TaxTMI 
TaxTMI 
2023 (5) TMI 1488
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....nd non-speaking order. 3. That the statement and surrender made by the appellant during the course of survey was made under coercion, mistaken facts and provisions of law. 4. That the alleged incriminating documents on the basis of which the addition has been made by the ld. Assessing Officer and upheld by the Id. Commissioner of Income Tax (Appeals) has no relation or link with the appellant, the addition made is illegal and unwarranted, same may kindly be deleted. 5. That the surrender made during the survey was made to cover all the discrepancies, if any, found relating to the alleged incriminating documents impounded during the survey. 6. (a) That in the facts and circumstances of the case, the ld. Assessing Officer as well as the Hon'ble Commissioner of Income Tax (Appeals) gravely erred in not giving the benefit of the surrender made with regard to the alleged incriminating documents found for which addition has been made in different assessment years whereas the surrender was made in Assessment Year 2014-15 covering all the earlier assessment years as well as Assessment Year 2014-15 to buy peace with the Department. (b) That t....
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....ning addition of Rs. 3,40,64,500/- under section 69A made by the ld. Assessing Officer on account of credit entries in the alleged impounded diary without giving set off of debit entries in the diary. 13. That the appellant craves to add, amend or alter any ground of appeal before or at the time of hearing of appeal, with the permission of the Hon'ble Income Tax Appellate Tribunal." 3. Since, the bunch of above appeals involve identical issues on similar facts and these are being decided by the ld. CIT(A) in the case of father and son by a common order and hence, the groups of appeals were heard together and adjudicated by this consolidated order for the sake of brevity. 4. The ground no 1 to 6 and 10 to 12 are inter-related to each other wherein the appellants challenged the addition made by the ld. Assessing Officer and upheld by the Id. Commissioner of Income Tax (Appeals) alleged to be based on incriminating documents in contrary to the facts on record that since, there was no relation or link with the appellant taken all credit entries and that without giving benefit of debit entries in the said document hence the addition made is illegal and unwarranted. ....
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....ppeal in each of the above appeal: The proceedings u/s 147/148 are void ab-initio because the notice u/s 148 was never served in accordance with the provisions of section 282 of the Income-tax Act, 1961. The proceedings u/s 147/148 are void ab-initio because the reasons to believe recorded by the AO are infact reasons to suspect. That no satisfaction was recorded by the Principle CIT which was mandatory under the provisions of Section 151(1) & reliance for the contention has been placed on the following judgments :- i. Smt. Nirmal Kaur vs. Dy. CIT International Taxation, Chandigarh I.T.A No. 575/ASR/2016 ii. United electrical Co. (P) Ltd. Vs. CIT [2002] 125 TAXMAN 775 (Delhi) iii ITO vs. M/s Observer Investment & Finance Pvt. Ltd. ITA No. 1185 & 1186/Del/2009 (ITAT Delhi E) iv. CIT vs. M/s Goyanka Lime and Chemical ITA No. 82 of 2012 (MP). "3.3 I have given careful consideration to the contentions of the appellant and to begin with non-service of notice has not been established by the appellant whereas in the assessment order specific date has been mentioned on which the notice was served. The Assessing Officer....
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....failed to file explanation about the nature and source of the amounts recorded in the diary. Further, the assessee has failed to file nature of outgoings and it has not been established by the assessee that the amounts were rotated to be reintroduced as receipts in the diary. Under the circumstances, the contention of the assessee is devoid of any merit and is therefore rejected. As observed above, the assessee in his letter dated 25.02.2014 dearly stated that he was confronted with certain documents which related to him. The assessee, on the basis of such documents surrendered an amount of Rs 1,60,00,000/- for the A Y 2014-15 along with his son Sh. Arshpreet Singh, who surrendered an amount of Rs 1,40,00,000, - for the A Y 2014-15. The documents confronted to the assessee included diaries relevant for the A Y 2014-15 as well diary No SGF-X1V. The assessee, in his statement recorded on 25.02.2014, in reply to Q. No 5 stated that diaries marked as SGF-XII, SGF-XHI, SGF-1X, SGF-XV1 and SGF-XV belonged to him and his son. Further, a copy of diary No SGF- XIV was again provided to the counsel of the assessee on 11.07.2017 and the assessee was required to explain the nature of entries r....
