AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (8) TMI 835
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....r the sake of convenience. 2. The grounds raised by the assessee Mr. M. A. Siddique for A. Ys. 2012 - 13 to 2016 - 17 are as under: - For Assessment Year 2012-13: 1. The learned CIT(A)-2, Panaji erred in Passing the Order in the manner he did. 2. UNDISCLOSED PROFIT FROM INDORE BUSINESS OPERATIONS: a) The learned CIT(A)-2, Panaji on the facts and circumstances of the case, and in law, has erred in partly upholding the additions made by the Assessing Officer amounting to 44,57,669/- as undisclosed profit from supari business operations at Indore, based on the piece of paper found during the course of search wherein certain figures were written, by overlooking the case laws relied on by the appellant. b) The learned CIT (Appeals)-2,Panaji has erred in law in coming to the conclusion that, evidences unearthed were from the appellant's residential cum business premises, which are direct evidences for unexplained income. c) The learned CIT(A)-2, Panaji on the facts and circumstances of the case, and in law has failed to comprehend the fact that, the appellant did not have the bank account maintained with Renuka Matha Multi state Urban cr....
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....o bank amounting to Rs. 18,80,167/- as unexplained money. c) The learned CIT(A)-2, Panaji on the facts and in the circumstances of the case has grossly ignored that, the entire cash deposits of the year may not be the turnover of particular year, it may contains cash receipts from the credits sales of the earlier years also as well as some are contra entries in the bank pass book (cash deposits and cash withdrawal) d) The learned CIT(A)-2, Panaji on the facts and in the circumstances of the case has failed to comprehend the fact that, Assessing Officer fails to cross verify the transaction between the appellant's and her spouse and other parties/contra entries 4. The Appellant craves leave to add, amend or alter any of the forgoing grounds. 5. For these and any other grounds that may be urged before the Hon'ble ITAT, it is prayed that the Hon'ble ITAT may allow the appeal with cost. For Assessment Year 2013-14 1. The learned CIT(A)-2, Panaji erred in Passing the Order in the manner he did. 2. UNDISCLOSED PROFIT FROM INDORE BUSINESS OPERATIONS: a) The learned CIT(A)-2, Panaji on the facts and circumstances of ....
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....E: a) The learned CIT(A)-2, Panaji on the facts and in the circumstances of the case, and in law, erred in upholding the additions made by the Assessing Officer amounting to Rs. 90,99,450/- by stating that, no compelling evidence has been produced before him by overlooking the various case laws relied on by the Appellant. b) The learned CIT(A)-2, Panaji on the facts and in the circumstances of the case has failed to appreciate the fact that, the books of accounts of the appellant were seized at the time of search proceedings and all the sources of cash deposits were available with the assessing authority since those transactions were recorded in the books of accounts. Therefore, assessing officer erred in law and on facts by making additions towards the cash deposits made to bank amounting to Rs. 90,99,450/- as unexplained money. c) The learned CIT(A)-2, Panaji on the facts and in the circumstances of the case has grossly ignored that, the entire cash deposits of the year may not be the turnover of particular year, it may contains cash receipts from the credits sales of the earlier years also as well as some are contra entries in the bank pass book (cash ....
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....e case, and in law has failed to comprehend the fact that, the appellant did not have the bank account maintained with Renuka Matha Multi state Urban credit co-operative society and cash deposits made by Mr. Shamshuddin Abdul Khader were did not pertain to his business turnover. The additions made by the assessing authority arbitrary in nature and also contrary to the evidence on hand and therefore against the law. d) The learned CIT(A)-2, Panaji on the facts and circumstances of the case, and in law, has failed to appreciate that, the assessment of the assessment year 2014-2015 do not abate under Section 153A in so far as there are no incriminating material found pointing out any undisclosed income belonging the appellant during the course of search pertaining to the assessment year 2014-2015 and therefore order passed by the assessing authority in so far it amounts to the items disclosed in the return of income already filed by the appellant is against the law. e) The learned CIT(Appeals)-2, Panaji has failed to comprehend the fact that, the evidences unearthed were loose sheets and digital evidenceswhich has got no evidentiary value and legally inadmissible und....
