TaxTMI 
TaxTMI 
2019 (9) TMI 550
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....akhs was seized. The statement of Shri Nanchand Bhogilal Shah, partner of the assessee firm was recorded on 04-12-2003 u/s. 131(1)(b) of the Act. He admitted cash seized Rs. 40 lakhs as undisclosed income of the group. In his statement he offered the entire cash for tax in the name of three group entities viz. Nanchand & Co., Swati Automobiles and Danendra Kumar & Co. spread over the period of six years starting from assessment year 1998-99. The details of cash disclosed in the name of group entities over the period of six assessment years is as under : Sr. No. Name of the concern A.Y. Amount (Rs.) 1 M/s. Nanchand & Co. 1998-99 3,10,000/- 2 -do- 1999-2000 3,10,000/- 3 -do- 2000-01 3,10,000/- 4 -do- 2001-02 3,10,000/- 5 -do- 2002-03 3,10,000/- 6 -do- 2003-04 3,10,000/- 7 -do- 2004-05 40,000/- 8 M/s. Swati Automobiles 1998-99 30,000/- 9 -do- 1999-2000 30,000/- 10 -do- 2000-01 30,000/- 11 -do- 2001-02 30,000/- 12 -do- 2002-03 30,000/- 13 -do- 2003-04 30,000/- 14 -do- 2004-05 20,000/- 15 M/s. Danendraku....
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....cludes the profits earned out of the unaccounted business activities. The appellant be granted just and proper relief in this respect. 3. On the facts and circumstances prevailing in the case and as per the provisions of the Act, it be held that the addition of Rs. 23,221/- on account of unaccounted expenditure is unwarranted, unjust and against the provisions and scheme of the Act. The said addition be deleted and the appellant be granted just and proper relief in this regard. 4. Without prejudice to the above ground, on the facts and circumstances prevailing in the case and as per the provisions of the Act, it be held that the amount of Rs. 23,221/- on account of unaccounted expenditure has already been taxed in the hands of Mr.Nandchand Shah for A.Y.2001-02 and therefore no separate addition should be made in the hands of the appellant. The addition be deleted and the appellant be granted just and proper relief in this respect. 5. On the facts and circumstances prevailing in the case and as per the provisions of the Act, it be held that the addition of Rs. 3,84,207/- on account of unaccounted initial investment is unwarranted, unjust and against the pr....
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.... 5.2 The ld. AR contended that in the statement recorded on 14-12-2003 Shri Nanchand Bhogi Lal Shah while replying to Q. No. 7 has categorically stated that unaccounted cash was generated from the transactions of unaccounted purchases and sales. Thus, the cash found in the premises of appellant was out of profits from unaccounted business activities. The ld. AR prayed that the telescopic effect of the cash declared may be given to the assessee against addition on account of gross profits on unaccounted sales. In case the benefit of telescopy is not given it would result in double addition of income in the hands of assessee. The ld. AR further contended that for the assessment year 1998-99 the cash declared by the assessee is Rs. 3,10,000/- and GP addition on account of undisclosed purchases as computed above is Rs. 2,69,700/-. After giving telescopic effect of cash declared against GP on unaccounted sales, there would be no addition. 5.3 In respect of addition on account of unexplained expenditure u/s. 69C the ld. AR submitted that once GP addition on unaccounted sales is made no further addition on account of unexplained expenditure u/s. 69C should be made. 5.4 The ld. AR....
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....ssee is that the cash seized during search is generated from the business activities. A perusal of statement Shri Nanchand Bhogi Lal Shah recorded on 04-12- 2003 u/s. 131 reveal that while replying to Q. No. 7, he has categorically stated that "Whatever profits the generated out of the transactions of purchases and sales are reflected in different pages in these four seized bundles formed also the part of total cash of Rs. 40/- lacs seized from my residence." Thus, unaccounted cash offered by the assessee was against undisclosed business transactions. 8. The Commissioner of Income Tax (Appeals) in First Appellate proceedings has enhanced GP addition by extrapolating sales for the month of October, 1997 to the entire year. The contentions of the assessee is that October being the month of Diwali festival the sales are at peak. Hence, sales during festival months/seasons cannot be extrapolated to the entire year. We find merit in the contentions of the assessee. Merely for the reason that there were high volume of sales in the month of October on account of festival, the sales cannot be extrapolated to the other months for computing annual turnover. This would give unrealistic ....
