TaxTMI 
TaxTMI 
2016 (5) TMI 1482
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....d along with the original returns, are bad in law since no incriminating material has been found. 3. The Ld CIT(A) has erred in upholding the rejection of books of accounts on the grounds that the deposits in the bank are not commensurate with the sale receipts on a particular day and relying on the papers pertaining to the A.Y. 2010-11 & 2011-12 and not taking any cognizance of the fact that all entries in the loose paper were completely explained. 3.1 The rejection of books of accounts on above grounds are totally illegal and bad in law in the absence of any defect found in the books of accounts specially in the cash book where all transactions including the cash sales are recorded. The assessee has maintained day to day stock registers which has been verified by the Ld AO and the Ld CIT(A). 4. The Ld CIT(A) has erred in observing that there is a huge suppression of cash sales and as such enhancing the sales at 17.5% and estimating the G.P. at the rate of 1.25% in gold transaction. All sales and purchases are fully vouched and the quantitative details have been maintained by the assessee. The Ld CIT(A) further erred in maintaining the addition in the si....
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....absence of any defect found in the books of accounts specially in the cash book where all transactions including the cash sales are recorded. The assessee has maintained day to day stock registers which has been verified by the Ld AO and the Ld CIT(A). 4. The Ld CIT(A) has erred in observing that there is a huge suppression of cash sales and as such enhancing the sales at 17.5% and estimating the G.P. at the rate of 1.25% in gold transaction. All sales and purchases are fully vouched and the quantitative details have been maintained by the assessee. The Ld CIT(A) further erred in maintaining the addition in the silver account by estimating the G.P. 4.1 The G.P. addition maintained at Rs. 7,79,54,342/- may please be deleted. 5. The Ld CIT(A) has erred in making a remark that the arbitration was correct and that the assessee has made the payment of 5 Crores to Lal Sai Estates. The Ld CIT(A) further erred in observing that even if the IDA acquires the land the assessee would be entitled to receive huge compensation. It was proved that the land in question was under acquisitioin of IDA and till today the same has not been released. The observations of the Ld ....
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....ddition in the silver account by estimating the G.P. 3.1 The G.P. addition maintained at Rs. 14,14,94,803/- may please be deleted. 4. The Ld CIT(A) has erred in making a remark that the arbitration was correct and that the assessee has made the payment of 5 Crores to Lal Sai Estates. The Ld CIT(A) further erred in observing that even if the IDA acquires the land the assessee would be entitled to receive huge compensation. It was proved that the land in question was under acquisitioin of IDA and till today the same has not been released. The observations of the Ld CIT(A) in para 15 to 15.4 deserves to be deleted. 5. The Ld CIT(A) has erred in making a remark that the cash found at Rs. 84,84,900/- is unaccounted. The cash book of the assessee showed a cash balance of Rs. 68,86,569/- and as such the addition of the whole amount is bad in law. 6. The Ld CIT(A) has erred in making a remark that the entries on the loose paper LPS1 Page 34 of Rs. 16,60,044/-, 45,30,200/-, 3,00,000/-, 4,79,215/- and Rs. 1,24,456/- are not reflected in the books. 7. The Ld CIT(A) has erred in maintaining the addition of Rs. 6,07,51,227/- as the income of MCX tran....
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....l." 3. In IT(SS) A No.254/Ind/2015 the Revenue has taken the following grounds of appeal :- "On the facts and in the circumstances of the case, the CIT(A) has - (i) While altering the addition of Rs. 4,15,97,088/- on account of estimation of gross profit on sales of gold bar made by the A.O., has erred in fact in holding that the A.O. made mistakes in conversion of 1 kg gold bar in 100 grams of gold bar during estimation of gross profit on sale of gold bar. Whereas, nowhere in the assessment order, the A.O. mentioned such conversion, but only talked about 100 grams out of 1 kg gold bar. (ii) erred in giving the aforesaid relief. The aforesaid issue was not clarified by the A.O. in the remand report. As such, the remand report was incomplete and defective. Instead of calling for the complete remand report, the CIT(A) relied on the incomplete and defective remand report and has given relief to the assessee. This tantamount to perverse finding of facts, since the revenue's version on the matter was neither obtained nor considered. (iii) While altering the addition of Rs. 4,15,97,088/- and Rs. 2,59,9,535/- on account of estimation of gross profit ....
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.... (ii) erred in giving the aforesaid relief. The aforesaid issue was not clarified by the A.O. in the remand report. As such, the remand report was incomplete and defective. Instead of calling for the complete remand report, the CIT(A) relied on the incomplete and defective remand report and has given relief to the assessee. This tantamount to perverse finding of facts, since the revenue's version on the matter was neither obtained nor considered. (iii) While altering the addition of Rs. 17,35,42,064/- and Rs. 9,65,123/- on account of estimation of gross profit on sales of gold and silver bar respectively made by the A.O. erred in not giving any contrary finding or any contrary enquiry against the A.O.'s findings on the basis of which the A.O. took the gross profit rate for gold and silver bar respectively. (iv) Erred in not accepting the rates taken by the A.O. even after confirming the findings related to large unaccounted cash sales. (v) Erred in giving the aforesaid reliefs. When incriminating materials were found and admitted to be credible and authentic by the CIT(A) and when rejection of books was upheld by the CIT(A); the findings on the basis....