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.... of the forgoing grounds. 5. For these and any other grounds that may be urged before the Hon'ble ITAT, it is prayed that the Hon'ble ITAT may allow the appeal with cost. For Assessment Year 2015-16 1. The learned CIT(A)-2, Panaji erred in Passing the Order in the manner he did. 2. UNDISCLOSED PROFIT FROM INDORE BUSINESS OPERATIONS: a) The learned CIT(A)-2, Panaji on the facts and circumstances of the case, and in law, has erred in partly upholding the additions made by the Assessing Officer amounting to Rs. 1,09,05,178/- as undisclosed profit from supari business operations at Nagpur, based on the piece of paper found during the course of search wherein certain figures were written, by overlooking the case laws relied on by the appellant. b) The learned CIT (Appeals)-2,Panaji has erred in law in coming to the conclusion that, evidences unearthed were from the appellant's residential cum business premises, which are direct evidences for unexplained income. c) The learned CIT(A)-2, Panaji on the facts and circumstances of the case, and in law has failed to comprehend the fact that, the appellant did not have the bank a....
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....er concluded such loans as undisclosed income for the assessment year under question, is bad and erroneous in law. 4. CASH DEPOSITS IN BANK ACCOUNT AMOUNTING TO Rs. 65,68,862/- TREATED AS UNDISCLOSED INCOME: a) The learned CIT(A)-2, Panaji on the facts and in the circumstances of the case, and in law, erred in upholding the additions made by the Assessing Officer amounting to Rs. 65,68,862/- by stating that, no compelling evidence has been produced before him by overlooking the various case laws relied on by the Appellant. b) The learned CIT(A)-2, Panaji on the facts and in the circumstances of the case has failed to appreciate the fact that, the books of accounts of the appellant were seized at the time of search proceedings and all the sources of cash deposits were available with the assessing authority since those transactions were recorded in the books of accounts. Therefore, assessing officer erred in law and on facts by making additions towards the cash deposits made to bank amounting to Rs. 65,68,862/- as unexplained money. c) The learned CIT(A)-2, Panaji on the facts and in the circumstances of the case has grossly ignored that, the entir....
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.... learned CIT(A)-2, Panaji on the facts and circumstances of the case, and in law, has failed to appreciate that, the assessment of the assessment year 2016-2017 do not abate under Section 153A in so far as there are no incriminating material found pointing out any undisclosed income belonging the appellant during the course of search pertaining to the assessment year 2016-2017 and therefore order passed by the assessing authority in so far it amounts to the items disclosed in the return of income already filed by the appellant is against the law. e) The learned CIT(Appeals)-2, Panaji has failed to comprehend the fact that, the evidences unearthed were loose sheets and digital evidences, which has got no evidentiary value and legally inadmissible under Section 34 of the Indian Evidence Act as held by the Supreme Court in the case of Common Cause (A Registered Society) Vs. Union of India (394 ITR 220/ 245 Taxman 214). f) Without prejudice to the above, the learned CIT(Appeals)-2, Panaji has erred in law and also on facts by upholding the estimation of profits at 4% which is not backed by any evidence or comparable cases, while in the case of supari business profits ....
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....se and any other grounds that may be urged before the Hon'ble ITAT, it is prayed that the Hon'ble ITAT may allow the appeal with cost. 3. Both sides were heard. After that, learned AR submitted that she wants to file written submissions along with copy of relevant seized Materials. Time was granted to her for doing the same up to 11.06.2020 with a copy of the same to learned DR of the revenue. Accordingly, she has filed the same. Learned DR of the Revenue supported the Assessment Orders in respect two appeals of the revenue and in respect of the remaining seven appeals of the assessee, she supported the orders of AO and CIT (A) both. Learned AR of the assessee supported the order of learned CIT(A) in respect two appeals of the revenue and in respect of the remaining seven appeals of the assessee, she reiterated the submissions made before CIT (A) and also submitted that the written submissions to be filed by her on or before 11.06.2020 should also be considered in addition to oral submissions made by her. In the written submissions filed by her in respect of ITA No. 62 to 64/Bang/2020, it is submitted that on page 22 para 6 of the order of CIT (A), this is the finding of....
