M/s. Rameshwar Chains and Jewellery Pvt. Ltd. vs DCIT

“1.

That the order passed by the Ld. CIT(A)-30, Delhi under the Central Charge is without jurisdiction and invalid and void ab initio, as the appellant's case has been decentralized and the PAN of appellant has been lying with the Company Ward-21(1), New Delhi.

2.

Without prejudice to the Ground of Appeal No. 1, that the order passed by the Ld. CIT(A) is bad in law and nature and liable to be quashed as

a)

The Ld. CIT(A) while passing the appellate order did not follow the principle of natural justice;

b)

The Ld. CIT(A) has re-iterated the finding of the AO and opinion has been formed through the already available facts;

c)

The Ld. CIT(A) has passed a non-speaking order as repetitions of facts do not form basis of any opinion;

d)

The adjudication of the Ld. CIT(A) does not contain adjudication on the submissions made by the assessee;

e)

The order passed by the Ld. CIT(A) suffers from cogent reasoning as no independent opinions and observations have been a part of the order;

f)

The submissions made by the assessee have nowhere been refuted by the Ld. CIT(A).

3.

That on the facts and circumstances of the case the Ld. CIT(A) has erred in confirming the disallowance of expenses to the tune of Rs.2,50,692/ on account of non-deduction of TDS, whereas the tax was duly deducted and deposited by assessee.

4.

That on the facts and circumstances of the case the Ld. CIT(A)-30 has grossly erred in confirming the additions of Rs.73,00,000/-, in respect of amount received from sister concern M/s Global Vision India Ltd., because;

a)

The genuineness of the advances received by the assessee company was duly established with the documentary evidences;

b)

The identity, genuineness and creditworthiness of the sister concern was never doubted for;

c)

The advances received were repaid back to the sister concern in next financial year through the proper banking channels but the same was not looked into;

d)

The addition made was based on the statement taken in a separate assessee namely M/s Vikas Chain & Jewellery Pvt. Ltd. without the opportunity of cross examination whereby the said party has received the funds from the same sister concern;

e)

The additions made in the case of other party i.e. M/s Vikas Chain & Jewellery Pvt. Ltd. has been deleted by the Hon'ble ITAT, Delhi.

5.

That on facts and circumstances of the case, the Ld. CIT(A)-30 has erred in confirming the additions of Rs.6,12,000/- made to the income of the assessee by holding the same as unexplained credits whereas the same was duly substantiated by the assessee but the same was not taken into consideration.

6.

The appellant craves leave for addition, amendment of any of the grounds of appeal. modification, alteration, amendment of any of the grounds of appeal.

“9.

Ground nos.3 & 4 Addition of ₹73,00,000/- Unexplained Receipt from Global Vision India Ltd.: The Assessing Officer (AO) added ₹73,00,000/-to the assessee's income, classifying it as an unexplained receipt purportedly received from M/s Global Vision India Ltd. (GVIL). The assessee argued that this amount was a legitimate business reccipt tied to commercial transactions. However, the AO disallowed this claim due to a lack of supporting evidence and inconsistencies in the financial records of both parties.

9.1

The assessee failed to substantiate the receipt with any documentation, despite its substantial value. In a standard business transaction of this scale, one would expect:

•

A contract detailing the terms,

•

Invoices for goods or services,

•

Delivery proofs or service confirmations,

•

Bank statements reflecting the funds' movement, or

•

Correspondence verifying the deal.

None of these were provided. Additionally, the AO's efforts to confirm the transaction with GVIL yielded no response, casting further doubt on its legitimacy.

9.2

The assessee recorded ₹73,00,000/- in its balance sheet under "Advance from Customers" for the relevant year. This amount was split between two units:

•

M/s Vikas Diamond Co.: ₹28,00,000/-

•

M/s D. C. Exports: 145,00,000/-

When pressed for details such as customer identities, transaction specifics, confirmation letters, bank statements, or tax returns-the assessee submitted only an unverified bank statement from GVIL showing a credit entry, which offered no meaningful clarification.

9.3

GVIL's financial statements raised additional concerns. Its audited profit and loss account for the assessment year 2005-06 showed no activity in gold jewellery trading, despite the assessee (a jewellery business) claiming a related transaction. GVIL reported a mere interest income of ₹23,342/-.These discrepancies suggest GVIL lacked the capacity or business scope to support such a large transaction.

