TaxTMI 
TaxTMI 
2022 (9) TMI 1547
X X X X Extracts X X X X
X X X X Extracts X X X X
....li office on 14th/9/2009. During survey, several papers and books were impounded. The AO came to conclusion that assessee has not accounted several cash receipts in the books of accounts. 03. Cash receipt entries with regard to the assessment year 2007 - 08 were also found and therefore original return filed by the assessee on 5/2/2008 declaring Rs Nil income, was reopened u/s 148 of the act, and reassessment order was passed on 28/12/2011 u/s 143 (3) rws 148 of The Income Tax Act, 1961 (The Act) whereby an addition of Rs. 48,867,846/- was made and income was assessed at that amount. 04. The assessee challenged the same the learned CIT - A deleted the above addition and allowed the appeal of the assessee therefore, the learned AO is in appeal for assessment year 2007 - 08 in ITA number 4124/M/ 2012. 05. ITA number 4124/MUM/2012 filed by the learned assessing officer for assessment year 2007 - 08 has raised following grounds of appeal:- i. on the facts and in the circumstances of the case and in law, the learned CIT (A) erred in deleting the additions made by the AO of Rs. 48,867,850/- on account of unaccounted cash receipt found in books impounded during survey. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee was dismissed. 012. Assessee preferred an appeal against that order the learned CIT - A passed an order on 30/11/2012 allowing the appeal of the assessee. Therefore, the learned assessing officer is in appeal in ITA number 1100/M/2013 for assessment year 2008 - 09. 013. For assessment year 2009 - 10, assessee filed its return on 11/10/2010 at a total income of Rs. 1,079,970/-. Based on survey, assessee declared undisclosed income for assessment year 2009 - 10 of Rs. 33,558,200/-, however return of income filed by the assessee did not include the same. The learned AO passed an assessment order u/s 143 (3) read with Section 144 of The Act on 28/12/2011 assessing the total income of the assessee at Rs. 33,558,200/-. 014. The assessee preferred appeal before the learned CIT - A, who partly allowed the appeal of the assessee reading that the learned assessing officer has made the addition without any material evidence. Accordingly, the appeal of the assessee was partly allowed. Therefore, the learned AO has preferred this appeal in ITA number 4122/M/2012 for assessment year 2009 - 10. 015. The learned AO in ITA no. 4122/Mum/2012 has raised following grounds of appeal:- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Return of income was assessed and the order was passed u/s 143 (3) read with Section 144 by ACIT - 25 - (3), Mumbai. iii. Return was selected for scrutiny and notice u/s 143 (2) was issued by ITO - 25 (3) (4), Mumbai. iv. However the order u/s 143 (3) dated 28/12/2011 is passed by another officer i.e. the Asst Commissioner of income tax - 25 (3), Mumbai. v. The assessment order passed u/s 143 (3) dated 28/12/2011 passed by the Asst Commissioner of income tax is bad in law since notice u/s 143 (2) which is essential for initiation of assessment proceedings is not issued by him but by The Income Tax Officer - 25 (3) (4) Mumbai . vi. The assessing officer who has passed the assessment order has not issued notice u/s 143 (2) of the act. vii. Notice u/s 143 (2) of the act was issued by a different assessing officer whereas the order was passed by the different assessing officer renders the entire proceedings and order passed as bad in law. viii. Issuing of notice u/s 143 (2) by one officer and finalizing the assessment by the different officer is not permitted. ix. To support its contention the assessee relied on the decisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ner of the firm Shri Bakul Jayantilal Parmar was recorded wherein in question number 12 was asked and replied as Under :- "Q 12 :- from the above it is seen that the farmers has received cash component over and above agreement value in respect of sale of galas Under phase V at Pelhar during financial year 2007 - 08 and 2008 - 09 at Rs. 6,568,200/- and Rs. 33,558,200/- respectively. Please state whether these cash components have been shown are reflected in books of accounts maintained by from. If the same is not reflective, please state why cash component received by the firm during FY seven - 08 and thousand eight - 09 be considered as additional income over and above the regular income in respect of assessment year 2008 - 09 and 2009 - 10. You have stated that the firm has already filed the return for assessment year 2008 - 09, Under these circumstances the firm should filed revised return for assessment year 2008 - 09 showing additional income of Rs. 6,568,200/- for assessment year 2008 - 09. Ans:- the firm has not recorded the cash component in the books of accounts maintained by the firm has hit is related to payments over and above the agreement value. There....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... nil 15 A - 12 1 - 103 68,26,110 1,20,58,320 16 A - 13 1 - 54 25,72,000 32,85,426 17 A - 14 1 - 101 1,17,65,850 nil Total 61,91,05,369 16,88,27,961 023. Based on the above documents, Ld AO questioned the assessee which remained unanswered therefore an ex parte order was passed u/s 144 of the act by making addition of Rs. 619,105,369 on account of cash receipts over and above the returned income of the assessee at Rs. 7,883,435/- and assessee the gross total income at Rs. 626,988,804/-. 