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....inding that the case of assessee squarely falls outside the purview of section 153A because the assessment has not abated and no new material was found or unearthed during the course of search and hence, these judgments are squarely applicable. These findings of CIT (A) are in favour of the assessee and the same have attained finality because no appeal is filed by the revenue against these findings of CIT (A). But in spite of this finding in para 6 of his order, the learned CIT (A) has held in para 7 of his order that the appeal of the assessee for A. Y. 2012 - 13 is partly allowed. In our considered opinion, after holding this in para 6 that the case of assessee squarely falls outside the purview of section 153A, learned CIT (A) should have held that the assessment order passed by the AO u/s 153A is bad in law and he should have allowed the appeal of the assessee instead of holding that the appeal is partly allowed. Therefore, we hold that the assessment order passed by the AO u/s 153A is bad in law and therefore, other grounds regarding merit of various addition are academic and no adjudication is called for about those grounds. 6. In the result, the appeal of the assessee for....
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....s raised by the assessee i. e. Ground No. 2 (d), same grievance is raised by the assessee that the assessment order passed by the AO in this year u/s 153A is also bad in law because the assessment has not abated and no incriminating material was found. But in this year, this grievance is unfounded because the search has taken place on 24.11.2015 and although the return of income was filed on 07.11.2015 i.e. before search but even the intimation u/s 143 (1) is dated 26.02.2016 and therefore, the assessment was pending on the date of search and hence, it has abated. Therefore, in this year, this ground is rejected. 12. In this year, three issues are raised on merit of various additions. As per Ground No. 2, the grievance is about of addition of Rs. 109,05,178/- made by the AO to the extent of 12% of the alleged undisclosed sales turnover of Rs. 908,76,485/- based on data retrieved from the impounded materials, PC of the assessee's business premises at Nagpur, SMS in the cell phones of the employees of at Nagpur wherein contents were mentioned in coded words and numbers. As per para 5.2.9 of his order in this year, although learned CIT (A) has noted that in the business of Arecanut....
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....n .com 495. Learned DR of the revenue supported the orders of lower authorities. 14. We have considered the rival submissions. We find that in Para 8 on page 52 of the assessment order, the AO has noted that one of the gifts claimed to have received by the assessee in this year is of Rs. 50 Lacs from Mrs. Haleema, sister of the assessee. This is also noted by the AO in the same para that in course of search, Mrs. Haleema was summoned and a statement on oath was recorded in which she admitted to have given a gift of Rs. 50 Lacs by way of cash but she was not able to recall the actual period of payment of gift. The AO has reproduced the relevant portion of her statement and as per the same, it is seen that although she has confirmed the giving of gift of Rs. 50 lacs to the assessee and has also stated that returns of income are being filed by her although details were not known to her. Regarding the details of gift, she stated that she does not know the details. Merely on this basis that the details of income tax returns and details of gifts are not in the memory of the donor at the time of statement, no adverse inference can be drawn by the AO. Thereafter, on pages 54 to 58, the ....
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....in the hands of the Donor sister Khadeejamma . Under these facts, we feel it proper to remand this matter to AO for a fresh decision by way of a speaking and reasoned order after considering the explanation and facts to be brought on record by the assessee in support of credit worthiness of both these donors because only credit worthiness of donor is challenged by the AO and there is no challenge to Identity of these two donors being relative of the donee assessee and genuineness of transactions. In this year, the balance addition of Rs. 10 lacs out of total addition of Rs. 75 Lacs is in respect of the claim of the assessee that he received loan of Rs. 10 Lacs from one Mr. Moosa Kunhi. The AO has stated on page 57 of the assessment order that no explanation is offered by the assessee and he has drawn adverse inference on this basis that he is an employee of the assessee for last 29 years and is aged 72 years and therefore, this loan is highly suspicious. There is no specific finding of CIT (A) about this loan. Under these facts, we feel it proper to remand this matter also to AO for a fresh decision by way of a speaking and reasoned order after considering the explanation and fa....
