TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 93
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....e of fish as expenditure and must have allowed the same in full. 4. Without prejudice to the above, on the facts and circumstances of the case, the learned CIT(A) must have allowed the claim of 60% out of the total advances as "business loss" since it is irrecoverable. 5. The learned CIT(A) erred in not giving full effect to the sworn statement after holding that "If the department believes one part, it should believe the second part also". 6. On the facts and circumstances of the case, the learned CIT(A) erred in not deleting the entire balances at bank amounting to Rs. 26,34,333. 7. The learned CIT(A) erred in holding that once a return has been filed disclosing certain income and paid taxes thereon, cannot be allowed to be retracted from the same. 8. The learned CIT(A) erred in not condoning the entire delay in filing block return for the purpose of interest u/s 158BFA. 9. The appellant craves for leave to add, to delete from, or to amend the Grounds of Appeal." 3. The assessee has also raised the following additional grounds:- "1. The order of assessment made on the appellant in the status of "Individual" u/s.158BC of the Act, is bad in law as the warrant of sear....
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.... 06.09.2000 as the benchmark for the purpose of levying surcharge in the case of the assessee. The levy of tax and surcharge was governed by the provisions of the Income-tax Act and that of the Finance Act which was not examined in the proper perspective. 3.5. The learned CIT(A) failed to see that the proviso inserted by the Finance Act of 2002 with effect from 01.06.2002 to Section 113 only clarified the legislative intent regarding the adoption of the appropriate years rate of surcharge falling within the block period. 4. Deletion of amount receivable on account of fish sales: Rs. 21,24,326: 4.1 The CIT(A) has erred in deleting the amount receivable by the assessee on account of fish sales even though the same was clearly mentioned in seized books as under: Ex.No. CHCS 2 Rs. 10,85,225 CHCS 42 Rs. 10,39,101 Total: Rs. 21,24,326 4.2 The CIT(A) has erred in not computing the profit on sale of fish, in spite of holding that only profit portion on account of sale of fish should have been assessed. 5. Amounts due to Purse-sein Boats Owners - Rs. 11,57,000/-. 5.1 The learned CIT(A) erred in allowed the assessee's claim for liabilities amounting to Rs. 11.57 lakhs a....
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.... 1.9.90 49,350 Ramanjenya 10,000 1.9.90 18,590 Sagar Deep 37,121 1.9.90 24,675 Suvarnakiran 10,000 1.9.90 7,990 S K Fisheries 5,000 2.9.90 1,380 Udaya Rashmi 25,000 1.9.90 20,680 Upkar 20,000 2.9.90 3,645 Chandrakiran 10,000 1.9.90 25,100 Vishva Indra 49,000 1.9.90 12,180 Sunder Enterprises 21,240 1.9.90 7,560 Gangajenya 8,000 1.9.90 2,000 HRF 16.000 1.9.90 15,040 Total 4,16,461 3,31,915 7 Liabilities for purchases not paid 7.1 The CIT (A) erred in--allowing assessee's claim of liability for purchases not paid amounting to Rs. 3.87 lakhs. 7.2 The learned CIT (A) erred in allowing this new claim which was not made before the Assessing Officer. 8. Bad Debts: a. Canoe Boat Advances : Rs. 24,74,076 b. Purse-sein Boat Advances: Rs. 7,44,017 8.1 The CIT(A) has erred in allowing the Bad Debts claimed by the assessee in respect of Canoe Boat Advances at 40% of the amount receivable, and at Rs. 7,44,017 in respect of Purse-sein Boat Advances, without discussing the admissibility of the claim under Sec. 361)(vii) and 36 (2) of the I T Act. 8.2. The learned CIT (A) failed to consider the following: a. The bad debts ....
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....47,380 Amount receivable on account of fish sales as on the date of search : Rs. 21,24,326 Undisclosed income for AY 2000-01: Rs. 96,105 ------------------ Rs. 1,53,40,336 R/Off Rs. 1,53,40,340 ------------------ 6. Against this, the assessee went in appeal before the CIT(Appeals). The CIT(Appeals) has given partial relief. Now the assessee is in appeal before us with regard to sustenance of certain additions and the department is also in appeal before us for deleting the additions. IT(SS)A No.60/Bang/2006 7. Ground Nos.1 & 2 in the main grounds are not pressed, accordingly the same are dismissed as not pressed. 8. Ground Nos.3 to 5 are with regard to non-granting of deduction of 60% out of total advances as business loss since it is irrecoverable. The assessee advanced a sum of Rs. 1,04,85,572 as follows:- Advance amount on Canoe boats : 69,38,192 Advance made to Purse-sein boats : 35,47,380 -------------- 104,85,572 -------------- 9. The assessee claimed business loss @ 60% of the above amount vide statement recorded u/s. 132(4) of the Act on 13.10.2000 in answer to Q. 11 & 17. However, the AO has not al....
