TaxTMI 
TaxTMI 
2017 (11) TMI 2042
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....ed cash and income of the assessee. The addition of Rs. 234498/- is totally unjustified and against the facts of record. 3. That the ld. CIT (A) has grossly erred to restrict 10% expenses under the following heads : Conveyance expenses Rs. 12345.00 Office & General expenses Rs. 5004.00 Telephone Rs. 7238.00 Total : Rs. 24587.00 The expenses has been disallowed on estimate basis and addition deserves to be quashed. 4. That the order of the ld. AO is bad in law and deserves to be quashed. 5. That the appellant reserves the right to add, amend, withdraw or alter any ground of appeal before the finalization of said appeal. 2. Briefly stated the facts of the case are that the case of the assessee was picked up for scrutiny assessment and the assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 19.02.2015. While framing the assessment, the AO made addition of Rs. 1,23,917/- on account of payment of packing expenses and advertising expenses violating the provisions of section 40A(3) of the Act. The AO has also made additions of Rs. 2,34.498/- on account of....
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....d are in the nature of cottage industries. However, no evidence to that effect was produced by the Authorized Representative, further it was also not stated as to how they are covered under the exception to the provisions and hence, the disallowance made by the Assessing Officer is confirmed. The ground of appeal is dismissed. The ld. Counsel for the assessee has not controverted the above finding of ld. CIT (A) by furnishing any evidence. Thus, we find no reason to interfere in the order of ld. CIT (A), which is hereby affirmed. The ground of the assessee is dismissed. 4. Ground No. 2 relates to confirming the addition on account of unexplained cash. 4.1. The ld. Counsel for the assessee reiterated the submission as made in the written brief, as under :- "In this regard it is submitted that in assessee's business mostly sales are made in cash. Since purchasers are last user of goods. The sale by the assessee are made as per individual satisfaction of each time. Usually customer changes the article as per his choice and some time due to non availability of desired design of gold ornaments purchasers left cash with the assessee and purchases the item as and when de....
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.... ld. CIT (A) has given his findings in para 3.3 of his order and for the reasons given therein, he upheld the action of the Assessing Officer. The findings of the ld. CIT (A) are as under :- " 3.3. I have perused the facts of the case, the assessment order and the submissions of the appellant. On perusal of the cash book, the Assessing Officer found that there was excess cash of an amount of Rs. 2,34,798/- and the assessee was asked to explain the same. It has been submitted that the entire sales are made in cash and in this case one customer Shri Jai Singh Kumawat had left his articles for some modification as well as paid in advance Rs. 4,00,000/- to the assessee which was not credited in the regular books of accounts but was deposited in the bank account. It was submitted that due to this the cash book has shown an OD balance of Rs. 2,34,798/- on 13.01.2012. The Authorized Representative claimed that the cash bill of sale of articles dated 20.01.2012 had been produced but since the sale was in cash the address was not available with the assessee and neither any confirmation was produced nor the party could be produced for the verification. It is seen that the books of a....
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..... 3. Businessman is the best judge: It is settled that a businessman is the best judge to take care of its own interest & to take decisions and the AO is not supposed to intervene therein nor he can replace the assessee. Here, whatever decisions were taken by the assessee, has to be understood as taken out of commercial expediency. Kindly refer T.T. Pvt Ltd v/s CIT 121 ITR 551 (Kar), 139 ITR 827 (MP) JK Woolen Manufacturers 72 ITR 612 (SC). 4. Wrong basis at all: It is further submitted that the ld. AO has taken own imaginary basis which is not a good basis looking to the nature of expenses or business of the assessee and made higher estimated disallowance. The AO has not brought any other single evidence or material on record before making disallowance. Therefore, also the entire disallowance, so made may kindly be deleted in full. And it is settled that no disallowance and addition can be made without any basis and material. 5. Reasonable Claim made: It is submitted that looking to a turnover of more than Rs. 6.87 Crore (approx), claim of above expenditure which is otherwise very lesser or reasonable or meager looking to the business of the assessee. Th....
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....ther the AO has not brought on record any evidence to prove that the expenses claimed by the assessee were bogus, inflated or pertained to have been for non business purpose except wrong allegation on the basis on her assumption and suspicion. Recently this Honble bench in the case of Sh. Anil Kumar Agrawal v/s ITO in ITA No. 288/Jp/2014 dt. 24.02.2016. It has been held at page 10 para 4.4 that since we have held that books of accounts were duly maintained by the assessee and all the sales and purchases are duly maintained by it, therefore, we do not find any justification for disallowing 5% of the expenses towards Conveyance, Deepawali, General, Telephone, Transport etc. Hence in view of the above submission the disallowance so made may kindly be deleted in full." 5.2. On the contrary, the ld. D/R supported the orders of the authorities below. 5.3. We have heard rival contentions, perused the material available on record and gone through the orders of the authorities below. The ld. Counsel for the assessee placed reliance on the Coordinate Bench decision in ITA No. 288/JP/2014 dated 24.02.2016 in the case of Shri Anil Kumar Agarwal vs. ITO wherein similar a....
