TaxTMI 
TaxTMI 
2021 (9) TMI 1241
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....,36,828/- out of the total addition of Rs. 7,30,89,378/- made by the AO in the appellant's income for the assessment year under consideration, on account of alleged profit on unrecorded sales of scraps. 1(b). That, in the facts and circumstances of the case, the learned CIT(A) grossly erred in not accepting the claim of the appellant that the unrecorded sales of scrap was not effected by the appellant only in one previous year relevant to A.Y. 2011-12 but factually, it was effected by him in two previous years relevant to A.Y. 2011- 12 and A.Y. 2012-13. 1(c). That, without prejudice to the above, the estimation of net profit @25% on unaccounted sales ofRs. 9,41,47,3101- at Rs. 1,35,36,828/- made by the ld. CIT(A) is quite excessive and arbitrary. 1(d). That, without prejudice to the above, the learned CIT(A) grossly erred in not giving any specific finding in his Order for grant of benefit of telescoping to the appellant in respect of the estimated net profit against the unexplained investments ofthe appellant determined by the ld. CIT(A) himself. 1(e). That, without prejudice to the above, the learned CIT(A) grossly erred in not giving a spe....
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....he learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of Rs. 9,00,000/- made by the AO in the appellant's income merely on guess work, surmises and conjectures on account of alleged receipt of interest on advance to Mr. Rahul. 4(b). That, without prejudice to the above, the learned CIT (A) grossly erred, both on facts and in law, in not accepting the explanation of the appellant that factually a sum of Rs. 30,00,000/- only was advanced by the appellant to Mr. Rahul and therefore, there was no justification for assuming a higher amount of receipt of interest in the hands of the appellant by misconstruing the facts of the case and thereby assuming a higher amount of advance to Mr. Rahul. 4(c). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in not considering the material fact that the entire undisclosed income of the appellant for the relevant previous year was duly covered by way of additional income shown by the appellant himself in the return of income furnished in response to Notice u/s. 153A and therefore, there was no necessity for 5. That, while adjudicating the gr....
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....from interest on loans and advances, were duly covered from such additional income and therefore, there was no justification for making any separate estimation or addition on account of unrecorded interest on loans and advances. 3. Ground of appeal raised by Revenue for AY 2011-12 in ITA No.259/Ind/2018 1."On the facts and in the circumstances of the case, the Ld. C/T(Appeals) erred in restricting the addition to Rs. 1,35,36,828/_ by applying N.P. @ 25% in place of addition made by of Rs. 7,30,89,378/_ on account of unaccounted sale of Scrap & Granules on the basis of incriminating documents found & Seized from the assessee's premises. 2.On the facts and in the circumstances of the cases, the Ld. c/T(Appeals) erred in restricting the addition to Rs. 31,11,201/_ in place of addition made by AO of Rs. 1,10,57,932/_ on account of unexplained expenditure u/s 69C on the basis of incriminating documents found and seized from the assessee's premise. 3. On the facts and in the circumstances of the cases, the Ld. c/T(Appeals) erred in deleting the addition to Rs. 52,00,000/- made by AO on account of unexplained investment in land on the basis of incrimi....
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....astic granules & scrap under the name and style of sole proprietorship concern 'M/s. D.P. Industries'. Search & Seizure Operations u/s. 132 of the Income-Tax Act, 1961 ( in short "The Act" )were carried out at the residential premises of the assessee and also on various other premises of the Kataria Group on 07-09-2011.During the course of the search various documents including diaries and loose papers were seized .In view of the seized diaries and other discrepancies noticed during the course of the search, the assessee, initially, through his nephew Shri Sunil Kataria, had made a disclosure of an additional income of Rs. 8,75,00,000/- vide a statement recorded under s. 132(4) of the Income-Tax Act, 1961. At the time of the search, Shri Sunil Kataria had admitted an overall additional income of Rs. 26 Crores on behalf of the entire Kataria Group which was inclusive of disclosure of additional income of Rs. 8.75 crores made on behalf of the assessee. The surrender was made subject to verification of the seized documents. Subsequently, after obtaining the copies of the seized material, Shri Sunil Kataria, vide letter dated 20-03- 2012, while maintaining the overall amount of....
