TaxTMI 
TaxTMI 
2012 (11) TMI 1136
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....iew of the matter the assessee maintained the books of account in the same manner and same fashion as adopted from the year of inception of the appellant firm which is a well recognized method of accounting and also accepted by the department year after year, therefore both the lower authorities while framing and confirming the orders/additions ignored the principles of consistency, hence the addition/ disallowances made are confirmed and unwarranted. 3. That in any view of the matter order dated 28.12.2011 passed under Section 153A(b) of the Income Tax Act vide which income as determined at Rs. 24,27,32,281/- is at all not correct as the same is not based on any incriminating material found in the course of search but based on presumption and surmises and wrong inferences drawn by ignoring all the Seized annexures which includes subsidiary books though entries were co-related with each book, hence the two lower authorities are wrong in making and maintaining the addition. 4. That in any view of the matter the undisclosed income was not determined on the basis of any search material and the Assessing officer simply proceeded as if it is a normal assessment and not....
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.... the Annexure P-11 & P-13. Though the lower authorities verified the facts but ignored the truth of the verification and even no finding was recorded in their orders, hence the addition is unjustified and illegal in facts and circumstances of the case. 9. That in any view of the matter after submission of two sets of voluminous paper books before the Commissioner of Income Tax (Appeal) which contain written submission and chart explaining details of the facts of all the columns of all the aforesaid annexures, based on which a remand report was also called from the assessing officer. Even before submitting the remand report the concerned Assessing Officer examined and verified all the annexure together at a time in presence of appellant on 23.07.2012 and he found that the entries of the annexures correlate with each other and he admitted this fact in his order sheet also but the learned Commissioner of Income Tax (Appeal) failed to consider the same and even failed to make any finding in this regard in his order, hence the addition is wrong and unwarranted. 10. That in any view of the matter allegation made by the assessing officer that the partners were indulged i....
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....ant was given any chance at any time to confront him nor his statement was recorded in presence of the appellant, therefore the entire concocted theory for making and confirming the addition is illegal and actions of the assessing officer as confirmed by the CIT(A) is also incorrect and unwarranted. 14. That in any view of the matter the alleged profit of Rs. 2,22,58,483/- as worked out by the assessing officer at page 6 & 7 of the assessment order is only an artificial and imaginary figure which has no value in the eyes of law specially when declared rental receipts from cold storage business have been accepted, therefore the two lower authorities were wrong in making and confirming the addition. 15. That in any view of the matter the learned Commissioner of Income Tax (Appeals) failed to give cognizance to the contents of the affidavit of the partner, past record of the appellant and failed to consider principle of consistency, disclosed rental receipts has been accepted year after year, no verification was done by the constituents kept their potatoes in cold storage, no discussion by the Commissioner of Income Tax (Appeals) on the explanation dated 22.08.2012, ....
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....d of appeal or modify/ amend or withdraw before the hearing or at the time of hearing of appeal. 2. The early hearing was granted in the matter while disposing of the stay application No. 01/Alld./2012 filed by the assessee. 3. We have heard the ld. Representatives of both the parties, perused the findings of authorities below and considered the material on record. 4. Briefly, the facts of the case are that the assessee is a partnership firm engaged in cold storage business with its head office at Sahson. The branches of the assessee are M/s. Bhola Sheet Grah at Sahson and M/s. Kesarwani Sheetalaya at Soraon. Action u/s. 132(1) was taken on 27.08.2009 in group cases of Keserwani Zarda Bhandar, Sahson, Allahabad and its partners. The AO framed the assessment u/s. 153A vide order dated 28.12.2011 for assessment year under appeal, i.e., 2008- 09 and made several additions, which were challenged before the ld. CIT(A). The assessee raised the additional grounds of appeals as well as sought admission of additional evidences before the ld. CIT(A), which were admitted by the ld. CIT(A) for hearing of appeal. 5. Though several grounds have been raised in the appeal of the ....
