TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 526
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.... as emerges from the order of the ld. CIT(A) is as under:- ''4.1.3 I have considered assessee's submission and also taken a note of judicial pronouncement relied upon the appellant as well as the factual matrix of the case. I found the AO has compared the receipts of the parlour from seized records to determine suppressed receipts of the parlour. He ignored the expenditure side of the seized records. He merely relied on the search statement and held that all the expenses relating to the parlour are recorded in the regular books of account of the assessee. The search statement cannot override the evidence seized by the department in the shape of documents. The gross receipts cannot be taxed as income. Therefore, under the facts and circumstances of the case, I direct the AO to give credit of the expenses recorded in the seized documents but not found recorded in the regular books of account . The A/R of the assessee has made working for this. The comparative chart is placed at PB pg 100 to 102 which shows the total expenses of Rs. 14,63,159/- are recorded in the seized documents but not in regular books of the parlour. This expenses were incurred to earn the suppressed receipts....
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....rongly stated in her statement that the entire expenses pertaining to receipts have been recorded in books of accounts. But this exercise has not been done by the ld. AO and he added the entire unaccounted receipts as income of the assessee. It is admitted legal position that the seized documents should be read as whole and the undisclosed income on the basis of seized material should be computed by taking into consideration all the contents of such seized documents but the same has not been happened in the case of the assessee and the part of the entries of the seized documents were only considered by the AO. Further in support of his action, the ld. AO relied upon the statement of the assessee wherein she admitted that the entire expenses of the parlor have been accounted for in books of accounts. But the oral statements cannot supersede to the seized documents and the seized documents which contain the details of receipts as well as the detail of expenses. It is settled law that the AO is quasi-judicial authority and should be governed in his function by judicial consideration and must conform to the rules of natural justice and must proceed without bias- Tin Box Co. Vs CIT 2....
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.... against Rs. 25,38,273/- made by AO.'' 2.4 We have heard the rival contentions and perused the materials available on record. Brief facts of the case are that the assessee is individual and during the year under consideration main source of income of assessee was from business of beauty parlors. The assessee filed her regular return u/s 139(1) of Income Tax Act on 28.09.2009 declaring total income Rs. 12,43,400/-. The department carried out search & seizure operations on assessee on 11.11.2010 . The case of assessee was centralized at Central Circle-1, Jaipur. Notice u/s 153A was issued on 09.08.2011, which was served to assessee on 10.08.2011 . In pursuant to notice u/s 153A of Income Tax Act, the assessee filed her return on 24.10.2011 declaring the same income which she declared in original return i.e. income of Rs. 12,43,400/-. It is also noted that the assessment was completed by AO vide his order dated 30.03.2013 assessing the total income at Rs. 61,16,804/- as against returned income of Rs. 12,43,400/- It is further noted from the assessment records that the AO had made an addition of Rs. 25,38,273/- on account of alleged suppressed receipts of Mahaveer Nagar, Hanuman Naga....
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.... appointed an Arbitrator - a retired High Court Judge (PB Pg 52-54) who decided a dispute in favour of Saroj Joshi directing the assessee to pay Rs. 21,50,000/- to Saroj Joshi (copy of award at PB page 55). The assessee has paid this amount by four cheques, copy of which is at PB pg 56-59. The outcome of this litigation proves beyond doubt that the amount was liability of the assessee not the income and the assessee made wrong entry in her account under bona fide belief that this amount is not repayable. The taxability of an amount depends on nature of the transaction and entries in the books of account cannot be decisive or conclusive in the matter. In this case, the arbitrator was appointed by the Hon'ble Rajasthan High Court and the assessee has repaid the amount in compliance of the Award passed by the Arbitrator. Considering the above fats and circumstances of the case, I am of the opinion that the amount of Rs. 16.00 lacs is not taxable receipt in the hands of assessee, accordingly , therefore, direct the AO to delete the addition of Rs. 16.00 lacs made by him on account of goodwill.'' 3.2 During the course of hearing, the ld. DR relied on the order of the AO and submitt....
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....by Smt. Saroj Joshi and for appointment of arbitrator suggested by assessee. e) Copy of notice dated 17.06.2011 given by Smt. Saroj Joshi for disapproval on name of arbitrator suggested by assessee. f) Copy of application dated 23.06.2011 filed before Additional district & session Judge, Jaipur for appointment of arbitrator. g) Copy of order dated 27.09.2011 passed by Additional district & session Judge, Jaipur. h) Copy of appeal filed before The High Court, Jaipur Bench. i) Copy of order of High court, Jaipur Bench, Jaipur dated 06.12.2012 wherein he appointed to Mr. Justice Bhanwroo Khan, former Judge of High court as arbitrator. j) Copy of entry recorded on order sheet by Mr. Justice Bhanwroo Khan (arbitrator) wherein he order to assessee to pay Rs. 21,50,000/- to Smt. Saroj Joshi. k) Copies of cheques of Rs. 21,50,000/- given to Smt. Saroj Joshi. Thus from the above documents this is clear that Smt. Saroj Joshi paid the amount of Rs. 16,00,000/- to assessee as loan and the assessee wrongly treated this amount as Goodwill. Now from the legal dispute settled between assessee and Smt. Saroj Joshi this has been proved that the amount was received as loan and the same ....
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....umstances provided u/r 46A of Income Tax rules and the additional evidence should be accepted in the interest of the justice. Further the facts of case law relied by the assessee in her application are identical and support the claim of the assessee. c) So far as submission of the ld. AO in para 1 that no partnership deed was produced along with application filed for admission of additional evidence. In this regard this is to submit that the copy of partnership deed was submitted to AO during the course of assessment proceedings and after that the receipt of Mahaveer Nagar parlor from January-2009 was treated by ld. AO as assessable in the hands of the firm. The copy of partnership deed is at PB Page105-108. In the partnership deed there is no reference of payment of Rs. 16,00,000/- to the assessee by Smt. Saroj Joshi. There was no written agreement/understanding between assessee and Smt. Saroj Joshi regarding receipt of sum of Rs. 16,00,000/- as Goodwill. Further if the assessee has credited something in wrong head the same cannot be taxed in the hands of the assessee. The real income can only taxed in the hands of the assessee. After settlement of legal dispute in between asse....
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....capital a/c of assessee treating the same received against goodwill. Thus from the legal notice it is clear that Smt. Saroj Joshri was only demanding her money along with interest whatever was paid by her to the assessee earlier, therefore there is no reason with ld. AO to suppose that the payment of Rs. 21,50,000/- was made to Smt. Saroj Joshi other than for the amount received from her earlier. ) As regard to finding of ld. AO in para 4 regarding justifying the taxability of Rs. 16,00,000/- in hands of the assessee as revenue receipt this is to submit that something can be taxed as revenue receipt when the same was received against sales of goods/services and the receipt is not refundable. In the instant case no goods/services were sold by the assessee to Smt. Saroj Joshi, therefore the same cannot be taxed as revenue income of the assessee. Further this amount cannot be treated as taxable capital receipt too because the same was refundable to the payer and later on the same was refunded back. g) As regard to finding of ld. AO in Para 5 regarding non treating the amount in question as loan; this is to submit that how the same can be treated as taxable revenue/capital receip....