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....ra 10 on page 61 of the assessment order, the AO has noted that total deposits in the blank accounts of the assessee in the form of cash deposit and by way of clearing in the A. Y. 2015 - 16 is Rs. 120,89,582/- and declared turnover is Rs. 55,20,720/- and he concluded that such excess deposit in the bank account Rs. 65,68,862/- is unaccounted income of the assessee. The AO has observed on the same page of the assessment order that cash deposit in Bhatkal Urban Cooperative Bank and IDBI Bank include those made under the duplicate PAN of the assessee Rs. 56,02,200/- although the assessee claims that the said PAN was never used. In our considered opinion, the basis adopted by the AO to make this addition is not a valid basis. This is undisputed fact that the books of account of the assessee are audited. This is also the claim of the assessee that all the entries in the various bank accounts are duly entered in the books and there is no concrete adverse finding of the AO that a particular bank account is not appearing in the books of the assessee or that some specific entries of the declared bank accounts is not appearing in the books of the assessee. If all the bank accounts of the as....
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....nce is unfounded because this year is the search year as the search has taken place on 24.11.2015 and the assessment order is passed u/s 143 (3) and not u/s 153A and therefore, in this year, this ground is rejected. 20. In this year also, three issues are raised on merit of various additions. As per Ground No. 2, the grievance is about of addition of Rs. 98,48,665/- made by the AO to the extent of 12% of the alleged undisclosed sales turnover of Rs. 820,72,201/- based on data retrieved from the impounded materials, PC of the assessee's business premises at Nagpur, SMS in the cell phones of the employees of at Nagpur wherein contents were mentioned in coded words and numbers. As per para 5.2.9 of his order in this year also, although learned CIT (A) has noted that in the business of Arecanut, the books of accounts disclose profit @ 2 - 3% but while computing income of unaccounted turnover, taxes and levies etc. are evaded and therefore, the profit will be higher and he directed the AO to assess income @ 4% of undisclosed turnover as against 12 % rate adopted by the AO. In the written submissions dated 11.06.2020 filed by the learned AR of the assessee for A. Y. 2016 - 17 also, si....
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.... Gaffur was summoned and his statement was recorded on oath. The AO has observed that initially, Mr. Gafur denied having any Benz Vehicle but later admitted that he has purchased the vehicle on loan. On page 54 of the assessment order, the AO has noted the details of the returned income of Mr. V. K. Abdul Gaffur for A. Ys. 2010 - 11 to 2015 - 16 as per which, the agricultural income was declared by him in the range of Rs. 8.75 Lacs in A. Y. 2012 - 13 to Rs. 15.64 Lacs in A. Y. 2015 - 16 in addition to taxable income in the range of Rs. 1.68 Lacs in A. Y. 2011 - 12 to Rs. 2.71 Lacs in A. Y. 2015 - 16. If total declared agricultural income and taxable income of these 6 years is aggregated, the same will amount to about Rs. 78.50 Lacs. In spite of this much income of Mr. V. K. Abdul Gaffur, the AO concluded that he did not have ability to buy Mercedez Benz car and made addition of the down payment Rs. 10,23,340/- and Rs. 25,13,400/- paid towards 12 instalments of Rs. 209,450/- per month totalling Rs. 25,13,400/-. In para 5.3.4 of his order, learned CIT (A) had observed that merely seeing a vehicle parked in the assessee's premises and repayment of loan pertaining to the said vehicle i....
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....ed by CIT (A) by holding in Para 5.4.5 of his order that the assessee is well to do person and the claim of receipt of gifts is from relatives and employees of comparatively smaller means. In this regard, learned AR of the assesssee has submitted in the written submissions that these are through banking channel and duly recorded in books. This is also a submission that this amount may be considered as undisclosed turnover and profit @ 2% can be brought to tax and in support of this contention, reliance is placed on the tribunal order rendered in the case of V R Textile vs. JCIT, 20 Taxman .com 154 and also on a judgment of Hon'ble Gujarat High Court rendered in the case of CIT vs. President Industries as reported in 124 Taxman 654 and on a judgment of Hon'ble Madhya Pradesh High Court rendered in the case of CIT vs. Balchand Ajit Kumar as reported in 135 Taxman 180. Learned DR of the revenue supported the orders of lower authorities. 25. We have considered the rival submissions. We find that in Para 8.3 on page 59 & 60 of the assessment order, the AO has noted that one of the loans claimed to have been received by the assessee in this year is of Rs. 20 Lacs from M/s Swadesh Trad....