024. Assessee preferred an appeal before the learned CIT - A who passed an appellate order on 27 March 2012 wherein addition to the extent of Rs. 9,136,813 was upheld. 025. The learned CIT - A further passed an order u/s 154 of the act in appeal of the assessee against the order passed by the learned AO u/s 154 of the act dated 5/10/2012 wherein the addition was confirmed to the extent of Rs. 9,136,813/-. 026. Therefore the learned assessing officer is aggrieved and is in appeal before us where the only challenge is the deletion of the addition of Rs. 609,968,556/- by the learned CIT - A which was added by the lea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....us parties for certain projects which could not fructify because of want of government approval and subsequently scrapped could not have been added to the income of the assessee as Sum is returned. The learned CIT - A categorically noted in paragraph number 15.4.2 wherein he confirmed the addition to the extent of Rs. 9,136,813. vii. He further stated that the additions made by the learned assessing officer of certain amounts are without having any cogent materials to substantiate. viii. He further held that whatever has not been received cannot be considered for taxing for various projects. ix. learned CIT - A deleted the addition with respect to cash advances of Rs. 31,692,383/- and Rs. 64,621,024 for assessment year 2007 - 08 and 2009 - 10 respectively from addition made in assessment year 2008 - 09. x. He further found that there is a duplicate entry of Rs. 13,493,471/- which needs to be deleted. xi. learned CIT - A deleted the addition because in the audited balance sheet the advances received from the customer are shown at Rs. 191,385,396/- whereas the advances received reflected in the impounded document is only Rs. 38,903,965/- a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n regarding quantum of alleged cash receipts. It can be seen from the Assessment Order, Remand Reports and letter of A.O. i.e. a) Assessment order dated 28/12/2010 b) Explanation letter of AO dated 11/11/2011 for Remand report 1. c) The second remand report dated 05/03/2012 15.2.1. Similarly it has been alleged by the AO that the appellant has been changing the stand. Since there was lot of submissions and counter submissions by the AO and AR, I thought it prudent to verify the facts from impounded papers and not the mere allegations or the submissions. Accordingly, letter dated 09.03.2012 was issued to the Assessing Officer, ACIT.25(3), Mumbai, with a copy to the concerned Jt.CIT., Mumbai (i.e. Jt.CIT.Rg.25(3), Mumbai) and the concerned CIT I.e. CIT.25, Mumbai. In his letter the A.O. was requested to produce the original impounded materials. Similarly, a copy of this letter was issued to the appellant to produce the Xerox copies of the impounded materials. The case was fixed for hearing on 19.03.2012. 15.2.2. On 19.03.2012, Shri Abhyuday Anand, ACIT.25(3) appeared along with Shri Santosh Kumar Jha, Inspector of Income-tax and produced t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt did not file any duplicate set of books of accounts which could have been considered. Therefore, only on the basis of loose papers where certain writings of amounts are there and again which is not in regular manner and which again clearly shows that these were rough notings reflecting certain projects against which certain amounts were likely to be received and out of which part of the amounts were received and which again was merely an advance/booking amounts and not any Final Sale amount which can be considered for taxation. Therefore, in my opinion such amounts or jotting of figures cannot be treated as Revenue Receipts, rather they can be termed as liabilities and, therefore, not taxable. 15.4.2. However, there are certain amounts reflected in the impounded materials and which the appellant have put their own money in the name of relatives, cannot get away and has to be considered as appellant's money and can be taxed accordingly. In the above referred Remand Report of the A.O. dated 20.9.2011, the A.O. have concluded such amount at Rs.91,36,813/- and the appellant also failed to rebut the same during the appellate proceeding, needs to be sustained and, therefo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pertaining to alleged cash advances of Rs.3,16,92,383/- and Rs.6,46,21,024/- of AY 2007-08 and AY 2009-10 respectively should be deleted from AY 2008-09. Accordingly, the A.O. is directed to delete amounts of Rs.3,16,92,383/- and Rs.6,46,21,024/ 15.5.3. I have further considered the stand token by the A.O. In the letter dated 18/08/2011, 11/11/2011, second remand report dated 05/03/2012 as well as submissions of the A.R. I have also gone through the facts mentioned In impounded papers and from there I observed that Rs.1,34,93,471/ forming part of A-1 (Vasai) is in the nature of duplication entries. Therefore keeping the principles of natural justice in mind I come to the conclusion that the same amount cannot be considered twice for the purpose of taxation therefore, I hereby direct the A.O. to delete the additions made in respect of Rs. 1,34,93,471/-. 