TaxTMI 
TaxTMI 
2024 (8) TMI 1635
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....e assessments have been framed in the case of the firm and individual assessee. For the purpose of adjudication, facts in the case of NSSB for Assessment Year (AY) 2013- 14 have been culled out in this order. The cross-appeals for this year in the case of NSSB arises out of common order passed by learned Commissioner of Income Tax (Appeals)-18, Chennai, [CIT(A)] on 30-10- 2023 in the matter of an assessment framed by Ld.AO u/s. 153A r.w.s. 144 of the Act on 30.09.2021. 1.2 The grounds raised by the assessee read as under: - 1. The order of the learned Commissioner of Income Tax (Appeals)-18 to the extent of sustaining the addition made in the assessment order is wrong, illegal and is opposed to law. 2. The Learned CIT(A)-18 erred in sustaining a portion of addition made in the assessment order in proceedings-initiated u/s 153A in the absence of any incriminating material found during search. The learned CIT (A) failed to see that in assessments made u/s 153A of the Income-Tax Act, 1961 addition can be made only on basis of incriminating material found in search u/s 132 of the Income-Tax Act, 1961. 3. The learned CIT(A)-18 ought to have seen that there ....
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....ence. The learned CIT(A)-18 ought to have seen that the departmental circular F.No.286/2/2003-IT(Inv) dated 10/03/2003 is binding on the assessing officer and that the addition cannot be made only on the basis of statement obtained at the time of search de hors any material evidence. 10. The learned CIT(A)-18 ought to have seen that although admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect. In the instant case the Gross profit declared and accepted by the department for the impugned year itself would stand as a testimony to the additional income declared by the appellant in return filed under section 153A and that the addition made by the assessing officer is arbitrary, unreasonable and devoid of material basis. The appellant relies in the decision of Apex Court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala (l973) 91 ITR 18(SC) is support of the aforesaid ground. 1.3 The grounds raised by the revenue read as under: - 1. The order of the ld. Commissioner of Income Tax (Appeals) is opposed to law and facts of the case ....
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....ndurai along with the cash received from respective departments / floors. The accounts department maintained accounts in Tally Software which was used to record assessee's books of accounts. The cash collections were deposited in the bank accounts as per the instruction of Shri Pondurai. 2.4 It was found that 'Day End application' utility of the billing software as available in the pen drive was being used to suppress the recorded sales at the end of the day. The suppression of sales by this application involved removal of items in the bill and not deletion of the entire bill. This tool allowed change in sales turnover for a particular date as per the requirement of the assessee. After removal of sales, sales report was generated and sale was manually entered in the Tally server by accounts section. This software was not linked to cash book. The software had another application by the name 'Akshaya Gold Application' which was similarly used for suppression of Sales and manipulation of accounts. 2.5 During the course of search at the business premises at T. Nagar and Padi, evidences of unaccounted sales and unaccounted purchases were found. The incriminating material was found....
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....2018-19 (till Jan, 2019) which has been tabulated on Page-7 of the assessment order. The Ld. AO also noted unaccounted purchases in NSSB, T. Nagar. However, the documents evidencing unaccounted purchases were not fully available since it was frequently destroyed by the assessee. In the sworn statement, Shri Pondurai agreed to offer Gross Profit of 21% on sales differential. 2.8 The Ld. AO also tabulated suppression of sales at Padi unit on Page Nos. 8 & 9 of assessment order. The suppression of sales in Textile division was computed as 15.69% of recorded sales whereas suppression of sales in furniture division was computed as 2.43% of recorded sales. After deducting unaccounted purchases, Ld. AO worked out suppressed profit of these units on Page No. 10 of assessment order. 2.9 During the course of assessment proceedings, the assessee-firm was confronted with all the above stated facts vide show-cause notice dated 30.03.2021. After considering detailed reply on behalf of the assessee, Ld. AO quantified sales suppression in the hands of the assessee-firm, for all the years, at Rs. 922.24 Crores whereas sales suppression in the hands of Shri Pondurai, for all the....
