purchases, de spite the ir being adequate materia l and evidences brought on record by the as sessee before the AO to show that the purchases and sales were made in the regular co urse of business.
12. O n the facts and circumstances of the case , the learned CIT(A) has erred, both on facts and in law in rejec ting the contentio n of the assessee that AO has erred in not taking the allegation to the lo gical conclusion after having held that purchases are not genuine it's the obvio us implication would have been made that sales are also not ge nuine.
13. O n the facts and circumstances of the case , the learned CIT(A) has erred, both on facts and in law in rejec ting the contention of the assessee that reasons recorded by the AO are contrary to the report received by it whereby it was clearly stated that purchases made by the assessee are actual purchases and hence there was no reason to believe that income has escaped assessment.
14. (1) On the facts and circumstances of the case, the learned CIT(A) has erred bo th on fa cts and in law in co nfirming the addition of Rs 2,12,316/- made on account of commission expenses.
5 ITA Nos. 9615 to 9618/Del/2019ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
(ii) That the addition has been made arbitrarily at the rate of 1% of purchases made by the assessee without there being any basis for the same.
15. O n the facts and circumstances of the case , the learned CIT(A) has erred both on facts and in law in confirming the above addition despite the fact tha t the addition is made by the AO re lying on the report of the investigation wing without application of his own mind.
16. On the facts and circumstances of the case learned CIT(A) has erred both on facts and in law in confirming the above addition despite that the same has been ma de by the AO without concluding the enquiry conducting during the course of assess ment proceedings, to the logical end.
17. On the facts and circumstances of the case learned CIT(A) has erred both on facts and in law in confirming the above addition despite the same having been made on the basis of statement recorded without giving assessee an opportunity to cross examine.
16. O n the facts and circumstances of the case , the learned CIT(A) has erred both on facts and in law in confirming the above addition by indulging in surmises witho ut bringing on any direct evidence agains t the assessee, only on the basis of presumption and assumption.
19. O n the facts and circumstances of the case , the learned CIT(A) has erred both on facts and in law in rejec ting the contention of the assessee that the order has been passed by the AO without affor ding adequate opportunity of being heard to the assessee."
4. In ITA No. 1026/Del/2021 , following grounds have been raised by the assessee:
"1. O n the facts and circumstances of the case , the order passed by the learned Co mmissio ner of Income 6 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
Tax (Appeals) {CIT(A)} is bad both in the eye o f law and o n facts.
2. (1 ) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in sustaining the addition of Rs. 1 ,39,57,341/- made by the AO on account of cash depo sit in the bank account treating the same as unexplained invok ing section 68 read with section 115BBE of the Income Tax Act.
(ii) T hat the abovesaid additio n has been confirmed ignor ing the detailed submissions and explana tions along with the evidences brought on record by the assessee explaining that the cash has been depo sited out of the cash sales made by the assessee during the normal course of business.
3. O n the facts and circumstances of the case , the learned CIT(A) has erred both on facts and in law in confirming the addition, despite the fact that the assessee has regular ly maintained co mplete stock records, books of acco unts are audited as per law and nothing adver se were pointed out both by the AO as well as CIT(A)
4. O n the facts and circumstances of the case , the learned CIT(A) has erred both on facts and in law in confirming the addition, despite the fact that the amount has already declared by the assessee as cash sales and the action of the learned AO w ill tantamount to do uble taxation of the same amount.
5. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the le arned AO in charging the income o f Rs. 1,23,77,599 /- already offere d by the assessee as discre pancy in stock under sectio n 68 read with section 115BBE of the Act.
(ii) T hat the above action of the lear ned CIT(A) is invalid in tota l disregar d to the fact that the additional income was o n account of discrepancy in stock found during the course of survey and is the business income of the assessee and hence canno t be char ge to 7 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
tax under section 68 read with section 115BBE of the Act.
(iii) That the learned CIT(A) has erred in ignoring the detailed submissions and explanations and evide nces brought on record by the assessee in this regard.
6. O n the facts and circumstances of the case , the learned CIT(A) has grossly erred both o n facts and in law in confirming the above additions by indulging in surmises without bringing on any direct evidence against the assessee, o nly on the basis o f presumption and assumptio n."
5. In ITA No. 883/Del/2020, following grounds have been raised by the Revenue:
"1. That the ld. CIT(A) has erred in facts and in law in restr icting the addition on account of inflated/bogus purchases to only 20% of the bogus bills without any basis and only on presumptions.
2. That the ld. CIT(A) has erred in facts and in law in passing a contradictory order i.e. on one hand ho lding the entities as well as the entire purchases from these entities as bogus but at the same time restricting the addition on account o f inflated/bogus purchase s to only 20% of the bogus bills without any basis."
6. In ITA No. 1949/Del/2021 , following grounds have been raised by the Revenue:
"That the Ld. CIT(A) has erred in law a nd on fac ts in deleting the addition o f Rs.1,94 ,95,060/- made by the AO on account of unexplained mone y being cash depo sited in the form o f demonetized currency despite the fact tha t during assessment pro ceedings the assessee had failed to offer any valid explanation with supporting documentary evidences about the nature and source of cash deposits in the manner required by the A.O. 8 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
ii. The Ld. C IT(A) has erred in law and on fac ts in deleting the addition of Rs.2,43,37,500/- overlooking the facts of the case that during the month of October and November, 2016 huge amount o f cash sales running into crores of rupees has been shown by the assessee in the book of accounts in co ntrast to the fact that dur ing the month o f April to Septe mber 2016, there was no cash sales.
