2012 (5) TMI 761

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....000534, as per the information called for u/s 133(6) from the Kotak Mahindra Bank. 2. In the facts and circumstances of the case, the CIT(A) has erred in allowing relief to the assessee, without appreciating the fact that the assessee had neither maintained any books of accounts nor kept a record of vouchers pertaining to most of the expenses and as such, had failed to discharge his onus of proving genuineness of his claim of having incurred expenses to the tune of Rs. 72,95,600/- apart from the source and availability of funds as well. 3. In the facts and circumstances of the case, the CIT(A) has erred in estimating NP @ 55% of the total receipts of Rs. 1,12,24,000/-, without appreciating the fact that the assessee had failed to prove that he had incurred expenses to the tune of Rs. 72,95,600/- and having failed to do so, the AO was justified in taking an adverse view as per Section 114 of the Indian Evidence Act. 4. In the facts and circumstances of the case, the CIT(A), while admitting that the availability of funds with the appellant cannot be ruled and also that it was not possible for the AO to verify the contents of the cash flow statement to a rea....

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....e first four grounds of appeal, as raised by the revenue, revolve around the relief in respect of expenses, granted by the CIT(A), without appreciating the fact that the assessee had failed to prove the source as well as availability of funds, in order to substantiate his claim of having incurred the expenses to the tune of Rs. 72,95,600/- 5. The ld. CIT(A) partly allowed the claim of the assessee. The relevant findings of the ld. CIT(A) are reproduced hereunder: "6.1 I have gone through the assessment order and the written submission of the appellant and findings recorded by the A.O. It is noticed that there is no dispute about the commission received at Rs. 11224000/-. It is fact that the appellant is predominantly an agriculturist and no accounts were maintained for business income from commission. The real controversy relates to the expenses incurred on earning the commission . Whereas assessee incurred expenses of Rs. 7295600/-, the version of the A.O is that the assessee could explain source of expenses of Rs. 3206640/- only and the rest of the expenditure amounting to Rs. 4088960/- is not explainable from the source narrated and explained during the course of ass....

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..... It is noticed that in the income and expenditure drawn by the appellant against total receipt of Rs. 1,12,24,000/-, the net profit declared is Rs. 39,28,400/- giving the rate of 35% in considered opinion and going through the facts of the case in totality, it will be fair if the net profit is estimated at 55% of the total receipt which would mean income of Rs. 61,73.200/- resulting in net addition of Rs. 22,44,800/-. (61,73,200-39,28,400) as against Rs. 40,88,960/- made by the A.O. These grounds are, therefore, partly allowed. Thus appellant gets relief of Rs. 1i8,44,160/- ." 6. We have carefully perused the rival submissions, facts of the case and the relevant record. In the course of present appellate proceedings before us, ld. 'DR' pointed out that CIT(A) has allowed relief merely on surmises and conjectures, without bringing any corroborative and cogent evidence, to support his contentions. A bare perusal of the findings of the CIT(A) reveals that, he, on the basis of facts of the case, estimated net profit at 55% of the total receipt, as income of the assessee. However, ld. 'DR' contended that main issue is not estimation of income in the present case, but....

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.... which is reproduced hereunder: "143(3)(ii) On the day specified in the notice,- (ii) issued under clause (ii) of sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment" 10. Having regard to the clear provisions of Section 143(3)(ii) of the Act, it is incumbent upon the assessee to support his return of income, by way of adducing evidence, whereas the AO is competent to make additions, on the basis of relevant material in his possession. The Hon'ble Supreme Court, in the case of Chuhar Mal V CIT (1988) 172 ITR 250, highlighted the fact that the principle of evidence law are not to be ignored by the authorities, but at the same time, human probability has to be the guiding principle, since the AO is not fettered, by technical rules of ev....