TaxTMI 
TaxTMI 
2020 (6) TMI 134
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....Y. 2008- 09 as the lead case. 3. Facts of the case in brief, are that the assessee is a private limited company having 12% shares of Shri Moin Akhtar Qureshi, and 73% shares of Mrs. Nasreen Moin Qureshi. It claimed to be a 100% export oriented unit engaged in the business of exports of buffalo meat primarily called Omasum and Offal primarily for consumption in China, Vietnam and Hong Kong and claimed deduction u/s 10A of the Act. It had filed its original return on 17th August, 2009 declaring nil income. For the impugned assessment year, the assessee had also claimed deduction u/s 10A of the Act amounting to Rs. 3,63,42,299/-. A search and seizure operation u/s 132(1) of the Act was conducted on 15th February, 2014 in the case of the assessee along with other cases of the AMQ group at various residential and business premises. A notice u/s 153A was issued to the assessee on 14th October, 2014 requiring the assessee to file the return for the relevant assessment year within 30 days which was served on the assessee on the same day. The assessee filed the return in response to notice u/s 153A declaring the total income of Rs. 1,84,50,000/- on 18th June, 2016 and offered additional in....
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....mpanies, etc. Such contracts were at mutually agreed rate for supply of Omasum, trachea, offal, etc. Apart from that, in order to meet its shortfall of raw material the group companies were engaged in purchasing raw material from slaughter houses and abattoirs in and around Delhi region. Such purchases were made on ad-hoc basis as and when need arose. The main processing plant/factory of the group is at Nainital Road, Rampur. During the course of assessment proceedings, the AO observed that there was complexity in accounts due to volume and multiplicity of transactions and specialized nature of business which created doubt towards the correctness and trueness of account and financial results declared by the assessee. Therefore, after obtaining approval of the PCIT, Central-2, New Delhi, directions for special audit u/s 142(2A) of the Act were issued on 19th December, 2016 to the assessee to get its accounts audited from special auditors. The special auditors furnished its special audit report on 5th May, 2017. After receiving the audit report from the special auditor and the reply of the assessee to the questionnaire issued by the AO from time to time, the AO completed the assessme....
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....ompared to the average export rates for buffalo meat, more particularly when the nature of procurement by the assessee is waste product and buffalo meat is the main useful product. Considering the manner in which the payments are recorded at amounts equal to or less than Rs. 20,000/- on a day spread over various days even when the purchase value from the respective parties are very high. The AO opined that the payments are recorded in the books of account in such a way that limit prescribed u/s 40A(3) is not violated. According to the AO, the payments made by the assessee are not covered under exclusions given in Rule 6DD for the reason that the purchases made by the assessee are through various persons and not directly from the cultivators/growers or producer of such products the payments to whom is excluded from the applicability of provisions of section 40A(3). Further, the assessee has not maintained any records to prove that the payments made by it fall within the exclusions prescribed in Rule 6DD. On the basis of the above, the AO disallowed the purchases made by the assesseee during the respective years from the A.Y. 2008-09 to 2014-15. The AO, therefore, made an addition of....
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....Abdul Majeed Qureshi. In absence of any satisfactory reply, the AO apportioned the amount of domestic sales in the ratio of turnovers for both the concerns and accordingly attributed the sales of Rs. 5,66,01,452/- to the account of the assesseee and added back to its total income. 9. The AO further noted from the books of account maintained in computer, seized as per annexure A-39 that Shri Mohd. Shahnawaz had received the cash amounts aggregating to Rs. 1,46,66,79,302/- pertaining to F.Y. 2006-07 to 2013-14 and out of this amount Rs. 8,95,00,000/- pertained to the year under consideration. According to the AO, this cash was received by Mohd. Shahnawaz from Moin Akhtar Qureshi/AMQ Group from undisclosed sources. However, as per him, since the funds received by Mohd. Shahnawas is actually the undisclosed income of Moin Akhtar Qureshi, the substantive addition was made in his account and the same was added in the case of the assessee on protective basis. 10. During the course of assessment proceedings, the AO noted that the assessee company has shown sundry creditors of Rs. 1,29,77,984/- from various parties for which no particulars was given in the balance sheet. He, therefore, as....
