TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 572
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.... 143(3) of the IT Act. All these appeals were heard together and are being disposed of by this common order for the sake of convenience. 3. The assessee in its appeal No.1768/BANG/2017 has raised the following grounds; 1. The orders of the authorities below insofar as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2A. The order of assessment passed u/s 153C r.w.s 143[3] of the Act is bad in law and void-ab-initio in as much the conditions precedent to invoke the provisions of sec.153C of the Act viz., the discovery of any assets/documents in course of search conducted in the case of any person that belongs to the appellant and is relevant for computing the income of the appellant for the year under appeal is totally absent and consequently the impugned assessment order passed deserves to be cancelled. 2 . The learned CIT[A] is not justified in upholding the proceedings initiated u/s. 153C of the Act without appreciating that the appellant has not been furnished the copy of the satisfaction reached and recorded by the Assessing Officer of the person searched as well as the Assessing Officer of....
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.....153C of the Act which were not satisfied, as there was no discovery of any assets/documents in course of search conducted in the case of any person belong to the assessee and without appreciating that the assessee has not been furnished with a copy of the satisfaction recorded by the AO as required u/s 153C of the Act. 6. The brief facts of the case are that the assessee is engaged in the business of management of Municipal Solid Waste on contract basis with BBMP. A search was conducted in at the residential premises of the assessee situated at No.10, Sri Ramanjeneya Nilaya, 32nd Main, 5th Cross-, Dollars Colony, BTM I Stage, Bangalore u/s 32 of the Act on 0910-2014 on the basis of warrant issued in the case of one Sri P. Gopinath Reddy and others. In this residential premise, the assessee stays along with several other family members, as it is a common residence for 19 members of the family of one Sri P. Chenga Reddy. During the course of search cash of Rs. 14,80,000/- was seized apart from jewellery weighing about 1,970 grams. Apart from these valuables, there were no other documents or books of accounts that were seized during the course of search. After completion of the sear....
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....e fact that he has not maintained the cash book, ledger and trial balance. Thus, there was clear unconditional and categorical admission on the part of the assessee that the books of accounts are not maintained. Thus, according to the AO, in the face of admission in the statement u/s 132(4) of the Act by the assessee himself, the non-seizure of any material/asset ceases to be of consequence and the statement itself assumes the character of incriminating documents, which has a bearing on the computation of income of the assessee. Further, in the instant case, there was also seizure of cash and jewellery and the assets seized which have a bearing on the determination of the total income of the assessee for the relevant assessment year. Hence, the AO held that the jurisdiction u/s 153C of the Act has been correctly assumed. 7. Being aggrieved, the assessee carried the matter before the ld.CIT (A) wherein it was contended that the search was conducted based on one person in the case of Sri P Gopinath Reddy. Therefore, it was contended that the search conducted in the residence of assessee could not clothe the AO to assume jurisdiction u/s 153C of the Act, since the document found in t....
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....f the Act and there has been material seized which belong to the assessee in the course of search conducted by the department. With regard to contention of the assessee that the seized cash and jewellery only relate to assessment year 2015-16 and this cannot constitute satisfaction for initiating proceedings for the assessment year 2009-10 to 2014-15. Further, ld.CIT(A) observed that once some material found belong to the assessee and having a bearing on the assessment of income, the AO has no choice in the matter. He is duty bound to issue notice u/s 153C of the Act and complete the assessment as per the provisions of Act. The provisions of the Act compels the AO to issue notice for six assessment years and it cannot be viewed in isolation and restrict to the year for which the materials are found. He further observed that the seized cash and jewellery that belongs to the assessee and this is not disputed. Hence, the case laws cited by the assessee are distinguishable on facts and not applicable to assessee's case. Therefore, the validity of the proceedings taken by the AO u/s 153C of the Act was upheld. 8. Being aggrieved, the assessee is in appeal before us. The ld. counsel....