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....facts, since the revenue's version on the matter was neither obtained nor considered. (iii) While altering the addition of Rs. 30,97,58,529/- and Rs. 40,69,563/- on account of estimation of gross profit on sales of gold and silver bar respectively made by the A.O. erred in not giving any contrary finding or any contrary enquiry against the A.O.'s findings on the basis of which the A.O. took the gross profit rate for gold and silver bar respectively. (iv) erred in not accepting the rates taken by the A.O. even after confirming the findings related to large unaccounted cash sales. (v) erred in giving the aforesaid reliefs. When incriminating materials were found and admitted to be credible and authentic by the CIT(A) and when rejection of books was upheld by the CIT(A); the findings on the basis of the same should not have been substituted by the estimation of gross profit, that too on the basis of the assessee's accounts which have been proved to be unauthentic and ethereal. This act of the CIT(A) defies logic and contradicts his own stand. (vi) erred in facts and law in deleting the addition of Rs. 3,00,00,000/- without bringing any finding or ma....
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....ts were included in the amount of unaccounted income determined on account of estimation of gross profit and despite the fact that no direct nexus between the two could be established. (xi) erred in facts and law in deleting the addition of Rs. 8,44,62,392/- made on account of unaccounted transactions in MCX on the basis of seized paper LPS-5 page No. 107. The CIT(A) has erred in arriving at the conclusion that addition of Rs. 2,37,11,165/- was the amount accounted for in the books without bringing any finding or mateiral on record contrary to the findings of the A.O. on this issue. Also the CIT(A) has erred in deleting the rest of addition ofRs.6,07,51,227/- without establishing the link which could prove that the said amount was included in the unaccounted income determined on the basis of estimation of gross profit even after confirming that the said amount is unaccounted income. (xii) erred in facts and law in deleting the additions of Rs. 20,27,500/-, Rs. 2,34,64,852/- and Rs. 20,22,954/- made on account of unrecorded transactions reflecting the in the seized paper page no. 108 to 109 without bringing any finding or material on record which could prove that t....
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....computation of assessed income in the end of the assessment order." 3. In the assessee's appeals, ground no. 1 & 8 in IT(SS) A Nos. 241/Ind/2015, ground nos. 1 & 9 in IT(SS) A No. 242/Ind/2015 and ground nos. 1, 14, 15 and 16 in IT(SS) A No. 243/Ind/2015 are general in nature and as such do not require any adjudication. 4. In the revenue's appeals, ground no. (ix) in IT(SS) A No. 254/Ind/2015, ground no. (ix) in IT(SS) A No. 255/Ind/2015 and ground no. (xix) in IT(SS) A No. 256/Ind/2015 are general in nature and as such do not require any adjudication. 5. Ground nos. 2 to 4.1 in IT(SS) A Nos. 241/Ind/2015, ground nos. 2, 3, 3.1, 4 and 4.1 in IT(SS) A No. 242/Ind/2015 and Ground nos. 2, 2.1, 3 and 3.1 in IT(SS) A No. 243/Ind/2015 in the assessee's appeals and ground nos. 1 to 5 in IT(SS) A Nos. 254 to 256/Ind/2015 in the revenue's appeal relate to rejection of books of accounts and with regard to part sustenance/deletion of additions made on the basis of gross profit in all these assessment years involved in these cross-appeals. 6. Brief facts of the case are that the assessee is an Individual doing the business of trading in gold and silver bullion and future trading in....
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....809 for the assessment year 2011-12. Now the assessee is in appeal before us. 8. Before us, the learned counsel for the assessee submitted that no incriminating documents were found. He further submitted that the assessee maintained complete stock records of all the purchases and sales which were fully vouched. The assessee imported gold and silver bullion under the Government policy through the banks. The assessee also purchased goods either from the banks or from various reputed dealers. All the purchases are fully vouched. The payments are normally received through RTGs in advance. Even for credit purchases the payments are made through banking channels mostly through RTGs in a short period. The assessee's sales are either in cash or by cheque. The credit sales are very few. The bills are issued in all cases. Since the market fluctuates on the basis of international prices, the assessee does not hold stock for a long. The market price is verifiable on the MCX gold report or the Sarafa publications. Since Indore is a central place for all the small gold dealers in surrounding areas, the dealers purchase goods in cash for which bills are prepared and entries are made in regular....
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....ru Tegh Bahadur Jayanti and sauda made has been entered in the sauda book. This paper does not depict any purchase or sale but merely shows the saudas and cannot be regarded as an unaccounted entry. He submitted that without prejudice to the above pleadings, the purchases are entered in books at cost without VAT and VAT charges are separately debited in the VAT A/c. A bill showing approximate rate of Rs. 20,000/- of Riddhi Siddhi Bullion dated 22.11.2010 was also included. The sales are effected along with VAT. With regard to loose paper LPS 5 page 107 which is a trial balance as on 24.11.2010, he submitted that the assessee has given complete bifurcation of the accounted and unaccounted entries and it was submitted that the unaccounted entries were only to the tune of Rs. 95,69,286/- on the credit side and Rs. 59,76,204/- on debit side. With regard to the entry in the name of MCX of Rs. 6,50,10,406/- it was submitted that this is the amount of Ahmedabad branch balance which was to the tune of Rs. 6.8 Crores. He pleaded that without prejudice to these, this was a credit entry and at the most the commission @ 2% could be estimated. It was submitted that this trial balance cannot be ....