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.... in appeal before this Tribunal. 9. We will first take ground Nos. 1(a), 1(b), 1(c), 1(d) & 1(e) of the assessee and Ground No. 1 of the Department relating to estimation of net profit from Trading in Scraps and Granules 10. The Ground Nos. 1(a), 1(b), 1(c), 1(d) & 1(e) of the Assessee and the Ground No. 1 of the Revenue are pertaining to the action of the Ld. CIT(A) in partially confirming the addition to the extent of Rs. 1,35,36,828/- out of the total addition of Rs. 7,30,89,378/- made by the AO on account of alleged profit on unrecorded sales of scraps. 11. During the course of the assessment proceedings, from the various diaries inventorized as Annexure A-1 to A-8 of Panchnama dated 07-09-2011, Ld. AO found that the assessee had carried out unrecorded business transactions of purchase and sale of scrap. During the course of the assessment proceedings, the assessee was required to make his explanation on the seized material. The assessee submitted that the diary marked and inventorized as A-8 was containing the unrecorded transactions of purchases whereas the remaining diaries marked and inventorized as A-1 to A-7 were containing the unrecorded transactions of sales ca....
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....s per the seized records, the quantity of sales is of 23,994.897 M.T. whereas, quantity of purchases is only of 2510.330 M.T. and therefore, it cannot be inferred that the unaccounted purchases made by the assessee was only to the extent of the seized records. 13. Ld. CIT(A), accepting the contention of the assessee, vide para (5.5) at page no. 48 of the impugned order, held that the entire unaccounted purchases were not found jotted down in the seized diaries. Thereafter, the Ld. CIT(A) held that in such case, the Ld. AO was not justified in working out the net profit of the assessee at Rs. 8,30,89,378/- and Ld. AO ought to have adopted some logical and reasonable approach in estimating the net profit from sale of Rs. 9.41 crores. Thereafter, by granting partial relief to the assessee, the Ld. CIT(A) determined the Net Profit on the sale of scrap by applying a flat N.P. rate of 25%. Accordingly, on the total unaccounted sales of Rs. 9,41,47,310/-, the Ld. CIT(A) determined the Net Profit of the assessee at Rs. 2,35,36,828/-, @25%, and thereafter, by granting the credit for the income of Rs. 1,00,00,000/- already offered by the assessee in his return of income furnished under s.....
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....and Unaccounted Purchases of Rs. 1,10,57,932/- found in diaries. Net Profit of Rs. 8,30,89,378/- determined by the AO which is patently wrong, absurd and arbitrary. Refer Para (11.1) on pg. 11 & para (11.7) on pg. 15 of AO's Order. 4 On a perusal of diaries A-1 to A-8, quantity of purchases in purchase diary is much less than quantity of sales stated in various sales diaries. As per the seized records, the purchase quantity was to the extent of 2510.330 M.T. only as against the sales quantity of 23994.897 M.T. 193 [Summary of quantities of unrecorded purchases and unrecorded sales] As per the seized material, Diary A-8, the purchase quantity is only 2510.330 M.T. whereas as per the other seized diaries viz. A-1 to A- 7, the total quantity of sales is 23994.897 M.T. without purchases, there could not have been any sales. 5 In a scrap business, normally the rate of profit ranges between 5% to 10%. The estimation of net profit by the AO and CIT(A) is arbitrary - The AO has estimated the net profit at 88.25% and the CIT(A) has estimated the same at 25%. The assessee himself has shown net profit of 12.25% in two years. 6 On the aggregate turnover of Rs. 9,4....
