M/s. R.P. Enterprises vs ACIT

PER SATBEER SINGH GODARA, JM

These assessee’s and Revenues’ cross appeals ITA Nos.2609 & 2724/Del/2024 for assessment year 2017-18, arise against the Commissioner of Income Tax (Appeals)-23 [in short, the “CIT(A)”], New Delhi’s order dated 26.03.2024 passed in case no. CIT(A), Delhi -23/10213/2019-20, involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case files perused.

It transpires during the course of hearing that both the assessee’s and the Revenue’s substantive grounds raised herein are very much inter connected ones. This is for the precise reason that the learned Assessing Officer appears to have framed his section 143(3) assessment in the assessee’s case on 10.12.2019, inter alia, making unexplained cash credits addition of Rs.36,92,61,100/- and Rs. 12 lakhs followed by section 69C bogus purchases disallowances of Rs.38,51,59,901/- as well as alleged advances from customers treated as unexplained to the tune of Rs.10,44,720/-; respectively. The assessee preferred its lower appeal wherein the learned CIT(A) has granted part relief i.e. the aforesaid section 69 addition of Rs.36,80,61,100/- stands upheld, his peak credit has been declined and section 69C bogus purchases disallowances (supra) Rs.38,51,59,901/- stands deleted. It is in this factual backdrop that both the parties have filed their instant cross appeal before the tribunal.

We have given our thoughtful consideration to the assessee’s and the Revenue’s respective submissions. We first of all make it clear that there is not much a dispute between the parties about the assessee’s regular business activity i.e. engaged in sale and purchase of gold/silver jewellery bullion is not in issue. And that its business income of Rs.2,07,76,240/- derived therefrom and declared under section 139(1) of the Act has been duly accepted. Now comes the aforesaid issue(s) of the assessee’s alleged unexplained cash deposits/credits as well as the corresponding bogus purchases along with the advances from customers as well as the remaining addition of Rs.12 lakhs (supra). We wish to emphasize here that the assessee’s relevant books of account had nowhere been specifically been rejected by learned lower authorities by taking recourse of section 145(3) of the Act. The fact also remains that it could not plead and prove the necessary factual reconciliation and verification of all the corresponding purchases as well carried out in the relevant previous year to the entire satisfaction of the learned Assessing Officer as well.

It is in this factual backdrop that we are of the considered view that a lumpsum addition in the assessee’s hands amounting to Rs.1,50,00,000/- in the given facts would take care of all of its alleged unexplained cash credits over and above that declared in the relevant books subject to a rider that the same shall not be treated as a precedent. Necessary computation is directed to follow as per law. We further wish to clarify here that the impugned addition of Rs.1,50,00,000/- shall take care of all the relevant heads herein i.e. unexplained cash credits, bogus purchases as well as advances from customers etc. The Revenue’s instant appeal ITA No.2724/Del/2024 fails and the assessee’s cross appeal ITA No.2609/Del/2024 is partly accepted in very. No other ground or argument has been raised at the assessee’s behest.

So far as assessee’s assessment under section 115BBE is concerned, we quote S.M.I.L.E. Microfinance Ltd. Vs. ACIT, W.P. (MD) No.2078 of 2020 & 1742 of 2020, dated 19.11.2024 (Madras) that the impugned statutory provision would come into effect on the transaction done on or after 01.04.2017 only. The assessee is accordingly directed to be assessed under the normal provision as per law.

This assessee’s appeal ITA No. 2609/Del/2024 is partly allowed and the Revenue’s appeal ITA No. 2724/Del/2024 is dismissed. A copy of this common order be placed in the respect case files.