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....acted as the premises of the assessee have been searched by the department under warrant issued in the name of his brother. Further, unaccounted cash and jewellery were found and seized which was claimed to be belonged to the assessee and therefore, the AO of the assessee has rightly recorded the satisfaction based on seized assets and other material for issuance of notice u/s 153C of the Act. It was further submitted that the assessee has not maintained any books of accounts; therefore, there is no question of any book of accounts. Further, the seized assets have been acquired out of business income and therefore, they are having the bearing and could be considered as in the nature of incriminating material. Further, the CIT (A) has verified the assessment, recorded the searched person as well as the assessee, and found that a satisfaction note has been duly recorded and the seized cash and jewellery belonged to the assessee and the same has been handed over to the AO of the assessee. Therefore, there was a valid satisfaction note available on the file of AO. Thus, the AO followed the due procedure for initiating the assessment proceedings u/s 153C of the IT Act and the same has....
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...., same is upheld. 12. Ground no.3A, 3B and 3C are relates to reducing the estimation of the business income to 8.5% of the gross receipts as against 12% of the gross receipts adopted by the AO, thereby sustaining a portion of the addition made which is highly excess. 13. Short facts are that the AO noted that the assessee claimed various huge expenses in the PEtL account i.e. wages of Rs. 3,09,77,799/- vehicle maintenance of Rs. 15,69,014/- fuel of Rs. 1,07,04,810/-, salaries of Rs. 28,80,000/- and many such expenses and the assessee has not produced any documentary evidence in support of these expenses. Therefore, vide questionnaire dated 15-11-2016 the assessee was asked to furnish the books of account and documents for verification. However, the assessee vide his submission dated 23-11-2016 stated that the books of accounts maintained in the computer has crashed and trying to retrieve the same. However, the AO observed the fact is that the assessee was found to be not maintaining any books of accounts even during the search. The assessee also admitted in his statement-recorded u/s 132(4) of the Act that he and his brothers have maintained no books of accounts. The AO has repro....
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....,599/- 21,62,084/- 9.00 2 2010- 24/09/2010 2,72,80,355/- 24,76,711/- 9.07 3 2011- 25/09/2011 5,13,66,767/- 45,93,237/- 8.94 4 2012- 27/09/2012 5,27,87,155/- 47,42,870/- 8.98 5 2013- 29/09/2013 5,81,25,970/- 43,18,402/- 7.43 6 2014- 27/09/2014 6,58,38,445/- 46,88,453/- 7.12 7 2015- 29/09/2015 3,78,19,995/- 26,91,887/- 7.12 15. After having considered the above chart, the Id.CIT (A) observed that the average income reported by the assessee comes to 9.07% of the turnover for the assessment year 2009-10, 2010-11, 2011-12, 2012-13 which is more than the prescribed rate of 8% u/s 44AD of the IT Act hence, the provisions of sec.44AD are strictly not applicable to assessee's case, since the turnover of the assessee far exceeds the limit mentioned in that section. However, the estimated income at 12% of the turnover cannot be sustained, as the said income is arbitrary and pure guesswork. The AO has not considered the past result or other assessees engaged in similar business. The only reasons offered to support the estimate is that there was huge cash of Rs. 20,85,080/- and jewellery valued at Rs. 1,51,29,897/- found....
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....The Id. counsel further placed reliance on the decision of the Tribunal in the case of Smt.Vidya Devi Ladhani Vs ACIT in ITA NO.118 to 120(6)/2017 AY: 2009-10 to 2012-13 (SMC). Copies placed at paper book 199. 17. Per contra, ld. DR supported the order of the ld.CIT(A). 18. We have heard the rival submissions and perused the relevant material on record. We find that the return of income was filed on 30.09.2013 and notice under section 143(2) could be issued up to 30.09.2014 for making scrutiny assessment in this case. However, the search was conducted on 09.10.2014 hence, on the date of search no proceeding were pending for assessment year 2013-14, hence, the assessment is not abated on the date of search. Therefore, no addition under section 153C could be made for the assessment year under consideration, where no incriminating material was found in search relating to that assessment year. Accordingly, addition in business income sustained on account of estimation (r) 8.5% of gross receipts is therefore, deleted. Accordingly, Ground No. 3A, 3B and 3C of appeal is allowed. 19. Ground No. 4 is relating to charging of interest under section 234A 234B and 234C of the Act. 20. We ar....