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....he cash at hand at Rs. 64,70,642.65/-, meaning thereby the cash amounting to Rs. 37,30,709.79/- is unexplained. The A.O. has observed that the excess cash shown in the balance sheet may either relate to bogus liability or unexplained cash from undisclosed source introduced by the partners. The A.O. further remarked that the assessee has not maintained regular books of a/c in the shape of cash book, ledger etc. The search & seizure action did not result in recovering any books of a/c from the business premises of the firm or from the residential premises of the partners of the firm. The said regular books of a/c were not found even in the premises of Shri Sanjay Gupta, FCA whose places were covered u/s 133A of the I.T. Act. On the strength of above discussion, the A.O. has treated Rs. 37,30,710/- as bogus liability and has made the additions u/s 68 of the I.T. Act. 7.2 The assessee challenged the addition before the ld. CIT(A) and the submissions of the assessee are reproduced in the appellate order as under : "That the assessing officer has discussed the facts in para-3 of the assessment order. The manner and basis of making the addition is highly objectionable in so far as t....
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....e examined and found in order. In the appellant's case the department has allowed auditor's fee and accounting expenses year after year. Thus simply because in the course of search operation since the books were not taken by the search party although available in the business premises of the appellant that does not mean that the Assessing Officer is free to make any kind of allegation according to her own test. That the assessing officer vide notice dated 28.02.2011 u/s 142 (1) a query no. 06 was made which is reproduced as under : "No books of account of firm have been found and seized during the course of search/ survey operation of the group, in the absence of books of account you are required to justify the books result shown in the audit final account" That in compliance to the query no. 06 reply was given in following manner : That thus is the light of addition made above reply was given on the basis of query hence there is no justification to draw a different view. That in this case a search was conducted on 27.08.2009 and before the date of search income tax return for the assessment year in question was already on record of the department along with the ....
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....of cash in hand as on 31.03.2008 as appearing in audit report which is as under : Kesarwani Sheetalaya Sahson, Allahabad 13,77,025.46 Kesarwani Sheetalaya Soroan, Allahabad 22,97,647.48 Bhola Sheetgrih Allahabad 27,95,969.77 TOTAL 64,70,642.65 That after considering the closing balance the assessing officer has deducted a sum of Rs. 27,39,932.86 as balance appearing in rough, dumb and waste document. The balance on such rough paper relates to different dates and so he deducted the said amount of Rs. 27,39,932.86 from the closing balance as per audit report as on 31.03.2008 and made addition to the extent of Rs. 37,30,732.00 (Rs. 64,70,642.65 - 27,39,932.00). For such artificial and irrelevant working the assessing officer stated in the order "It is established on the basis of above mentioned annexure that assessee has raised either bogus liability or unexplained cash introduced by partners by Rs. 37,30,732.00 and added to the income of assessee u/s 68 of Income Tax Act". In the above observation the word "either" is very important which suggests that the addition was made with negative mindset and is clear cut case of confusion in assessing offi....
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....he cash in hand with impounded/seized books of accounts of one of left branch of assessee. In the order sheet entry dated 18.10.2011, while examining the seized papers, the then assessing officer has clearly remarked as not explained for said annexure A-3/1 on which assessee's FCA has signed and noted. Again, as per further order sheet entries, assessee failed to correlate the seized paper with seized books of accounts. Assessee was asked by the undersigned during the course of discussion on 25.07.2012 to verify the above paper with the books of accounts. But on 25.07.2012, an adjournment was sought for 26.07.2012 and on 26.07.2012, another adjournment was sought for 27.07.2012. On 27.07.2012 also no one attended nor written reply was filed. In the circumstances, I have no option but to justify the addition by my predecessor amounting to Rs. 37,30,710/-." 7.4 The assessee further filed his rejoinder to the remand report filed by the AO, which is reproduced in the appellate order as under : "(a) That with regard to para-9 C of the remand report, it is submitted that in the remand report the assessing officer has tried simply to cover the lapses for not verifying the facts. ....
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....se in cash in hand as per A.O. during F.Y. 2007-2008. This is not the figure of cash balance as considered by the learned assessing officer as all he aforesaid figure/ details are mentioned in the referred annexure itself. (c ) That, Sir, actually, while comparing the cash in hand as mentioned in the aforesaid documents annexure with the books of accounts, the learned assessing officer has taken the figure of cash in hand of all the three units from the audit balance sheet for F.Y. 2006- 2007 relevant to A.Y. 2007-2008 which is Rs. 12,37,518.06 and then deducted the cash balance as on 11.03.2008 and 03.03.2008 from Rs. 39,77,450.93 which comes to Rs. 27,39,932.86 (Rs. 39,77,450.92 - 12,37,518.06). In this way the closing cash balance as on 31.03.2008 at Rs. 64,70,642.65 of three units is being compared with Rs. 27,39,932.86 and by such working he added the difference of Rs. 37,30,732.00 (Rs. 64,70,642.65-27,39,932.06) which is totally incorrect and thus the entire working of assessing officer is against the principles of accountancy and done in haphazard manner. In this regard it is also necessary to mention here that only cash in hands of two units of the appellant firm should ....