9.4

The AO recorded a statement from Sh. Praveen Jain, GVIL's working director, under oath during proceedings under section 153A. His responses revealed: GVIL was incorporated 2.5 years prior, and he joined later, with limited insight into its earlier finances. He could not clarify shareholding details or profit-sharing arrangements. He displayed a general lack of awareness about GVIL's operations, undermining the transaction's credibility.

9.5

The assessee bore the burden of proving the receipt's legitimacy and its connection to disclosed business activities. Its failure to provide commercial justification, documentation, or third-party confirmation combined with GVIL's inconsistent records and the director's vague testimony supported the AO's conclusion that the ₹73,00,000/- was unaccounted income. In view of above ground of appellant is dismissed.

10.

Ground no 5 & 6: Unexplained Cash Credit: The department seeks to impose tax on an amount of Rs. 6,12,000/-, which has been classified by the Assessing Officer (AO) as an unexplained cash credit under Section 68 of the Income Tax Act. The assessee contends that this amount represents a legitimate receipt from a trading transaction with an individual named Tapas Manna Karigar, supported by certain documentary evidence.

10.1

The core issue revolves around a credit entry of Rs. 6,12,000/-in the assessee's books of accounts, which the department alleges to be unexplained. The assessee claims this amount stems from a genuine transaction with Tapas Manna Karigar, described as both a customer and a karigar (worker), and asserts that supporting documents substantiate its legitimacy. The department, however, challenges the authenticity and source of this credit, leading to its classification as taxable income.

10.2

Under Section 68 of the Income Tax Act, any sum credited in the assessee's books of accounts, for which the nature and source are not satisfactorily explained, may be treated as the assessee's income. The key points of the legal framework are. The burden of proof lies with the assessee to demonstrate the genuineness of the transaction, including the identity and creditworthiness of the party involved (in this case, Tapas Manna Karigar) and the source of the funds. If the assessee fails to provide a satisfactory explanation, the department is empowered to add the amount to the assessee's taxable income. The department must have a reasonable basis to invoke Section 68, but once applied, the onus shifts entirely to the assessee to disprove the allegation.

10.3

The department's decision to tax the amount igrounded in the following observations:

Non-Appearance of Tapas Manna Karigar: The assessee promised to produce Tapas Manna for verification during the assessment proceedings but failed to do so. This raises doubts about the credibility of the claimed transaction.

Lack of Creditworthiness Evidence: The assessee did not provide critical financial documents, such as Tapas Manna's bank statements or Income Tax Return (ITR), to establish his capacity to advance a sum of Rs. 6,12,000/-.

Inadequate Explanation: The assessee's assertion that Tapas Manna acted as both a karigar and a customer does not inherently prove his financial ability to engage in such a significant transaction.

Procedural Context: While the AO could have summoned Tapas Manna under Section 131 of the Act, the absence of such action does not absolve the assessee of their responsibility to substantiate the credit under Section 68.

These factors collectively support the department's suspicion that the amount is an unexplained cash credit.

10.4

The assessee submitted several pieces of evidence to defend the transaction, but these fall short of meeting the requirements under Section 68:

•

Books of Accounts and Bank Statements: The recording of the transaction and payment via cheque demonstrate its occurrence but do not confirm the legitimacy of its source or Tapas Manna's creditworthiness.

•

Sale Bill and VAT Payment: These documents verify the transaction's commercial nature but do not address the financial capacity of Tapas Manna to provide the funds.

•

Subsequent Transaction: The assessee referenced a sale to Tapas Manna in the following assessment year, but this is irrelevant to proving the legitimacy of the current credit entry.

•

Offer to Produce Tapas Manna: While the assessee expressed willingness to present Tapas Manna, their failure to follow through during the proceedings undermines this claim.

10.5

The evidence provided by the assessee establishes the existence of a transaction but fails to discharge the burden of proving its genuineness or the source of the funds, as required under Section 68.

Based on the analysis it is clear that the assessee has not adequately explained the nature and source of the Rs. 6,12,000/- credit, nor demonstrated Tapas Manna's creditworthiness, as mandated by Section 68.”