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....of Mahendra Kumar Agrawal the rejection of books was held unjustified and the GP of 0.1% was accepted. He also pleaded that similar view has been taken in the case of ITO v/s Girish M Mehta. The assessee had filed number of instances of sale and purchase showing the rate of profit earned by the assessee at pages 40 - 46 of paper book no. II. It would be noticed that in the earlier year when the quantum of the sale was very less the assessee has shown a better profit. For the year 2009-10 the turnover was Rs. 190.26 crores which increased to Rs. 1035.93 crores in the assessment year 2011-12. Thus, the sales have increased by more than 5 times. The gold rates are verifiable from the internet which are fluctuating every hour on the basis of the international market. The learned counsel for the assessee also submitted that no incriminating document and unaccounted purchases or sales were detected for the assessment year 2009-10. The GP rate was also 0.53% which reflects good results for the year. Therefore, there is no justification for estimating GP for the assessment year 2009-10 and also enhancing the turnover. The learned counsel for the assessee, therefore, submitted that the a....
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....as Rs. 190.26 crores. The turnover of gold bullion for the assessment year 2010-11 increased to Rs. 585.95 crores and for the assessment year 2011-12 it increased to Rs. 1035.53 crores. One of the major reasons claimed for the fall in GP rate was the manifold increase in the turnover. The Assessing Officer estimated the profit on 1 kg. of gold in the range of Rs. 4000/- to Rs. 6000/- per 100 gm and GP on sales of silver was in the range of Rs. 1200/- to Rs. 2500/- on 1 kg. The CIT(A) estimated the GP at 1.25% and also enhanced the total turnover by 17.5% for these years and made the addition. 13. We further find that the CIT(Appeals) vide para-14 of the order concluded that method of estimation of profit adopted by AO was defective and faulty hence such estimation of income was rejected for all the years in relation to gross profit on sales of gold bullion. Similar defects were also there in estimation of profit by AO on sale of silver bars hence that estimation was also rejected. However, the learned CIT(A) grouped the sales of gold bullion and silver bullion together at Rs. 10,35,53,58,633/- (i.e. gold bullion Rs. 1030,03,690/- and silver bullion Rs. 5,50,01,943/-) for A.Y. 20....
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.... unaccounted sales for the assessment year 2011-12 and with a view to plug the loopholes, we are of the view that the enhancement in turnover by 5% on the sales recorded in the books of accounts shall be reasonable for the assessment year 2011-12. We accordingly direct the Assessing Officer to enhance the turnover by 5%. Further, on account of sharp fall in GP rate as disclosed by the assessee as compared to assessment year 2009-10, we also find it appropriate to enhance the turnover by 5% for the assessment year 2010-11. We direct accordingly. Since we are accepting the GP rate declared for the assessment year 2009-10 in the absence of any incriminating documents for the relevant period and better book results in comparison to succeeding years and no defect in books of accounts was found by the authorities below for assessment year 2009- 10, therefore, we direct to accept the book results for the assessment year 2009-10. The gold prices were also increased during the relevant period. The average gold price for the period relevant to the assessment year 2007- 08 was Rs. 8.36 lacs per kg. which increased to Rs. 16.32 lacs per kg for the period relevant to the assessment year 2010-11....
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....ver bullion account for the assessment years 2010-11 and 2011-12. 17. Ground no. 5 in IT(SS) A No. 241/Ind/2015 (assessee's appeal) and ground no. 6 in IT(SS) A No. 254/Ind/2015 (revenue's appeal) is regarding the addition sustained of Rs. 2,02,47,590/ - on account of unaccounted investment in A.Y. 2009-10. 18. The facts, in brief, are that on 26.1.2010 the police intercepted two persons with 30 silver bars weighing 919.276 kgs valued at Rs. 2,02,47,590/-. They were transferring the bullion from the residence of the assessee at Gumasta Nagar to his office at Chhota Sarafa, Indore. The police seized the silver which was requisitioned by DDIT (Inv.) by invoking provisions of section 152A of the Act. The assessee claimed that these silver bars were purchased on 25.8.2008 by the assessee at Ahmedabad from Riddhi Siddhi Jewellers 609.456 kgs and M/s M.D. Overseas 309.211 kgs and then transported from branch office at Ahmedabad to Indore office by Rajesh Driver of the assessee who carried the same by Vehicle No. MP 41, D- 0175. The original bills were handed over to the police. The Assessing Officer did not believe the assessee's explanation and made the addition. The learned CIT(A....
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.... purchases from M/s Hyundai Exports of Rs. 17,85,88,277/-. As per the Assessing Officer, the assessee could produce the original bills to the tune of Rs. 12,56,94,400/- and the remaining bills were not produced. The Assessing Officer observed that bill/tax invoice does not bear the official seal of the seller. In place of seller, the space was found blank. The bill issued on 17.9.2008 was not found to have been signed by the seller and the order number, date of order, delivery memo, etc. were found blank. He observed that the bills produced cannot be relied upon and accordingly addition was made. 24. Against the addition so made by the Assessing Officer, the assessee preferred appeal before the learned CIT(A) who observed as under :- "18.2 As is evident entire purchase account of purchases of Rs. 17,85,88,277/- from M/s Hundai Export was manipulated one. However having arrived at conclusion of questionable purchase from one party, it does not lead to such conclusion automatically that entire of such amount is to be added in hands of appellant, unless it can be established that such purchases were not for business of appellant, but for his personal consumption. Certainly....
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....ck register different purchases. He further submitted that the confirmation from the seller has been filed, bills were produced, purchases are entered in the regular books of accounts and also in the stock register, payments for all these purchases were made through banking channels, all these payments are verified from books of accounts and bank statements. He, therefore, pleaded that such additions are unjustified. 27. On the other hand, the learned DR relied upon the assessment order. 28. We have heard both the sides. We find that the assessee has filed confirmation from the seller, the original bills were produced, the purchases are entered in the regular books of accounts and stock register. The payments for these purchases were made through banking channels that too in advance, which are verifiable from the books of accounts as well as from the bank statements. The assessee has submitted necessary documents and evidence in the paper book. Keeping all these facts in view, we find no merit in sustaining the addition. Hence, we delete the same. 29. Ground no. 7 in IT(SS) A No. 241/Ind/2015 is regarding sustenance of addition of Rs. 50 lacs made u/s 68 of the Act which w....
