TaxTMI 
TaxTMI 
2017 (12) TMI 994
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....d in upholding the addition of Rs. 24,00,000/- made by the AO u/s.69A of the I.T. Act as unexplained money, which upholding of the addition u/s. 69A of the I.T. Act of Rs. 24,00,000/- by the learned CIT[A] as unexplained money is most arbitrary, unjust and untenable in law and in the alternative highly excessive w.r.t. facts and circumstances of the case. 4. That the learned CIT[A] failed to appreciate that the assessee, by way of establishing the identity of Shri O.P. Gupta on whose behalf the assessee in the capacity of power of attorney holder of Shri O.P. Gupta collected royalty of Rs. 24,00,000/- from different persons for making payment to mining department and also narrating sequence of events which proved beyond doubt the availability of cash amount of Rs. 24,00,000/- with the assessee, had discharged the burden of proof which lay upon him. 5. That sustaining by the learned CIT [A] of the addition of Rs. 5,00,000/- made by the AO u/s. 69A of the I.T. Act in regard to amount of Rs. 5,00,000/- given to the assessee by Shri Vijay Kumar Meena for making on his behalf a DD of Rs. 5,00,000/- to be tendered alongwith application for allotment of liquor shop is most arbitrary....
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....h sale. As per practice adopted by the assessee, for the sales made during a day, one consolidated entry of sale is made in the cash book. Thus, the cash sales recorded in the books depends on the sweet will of the assessee. As such possibility of leakage of revenue by recorded less sales, cannot be ruled out. Further, the Assessing Officer observed that no stock register or quantity details of the goods traded are available. In the absence of daily stock records it cannot be ascertained whether whole of the goods purchased during the year have been included in sales or not? Assessing Officer observed that there is a difference in the figure of sales uploaded while filing the ereturn and the figure of sales recorded in the audited books of a/c. Therefore, he was of the view that books of accounts maintained by the assessee are not reliable and the correct profits of business cannot be deduced therefrom and proceeded to estimate the profits. The Assessing Officer adopted 20% of the gross profits against the gross profits of 17.40% declared by the assessee. The assessing Officer further made addition by invoking the provisions of Section 69A of Rs. 24,00,000/-, Rs. 5,00,000/- and Rs.....
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....failed to appreciate the fact that during the year under appeal there was increase in sale. Hence, the gross profit fell little bit. He submitted that it is a settled position of law that merely non-maintenance of stock register is not a sufficient reason to reject the books of accounts. 3.2 On the contrary, Ld. D/R opposed the submissions and submitted that the Assessing Officer who justified in adopting the past year's results declared by the Assessee. 3.3 We have heard the rival contentions, perused the material available on record. The Assessing Officer rejected the books of accounts and estimated the profit by observing as under:- "3.2 I have considered the averments made by the Ld. A/R. It is a common practice in liquor trade that entire sales are made in cash for which no individual sale bills are issued. The consolidated sale of a day recorded in the cash book does not have particulars of the goods sold Even though purchases have been made from govt. undertaking, sales made by the assessee are not open to verification. On this ground alone various Tribunals and High Courts have held that provision of section 145(3) do apply in liquor cases. The cases relied upon by the ....
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....of gross profit, in the cases of Kansara Bearings Pvt. Ltd. vs. ACIT (270 ITR 235)(Raj) and Ajay Goyal vs. ITO (99 TTJ 164) it has been held that Past year profit declared by the assessee is the best guide for application of GP/ NP rate. As mentioned above in just preceding year the assessee had declared gross profits @ 19.41% on sales of Rs. 1,36,26,368/-. Even those gross profits have not been subjected to scrutiny u/s 143(3) of the I T Act. As per the govt. policy while fixing the M.R.P. of the products, retailers margin is considered at 20% of the sale price by the RSBCL and SGSSM through whom IMFL and CL is supplied to retailers. Considering all the relevant facts the sales of assessee are estimated at Rs. 1,75,00,000/- on which GP rate of 20% is applied to estimate assessee's profits of business. This will provide gross profits of Rs. 35,00,000/- against the declared profits of Rs. 29,52,155/-. The difference of Rs. 5,47,845/- is added to the income of the assessee." This finding of the assessee was affirmed by the Ld. CIT(A). The Ld. CIT(A), has decided this issue by observing as under:- "In the present proceedings, the appellant's main submission was that the ....
