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ACIT, New Delhi vs. Goel Jewellers Overseas Corp, New Delhi - (Income Tax Appellate Tribunal) (24 Aug 2023)

Suspicion, however, strong it may be, the same cannot be accepted as final truth without bringing on record some tangible evidence


Direct Taxation

The assessee engaged in the business of manufacturing, export and retail sale of jewellery, filed its return of income for AY 2017-18 at a total income of Rs.19,27,857. The only issue involved in the grounds of appeal of the Revenue is regarding addition made by the A.O. under Section 68 of the Income Tax Act, 1961 to the tune of Rs. 3,89,52,097 which has been deleted by the CIT(A). Learned Departmental Representative submitted that the CIT(A) committed error in deleting the additions made under Section 68 of the Act.

During the assessment proceedings, the A.O. did not find difference in the stock/Inventory register or the stocks maintained by the assessee, no adverse recording or findings have been made vis-a-vis any difference noticed by the A.O. in the stock, thus, in the absence of any defect or infirmity in the stock data, the A.O. has no reason to disbelieve the sales. Though, the A.O. found certain suspicions features in the books in terms of sudden spike in cash sales as compared to earlier and succeeding years, but the A.O. was not able to point out any defect in the books of account or audit financial statement of the assessee. The suspicion, however, strong it may be the same cannot be accepted as final truth without bringing on record some tangible evidence.

Mere surmise cannot replace an evidence to prove the wrong doing if any by the assessee. Once, the A.O. accepts the books of accounts and the entries in the books of account are matched, there is no case for making the addition as bogus sales. The Hon'ble High Court in the case of Lal Chand Bhagat Ambica Ram Vs. CIT held that the assessee maintained the books of accounts according to the mercantile system and there was sufficient cash balance in its cash books and the books of account of the assessee were not challenged by the Assessing Officer. If the entries in the books of accounts are genuine andthe balance in cash is matching with the books, it can be said that the assessee has explained the nature and source of such deposit.

Fact that entries pertaining to cash sales and corresponding bank accounts have been duly reflected in the books of accounts, the stock position shown in the books of accounts have also been accepted by the A.O. and there is no allegation on the assessee of non availability of stocks or fictitious purchases and A.O. has also not rejected the Assessee's books of account under Section 145(3) of the IT Act, there is no ground to interfere with the observations and conclusion of the CIT(A). The Appeal filed by the Revenue is dismissed.


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