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....assessee failed to prove its case before the learned CIT(A) and as such he was fully justified in maintaining the addition made by the Assessing Officer. 32. We have heard both the sides. We find from the bank statement of M/s Pramila Investment & Finance Limited that there was bank balance of Rs. 32.5 lacs on the last date of the financial year i.e. on 31.3.2009. The interest was paid after deducting TDS. These facts are sufficient to establish that the assessee was able to be discharge the obligation casted upon him u/s 68 of the Act by establishing the identity, creditworthiness and genuineness of the transaction. In this view of the matter, we have no alternate but to delete the addition. Accordingly we direct the Assessing Officer to delete the addition. This ground of the assessee is, therefore, allowed. 33. Ground no. 7 in the revenue's appeal in IT (SS) 254/Ind/2015 is against deleting the addition of Rs. 45 lacs made by the Assessing Officer on account of unexplained cash credit u/s 68 of the Act. 34. The learned CIT(A) has deleted the addition with the following observations :- "17. Gr. no. 9 of appeal is against addition of Rs. 45 lakh u/s 68 of the I.T....
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.... (iii) 30.4.2010 Rs. 1,50,00,000/- (iv) 31.8.2010 Rs. 1,50,00,000/- The Assessing Officer in his order for the assessment year 2010-11 observed that the assessee has paid Rs. 2 crores which was from his undisclosed income. He accordingly made the addition. 40. Being aggrieved by the addition so made by the Assessing Officer, the assessee preferred appeal before the learned CIT(A). The learned CIT(A) after considering the facts of the case and arguments of the learned counsel for the assessee, confirmed the addition made by the Assessing Officer. Now the assessee is in appeal before the Tribunal. 41. Before us, the learned counsel for the assessee contended that Khajrana land belongs to the assessee and his maternal uncle, Shri Keshav Nachani, who was looking after this land. This land was notified for acquisition by Indore Development Authority. He submitted that as such the said land could not be transferred to anybody. The agreement was entered into and the payment of Rs. 51 lacs was received which was duly entered in the books of accounts. Since the agreement could not be acted upon because of the scheme announced by the IDA, the matter was referred for arbi....
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....sessment order of M/s Lal Sai Estate Private Limited was also filed before the authorities below. He submitted that these facts also find mention in the assessment order of M/s Lal Sai Estate Private Limited, the party with whom said agreement was executed. It was claimed that possession of the land was not given and the land was shown in fixed assets in the balance sheet in all these years. He submitted that the said land could not be transferred even today because of the scheme of IDA. He also submitted that this document only mentions that the assessee would make payment but the assessee has not done so. It is also claimed that the assessee has neither received any payment of Rs. 2,50,00,000/- as mentioned in the arbitration award nor has executed any registry till date. 42. On the other hand, the learned DR relied upon the orders of the authorities below and submitted that the assessee has no case. 43. We have heard both the sides. We find that the so called award was not complete as one of the arbitrators did not sign arbitration award. We further find that the addition has been made only on the basis of presumption that the assessee might have received the amount as per....
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....made the additions u/s 68 of the Act. 46. Being aggrieved by the order of the Assessing Officer, the assessee preferred appeal before the learned CIT(A). After considering the arguments of the assessee and the facts of the case, the learned CIT(A) sustained the addition by holding that this addition shall be over and above the addition of gross profit and also confirmed the disallowance of interest paid to these parties. Now the assessee is in appeal before us. 47. Before us, the learned counsel for the assessee submitted as under :- "Addition u/s. 68 in the name of Sambhav Exports Limited The Ld. AO has made the additions of Rs. 3,00,00,000/- being the sundry credit balance in the name of Sambhav Exports Limited on the ground that the identity, and creditworthiness of the creditor has not been proved by filing the copy of the Income tax return and the bank statements of the said party. It was submitted that the assessee has filed the confirmation with PAN NO. It would be noticed that the transaction has taken place through banking channel. The Ld. AO issued the commission u/s131(1)(d) to DDIT investigation. In the report the Ld. DDIT clearly mentioned that ....
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.... location of the company and its directors along with PAN and telephone nos. were given. The confirmation of the landlord M/s. Mehta Industrial Corporation who had given the premises (table space) on rent to the lender company was also filed. The bank statements and the copies of the IT returns were also filed which proves the fact beyond doubt that the lender company was not a paper company as alleged. Kind attention is invited to page nos. 339 to 345 of paper book dated 07.01.2016 which includes confirmation of accounts by the depositor, copy of bank statement of Axis Bank and IndusInd Bank as well copy of Income tax return submitted before AO are annexed which proves not only the identity but genuineness of transaction also which was just doubted upon by the AO. The report of DDIT (Inv.) Bombay who had issued summon u/s 131 to the director of the company also revealed the fact that the company is in existence and having table space with M/s. Mehta Industrial Corporation. Thus, not only the identity of the company was proved from the fact that it is duly incorporated under the Companies Act but its capacity and genuineness of transaction was also proved. Interest was paid on the ....
