TaxTMI 
TaxTMI 
2025 (11) TMI 1307
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....the AO which have been reproduced by him in the assessment order completely Ignoring the fact that the surrender made during the survey was retracted by the assessee. 3. That the Id. CIT(A) NFAC has erred in law and on facts in confirming the addition of Rs.1,00,00,000 in a summary manner without going into the merit of addition made by the AO simply on the basis of a slip pad alleged to be reflecting the distribution of profits amongst the partners without there being any corroborative evidence. 4. That the Id. CIT(A) NFAC has grossly erred in law and on facts in confirming the addition of Rs.80,00,000 simply on the basis of a loose sheet which was got prepared by survey team under pressure and alleging the same to be the amount receivable by the assessee firm without there being even an lota of evidence of the alleged for the same. 5. That the Id. CIT(A) NFAC has erred in law and on facts in confirming the addition of Rs.17,00,218 alleged to be the unaccounted amount spent on construction of building inspite of the fact that no building was constructed during the year under assessment. 6. That the Id. CIT(A) NFAC has erred in law and on facts i....
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....ing survey and its subsequent retraction are as under: Serial Surrender Particulars: Before Survey Team Disclosed in Return 1) 2) 3) 4) 5) Excess Cash Excess stock Sundry Debtors Building invest Partners Slips 8,40,000.00 8,40,000.00 31,60,000.00 31,60,000.00 80,00,000.00 Retracted 30,00,000.00 Retracted 1,00,00,000.00 Retracted 2,50,00,000.00 40,00,000.00 7. From the above chart it is seen that out of the total surrender of Rs. 2.50 crores, made before the survey team, the surrender amounting to Rs. 2.10 crores, in respect of sundry debtors receivables, funds related to partners slips and investments in constructions, has been retracted, on the ground of "forced surrender". 8. Regular return has been filed by the assessee u/s 139(1) of the Act 61, disclosing an income of Rs. 46,30,280/- (including the additional income of Rs. 40 lakhs, disclosed in survey covering excess stock and cash ) on a gross sales of Rs. 4.06 crores along with audited financials supported by books of accounts which are produced and examined in course of scrutiny. 9. Various queries were raised in scrutiny and response was....
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....fit rate of 3% in the case of the assessee on gross sales of Rs. 4,03,09,650/-, which works out to Rs. 12,09,290/- whereas the assessee has shown the same at Rs. 6,30,280/-. The difference of Rs. 5,79,010/- is added back to the returned income of the assessee. The addition of net profit of Rs. 5,79,010/- is confirmed. 5. The appeal filed by the assessee is dismissed." 11. Now the assessee is before the tribunal on the grounds contained in the memorandum of appeal. In course of hearing the Ld. AR of the assessee filed a short paper book containing copies of surrender letter dated 19/01/2016 and the subsequent retraction letter dated 01/03/2016 ( filed within forty days ), copies of impounded slip pads relating to four partners of the assessee firm recording date wise movement of cash to and from the partners, ( along with a copy of the summary of cash outflow and inflow compiled post survey on the basis of such impounded document in excel sheet ), copy of the impounded sundry debtors list ( undated typed two pages ) and copy of order u/s 133A(3)(ia) dated 19/01/2016, and has also filed written submissions in support of his case. 12. The Ld. AR submitted that ....
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....arbitrary figure ), without the back up of any credible evidence and as such the said surrender has been rightly retracted by the assessee, within forty days and the genuine disclosure of additional income pertaining to excess CASH and STOCK has been rightly accepted by the assessee and the same has been duly disclosed and has already formed a part of the returned income. He submitted that since the retraction by the assessee has been done within reasonable time after examination and verification of own records, the same may please be accepted, as correct factual particulars. 17. He further submitted that no incriminating materials or documents has been found in survey and all relevant invoices, purchase and sale bills, bank records, books of accounts, were available and no discrepancy has been found in respect of such books of accounts, except the discrepancy of excess physical cash vis a vis the cash book record, which has been immediately surrendered. Similarly, the survey team has worked out the valuation of stock on the survey date on physical inspection and the value of excess stock worked out by the survey team was Rs.27.31 lakhs against which the assessee has made a surr....