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....her expenditure, wholly and exclusively for the purpose of business, the AO made disallowance of Rs. 23,66,967/- being 50% of Rs. 47,33,934/- under the head 'other expenses', 'export development expenses', 'motor cycle expenses', etc. 13. The AO observed that the assesseee has claimed salary expenses of Rs. 21,66,000/-, but failed to respond to the questionnaire raised during the course of assessment proceedings to substantiate such salary expenses. Subsequently, from the reply so furnished by the assessee that the necessary cash receipts in respect of salary paid in cash amounting to Rs. 18,64,000/- are in record of the assessee company and same were also made available to the special auditors for their verification at the time of special audit was not accepted by the AO. Since these payments from salary was made in cash to employees who do not have any bank accounts and the salary register was recently created and the handwriting of the persons was same in most part of the register, the AO disallowed salary expenses of Rs. 18,64,000/- debited by the assessee in the books of account. 14. The AO, during the course of assessment proceedings, noted that the assessee has claimed ren....
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....h Court in the case of CIT vs. Kabul Chawla, 380 ITR 573 and in the case of PCIT vs. Lata Jain 384 ITR 543. 18.1. On the basis of the arguments advanced by the assessee and on the basis of the decisions cited before him, the ld.CIT(A) deleted the additions which are not on the basis of any incriminating material found during the course of search by observing as under:- "7.1. I have considered the contentions of the appellant. In such situation, the issue, when no incriminating material/evidence is found and assessments in those years are completed assessments, can any addition/disallowance be made, has been dealt with and answered by Hon'ble Jurisdiction High Court in the case CIT vs. Kabul Chawla, as mentioned by appellant in its submission. Hon'ble Court has taken a view in such cases that although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Assessing Officer which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. As per ....
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....earch. i) Addition of Rs. 23,53,53,913/- on account of unexplained purchases - As referred above and as discussed in details by AO in the assessment order, these purchases were shown by appellant in its books of account and correspondingly in the profit and loss account; and after making enquiry in the regular course of scrutiny, AO has treated substantial part of these purchases as bogus on account of cash payments made and non-maintenance of bills/vouchers. However, no incriminating material/evidence was found during the search proceedings in respect of these purchases. ii) A disallowance of Rs. 3,63,42,299/- has been made u/s 10B of I. T. Act by observing that the assessee failed to establish that its activities of dealing in raw meat comes in the category of manufacturing activity as per the provisions of section 10B of I. T. Act. iii) Addition of Rs. 1,29,77,985/- on account of outstanding creditors - These additions also have been made by AO in the course of regular scrutiny of books of account and balance sheet of appellant wherein the creditors of the aforesaid amounts were shown as outstanding by appellant itself. The addition has been made due to the reasons that th....
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....iled to provide the receipts/evidence with regard to donation/charity, if any made by him, 7.1.2 In view of above, it can be seen that none of the above additions have been made by AO on the basis of incriminating material/evidence found during the search proceedings. Since the assessment year under consideration is a completed assessment year, any addition/disallowance ought to have been made by AO on the basis of such incriminating material/evidence as found during the search proceedings in view of various decisions, including CIT Vs. Kabul Chawla (supra), of Hon'ble Jurisdiction High Court. In view of this, the aforesaid additions made by AO are not sustainable and deserve to be deleted as made during the regular course of assessment proceedings, not on the basis of incriminating material/evidence found during the search proceedings. I, therefore, delete the aforesaid additions made by AO and allow the respective grounds taken by appellant." 19. So far as the addition of Rs. 5,66,01,452/- on account of domestic sales is concerned, the ld.CIT(A) sustained the same by observing as under:- "7.4.3 I have considered the facts of issue, basis of addition made by AO and submis....