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....P) 249 is concerned, in that case, despite several opportunities, the assessee was unable to provided confirmations from the concerned parties, therefore, the Hon'ble Court reached to a particular conclusion, whereas in the present appeals, the identity of share applicants, namely, M/s. Shrilal Traders Private Limited, M/s Lakeview Vinimay Private Limited, M/s Saharsh Suppliers Private Limited and M/s Ambitions Tie Up Private Limited was established, therefore, in view of the decision from Hon'ble Apex Court in the case of Lovely Exports Private Limited (supra), this judicial decision from Hon'ble High Court may not help the revenue. 6. So far as the argument of the learned Sr. DR and the objections / observations of the learned Assessing Officer/learned Commissioner of Income Tax (Appeals) that these are paper companies only, the contention raised on behalf of the assessee is that the net worth (as on 31.3.2007) of such share subscribers is Rs. 317.31 lacs, Rs. 424.58 lacs, Rs. 385.71 lacs and Rs. 289.01 lacs. We are not going on the issue of worth of these share applicants because the Hon'ble Apex Court in the case of Lovely Exports Private Limited (supra....
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..../subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. Once these documents are produced, the assessee would have satisfactorily discharge the onus cast upon him. The AO can discredit the documents produced by the assessee with cogent reasons and materials but not on the realm of suspicion; (ii)If the assessee has produced documents like PAN Card, bank account details or details from the bankers the onus shifts upon the AO and it is for him to reach the shareholders and the AO cannot burden the assessee merely on the ground that summons issued to the investors were returned back with the endorsement "not traceable" (v) There is an additional burden on the Department to show that even if share applicants did not have the means to make investment, the investment made by them actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee." 50. We also find that the Hon'ble Rajasthan High Court in the case of Shri Barkha Synthetics Limited vs. CIT (2006) 283 ITR 377 held that if the transactions are made through banking channels and once t....
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....opal both being project of Shri Keshav Nachani & partners. On that basis appellant admitted following unaccounted investment:- AY 2010-11 Rs. 2,71,75,000/- AY 2011-12 Rs. 1,98,36,250/- AY 2011-12 Rs. 70,38,750/- (cash seized and disclosed at Rs. 84 lacs) 16.1 On the basis of such admission, while AO accepted that part of such investment of Rs. 70,38,750/- was returned back to appellant as cash & was covered in disclosure of cash seized of Rs. 84 lakhs, he made addition of Rs. 2,71,75,000/- and Rs. 1,98,36,250/- as unaccounted investment made by appellant in Bhopal properties (C-21 Mall and Globus green Acre Project) in AY 2010-11 and AY 2011-12. It is therefore held that as per seized documents from pen drive and as per admission of appellant, there is no doubt that amount of Rs. 2,71,75,000/- was unaccounted investment of appellant in AY 2010-11, in Bhopal property but since an addition of gross profit of Rs. 7.79 crore is already confirmed in hands of appellant , in this year, as unaccounted profit earned, hence investment of Rs. 2,71,75,000/- though unaccounted would be merely application of unaccounted income already taxed in hands of appella....
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....res on 31.08.2010. As discussed while deciding ground no. 5 in appeal for A.Y. 2010-11, the award did not reach its finality, hence on presumption addition made in the A.Y. 2011-12 also is not sustainable. We, therefore, direct to delete the same. This ground of the assessee is, therefore, allowed. 61. Ground no. 5 is regarding sustaining the addition of cash found of Rs. 84,84,900/-. The revenue has also taken this issue in its ground no. 7 in IT(SS)A No. 256/Ind/2015. 62. The learned CIT(A) has dealt with this issue in para 16 of his order. Since the assessee himself has admitted this cash as unaccounted in his statement u/s 131 of the Act and before us also the assessee is not able to controvert his statement with any evidence, therefore, we find no merit in this ground of the assessee. In this view of the matter, the assessee's appeal is dismissed whereas the departmental appeal is allowed. 63. Ground no. 6 in the assessee's appeal is against sustaining the addition made on the basis of loose paper LPS-1/34 of Rs. 16,60,044/-, Rs. 45,30,200/-, Rs. 3,00,000/-, Rs. 4,79,215/- and Rs. 1,24,456/-. The revenue has also filed an appeal on this issue in ground no. 10 in IT(SS....
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....ddition of Rs. 1,24,456/- it was explained that the assessee received advance payment of Rs. 92,50,000/- from M/s Jai Mata Di Bullion and Jeweller against which sale bill was issued of Rs. 91,25,544/-. The learned counsel for the assessee submitted that it is thus apparent that Rs. 1,24,456/- was the excess amount over and above the bill issued. He further submitted that how the excess amount can be treated as suppressed sale ? To prove the veracity of these facts, the learned counsel for the assessee drew our attention to pages 9 to 13 of the assessment order. The learned counsel for the assessee, therefore, prayed that in the wake of the facts mentioned above, learned CIT(A) was fully justified in deleting the addition and as such the revenue's appeal deserves to be dismissed. 68. We have heard both the sides. We have already decided the issue of gross profit and enhancement of turnover in earlier part of this order. This ground has been taken by the assessee in his appeal and the learned CIT(A) has allowed the same. Keeping these facts in view, we sustain the order of the learned CIT(A) to the effect that no separate addition can be made for such notings on this loose paper p....