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....ions made during assessment proceedings are in respect of undisclosed business transactions. The GP addition is made on turnover determined by extrapolation of sales. We are of considered view that the assessee deserves the benefit of telescopic effect on GP additions against cash seized and offered to tax. Therefore, we find merit in the contentions of the assessee in seeking the benefit of telescopy of cash seized against addition on account of gross profits on unaccounted sales. In principle, we allow ground No. 6 of the appeal. However, we deem it appropriate to restore this issue back to the file of Assessing Officer for limited purpose of giving telescopic effect to the GP after re-computation. Accordingly, ground No. 6 of the appeal is allowed for statistical purpose. 12. The ground No. 7 is general in nature, hence, require no adjudication. 13. In the result, the appeal of assessee is partly allowed in the terms aforesaid. ITA No. 2208/PUN/2016, (A.Y. 1999-2000) 14. The assessee has taken following grounds : "1. On facts and circumstances prevailing in the case and as per provisions & Scheme of the Act it be held that, the addition of Rs. 14,698/-....
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....t be held that the addition of Rs. 1,06,665/- on account of unaccounted expenditure is unwarranted, unjust and against the provisions and scheme of the Act. The said addition be deleted and the appellant be granted just and proper relief in this regard. 4. Without prejudice to the above ground, on the facts and circumstances prevailing in the case and as per the provisions of the Act, it be held that the amount of Rs. 1,06,665/- on account of unaccounted expenditure has already been taxed in the hands of Mr.Nandchand Shah for A.Y.2001-02 and therefore no separate addition should be made in the hands of the appellant. The addition be deleted and the appellant be granted just and proper relief in this respect. 5. On the facts and circumstances prevailing in the case and as per the provisions and scheme of the Act, it be held that the addition on account of unaccounted expenditure amounting to Rs. 1,06,665/- be restricted to Rs. 23,930/- since the balance amount of Rs. 82,735/- has already been taxed in A.Y.2001-02. The appellant be granted just and proper relief in this regard. 6. Without prejudice to the grounds raised above, on facts and circumstances pre....
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....unted expenditure amounting to Rs. 82,735/- be deleted as the said amount has already been taxed in A.Y.2000-01. The appellant be granted just and proper relief in this regard. 5. On the facts and circumstances prevailing in the case and as per the provisions of the Act, it be held that the addition of Rs. 1,91,767/- on account of unaccounted initial investments is unwarranted, unjust and against the provisions and scheme of the Act. The addition be deleted and the appellant be granted just and proper relief in this regard. 6. Without prejudice to the grounds raised above, on facts and circumstances prevailing in the case and as per provisions of law and scheme of the Act, it be held that the appellant is allowed to claim telescopic effect of the additions made and the appellant be granted consequential relief in accordance with the provisions of law. The appellant be granted just and proper relief in this regard. 7. The appellant prays to be allowed to add, amend, modify, rectify, delete, raise any grounds of appeal at the time of hearing." 20. The appeal is time barred by 465 days. The assessee has filed an application seeking condonation of delay su....
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....t be held that the cash found at the premises of the appellant was out of the unaccounted business activities of the appellant firm and the amount declared out of the cash found includes the profits earned out of the unaccounted business activities. The appellant be granted just and proper relief in this respect. 3. The appellant prays to be allowed to add, amend, modify, rectify, delete, raise any grounds of appeal at the time of hearing." 24. In the impugned assessment year only issue raised by the assessee is against GP addition and for allowing telescopic effect. The facts being similar to assessment year 1998-99, the findings given by us while adjudicating the appeal of assessee in assessment year 1998-99 will apply mutatis mutandis to the assessment year under appeal. Accordingly, the grounds raised by the assessee are allowed for statistical purpose. ITA No. 2212 /PUN/2016, (A.Y. 2004-05) 25. The assessee has taken following grounds : 1. On facts and circumstances prevailing in the case and as per provisions & Scheme of the Act it be held that, the addition of Rs. 1,49,234/- on account of gross profit on unrecorded sales is not in accordance with t....
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....ly defended the impugned order and submitted that the order of Commissioner of Income Tax (Appeals) levying penalty is in accordance with the provisions of the Act. 30. Both sides heard. Orders of the authorities below examined. A perusal of the order dated 24-06-2016 passed by the Commissioner of Income Tax (Appeals) reveal that Commissioner of Income Tax (Appeals) initiated penalty proceedings u/s. 271(1)(c) for concealment of income qua enhancement of GP addition. Similarly, for addition u/s. 69B penalty proceedings u/s. 271(1)(c) are initiated for concealment of income. The Commissioner of Income Tax (Appeals) vide order dated 05-12-2012 levied penalty in respect of aforesaid additions for concealment as well as furnishing inaccurate particulars of income. The relevant extract of the impugned order reads as under : "I am of the opinion that the Appellant has concealed the particulars of its income and furnished inaccurate particulars within the meaning of the provisions of section 271(1)(c). Therefore, penalty u/s. 271(1)(c) is clearly attracted in the instant case." 31. A perusal of the orders by Commissioner of Income Tax (Appeals) initiating penalty proceeding....