15.5.4. As regards Rs. 3,89,03,965/-, it may be mentioned that in the Audited Balance Sheet for A.Y.2008-09 reflects the amount of advances received from customers at Rs.19,13,85,396/- which is higher than Rs.3,89,03,965/-. Since it is already a part of liability by the appellant therefore the same shall not be cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ulation and working for the enhancement, cannot be accepted and, therefore, is rejected. 15.5.5.3 That, amount of Rs. 66,64,617/- (refer para 4 page 2 of the First Remand Report where the A.O. did not consider the same for any addition) and also were not appearing in impounded books. Further, in the Second Remand Report the A.O. has proposed to include the amount in enhancement, cannot be accepted because the same has been taken by AO now merely on the basis of surmises and conjectures. The Income Tax Act, 1961 does not deal with taxing of such illusionary amount. Therefore, the proposal of the A.0 in the second Remand Report to consider the above amount in calculation and working for the enhancement, cannot be accepted and, therefore, is rejected. 15.5.5.4 That, Rs. 3,08,77,221/- Is duly reflected in books of the accounts under the head "Advance Received from Customers which is duly appearing in the books of accounts for year ended 31/03/2008 (refer Table in para 6 of page 3 of First Remand Report, where the A.O. has not made any suggestion addition/inclusion of this amount). 15.5.5.5 As regards amount of Rs.91.36,813/- (refer para 7 page 3 of the First ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... have been considered as income of the assessee as the same has not been received at all. Such is the case with respect to the sum of Rs. 79,393,324 with respect to annexure A - 8 , Rs. 1,317,910/- pertaining to annexure A - 9 and 18,02,252/- pertaining to annexure A - 10 of Kandivali project. Further Rs. 378,796,697 as mentioned in the second remand report clearly shows that this amount is not appearing in any of the impounded material, same has been included by the learned assessing officer on the basis of the balancing figure of the amount receivable, and amount received. Therefore if the amount is not received and is merely a balancing figure, the same could not have been taxed as income of the assessee as it is not at all received. Same is the fate of sum of Rs. 6,664,617. Naturally, the sum of Rs. 31,692,3 83/- and Rs. 64,621,024/- pertains to assessment year 2007 - 08 and assessment year 2009 - 10 and therefore naturally they could not have been added in the hands of the assessee for assessment year 2008 - 09 and therefore same are deleted. Obviously, whether the same are taxable in the hands of the assessee or not in those years were required to be dealt with by deciding th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be excluded for the respective reasons as stated above. Therefore, it is apparent from the order of the learned CIT - A that he has not gone by the addition made in the assessment order of Rs. 619,105,369/- but he has considered the amount of addition required to be made as per the learned assessing officer as per the first remand report amounting to Rs. 751,981,580/- . Out of this, he has given a detailed explanation for deleting the addition of sum of Rs. 748,451,911/- and he sustained the addition of Rs. 9,136,813/- which is higher than the balance amount of Rs. 35,29,669/- (75,19,81,580 -74,84,51,911). Therefore, we confirm the order of the learned CIT - A deleting the addition of Rs. 609,968,556/- . Accordingly These ground of appeal of the learned AO is dismissed. 033. Accordingly, appeal of the learned assessing officer in ITA number 4123/M/2012 for assessment year 2008 - 09 is dismissed. 034. on the issue of invocation of Rule 27 of The Income Tax Appellate Tribunal Rules 1963, the fact clearly shows that the assessee has mentioned all these facts in the statement of facts as well as in the grounds of appeal before the learned CIT - A. The learned CIT - A decided the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of ITO and where the income declared returned by a Non Corporate assessee is above Rs. 20 lakhs, the jurisdiction will be of DC/AC. 3. Petitioner has filed return of income of about Rs. 64,34,663/- and therefore, the jurisdiction will be that of DC/AC and not ITO. Mr. Jain submitted that since notice under section 148 of the Act has been issued by ITO, and not by DC/AC that is by a person who did not have any jurisdiction over Petitioner, such notice was bad on the count of having been issued by an officer who had no authority in law to issue such notice. 4. We have considered the affidavit in reply of one Mr. Suresh G. Kamble, ITO who had issued the notice under section 148 of the Act. Said Mr. Kamble, ITO, Ward 12(3)(1), Mumbai admits that such a defective notice has been issued but according to him, PAN of Petitioner was lying with ITO Ward (12)(3)(1), Mumbai and it was not feasible to migrate the PAN having returned of income exceeding Rs. 30 lakhs to the charge of DCIT, Circle 12(3)(1), Mumbai, as the time available with the ITO 12(3)(1) was too short to migrate the PAN after obtaining administrative approval from the higher authorities by 31st March, 2019.