2023 (12) TMI 391 - AT - Income Tax

ITAT allows appeal on Section 69 unexplained investments, rejects presumption-based additions without recorded statement

ITAT Delhi allowed assessee's appeal regarding addition u/s 69 for unexplained investments, holding that treating account 'AP' as belonging to assessee ... Addition u/s 69 - unexplained investments - Computation of peak unaccounted cash - CIT(A) held that the fact of unaccounted receipts and payments cannot be denied, since all the unaccounted transactions are in cash, the possibility of cash being rotated cannot be ruled out, hence, the benefit of peak is required to be given in the case of the assessee - Primary reason for treating the account code named 'AP' in the Hazir Johri software seized during the course of search action on Jindal Bullion Ltd., is that the banking transactions between Priyanka Jewellers/ Sh. Anoop Soni and JBL group are reflected in the Hazir Johri data as well as in the Tally data. This according to the Assessing Officer alone is sufficient evidence to establish that the accounts maintained under the names 'AP' in Hazir Johri software pertained to the assessee - HELD THAT:- The entire addition by treating the account AP as belonging to Anoop Soni has been made on the basis of presumption drawn and the statement of Shri Parul Ahluwalia. However, statement of the assessee has not been recorded on this issue either at the time of search, post search inquiries or even during the assessment proceedings. A careful examination of the account AP as reproduced in the assessment order would reveal that in the remarks column various acronyms have been used against different transactions such as JD, KCX, RBG Overseas, KMTY, Oven AJ, JBL Coins, Oppo Mobile, Satia, Ishaan, Anshul, Vinod 8676, Guddu etc. These abbreviations show that the transaction recorded is ne ither through bank nor cash because since specific acronyms have been used, these transactions cannot be inferred to be pertaining to the assessee even if it is presumed with account AP be longs to the assessee. Hence, keeping in view, the entire factual matrix of the case, we hold that no addition is warranted in the case of the assessee. In the result, the peak credit theory set out by the ld. CIT(A) would also be come infructuous. The appeals of the assessee on this ground are allowed. Addition on sale of gold - assessee argued that notwithstanding anything, if the gold is considered to be sold, the same ought to have been purchased by the assessee. Hence, only the profit needs to be taxed - HELD THAT:- The argument of the ld. AR is in tune with the regular business practice. Hence, the AO is directed to compute 2% on the said sale of gold. Addition u/s 69 - HELD THAT:- CIT(A) determined amount of unaccounted receipts also and accorded benefit of unaccounted receipts - Hence, we decline to interfere with the order of the ld. CIT(A). Addition of Trail Balance Profit - transactions are recorded in code names - CIT(A) confirmed the addition holding that the examination of the seized document would reveal that it is a single page of the printout, it is a part of the trial balance as on 03.01.2017 of multiple accounts which are named in the first column - HELD THAT:- Having gone through the entire factum, we hold that the credit balance on a single page without bringing any primary or corroborative evidence of conducting the business of “dabba” trading such as broker, terminal, computer back up, running account or any other evidence cannot be treated as profit earned by the assessee. Since, the document proves payment of cash, the addition is sustained to the tune of Rs. 1,16,365/-. Issues Involved:1. Addition based on Hazir Johri software and unexplained investments under section 69.2. Unaccounted sale of gold.3. Addition under section 69 for unexplained investments in gold and silver.4. Addition based on trial balance for dabba transactions.5. Addition for unexplained cash and jewelry.6. Addition for unexplained investment in silver.Summary:1. Addition based on Hazir Johri software and unexplained investments under section 69:The assessee contested the addition made by the AO based on the Hazir Johri software seized during a search on Jindal Bullion Ltd. The AO treated the ledger account titled 'AP' in the software as belonging to the assessee and made additions under section 69. The CIT(A) reduced the addition by applying the peak credit concept. The Tribunal found no direct evidence linking the assessee to the ledger account 'AP' and held that the addition was based on presumptions. Consequently, the Tribunal allowed the assessee's appeal and dismissed the revenue's appeal.2. Unaccounted sale of gold:During the search, documents showing 'out gold' were found, leading to an addition for unaccounted sale. The Tribunal directed the AO to compute the profit at 2% on the said sale, aligning with regular business practice.3. Addition under section 69 for unexplained investments in gold and silver:The AO made additions based on notings in the impounded documents. The CIT(A) provided partial relief by considering unaccounted receipts. The Tribunal upheld the CIT(A)'s decision for unexplained investments in gold and directed the AO to compute the profit at 2% for both gold and silver.4. Addition based on trial balance for dabba transactions:The AO added Rs. 54,80,828/- as income from dabba transactions based on a trial balance found during the search. The CIT(A) confirmed the addition. However, the Tribunal found no corroborative evidence linking the assessee to dabba trading and sustained the addition only to the extent of Rs. 1,16,365/- based on cash payment evidence.5. Addition for unexplained cash and jewelry:During the search, cash and jewelry were found at the assessee's residence. The Tribunal confirmed an addition of Rs. 46,010/- for unexplained cash, considering the assessee's explanation for the source of cash.6. Addition for unexplained investment in silver:The assessee did not press this ground due to the low quantum of the addition. The Tribunal dismissed this ground.Conclusion:The Tribunal partly allowed the assessee's appeals and dismissed the revenue's appeals, providing relief on various grounds while sustaining some additions based on available evidence.