iii. T he Ld. C IT(A) has erred in law and on fac ts in deleting the a ddition o verlooking the fac ts of the case that the average monthly balance of cash-in-hand during immediately preceding year was about Rs. 75 Lakhs only w hich was equal to the total of abo ut 4 days cash sales, whereas, in the curre nt year, even though the to tal yearly cash sale had decreased, the cash in hand as on 8th November, 2016 was show n at an abnormal increase of about Rs.3.40 Crores which was equal to cash sales of about 18 days' iv. The Ld. C IT(A) has erred on facts and in law in deleting the addition ignoring the facts of the case that the asse ssee has shown big increase in sale s on 8th November 2016 in a single day resulting into increase in the cash-in-hand whereas it could not submit complete copy of cash account with narration of entries and details of persons from w hom the cash had been rece ived in the required format.
v. The Ld. CIT (A) was not justify in law in overlooking the modus operandi adopted by the assessee to take bene fit of the situatio n and cir cumstances arised due to de monetization wherein the assessee just managed artificial entr ies of cash sales which is nothing but part of a color able dev ice, as he ld by Hon'ble Supreme Cour t in the case of Mc Dowell & Co. Ltd. Vs CTO 154 ITR 148(SC), to bring the unaccounted cash into the books of acco unt."
7. With regard to the reopening u/s 147, we affirm the order of the ld. CIT(A).
9 ITA Nos. 9615 to 9618/Del/2019ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
8. The assessee filed its return of income u/s 139(1) on 23.09.2010 declaring an income of Rs. 30,41,790/-. Thereafter on 16.10.2014, a search and seizure operation was conducted on assessee along with Brijwasi Jewellers. Cons equent to the searc h action, notice u/s 153A with respect to A.Y. 2009-10 to 2014-15 were issued. T he assessee during the above mentioned proceedings via reply dated 24.10.2016 submitted the details of purchases. Thereafter, the AO vide assessment order dated 21.12.2016 u/s 153A of the Income Tax Act, 1961 accepte d the retur ned income filed by the assessee.
9. Thereafter, the case of assessee was again reopened by the AO on the basis of information received fro m Director of Income Tax Investigation-II, Mumbai alleging the assessee to be a beneficiary who had obtained bogus purchas e entries from various shell concerns controlled by the entry operator Sh. Bhanwarlal Jain. Accordingly, a notice u/s 148 was issued in the case of the assessee on 30.03 .2017. Thereafter , the assessee vide reply dated 21.04.2017 stated that its return of income filed u/s 153A on 02.02.2016 may please be treated as return in respo nse to notice u/s 148. The AO was also requested to provide the re ason for reopening the case. Further, in the said reply the assessee also raised its obje ctions w ith respe ct to issuance of notice under sectio n 148 of the Act. The assessee submitted before the AO that the notice issued is vague and its assessment has already been completed under s ection 153A of the Act wherein no a dverse inference has bee n drawn with respect to the business operation of the assessee.
10 ITA Nos. 9615 to 9618/Del/2019ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
10. The reasons for reopening provided by the AO are as under:
" R ea s on s f o r r e o p en in g a s s e ss m en t u / s 14 7 of t h e In c om e Ta x Ac t f o r th e A.Y . 2 0 07 - 08 i n th e c a s e o f M/ s N eh a J e w ell e r s P vt. Lt d. , 1 1 70 , K u ch a Ma h a j a ni , Ch an dn i C h ow k , D el hi - 11 0 00 6 Th e a s se s s e e fi l ed re tu rn of i nc o m e on 22 . 1 0 .2 0 07 d e cl a rin g loss of R s .1 7 ,0 0 , 9 02 / -. A s s e ss m ent in t h e c a s e w a s c ompl e t ed u / s 14 3 ( 3 ) o f th e In co m e T a x A ct , 1 9 61 ( h er e i n a ft e r r e fe r r ed t o a s t h e Ac t ) on 24 .1 2 .2 0 0 9 at a t ot al in c om e of R s. 3 6 ,56 5 /- a ft e r m a ki ng a dd it i on o f Rs .1 7 ,3 7 , 4 67 / -.
A s ea r ch and sei zu r e op e ra t i on w a s c o n du ct e d in th e ca s e of Bh a n w a rila l J a in Gr ou p on 0 3 . 1 0.2 0 13 b y th e I n v e st ig a ti on Wi n g , Mu m ba i . D u ri ng th e c ou rse of s ea r c h, th e s t a t e m ent o f Bh a n wa ril al Ja in w a s r ec o rd e d u / s 1 32 (4 ) o f th e A ct o n 1 2 .1 0 . 2 01 3 . I n h i s st a t em en t , Bh a n w a ri l a l J a in ha s men t i on ed t h e n am e s of th e 6 8 f i rm s/ c om p a ni e s w hi c h a r e eng a g ed in th e bu s in e s s o f p r ov id in g a c c om m o d a ti on e n tri e s a n d b og u s pu r c h a s e b il l s . Th e sta t e m en t s o f S h . Lu nk a r a n Pa r a s m a l Kot h a ri, S h . An il K hi ch d a a n d S h. R it esh S i r o y a w e r e r e c or d ed u/ s 1 31 of th e A ct on 06 .10 .2 0 13 , 0 6 .1 0 . 2 01 3 an d 0 4 .10 .2 0 1 3 r e sp e c ti v ely . Th e y all con cu r r ed in th e w h ol e m od u s op e ra nd i of i s su i ng bog u s p u r ch a s e bi l l s t o pa rt i e s . It w a s a l s o r e v ea l e d th a t B han w a ri lal Ja in G r ou p c o mp ri s es of a b ou t 7 0 com p a ni es w ho a r e eng ag ed in b o ok in g b o gu s s a l e s in th e i r b oo k s , t h er e by p r ov idi ng b og u s pu r c ha se ent ri e s t o it s cu s to m e r s. T h e f i rm s m en ti on e d bel o w v iz . , M /s R a ja n D i am on d s, M /s M a y u r E xp o rt s a n d M/ s Mu k ti E xp o r ts f ig u r e in th e li st o f g r ou p fi rm s / c om pa n i e s of Bh a n w a ril a l J a in G r ou p .
