Sanjay Kumar Sharma Vs ITO (ITAT Jaipur)
Summary: The assessee, an individual carrying on the business of manufacturing and trading of brushes and abrasive products through proprietorship concern M/s R.P. Brushes, filed the return for AY 2022-23 on 12.10.2022 declaring total income of Rs. 12,03,370. The case was selected for compulsory scrutiny following a search and seizure action under section 132 of the Income Tax Act, 1961 conducted on 10.02.2022 in the case of the Baba Group. The assessee was not the searched person and no incriminating material or cash was found from his possession.
The Assessing Officer alleged, on the basis of screenshots, notings and electronic data stated to have been recovered from a third party’s mobile phone, that sales made by the assessee to M/s Baba Super Minerals were inflated from Rs. 17,70,000 to Rs. 38,27,000 and that the excess Rs. 20,57,000 had been returned in cash. The assessment under section 143(3) read with section 144B resulted in an addition of Rs. 20,57,000 under section 69A read with section 115BBE as unexplained money and a disallowance of Rs. 1,30,376 under section 40A(3) in respect of nine cash payments. The CIT(A) dismissed the appeal and confirmed both additions.
Before the Tribunal, the assessee contended that the entire section 69A addition rested on third-party material; that the sales were recorded in the books and supported by GST invoices, e-way bills, GST returns, ledger accounts and bank statements; and that the sale consideration was received through banking channels. It was also submitted that no cash trail or independent material connected the assessee with the alleged cash return, complete Annexure A and Annexure B were not supplied, and cross-examination of persons from the Baba Group was not provided. The assessee relied upon M/s Advance Strips Pvt. Ltd. and Shri Virendra Singh Ratnawat. The Revenue maintained that the search material specifically identified the assessee as a party from whom cash was received back and defended the section 40A(3) disallowance on the basis of the assessee’s own cash book.
