TaxTMI 
TaxTMI 
2023 (7) TMI 1480
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.... as per accounting standard AS-I?" 3. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in giving a finding which is contrary to the ratio of the decisions of Hon'ble Allahabad High Court in the case of Awadhesh Pratap Singh Abdul Rehman & Bros Vs. CIT 201 ITR 406 (All.) regarding parameter of satisfaction for rejection of books of account?" 4. "Whether on points of law and on facts & circumstances of the case, the Id. CIT(A) was justified in accepting fresh evidence produced by the assessee, if any without allowing the AO, proper opportunity to examine the same, thereby violating the provisions on law under Rule 46A of the I.T. Rules?" 5. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in giving a decision in favour of the assessee and against the revenue though there is no nexus between the conclusion of fact and primary fact upon which conclusion is based? 6. "Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 2,32,59,204/- by giving a finding which is contrary to the evidence on record, as th....
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....14-15-- request regarding - Appellant The revenue Partnership firm Assessment year 2014-15- Trading of tractors, trolly and parts ITR us 139 03-09-2014 Rs.77,71,280/- Assessed income us 143(3) 24-12-2016 Rs.3,10,30,484/- Addition Rs.2,32,59,204/- 8% on cash payment of Rs.4,09,06,963/- calculated at Rs.,3,34,49,568/-, reduced declared NP of Rs. 1,01,90,365/- and net NP of Rs.2,32,59,204/- added, based qu.no 14 page 8 of statement of Shri Sanjay Singhal (Para-6 page-3) Revenue effect 97,56,280/-( aprox.) It is assessee's appeal, hence, CBDT Circular no 17/2019 dated 08-08-2019 and does not fall under exceptional cases vide CBDT circular no 03/2018 dated 11-07-2018, is applicable in the case. AO is observation Based on survey finding and statement and various discrepancies, the AO was in view that books of accounts is not reliable. (Para03 Page-01) 1. AO show caused the assessee for rejection of books of account (para-4 page-2) 2. AO adjudicated assessee explanation on production of books of account para-4 page-2) 3. Based on reply of the partner, the AO rejected the explanation on production of books of account and rejection of books of....
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....ences on records Reasons for applying section 145(3) * Statement of Shri.U.S.N. Murty,accountant, recorded on 08-03-2018, *Entries the vouchers which given to him by the partners. And for other vouchers denied to be aware of them Reply-4& page 1 * expenses vouchers for 5 different place was confronted to the assessee to verify form regular books of account, Shri. Murty categorically, accepted that vouchers were not entered in regular books of account. (Reply 6 page 2) * The vouchers pertains to 13-02- 2016 and date of survey is 08-03-2016. The assessee failed to verify expenses vouchers in regular books of account. The books are with the assessee in computers and was not properly recorded and was complete. Hence, there is sufficient cause to doubt books result and rejection us 145(3). The accountant categorically re affirm that enters only those vouchers, which are given to him for accounting entry. He also admitted that there are some more vouchers which has been left for entry( reply 9 page-3) The facts above, reveals that the assessee is routine practicing pick and choose method to entered expenses in account and many more vouchers were left unentered in accou....
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....rbed. The assessee voluntary disclosed income at the rate of 8% of income. Reasons for rejection of books of accounts is based on facts on the spot and not on presumption or surmise. Retraction from statement The assessee filed affidavit to retract his admission from his statement recorded during the time of survey operation. Para-8 and 9 of the affidavit the assessee claimed to be in depression, a patient under treatment of depression and was under disturbed mental state(para-13),lost equilibrium of mind(para-14) loss of memory (para-16), under treatment of cervical problem in 04-06-2014.( para-10) Not reliable for the reasons as under *The assessee was a patient of cervical problem some where 2014 and two years was elapsed on the date of survey. The medical report furnished categorically denies that parenchyma, i.e. outer membrane made of cell, is found intact and no significant abnormally detected. The problem is connected only with bone problem in vertebra. The has self-made claim of loss of memory, depression and of affected brain not verifiable from medicine prescribed for treatment. *The medicine prescribed for treatment is restricted to dislocated vertebra and not for ....
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....s and is apparent. The apparent is real. The facts and surrounding information on records, and statement disclosed the truth the paid in cash many expenses and there is no agreement with subcontract. The assessee denied to have maintained stock register and also to have maintain muster roll. These are surrounding facts and valid reasons for rejection of books of account. The reliance is placed on decisions held as under ♦CIT Vs Durga Prasad More 82 ITR 540 [SC] ( Page -1 to 3) It was held that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not real and that the taxing authority are entitled to look into the surrounding circumstances and find out the reality and the matter has to be considered by applying the test of human probability. ♦Sumati Dayal Vs CIT [1995] 125 CTR 124 (SC) (Page 3 to 5) It was held that although apparent must be considered real but if there is reason to believe that apparent is not realas the case under consideration, then the apparent should be ignored to unearth harsh reality. * CIT Vs NR Portfolio ITA No. 1018/2011 HC of Delhi(Page 41 to 47)( emphasis) Para-14 When an assesse....