C o n se q u en t u po n t h e s ea r ch op e ra t i on , in f o r ma t i on w a s r e c ei ve d f r om th e D ir e c t o r of In co m e Ta x (I n v es ti ga t i o n) - I I , Mu m b a i r e ga r d in g b og u s pu r c ha se en t r i es p r ov i d ed by Bh a n wa ri l a l J a i n G r ou p t o M/ s N eh a J ew el l er s Pv t . L td . , 1 1 70 , K u c h a Ma h a ja n i , C h a n d n i C ho wk , D elh i .
As p e r t h e i n fo rm a t ion , t h e b og u s p u r c ha s e e n t ri e s p r ov i d ed t o M / s N eh a J e w el l e r s P vt . Lt d . by t h e g r oup c on c e r n s of B h a n w a ril a l Ja in G r ou p fo r th e 11 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
F in an cia l Y e a r 20 0 6- 0 7 , r el e va n t t o t h e A s s e ss m ent Y ea r 2 0 07 - 08 is a s u nd e r:
S. N o . N a m e o f t h e En t r y P r ov id e r Am ou nt
1. M/ s R a j a n D i a m ond s R s .4 4 ,7 7 , 5 11 / -
2. M/ s Ma y u r E xp o rt s R s .4 9 ,9 4 , 9 00 / -
T ota l R s .9 4 ,7 2 , 4 11 / -
P er u s a l o f th e au di t ed ba l a n ce s h e et of t he a s s es s e e c o m pa n y, it i s n ot i c e d th a t , in the s ch ed ul e of Su n dr y C r e di t or s, the names of M/ a R a jan D iam on d s and M/ a Ma y u r Exp o rt s a r e p r e sen t . F u r th er , it is a l s o n o t i c ed f ro m th e s ch e du l e o f Su n d r y C r ed it or s t h a t t h e na m e o f on e m o r e c on c ern viz ., M/ s Muk t i Ex p o rt s , w h ic h forms pa rt of th e gr ou p c on c e rn s of Bh an w a ril al J a in G r ou p i s a l s o p r es en t .
Th e t ran s a ct i ons o f th e a ss e s s e e co m p a n y w it h th e s e c on c e rn s b el on gi n g to B h a nw a ri la l J ai n G r oup c a n b e s u mm a ri z ed a s un d e r:
S. N o . N a m e o f t h e En t r y P r ov id e r Am ou nt
1. M/ s R a j a n D i a m ond s R s .4 4 ,7 7 , 5 11 / -
2. M/ s Ma y u r E xp o rt s R s .4 9 ,9 4 , 9 00 / -
3. M/ s Muk t i E xp o rt s R s .4 2 ,2 1 , 9 03 / -
T ota l R s .1 ,3 6 ,9 4 , 31 4 / -
Th i s i m p li e s th a t th e a s s e s s e e c o mp a n y ha s b o ok e d b ogu s pu r ch a s e s fr om th e a f o r em en t i on ed p a r ti e s t o th e tu n e of R s .1 ,3 6 , 94 ,3 1 4 / - a s th ey f o rm pa rt of the 70 c o m pa n i e s of B h a nw a rl a l Ja in G r oup , pr o vi di n g bog us pu r c ha se en t ri e s t o v a ri ou s p e rson s . Th e r ef o r e , th e s e bog u s pu r c h a s e s am oun ti ng t o R s .1 , 3 6 ,9 4, 3 1 4/ - sh ou ld h a v e b e en di sa l lo w ed .
In vi e w of th e ab ov e , I h a v e r ea s on s t o b eli e v e th a t in c o m e a m oun t in g t o R s .1 ,3 6 ,9 4 , 3 14 / - c h a rg e a b l e t o t a x h a s e sc a p ed a s s e ss m e n t b y r ea s on of fa il u r e on t h e p ar t o f th e a s ses s e e c o m pa n y t o di sc l o s e f u ll y a n d t ru l y a l l ma t e ria l fa ct s n ec e s sa r y f o r i ts a s se ss m en t .
Ac c o rd in gl y , in m y op in i on i t i s a fi t ca s e f o r is su e o f n oti c e u/ s 1 4 8 o f th e Ac t ."12 ITA Nos. 9615 to 9618/Del/2019
ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
11. The crux of the reopening is that, Information was received from the office of D irector of Income Tax (I nvestigation)-II, Mumbai. As per the sta tement of Mr. Bhanwarlal Jain, assessee was also a beneficiary among others with regard to bogus purchase of diamonds.
12. Thereafter, the AO issued statutory notice u/s 143(2) dated 26.05.2017. The AO issued notice u/s 142(1), where in the Ld. AO has asked the assessee to submit the de tails in respect of purchase made from following parties:
Megha Gems Navkar India
13. The assessee vide reply dated 10.08.2017 submitted the details of the above 2 parties from whom the purchases were made by the assessee. The assessee stated that it was not aware about any of those state ments and asked for the co py of the statement of Bhanwar Lal. Thereafter, the AO vide notice u/s 142(1) dated 10.10.2017 asked to file var ious details in respect of the se 2 parties to whom asse ssee has purchase d the material during the year under consideration. The assessee vide reply dated 06.11.2017 also submitted the following documentary evidence s to prove the genuineness of the transaction:
i. Ledger A/c in the books of the assessee. ii. Copy of purchase Bill and Purchase Account. iii. Stock Ledger in the books of assessee.13 ITA Nos. 9615 to 9618/Del/2019
ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
iv. Bank statement of the assessee highlighting the payment made for purchase.
v. Sales Ledger of the assessee showing sales of the goods purchased from the alleged parties.
vi. Confirmation of Accounts from the par ties from whom purchases have been made.
vii. Copy of PAN Card of the alleged parties. viii. Copy of VAT/C ST Registration of the parties.
ix. Copy of ITR of the alle ged parties.
x. Bank stateme nt of the parties from whom purchases
have been made.
xi. Copy of stock Ledger of the parties from whom
purchases have been made.
xii. Copy of Audited Financial Statements of the above
alleged parties.