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....00 0 100000 Not recorded 12 CADBURY 0 47600940 47600940 Recorded Transaction. Stock in hand 26.899 Kg gold of Rs. 5,41,21,082.0 0 Gold in this trial balance was found short in comparison of opening gold balance on 25-11-2010 indicating unaccounted cash sales. 13 CASH HAJAR 0 2769710 2769710 Recorded transaction. Out of Cash in hand Rs. 68,86,569/- opening Bal Discussed in par 16 of this order 14 DAMU 0 7526900 7526900 Cross entry. This is cross entry with Damu Brajesh $ Co. -- 15 DEVA RAM 400000 0 400000 Not recorded.Temporary advance -- 16 GOPAL RAJKOT 14627 0 14627 Not recorded -- 17 JATIN 2100000 0 2100000 Not recorded This proves modus operandi of unrecorded cash sales 18 KAPIL 0 5023673 5023673 Rs.15,09,999 in books As debit to Hitesh Dhanwani Diff. 35,13,674/- ( Kapil is nick name of Hitesh) is cash balance kept with him which was out of opening cash balance in books of account as on 24.11.2010 (search date 25.11.2010), Hitesh/Kapil is also looking after the business of the assessee being son of the assessee. Tra....
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.... both accounted as well as unaccounted. For example Axis Saving a/c, D.P. Jewellers, Damu Brajesh & Co., Rajesh MM, Lal BPL, Pappu Jai Mata Di etc are all in real or abbreviated name, but none of them is in bogus name. Hence "MCX" is also to be taken as real name especially when appellant has done huge transactions on MCX in name of self as well as on child ID's and dabba trading. In order to avoid any examination of MCX trading a/c, appellant tried to divert department's attention by stating that it was "Ahmedabad Branch current a/c balance" without explaining how noting as "MCX" could mean "Ahmedabad Branch balance". 20.3 Secondly it is interesting to note as to how two entries namely "MCX - Rs. 6,50,10,406/-" and "Ahmedabad Branch Balance - Rs. 6,80,22,823/-", where both name & amount are different, could be stated to represent the same thing, while appellant himself has tried to reconcile even small differences of few thousand in other accounts of this trial balance. Despite all efforts to divert the attention, it has become clear from this trial balance seized at page 107 of LPS-5 as also from page no.7 to 51 of LPS-2, that huge transactions were carried out by appell....
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..../- as per the table given below :- Fictitious name Number enclosed Actual name for Net surplus Brokerage Choudhary 12002 516827 2313/- Ishwar ji 25018 Sanjay 5586694 11764/- Kailash Jhansi 25027 Kumar 1766912 0 Kishore ji 12026 3146848 5972/- Monty 25012 Mahesh 102960 Dr. 0 Patni 25029 Santosh Kuamr 810039 6185/- Pyarelal 12038 Nachare 132363 3081/- Suresh JBL 12022 1220831 3384 Vinod 25047 4654359 0 Zaveri 25043 117801 0 Tony 2394506 6680/- Sharad JBL 25036 22835206 2,07,773/- Total 4,31,82,986/- 2,47,152/- Both of these amounts i.e. Net surplus in MCX trading in these 12- names of Rs. 4,31,82,986/- is nowhere reflected in books of accounts and while appellant has reflected brokerage income from MCX trading at only Rs. 2,80,356/-for the entire year, such brokerage income just for 4 days from 20-11-2010 to 24-11-2010 was Rs. 2,47,152/-, as per the seized papers, which shows huge suppressi....
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....r unaccounted transactions in trading of bullion, a G.P. addition is already made in para 14 of this order. As a result Gr. No.14 of appeal is partly allowed." 71. Against the above finding of the learned CIT(A), the revenue as well as the assessee are in appeal before us. 72. The earned counsel for the assessee submitted that so far as loose paper LPS 5 page 107 is concerned, it is a trial balance as on 24.11.2010. He submitted that the assessee had given the complete bifurcation of the accounted and unaccounted entries. He also submitted that the unaccounted entries were only to the tune of Rs. 95,69,286/- on the credit side and Rs. 59,76,204/- on debit side. Regarding the entry in the name of MCX of Rs. 6,50,10,406/- it was submitted that this entry is the amount of Ahmedabad branch balance which was to the tune of Rs. 6.8 Crores. Without prejudice to these submissions, he submitted that this was a credit entry and at the most the commission @ 2% could be estimated. It was submitted that this Trial balance cannot be a reason for rejecting the books. It might contain the unaccounted entries but they are all balances as on a particular day which has been assessed to tax for ....
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....eek's time and in most of the cases they are intra-day transactions which are normally settled by payment/receipt of difference. When such trading is done on behalf of others, brokerage income is earned. Therefore, it would be unrealistic approach to consider entire trading transactions as unrecorded income. The approach of the CIT(A) to consider credit balance appearing in the name of MCX as undisclosed income even after deducting profit earned and recorded in the books cannot be sustained. While carrying out transactions in any commodity exchange like MCX, nominal margin money is required. Therefore, it would be fair and proper to estimate further additional profit over and above disclosed by the assessee. We, accordingly direct to estimate net profit @ 5% on undisclosed income on Rs. 6,50,10,406/- appearing in the trial balance in the name of MCX. This ground of appeal is therefore, partly allowed in favour of assessee. 75. The revenue is also before us on this issue by taking ground no. 11 in IT(SS) A No. 256/Ind/2015 relating to deletion of Rs. 8,44,62,392/- as unaccounted transactions in MCX. 76. Before us, the learned DR submitted that the learned CIT(A) was not justif....