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....njustified." 7.5 The ld. CIT(A), considering the submissions of the assessee and findings of the AO, confirmed the addition and also directed that since the aforesaid amount is not added in the computation of income, therefore, it is to be added now. Findings of the ld. CIT(A) are reproduced as under : "6.2 Decision: The appellant's first contention is that the loose paper marked as Annexure A-3/1 page no. 107 is nothing but a rough, waste and dumb document hence liable to be discarded. I do not agree with this submission of the appellant because the said loose paper was found from the premises of the assessee. The description of this particular loose paper pertains to the cash receipts and the cash expenditure of three branches of the assessee concern. There are definite figures, definite dates and definite mention of branches. There is also definite mention of cash deposit in the bank. With these definite descriptions how can the assessee deny the significance and the relevance of entries on the above loose sheets. There is no doubt about the fact that the entries pertain to the assessee. The presumption as envisaged u/s 132(4A) is not successfully rebutted by the assess....
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....ore, Section 68 cannot be invoked. The reason is very clear simply because the A.O. has herself denied the maintenance of any books of a/c by the assessee. If there are no books of a/c, the presumption of any entry corresponding to excess cash of Rs. 37,30,710/- can also not be substantiated. Therefore, within the inherent powers of the CIT(A), I correct the section under which the addition is made. The addition is confirmed u/s 69A of the I.T. Act. Accordingly, the above grounds of appeal are dismissed. Though the A.O. has made the addition in the body of the assessment order, she has forgotten to add amount of Rs. 37,30,710/- in the computation of income. Vide order-sheet entry dated 31.07.2012, the A.Rs. were asked to show cause as to why amount of Rs. 37,30,710/- should not be added in the computation. As a matter of fact, this mistake was noticed during the course of appellate proceedings, the appellant has not objected to the addition of the above amount in case it is upheld by my decision. I, therefore, enhance the income of the assessee u/s 251(1)(a) r.w.s. 251(2) of the I.T. Act by Rs. 37,30,710/-." 8. The ld. Counsel for the assessee reiterated the submissions made ....
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....ct, which the ld. CIT(A) has rightly held not applicable to the facts of the case. The ld. CIT(A), however, applied the provisions of section 69A of the IT Act while confirming the addition in this case. Section 69A of the IT Act reads as under : "Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year." 10.1 Before applying the above provision, it is necessary for the AO to record findings of fact that the assessee is found to be owner of anymoney and such money is not recorded in the books of account, if any, maintained by him for any source of ....
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....r a case of addition u/s. 68 of the IT Act nor section 69A of the IT Act. We, therefore, do not subscribe to the view of ld. CIT(A) in sustaining the addition. As noted above, it is a case of lesser cash in hand as per seized paper as compared with the books of account in which the assessee has shown more cash in hand. Therefore, the authorities below were not justified in holding it to be unexplained money not recorded in the books of account of the assessee. At the most, the authorities below could have presumed that the assessee has spent the difference of amount in question somewhere as per cash in hand as per books of account and lesser cash as per seized documents, but that would also not suffice to make addition under any of the above provisions because every person is at liberty to spend their own amount anywhere as per his choice because the assessee has not claimed any deduction in this case. Examining the case of the assessee from every possible angle, we find the addition of Rs. 37,30,710/- wholly unjustified. We, accordingly, set aside the orders of the authorities below and delete the addition of Rs. 37,30,710/-. These grounds of appeal of the assessee are accordingly....