14. On 05.12.2017, the assessee has provided the sales,
purchase and inventory analysis to establish the genuineness of purchases. The assessee vide reply dated 18.12 .2017 has also submitted the affida vit from the directors of the above mentioned parties in w hich the y have affirmed the trans action with the assessee. The assessee also contended that the payment for purchases have been duly made by the asses see in the subsequent financial year s and there is no outstanding balance in the books of the assessee in respect to these parties. Copy of ledger A/cs of the parties in books of the assessee for the AY 2010-11 to AY 2015-16 was submitted before the Assessing Officer. The assessee in its reply dated 18.12 .2017 maintained that Sh. Bhanwar Lai Jain, Sh. Lunkaran Parasmal 14 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
Kothari, Sh. Anil Khicha & Ritesh Siroya are not known to them and they have not do ne any business transaction with them. The assessee further submitted that before relying upon their state ments opportunity of cross examination mus t be given. The assessee also placed reliance on the judgment of ITAT prono unced in the case of Indo Unique Trading Pvt. Ltd. and Reliance Corporation w herein it was held that no addition could be sustained in respect of purchased made if addition was merely based on the statement of Sh. B hanwarlal Jain wherein he stated tha t he arranged accommodation entries in the form of bogus purchase. T he asse ssee in the abo ve reply also submitted that the similar to present case, cases of the assessee for the AY 2007-08 and AY 2008-09 were also reopened on the basis of statement recorded of Sh. Bhanwarlal Jain. However, no adverse inference w as drawn, as assessee had submitte d all the required documents at the time of assessment.
15. The asse ssee submitted that the diamonds purchased from these entities have been sold and are part of stock ledger and sales in respect of the same has been duly re corded in the books of acco unts of the assessee. Further, as the payme nt for purchase has been made through proper banking channels.
16. The AO after considering the entire facts and the state ment of Sh. Bhanwarlal made addition of Rs .2,12,31,648/-
by the treating the pur chases made by the assess ee from Megha Jems and Navkar India as bogus purchases. The AO also made an addition Rs.2,12,316/- i.e. 1% of Rs.2,1 2,31,648 /- as commission paid.
15 ITA Nos. 9615 to 9618/Del/2019ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
17. Aggrieve d by the order o f the AO, the assessee filed an appeal before the ld. C IT(A).
18. The ld. CIT(A) in his or der at PB Pg 46 para 5.5.10 observed that assessee has demonstrate d beyond doubt that it has indeed made purchases and therefore the genuineness of purchases cannot be doubted, however the Ld. C IT(A) ass umed that purchases has been made from grey market and the assessee has obtained bogus purchase bill from Bhanwarla l Jain and therefore the Ld. CIT (A) confirmed the addition of Rs.42 ,46,330/- i.e. 20% of Rs. 2,12,31,648/-.
19. Aggrieve d, both the Revenue and the as sessee are in appeal before the Tribunal against the order o f CIT(A). The revenue filed appeal against the deletion made by the ld. CIT(A) on account of bogus purchases and the assesse e is in a ppeal against the determination of 20% of the purchases as undisclosed income. Since, the issue is inter-co nnected, it is being dealt by common adjudication.
20. Heard the arguments of both the parties and peruse d the material available on record.
21. At the outset, it is rele vant to mention the following pertinent points:
The AO has re -opened the assessment solely on the basis of information received from the investigation wing. The AO has not rejected the evidences submitte d by the assessee to prove the genuineness of the purchases.16 ITA Nos. 9615 to 9618/Del/2019
ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
The AO has not rejected the books of acc ount of assessee.
The AO and the Ld. CIT(A) has not doubted the sales made by the assessee.
The AO and the Ld.CIT(A) has not pointed out any discrepancy in the stock of asse ssee.
The AO has made the addition bases on the state ment of Bhanwarlal & his asso ciated and these statement has been retracted by the aforesaid persons. The AO and the Ld. CIT(A) has accepted the fact that Bhanwarlal Jain is engaged in the business of import and sale of sale of rough diamonds.
The AO has failed to provide opportunity of cross which was asked by assessee during the course of assessment proceedings via reply dated 18.12.2017. The assessee has made payme nt of purchase ma de from Megha Gems and Navika India in subsequent years also. The AO issue d notice to the above mentioned parties us/133(6) of the Act.
22. The various factors considered by the ld. CIT(A) are as under:
Sh. Bhanwar lal Jain and his associates/employee has nowhere admitted in their respe ctive sta tements that have given any accommodation entry to the assessee company. Further, the e vidences found do not contain the name o f the a ssessee.
The name of the assessee is also now here mentioned in these docume nts.17 ITA Nos. 9615 to 9618/Del/2019
ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
Neither of the transaction me ntioned on the documents pertains to the assessee.
The seized material co ntains database o f 944 clie nts along with their co des and full names but the name of the assessee is nowhere mentione d on the said lis t of 944 clients.
Sh. B hanwarlal also, nowhere taken name of the assessee company nor the same is appearing in any seized material confronted to them.
AO issued no tices under 133(6 ) to the alleged parties on 31.10.2017 on the addresses given by the assessee company & all the par ties replied to the Assessing Officer and submitted all the details required by the Assessing Officer.
