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2016 (1) TMI 1085
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....g addition of Rs. 50,000/- only, though the fact is that the rejection was upheld on the basis of seized documents. 2. On the facts and in the circumstances of the case, the ld. CIT(A), Ajmer has erred in not taking cognizance of various discrepancies pointed out by the AO. 3. On the facts and in the circumstances of the case, the ld. CIT(A), Ajmer has erred in not applying gross profit rate of earlier years i.e. A.Y. 2004-05 to 2005-06 which formed a sound basis of adopting gross profit rate of 30% in the current year.'' Assessee's common ground No.1 for AY 2008-09 & 2009-10 1. The assessment order framed by the Learned Assessing Officer has erred in passing the order u/s 153A/153C/143(3) of the Income Tax Act, 1961 in void abinitio deserves to be quashed because no incriminating documents were found during the course of search and no proper satisfaction was recorded. Assessee's common Ground No. 2 for AY 2008-09 and 2009-10 1. Under the facts and circumstances of the case the Learned CIT(A) has erred in sustaining the addition of Rs. 15,63,530/- by applying GP rate of 30.36% as against 15.55% for AY 2008-09 and addition of....
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....rded by issuing notice u/s 143(2) on 22.06.2010 and subsequent letters dated 21.01.2011, 12.04.2011, 21.04.2011. However during the pendency of these proceedings the Learned Assessing Officer issued notice u/s 153C on 19.07.2011 without there being any satisfaction recorded in the assessments of Modi group and there was no assessment in the case of said Shri Govind Ram. The purported satisfaction for issuing notice u/s 153C referred to by ld. AO in para 4.2 on page 2 and 3 of the assessment order is as under - "Satisfaction note for initiating proceeding u/s 153c of the IT Act In the case of M/s Jypore Jewellery manufacturing Pvt. Ltd.,1&2,Ratan Shikha, Near Gokkle Park, Janta Colony, Jaipur PAN -AAACJ4640C for the A.Y.2004-05 to 2009-10. A search was conducted in the case of Private Vaults Group, jaipur on 08/09/2009 based on search in the case of sh. DD. Modi Group. Certain Lookers in private Safe Deposit Vaults were identified which were suspected to be belonging to this group. The warrant was issued in the name of locker owners i.e. Shri Govind Dev and Shri Ram, 26, Bani Park, Jaipur on the basis of address available with the vault operator. The D.D. Modi Group disowne....
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....oup as contemplated by sec. 153C. Similarly there was no assessment in the case of Shri Govind Dev as the 153A proceedings were dropped in that case, consequently there is no valid satisfaction in this case also. (iii) The new satisfaction about initiating 153C satisfaction is silent regarding the pending proceeding initiated u/s 153A with the issue of notice on 29.12.2009 in the case of the assessee. (iv) The proceedings though are initiated u/s 153C the assessments have been completed u/s 153A rws 143(3) as is clear from the respective orders of ld. AO and CIT(A). (v) In these circumstances the Learned Assessing Officer erred in issuing notice u/s 153C when the proceedings u/s 153A were already pending. Besides ld. AO has erred in holding that the notice issued u/s 153C satisfy the terms laid down in this behalf. (vi) The proceedings are continued u/s 153C but the assessment is completed u/s 153A despite consciously dropping the notice u/s 153A. (vii) Assessment u/s 153A and 153C are totally different and mutually exclusive, an assessment cannot be framed in continuation of both notices and similarly cannot be concluded u/s 153A if pro....
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....illed no proceeding can be initiated. The ratio of the aforesaid cases makes it clear that in the cases where conditions precedent for issuing notice u/s 153A or C are not fulfilled, they are liable to be quashed. Since in assessee's case the Learned Assessing Officer erred in assuming valid jurisdiction u/s 153A or C, the impugned assessments purporting to be completed u/s 153A are ab-initio void and deserve to be quashed. 2.5 Apropos merits ld. Counsel contends that regular returns for all the impugned years were filed and regular assessments were framed by making some routine GP additions which were reduced or deleted in appeals. From the above referred locker papers reflecting regular unaccounted transactions mentioning details of sales and purchases along with the stock of unaccounted jewellery were found. During the course of impugned assessment proceedings in order to determine the profits from unaccounted papers, assessee prepared complete accounts of sale, purchases, P &L a/c and determined the unaccounted business. Same were produced and verified by ld. AO and no inconsistency or discrepancy is pointed out therein. Thus on the basis of papers and jewelry stock found....
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....r than regular books but the comparative net profits are more since there is no expenditure. It is further contended that: (a) The unaccounted sales during the sale period are much higher than the regular sales, which is solely due to factor of higher and faster turnover and lesser GP. (b) It is further noticed that although GP is better in regular sales but ultimately the regular sales disclose very less NP whereas unaccounted sales the GP is lower but average net profit rate is around 8.68% which supports the assessee's contentions. (c)The GP rate is comparatively low firstly on the ground that turnover is just the double. Secondly the assessee compromises in the profit in the unaccounted sales as the expenses on unaccounted sales are almost negligible and therefore at the end net profits are more. Reliance is placed on: (i) Abhishek Corporation Vs. Deputy Commissioner of Income Tax 63 TEJ 651 (Ahd) It was held that only net profit rate can be applied on unaccounted sales/receipts. (ii) Further in the case of Moolchand Kumawat & sons Vs. DCIT Ajmer M.A. 93/JP/2008 out of ITSSA No. 24/JP/2005 dated 20.02.2009 Taxworld ....