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....is in the hands of appellant company. Since the AO has already made the addition on substantive basis in the hands of Mr. Moin Akhtar Qureshi, the addition made on protective basis in the hands of the appellant company is being deleted subject to the decision of appellate authority in the case of Mr. Moin Akhtar Qureshi. The addition may get revived in case the findings are given by appellate authorities in the case of Mr. Moin Akhtar Qureshi that the said money belonged to the appellant company. In view of this, this ground is allowed for statistical purposes." 21. Before the CIT(A), the assessee had taken a ground stating that the income voluntarily disclosed before Settlement Commission for the year under consideration which was offered as additional income in the return filed u/s 153A of the Act should be given set off. 21.1. However, the ld. CIT(A) rejected the same by observing as under:- "8. The Last Ground taken by appellant pertains to the additional income included by appellant in the return of income. The ground has been taken that the additional income of Rs. 1,85,00,000/- was voluntarily disclosed before ITSC by the appellant for the year under consideration and th....
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....dition was provided by the AO to the appellant. 2.2 That the CIT (A) was not justified in upholding the alleged addition by rejecting the submission of the appellant that the entire sales cannot be added as undisclosed income, it is only the profits emanating from undisclosed sales after reducing corresponding purchase cost and overheads that could have been taxed. 2.3 That the CIT (A) was not justified in upholding the alleged addition by not considering the submission of the appellant that the AO has not provided credit for the income from undisclosed activity of meat sale/ purchase already included in the return of Income filed in response to notice u/s 153A based upon the application filed before the Income Tax Settlement Commission (ITSC), which was rejected and hence not decided by ITSC in AMQ Group of entities. 3. That the CIT(A) was not justified in holding, that the addition of Rs. 8,95,00,000/- on account of alleged cash payments outside books of accounts for purchases of meat products protectively added in the hands of the appellant and substantively added in the hands of Moin Akhtar Qureshi, is deleted in the hands of the appellant subject to outcome of appeal i....
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....nditure through credit cards and foreign travelling 6) The Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts in deleting the addition of Rs. 23,66,967/-on account of other expenses. 7) The Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts in deleting the addition of Rs. 18,64,000/- on account of salary expenses. 8) The Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts in deleting the addition of Rs. 3,64,000/- on account of rent expenses. 9) The Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts in deleting the addition of Rs. 1,00,000/- on account of charity/donation receipts / evidences. 10) The Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts in deleting the addition of Rs. 33,02,400/- on account of interest free advances. 11) The Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts in deleting the addition of Rs. 2,56,52,430/- made on account of under invoicing of export sales. 12) The Ld. Commissioner of Income Tax (Appeals) has erred in law and on the facts in deleting the addition of Rs. 8,95,00,000/- on account of c....
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.... the Hon'ble Supreme Court in the case of Mukundray K. Shah, 290 ITR 433, she submitted that the Hon'ble Supreme Court in the said decision has held that even if the addition arises out of enquiry related to source of investment, if details of such undisclosed investment is found during the course of search, addition has to be sustained. 23.3 Referring to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Arun Malhotra, 363 ITR 195, she submitted that the Hon'ble High Court in the said decision has held that where the AO having found that transaction of purchase and sale were bogus, made addition u/s 69A, the Tribunal was not justified in deleting the addition without going into evidence on record. Referring to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Kuwer Fibres Pvt. Ltd., 77 taxmann.com 345, she submitted that the Hon'ble High Court in the said decision has held that where statements recorded were corroborated by materials, there was no justification to reject the statements which merely explain the documents seized. Once the raw material quantity that did not appear in the regular books of account was discovered and should be covered....