The Assessing Officer has not raised any concern whatsoever re garding the identities of parties or about the authe nticity of the do cuments submitted by the parties direc tly to the AO in the response to the notice under section 133(6 ) of the Act. the Id.AO did not make any further enquiry and just passed the adverse order agains t the a ssessee.
The assessee has made purchases from M/s Megha Gems which is the proprietor ship concern of Sh, Mitesh Pamecha and M/s Navkar India which is the proprietorship concern of Sh. Abhishek Lodha who have no t given any such state ment w here they would have admitte d being employees of Sh. Bhanwar lal Jain and providing accommodatio n entry.
18 ITA Nos. 9615 to 9618/Del/2019ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
Infact, Sh. Mitesh Pamecha and Sh. Abhishek Lo dha, have provided confirmations and affidavit to the assessee confirming tha t the purchases were actually made and are totally genuine.
During the course of search operation in the case of assessee in the year 2014, the busines s operation of the assessee company were verified by the search party. The block period covered in said search included the year under consideration. However, no incr iminating materia l was found during the course of search for the year under consideration.
During the said search action physical stock taking was done of each and every item of stock and reconciled with the books of a ccounts.
23. The ld. CIT(A) having after held that the genuineness of the parties from whom purchases were claimed to have been made has been doubted, he also held that genuineness of the purchase as a whole cannot be doubted as the assessee has made corresponding sales. Observing thus, the ld. C IT(A) confirmed the addition @ 20% on the alleged purchases as bogus.
24. We find the decision of the ld. CIT(A) is oxymoronic as the ld. CIT(A) having given categorical observation that the diamonds have been indeed purchased, sold, the profit is offered to tax, the name of the assessee has not been mentioned by the so-called bogus bill provide r namely, Sh. Bhanwarlal Jain, but went on to disallow 20% of the purchases as bo gus. It is an undisputed fact that Sh. Nitesh Pamecha and 19 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
Sh. Abshisek Lodha who are the proprie tors of Me gha Gems and Navkar India have not given any statement as to the bogus sale to the assessee rather they have filed affidavit confirming the purchases. The Assessing Officer has made enquiries by is suing notice u/s 133 (6) of the Income Tax Act, 1961 w hich have been duly complied by the purchase parties. Having sa tisfied with the reply, the AO has no t made any further enquiries but made addition sole ly based on the information received from the Investigation Wing. Even, the statement give n by the Sh. Bhanwarlal Jain has not pointe d out any transactions with the assessee company. He nce, keeping in view, the entire facts and circumstances , we hold that the ld. CIT(A) has rightly deleted 80% of the addition made on account of alleged bogus purchases and wrongly confirmed 20% of the s ame purchases witho ut any basis.
25. We find that the assessee has duly discharged the onus place d upon the assessee regarding proving genuineness of the purchase. Similar issue came up for consideration before the Co-ordinate Bench of Tribunal, Mumbai in the case of Indo Unique Trading Pvt. Ltd. Vs. DCIT-5 (2)(1), Mumbai, 2017 (8) TMI 1302 dated August 16, 2017, where in the Tribunal deleted the addition made by AO holding as under:
"11. On the contrary, we notice that the assess ee has proved the genuineness of purchases by obtaining confirmation letters in the form of affidavits from all the suppliers. The AO has done independent enquiry during the course of assessment proceedings by issuing notices u/s 133(6) of the Act to a ll the suppliers. We notice that the notices were duly served upo n the 20 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
suppliers and they have also responded by filing their replies duly confirming the transactio ns. The AO has rejected the replies by observing that the re plies lacked details and they did not mention a bout the nature o f transactions. In our view , the said observations are vague in nature. On the contrary, a perusal of the affidavits furnished by the supplie rs would show that they have confir med the sales affected by them to the assessee. Further they have also verifie d and signed the ledger account copies as available in the books of acco unt. When the suppliers confirm that the transactions of sales made by them to the assessee are genuine, that too, in response to the notices issued by the AO u/s 133(6) of the Act during the course of assessment proceedings, in our view, the said replies cannot be rejected without bringing on record a ny material to show that they are not true. We notice that the AO did not bring any material on record and he simply relied upon the report given by the investigation wing. As per Ld. A.R., the statement given by Shri Bhanwarlal Jain is a general statement only. The assessee, as s tated earlier, has furnishe d confirmation of ledger accounts and also a ffidavits to prove the genuineness of transactions. We notice that the AO could not co ntrovert those documents.
12. I n view of the foregoing discussions, we are of the view that the assessee has duly discharged the burden to prove the genuineness o f purcha ses. On the contrary, the AO has simply relied upon the report given by the investigation wing. I n this view of the matter, we are of the view that no addition is called for on account of alleged bogus purchases. Accordingly we set 21 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
aside the order passed by Ld CIT(A) on this issue and dire ct the AO to delete the impugned addition."
26. This contention of the assessee is also supported by the follow ing judic ial pronouncements:
M/s. Simoni Gems Vs. DCIT, 2019 (3) TMI 16 52 dated march 13, 2019 (ITAT Mum.) M/s. Ariha Diamond Jewellery Pvt. Ltd. Vs. DCIT, 2018 (8) TMI 1181 date d July 4, 2018 (IT AT Mum.) M/s. Vama International Vs. ITO, 2018 (2) TMI 1760 dated February 15, 2018 (ITAT Mum.) PCIT Vs. Tejua Rohitkumar Kapadia, 2018 (7) TMI 590 dated May 4, 2018 (SC )
27. Hence, in the view of above mentioned submissions and judicial prono uncements, it evident that assessee has duly discharged the onus ca sted upo n him to prove the genuineness of the purchases. Consequently, no addition is warranted as the purchases were genuine and made during the co urse of regular business. Therefore, the Revenue appeal is dismissed and that of the assessee appeal is allowed.