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....the assessee and rate of 20% applied on it as held by the Assessing Officer. This ground of appeal is partly allowed." It is settled position of law that the Assessing Officer is empowered to reject the books of accounts, in the event if he is not satisfied about the correctness or completeness of the account of the assessee. The Assessing Officer may make an assessment in the manner provided under section 144 of the Act. In our view, the Assessing Officer requires to satisfy himself about the correctness and completeness of the accounts. Admittedly, in the present case the assessee is engaged in the business of liquor which is regulated by the concerned Excise Department. The Assessing Officer has not made any enquiry from Excise Department with regard to quantity of liquor sold by the assessee. Moreover, the Assessing officer has not brought any material on record suggesting that the assessee was involved in selling liquor and not recording the same. Since, the purchase and sales are to be notified to State Excise Department as well, the AO has not brought any material suggesting that the State Excise Department has adversely reported about the sale and purchase. Under these u....
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.... 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 assessee of such financial year. 4. That the correct factual position is that the appellant assessee maintains regular books of accounts and the same are audited by a Chartered Accountant and moreover Tax Audit Report forms part of the original paper book at page no.21 to 31 filed by the appellant assessee on 23.5.2017 and amount of Rs. 24,00,000/- mentioned above is duly recorded in the books of accounts maintained by the assessee and is duly reflected in the annexed balance sheet at page no.28 of the paper book. In support of it the assessee has already furnished audited final accounts and Tax Audit Report in the paper book page no.21 to 31. In the liability side of the audited balance sheet which is page 28 of the paper book it is clearly written as under: "Royalty collection payable (Mr. O.P. Gupta) Rs. 24,00,000/- 4. That as the above m....
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....duly recorded in the books of accounts maintained by the assessee and is duly reflected in the annexed balance sheet at page no.28 of the paper book. In support of it the assessee has already furnished audited filial accounts and Tax Audit Report in the paper book page no.21 to 31. In the liability side of the audited balance sheet which is page 28 of the paper book it is clearly written as "receipt for DD Rs. 13,00,000/-. The bifurcation of Rs. 13,00,000/- is as under: i) Vijay Kumar Meena Rs.5,00,000/- ii) Hawa Singh Meena Rs.5,00,000/- iii) Smt.Sunita Devi Rs.3,00,000/- NOTE: Addition of Rs. 5,00,000/- on account of credit of Rs. 5,00,000/- in the name of Hawa Singh Meena stands deleted by the learned CIT[Appeals] and the department is not in appeal against this relief given to the assessee by the learned CIT[A]. 5. That as the above mentioned amount of Rs. 5,00,000/- in the name of Mr. Vijay Kumar Meena is duly recorded in the books of accounts maintained by the assessee provisions of sec 69A are not at all applicable in assessee's case and as such additions made u/s 69A of the IT Act by the AO and sustained by the learned CIT (Appeals) are liable to be ....
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....n by her during the relevant period was not auditable u/s.44AB of the I.T. Act. It is highly unbelievable that a person running a govt. allotted liquor shop does not have turnover of even sixty lac rupees and even does not have a bank account. Since she has not been produced, verification of facts regarding her capacity and genuineness of the transaction could not be carried out. Since availability of cash balance of Rs. 3,00,000/- in her hands has not been proved, the amount of Rs. 3,00,000/- shown in the cash book in her name is held to be unexplained and added to the income of assessee u/s.69A of the I.T. Act. " 2. That from reading the above referred para 8.2 of the assessment order the Hon'ble Bench will very kindly note that the A.O. has made addition of Rs. 3,00,000/- to the income of assessee u/s.69A of the I.T. Act. 3. That invoking of provisions of sec.69A of the I.T. Act and making addition u/s.69A of the I.T. Act at Rs. 3,00,000/- are void ab initio and liable to be cancelled particularly on account of the reason that provisions of sec.69A of the I.T. Act can be applied only in those cases where in any financial year the assessee is found to be the owner of an....