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.... 62,23,10,784.53 18.80% 1,95,09,00,000.00 36,67,69,200 AY 15-16 3,16,21,91,719.00 58,68,04,743.00 18.56% 2,05,12,00,000.00 38,07,02,720 AY 16-17 2,94,98,03,881.00 51,56,90,280.90 17.48% 1,71,11,00,000.00 29,91,00,280 AY 17-18 2,97,66,06,681.00 51,09,90,844.42 17.17% 1,14,50,00,000.00 19,65,96,500 AY 18-19 1,47,41,76,953.00 31,96,60,044.15 21.68% 44,89,00,000.00 9,73,21,520 T Nagar Proprietorship concern AY 18-19 1,99,71,70,315.00 32,27,61,142.75 16.16% 41,11,00,000.00 6,64,37,552 AY 19-20 3,87,89,74,983.09 59,54,82,060.75 15.35% 44,06,00,000.00 6,76,38,847 Padi Proprietorship concern AY 19-20 7,16,54,01,033.96 1,10,40,62,932.87 15.41% 32,09,30,373.00 4,94,73,514 Padi Furniture - Proprietorship concern AY 19-20 2,24,84,19,907.41 42,34,82,658.24 18.83% 1,35,80,060.00 25,57,761 ....
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....ed that since AO did not disturb the books results declared by the assessee for various AYs, the GP rate as admitted in the books of accounts should be considered. It was also claimed that the details of unaccounted purchases for AY 2018-19 in the case of the individual was not available fully during the search as it was destroyed frequently as stated in reply to Q. No. 26 by Shri Pondurai during search. It was also claimed by the assessee that the assessee used to sell the same set of items in both the two years and therefore, such drastic increase in GP rate was unrealistic. It was impossible to achieve completely distinct GP in two consecutive years. 3.6 The Ld. CIT(A), partially accepting the assessee's submissions and going by the statement made by Shri Pondurai u/s 132(4) during search proceedings, accepted GP rate of 21% on suppressed turnover. It was observed by Ld. CIT (A) that the statement was a voluntary statement which was not retracted. Therefore, referring to various judicial decisions holding the field, Ld. CIT (A) held that it would be justified to adopt GP rate of 21% in case of assessee-firm. The computations were revised accordingly. Since for AY 2018-19....
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.... purchases, complete data in that regard is not available. Moreover, the purchases were centralized at one place which was distributed to various centers / outlets as per their requirement. The modus operandi to suppress the sales was that only few items in cash bills, on some random basis, would be removed at the end of each day. It is not the case that entire bill would be removed from the system. The goods sold by the assessee could be out of accounted purchases or out of unaccounted purchases. The random deletion of sales could relate to accounted purchases or unaccounted purchases. As righty held by Ld. CIT(A), in the given scenario, it would be practically impossible to map accounted and unaccounted purchases with sales which could also be accounted or unaccounted. There would be no certainty either in purchases or in sales. Therefore, incomplete data of purchase could not be mapped with unaccounted sales. On given facts, there would be no option but to make an estimation of GP rate on suppressed sales as unearthed by the department during search action. 5. Evidently, the assessee is dealing in diversified nature of goods which include home appliances, textiles, jewellery ....
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....ing grounds raised by the revenue, in assessee- firm as well as in the case of individual assessee, for all the years, stand dismissed. 9. The individual assessee Shri Pondurai has assailed the action of Ld. AO in extrapolating the sales for earlier years. We are of the opinion that considering the ratio of decision of Hon'ble Supreme Court in the case of Pr. CIT vs. Abhisar Buildwell (P.) Ltd. (149 Taxmann.com 399), no addition could be made for completed assessment in the absence of any incriminating material. We find that suppressed sales for AYs 2017-18, 2018-19 and part of 2019-20 with respect to Padi units are merely extrapolated sales based on 3 months unaccounted sales of AY 2019-20. There are no evidences of suppression of sales in AYs 2017- 18, 2018-19 and remaining months of 2019-20. It is trite law that no addition could be made merely on the basis of assumption, conjectures or surmises. Unless evidences of suppression of sales in relevant years are brought on record in those years, the suppressed sales for only a part of month could not be extrapolated for those years. Therefore, the assessee has rightly offered additional income only in respect of sales suppression....