AY 2011-12 to AY 2013-14 The facts and circumstances for A.Y. 2011-12 to A.Y. 2013-14 are similar to the facts and circumstances involved in the A.Y. 2010-11. Hence, considering the above mentio ned facts, the assessee's appeals for all these years are hereby allowe d and consequently the revenue's appeals are dismissed.
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ITA No. 1026/Del/2021 : A.Y . 2017-18 (Assessee App eal) ITA No. 1949/Del/2021 : A.Y . 2017-18 (Revenue Appeal)Cash Sales/Cash Deposits:
28. The AO noticed that the assessee has deposited cash of Rs.4,58,30,000/- during the period of demonetiz ation and held that the assessee has not able to substantiate with cogent reasons and documentary evide nce about the sour ce of cas h.
29. The ld. C IT(A) restricted the addition of Rs .4,58,30,000/- to Rs .2,63,34,940/-. Aggrieved with the order of the ld. CIT(A), the assessee filed appeal against the co nfirmatio n of Rs.2,63,34,940/- and the revenue came in appeal against the deletion of Rs.1,94,95,000/-.
30. Heard the arguments of both the parties and peruse d the material available on record.
31. Before us, the ld. AR argued that where assessee has filed its s ubmissions and placed evidence on record, then it is the duty of AO to act fairly as a reasonable person and examine the fact of the ca se in the light evidence available a nd should not come to a conclusion o n the basis of surmises and conjectures.
32. It is a fact on record that o ut of the total cash deposits, an amount of Rs .48,35,500/- pertains to deposit of new currency note on vario us dates from 06.12.2016 to 30.12 .2016 in State Bank of India A/c No. 31021809029 and in A/c No. 000026426830019 Deutsche Bank. The deposit on 10.11 .2016 23 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
of specified currency note was to the tune of Rs .4,10,00,000/- in the State Bank of India A/c No. 34355670650.
33. It is a fact that cash deposits during the demonetization perio d was made in 3 bank accounts of the assessee company. Out of the total cash deposits of Rs.4,58,30,000/- the old curre ncy notes were amounting to Rs.4 ,10,00,0 00/-whic h was depo sited on 10.11.2016 in SBI Bank account no .34355670650 and the remaining cash deposits of Rs.48,34,500 /- was made in new currency over the period of 06.12.2016 to 30.12.2016 in the o ther two bank accounts SBI Account no.31021809029 and Deutsche Bank Account no.26426830019. Further , in this regard the assessee had also filed de tails wherein the assessee had submitted the copy o f Form 'Cash Transaction 2016' filed on Income Tax E-filing Portal with respect to the cash de posits made during demonetization period. The copy of said forms with respect to the cash deposits made in all the three bank accounts of the assessee is placed in the paper book. I t was submitted tha t on perusal of the form pertaining to SBI bank account no.31021809029, it can be noticed that the assessee has clearly mentioned that deposits of Rs.36,30,000/- ma de in the said bank account during demonetization period was made in new currency which pertains to the cash sa les made from 15.11.2016 to 03.12.2016. Fur ther on perusal o f the complete form it can be noticed that the assessee had submitted all the details pertaining to the cash sales made in the new currency including name and address of the buyer, amount received in new currency alongw ith invoice number against which said amount was received. Further , from 'Cash Transaction 2016' 24 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
pertaining to Deutsche Bank Account no. 26426830019, it can be noticed that the assessee has clearly mentioned that depo sits of Rs.12,00,000/- made in the said bank account during demonetization period was made in new currency which pertains to the cash sales made from 10.12.2016 to 28.12.2016. Further on perusal of the complete form it can be noticed that the assessee had submitted a ll the details pertaining to the cash sales made in the new currency inc luding name and address of the buyer, amount rec eived in new curre ncy alongwith invoice number against which said a mount was received. It was argued that the AO has ignored the above facts before him while passing the assessme nt order and accor dingly the AO was not justified in treating the cash depo sits made in new currency amounting to Rs.48,34,500/- as unexplained deposits made in o ld currency. It w as argued that on perusal of the above facts it can be clearly noticed that the depo sits made in new currency was nowhere unexplained, since assessee had submitted all the details pertaining to the same including name and address of the buyer, amount received in new currency alongw ith invoice number against which said amount was received, it cannot be treated as undis closed income.
34. It was further argued that vide note no. 28- Disclosures on Specified Bank Notes, of audited financial sta tement o f the assesse wherein the details of specifie d bank notes and new curre ncy notes held and transacted during the period from 08.11.2016 to 30.12.2016 is given. On perusal o f the same, it can be found that the assesse has deposited Rs. 4,10,00,000 25 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
only in demonetized currency and balance amount of Rs. 48,34,500/- was depo sited in new currency. The refore, it was argued that addition to the e xtent of cash deposited in new curre ncy note s amounting to Rs. 48,34,500/- is liable to be deleted.
35. The ld. AR argued that the cash sales have been made to the e xtent of Rs.8,14,975/- on 08.11.2016 to identified parties having PAN and assessee has given including name, address, PAN of the buyer alongwith the amount of sales and the invoice details against which the said sales were made. Further, cash depo sits to the extent of Rs. 97,27,528/- pertains to sales made to identified parties and the assessee has given name, address of the buyer alongwith the amount of sales and the invoice details agains t which the said sales were made. It was argued that, in view of the same it can be said that the total cash sales made to he identified parties, amounts to Rs. 1,05,69,503 /- and the c ash deposit canno t be treated as unexplained deposits from unknown sour ces. Thus, the ld. AR argued that the amo unt of Rs.1,05,69,503/- for which the comple te sources have been prove d and an amount Rs.48,34,500/- w hich is deposited in the form of new notes cannot be treated u/s 68 of the Income Tax Act, 1961 under any imagination.