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....ddition has to be made because source of such advances could not be explained by the assessee and regarding claim of it as business loss, no specific finding is given and this claim was rejected by saying that bad debts are allowable u/s 36 (1) (vii) on actual write off and it can be claimed by the firm M/s * Co. and not by individual partner. We feel that these findings of Chandrahas learned CIT (A) are also not sustainable because if the advances are given by the present assessee, its non recovery can be claimed as business loss by the present assessee only and it should be allowed if other pre requirements for claiming such loss is satisfied by the assessee. Actual write off in books is required to claim bad debts but the assessee is claiming it as business loss and not as bad debt u/s 36 (1) (vii). Such claim as bad debt is neither claimable nor allowable for this reason alone that the requirements of section 36 (2) cannot be satisfied for nonrecovery of trade advances. Hence, we will it proper to remand this matter also to the AO for a fresh decision about the claim of the assessee as business loss. We order accordingly and direct the AO to decide this issue by a speaking and ....
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....ged that no deduction could be given u/s. 36(1)(vii) r.w.s. 36(2) of the Act. As we have already observed, since the assessee has not maintained any books of account, there is no question of writing off any debts as bad in the books of account and section 36(1)(vii) r.w.s. 36(2) of the Act cannot be applied. On the other hand, when the assessee made advances on business necessity, non-recovery of the same has to be allowed as a business loss. It is not the case of the department that these advances are made for non-business purposes. Being so, such advances are incidental to the business of the assessee and loss thereof cannot constitute a deduction u/s. 28 of the Act. In the present case, the irrecoverable amount has been identified by the assessee and in the course of statement u/s. 132(4) the assessee offered 40% of such advances as undisclosed income of such advances. However, the AO has not given any deduction towards this. On the other hand, the CIT(Appeals) has given deduction to the extent of 60%. It is not possible to accept this finding of the CIT(Appeals) as the assessee has identified the amount of bad debts out of total advances made by the assessee and it was duly ref....
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.... no direction so the income returned can be retracted. Assessee is only fisherman. AO has not issued any guidance with notice how income is to be computed and filed. Assessee cannot earn so much in three months only, Rs. 26.3 laths and there are sale proceeds which con not be taxed. If a declaration is made without knowing legal provisions, it is illegal disclosure, which should be allowed to be retracted. The logic of the appellant is appealing, however this amount has been disclosed by the appellant themselves in the block return filed and therefore it is difficult for me to consider the reversal of this transaction. The contention of the appellant that the advances was in the nature of expenses, and he should be allowed to retract from the disclosure made, cannot be considered or permitted. Once a return have been filed disclosing certain incomes and paid taxes thereon, cannot be allowed to retract from the same." 17. The ld. AR relied on the judgments in the case of Gujarat High Court in the case of CIT v. Milton Laminates Ltd. in ITA No.1022/2010 dated 24.1.2012 wherein it was held as under:- "7. In view of the above, we do not find any reason to interfere with the Tribunal....
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....t. 19. In the present case, the respondent-CIT has nowhere stated that the petitioner is not entitled to the relief under section 10(10C) of the Act. In fact, the said position is undisputed. The Assessing Officer himself had passed an order under section 154 of the Act, granting such relief. In the circumstances, even the order under section 264 of the Act made on 29-3-2004, cannot be sustained." 19. Further, he drew our attention to the Supreme Court judgment in CIT v Shelly Products & Anr., 261 ITR 367 (SC) wherein it was held that where an order of assessment is set aside or annulled and no further assessment can be made, the assessee would be entitled only to the amount of tax paid in excess of liability incurred by him on the basis of income disclosed, not the tax paid by him by way of advance tax or self-assessment tax paid. Amendment of section 240 w.e.f. 1.4.1999 by insertion of proviso (b) is declaratory of the law and therefore retrospective. 20. According to the ld. AR, in the present case, the above judgment cannot be applied as there was no annulment of assessment made by the AO and there was only disclosure of additional income on mistake of fact by the assessee.....