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....uted by either of the parties. 21. Before the CIT(A) as well as before us, the contention of the assessee was that the transactions jotted down in these diaries pertain to two financial years relevant to A.Y. 2011-12 and A.Y. 2012-13. During the course of the hearing before us, the A.R. of the assessee, reiterated his arguments by making a reference of the excel sheets of purchases and sales prepared on the basis of the seized diaries. However, even before us, Ld. counsel for the assessee (in short Ld. AR) failed to demonstrate with any positive evidence that the jottings made in these diaries pertain to two financial years. Since, the assessee himself is claiming that he had commenced the unaccounted business of scrap trading during the financial year relevant to A.Y. 2011-12 only and further since, from the seized diaries the assessee has failed to demonstrate that these transactions were also carried out by him during the subsequent financial year too, we find absolutely no infirmity in the views taken by the authorities below that the transactions of unrecorded trading of scrap were carried out by the assessee during the financial year relevant to A.Y. 2011-12 only and conse....
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....6) was pleased to observe as under: "5. On appreciating the rival submissions raised at the Bar, we have carefully perused the order passed by the Commissioner of Income-tax (Appeals) and also that of the Tribunal. It is not disputed that the undisclosed income was Rs. 2,57,000. The sole question that arises for consideration is whether the entire income has to be treated as profit or there should be adoption of a method of net profit income. In the case of CIT v. President Industries [2002] 258 ITR 654, the High Court of Gujarat in a similar matter came to hold as under (page 655) : "Having perused the assessment order made by the Assessing Officer, the order made by the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal, we are satisfied that the Tribunal was justified in rejecting the application under Section 256(1). It cannot be a matter of an argument that the amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represented the price received by the seller of the goods for the acquisition of which it has already incurred the cost. It is the realisation of excess over the....
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....(A) at 25% is quite at a higher side. In all the fairness to both the parties , we restrict the estimation of net profit at 10% of the undisclosed sales. Before us, the assessee has also taken two separate grounds bearing nos. 1(c) and 1(d) for allowing him the benefit of telescoping of the total undisclosed income shown in the return against the net undisclosed income/investment finally determined. We are of the considered view that an assessee is eligible for claim of set-off of the undisclosed income voluntarily shown by himself in the return of income filed u/s. 153A against any undisclosed income/undisclosed investment, finally determined. Accordingly, the AO is directed to work out the net profit at the rate of 10% on the unaccounted sales of Rs. 9,41,47,310/- i.e. at Rs. 94,14,731/- and after giving due benefit of telescoping of the undisclosed income of Rs. 3,60,00,000/- already shown by the assessee in his return of income (other than those undisclosed income for which a separate specific claim for set-off is made by the assessee), re-compute the total income of the assessee. Accordingly, the Ground No. 1 of the Revenue is dismissed and Ground Nos. 1(a), 1(c) and 1(e) of t....
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....e assessee was found to be on a lower side. Accordingly, the Ld. CIT(A) estimated the initial capital of the assessee at one half of impugned purchase amount i.e. at Rs. 55,28,966/- as against the same shown by the assessee at Rs. 24,68,215/-. Finally, the Ld. CIT(A) granted a relief of Rs. 79,46,731/- and confirmed an addition of Rs. 31,11,201/- in the assessee's income. 28. Aggrieved with the Order of the Ld. CIT(A), both the assessee as well as the Revenue have preferred cross-appeals before this Tribunal on the issue. 29. Before us, learned Department Representative (In short Ld CIT(DR) ) vehemently argued supporting the observation of Learned AO and the finding of Ld.CIT(A) given in favor of Revenue on this issue of estimating profit from unaccounted scrap trading business. 30. Learned Counsel for the assessee has also filed one written synopsis. The relevant portion of such synopsis is being reproduced as under: Key Points of Assessee's Submission and Relevant Pages of Paper Book: S. No. Submission in Brief Relevant Pages of Paper Book Remarks 1 Once the assessee is found to have earned any unrecorded revenue and simultaneously has also been foun....