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....se of Mukundray Shah, 290 ITR 433 and the decision of the Hon'ble Delhi Bench of the Tribunal in the case of Parag Dalmia, ITA No.5499/Del/2017, she submitted that the ld.CIT(A) is not justified in deleting the various additions made by the AO by simply relying on the decision of the Hon'ble Delhi High Court in the case of Kabul Chawla. 25. So far as Ground No.2 is concerned, she submitted that the protective addition of Rs. 8.15 crore was deleted by the ld.CIT(A) with some directions. She submitted that the AO made the addition on the basis of evidence found during the search containing detail/record of cash claimed to have been received by Mr. Mohd. Shahnawaz from Mr. Moin Akhtar Qureshi. He could not tally the cash as per its books of account. Since the ld.CIT(A) has not given any reasoning in respect of merit of this issue, therefore, she submitted that this issue should be restored back to the file of the CIT(A). 26. So far as the proceedings for A.Y. 2012-13 are concerned, the ld. DR submitted that the assessment proceedings for the A.Y. 2012-13 were abated as notice u/s 143(2) was issued on 23rd September, 2013. The assessment proceedings were not completed as on the date ....
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....assessment proceedings before the CIT(A). 28. So far as the income reported before the Income-tax Settlement Commission is concerned she submitted that the income reported by AMQ Agro Pvt. Ltd. before the Settlement Commission are as follows:- A.Y. Income offered before ITSC (In Rs.) Income Offered in return (In Rs.) 2008-09 18500000 18500000 2009-10 15000000 15000000 2010-11 1000000 1000000 2011-12 20000000 20000000 2012-13 1700000 1700000 2013-14 4000000 4000000 2014-15 2500000 2500000 Total 62700000 62700000 29. Similarly, the details of income reported by Moin Akhtar Qureshi before the Settlement Commission are as under:- A.Y. Income offered before ITSC (In Rs,) Income offered in return (In Rs.) 2008-09 2680000 2680000 2009-10 1080000 1080000 2010-11 1200000 1200000 2011-12 11400000 11400000 2012-13 2800000 2800000 2013-14 5000000 5000000 2014-15 107500000 0 Total 131660000 24160000 30. She submitted that the additions were made protectively in the case of AMQ Agro Pvt. Ltd. and substantively in the case of Moin Akhtar Qureshi for various assessment years, the details of which are as under:- Nature of Addition A.Y. 2008....
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..../18) AY 2011-12 (ITA No. 1499/D/18) AY 2012-13 (ITA No. 4290/D/18) 1. Addition on account of purchases made during the year. 23,53,53,913.00 19,14,20,864.00 28,21,46,148.00 74,18,25,388.00 34,67,78,496.00 2. Addition on account of under-invoicing of export sales 2,56,52,430.00 2,72,51,370.00 2,50,95,420.00 4,06,29,600.00 3,72,00,870.00 3. Protective addition on account of cash received in OMASUM DELHI Account. 8,95,00,000.00 17,73,84,049.00 28,68,36,793.00 55,95,50,573.00 13,21,11,994.00 4. Addition on account of outstanding sundry creditors. 1,29,77,985.00 8,46,909.00 11,13,865.00 1,65,70,800.00 5,62,05,556.00 5. Addition on account of disallowance of deduction u/s 10B 3,63,42,299.00 2,96,52,421.00 - - - 6. Addition on account of TDS not deducted - 3,19,022.00 - 2,61,370.00 - 7. Addition on Account of expenditure through credit cards. 21,27,829.00 21,27,829.00 6,96,307.00 5,49,662.00 22,49,066.00 8. Addition on account of other expenses 23,66,967.00 3,48,380.00 16,582.00 2,65,804.00 39,42,914.00 9. Addition on account of Salary expenses 18,64,000.00 20,87,400.00 17,50,800.00 27,00,000.00 21,00,000.00 10. Addition....
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....fore the Hon'ble Supreme Court, the same would not be a ground to take a contrary decision than the view taken by the Hon'ble Delhi High Court. He accordingly submitted that since the decision of the CIT(A) is based on the decision of the Hon'ble Delhi High Court in the case of Kabul Chawla (supra), therefore, the same being in accordance with law should be upheld and the ground raised by the Revenue on this issue should be dismissed. 34. So far as the deletion of addition on account of under invoicing of export sales is concerned, the ld. Counsel for the assessee submitted that the addition made by the AO on account of under invoicing of export sales from A.Ys 2008-09 and 2010-11 to 2012-13 are not related to any seized material found during the course of search action. He submitted that the addition made by the AO on the ground that the assessee is engaged in under-invoicing of export sales is highly illogical, arbitrary and wrong assumption of fact on the basis of e-mail conversation in which there is nothing to suggest that the assessee company is engaged in under-invoicing of export sales. While making such addition, the AO has completely ignored the submissions made by the a....