36. With regard to the cash deposits of Rs.3,04,30,497/- made on 08.11.2016 , the ld. AR argued that of 11 t h November, 2016 there was 'Dev UthaniGyaras' which is cons idered to be auspicious day for the purpose of marriages which led to huge demand of go ld and gold jewllery in the market. Further, after the demonetization was announced at 8 PM on 08.11.2016, 26 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
there was huge rush/panic in the market to buy gold and jewe llery items either due to the wedding seaso n follow ing in the month of November, 2016 or on account of people coming out in the market to convert their cash in ha nd of the old curre ncy notes in gold/jeweller y items, since the old currency was a legal tender till 11:59 PM of 08.11.2016 and the assessee being a renowned/re puted jeweler in the Chandani C howk (Kucha Mahajani) jewe llery market have a huge customer base to w hich the cash sales were made on 8th N ov, 2016. To buttress his point, the ld. AR submitted the details of cash sales and the cash deposits in the following mo nths:
Month Total sales Credit Sales Cash sales Cash deposits December, 2016 2 5 ,5 6 0 , 7 5 5 2 2 ,3 4 2 , 1 3 7 3,218,618 4,834,500 January, 2017 5 0 ,5 5 3 , 9 7 9 3 2 ,8 5 9 , 8 2 6 1 7 ,6 9 4 , 1 5 3 1 6 ,0 0 0 , 0 0 0 F e b r u ar y , 2 0 1 7 4 5 ,3 5 6 , 2 0 8 2 1 ,9 0 2 , 2 9 9 2 3 ,4 5 3 , 9 0 9 2 0 ,6 0 0 , 0 0 0 March, 2017 7 9 ,8 9 5 , 8 0 0 6 0 ,3 4 2 , 9 0 2 1 9 ,5 5 2 , 8 9 8 2 2 ,6 0 0 , 0 0 0 Total 2 0 1 , 3 6 6 ,7 4 2 1 3 7 , 4 4 7 ,1 6 4 6 3 ,9 1 9 , 5 7 8 6 4 ,0 3 4 , 5 0 0 A ve r a g e of fo ur 5 0 ,3 4 1 , 6 8 6 3 4 ,3 6 1 , 7 9 1 1 5 ,9 7 9 , 8 9 4 1 6 ,0 0 8 , 6 2 5 m o n t hs
37. Based on the factual presentation of the business affairs, the ld. AR argued that even after demonetization the assessee had made total sales of Rs.20.13 Crores which includes credit sales of Rs.13 .74 crores and cash sales of Rs.6.3 9 cores in the months of De cember, 2016 to March, 2017. The ld. AR also submitted the details of sales and cash depos its of the pre demo netizatio n period of the assessee company which is as under:
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Month Total Sales Credit sales Cash Sales Cash Deposits Apr-16 5,380,720 1,802,233 3,578,487 15,000,000 May-16 32,979,075 19,845,550 13,133,525 12,000,000 Jun-16 25,063,109 1,875,662 23,187,447 3,600,000 Jul-16 19,080,896 2,183,136 16,897,760 11,050,000 Aug-16 21,839,490 4,981,748 16,857,742 43,800,000 Sep-16 44,663,884 17,723,595 26,940,289 26,000,000 Oct-16 82,179,512 29,859,787 52,319,725 54,000,000 Tota l 231,186,686 78,271,711 152,914,975 165,450,000 Average of Seven 33,026,669 11,181,673 21,844,996 23,635,714 Months
38. The ld. AR argued that if the monthly average data of first seven months (pre demonetization perio d) is compared with the last four months (post demone tization period), then it dearly evident that average monthly turnover of the a ssessee in the post demone tization period is much better that the pre demo netizatio n period. There could be slender variation in the cash sales and deposits. The ld. AR also submitte d the details of cash sales for a period of four years to prove that the huge cash sales and cash deposits are a norm in the regular business of the assessee. Hence, the deposits made during the year should not be looke d with suspicion for no reason. To prove the normality of cash cash deposits, the month wise details of the cash sales for the F.Y. 2014-15, F.Y. 2015-16, F.Y. 2016-17 and F.Y. 2017-18 have been submitted by the assess ee which is as under:
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F.Y. 2014-15 F.Y. 2015-16 F.Y. 2016-17 F.Y. 2017-18 Month Cash Sales Cash Cash sales Cash Cash Sales Cash Cash Sales Cash (Ind. Tax) Deposits (Ind. Tax) Deposits (Ind. Tax) Deposits (Ind. Tax) Deposits April 17670400 19000000 29244092 27100000 3578487 15000000 23885405 21500000 May 9911408 8600000 21225517 17500000 13133525 12000000 21128693 23900000 June 14944316 14600000 15986339 19300000 23187447 3600000 53265768 51150000 July 22806590 18250000 26203657 25200000 16897760 11050000 24412886 26705000 August 24303509 21550000 29494804 33000000 16857742 43800000 24095760 24700000 September 35666106 33600000 31158370 28200000 26940289 26000000 24587342 18480000 October 29178669 31450000 41934126 44000000 52319725 54000000 24863625 28200000 November 36451737 34300000 54898674 54000000 52876149 51000000 34848954 36100000 December 26268495 33620000 50598828 46500000 3218618 4834500 28902635 26477500 January 31967732 26200000 66549719 63100000 17694153 16000000 37849774 38610000 February 20213052 26500000 46844714 37100000 23453909 20600000 32536882 34500000 March 40897333 42000000 1315572 7500000 19552898 22600000 27096081 24700000
39. Rebutting the arguments o f the Assessing Officer that the assessee was engaged in same jewellery business in the earlier year also wherein cash sales made were of Rs.41.54 Crores and in the year under consideration there was decline in cash sales to Rs.26.97 Crores, but the cash deposits ma de during the course of demonetization had increased was Rs.4.58 Crores as against Rs.93,00,000/- in the preceding year during the corresponding period which shows the abnormal pattern of cash sales as well as cash deposits in the year under consideration vis-a-vis last year, the ld. AR argued that AO is trying to compare the decline in cash sales in the year under consideration with the abnormal rise in the cash deposit during the demonetization period and the argument of the Asse ssing Officer is factually incorrect. It was argued that the main reason for decline o f cash sale in the year under co nsideration is mainly on account of cash/new currency crunch in the market during the post demonetization period. the cash sales made in the pre demo netizatio n i.e. April, 2016 to October, 2016 is Rs.15 .29 Crores in compariso n to Rs. 19.52 crores in the 29 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
prece ding year (April, 2015 to October, 2015) did not have much variation, the variation w as only 21.67%. However, if we look at the post demonetization perio d cash sales i.e. from December, 2016 to March, 2017 the same was Rs .6.39 Crores in comparison to Rs.16.53 Crores in the preceding year in the same period (December, 2015 to March, 2016) the variatio n was 61.34%. Accordingly, it can be said that it was the post demo netizatio n period which has contributed to the decline in overall cash s ales in the year under consideration in comparison to the preceding year. It can further be derived from this analysis that at the time of demonetization i.e. on 08.11.2016 there was not much variation in the cash sales/turnover of the assessee company in compariso n to the preceding years.