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....turnover, the same claim should be examined and decided and if the assessee is able to satisfy the AO on this aspect then only reasonable profit only on such turnover should be added instead of adding the entire turnover. We hold accordingly and Ground No. 4 is allowed for statistical purposes. 26. In the result, the appeal of the assessee for A. Y. 2016 - 17 in the case of Mr. M. A. Siddique in ITA No. 66Bang/2020 is partly allowed in the terms indicated above. 27. Now we take up and decide the appeals of the revenue in the case of Mr. Mohammed Safwan for A. Ys. 2014 - 15 & 2015 - 16 in ITA Nos. 88 & 89/Bang/2020 and two appeals of the assessee in the case of the same assessee for A./ Ys. 2015 - 16 & 2016 - 17 in ITA Nos. 67 & 68/Bang/2020. First, we take the appeal of the revenue for A. Y. 2014 - 15 in ITA No. 88/Bang/2020. The grounds raised by the revenue are as under:- 1. The order of learned CIT(A) is opposed to law and facts of the case. 2. The CIT(A) has erred in not considering the seized materials on the overseas business profits and investments made by the assessee. 3. The CIT(A) has erred in not considering the fact that the impoun....
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....ake note of relevant facts in respect of Ground Nos. 10 to 12. We find that the AO has noted in the assessment order that search has taken place on 24.11.2015 and original return of income was filed by the assessee on 02.01.2015 disclosing a taxable income of Rs. 750,820/-. The AO also noted that this return was processed u/s 143 (1) 02.03.2015. There is no mention that any notice u/s 143 (2) was issued prior to the date of search and hence, it is apparent that assessment was not pending on the date of search and hence, it has not abated. As per Para 6 of the order of CIT (A), this is the finding given by CIT (A) that no new material were found or unearthed during the course of search and as per Grounds No. 10 to 12 raised by the revenue, there is no ground that this finding of CIT (A) is incorrect. As per Ground No. 10, this is the grievance of the revenue that u/s 153A, addition can be made in respect of an income not emanating from any seized material also. As per Ground No. 11, this is the grievance of the revenue that as per a subsequent judgment of Hon'ble Karnataka High Court rendered in the case of PCIT vs. GMR Energy Ltd. In ITA No. 358 of 2018 dated 08.01.2019, the earlie....
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.... judgment of Hon'ble Karnataka High Court rendered in the case of Canara Housing Development Co. vs. CIT (Supra), we find that this judgment is not applicable in the present case because in that case, this is the finding of Hon'ble Karnataka High Court that incriminating material was found in course of search and under these facts, it was held that addition can be made in assessment u/s 153A even in respect of that issue also for which no incriminating material was found in course of search. We have already noted above that this is not a claim of the revenue as per grounds raised by it that any incriminating material was in fact found in course of search and therefore, the order of CIT (A) is bad in law because it is based on this finding that the assessment has not abated and no new material was found or unearthed during the course of search. Hence, it transpires that this fact is accepted by the revenue also that no incriminating material was found in course of search and we proceed with this understanding. Since, in the case of Canara Housing Development Co. vs. CIT (Supra), incriminating material was found in course of search and no such material was found in the present case, ....
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.... construed to override it or render the substance and core nugatory. Sec. 147 has this effect that the AO has to assess or reassess the income ("such income") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which, comes to his notice during the course of the proceedings. However, if after issuing a notice under s. 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under s. 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee." 31. As per this judgment, it was held that if the AO accepts that the income which escaped assessment as per reasons recorded by the AO for reopening has not in fact escaped assessment then it is not open to him to independently assess some other income. The assessment proceedings u/s 153A regarding unabated assessments are also in fa....