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.... SI. No.1-4316. Total weight of potato mentioned on the pages relating to 30.11.2007 is 89705.12 quintal. In this register also only SI. No. 1-282 have the name and address of the persons against them. The rest serial nos. do not have such details. Like her inference relating to register found pertaining to M/s Kesarwani Sheetalaya, Sahson, the A.O. inferred that the potatoes kept from SI No.283-4316 belong to the assessee firm. 11.3 Another register impounded and marked as Annexure P-13 for the period 08.10.2007 to 30.11.2007 have the entries from SI No. 2743-3047. This register also does not bear the name and address of the persons from SI No.3048- 6292. 11.4 In reply to the notice issued by the A.O., the assessee had stated that as when the potato is released from the storage, rent receipts were issued to the potato owners and these receipts had complete details. The assessee has recorded the rent receipt on the basis of the above. It was also explained by the assessee that the names and addresses of the persons were not recorded due to rush for release of potato. Such details are available on the receipts issued to farmers/ parties. 11.5 The A.O. remarked that the modu....
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....ve, the A.O. has made the addition of Rs. 21,08,69,838/- for the purchase of potato. It is also mentioned by the A.O. that the same potato have been sold @ Rs. 1,100/- per quintal, which give sale proceed of Rs. 25,77,29,802/-. The A.O. has given the credit to the storage rent amounting to Rs. 2,46,01,481/- to the assessee and has worked out the profit of Rs. 2,22,58,483/- after deducting the purchase price and storage expenses from the sale proceeds. So in all addition of Rs. 23,31,28,321/- has been made. 11.8 The assessee challenged the addition before the ld. CIT(A) and submissions of the assessee are reproduced in the appellate order as under : "That the Assessing Officer has discussed the facts in para 4 of the assessment order. The manner and approach as adopted by the assessing officer is highly unjustified, surprising and incorrect. For making the addition the colours which have been given by the assessing officer in respective para are far away from the true facts of the case with an only intention to mislead and confuse higher authorities/court and to create tax liability in wrong manner. According to the colourful invention of the assessing officer alleging that th....
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....ecessary to bring to your kind consideration the working procedures of business and system of our accountancy which are as under:- (1) That the constituent comes with his potato loaded on Tractor/Truck. (2) That on arrival of the potato at the gate of the cold storage a gate-pass is issued to the concerned constituent. The gate pass bears Gate Pass_Sl. No., Date, Name & Address of the constituent, No. of bags and after filling the same constituent's signature is obtained at various time there on and Original copy of the Gate Pass is given to the Constituent and Carbon Copy of the same is retained with us. Photo copies of some of the gate passes are enclosed herewith. (3) That after that Taul Parchi consisting of Sl. No. Date, Name & Address of the Constituents, no. of bags of potato and Weight of Potato brought by the constituents, lot no., chamber no. etc. is made and a copy of the Taul Parchi is also given to the constituent. Photo copies of some of the Taul Parchi are enclosed herewith. (4) That all these details are recorded in stock & rent register called as Bhandaran Nikasi Register also. The said register was found and seized by the Search Party in the course....
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.... 133A of the Act was also conducted in business cum office premises of M/s Gupta Sanjay & Associates who is our Chartered Accountant and from there certain documents were found and impounded as P/11 & P/13 which contains three registers. According to the Assessing Officer names and addresses of the farmers who had stored their potato in the cold storages of the appellant was maintained in part in the register and in these background a notice dated 19.10.2011 under Section 142(1) of the Act was issued requiring the appellant to explain as to why the potatoes stored in the Cold Storage which have no names and address of the owners of potato be not treated as appellant's own potato. That in nutshell the only objection of the Assessing Officer is that Sl. No. 225 to 4268 in P/11 and Sl. No. 3048 to 6292 of P/13 do not bear names and addresses of the potato owners and only this fact has been adopted as a basis by the Assessing Officer to draw inference and allege that the partners indulged in potato business and as such made huge addition. But it is absolutely incorrect, as the assessing officer measurably failed to consider and understand full facts appearing in the said annexures ....
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....ten by digesting corresponding details mentioned in the other columns of the same documents. Sir while computing the income if the assessing officer would have considered informations of each and every columns of both the referred annexures together at a time with supporting documents, judiciously then such artificial and incorrect situation would have not come-up to arise at this conclusion that the appellant carried on potato business and made investment in potato business and earned income. Thus under these circumstances the addition made by the assessing officer is unjustified, arbitrary and without any basis or adverse material on record in any of the past and future years when no such inference drawn and additions made. That the most important fact that the said P-11 & P-13 were found from the premises of M/s Gupta Sanjay Associate and not from the premises of the appellant, therefore it was a seizure of documents from the office of our C.A. Sanjay Gupta No doubt the appellant confirmed that the annexures P-11, P-13 belongs to the appellant firm and which is a compilation of subsidiary books, such Gate- pass, Taul Parchi, Weight-slip, rent receipt register etc as mentioned....