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....n this count was warranted. - - G. Our Detailed Submissions before the Hon'ble Bench: The detailed submission of the assessee on the issue, which was also made before the CIT(A) is placed at page no. 12 to 15 of the Paper Book. The same has also been reproduced by the CIT(A) at page no. 15 to 18 of the impugned Order while adjudicating the Ground Nos. 4(a), 4(b) & 4(c) raised by the assessee. The assessee wish to place reliance on such detailed written submission made before the CIT(A). H. Legal Authorities on which Assessee wish to rely: Reliance is placed on the following judicial pronouncements: (i) CIT (Central) Cochin vs. P.D. Abraham @ Appachan (2012) 252 CTR (Ker) 407 [Copy of judgment enclosed as Annexure A-9.01 (PB Page No. 118 to 130)] (ii) CIT vs. Tips Industries Pvt. Ltd. (2010) 321 ITR 0154 (Bom.) [Copy of judgment enclosed as Annexure A-9.02 (PB Page No. 131 to 140)] 31. We have duly considered the facts and circumstances of the case and carefully gone through the AO's order, the Ld. CIT(A)'s Order, various relevant seized documents, written and oral submissions made from both the sides. 32. We....
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....d investment of the assessee in the initial capital of the business should be computed at 1/24th of the total annual sales of Rs. 9,30,89,378/- found recorded in the seized diaries which works out to be at Rs. 38,78,724/- as against the same determined by the Ld. CIT(A) at Rs. 55,28,966/-. We also direct the Ld. AO that assessee would be eligible to set off of this amount of Rs. 38,78,724/- against the total income of Rs. 3,60,00,000/- surrendered in the return of income furnished under s.153A of the Act. However, we will deal with the telescoping benefit/set off available to assessee against the surrendered income of Rs. 3.60 cr offered in the income tax returns, available to the assessee for the additions to be confirmed in the hands of assessee, after dealing with remaining issues raised before us. Accordingly, the Ground Nos. 2(a) & 2(b) of the assessee are Partly Allowed and Ground No. 2 of the Revenue is dismissed. Ground Nos. 3(a), 3(b), 3(c) &3(d) of the Assessee - Loans Advanced to Mr. Rahul - Rs. 3,00,00,000/- AND Ground Nos. 4(a), 4(b) & 4(c) of the assessee - Estimated Interest on Loans to Mr. Rahul - Rs. 9,00,000/- 33. The ground nos. 3(a) to 3(d) of the Assessee....
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....ter was written by Shri Hemant Kataria to his father Shri Kantilal Kataria, i.e. the assessee on 24/12/2010, it will be assumed that the assessee has advanced this amount on or before 24/12/2010. Accordingly, the AO made an addition of Rs. 3,00,00,000/- in the hands of the assessee as unexplained investment in the form of loans and advances to Shri Rahul ji by invoking the provisions of section 69 of the Act. The AO further made an observation to the effect that since the assessee has not furnished any proof regarding receiving back the amount of Rs. 3,00,00,000/-, interest will also be estimated @12%. Accordingly, the AO estimated receipt of interest @12% p.a. on the aforesaid unexplained investment of Rs. 3,00,00,000/- i.e. at Rs. 9,00,000/- and Rs. 36,00,000/- respectively for the previous year relevant to A.Y. 2011-12 and A.Y. 2012-13 and added the same to the total income of the assessee. 36. Aggrieved, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A), at para (7.3), stated that during the appeal proceedings, the assessee was required to file complete details of the impugned amount advanced to Mr. Rahul and also to correlate the advancing of loan out of un....
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.... 8 & 9 of such list, amounts of Rs. 9,90,000/- and Rs. 20,00,000/- [extrapolated to '00'] have been shown against 'Rahul Ji'. Even, in the decoded form, such reference was made by concerning son in his subsequent letter to the assessee [kindly refer PB Page No. 148]. 3 Factum of family disputes is evident from a copy of letter addressed by the assessee on 01- 12-2009 to all his three major sons. A copy of such letter was also seized and inventorized during search as page no. 25 to 29 of LPS-12 142 to 146 In the said letter, the assessee had requested all his sons to maintain peace and harmony in the family and to put all the disputes amongst themselves at rest. 4 The then prevailing family dispute, as asserted above, is also evident from one another letter dated 27- 12-2010 written by yet another son of the assessee, namely Shri Arvind Kataria, to the assessee. Such letter was also seized and inventorized by the search party as Page no. 45 of LPS-12. 147 - 5 Shri Hemant Kataria, who had written the letter asking for the details of Rs. 300 lakhs, realized that the total amount of advance to Mr. Rahul was of Rs. 29.90 lakhs only and not of Rs. 300 lakhs.....
