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IN THE INCOME TAX APPELLATE TRIBUNAL,
DELHI `SMC' BENCH, NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
ITA No. 194/DEL/2020
[Assessment Year: 2016-17]
NAVKAAR TRADERS, Vs. ITO, WARD-40(5),
3197, 232, GF, CIVIC CENTRE,
CHANDER NAGAR, MINTO ROAD,
TRI NAGAR, NEW DELHI 110 002
NEW DELHI 110 035
(PAN: AAFMN4226H)
[Appellant] [RESPONDENT]
Assessee by: Ms. Aakriti Dhwan, Advocate
Revenue by : Sh. C.P. Singh, Sr. DR.
ORDER
This appeal is filed by the assessee against the order of the Ld.
Commissioner of Income Tax [Appeals-14], New Delhi dated
28.11.2019 pertaining to assessment year 2016-17 on the
following grounds:-
1. On the facts and circumstances of the case, the
Ld. CIT(A) erred in confirming the addition to the
extent of Rs. 10,00,000/-.
2. On the facts and circumstances of the case, the
Ld. CIT(A) erred in not appreciating that the
entire cash sales have been disclosed by the
appellant u/s. 44AD of the Income Tax Act.
3. On the facts and circumstances of the case, the
Ld. CIT(A) erred in not appreciating that all the
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cash sales were below Rs. 2,00,000/-, which
does not require quoting of PAN.
4. On the facts and circumstances of the case, the
Ld. CIT(A) erred in not appreciating that the
entire sales including the cash sales were duly
reported in the VAT return and the appellant had
collected and deposited VAT on the same.
5. On the facts and circumstances of the case, the
order passed by the Ld. CIT(A) is based on
surmises, presumptions and conjectures as the
addition to the extent of Rs. 10,00,000/- was
confirmed solely on the basis of the pattern of
cash deposit followed by the appellant.
6. On the facts and circumstances of the case, the
Ld. CIT(A) has erred in confirming the addition of
cash sales to the extent of Rs. 10,00,000/-
despite the fact that the purchases during the
year have not been disputed.
7. On the facts and circumstances of the case, the
Ld. CIT(A) has erred in confirming the addition
without appreciating the bank statement, bank
book, details of cash deposited in the current
bank account, ITR, computation of income, stock
register, details of cash sales, vat return, creditor
confirmation, cash sales bills and other
documentary evidences submitted by the
appellant in support.
8. On the facts and circumstances of the case, the
Ld. CIT(A) has erred in not appreciating that the
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partnership was incorporated on 15.11.2015 and
the first purchase was made on 03.1.2016
thereby there could not have been any sales
effected prior to last quarter of 2015-16.
9. The appellant craves leave to add, amend or
alter any of the grounds of appeal.
2. The brief facts of the case are that assessee filed its return of
income electronically on 14.02.2017 declaring income of
Rs. 39,480/-. Subsequently, the case of the assessee was selected
under CASS for limited scrutiny to examine the issue of "Whether
the cash deposits has been made from undisclosed sources". The
assessee was engaged in the retail trading of jewellery. During the
year under consideration, the AO noticed that assessee has
deposited cash, amounting of Rs. 23,65,264/- in the bank account
maintained with Yes Bank. Statutory notices were issued to
assessee to furnish the details of cash deposits in the bank account
and detail of name, address and PAN of the parties to whom sale
was made in cash. In response, the assessee did not furnish any
detail of name, address and PAN of the parties. Further, a final show
cause notice dated 18.12.2018 was issued to substantiate the
identity, genuineness and creditworthiness of the transactions. In
reply of show cause, assessee submitted part submission which was
not found satisfactory according to the AO and he completed the
assessment at Rs. 24,04,740/- u/s. 143(3) of the Income Tax Act,
1961 (in short "Act") vide order dated 25.12.2018 by making the
addition of Rs. 23,65,264/- on account of unexplained income from
undisclosed sources. Against the assessment order dated
25.12.2018, assessee appealed before the Ld. CIT(A), who vide his
impugned order dated 28.11.2019 has partly allowed the appeal of
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the assessee by directing the AO to restrict the addition amounting
to Rs. 10,00,000/-. Aggrieved with the impugned order, assessee
appealed before the Tribunal.