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..... Different rates may be charged from different buyers depending upon the relationship with each individual buyer, volume of business done with the buyer, prospects of product order in future, etc. Therefore, the contention of the AO that different rates have been charged by the assessee from different suppliers on same day or nearby date is arbitrary, illegal and not based on the facts and circumstances of the present case and the peculiar nature of the business of the assessee company. 35. So far as the addition made on account of outstanding sundry creditors is concerned, he, relying on the decision of the Hon'ble Delhi High Court in the case of Kabul Chawla (supra) submitted that the CIT(A) was fully justified in deleting the addition. So far as the deletion of various other additions made by the CIT(A) is concerned, he submitted that in view of the decision of the Hon'ble Delhi High Court in the case of Kabul Chawla, the CIT(A) was fully justified in deleting the addition. 36. So far as the addition sustained by the CIT(A) is concerned, the ld. Counsel for the assessee strongly challenged the same. So far as the addition of Rs. 5,66,01,452/- made by the AO and sustained by t....
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....." Page 54 of Asst order "Thus it is dear that although M/s AMQ Agro India pvt ltd was purchasing animal byproducts from different suppliers through Mohd Shahnawaz but instead of integrating books of OMASUM DELHI with its own regular books of accounts maintained at Rampur, the group was indulging in out of books purchases by utilizing cash that was generated over a period of time through unaccounted sources by Moin Akhtar Qureshi" Page 52 of Asst order "9. B Details of cash given to Mohd Shahnawz for unaccounted purchases" Page 54 of Asst order "Thus while Mohd Shahnawaz was engaged by the group for making purchases, there would have been no difficulty in recording so in the books of accounts, if the withdrawals for purchases had been only from meat business." Page 54 of the Asst order "Thus it is dear that although the group was purchasing animal by products from different suppliers through Mohd. Shahnawz but instead of integrating books of OMASUM DELHI with own regular books of accounts maintained at Rampur, the group was indulging in out of books purchase by utilizing cash that was generated over a period of time through unaccounted sources." Page 55 of the Asst or....
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....d income of Rs. 1.85 crore voluntarily declared in the return filed in response to section 153A notice is concerned, the ld. Counsel for the assessee submitted that in para 17 of its written submissions, it was clearly submitted that corresponding credit in respect of income already declared in the return should be allowed otherwise it would lead to double taxation of the same income. Copies of original return and return in response to 153A notice were filed before the CIT(A) which substantiates the fact that additional income of Rs. 1.85 crore was declared from the undisclosed sale purchase activity. 40. So far as the contention of the ld.CIT-DR that the addition on account of bogus purchase are based on incriminating documents found during the course of search and for which she has produced a bunch of papers alleged to be incriminating documents on the basis of which it was argued that the assessee had made various purchases, the ld. Counsel for the assessee submitted that the assessment order for the relevant assessment year does not speak about any incriminating documents on the basis of which the alleged addition on account of bogus purchase has been made. In the assessment o....
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....carried on outside the books of account. In addition to the same an altogether separate addition has been made by the AO by disallowing part of the purchases as bogus by holding that substantiating evidence in the form of bills and vouchers and invoices was not produced. There is no incriminating material found/seized for forming basis for such addition. Since the CIT(A) has deleted the addition for A.Y. 2008-09 to 2012-13 by holding that in the absence of any incriminating material no addition can be made for these assessment years which were nonabated years, therefore, there is no merit in altogether new argument now being made by the CIT-DR that bunch of papers produced during the course of hearing are incriminating documents in relation to the bogus purchases made by the assessee. He accordingly submitted that the arguments advanced by the ld.CIT-DR that the addition is based on incriminating documents is not in accordance with the law. 41. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both the sides. ....