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.... Except loose paper no. 50 of LPS-12, all other loose papers of LPS-12 give a clear indication and rather evidence that the agreement amount of advances to Mr. Rahul against purchase of properties in two projects was aggregating to Rs. 29,90,000/- only and not of Rs. 300 lakhs as presumed by the AO to suit his own convenience. 141 The assessee has demonstrated that even the contents of loose paper bearing page no. 50 of LPS- 12 are not correct and therefore, there cannot be any justification for presuming the amount of advance to be at Rs. 300 lakhs as against the actual amount of advance of Rs. 29,90,000/- 9 The AO, except banking upon the only loose paper inventorized as page no. 50 of LPS-12, has not conducted any other enquiry and has not brought on record any other tangible adverse material. The AO has not conducted any enquiry from Shri Hemant Kataria, the author of the letter. The AO has also not enquired either from the assessee or from anyone else about the whereabouts of Mr. Rahul. The AO has also not made any effort for conducting any enquiry from Mr. Rahul either by way of issuance of summons under s.131 or calling information under s.133(6) of the Act. -....
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....aid income and no further addition was warranted - - 40. Per contra Ld. CIT-DR vehemently argued referring to the finding of both the lower authorities and seized documents. 41. We have heard rival contentions, duly considered the facts and circumstances of the case, carefully gone through the orders of both the lower authorities, relevant seized documents and material placed before us. We find that in the instant case, Ld.AO has made the entire addition of Rs. 3,00,00,000/- as unexplained investment of the assessee under s.69 of the Act on account of advance payment made to some Mr. Rahul on the sole basis of some correspondences exchanged between the assessee and his son Shri Hemant Kataria. We find that both the authorities below have heavily relied upon one letter dated 25.12.2010 purported to be in the handwriting of Shri Hemant, (one of the sons of the assessee) and given to the assessee by which he has required his father to seek the details of the various advances aggregating to 300 Lacs (written as '300L'), for various projects. We find that except this letter, there was no other basis either for the AO or for the CIT(A) to presume that the assessee had given s....
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....is case, except placing reliance on some jotting in some letter from one of the sons of the assessee addressed to the assessee, ld. AO or the Ld. CIT(A) was not having any other corroborative evidence on record. We notice that Ld. AO has not made any attempt to make any enquiry either from Mr. Rahul or from Mr. Hemant, the author of the letter. Even the statement of the assessee on this issue was not sought either by the Investigation Wing or by the AO. However, as against such sole piece of evidence in the form of letter, with the aid of the other loose papers, Ld. counsel for the assessee has established that the amount of advances given to Mr. Rahul was to the extent of Rs. 29,90,000/- only. And on this document which contain names of various other person to whom loans and advances are alleged to have been given is also in dispute before us and shall be dealt with in subsequent paras. Accordingly in the given facts and circumstances of the case, we reverse the finding of the Ld. CIT(A) given in the impugned order on the subject issue. 44. We further find merit in the contention of the assessee that even in respect of sum of Rs. 29,90,000/-, no separate addition was called for....
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....ideration. Once the CIT(A) has confirmed the addition under s.69 of the Act, it has to be necessarily held that the advances were given by the assessee during the year under consideration only and not in the earlier years, for the reason that under the provisions of s.69 of the Act, an addition can be made only for the year in which the assessee has been found to have made undisclosed investment. In our view, the Ld. CIT(A) was not correct in sailing on two boats inasmuch while confirming the addition, he has presumingly affirmed that the assessee had made the investment only during the year under consideration but, while considering the benefit of telescoping, the Ld. CIT(A) has presumed that the assessee might have made such investments by giving advances to Mr. Rahul in earlier years. In our considered view, since, we have fully deleted the addition of Rs. 3,00,00,000/- so made by the AO, as aforesaid, the question of telescoping has become academic in nature only. Accordingly, the Ground No. 3(c) of the assessee is allowed. 46. Through the Ground No. 3(d), the assessee has claimed that the Ld. CIT(A) did not accept his plea that the advances given to Mr. Rahul were received ....