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....ch are the initial and essential register and the business with constituents starts which are complete in all respect and the rent received from the constituents have been duly recorded in cash book from time to time. Sir, P-11 & P-13 are the Rent Register of Potato whereas A-2/22 & A- 2/9 are entry register of Potato (bhandaran / nikasi register). Since same gate pass no. Taul Parchi No. rent amount, weight of potato and number of bags etc. are appearing in aforesaid four registers i.e. P- 11, P-13, A-2/22 & A-2/9 A-1/1 to A-1/5 therefore to treat them differently for making huge addition is highly unjustified. The aforesaid fact were already brought to the knowledge of ADI also vide our letter dated 22.10.2009 in compliance to the query dated 19.10.2009. Copies of the same are enclosed at pages........ of the paper books. That Sir, for instance in most of the government departments while entering, a gate pass is made in which gate pass no. and name of party, purpose of visit etc. are mentioned and issued to the concerned person and while going out of the office if only gate pass no. was noted and scored out in register that does not mean that since name and address of out goin....
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.... A-1/1 to A- 1/5 than probably no question would have cropped up but the assessing officer miserably failed in putting the query. That at page 6 of the assessment order a chart has been produced by the assessing officer for working out the alleged undisclosed investment but while preparing the chart the assessing officer miserably failed to consider Annexure A-2/22, A-2/9, A-1/1 to A-1/5 which are foundation register in respect of in coming and out going of potatoes with complete details and it is also a fact that the weight of potato as mentioned in column no. 4 of the chart is duly tallied with bhandaran / nikasi register also i.e. the above four registers which may kindly be verified at your end also. That Sir, it is a search assessment and chapter XIV-B of Income Tax Act' 61 deals with ascertainment of undisclosed income of the party for the block period with reference to the evidence unearthed during the search or information available which are relatable in such evidence but in the present case the documents mentioned above as P- 11 & P-13 and its columns which are in dispute duly tallied with regular books, therefore the said document under reference can not be called....
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....entire addition made by assessing officer on the basis of incorrect inference drawn by her. That in computing the income the assessing officer made an addition of Rs. 21,08,69,838/- on account of investment in potato and alleged profit earned there on to the extent of Rs. 2,22,58,483/-, meaning thereby that total amount of Rs. 23,31,28,321/- involved in such business but in course of search operation no undisclosed amount on investment was found. So therefore, a natural question arises that where such funds have gone and this fact also proves that the addition made is completely hypothetical and is based on surmises only . That further a notice under section 142(1) read with section 153A of the I.T. Act was issued and in the said notice a query was made (query no. 4) which is reproduced as under: "You are requested to submit that the inventories of opening stock and closing stock with vouchers in support of valuation of stock to justify the stock shown in the audited final account filed with the return of income. To furnish comparative purchases, sales and gross profit rate for the year under consideration and for last three years." That in compliance to query no. 4 a d....
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.... A-2/22, A-2/9 and A-1/1 to A-1/5 and A-1/1 to A-1/5. Thus the A-2/22, A-2/9 and A-1/1 to A-1/5 and A-1/1 to A-1/5 were the initial register in which complete details are available in different columns and same column are appearing in P-11 and P-13 but the assessing officer failed to consider the initial register that is to say entry register. That Sir, in entire assessment order there is no finding that the books of accounts are unreliable and vogue, proviso to Section 145(3) of the Income Tax Act has not been made applicable hence the additions have been made in a very vague, and casual manner and the same is unwarranted and liable to be deleted. That thus in the light of above submission it is further stated that even no enquiry was made by the assessing officer by calling any partner whether they are engaged in potato business and whether any purchase and sale of potatoes was made by them. This request is made with a background that in any earlier or subsequent assessment year such type of allegation was never made by the department especially when sufficient evidences exist on record that the firm kept/ stored potato of different constituents only on rent basis. Likewise....
