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2017 (11) TMI 314
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....s and documents relating to the assessee were found and seized. Hence, the assessing officer issued notice u/s 153C on 15.12.2008 for the six assessment years i.e. from 2002-03 to 2007- 08 and out of which these appeals are related to the assessment year 2007-08 and 2008-09. The assessment was completed on the total income of Rs. 30,30,392/- against the admitted income of Rs. 89,968/-. 5. Appearing for the assessee, the Ld. AR argued that the notice issued u/s 153C was invalid since no books of accounts or any other documents belonging to the assessee were found by the assessing officer in the search conducted in the premises of A.T.Rayudu Group. The Ld. AR further argued that the department has filed a paper book furnishing the satisfaction note and the seized documents found in the premises of A.T.Rayudu Group. As per the satisfaction note, the seized material was marked as Ann.ATR/B/21 vide pages 27-31 which is the foundation for recording the satisfaction of the assessing officer to issue notice u/s 153C of IT Act. The Ld. AR invited our attention to the page nos.27-31 referred above which was the statement of Bank account related to 'Supraja Baywatch Bar Restaurant' and sta....
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....ight variation in the profit share ratio. The assessing officer has duly recorded the satisfaction and at the stage of issue of notice sufficiency of the reasons is not relevant. Further, the Ld DR argued that the assessee has never contested this issue either before the assessing officer or before the Ld.CIT(Appeals). Therefore, assessing officer has assumed that the documents are belonging to the assessee and has rightly issued notice u/s 153C. The Ld. DR relied on the decision of Hon'ble Gujarat High Court in the case of Rajesh Sunderdas Vaswani 76 taxmann.com 311. 7. We have heard the rival submissions and perused the material placed on record. A search u/s 132 was carried out in the case of A.T.Rayudu Group and during the course of search, loose papers were found marked as Ann.ATR/B/21, page nos.27-31. The assessing officer has recorded the satisfaction and issued notice u/s 153C of Income Tax Act. The assessee contested the validity of issue of notice u/s 153C of Income Tax Act before this tribunal. In this case, the assessee's contention was that the seized material was relating to Supraja's Baywatch Bar Restaurant which was run for the period from July 2005 to June 2006 ....
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....sion of Income.etc. As per the satisfaction note, the notice u/s 153C was issued basing on the material found and seized during the search in the residential premises of A.T.Rayudu and Group bearing No.ATR/B/21 page No.27-31. On verification of the seized material it was an account copy of the State Bank of Hyderabad bank account for the period from 08.07.2006 to 16.08.2006 which was maintained by the assessee. The Ld.AR argued that the seized material does not belong to the assessee. Though the contention of the Ld.AR is not acceptable as discussed in earlier paragraphs, on going through the assessment order passed by the assessing officer, there was no reference to the seized material in the assessment order for making any addition. The assessing officer has made the following additions in the assessment order (1) Business income estimated Rs. 15,84,291/- (2) Unexplained expenses u/s 69C towards pre operative expenses Rs. 7,98,101/- (3) Unexplained expenses u/s 69C towards rent payment of Rs. 6,48,000/- 8.2 All the above additions are made on the basis of loose sheets found during the course of survey conducted on 06.12.2007 which was found and impou....
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..... Ho'ble Delhi High court on the similar facts in the case of Commissioner of Income-tax v. Refam Management Services (P.) Ltd. [2017] 80 taxmann.com 251 (Delhi) held that Proceedings initiated under section 153C against assessee in respect of assessment years 2003-04 to 2008-09 are not justified where only the document seized during search in question was a cheque book pertaining to assessee which reflected the issue of cheques during August 2008 to October 2008, relevant to assessment year 2009-10. In the judicial pronouncements cited (supra) held that in the absence of incriminating material, the assessing officer cannot invoke the provisions of power u/s 153C of IT Act. In the instant case, the seized materal was the copy of the bank account and the revenue has not established that the seized material in question was incriminating evidences to invoke the provisions of 153C of IT Act. The facts of the case are similar to that of the decision of Hon'ble Delhi High court in Refam Management Services (P.) Ltd supra Therefore, the assessment order as well as CIT(Appeals) order clearly evidences that no incriminating material was found which was taken as evidence or basis for framing....