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....dering that the funds has been returned back the very next day by the partners each time (as clarified in the affidavit in para 10 dated 01/03/2016). The Ld AR submitted that the said addition is very much arbitrary, without any basis and simply based on presumption and assumption, without considering the factual and practical aspect of the matter, that it is the same fund that is rolling in the business, the peak of which is only say Rs. 15 lakhs, and the same is already covered by the surrender made by the assessee and as such the addition of Rs One crore, wrongly made may please be deleted. 22. Ground No : 4 Regarding the addition made on account of Sundry Creditors (receivables) amounting to Rs. 80 lakhs, on the basis of impounded document A - 2, ( copy made a part of this order ), 23. It is submitted by the Ld. AR that this particular typed sheet has been prepared at the site on the date of survey, and it was never existing at the site pre survey and the assessee was forced to make it a part of the surrender letter and subsequently, the same has been categorically denied in the sworn affidavit ( cum retraction letter ) in para 6 and 7 ( already reproduced in para - 15 of....
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....uring the year concerned, he prayed that the addition wrongly made may be deleted. 26. Ground No 6 : Regarding the addition made by the AO after rejection of book results u/s 145(3) of the Act 61, and estimating the net profits @ 3% against the disclosed NP rate of 1.56%, in absence of stock register being produced for examination in course of scrutiny, the Ld AR submitted that the AO was legally wrong in taking recourse to section 145(3) of the Act for non production of stock register, when all other books of accounts, including cash book, ledger, invoices, banks, bills vouchers, VAT records, details of inter state and intra state purchases, transport, etc, are all produced and examined and no defects in such books has been found . Secondly, he submitted that the net profits as per audited accounts are disclosed at 46.30 lakhs on gross turnover of Rs. 4.03 crores ( after considering partners interest and remuneration) works out to approximately 11% (eleven percentage) of gross which is more than satisfactory, and the AO was not at all justified in refusing to consider the surrendered amount for the purpose of calculation, more so considering the fact that the surrendered amount....
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....al dismissed ACIT V Ravi Agricultural Industries (2009) 117 ITD 338 (Agra) "The premises of the assessee was subjected to a survey u/s 133A during the course of which the revenue authorities found certain loose papers on which some numerical entries were recorded. At the time of survey, one of the partner of the firm agreed to surrender the amount mentioned n loose papers as on unexplained Investment. Subsequently, the said partner retracted from the statement made. The AO made addition to the assessee's income on the basis of loose papers without any other supportive evidence. The CIT(A) deleted the addition. The Tribunal held that when partner had retracted for his statement, the Impugned addition made by the AO should have been supported by enough material in the possessions of the Department Sine loose papers did not conclusively establish that they pertained to business transactions of the assessee firm, the Tribunal held that the CIT(A) was justified in deleting the addition. Thus the Tribunal upheld the order of CIT(A) and the decision was rendered in favor of the assessee" CBI V V.C. Shikla (1998) AIR SC 410 "Loose s....
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....eting the assessment, order passed by the AO cannot be said to be erroneous or prejudicial to the Revenue and the CIT was not Justified in invoking powers u/s 263." 29. Ground No 7: The Ld. AR, has not pressed on the ground No. 7, relating to excess stock of Rs. 27.31 lakhs and excess cash of Rs. 8.40 lakhs, because the same has already been surrendered and has formed a part of returned income and taxes paid accordingly, and there is no addition on this ground as such the same is treated as infructuous and withdrawn. 30. The Ld DR relied on the order of the Ld CIT ( A ), and submitted that the assessee has voluntarily surrendered the amount of additional income in course of survey, and the surrender of the same are supported by six pages of the impounded documents, consisting of two pages Debtors list and four pages of slip pads and prayed for upholding the order of the Ld. first appellate authority. 31. We have heard the rival submissions and considered all materials on record and we are of the opinion that regarding the surrender of excess cash and excess stock (of marbles) both are made voluntarily and in good faith before the survey team, and has been duly incorporated....