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....ly, the addition of Rs.2,32,59,204/- for the assessment year 2014-2015 was made by the assessee. 7. It was also submitted by the ld. Sr-DR that the assessee has submitted a correct statement by way of an affidavit of the partners Mr. Sanjay Singhal on 08.04.2016 before the ld.AO taking shelter of his disturbed statement of mind, great medical stress and strain, the assessee in the said affidavit has said that, he forgot completely that the return filed by the assessee-firm M/s PSA Construction for the assessment year 2013-2014 was subject to scrutiny under scrutiny assessment u/s.143(3) of the Act. During the course of assessment proceedings for AY 2013-14, the books of accounts along with bills and vouchers were duly produced and verified by the ld. AO and has made a retraction from the statements recorded u/s.133A of the Act on 09.03.2016. The partner of the assessee has submitted in the said affidavit that he must have agreed to offer income of 8% of the gross receipt subject to allowance on account of remuneration and interest to partners. The assessee has also taken the rescue of his disease as neck cervical commonly known as depression. All such medical reasons based on whic....
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....lectronically along with Audited Balance Sheet and Profit & Loss Account for A.Y 2014-15. (Placed on Page No.192 to 204 of the PB and Letter filed before AO is placed on Page No. 220 to 221 of the PB) 4. 03.09.2014 Return of Income filed u/s 139(1) for A.Y 2014-15. (Placed on Page No. 67 of PB) 5. 08.09.2015 Return of Income filed u/s 139(1) for A.Y 2015-16. 6. 17.12.20 15 Assessment Order passed u/s 143(3) for A.Y. 2013-14 vide order dated 17.12.2015 The then Learned DCIT-2(1), Raipur had accepted book results of the assessee and the factum of having maintained the books of accounts and bills and vouchers was also affirmed by the then Learned DCIT-2(1), Raipur. Assessment got completed much before the date of Survey u/s 133A on 08.03.2016. 7. 08.03.20 16 to 09.03.20 16 Survey operation u/s 133 A conducted on business premises of the assessee. Statement of partner was recorded u/s 133A thrice, copies of statements are placed on Page No.86 to 106 ofPB. 8. 10.03.20 16 Books of accounts along with bills and vouchers for F.Y 2011- 12 to 2015-16 were produced vide letter dated 10.03.2016 in response to summon u/s 131 dated 09.03.2016. (Placed on Page No.70 of PB)  ....
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....by the assessee in Para No. 1 on Page No. 1 and Para 4.1 on Page No. 5 of the Assessment Order. Arguments: Nothing prevents the assessee to produce the books of accounts along with bills and vouchers during the course of assessment proceedings before the AO even if the same were not produced before the survey team owing to any reason and the Learned AO was duty-bound to examine the books of accounts. 17. Statement recorded u/s 133A has no evidentiary value: as has been held by the Hon'ble Supreme Court in the case of CIT vs. S Khader Khan Son (2012) 82 CCH357. 18. Non production of books of accounts at the time of survey cannot be a ground for rejecting books of account: Mere non production of books of accounts during the course of survey proceedings cannot be a sole reason for rejection of the books of accounts as has been held in the following judicial pronouncement: s. No. Title Citation Authority CLC reference 1. ITO vs. Vijay Kumar Kesar (2010) 327 ITR 497 High Court of Chhattisgarh Page 136 2. Mahesh Coal Traders vs. CIT 976, 977 of 2013 High Court of Allahabad Page 90 3. Evergreen Bar & Restaurant vs. Ad. CIT (2....
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....t of Gujarat Page 181 2. DCIT vs. Vipin Aggarwal (2016) 46CCH 291 Chandigarh Tribunal Page 190 9. CBDT has laid emphasis on collection of evidences vide CBDT circular dated 10.03.2003 and 18.12.2014: The copy of CBDT Circular dated 10.03.2003 and 18.12.2014 is placed on Page 711 to 714 of the Paper Book. Prayer; It is humbly prayed that the rejection of books of accounts may kindly be declared as bad in law and order passed by the Learned CIT(A) may kindly be confirmed. 10. Alternate Plea: Manner of Assessment of Total Income in A.Y 2012-13, 2013-14 and 2015-16; The total income for the A.Y 2012-13, 2013-14 and 2015-16 was computed in the following manner: S. No. Particulars A.Y 12-13 A.Y 13-14 A.Y 15-16 1. Copy of Assessment Order is placed on following page No. of Paper book. Page 117 to 133 Page 134 to 149 Page 150 to 167 2. Contractual Receipts 19,15,01,238/- 29,48,13,181/- 68,41,91,293/- 3. Add: Interest on FDR 8,09,290/- 9,55,020/- 20,12,360/- 4. Gross Receipts 19,23,10,528/- 29,57,68,201/- 68,62,03,653/- 5. Net profit (a> 8% 1,53,84,842/- 2,36,61,456/- 5,48,96,292/- 6. Add: Interest on IT Re....