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....ed vide order dated 20.02.2016. While framing the assessment, the AO assessed the total income of the assessee at Rs. 2,12,09,620/- after considering the surrendered income of Rs. 1,61,94,434/-. Against this, the assessee preferred an appeal before ld. CIT (A), who after considering the submissions, partly allowed the appeal. Aggrieved by this, the assessee has preferred the present appeal before this Tribunal. 10. Ground Nos. 1, 2 & 3 of the assessee's appeal are related to each other. Thus all these grounds are adjudicated together. The ld. Counsel for the assessee reiterated the submission as made in the written brief. The submissions of the assessee are as under :- "1. Correct Facts: At the very outset we submit the correct position, facts which have been ignored by both the lower authority despite the available on record or misinterpreted by them. As the assessee is a dealer and manufacturer of gold and diamond ornaments and jewellery since long. During the year survey u/s 133A was conducted on dated 06.11.2012. During the course of survey actual position of stock was found and as per books of accounts and valued by the AO and departmental valuer were as under: ....
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....2012 comes to 14.396 Kg, the valuation of which is 3,95,21,744/- out of the jewellery of 0.331kg is sold today, after reducing this sale the weight of stock comes to 14.065 kg i.e 14065 gram. Thus the stock of 8863.75 gram found in excess. Please explain". In Ans. (PB6-7)to this the partner has stated that " I have seen the books of accounts. According to that the stock of 2306.234 which has been received physically by us and we have made payment but we have not received the bill (the details of the same is given at page 7 PB7). There apart I also want to say that according to books of account in which the summary of opening stock is there, which also include the 1289.800 gm Diamond gold jewellery, the calculation of which has been taken by you in the valuation of stock i.e included in the opening stock valuation of Rs. 3,95,21,744/- but not included in the quantity of opening stock of gold. Because it has been shown separately. Thus according to me the difference in the quantity of gold come to 5277.72 gm. Thus the assessee has accepted the weight of excess stock of gold at 5267.72 gms (wrongly written as 5277.72 gms in the statements). Not the quantity ....
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....e contention of the appellant. The assessee has come to know about the above mistake only after getting the copy of statements because the copy of statement of Sh. Kulbhushan paliwal partner of the firm and other persons recorded during the survey was provided on 20.09.2013 and return of income was filed on dated 27.09.2013 the assessee in return of income has given a detailed note in regarding less value of surrender amount vide AnnexureA-2 attached with this WS. The assessee after reading the total facts of statement the value of surrender amount as per statement recorded and books of accounts come to know that surrender value wrong due to mistake and same was retracted by him by filing detailed note alongwith return of income AnnexureA-2 attached with this WS. Thus the assessee has filed objection against surrendering amount within a period of 7 days from the date of receipts of statements. In the above statement the assessee nowhere has stated that I surrender such amount or quantity of color stone in the x quantity and x value. He has only stated about the Gold . Further in the assessment order itself the ld. AO at page 3 in middle para stated that" it result....
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.... which were started on 06.11.2012 and completed on 07.11.2012 . The revenue authority has asked regarding the excess stock of gold in ques No.13-14 and thereafter asked for surrender in the question No.24 and statement has been finished in question No. 25 on 07.11.2012, why the department has not asked for surrender continuously after the Ques.14. 5.1 Further it is the settled legal position that the Statement recorded during survey has no evidentiary value as held in Paul Mathews & Sons (2003) 263 ITR 101 (Ker.). It was held that statement during survey does not give the same status of "evidence". Section 132(2) specifically states that such statement can be used as "evidence in any proceedings under the Act." However section 133A does not give statement during survey the status of an evidence. It is further submitted that as per section 133A, there is nothing which suggest that a statement can be recorded on oath before the commencement of survey or during survey. However it recourse is taken to section 131(1). During the survey, a statement can be recorded on oath, as the powers to record a statement on oath are vested in the authority u/s 131(1) read with sect....
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....5. I have been further directed to request you to closely observe/oversee the actions of the officers functioning under you in this regard. 6. This issue with approval of the Chairperson, CBDT. 7. Further, in respect of pending assessment proceedings also, Assessing Officer should rely upon the evidence/ materials gathered during the course of search/ survey operations or thereafter while framing the relevant assessment orders" In respect of surrendered stock as income from other sources in place of business income and disallowing the remuneration of Rs. 64,10,000/- to partners, the ld. Counsel for the assessee submitted as under :- "At the very outset it is submitted that the above matter is directly covered by the recent decision of this Honble bench in the case of DCIT v/s Sh. Ram Narayan Birla in ITA No. 482/Jp/2015 dt. 30.09.2016, where the Honble Bench at page 4 in para 4.3 held that " Undisputed facts emerged from the record that at the time of survey excess stock was found. It is also not disputed the assessee is engaged in the business of jewellery. During the course of survey excess stock valuing Rs. 77,66,887/- was found in respect ....