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....complex and it has to be filed within small time. In this connection, there was error in the return of income which may be condoned by this Tribunal. , 23. On the other hand, the ld. DR submitted that the assessee himself disclosed cash balance in its return filed consequent to notice u/s. 158BC. This amount is from the sale proceeds of fish which is the business of the assessee and mistaken admission of this amount by assessee holds no merit. The ld. DR submitted that the entire amount has to be considered as income of the assessee. No profit percentage is to be estimated to sustain part of the addition. 24. We have heard both the parties and perused the material on record. In this case, there is a bank balance of Rs. 26,07,363 and physical cash of Rs. 26,970 totalling to Rs. 26,34,333. It is an admitted fact that it is generated from sale transaction of fish. In our opinion, it is fair to estimate only net income at 5% of the deposit by placing reliance on the order of the Tribunal in the case of M.A. Siddique v. DCIT in ITA Nos. 62 to 66/Bang/2020 dated 14.8.2020 wherein it was held as under:- "42. As per Ground No. 3, the dispute is about addition of Rs. 103.68 Lacs made by....
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.... 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 declared by the assessee at Rs. 619,750/- and it is accepted by the AO and only addition made in business income is of Rs. 58,58,136/- which is regarding income of a foreign company and therefore, declared profit on domestic turnover is accepted by the AO and the domestic turnover as noted by the AO in para 8 of the assessment order is Rs. 95.25 Lacs from sale of apartments. This results into profit rate of 6.50%. Respectfully following this tribunal order, we hold that only profit element @ 6.50% of undisclosed turnover of Rs. 103.68 Lacs should be added instead of addition of Rs. 103.6....
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...., other documents or any assets are requisitioned under section 132A in the case of any person, then, the Assessing Officer shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter. (2) The total undisclosed income relating to the block period shall be charged to tax, at the rate specified in section 113, as income of the block period irrespective of the previous year or years to which such income relates and irrespective of the fact whether regular assessment for any one or more of the relevant assessment years is pending or not. [Explanation.-For the removal of doubts, it is hereby declared that- (a) the assessment made under this Chapter shall be in addition to the regular assessment in respect of each previous year included in the block period; (b) the total undisclosed income relating to the block period shall not include the income assessed in any regular assessment as income of such block period; (c) the income assessed in this Chapter shall not be included in the regular assessment of any previous year included in the block period.] (3) Where the assessee proves to the satisfaction of the Assessing Officer that any part of....
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....35. We have heard both the parties and perused the material on record. The amount of Rs. 21,24,326 receivable from the debtors represented the amount relating to sale of fish which was supplied by the boat owners and cost of such fish supply was adjusted out of the advances given to the boat owners. The AO made an addition of Rs. 104,85,570 towards advances to various boat owners. The said amount of Rs. 21,24,326 receivable from the debtors was already subsumed in the advances made to boat owners, therefore once again that cannot be addition. Otherwise, it amounts to double addition, one as advances to boat owners and another as sale of fish. Being so, the CIT(Appeals) allowed the claim of the assessee that only profit element of this transaction can be taxed as it would be an asset, since the total cost of fish sales was adjusted out of the advances given to the boat owners. This view of ours is supported by the judgment of Madhya Pradesh High Court in the case of Smt. Daya Bai v. CIT, 154 ITR 248 (MP) wherein it was held that under the Income-tax Act, levy of tax twice on the same income is not permissible. In the present case, since the advances made to boat owners was subject t....
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....ave been provided by the assessee in the assessment and appellate proceedings. However, the CIT(Appeals) has not referred to the concerned seized material based on which the amount of prior period advances have been arrived at. According to the ld. DR, the assessee has not made this claim on prior period transactions before the AO and no decision on this issue is found in the assessment order. The assessee claimed prior period advances as per letter dated 02.8.2005 filed before the CIT(A) a sum of Rs. 4,16,461 as advance given to various parties prior to the block period and Rs. 7,53,052 as advance given to Canoe Boat owners prior to block period which is as follows:- a. Under Canoe boat advances 1. Sagar Kiran Rs. 1,50,000 2. Srirama, Kodikial Rs. 1,00,000 3. Meghadoot (Kamat) Ullal Rs. 1,10,000 4. Mahalakshmi Bengere Rs. 20,004 5. Mahalakshmi Fund Boloor Rs. 42,000 6. Chaitanya Fund, Ullal Rs. 1,31,048 7. Sri Anjeneya Bengere Rs. 2,00,000 Rs. 7,53,052 Advance to parties prior to block period Rs. 4,16,461 Total Rs. 11,69,553 40. Purse-sein boat Advance - Rs. 4,16,461 : As per letter dated 2.8.2005 filed before the CIT(A)....