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....liquid funds ) are circulating in the said business, the peak of which is determined from impounded documents at Rs. 15 ( fifteen ) lakhs ( approx. ), and the said excess funds has remained outside regular books and is represented by some current assets either stock in trade and / or cash, and that is what has been unearthed during survey and we have no hesitation in holding that the excess fund circulating is fully covered by the total surrender of Rs. Forty lakhs on account of stock and cash, made by the assessee and no further addition is called for on this count. The addition of Rs. One crore on this count is deleted, as such the ground no 3 is treated as allowed. 34. Regarding the addition on account of sundry debtors receivable amounting to Rs. 80 lakhs (approx.), based on two impounded typed sheet of paper containing names of certain persons (undated and without address) which has been subsequently retracted by the assessee we find that the partner (in his affidavit) has categorically stated that the said impounded sheet has been prepared at the survey site by the survey team and was not a document which was actually existing at the premises pre survey, and has no connect....
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....must be a book of account, and that account must be one regularly kept in the course of business... I think the term "book" in Section aforesaid may properly be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume." The above view was again expressed in Zenna Sorabji v. Mirabelle Hotel Co. (Pvt.) Ltd., AIR 1981 Bombay 446,. "In order that a document could be relied upon as a book of account, it must have the characteristic of being fool-proof. A bundle of sheets detachable and replaceable at a moment's pleasure can hardly be characterized as a book of account. Moreover what Section 34 demands is a book of account regularly maintained in the course of business. A ledger by itself could not be a book of account of the character contemplated by Section 34." 36. As such being enlightened by the above judicial precedent, we arrive at a conclusion in the instant case that loose sheets alone without any independent evidence cannot fix a liability upon a person. In the instant case no such corroborative evidences has been brought on record and even ....
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....Commissioner of Income-tax Bhatinda, with 2 ITOs and other staff and carried out survey u/s 133A of I.T. Act, 1961 as per authorization under the aforesaid section. 2. The survey team did not find any incriminating material or documents suggesting any part of our income as unrecorded in debtor's a/c Rs.80,00,000/-, building a/c 30,00,000/-and transaction in slip pad impounded Rs. One crore. 3. The survey team misled the partners and under threat of more severe action directed us to make surrender of Rs. 2, 50, 00,000/- for the A.Y. 2016-17 and pay advance tax accordingly. 4. Since the survey team has been sitting at our premises for long time one of our partners felt depressed by the threat and agreed for the surrender as proposed by the team, although no incriminating or other documents of dubious nature were found. 5. Consequently at the direction of survey team under threat following income was offered for surrender :- Excess Cash 8,40,000/- 3.1,60,000/- Stock Robert 1/2/16 Scanned with OKEN Scanner 20 Sundry Debtors 80,00,000/- Building Transaction in slip pad 30,00,000/* NOTARY 1,00,00,000/- 2 XR GARG! 2007 RAJEDE 2,50,00,000%....
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....d above is true and correct to the best of my My knowledge and belief. 31 / 1.3.16 May God help me. Khush Deponent > Robmile 2 1/3/16 1/3/16 Robin Kumar Bhucho Mandi (Bti) -weg 22: 1 123/3) note 98884-6615) 0 ATTESTED AS IDENTIFIED RAJINDER KUMAR GARG Naby/ Advocate Appointed by Govi. of India Distt. Courts, BATHINDA. 1.5.16 Scanned with OKEN Scanner Document 2 (2) 1 Robin Kumar (Partner) Cash Payment 5-4-15 247000.00 14-5-15 193000.00 28-6-15 253000.000 17-7-15 367000.4 15-8-15 217000.10 7-9-15. 197000:00 18-10-15 227000.00 9-1-15 268000.00 5-12-15 283000.00 8-1-16 248000 . L 95 9500000 19/1/16 Loreil AAPNAM. Saujeen thema 1. Scanned with OKEN Scanne 8) 3 Cash Received from Robin Kuver, Partner Apral Marbe. 6-4-15 2.47000 -1,93,000 15-5-15 : 2,53,00.0 29-6-15 18-7-15: 3,67,000 217,000 16-8-15- 8-9-15 1,97,000 227,000 19-10-15 268,000 10-11-15 283,000 6-12-15 210,000 9-1-16 Guilsindles Sinsty Alona Marble Pastar Document 3 DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT CLOSING BALANCE AMOUNT PAID ....