TaxTMI 
TaxTMI 
2025 (5) TMI 279
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.... assessee read as under: "1. That the order of learned Commissioner of Income Tax (Appeals) is bad in law as well as on the facts and in the circumstances of the case. 2. That the learned Commissioner of Income Tax (Appeals), in para 5 of the order, has erred in facts and law in holding that 'it is evident from the facts of the case and submissions made by the applicant that several incriminating documents in physical as well as electronic form were found and seized from the different premises during the course of search wherein out of books cash receipts were found to be recorded. These seized/impounded materials which are incriminating in nature have direct bearing on the total income of the appellant and proper satisfaction was recorded before initiating proceedings u/s 153C of the Act' and accordingly rejecting ground nos. 1 to 4 raised before him. 3. That the learned Commissioner of Income Tax (Appeals), in para 6 of the order, has erred in facts and law in holding that 'the appellant was provided sufficient opportunity by way of issuing various notices on different dates starting from 26.02.2021 to 31.08.2021 and a show cause notice date....
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....t, decoration, lighting etc. for marriage parties, get- togethers and other ceremonies and other functions. 5. The assessee is a regular income tax assessee and had filed an original return of income u/s 139 of the Income-tax Act, 1961 [the Act, for short] on 04.11.2016 at a total income of Rs. 5,06,360/-.A search and seizure operation was carried out at the residence of the partners and the business premises of other concerns in the group on 03.05.2018. The assessee was not covered in the search u/s 132 of the Act whereas certain recordings/details were found inventorised from various premises. Notice u/s 153C of the Act was issued to the assessee on 10.02.2021, in response to which the assessee filed a return of income on 17.02.2021 declaring total income of Rs. 5,06,360/-. 6. During the course of search, an excel file named "Booking Amount Detail_35890.xlsx" was retrieved from Laptop impounded as Annexure A-5 from the Pandal - Velvet, Rajouri Garden, New Delhi which contained a sheet named "Jan to July" giving the details of total cash receipts including receipts by cheque from functions involving cash component held at the banquets run by the assessee. 7. The assessee ....
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....tion of total unaccounted receipts of Rs 6,31,87,606/- but granted relief by holding that 10% of the total receipts will be taxed as unaccounted income of the assessee and accordingly upheld Rs 63,18,760/- as income of the assessee. 13. Now the assessee is in appeal before us. At the outset, the assessee stated that he is only contesting ground no 4 and 5 of the appeal and would not press the ground no 1 to 3 with regard to veracity of Notice u/s 153C, legality of order u/s 153C and violation of principles of natural justice. The ld AR fairly stated that he will only contest the case on merits. 14. Having said so, the ld AR stated that the seized material on the basis of which suppression factor has been determined is Annexure A-5 for the period January 2016 to July 2016 and accepted that for this period, evidence has been found to show that the assessee is receiving cash over and above the cheque payments which is its unaccounted turnover. The ld AR stated that the details of Annexure A-5 are reproduced in the assessment order at page 65 of appeal memo which is in respect of 24 functions. The ld AR stated that the reference to pages 94 to 96 of APB for AY 2016-17 and pages 8....
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..... 27,80,000/- 4. Unaccounted sales as per Toshiba laptop Total Rs. 13,50,560/- Total Rs. 2,66,47,512/- 17. The ld. counsel for the assessee concluded by saying that the Id. CIT(A) has applied 10% net profit on unaccounted turnover as computed by the AO at Rs. 6,31,87,608/- and has sustained the addition to the tune of Rs. 63,18,760/- as against addition of Rs. 6,31,87,606/- made by the Assessing Officer in the assessment order.10% of net profit on correctly computed/estimated unaccounted turnover of Rs. 2,66,47,512/- would be Rs. 26,64,751/- and thus the assessee claims a further relief of Rs. 36,54,009/- (Rs. 63,18,760/- minus Rs. 26,64,751) which may kindly be allowed. 19. Per contra, the ld. DR strongly supported the order of the AO.The ld DR submitted that the addition and extrapolation made by the AO with regard to the unaccounted receipts from the business activities of the assessee is based on the seized materials and evidences found in the course of search and is very much permissible in law. The ld DR further pointed out that the assessee has not contested the veracity, relevance of the seized documents and has completely accepted the descrip....