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....d seized papers in respect of ownership of potatoes has been made and following discrepancies have been noticed which has been confronted to the counsel of assessee vide order sheet entry dated 25.07.2012 and he was further required to explain on various points with supporting evidence on 26.07.2012. Sl No. Date Amount as per Rent receipt register Amount as per cash book Receipt no. as per Recent receipt register Receipt No. as per cash book 1 11.06.2007 1,32,345 1,32,345 361- 402 361 - 385 2 12.06.2007 40,687 40,687 403 -413 386 - 413 3 28.09.2007 55,010 55,010 1739 - 1761 1756- 761 4 30.09.2007 46,153 46,153 1780 - 1799 1797-799 5 01.10.2007 68,363 68,363 1800 - 1832 1817- 832 Close to 50 entries were test checked. In respect of previous hearing, the counsel has submitted few documents in order to explain on entries on page no. 47 of LP-1 seized from the residence of Sri Raj Kumar Kesarwani, the partner. The documents are - i. Litigation in Allahabad High Court between Jyoti Agarwal and ADJ and others pertaining to Narendra Cold Storage ii. Certific....
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....efore herself during the course of assessment proceedings. Again, assessee was required vide order sheet entry as mentioned above by the undersigned to produce copy of reconstituted partnership deed after death of any partner, but assessee failed to furnish the same. It is established that no reconstitution of firm was made after the death of one partner Bhairo Nath Kesarwani. In this way, the firm should be assessed as "AOP". Since assessee failed to explain with evidence, addition of Rs. 23,31,28,321/- is established." 11.10. The assessee filed rejoinder to the remand report before the ld. CIT(A), which reads as under : "(i) That with regard to para 9-D of the remand report it is submitted that an addition of Rs. 23,31,28,321/- has been made in arbitrary manner. In the remand report the assessing officer has mainly put his all emphasis that the appellant failed to extend his co-operation in remand proceedings but his such allegation is only an attempt to justify his incorrect and unhealthy action and in this regard events of this proceedings are as under : EVENTS a) Hearing of the appeal before your goodself was fixed on 09.07.2012. b) On 09.07.2012 two separate....
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....eal of impounded annexure P-11 and P-13 was opened and after opening the seal of annexures P-11 and P-13 necessary verification fo the records for submission of the remand report was examined and the same was again sealed under their signatures. Copy of the Panchanama dated 25.07.2012 made by the learned Dy. CIT is enclosed herewith and then the hearing was adjourned to 26.07.2012. (page 36 to 38) k) On 26.07.2012 due to illness of appellant's C.A./ an adjournment application was moved by an authorized person and thereafter hearing was adjourned to 27-7-2012. (page 39) l) On 27.07.2012 the Dy. CIT prepared the remand report and closed the chapter in his own ways. Contents of the order sheet entries are enclosed herewith. 13 (ii) That in the light of above facts it is further submitted that in the remand report at page-5 allegation made by the assessing officer that the compliance were not made is incorrect and it appears that the purpose of such allegation is nothing but to divert the mind of higher authorities. The appellant su-moto vide his letter sent on 15.07.2012 through speed post made a request to the assessing officer to verify the seized documents and thereafter o....
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....f the assessing officer that the nature of the business of cold storage is just like nature of business of dry-cleaning and stitching of clothes (Tailor) where when a person gives his cloth for dry-cleaning or stitching he never give advance payment because cost of his goods is more than the service- amount charged. Moreover if the shopkeeper is asked to bring his four years old customer whose clothes were dried- cleaned or tailored by him then how can he do so ? So similar situation is there in the appellant's cold storage also. Therefore the matter requires a practical approach and sympathetical consideration from the angle of a businessman only. c) That in cold storage business there is neither any government's rule/ act nor in any other cold storages of the district such type of khasara khautani is demanded from the constituents who store their potatoes then how we can do so? And if we demand such thing no body will come to us to store the potatoes and in this way the cold storage will come to stand still and ultimately it will cause loss to the revenue and unemployment also. d) That sir kindly consider that our receipt received from the constituents during the year, book....