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... filed by the learned assessing officer in ITA number 123/M/2012 and 1100/M/13 are dismissed. Assessment year 2007 - 08 040. The learned assessing officer for assessment year 2007 - 08 where the only grievance is deletion of the addition made by the assessing officer of Rs. 488,67,850/-. The cost of repetition, return of-income was filed on 5/2/2008 at Rs. Nil. During the course of assessment proceedings the learned assessing officer made an addition of Rs. 48,867,846/- stating that the above amount is received in cash by the assessee is only money which are not recorded in the books of account and therefore assessment order u/s 143 (3) of the act was passed on 28/12/2011 at the total income of Rs. 48,867,846. 041. The assessee agitated the same before the learned CIT - A wherein assessee submitted that a sum of Rs. 1,913,000 is amount in nature of the bank balance in cash countered by the appellant, Rs. 11 lakhs have been considered by the AO by adding 2 zeros,, a sum of Rs. 8,790,058 - is not in the nature of income but is the amount of expenditure incurred for purchase of land and no basis was found during the course of assessment proceedings with respect to the balance....
X X X X Extracts X X X X
X X X X Extracts X X X X
....apers, it is found that amount of Rs.14,18,000/- comprises of bank balance while sum of Rs. 4,95,000/ represents the total of number of notes along with denominations counted by the appellant. Therefore in no case the same can be considered as cash receipt. Consequently, the AO is directed to delete the additions of Rs. 14,18,000/- and Rs 4,95,000/-. 5.3. On verification of the impounded papers by me I found that in respect of Gala No 11/102 the appellant has actually received only Rs.11,000/- and the same has been taken by the Ld. Assessing officer by adding two zeros in the said amount. However the same cannot be sustained because in the eyes of law AO has to read the exact wordings of the written material and cannot modify the same without adducing concrete evidence and correlating the same with further assets or investments or bank deposits or any further advances. Since the gross amount figure taken by the A.O. has not been correlated other, it can be safely concluded that the receipt of such figures in the hand d to/ appellant remained unsubstantiated. Consequently, the AO is directed t delete the additions of Rs. 11,00,000/-. 5.4. On verification of the imp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....deleted by the learned CIT - A. Secondly, a sum of Rs. 11,000/- written in the seized material, have been extrapolated by the learned AO by adding 2 zeros in making at Rs. 11 lakhs. We find that such extrapolation is unwarranted unless it is mentioned in the impounded material. There is no mention of such extrapolation in the impounded material and therefore the addition to the extent of Rs. 11 lakhs could not have been made and therefore same is deleted by the learned CIT - A the addition to the extent of Rs. 11,000/- is sustained. Further a sum of Rs. 1,751,440/- is not reflected in the impounded troopers and therefore correctly deleted. We further find that amount of Rs. 121,001/- has been considered twice, therefore same also correctly deleted by the learned CIT - A. 045. Now we find that the learned CIT - A has deleted the addition of Rs. 2,862,000 holding that same is pertaining to assessment year 2008 - 09 and therefore same cannot be considered in assessment year 2007 - 08. This finding has been given by the learned CIT - A without first ensuring that the same has been added in the assessment year 2008 - 09 or not. Therefore, we direct the learned assessing officer to ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 048. In the result, the solitary ground raised by the learned assessing officer with respect to the addition of Rs. 48,867,850/- is partly allowed. 049. The second ground raised in the appeal of the learned assessing officer is merely academic in nature as assessee does not have any turnover. Therefore ground number 2 is dismissed. 050. Accordingly appeal of the learned AO for assessment year 2007 - 08 in ITA number 4124/M/2012 is partly allowed. 051. Now we come to the rule 27 in by the assessee during the course of hearing before us. The assessee filed return of income declaring nil income on file/2/2008 whereas the case of the assessee was reopened u/s 148 of the act by the learned Asst Commissioner of income tax (25) (3), Mumbai. This is in violation of instruction number 1/2011 dated 31 January 2011. According to that instruction the same should have been assessed by the learned assessing officer. The issue is squarely covered in favour of the assessee by the decision of the honourable Bombay High Court in case of Ashok Devichand Jain (supra) dated 8 March 2022 which is already been considered by us in deciding the similar issue for assessment year 2008 - 09. Ther....