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..../- as against Rs. 1,84,50,000/- declared by the assessee in the return filed in response to notice u/s 153A wherein he made various additions, the details of which are as under:- (Amount in Rs.) i) Bogus purchase 23,53,53,913/- ii) Under-invoicing of export sales 2,56,52,430/- iii) Undisclosed domestic sales 5,66,01,452/- iv) Cash received in Omasum-Delhi account 8,95,00,000/- v) Outstanding creditors 1,29,77,985/- vi) Disallowance of deduction claimed u/s 10B 3,63,42,299/- vii) Disallowance of expenditure through credit cards and foreign travelling 21,27,829/- viii) Other expenses disallowed 23,66,967/- ix) Salary disallowed 18,64,000/- x) Rent disallowed 3,64,000/- xi) Addition on account of notional interest on interest free advances 33,02,400/- xii) Charity/donation disallowed 1,00,000/- xiii) Addition on account of deemed dividend u/s 2(22)(e) 2,26,923/- 43. The submission of the assessee that no addition can be made in absence of any incriminating material found during the course of search in case of a completed assessment in view of the decision of the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla, 61 ta....
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....ent of the ld.CIT-DR that the addition made on account of bogus purchases are based on incriminating documents found during the course of search is concerned, we find from the assessment order that the addition was made by the AO not on account of any incriminating material found during the course of search, but, on account of non-availability of supporting vouchers for purchases recorded in the books of account, payments made in cash for such purchase where each payment is less than Rs. 20,000/-, non-maintenance of quantitative records for purchases, rate of purchases shown in the books appears to be on the higher side and that the parties are not identifiable, etc. The AO has prepared the chart for each assessment year containing the total purchases made by the assessee, purchases for which invoices are not available and payments made in cash, the details of which are already given in the preceding paragraph at para No.5 of this order. There is absolutely no mention of any incriminating material/evidence to show that the purchases booked in the books of account are bogus except the books of account found to be maintained in the name of "OMASUM-DELHI" during the course of search o....
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.... of transactions and relationship with buyers, etc. The relevant observation of the CIT(A) has already been reproduced in the preceding paragraph. In view of the above and in absence of any incriminating material found during the course of search on account of under-invoicing of export sales, the ld.CIT(A) in our opinion, was fully justified in deleting the additions. 49. So far as the addition on account of sundry creditors, ad-hoc disallowance of expenses on account of salary, rent, other expenses, expenditure through credit cards, additions on account of notional interest on interest free advances, disallowance of charity and donation, addition on account of deemed dividend u/s 2(22)(e) and disallowance of deduction claimed u/s 10B are concerned, we find the same are not based on any incriminating material/evidence found during the course of search but are based on entries already recorded in the books of account and on the basis of post search enquiries. Therefore, the decision of the Hon'ble Delhi High Court in the case of Kabul Chawla (supra) is squarely applicable on this issue and, therefore, there is no infirmity in the order of the CIT(A) in deleting the additions. 50. ....
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....losed domestic sales, protective addition on account of cash received in OMASUM-DELHI account and not giving set off of the additional income on account of the profit declared in 153A return. For A.Y. 2010-11, the assessee has taken another ground challenging the addition on account of TDS not deducted. 54. So far as the addition on account of undisclosed domestic sales and protective addition on account of cash received in OMASUM-DELHI account is concerned, we find, during the course of search, certain documents were found and seized inventorised as Annexure A-1 to A-45/Party D-11. The said seized material along with daily backed up data found to be maintained in Tally software was referred as OMASUM-DELHI account. On the basis of the seized material, the AO made additions by holding undisclosed domestic sales and unexplained cash payments, the details of which are as under:- (Amount in Rs.) Assessment Year Undisclosed domestic sales added in the hands of AMQ Agro India Pvt. Ltd. Undisclosed domestic sales added in the hands of Moin Akhtar Qureshi Protective addition on account of cash received in Omasum Delhi A/c in AMQ Agro and substantive addition in the hands of Moin Akh....