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.... (ii) Assistant Commissioner of Income Tax Nitin Mukesh Mathur (2004) 88 TTJ 220 (Mum) (iii) Bajrang Lal bansal vs. DCIT (2005) CIT 94 TTJ 1071 (Del) (iv) CIT vs. C.L. Khatri (2005) 197 CTR 44 (MP) (v) Jagdish Duggal vs. Assistant Commissioner of Income Tax (2009) 24 DTR 174 (Chd. Trib) (vi) Sukh Ram vs. Assistant Commissioner of Income Tax (2006) 99 ITD 227 (Ahd.) (vii) Anand Autoride ltd. vs. Jt. CIT (2006) 99 ITD 227 (Ahd) (viii) Kantilal Prabhudas Patel vs. Dy. CIT (2005) 93 ITD 117) (Indore TM) (ix) Smt. Rajrani Gupta vs DCIT (2000) 72 ITD 155 (Mum) (x) Dr. R.M.L. Mehrotra vs. Assistant Commissioner of Income Tax (1999) 64 TTJ 259 (All) 2.9 It is further submitted that following judicial precedents have held that incriminating material should be applied in totality and not on piece meal basis to favor the revenue, the seized evidence is to be accepted in totality in the interest of natural justice. The concept of Heads I win and tails you lose is alien to the principles of income tax law. (i) CIT vs. Indio Airways Pvt Ltd (2012) 79 DTR 289 (Del) (ii) Vivek Kumar Kathotia vs. DCIT (2013....
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....n additional income of Rs/- 25 lac on being pointed by the survey party that there was under statement of stock. Assesses did not declare such income in the IT return A.O. made addition of Rs. 25 Lac. Not justified. (c) Kailash Ben Mohanlal Choksi v/s CIT (2008) 14 DTR (Guj) 257 It is too much to give credit to a statement recorded at midnight where a person may not be in a position to make any correct and conscious discloses" Disclosure statement recorded at odd hours cannot be considered to be a voluntary statement. . (d) Contech Transport Service (P) ltd Ors V/s ACIT (2009) 19 DTR 191 (Mumbai) 28-11-08 No addition can be made only on the basis of admission in statement V/s 132 (4) (e) Chitra Devi V/s ACIT (Jodhpur Branch) (2002) 77 TTJ (Jd) 640 Statements recorded during search are not evidences found during search. Addition cannot be made on the basis of statement alone. (f) Ajit Chintaman Karve V/s I.T.O. (2009) 311 ITR (AT) 66 (Puna) ITAT Branch That merely because an offer was made having no cogent basis or approval of law that should not stop a taxpayer from correcting his mistake. It was the duly of th....
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....ssessing Officer and no serious defect was pointed out. The Learned Assessing Officer is wrong in observing that no stock register was maintained. The assessee has maintained quantitative details of stock, which was also produced. When quantitative details have been maintained, no incriminating material was found and no serious defect are pointed out ld. AO was not justified in reviewing the trading result and estimate the regular GP which was already subject matter of appeals. The defects pointed out by the Learned Assessing Officer are superficial and have no significance on profit earning. In the absence of specific defect there was no justification with the Learned Assessing Officer for rejecting the books of accounts. The provisions of section 145(3) have therefore been wrongly invoked. 2.13 It is further contended that rejection of accounts is no ground for application of higher GP without any basis as rejection of books does not give a license for making presumptive trading addition unless something specific is pointed out. The Learned Assessing Officer neither pointed out any serious defect in the books of accounts nor any comparable case for applying GP rate of 35%. Rel....
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....ent which includes rejection thereof and estimation of GP. 2.16 Ld. Counsel in rejoinder contends that all the facts were in the knowledge of ld. AO, assessee cannot guide him in adopting a particular provision as neither it is under obligation to do so, nor the AO will comply with assessee's guidance. Therefore, it was the statutory duty of ld. AO to adopt proper legal provisions. His onus of choosing appropriate legal provisions for initiation, continuation and concluding of assessments cannot be shifted on assessee. Besides if the proceedings are conducted on wrong jurisdictional premise, they are untenable and void proceedings, as held by catena of judicial proceedings. In the name of search proceedings AO cannot review his own orders when no incriminating material qua the assessee's regular books is found as there was no search on assessee. Qua unaccounted turnover when on the basis of incriminating material itself, accounts are prepared and profits are determined, it cannot be summarily discarded and additions made on wrong comparison based on gross presumptions. 2.17 Apropos surrender, assessee has cited various case laws to the effect that an unverified surrender can ....