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....rofit upto May was Rs. 19,74,787/-, June Profit was Rs. 1,37,602/- and profit upto June was Rs. 21,12,389/- (Average monthly profit i.e 2112389/12=1760324/-). The entries in the above document was partially tallied with the books of accounts of the assessee. Since the above income and expenditure does not tally completely with the regular books of accounts maintained by the assessee, the assessing officer rejected the books of accounts and estimated the income at Rs,1,76,032/- per month which worked out to Rs. 21,12,384/- for the whole year and brought the same to the tax. Aggrieved by the order of the assessing officer the assessee filed appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition made by the assessing officer. The relevant part of the Ld. CIT(A) order is extracted which reads as under: "8.2 I have considered the arguments of the assessee and have gone through the material impounded which is extracted in the assessment order. P&L account impounded clearly reflects net profit of Rs,1,37,602/- for the month of June 2007 and also shows profit up to May 2007 at Rs. 19,74,787/-. This P&L statement is found from the assessee's premises. When the assess....
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....ses. Therefore, the Ld.AR argued that the assessing officer has estimated the income for the entire year on the basis of one month profit which is purely a guess work. According to the Ld. AR the addition required to be deleted 13. On the other hand, the Ld.DR argued that the assessee is engaged in the liquor trade and bar & restaurant. In the liquor trade, the licence is given from June to June and in the loose sheet found during the course of survey it was noted that the profit upto June was Rs. 21,12,389/- and profit for the month of June was 1,37,602/- net of all expenses. The average net profit on the total profit per month worked out to Rs. 1,76,032/- .Therefore, the assessing officer has rightly estimated the income basing on monthly profit @1,76,032/- declared by the assessee upto June 2007. The Ld.DR further argued that it is for the assessee to prove that the contents of loose sheets found during the course of search were incorrect. Therefore, the Ld.DR argued that there is no error in the assessment order which was rightly confirmed by the CIT(Appeals) and no interference is called for. 14. We have heard the rival submissions and perused the material placed on reco....
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....e assessment year 2008-09. The assessee did not furnish the true and correct financials before the AO with correct amount of sales and the profit. In the circumstances of non cooperation of the assessee the AO has no option except to estimate the profit. However the sales cannot be the same amount through the year. For the month of June 2007 the net profit was Rs. 1,37.602/- on total sales of Rs. 9,92,826/- which works out to 13.85% on total sales. Therefore we direct the AO to estimate the net profit on total sales of the assessee @13.85% for the A.Y-2008-09 or to adopt the profit admitted by the assessee whichever is higher. Accordingly this ground of appeal of the assessee is partly allowed. 15. Ground No. 4 is related to the depreciation, interest on partners' capital and remuneration to partners. No information is available with regard to the depreciation claimed by the assessee, Interest on partners capital and remuneration to partners from the assessment order. On verification of Form 35, it appears that the assessee has not raised this ground before the CIT (Appeals). However, unless the partnership deed permits the interest and remuneration it is not allowable deduction....
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.... Rs. 14,498/ -. Hence AC after giving credit to the amount of Rs,14,498 added back Rs. 22,99,542/- in the hands of the firm for A.Y.2009-10. Against this addition it is argued by the assessee that the capital under the name of Pushakara is mythical and is shown to boost up the capital of the firm and to strengthen its financial status. In fact there is no such partner in the firm. The two partners viz., Subba Raju and Jaswant had capital balance of Rs. 7,00,867/ - and Rs. 14,498/- as on 31.03.2007. Therefore it is contended that the addition made is not based on any facts and the same should be deleted. It is also argued relying on indwell Constructions, that once the net profit is estimated no further addition is warranted. I have considered the arguments of the assessee. The impounded statement reflects capital in the name of Pushkara. As stated by the assessee this name indeed seems to be a mythical name. However money does not come from mythical sources. Though the name may be pseudonym, the money shown as a source is definitely not pseudo as it has the matching assets shown in the balance-sheet. Therefore AO is duty bound to examine the capital introduction in the name of Push....