3. Ld. Counsel for the assesseee submitted that Ld. CIT(A) erred
in confirming the addition to the extent of Rs. 10,00,000/- and not
appreciated that the entire cash sales have been disclosed by the
appellant u/s. 44AD of the Income Tax Act. It was further submitted
that Ld. CIT(A) also not appreciated that all the cash sales were
below Rs. 2,00,000/-, which does not require quoting of PAN. It was
further submitted that Ld. CIT(A) erred in not appreciating that the
entire sales including the cash sales were duly reported in the VAT
return and the assessee had collected and deposited VAT on the
same. It was further submitted that Ld. CIT(A) has sustained the
addition in dispute on surmises, presumptions and conjectures as
the addition to the extent of Rs. 10,00,000/- was confirmed solely
on the basis of the pattern of cash deposit followed by the assessee.
It was further submitted that Ld. CIT(A) has erred in confirming the
addition of cash sales to the extent of Rs. 10,00,000/- despite the
fact that the purchases during the year have not been disputed. It
was further submitted that Ld. CIT(A) has wrongly confirmed the
addition in dispute without appreciating the bank statement, bank
book, details of cash deposited in the current bank account, ITR,
computation of income, stock register, details of cash sales, vat
return, creditor confirmation, cash sales bills and other documentary
evidences submitted by the appellant in support. It was the further
submission that Ld. CIT(A) has erred in not appreciating that the
partnership was incorporated on 15.11.2015 and the first purchase
was made on 03.1.2016 thereby there could not have been any
sales effected prior to last quarter of 2015-16. In support of her
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contention, Ld. Counsel for the assessee filed a Paper Book
containing pages 1-72 having various documentary evidences
already filed before the lower authorities. In view of the above, she
requested that the addition sustained by the Ld. CIT(A) may be
deleted and appeal of the assessee may be allowed.
4. On the contrary, Ld. DR relied upon the orders passed by the
revenue authorities.
5. I have heard both the parties and perused the records especially
the orders of the authorities below and the submissions and the
Paper Book containing pages 1-72 in which the assessee has
attached the copy of assessment order dated 25.12.2018 for AY
2016-17 alongwith notice of demand and rectification request under
section 154 of the Act; copy of the order dated 28.11.2019 passed
by the Ld. CIT(A)-14, New Delhi; copy of the ITR and computation
for AY 2016-17; copy of bank statement; bank book; details of cash
deposited in bank; purchase details; credit confirmation; VAT
return; VAT Surrender Certificate; Cash Sales Bills and Stock
Register. I note that the entire cash sales have been disclosed by
the assessee u/s. 44AD of the Income Tax Act where the assessee
has shown gross receipts of Rs. 46,58,849/- including cash sale of
Rs. 23,65,264/-. It is also noted that the entire sales including the
cash sales were duly reported in the VAT return and the assessee
had collected and deposited VAT on the same. However, the Ld.
CIT(A) sustained the addition solely on the basis of the pattern of
cash deposit followed by the assessee. It is further noticed that cash
sales to the extent of Rs. 10,00,000/- during the year have not
been disputed, however, Ld. CIT(A) has not properly appreciated
the bank statement, bank book, details of cash deposited in the
current bank account, ITR, computation of income, stock register,
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details of cash sales, VAT return, creditor confirmation, cash sales
bills and other documentary evidences submitted by the assessee.
In view of above, I am of the considered opinion that assessee has
fully discharged its onus and prove the identity, creditworthiness
and genuineness of transaction by providing sufficient documentary
evidences and despite that Ld. CIT(A) has only given partly relief
and restrict the addition to the tune of Rs. 10,00,000/-, which is
not tenable in law and in view of the facts and circumstances of the
case, hence, the same needs to be deleted. Therefore, I hold and
direct accordingly and allow the grounds of appeal raised by the
assessee.
6. In the result, the Appeal of the Assessee is allowed.
The order pronounced on 17.03.2020. Sd/-
[H.S. SIDHU]
JUDICIAL MEMBER
Dated:17-03-2020
SRB
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A) Asst. Registrar,
5. DR ITAT, New Delhi
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