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....ear, month and nature of all such entries based on the details as mentioned in the said chart duly supported by the evidences / documents. That from the enclosed chart and explanations against each of the entries duly supported by the documents / evidences mentioned, it is now crystal clear that the said seized paper has no connection / link or relevance with the appellant firm. From the enclosed papers such as challans, details of cheques, case-court order, form-16A, payment of brokerage in respect of sale of Narendra Cold Storage, payment to C.A. etc. it is clear that the entries relate to Narendra Cold Storage only and not to the appellant firm, thus the inference drawn on the basis of these entries/ document is liable to be ignored legally. 13 (vi) That thus in this way querries at point no 1, 2 and 3 raised by the assessing officer were properly and fully explained by the appellant which even could not be perused by the assessing officer and therefore he made such uncalled for allegation, for the reason best known to him but the same is unfair and unjustice. 13 (vii) That in the remand report at page -5 another new issue was raised by the assessing officer about non executi....
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....entioned, no such persons actually existed. Therefore, potatoes stored against those serial nos. belong to the assessee. The A.O. has also referred to the statement of one of the partners Shri Raj Kumar Kesarwani who had stated that he had made investment in potatoes. The A.O. mentions that the seized paper has been made part of the assessment order in the case of Shri Raj Kumar Kesarwani for A.Y.2006-07. The aforesaid paper is part of Annexure A-1/7. The A.O. did not accept the plea of the assessee that the names of the persons and their addresses were available in other register used for Bhandaran/ storage of the potatoes. In order to give the assessee one more opportunity to explain their view point the issue was remanded to the A.O. The A.O., vide his report dated 27.07.2012, has submitted that he asked the assessee through order-sheet entry dated 18.07.2012 to comply with the following:- i. Produce Khasra and Khatauni of at least 50 farmers who had stored potatoes in your cold storage in support of holding of agricultural lands. ii. Please state as to how much potatoes are produced in land owned by the partners of the firm. Detail of consumption of potatoes may also p....
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....gned ownership of the potatoes. In the light of above facts and in the circumstances, I find my views aligned with the A.O. that the appellant could not substantiate the claims whenever the opportunity was given to it. Accordingly, I uphold both the additions amounting to Rs. 21,08,69,838/- being the investment in the potatoes and Rs. 2,22,58,483/- being the profit on the sale of the potatoes. The affidavit given by one of the partners is nothing but the reiteration of submission given before the A.O. and before me. Those do not give any support being independent evidence to be considered. Moreover, the veracity of the content of the affidavit also becomes questionable in the face of no replies to the queries raised by the A.O. Again the confirmation letters given from the employees also do not carry much meaning mainly because (i) the letters only reiterate what the assessee had stated (ii) the possibility of the employees under the influence of the assessee cannot be ruled out. I, therefore, dismiss the grounds taken above." 12. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and submitted that the addition has been made mere....
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....e by the AO. He has relied upon the decision of Hon'ble Supreme Court in the case of CIT vs. Messrs P.M. Rathod & Co., 1959 AIR 1394 on the proposition that it is the duty of the bailee to dispose of the goods in accordance with the directions of the bailor, which in that case was to deliver the goods against payment. He has also relied upon the decision of Hon'ble Supreme Court in the case of UCO Bank vs. Hem Chandra Sarkar (1990)3 SCC 389, in which it was held that bailee does not represent bailor - where person has no authority to change contractual or legal relationship of parties, this indicates that he is a bailee and not an agent. He has submitted that in the case of the assessee, there is no element of sale at all. Therefore, there is no question that the assessee concealed unexplained sale of potatoes. He has, therefore, submitted that the entire addition is unjustified. 13. On the other hand, the ld. DR relied upon the orders of the authorities below and submitted that the assessee failed to explain the entries in receipt and dispatch registers. No names and addresses are mentioned in the register. Therefore, onus upon the assessee to explain the entries has not been d....
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....ides that no licensee shall refuse to accept the agricultural produce for storages in his cold storage without any lawful excuse. Section 15 provides, every licensee shall keep in his cold storage agricultural produce of one hirer separate from such produce of other hirer and from other produce of the same hirer, for which a separate receipt has been issued, so as to permit at all times the identification and easy delivery thereof. Section 16 provides licensee to allow facilities for the hirers to inspect the goods. Section 19 provides above delivery of goods and provides, every licensee shall on demand made by or on behalf of the hirer, deliver the goods stored in the cold storage, provided the hirer surrenders the receipt and pays all charges due to the hirer. Every receipt so surrendered to the licensee shall be defaced and shall not be re-issued. Subject to agreement between the parties, the hirer may take partial delivery of the goods stored in a cold storage and in every such case, the licensee shall make necessary endorsement on the receipt and return it to the hirer. Section 20 provides licensee's lien over possession of goods in cold storage until the receipt thereof is su....