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....f the assessee was deleted subject to the decision of the appellate authority in the case of Moin Akhtar Qureshi. So far as the argument of the assessee that the additional income of Rs. 1.85 crore voluntarily disclosed before the Income-tax Settlement Commission and unclaimed in the return filed in response to section 153A should be reduced from the final undisclosed income was rejected by the CIT(A) on the ground that nothing was submitted in its support during the appellate proceedings. 58. It is the submission of the ld. Counsel for the assessee that no basis for computing the addition of Rs. 5.66 crore and Rs. 8.79 crore was provided by the AO and, therefore, the addition made by the AO and sustained by the CIT(A) is not correct. It is his submission that the transactions related to cash payment to Md. Shahnawaz for making purchase and in turn domestic sales made by him are intrinsically related to each other. According to him, the search operation did not detect the entire amount of undisclosed sales as the figures of undisclosed sales i.e., Rs. 38.98 crore whereas the figures of cash paid for purchase is Rs. 143.52 crore. According to him, both the transactions are co-relat....
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....ad been only from meat business." Page 54 of the Asst order "Thus it is dear that although the group was purchasing animal by products from different suppliers through Mohd. Shahnawz but instead of integrating books of OMASUM DELHI with own regular books of accounts maintained at Rampur, the group was indulging in out of books purchase by utilizing cash that was generated over a period of time through unaccounted sources." Page 55 of the Asst order Please state whether the above cash payment to Mohd. Shah Nawaz are reflected in the books of accounts of afore mentioned proprietorship concern and company. If above payments are not accounted for in the books of accounts of M/s Abdul Majeed Qureshi and M/s AMQ Agro Pvt Ltd then why these should not be treated as unexplained cash purchase made by these two concerns. Further, how these cash purchase are going to be segregated to the between the concern/ company." 60. We find, the ld.CIT(A) has overlooked the above contents of the assessment order and recorded an incorrect finding that the assessee failed to establish that there were any additional purchases outside the books of account against the undisclosed sales. 61. Under t....
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....he peak balance only which are to be taxed and not the entire cash payment. 64. We also find some merit in the argument of the ld. Counsel for the assessee that the entire amount of sales aggregating to Rs. 38.98 crore (for the year under appeal Rs. 5.66 crore) cannot be brought to tax and only the net profit embedded in the same should be added as the undisclosed income of the assessee. It has been held in various decisions that even if undisclosed sales are assumed to have been emanated out of purchases recorded in the regular books of account, only the profit element can be considered to be the income of the assessee and under no circumstances the entire sales can be considered to be the income of the assessee. It has also been held in various decisions that in case where stock is found short during search operation only the GP is added on the presumption that such stock recorded in the books of account found short is presumed to have been sold outside books of account. The various decisions relied on by the ld. Counsel for the assessee that the entire unaccounted sales cannot be added to the total income, but, only the net profit is to be added also support his case. 65. Ther....
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....f 15 days since the product is a perishable one. The above initial capital so computed by the AO shall be apportioned between the assessee i.e., AMQ Agro India (P) Ltd. and Moin Akhtar Qureshi on the basis of their respective purchases and to be added to the income of the assessee as undisclosed investment. 66. Ground of appeal No.2 and 3 of the assessee's appeal are accordingly disposed in the terms indicated above and are treated as allowed for statistical purposes. 67. Before parting with this order, we may further mention that in the case of the assessee AMQ Agro India Pvt. Ltd., the addition on account of cash payments for purchases aggregating to Rs. 143.57 crore has been made on protective basis and substantively the same has been added in the hands of the Moin Akhtar Qureshi. However, in the present case, the matter in dispute is not as to in which hands the addition is to be made, but, the dispute is with regard to correct determination of the undisclosed income from undisclosed activity of meat trading. By deciding the manner of computation of undisclosed income and its appropriation between the assessee and Moin Akhtar Qureshi, the issue regarding protective and substa....