40. Rebutting the arguments of the AO tha t the average monthly cash in hand balance in the preceding year was Rs.75 ,00,000/- however, as on 08.11.2016 the assessee had abnormal cas h in hand balance of Rs.3 .40 Crores, the ld. AR submitted that the AO was trying to compare average of cash in hand balance of the assessee company as on las t day of every month of financial year 2015-16 with the cash in hand ba lance as on 08.11.2016. It was argued that the AO has conveniently chosen 12 specific da tes last day of each month of financial year 2015-16 and compared with the cash balance as on 08.11.2016. It was ar gued that the cash in hand balance can never have similar pattern on specific date of different years. Explaining the fluctuations, the ld. AR submitted tha t the assessee company had cash in hand balance as lo w as Rs.11 ,16,165/- as on 06.05.2016 and as high as Rs.2.97 crores 30 ITA Nos. 9615 to 9618/Del/2019 ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
as on 10.08.2016 and Rs.1.74 Crores as on 24.09.2016. Based on these amo unts, it was argued that it was no t for the first time that the assessee had held cash in hand balance of Rs. 3 Crore or Rs.4 Crores. In fact, in the year under consideration there were many occa sions evident from the ca sh book which prove s that assessee company has held such huge cash in hand balances in past also.
41. Countering the arguments of the AO, the assessee has show n big increase in sales on 08.11.2016 in a single day which lead to increase in cash in hand which was done because VAT retur ns had not been filed for the said month, the ld. AR argued that the logic given by the AO to doubt the genuineness of cash sales made on 08.11.2016 is again illogical and without any basis. It was submitted that the reason why the VAT return for the month of November, 2016 was not filed as on 08.11.2016 is simply because of the fact that the same was no t due for filing on the said date. As per the VAT legislation the VAT returns are filed quarterly i.e. the end of each quarter of the financial year. Meaning there by the VAT return for the month of Nove mber, 2016 was due for filing in the month of January, 2017 i.e. at the end of 3rd quar ter of the financial year. Hence, the observation of the AO in the assessment order has no legal standing, accordingly liable to be reje cted. The ld. AR also submitted the details of the availability o f the sto ck for the said sales which has been duly perused by the ld. CIT(A).
42. In conclusion, the ld. AR has also submitted the cash depo sits for the F.Y. 2015-16 and F.Y. 2016-17 ar e as under:
31 ITA Nos. 9615 to 9618/Del/2019ITA Nos. 883 & 884/Del/2020 ITA Nos. 1026 & 1949/Del/2021 Neha Jewellers Pvt. Ltd.
F.Y. Diwali Cash Sales in Cash Deposit in Total Cash Month Diwali Month Diwali Month Deposits in FY 2015-16 November 5,48,98,674 5,40,00,000 40,25,00,000 2016-17 October 5,23,19,725 5,40,00,000 28,04,84,500
43. We also find that the ld. CIT(A) has rightly deleted the amount of Rs .1,94,00,000/- ow ing to proving the details of all the parties w ith name and PAN number . On going through the cash sales and cash de posits in the month of December 20116, January 2017, February 2017, March 2017 which has reflected cash sales of Rs.32 lacs, Rs.1 .76 Cr., Rs.2.3 Cr., Rs.1.9 Cr. totaling to Rs .6.39 Cr. in a period of four months which has been accepted by the Revenue. Further, the comparison o f cash sales from the month of April 2016 to October 2016 reflected total cash sales of Rs.15.29 Cr. which was also accepted by the Revenue. Further, the total cash deposits in the F.Y. 2014-15 was Rs.27.53 Cr., F.Y. 2015-16 was Rs.40.50 Cr., F.Y. 2016-17 was Rs.32.39 Cr. and F.Y. 2017-18 was Rs.32.90 Cr. approximately. Hence, keeping in view the entire cash de posits of the assessee were a period of four years including the period before us, the cash de posits of Rs.2.63 Cr. as confirmed by the ld. CIT(A) cannot be upheld.
44. In the result, the appeal of the assessee is allowed and the appeal of the Revenue is dismissed.
Order Pronounced in the Open Court on 09/08/202 3.
Sd/- Sd/- (Yogesh Kumar US) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 09/08/2023 *Subodh Kumar, Sr. PS*