X X X X Extracts X X X X
X X X X Extracts X X X X
....made there under. 5.1 Briefly the case of AO is that: "The assessee has declared undisclosed income of Rs.3,35.58,200/- during the survey conducted on 16-10-2008. By this time the almost half of the financial year relevant to the AY 2009-10 was over and the assessee was in a position to ascertain the profits for AY 2009-10. He has made disclosure of undisclosed income on oath based on the cash receipts found during the survey which has also been impounded. Income disclosed would be after deducting all expenses to earn such income. Hence income offered to tax cannot be less than declared income unless such less income is substantiated by proof. Further the assessee himself as submitted a letter dated 17-10-2008 to the department which states as follows: "2 During survey action, inventory of Note Book Loose Papers was made at Sr. No.1 & 2 of the Inventory. The statement of Shri Bakul J.Parmar one of the partners was also recorded on oath in the presence of another partner Shri Nitesh J Pannar Based on the notings in Note Book and Loose Papers, with regard to cash component received by the firm, the additional income was offered for taxation as unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... gross receipts at Rs 3,35,58,200/-. The Ld. Assessing Officer merely acted on only one ground i.e., he made the addition on the basis of declaration made by the appellant at the time of survey by ignoring all the factual evidences on record. The Id. Assessing Officer interpreted the word income used by the appellant at the time of survey in the literal sense and made the addition. According to the Ld. Assessing Officer the declaration made by the appellant at the time of survey was in nature of income and therefore he disallowed all the expenses required for generating the receipt of Rs. 3,35,58,200/- The ld. Assessing Officer did not appreciated the fact that the accounts of the appellant have been audited under the section 44AB of the Income Tax Act, 1961, and all the expenses debited to P/L account have been duly verified and certified by the auditors. Further, all the expenses incurred are supported with proper documentation. The appellant had declared revenue of Rs. 3,35,58,200/- in his books of accounts & has claimed expenses incurred for generating the revenue. The Net profit of Rs. 10,79,970/ after deducting all the expenses was reflected in the Return of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to record the statement on oath and hence the statement taken during the course of survey has no evidentiary value. The Mumbai Tribunal in the case of Dy CIT VIS Premsons (130 TTJ 159) held that no addition can be made or sustained simply on the basis of statement recorded at time of survey/ search; in order to make an addition on basis of surrender during search or survey, it is qua non that there should be some other material to co relate undisclosed income with such statement. ITO vs. Bajrang Trading Company (2011) [Tax World Vol. XLV Part-1 Page 33 (January, 11)] wherein it was held that adhoc disallowance cannot be made simply holding that self made vouchers cannot be taken as correct and proved, unless some of such vouchers are proved as bogus or fake Mumbai Bench of ITAT in Pearl Farben Chem. Pvt. Ltd. I.T.A. No. 1122/Mum/2010 (order dated: 12th November, 2010.) wherein it was held that the Assessing officer has to give basis for disallowance. The disallowance has to be based on some material and cannot be arbitrary. The round figure estimated additions without giving any basis cannot be sustained. The Nagpur Tribunal in the case Elite Developers v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....return of income have been filed within the time allowed as per the provision of the Income Tax Act, 1961. Moresoever if he was not satisfied with the books of accounts he should have conducted an enquiry in order to point out that there was any discrepancies in books of accounts. The Income Tax Act, 1961 has also given sufficient powers to AO to conduct enquiry in order to find out any discrepancies in books of accounts. On perusal of AO order it has been also observed that before rejecting books of accounts he had called for Balance Sheet, P/L account, various ledgers, bills and vouchers etc. Thereafter he rejected the same as according to him they were handmade and hence appeared to be self-made and non-genuine. However, even for time being it is assumed that the vouchers and bills are self made and non genuine then also it can only raise a doubt about validity of expenses claimed by the appellant. In no circumstances rejection of vouchers can lead to rejection of books of accounts. Further to made the addition he had solely relied upon the statement given by one of the partner at the time of survey. He failed to appreciate that an admission made at the time of survey, ....