TaxTMI 
TaxTMI 
2018 (6) TMI 609
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....the DDIT(Inv.) Unit-II, Nagpur. It is noted by the Assessing Officer that in pursuance to tax evasion petition in the case of Shri Afzal Ansari (then partner of the assessee firm), the DDIT(Inv.) carried out certain enquiries and forwarded the report to the Assessing Officer for necessary action. The Assessing Officer noted during the course of assessment proceedings that the DDIT(Inv.) had recorded the statement of Shri Afzal Ansari wherein he admitted investment of Rs. 53 lacs for acquisition of a sand block in the name of Shri Prashant Umathe. The Assessing Officer further noted that the assessee was asked to furnish the details of the said transaction of Rs. 53 lacs which was not recorded in the books of accounts wherein the assessee produced the copies of cheques/DDs and subsequently disclosed an amount of Rs. 53 lacs in lieu of unaccounted payment made to Shri Prashant Umathe for acquiring said sand ghat. The assessee also "disclosed an amount of Rs. 10 lacs being income earned on the above investment which been offered for tax. 4. In view of the above information, the Assessing Officer reopened the assessment by issue of notice u/s 148 and the facts contained in the repor....
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....y (as against original return filed on 30.07.2007 showing income at Rs. 64,249/-). The Assessing Officer further noted that the expenses in this case were itself unaccounted and that the DDIT(Inv.) has therefore rightly asked the assessee to offer the undisclosed income. He noted that Shri Umathe is not a man of means and further noted as under :- "If an assessee in his written submission states that, in question No. 13 it was income arising out of advance/cost of purchases at Rs. 53 lacs has been offered to tax and not total amount of Rs. 53 lacs. Then why does the DDIT(Inv.) states in the letter that Rs. 53 lacs has been disclosed in view of unaccounted payment and Rs. 10 lacs voluntarily disclosed by the assessee' for A.Y. 2006-07." 6. The Assessing Officer further concluded as under:- "The DDIT(Inv) has rightly observed after conducting discreet enquiry that the assessee has declared Rs. 63 lacs (Rs.53 lacs from unaccounted payments to purchase the sand ghat and Rs. 10 lacs volunatarily) as undisclosed income. Thus on going through the above discussion and after considering the facts of the assessee it is clear that assessee has paid Rs. 53 lacs as unac....
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....fts had been prepared towards business transactions and were reflected in the books of accounts and that there was no undisclosed investment with regard to the same. Thus the appellant had retracted the statement made by its ex partner almost immediately after the statement recorded by the DDIT (Inv.) on 21.01.2013 and 11.02.2013. This fact of retraction from the statement made before the DDIT (Inv.) is duly mentioned in submission of the appellant before the Id. AO during assessment proceedings and finds mention in the first paragraph of the appellant's submission before the Ld. AO which is reproduced on page 3 of the assessment order. 6.2 Even during the course of assessment proceedings, the appellant reiterated the same submissions and explained that three demand drafts were drawn on the Centurion Bank of Punjab amounting to Rs. 33,45,386/- and that these were routine business transactions towards advance/cost of purchase given to Shri Umathe and were 'paid directly to Collector and later adjusted towards sand purchase. It was also stated that these transactions are duly reflected in the bank accounts and it was only the income arising out of the said turnover w....
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....ed that it has made payment of Rs. 33,45,386/- by way of demand drafts which are duly reflected in its bank accounts. At no point has the Ld. AO been able to rebut the above assertions of the appellant. Further at no point has the Ld. AO been able to bring on record any evidence to substantiate as to how the said figure of Rs. 53 lacs was arrived at and what is the nature of evidence underlying the said quantification of Rs. 53 lacs. 6.7 It is also a fact that the appellant has consistently mentioned before the DDIT(Inv.) (by way of letter) and the Ld. AO (during assessment proceedings) that it had omitted to include turnover amounting to Rs. 55 lacs in its return of income which has now been duly incorporated and the profit arising there-from has been offered to tax. In the return of income that the appellant filed in response to 148 notice, the estimated turnover has been taken at Rs. 59 lacs and it can be seen that the A.O. has accepted the turnover in the profit & loss account and in view of the same there is no justification of adding a further amount of Rs. 53 lacs to the income of the appellant. 6.8 Attention is also invited to the CBDT's Circular beari....
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....06 to 2008-09 which is reproduced hereunder : Asstt. Year Turnover Net Profit Net profit as % of turnover 2005-06 73,02,832 3,18,853 4.37% 2006-07 32,74,419 3,15,784 9.64% 2007-08 38,95,461 5,05,191 12.96% 2008-09 37,90,546 6,01,710 15.87% 7.2 As stated above, the income is offered @ 7.4% which is less than 9.6% as shown in the original return of income. Thus there is no basis with the appellant for showing the net profit at such a low percentage. Also it can be seen that the net profit percentage in subsequent years is 12.96% and 15.87%. Considering the above facts, it would be appropriate to estimate the net profit for the year under consideration at 10.7% (which is the average of the net profit percentage for the above four years). The same comes to Rs. 6,31,890/- as against Rs. 4,40,000/- shown by the appellant and hence addition to the extent of Rs. 1,91,890 is hereby confirmed and the appellant gets a relief to the extent of Rs. 8,08,110/-. 10. Against above the order, the Revenue is in appeal before us. 11. We have heard both the counsel and perused the records. Learned departmental representati....
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....ri. G) In assessment proceeding before A.O. the details as to investment made for purchase of sand having been flown from regular bank account was demonstrated. The source of deposit in the bank account being loan from bank and refund from Income Tax Department were also placed on record to substantiate purchases are from the funds available in the regular bank account and is not undisclosed investment. Such facts were not disputed by A.O. or found to be incorrect. (P-30 - 34)[Vol.-l] H) There is no evidence on record to substantiate that assessee has unexplained investment of Rs. 53 lacs. Assessee had clearly submitted before A.O. that actual investment made for purchase of sand as per books of account is Rs. 33.45 lacs and assessee has not given trade advance to the tune of Rs. 53 lacs. Inspite of specific averment before A.O. no evidence has been brought on record by A.O. to show that the assessee has made investment of Rs. 53 lacs which remained unexplained. The addition correctly deleted by Hon'ble CIT(A) for detailed reasons given in the appellate order. I) It is settled proposition of law that no addition can be made on the basis of mere statem....
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....ired by Deputy Director of Investigation. The same is evident from the tone and tenure of the statement recorded and also the fact that statement recorded is in two parts with the gap of almost more than 20 days. A.O. has not examined the existing partners of the assessee firm and has proceeded to rely on the statement of Shri Afzal Ansari given at the time when he was not partner of the firm. The statement given by Afzal Ansari is no valid legal evidence on the basis of which alone income can be assessed to tax at the hands of assessee. 13. Upon careful consideration, as regards the addition of Rs. 53 lacs, we find that the same has been done suddenly on the basis of admission of ex-partner of the firm before the Investigation Wing that sum of Rs. 53 lacs was paid being unaccounted payment for the purchase of sand ghat. No corroborative material whatsoever in this regard has been brought on record by the Revenue. The examination of the books of account has shown that a sum of Rs. 33,45,386/- was paid for acquisition of the sand ghat. The admission of payment by the ex-partner was not accepted by the other partners. In such circumstances de hors any corroborative material, the s....