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....inent, at this point of time, to mention that the validity of notice u/s 153C; assumption of jurisdiction by the AO; availment of opportunities to represent the case and the relevance of the seized material and taking them as the basis of additions made, are not under dispute. The dispute lies only on the quantum of additions made. 23. We find that in the course of search, materials were seized such as laptop as Annexure A-5 from Velvet, Rajori Garden (Document set-7) which showed that the assessee had received Rs 1,84,39,110/- as cash which were not accounted for in the books of the assessee. Further, from the images extracted from mobile phone of Sanjeev Kohli and Sunit Kohli (Documents set-21), we find that unaccounted receipts found is Rs 13,50,560/-. On the basis of these data, the assessing officer calculated the suppression factor as 2.9217 as follows: Document set Accounted Sales Unaccounted Sales Document Set 7 63,23,725 1,84,39,110 Document Set 21 4,49,440 13,50,560 67,73,165 1,97,89,670 Ratio 2.9217 24. The assessing officer, on the said basis of suppression factor of 2.9217, has made addition of Rs. 5,00,3....
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....ssee. Accordingly, he considered the total suppressed sales turnover at Rs 6,31,87,606(i.e., the suppressed sales turnover computed by the AO of Rs 5,00,36,946 and the unaccounted sales found from the seized evidence of 1,31,50,660).The CIT (A) took the addition of Rs 1,31,50,660/-,made separately by the AO, as part of suppressed turnover and applied a rate of 10% on it to compute unaccounted income of the assessee. 27. We further find that with regard to the adoption of the profit rate of 10%, the CIT(A) has considered the evidences found and seized during search in respect of one of the group concern, M/s Fourstar Hospitalities LLP found in the excel workbook titled as 'pendrive- 00641' marked as annexure A-13 in which there is a worksheet named as 'sheet-1' which records the unrecorded transaction of receipts and payment held in respect of M/s APPL (Angel Promoters Private Limited ) for the period from 02-03- 2017 to 10-11-2017 and in respect of M/s. Fourstar Hospitalities for the period from 11.11.2017 to 10.04.2018 and further Annexure A-12 has been found from M/s Fourstar Hospitalities for the period from 11.04.2018 to 2.05.2018. On the basis of the seized data contained i....
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....ly 38 functions out of this 66 functions, therefore it was proposed that since cash receipts of unaccounted sales are not in respect of each and every function held, estimate of unaccounted sales should be made on proportionate basis. 29. The assessee stated that for AY 2016-17,if an estimate of unaccounted sales has to be made other than unaccounted sales as per seized material, the same ought to be only for and in respect of the functions held between April 2015 to December 2015 for the said year. The assessee further proposed that as per the Annexure A-5, the assessee has been found to have received unaccounted cash receipts in respect of only 24 functions. The sales as per books for this period is totaling to Rs. 1,28,32,000/- which is in respect of 46 functions held during the period from April 2015 to December 2015.As is evident from the seized material, the cash receipts are in respect of only 36% (24/66*100) of functions held. Thus 36% of the sales as per books would be Rs. 46,19,520/-(12832000*36%). And by applying the suppression factor of 2.9217 to Rs. 46,19,520/- the unaccounted sales for the said period would be Rs. 1,34,96,852/- instead of Rs. 5,00,36,946/- estimat....
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....1973) 90 ITR 271(SC) on the subject of estimating income, which had held as follows: "In the case of 'best-judgment' assessments, the courts will have to first see whether the accounts maintained by the assessee were rightly rejected as unreliable. If they come to the conclusion that they were rightly rejected, the next question that arises for consideration is whether the basis adopted in estimating the turnover has a reasonable nexus with the estimate made. If the basis adopted is held to be a relevant basis even though the courts may think that it is not the most appropriate basis, the estimate made by the assessing authority cannot be disturbed. In the present case, there is no dispute that the assessee's accounts were rightly discarded. We do not agree with the High Court that it is the duty of the assessing authority to adduce proof in support of its estimate. The basis adopted by the Sales-tax Officer was a relevant one whether it was the most appropriate or not. Hence the High Court was not justified in interfering with the same." 31. We are therefore of considered view that the CIT(A) has applied a scientific view gathered from the seized materials ....