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....ppeal by taking ground no. (xii) in IT(SS) A No. 256/Ind/2015 on this issue. 80. Brief facts of the case are that during the course of search some loose papers were found and entries made therein were found not to have been explained by the assessee. As per the assessment order (page 19) the assessee made cash sales of Rs. 20,27,500/- and made purchases of Rs. 20,22,954/- (page 25). The Assessing Officer found that both these transactions were not recorded in the books. At page 25 of the assessment order the Assessing Officer observed that unrecorded sales of the assessee were Rs. 2,34,64,852/- as per entries on page 109 of LPS-5. He, therefore, treating these transactions as out of book, made the additions thereof. 81. Felt aggrieved, the assessee preferred appeal before the learned CIT(A) and the learned CIT(A) vide para 21 of his order observed as under :- 21. Gr. no.15 of appeal is against the addition made of Rs. 20,22,954/- on the basis of seized paper page 108-109 of LPS-5. According to appellant these papers contained data for saudas entered into by appellant & they were all entered is books of accounts. The entries on the seized papers are discussed below:- ....
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....was not justified in granting relief to the assessee without any basis. 84. On the other hand, the learned counsel for the assessee submitted that LPS-5/109 was explained in detail before the authorities below and detailed explanation finds place from page 20 to 25 of the assessment order. The entries were in the form of Saudas of purchase and sale and they were properly recorded as and when the delivery was given/taken. He submitted that as such there was no justification in making the addition by treating the transactions as unrecorded sales. It was, therefore, submitted that the learned CIT(A) was fully justified in deleting the addition after considering the detailed submissions of the assessee to the effect that enhancement turnover and application of gross profit rate would cover such discrepancy, if any. 85. We have heard both the sides. We find that the learned CIT(A) has deleted this addition on the basis that "since addition of gross profit of Rs. 14.14 crore is already made in this year taking into consideration, the various unrecorded transaction, hence no separate addition is called for, for the entries recorded on page 108-109 of LPS-5. Hence additions of ....
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....- on account of cash book opening balance of Rs. 27,69,710/- on 25-11-2010, cash sales of Rs. 1.12 crores, unaccounted cash payments of Rs. 5 lakh each to M.J. Jewellers and to Ishwar (MCX) and unaccounted cash purchases of Rs. 79,40,236/-, could not be made separately, as all those transactions indicate suppression of cash sales and suppression of GP, for which sales is enhanced by 17.5% and GP is enhanced by Rs. 14.14 crore. Therefore though seized paper shows modus operandi of unrecorded transactions, but all five additions made on the basis of this paper are deleted. Gr. no.16 of appeal is allowed." 89. Before us, the learned DR supported the assessment order. 90. On the other hand, the learned counsel for the assessee submitted that LPS-5/55 was explained in detail before the authorities below and detailed explanation finds place from page 29 to 37 of the assessment order. The entries were of purchase and sale which were properly recorded. As regards cash balance stated on the loose paper LPS-5/55 it was explained by the learned counsel for the assessee that the same forms part of total cash found during search over Rs. 84 lacs. The assessee maintained cash at different ....
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....e assessee which were found not recorded in the books. Section 69C of the Act reads as under :- 69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the 6[Assessing] Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year :] 7[Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income.] (emphasis supplied) From a bare perusal of the above section it becomes crystal clear that unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income. Since these payments were made by the assessee but not recorded in the books of accounts, the learned CIT(A) was not justified in granting relief against the addition made towards gross profit. We, there....
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....kar Exim P. ltd remained unexplained & when he could not face the compelling circumstances & findings of investigations of DDIT, he surrendered this unsecured loan of Rs. 1 crore, as his unaccounted income, as a part of his overall disclosure of Rs. 10 crore made by appellant. 26.3 As a result it is held that cash credit of Rs. 1 crore remained unexplained and its addition u/s 68 of I.T. Act is hereby confirmed. For this purpose reliance is placed on the decision in cases of M/s Agarwal Coal Corp. P. ltd [2011] 17 ITJ 111 (Indore Trib.) wherein it was held that credit entries taken from paper companies remained unexplained as also on the decision of jurisdictional High Court in case of Gyan Chand Anil Kumar [2002] 120 Taxman 842 (MP) wherein addition of cash credit was upheld even though same was returned very next day, as entries were manipulated ones. Reliance is also placed on decisions in cases of Umesh Krishnani [2013] 217 Taxman 13 (Gujarat) Hindon Forge P. Ltd [2012]211 Taxman 113 (Allahabad) and Smt. Suman Gupta [ 2012] 138 ITD 153 (Agra). As addition of Rs. 1 crore is confirmed, the disallowance of interest expense on such loans of Rs. 7,15,397/- is also upheld. A....
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....king channel and the existence of Sanskar Exim Pvt. Ltd. was fully proved. The confirmation letter was filed from the above named party. Since all necessary details have been filed the additions upheld may please be deleted." 99. We have heard both the sides. After considering the arguments of the parties in the wake of the facts obtaining in this case, we find that similar addition made u/s 68 of the Act in relation to deposits received from three depositors has been deleted by us for the reasons given in the foregoing paragraphs. The facts as well the evidence produced i.e. confirmation certificates along with copies of bank statement and acknowledgment of returns remain the same. The facts being identical, the loan taken from M/s. Sanskar Exim Pvt Ltd. at Rs. One crore is held to be genuine and, therefore, the addition made by the authorities below is hereby deleted. We, therefore, direct the Assessing Officer to delete the addition. 100. In ground no. 12 the assessee has taken the ground that the learned CIT(A) has erred in maintaining the addition of Rs. 17,99,014/- and Rs. 12 lacs being the interest paid on the unsecured loans received from Khusi Export and Vinay Gems w....
