TaxTMI 
TaxTMI 
2023 (3) TMI 1618
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....e is that the assessee is Partnership Firm engaged in the business as Developer and Construction activities. The assessee is part of JP Iscon Group. There was a search and seizure proceedings u/s. 132 of the Act in JP Iscon Group on 25-02-2016 and also its senior marketing manager Ms. Kalindi S. Shah. Certain loose papers from the bedroom almirah of Ms. Kalindi S. Shah were found, inventorized and seized as annexure-A-3 of Panchnama dated 26-02-2016. In the statement recorded u/s. 132(4) of the Act, Ms. Kalindi S. Shah has categorically accepted the details of transactions by Iscon Crystal Project in Deesa, Palanpur which is a commercial project, wherein cash receipt of Rs. 1,77,84,870/- is reflected. In reply to question no. 35, she accepted that the pages contained details of transactions of Iscon Crystal Project. It was noticed that this was a computerized cash book page for the period 07-07-2012 to 04-09-2012. On the basis of the above aforesaid documents, proceedings u/s. 153C were initiated in the case of the assessee and search assessment was completed by making addition. 2.1. The assessee submitted that it is a partnership firm consisting of five partners including JP Is....
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.... the entries found noted in the computer sheet were on money receipts charged by the appellant firm. 5.6 Moreover, Shri Jatin Gupta who stated to have given the papers to Ms. Kalindi S. Shah was neither a partner nor an employee in the appellant firm and his connection to the appellant firm has not been brought on record to examine how and in what manner the aforesaid computer PDF file was maintained by Shri Jatin Gupta and subsequently by Ms. Kalindi S. Shah who was also not involved or engaged in the business activity of the appellant firm. Even Shri Jatin Gupta was never examined and recorded his statements to verify the statement of Ms. Kalindi S. Shah whereby the above papers stated to have been given to her by Shri Jatin Gupta. Except in the notice issued u/s. 142(1) of the I.T. Act by the AO on 14.11.2018 whereby question and answer No. 35 of Ms. Kalindi S. Shah did 25.2.2016 has been reproduced but the copy of such statement was not made available to the appellant for cross examination by appellant and therefore there is lack of principle of natural justice as such statement has been utilized against the appellant behind the back. The whole statement ought to have ....
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....after various Hon'ble courts have followed the said judicial pronouncement. 5.9 It has also been argued that during the course of search proceedings at the main office premises of JP Iscon Pvt Ltd no incriminating material has been found with respect to the project at Deesa undertaken by the appellant and therefore the allegation of on money receipts is not correct. 5.10 It has also been submitted that the entry in the books of accounts maintained in the regular course of business is relevant for the purpose of considering the nature and impact of the transaction but notings of sheet of papers or loose sheet of papers are required to be supported/corroborated with the loose papers found from the possession of appellant firm or found from the possession of the third party. In the instant case, the AO has made the addition u/s. 68 of the IT. Act stating that the sum is credited to the books of accounts in the form of cash book. Although the computer page with the header of ZYX Iscon Crystal Deesa book are loose sheets and not the books of accounts of the appellant firm. Neither it was the cash book of the appellant firm maintained in regular course. If fact, it ....
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.... on money receipts is considered as income, then the NP rate of the appellant firm works out very high which is not prevailing in this business. In this regard, no comparable case of that high net profit level has been brought on record by the AO. Therefore, before making such addition, the AO ought to have brought on record some comparable cases to compare such NP rates which could justify the addition of the on money receipts in the case of the appellant. 5.18 The reliance has been placed on the decision of Hon'ble ITAT, Ahmedabad in the case of ITO Vs. Anand Builders whereby it has been held that in such circumstance, 8% of the unaccounted on money could be taxed in place of the entire unaccounted on money receipts. It is needless to mention that the entire on money receipts cannot be taxed for the reason that against the unaccounted receipts there is always the unaccounted payments. Therefore, certain part of such unaccounted receipts only remains in the hands of appellant and the same can only be taxed. Subsequently, the above decision of the Hon'ble ITAT was upheld by the Hon'ble Gujarat High Court and the SLP filed against the judgement of Hon'ble Gu....
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....te the income at the rate 8% of the on money receipts of Rs.1,77,84,870/- which works out to Rs.14,22,790/-. Thus, the addition of the income out of the on money receipts to the extent of Rs. 14,22,790/- is confirmed and relief is granted for the balance amount of Rs. 1,63,62,080/-. Thus, this ground of appeal is partly allowed." 4. Aggrieved against the Appellate Order, the assessee is in appeal against the 8% confirmation of the on money receipts and the Revenue is in appeal against the deletion of Rs. 1,63,62,080/-. 4.1. Ld. Counsel Ms. Nupur Shah appearing for the assessee submitted that there was no search conducted at the business premises of the assessee firm and no incriminating material was recovered from the assessee firm as well as from the premises of JP Iscon Group where search was conducted relating to the project carried out by the assessee firm. However only in the residential premises of Ms. Kalindi S. Shah some dump papers were recovered and statement were recorded. The above dump material was not given to the assessee and no opportunity of cross examination was given to the assessee as held by the Hon'ble Supreme Court in the case of Andaman Timber Industri....