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....of the sons of the assessee] to the assessee asking, vide Q. No. 9, for details of land purchased and sold at Indore. Below such query, some jottings of purchase and sale are written in the handwriting of the assessee that 65000 sq. ft. land purchased for Rs. 80/- per sq. ft. and 36000 sq. ft. land sold for Rs. 115/- per sq. ft.During the course of the assessment proceedings, Ld. AO required the assessee to furnish the details of purchases and sales. The assessee, in response, stated that he had made an investment of Rs. 52,00,000/- for purchase of land but the registration of the same had not taken place. The assessee further added that the entire investment was made out of his undisclosed income and the same was covered by the additional income of Rs. 3,60,00,000/- shown by the assessee in his return of income for the relevant assessment year. Since as per the assessee, no formal documents were executed for purchase and sale, the details of sellers and buyers could not be furnished. Ld. AO has stated that the assessee did not file any details in respect of purchasers and sellers or copies of agreements etc. Ld. AO further stated that the payment made by the assessee was not recor....
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.... undisclosed income already surrendered and disclosed in the return of income 68 The assessee disclosed an additional income of Rs. 3,60,00,000/- in his return of income for the relevant assessment year. The same has also been considered in the table given at Part-II above. 2 In respect of the subject transactions, no registration of documents was done. Since no formal documents regarding purchases and sales were entered into, the same could not be produced before the lower authorities and in such eventuality, the assessee also could not furnish the details of purchasers and sellers. - b) Key Points of Assessee's Submission and Relevant Pages of Paper Book: S. No. Submission in Brief Relevant Pages of Paper Book Remarks 1 The assessee disclosed an additional income of Rs. 3,60,00,000/- in his return of income for the relevant assessment year which is inclusive of the profit of Rs. 12,60,000/- from sale of the subject land and therefore, no separate addition was warranted. 68 The income has also been considered in the table given at Part-II above. 55. Reliance also placed on the submission of the assessee made before the C....
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....q.ft. i.e. for Rs. 40,80,000/-. It has further been submitted by the assessee that in respect of the profit on sale of the 36000 sq.ft. land which works out to be Rs. 35/- per sq.ft. at Rs. 12,60,000/-, a separate addition has duly been made by the AO himself. It has been contended that the sales proceeds amounting to Rs. 40,80,000/- from the subject land was duly available to the assessee for explaining his sources for other unexplained and undisclosed investments in loans and advances and as also, in the scrap business. It was prayed that a suitable direction for grant of benefit of telescoping against such sale proceeds of Rs. 40,80,000/- be allowed against other unexplained investments found to have been made in the same year. 59. Per contra, the Ld. CIT(DR) objected the assessee's claim on the ground that the assessee could not establish nexus of such sales proceeds with other unexplained investments. 60. We have considered the rival contentions, seized documents and facts and circumstances of the case. In our considered view, having held that the assessee had derived income amounting to Rs. 12,60,000/- from partial sale of land, it has to be necessarily held that the sa....
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....he assessee to explain the contents of page no. 44, LPS-12 probably bearing a date '27.12.' which contained reference of giving loans and advances aggregating to Rs. 10,43,60,000/- to various persons. In response to the same, the assessee, vide his counsel's letter dated 25-01-2014, made a detailed explanation in respect of the subject loose paper and also demonstrated that the aggregate amount of Rs. 10,43,60,000/- as calculated by him was suffering from some factual errors and the total of the advances ought to have been at Rs. 2,31,95,000/- only. Ld. AO rejected the explanation and held that the advance of Rs. 10,43,60,000/- as unexplained investment of the assessee under s.69 of the Act in the form of loans and advances. Ld. AO, after giving a set-off of the additional income of Rs. 2,60,00,000/- offered by the assessee from such undisclosed investment of Rs. 10,43,60,000/-, made an addition of Rs. 7,83,60,000/- in the hands of the assessee as his undisclosed income. Further, the Ld.AO also estimated interest @12% p.a. on the aforesaid loans & advances and made a separate addition of Rs. 1,25,23,200/- in the assessee's income for the year under consideration. 63. Aggrieved, ....