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.... 5. The CIT(A) has erred in ignoring the submissions made by the assessee's Authorised Representative before him by which it was submitted that company was incorporated in Kingdom of Saudi Arabia but the profit was not distributed. 6. The CIT(A) has erred in holding these documents as dumb document on the basis that the Assessing Officer should have made foreign enquiries ignoring the fact that the Income tax Act, 1961 gives him the power to conduct such enquiries either himself or through the Assessing officer. 7. The order of CIT(A) is in complete violation of the ratio laid down by Hon'ble Supreme Court of India in its decision in the case of Kanpur Coal Syndicate, 53 ITR 225 (SC). 8. For these and other grounds that may be urged upon, the order of the CIT(A) may be reversed and that assessment order to be restored. 36. Learned DR of the revenue supported the assessment order and learned AR of the assessee supported the order of CIT (A) 37. We have considered the rival submissions. We find that in para 5.1 of his order, learned CIT (A) has noted that the assessee has raised in respect of five additions. First three additions so note....
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..... Y. 2015 - 16. The total of such addition comes to Rs. 135,51,596/-. If we reduce this amount from Rs. 147,68,009/-, the balance left is Rs. 12,16,413/- Net worth as on 08.02.2015 will also include alleged net profit of F. Y. 2014 - 15 for which separate addition is made by the AO which is more than Rs. 12,16,413/- and therefore, separate addition of Rs. 147,68,009/- based on net worth as on 08.02.2015 is not valid at all even if all the allegations of the AO are accepted as correct. 38. We therefore hold that for the deletion of the third addition of Rs. 147,68,009/-, there is no infirmity in the order of CIT (A) and now we examine and decide about deletion of remaining two additions of Rs. 58,58,136/- and Rs. 40,18,689/-. Regarding these two additions made on the basis of alleged incomes of the current year of various concerns abroad i.e. M/s MAFR and M/s Shath Asaia Trading and Contracting and in Para 6.1 of the assessment order, the AO also noted that these allegations are on the basis of scanned copies of company Statement and thereafter in Para 6.2 of the assessment order, names of various other concerns of abroad are noted i.e. M/s Abdullah Marhool Al-Shammary Trading Es....
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....3.6 of his order where he is discussing about some gifts but this addition is not for gift but for loan. This addition was confirmed by CIT (A) by holding in Para 5.3.6 of his order that the assessee has obtained gifts largely by depositing cash in the accounts of the alleged donors and the claim of receipt of gifts is from relatives and employees of comparatively smaller means. In this regard, learned AR of the assesssee has submitted in the written submissions that these loans are through banking channel and duly recorded in books. Reliance is placed on the judgment of Hon'ble Karnataka High Court rendered in the case of CIT vs. Manisha Sadhwani, 41 Taxman .com 495. Learned DR of the revenue supported the orders of lower authorities. 41. We have considered the rival submissions. We find that as per the orders of the lower authorities, out of three ingredients i.e. identity of the loan creditors, genuineness of the transaction and credit worthiness of the loan creditors, the challenge of the AO is to 3rd ingredient i.e. credit worthiness of the loan creditors only and earlier two ingredients are not under challenge. On similar issue in the case of the father of this assessee Mr....
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....tribunal order rendered in the case of V. R. Textiles vs. JCIT, 20 Taxman 154 (Ahmedabad) and copy of this tribunal order is filed. Reliance is also placed on a judgment of Hon'ble Gujarat High Court rendered in the case of CIT vs. President Industries as reported in 124 Taxman 654 and on a judgment of Hon'ble Madhya Pradesh High Court rendered in the case of CIT vs. Balchand Ajit Kumar as reported in 135 Taxman 180. Learned DR of the revenue supported the orders of lower authorities. 43. We have considered the rival submissions. We find that as per para 8 of the assessment order, the AO states that this cash deposit by the assessee in bank account is in excess of the declared turnover not deposited by way of cheques. Hence, as per the AO also, the allegation is this that this is unaccounted turnover. Therefore, in our considered opinion, the tribunal order rendered in the case of V. R. Textiles vs. JCIT (Supra) is applicable. In this case, the tribunal held that entire undisclosed sales cannot be treated as profit of the assessee and only the profit element by applying Profit rate of 6.09% should be added. We find that it is noted by the AO that the income from business is decl....