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....naccounted transactions. It is also a fact that appellant is involved in large scale commodity transaction on MCX. Considering all these facts the addition of Rs. 2,74,06,204/- made on the basis of seized paper is hereby confirmed. Gr. no. 23 of appeal is dismissed." 104. Against the above findings of the learned CIT(A), the assessee is in appeal before the Tribunal. 105. Before us, the learned counsel for the assessee submitted as under :- "Addition in respect of paper on internet of O-Brien. The copy of the said paper is given at Pg.357 of the PB. This paper was recovered from the internet and address of the party is given as Jitesh International of Sharjaha. The reply to the notice given is placed at P.221 of the common PB. It is submitted that Jitesh International was transferred by the assessee prior to the year 2001 to Shri Balkrishna Parsram of Dubai. The dealing is with that firm which is situated outside India. The Ld. AO wanted the assessee to produce Shri Balkrishna Parsram and his accounts book which was not possible. During the course of the proceedings the letter was filed by him stating that this company belongs to him. It is humbly submitted that the ....
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.... in support of its claim. We, therefore, sustain the order of the learned CIT(A) and dismiss this ground of the assessee. IT(SS) A No. 256/Ind/2015 - Revenue's appeal 107. Ground no. 8 in this appeal is regarding the deletion of addition of Rs. 70,72,244/- and Rs. 11,07,760/- made on account of unaccounted jewellery found during search. 108. The learned CIT(A) has accepted the claim of the assessee that the gold ornaments up to Rs. 52 lacs were unaccounted. The learned CIT(A) has dealt with this issue in paras 17 and 17.1 at pages 106 and 107 of his order which are reproduced hereunder :- "17. Gr. no.11 of appeal is against making an addition of Rs. 70,72,244/- & Rs. 11,17,760/- u/s 69 A of I.T. Act, on account of investment in Jewellery. During search at residence of appellant, Jewellery weighing 4122.230 gm of Rs. 70,72,244/- was found, out of which Jewellery weighting 2431.831 gm of Rs. 41,64,385/- was seized. Besides this Jewellery of Rs. 11,07,760/- was found in locker no.1298, Bank of India. During post search proceedings, appellant has accepted that Jewellary seized from residence & lockers of Rs. 52 lakh has been purchased by him, out of his unaccounted so....
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....ive. During simultaneous search at office premises of appellant's maternal uncle Shri Keshav Nachani a pen-drive inventorized at S.No.1 of Ann. BS-1 dated 26-11- 2010 was seized from Orbit Mall office. From this pen drive unaccounted investment of appellant was found of a total of Rs. 5.40 crore in C-21 Mall Bhopal and Globus Green Area project, Bhopal both being project of Shri Keshav Nachani & partners. On that basis appellant admitted following unaccounted investment:- AY 2010-11 Rs. 2,71,75,000/- AY 2011-12 Rs. 1,98,36,250/- AY 2011-12 Rs. 70,38,750/- (cash seized anddisclosed at Rs. 84 lacs) 18.1 On the basis of such admission, while AO accepted that part of such investment of Rs. 70,38,750/- was returned back to appellant as cash & was covered in disclosure of cash seized of Rs. 84 lakhs, he made addition of Rs. 1,98,36,250/- as unaccounted investment made by appellant in Bhopal properties (C-21 Mall and Globus green Acre Project) in AY 2011-12. It is therefore held that as per seized documents from pen drive and as per admission of appellant, there is no doubt that amount of Rs. 1,98,36,250/- was unaccounted investment of appellant in AY 2....
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....g of cash in hand which is verifiable from the books of accounts. Regarding the addition of Rs. 45,30,200/-he submitted that it was already included in total sales effected on 10.7.2010 of Rs. 2,24,19,341/-. This was not accepted by the Assessing Officer. So far the addition of Rs. 4,79,215/- was explained by the learned counsel for the assessee as contra-entry of cheque issued of Rs. 3 lacs and another amount of Rs. 1,79,215/- as temporary advance for purchase of jewellery. As regards the addition of Rs. 1,24,456/- it was explained that the assessee received advance payment of Rs. 92,50,000/- from M/s Jai Mata Di Bullion and Jeweller against which sale bill was issued of Rs. 91,25,544/-. The learned counsel for the assessee submitted that it is thus apparent that Rs. 1,24,456/- was the excess amount over and above the bill issued. He further submitted that how the excess amount can be treated as suppressed sale ? To prove the veracity of these facts, the learned counsel for the assessee drew our attention to pages 9 to 13 of the assessment order. The learned counsel for the assessee, therefore, prayed that in the wake of the facts mentioned above, learned CIT(A) was fully justifie....
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....be dealt with as per our directions above. 127. In ground no. 16 the revenue taken the ground in respect of deleting the addition of Rs. 3,85,520/- made on the basis of LPS -2. 128. The learned CIT(A) has dealt with this issue in para 25 at page 117 as under :- "25. Gr. no. 19 of appeal is against addition of Rs. 3,85,520/- added on the basis of page no.91 of LPS- 1/91, which is a purchase bill of gold of Rs. 3,85,520/- from M/s Prakash Jewellers. AO added the same in apprehension that same was not recorded in books, whereas appellant produced the books before AO showing both inward & outward entry, showing that such purchase was cancelled. Since books were produced showing reversal of such entry, no adverse inference could be drawn, without any basis. Hence addition of Rs. 3,85,520/- is hereby deleted. Gr. no.19 of appeal is allowed." 129. The learned DR failed to controvert the findings of the learned CIT(A) that the books of accounts produced reflected such entries and no adverse inference is drawn. For the same reasons, this ground of the revenue is dismissed. 130. In ground no. 17 the revenue has taken the issue regarding deleting the addition of Rs. 9,43,....