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....0.43 crores. The Ld. CIT(A) also observed that from the assessment order and remand report, it is evident that no enquiries were found conducted by the AO on the issue of bracketed figures which were shown as future requirements. No evidences have been brought on record to prove that the figures shown in brackets were actually paid/ advanced. The Ld. CIT(A) further stated that ld. AO has not conducted any enquiry to ascertain the details and nature of loans/ advances or investment in land or projects. Accordingly, the Ld. CIT(A) directed Ld. AO to delete the addition to the tune of Rs. 3.90 crores (figures in brackets) on account of future projections found made against items at S. No. 11 to 13 of Page no. 44 of LPS-12. 67. At para 11.12 of the impugned order, the Ld. CIT(A) further observed that at S. No. 14 of loose paper, there is mention of name of one Atul, CA against whom the remark "300 Lakh march profit required" is given. The Ld. CIT(A) stated that ld. AO has made addition of Rs. 3 crores without even raising a single query. The Ld. CIT(A) further stated that the amount seems some future planning or requirement as 'March' is clearly written on this incriminating documen....
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....uch loose paper was prepared by Mr. Arvind Kataria, one of three sons of the assessee. The assessee had owned such paper before the search party and even before the Assessing Officer, the assessee had fastened his liability on the subject loose paper. Thus, in any manner, the assessee is not disowning the subject loose paper. 2 The date put on such loose paper is that of 27-12. Thus, it can be presumed that it was prepared on 27-12-2010, a date which falls in the previous year relevant to the assessment year under consideration. - Probably, the purpose and intent of preparing such loose paper, by Shri Arvind Kataria, was to keep himself reminded of certain things. 3 Such loose paper is mixed in the nature. It contains jottings of certain transactions which have already taken place. It also contains certain jottings for work to be done. It will be appreciated that if the said loose paper was prepared on 27-12-2010, then the notings with the description of January clearly relates to something to be done in the next month. - For an example, against item no. 11 of the subject loose paper, where there is a mention of 'Borana Jameen', a description of (Jan....
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....e of the AO. On a plain reading of the description written against item no. 13, no person of ordinary prudence could have reach to a conclusion that the assessee had actually given a sum of Rs. 300 lacs to Mr. Hemant which was only shown as a requirement on the loose paper. 7 The AO has also misinterpreted the figures ' =00 (300 Lac March Profit Req.)', written against item no. 14 'Atul C.A.' as Rs. 3,00,00,000/- without assigning any reason. The figure of 300 Lac with the narration of 'March Profit Require' was just a planning (which could not materialize) and it was not, in any manner, representing any loan or advance of Rs. 300 Lacs made by the assessee to Atul C.A. as wrongly interpreted by the AO. 151 During the relevant previous year, the assessee had earned an income of Rs. 3,60,00,000/- from undisclosed sources. Such income was earned by the assessee from carrying out unaccounted transactions of scrap trading, interest income on unaccounted money lending and others. Such income was earned by the assessee from undisclosed sources and there was no recording of such income in his regular books of account. The assessee wanted to bring such....
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....ed out the interest @ 12% on the assumption that the assessee had given loans and advances aggregating to Rs. 10,43,60,000/-. - The actual aggregate amount of loans and advances given by the assessee during the relevant previous year was to the extent of Rs. 2,31,95,000/- only. The interest bearing loans were given by the assessee, on various dates, during the relevant previous year from time to time out of undisclosed income generated by him from time to time. 3 From making the loans and advances, the assessee had earned interest income nearly Rs. 15,00,000/- only. The interest income so earned was redeployed by the assessee for making loans and advances. Since the assessee has already considered the aggregate amount of loans and advances of Rs. 2,31,95,000/-, which includes the amount of loans and advances given from the deployment of interest, no separate addition on this count is called for. - - 4 The assessee himself had shown an income of Rs. 3,60,00,000/-, in his return of income for the assessment year under consideration, from undisclosed sources and therefore, even if any receipt of interest is assumed, the same is very well covered by the afore....