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....otatoes in which complete details have been mentioned to show to whom the goods have been delivered with complete particulars and weight of potatoes etc. Thus, the assessee maintained the mandatory receipts meant for keeping and delivery of the agricultural produce to the hirer in their cold storage. No incriminating material / evidence was found in the search or survey that the assessee made any investment in purchase of potatoes or made sales thereof or earned profit thereon. During the course of search and survey, no unaccounted stock of potatoes belonging to the assessee was found. No evidence has been brought on record to prove any history of the assessee in past for dealing in potatoes or making investment in purchase of potatoes. The assessee maintained proper books of account. Gate passes are issued to release the potatoes to owners/constituents and copies retained by the assessee. Weight receipt (Taul Parchi) is issued with complete details of potatoes and the names of owners/constituents are filed in the paper book to support the above findings. Bhandaran and Nikasan Registers were also seized as A-2/22, A-2/9, A-1/1 to A- 1/5. These contain complete details of gate passe....
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....for the assessee to mention the names and addresses in the exit register also. The assessee in page 71 to 72 of the written submissions has mentioned that in earlier assessment years as well as in subsequent assessment years, the assessee earned only income on account of rent, therefore, the authorities below on the principle of consistency should have accepted the claim of assessee. On examination of the Bhandaran and Nikasan register and comparison with the seized document P-11, 13 we find that all the entries are same at the time of delivery of goods which were recorded at the time of inward entry of taking the potatoes for storage except that names of the parties are not mentioned. Therefore, there is nothing before the AO to support his findings of assessee making unaccounted investment in purchase of potatoes or making sales or earning profit thereon. Since no violation of the Rules of Cold Storages Act has been brought on record and the assessee maintained mandatory rent receipts as per this Special Act, which is available on record, therefore, the authorities below should not have drawn adverse inference against the assessee. In the absence of any incriminating material or ....
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....ct the addition by disallowing 5% of the expenses instead of 10% confirmed by the authorities below. We, accordingly, modify the orders of the authorities below and restrict the addition of disallowance to 5%. In the result, these grounds of appeal of the assessee are partly allowed. 17. On ground No. 18 & 19, the assessee challenged the disallowance of petrol expenses of Rs. 77,099/- and disallowance of 1,17,246/- under the head depreciation on car for personal user. The AO noted that personal user of the car by the partners cannot be denied and accordingly, 20% of these expenses have been disallowed. The ld. CIT(A) following his order for the assessment year 2005- 06 confirmed the additions. The ld. Counsel for the assessee submitted that there is no element of personal use of these expenses and in earlier years, no disallowance has been made prior to the block period and all vehicles were used for the purpose of business On the other hand, the ld. DR relied upon the orders of the authorities below. 18. On consideration of the rival submissions, we are of the view that the addition is excessive in nature. The assessee is a firm and running a cold storage at different branch....
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....ich contained day-to-day expenditure/investment recorded in the books of account. Therefore, the addition is unjustified. On the other hand, the ld. DR relied upon the orders of the authorities below. 20. We have considered the rival submissions and the material on record. Hon'ble Supreme Court in the case of Sargam Cinena vs. CIT, 328 ITR 513 held that when books of account of the assessee are not rejected, the Assessing Officer cannot refer the matter to the Departmental Valuation Officer. Hon'ble Rajasthan High court in the case of CIT vs. Pratapsingh Amrosingh Rajendra Singh & Deepak Kumar, 200 ITR 788 held that "there was no dispute that the assessee maintained proper books of account and same had been accepted in past and no defects were pointed out in the books. The expenses were fully supported by vouchers. Full details were also mentioned in respect of each items in the books. Simply because valuation report was of a higher amount, books could not be said to be unreliable. The Tribunal was, therefore, justified in deleting the addition of Rs. 55,780/-." The assessee filed details of investment made in earlier years in the property at pages 116 of the paper book, which s....
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