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.... Reliance is placed on the following judicial pronouncements: s. No. Title Citation Authority CLC Reference 1. RadhasaomiSatsan g vs. CIT (1992) 193 ITR321 Hon'ble Supreme Court Page 207 2. CIT vs. Godavari Corporation Ltd. (1985) 156 ITR 835 High Court of Madhya Pradesh Page 220 3. ITO vs. Tejmalbhai& Co. (2006) 99 ITD 399 Rajkot Tribunal Page 227 4. Indian Herbs Research &Supply vs. ACIT (2006) 25 CCH 0091 Delhi Tribunal Page 230 Prayer: It is humbly prayed that the order passed by the Learned CIT(A) may kindly be confirmed and appeal of the revenue may kindly be dismissed. 9. It was also submitted by the ld. AR that the partner of the assessee has informed to the survey team regarding the books of accounts maintained by the assessee firm. He drew our attention to the question No.7 of the statements recorded u/s.133A of the Act, dated 08.03.2016, wherein in answer to a query by the survey team, the partner of the assessee has submitted the books of accounts, like cash book, bank book, purchase book, sell book etc. and computer data are maintained in this office. Ld. AR further drew our attention to page 99 of the paper book whe....
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....assessment proceedings before the AO even if the same were not produced before the survey proceedings owing to any reason and the AO was duty bound to examine the books of accounts. Ld. AR also submitted that statement recorded u/s.133A of the Act has no evidentiary value and has placed his reliance on the judgment of the Hon'ble Supreme Court in the case of CIT vs. S. Kader Khan Son, reported in [2012] 25 taxmann.com 413 (SC)/[2012] 210 Taxman 248 (SC). Another contention raised by the ld.AR that non-production of the books of accounts at the time of survey cannot be a ground of rejecting the books of accounts on this issue. Ld. AR relied on the following judgments :- i) ITO Vs. Vijay Kumar Kesar, [2010] 327 ITR 497, wherein the jurisdictional High Court has held as under :- Section 69 of the Income-tax Act, 1961 - Unexplained investments - Assessment year 2000-01 - Where addition was based solely on assessee's confession during survey which was later retracted and Commissioner (Appeals), after considering material produced by assessee during assessment proceedings and on due appreciation thereof, had accepted explanation of assessee for retraction of his admission as bon....
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.... be set aside and be remanded to it for fresh adjudication. iii) Evergreen Bar & Restaurant Vs. Ad.CIT [2008] 27 CCH 170 (Mumbai Tribunal), wherein the Tribunal has held Assessee's books of account being regularly audited, returns of income being filed along with balance sheets and P&L a/c, and sales-tax assessment having been made on the basis of such books, CIT(A) was not justified in his conclusion that assessee was not maintaining any books of account merely because no books of account were found during survey; AO taking sales figures of liquor of 5 days and extrapolating the same so as to arrive at the annual sales of 5 consecutive years, that too without any incriminating evidence was not justified in his action and additions made on that basis could not be sutained. 11. Ld. AR also contended that explanation furnished during the course of assessment proceedings cannot be ignored because the explanation was not furnished during the course of survey. On this aspect, ld. AR relied on the following judgments. i) Yadurish Rai Jhunjhunwala (1987) 67 STC 381 (Allahabad High Court) ii) Ramdas Jugani (2006) 282 ITR 356 (Madhya Pradesh High Court 12. The next contentio....
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....and the order passed by the ld. CIT(A) deserves to be confirmed. The ld.AR also requested to accept one alternative plea in the present case, wherein the assessment year 2012-2013, 2013-2014 & 2015-2016, which were also covered by the same survey proceedings, wherein the assessments were completed u/s.143(3) of the Act on the basis of directions issued by the JCIT, Range-2, Raipur u/s.144A of the Act dated 20.12.2017 and had directed the AO to allow depreciation, partner's remuneration and interest over and above the estimated net profit @8% of the gross receipts, in case the return of income is higher than the income computed under the direction of ld. JCIT u/s.144A of the Act then the returned income will be considered as assessed income. Therefore, it was the submission of the ld. AR that the same proposition should be applied for assessing the income for the assessment year 2014-2015 i.e. the year under consideration in the present appeal. Ld. AR further submitted that under the rule of consistency when the department has taken a stand in one year, the same modus operandi in calculating the taxable income of the assessee should be applied in the other years also. In support of ....
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....rified primary evidence and Tribunal had confirmed order of CIT(A), in view of retraction of admission by the assessee, deletion of addition was held to be justified by the Hon'ble High Court. Ld. CIT(A) has further relied on the decision of ITAT Mumbai Bench of the Tribunal in the case of Chawla Brothers (P) Ltd., reported in [2011] 43 SOT 651 (Mum), wherein it is held that the declaration in survey u/s.133A of the Act is subject to explanation and reconciliation by the assessee and if explained, it has to be considered. 16. On a thoughtful analysis of the factual matrix of the present case, apparently the assessee has provided its books of accounts maintained on computer, however, supporting documents and vouchers were not produced before the survey team during the survey proceedings u/s.133A of the Act but all the books of accounts, bills and vouchers with supporting evidences were submitted by the assessee before the AO during the assessment proceedings but the same were summarily rejected by the ld. AO stating that it seems that assessee has manipulated the books of accounts and other documents, hence, the same cannot be relied upon. Such an observation of the ld.AO shows tha....