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....145 of the Act and accordingly, gross receipts were estimates at 12% business income at Rs. 79,37,576 of gross receipts of Rs. 6,61,46,468 as shown in 26AS from. Accordingly, business income was worked out at Rs. 79,37,576 as against business income returned at Rs. 46,88,453. Thus, the difference of Rs. 32,49,123 i.e. [ 79,37,576- 46,88,453] was added to total income. 27. Being, aggrieved, the assessee filed an appeal before the Ld. CIT (A). However, Ld. CIT (A) found that percentage of turnover for the year under consideration comes to 7.12% as compared to A.Y. 2013-14 at 7.43% and in A.Y. 2012-13 at 8.98%. Since books of accounts were not produced before the AO, hence, rejection of the same was held to be justified The gross profit disclosed during assessment years 2010-11, 2011-12, 2012-13 were of 9.07%, 8.94% and 8.98% which is more than presumptive rate of 8% as per provision of section 44AD of the Act. Hence, the CIT (A) directed the AO to reduce the percentage rate of business income at Rs. 8.5% after reducing the margin of 0.5% from average rate of previous years and considering presumptive rate of 80/0. 28. Being, aggrieved the assessee filed this appeal before the Trib....
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....his ground is therefore, disposed-off accordingly. I.T.A. No. 1770/BANG/2017/A.Y. 2015-16 33. Ground No.1: is general in nature hence, it does not require any specific adjudication. 34. Ground No. 2A Et 2B: relates to upholding the rejection of income reported by the Appellant, which is supported by the audited financial statement while reducing the estimation of business income to 8.5% of the gross receipts as against 12% of the gross receipts adopted by the Ld. AO, which is very highly excessive and liable to be reduced. 35. Succinct facts are that the assessee has claimed huge expenses in Profit Et Loss Account being wages expenses of Rs. 1,48,20,220, vehicle maintenance Rs. 14,95,500, fuel expenses of Rs. 1,31,48,119, salaries Rs. 7,12,500 and money such expenses, which were not found supported by vouchers and books of accounts. The assessee has claimed that books of accounts maintained in computer could not be retrieved as the computer has been crashed. However, the AO has observed that the facts is that the assessee was not found maintaining any books of accounts during the course of search and seizure operation as admitted during the course of statement recorded under se....
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....8% in A.Y. 2012-13 , 7.43% in A.Y. 2013-14, 7.12% in A.Y. 2014-15 and 7.12% in A.Y. 2015-16 of which average comes to 7.918% Hence, the AO was not justified adopting rate at 8.5% of gross receipts by upholding the addition on this account. Since, the average gives a rate of 7.918, which is almost equal presumptive rate of 8% under section 44AD in the case of non-maintenance of books of accounts. Therefore, we considering the facts and facing a reasonable approach of the opinion that it would meet end of justice if the profit rate were applied at 8% being equal to presumptive rate under section 44AD to gross receipts as against estimation (r) 8.5% made by the Ld. CIT (A). The AO is directed to recalculate the addition of business income by adopting 8% of gross receipts. This ground of appeal is therefore, partly allowed. 40. Ground No. 3 is against sustaining addition of Rs. 3, 93,000 made by the Ld. AO in respect of 1/3rd cash seized at the time of search. 41. The AO noted that during the course of search and seizure operation, cash of Rs. 20,85,080 was found out of which cash of Rs. 14,80, 000 was seized. However, the assessee has failed to substantiate his contention by documen....
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....rant issued in the name of one of the brothers, jewellery worth Rs. 1,51,29,897 was found out of which jewellery weighing 1970.39 grams valued at Rs. 49,28,705 was seized. In the statement recorded during search on 09.10.2014 independently from Shri P. Vidyanath Reddy, P Vitalnath Reddy and E Ramana Reddy, it was stated that three of them stay in a joint family and all the jewellery of family kept at one place. However, the source of acquisition of seized jewellery was not produced, therefore, the AO divided the seized jewellery equally between Shri P. Vidyanath Reddy, P Vitalnath Reddy and E Ramana Reddy at Rs. 16,42,900 and made addition being 1/3rd share of the assessee, accordingly. 48. Being, aggrieved, the assessee filed an appeal before the Ld. CIT (A). It was submitted that the assessee and his two brothers were leaving together in common residence and the jewellery found at 5282.71 grams during search out of which 1970.39 grams was seized which was belonged to 19 family members. It was submitted that the gold jewellery of 381 grams was only belonged to him out of which 145 grams was acquired in financial year 2010-11 and same was reflected in financial statement for the s....