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....ing the year itself. We find merit in the findings of the CIT(A) that the loose paper was prepared on 27.12.2010 and therefore, any mentioning regarding the requirement of funds in the May can only be interpreted that such funds were required in the May 2011 and not in the year under consideration. On such holistic interpretation of the loose paper, it cannot be said that the assessee was required to make any investment of Rs. 300 lacs for purchase of any land at 19km. In our considered view, it is not the case of the AO that the description mentioned against the aforesaid three items denotes the amount already invested by the assessee prior to the search. In our view, such description only denotes the requirements of some further funds in future and therefore, it can only be termed as planning and projections and not the actual investments made by the assessee during the year under consideration. We note that at no stage, the revenue conducted any independent enquiry regarding the alleged investment by the assessee either from the records of Sub-Registrar or any other sources. In such circumstances, in our considered opinion, merely on the basis of jottings with the description 'r....
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..../- to Rs. 1,95,40,000/-, has held that the separate benefit of telescoping has already been granted by him to the assessee in respect of undisclosed investment in purchase of land at Rs. 52,00,000/- and profit on sale of such land at Rs. 12,60,000/- aggregating to a sum of Rs. 64,60,000/- while adjudicating the separate grounds related to such issues. 79. We observe that the assessee has challenged the quantum of telescoping benefit given by the Ld. CIT(A) against the total undisclosed income of Rs. 3.60 cr. surrendered during the course of search and offered to tax in the return of income. As observed earlier in the preceding paras, we will specifically deal with the issue of telescoping benefit and set off of the addition sustained in the hands of assessee against the income surrendered and offered to tax, in the subsequent paras. However, since we have deleted some of the additions sustained by ld. CIT(A) there will be an overall change in the telescoping benefit available to the assessee. Thus, these two grounds of the assessee are partly allowed subject to our working of telescoping benefit available to the assessee. 80. Now, coming to the ground no.7(a) & 7(b) raised by....
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....ed. Now since we have dealt with all the additions challenged before us by assessee and revenue and have decided the same, in order to keep clarity, we deem it proper to deal with this issue keeping in mind our finding of various additions dealt by us in the forgoing discussions. 85. We find that the assessee was subjected to search u/s 132 of the Act and in his individual name surrender of Rs. 6 cr. was made which was bifurcated into two parts. For A.Y. 2011-12 Rs. 3.60 cr. was offered to tax in the income tax return and the remaining sum of Rs. 2.4 cr. was disclosed in the return of income for A.Y. 2012-13. The instant appeal relates to A.Y. 2011-12 for which Rs. 3.60 cr. have been offered to tax. First we will mention the details of additions confirmed by us in the hands of assessee for A.Y. 2011-12: i. Estimated net profit in scrap business Rs. 94,14,731/- ii. Unexplained investment in scrap trading business Rs. 38,78,724/- iii. Unexplained investment in purchase of land Rs. 52,00,000/- iv. Unaccounted profit on sale of land Rs. 12,60,000/- v. Unexplained investment in loans and advances Rs. 2,31,95,000/- vi. Estimated interest on unexplained....
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....ssee. On this seized loose paper a date 27.12.2010 is mentioned and since the addition has been made purely on the basis of this loose paper and no other incriminating material has not been found nor any other enquiry conducted, we have held that the date mentioned this document 27.12.2010 is to be presumed as the date on which loans and advances were given. Now keeping this fact in mind we find that apart from the income of Rs. 3.60 cr. offered to tax, the assessee also possessed the accumulated profit from unaccounted business of trading in scrap as on the date of a giving loans and advances on 27.12.2010. Thus if we presume that assessee had evenly earned the income during the year from scrap trading business and then the income for 8 months i.e. from 01.04.2010 to 30.11.2010 based on the yearly estimated income from scrap trading business of Rs. 94,14,731/-, would come at Rs. 62,76,487/-. In our considered view this amount was also available with the assessee to give loans and advances appearing in the seized loose paper appearing no. LPS-12 page 44. We, therefore, hold that the assessee was having sum of Rs. 4,22,76,487/-( Rs. 3.60 cr. offered in the income tax return + profit....