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....o be further divided in both the appellants: A.Y. Peak Credit Arshpreet Singh Share Gurmail Share Singh 2010-11 14,00,000 7,00,000 7,00,000 2011-12 34,65,000 17,32,500 17,32,500 2012-13 54,50,000 27,25,000 27,25,000 2013-14 37,50,000 18,75,000 18,75,000 Total 1,40,65000 70,32,500 70,32,500 14. When above kind of noting or diary is found, debits and credits both are to be considered and peak is to be arrived at to compute the real income. For this proposition, we rely upon the ratio of decisions in: ● Mr. Nadessan Sivapragasam Vs. ACIT ITA No. 112-114 /Cheny/2021(ITAT Chennai) (Refer page no. 92-127 of compilation of judgement already on record) ● DCIT Vs. Shree Bhagwati Machines Pvt. Ltd. ITA No. 296-301/Jp/20221 (ITAT Jaipur) (Refer page no. 128-172 of compilation of judgement already on record) 15 It is further submitted that as against above aggregate peak of Rs. 1,40,65000/- from the diary in all the years, the appellants have already disclosed Rs. 3 crores in aggregate in their ITRs for AY 20....
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.....2014 (AY 2014-15). The relevant document found during the course of survey, were diaries which were then marked as "SGF-XII", "SGF-XIII", "SGF-IX", SGF- XII", "SGF- XVI" and "SGF-XV" "SGF-XVI. On confronting, these diaries to Sh. Gurmail Singh, who was present at the time of survey, has admitted in his statement recorded on oath in answer to question no. 5 as above that "These diaries belong to me and my son Mr. Arshdeep Singh. These dairies have no relevance with the Satguru Foundation or Desh Bhaga Dental College ....... ". and in answer to question no. 6 that the dairies marked as "SGF-IX", "SGF-XV", "SGF-XIII" and "SGF- XIV" belongs to me and the balance diaries pertain to my son Mr. Arshpreet Singh. (APB, Pgs. 194" -204). While recording the statement on oath of the appellant (Sh. Arshpreet Singh) on the date of survey u/s 133A of the Act, in answer to specific question no.3, he admitted that the documents marked at "SGF- XII", "SGF-XVI (notebook green) loose papers as listed in the impounded order dtd. 18.02.2014, were belong to him (APB, Pgs. 205- 208) which is reproduced as under: "Q.3 During the course of survey at the premises of Satguru Foundation (Regd.) carri....
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....n) loose papers as listed in the impounded order dtd. 18.02.2014, and which he admitted were being belonging to him (APB, Pgs. 205-208) which is reproduced as under: "Q.3 During the course of survey at the premises of Satguru Foundation (Regd.) carried out on 18.02.2014, certain documents and loose papers marked at "SGF- XII", "SGF-XVI (notebook green) loose papers as listed in the impounded order dtd. 18.02.2014, which are being shown to you. In his statement recorded on oath on 18.02.2014 your father Sh. Gurmail Singh has deposed that these dairies/documents pertain to you. Do you agree with his statement? Answer - Yes, I agree with the depositions made by my father in respect of these documents, as these documents belongs to me." 12. Under the circumstances and considering the material facts, we are of the considered view that the Ld. AR contention that diary No. "SGF-XIV" in specific has never been confronted to the appellant during the survey is appears to be factually correct and this facts is also evident from the statement of the father and son as above wherein neither the survey party nor the AO has confronted any such document marked as Diary No. "SGF....
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....id belong to the appellants and that the transaction entered therein are unexplained investment being either made in the properties were out of books of accounts or other tangible or intangible Assets. In view of that matter we are of the considered opinion that the ld. CIT(A) did not appreciate the facts on record and he was not furnished in confirming the addition. 15. Even if the notings in the diary SGF XIV (APB, Pgs. 45 to 117 with English version 118 t0 192) presumed to be belonging to the appellant assesses, then the benefit of peak credit would be allowed to the appellants by considering the debits and credits entries of both sides written in the pages of the alleged diary no SGF XIV while computing the real income. If, the benefit of payments is given to the appellant to arrive at correct picture of peak, the year-wise calculation from this diary comes as under: A.Y. Receipt Payments Peak Credit 2010-11 6,61,54,600 6,66,13,700 14,00,000 2011-12 7,57,24,715 7,44,03,715 34,65,000 2012-13 5,84,55,112 5,96,76,112 54,50,000 2013-14 2,83,61,830 2,84,61,830 37,50,000 16. Without prejudice to the above, if this diar....
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....urt in the case of L. Sohan Lal Gupta Vs CIT (1958) 33 ITR 786 that an affidavit filed by the assessee cannot be discarded, unless an opportunity is given to the assessee to substantiate its case. In this case, the Assessing Officer as well as learned CIT(A) has discarded retraction letter filed by the assessee only on the basis of admission of undisclosed income recorded in the statement u/s. 132(4) of the Income Tax Act, 1961. In our considered view, the Assessing Officer as well as learned CIT(A) were completely erred in making additions towards only credit entries in the seized documents, disregarding explanation furnished by the assessee. 18. Coming back to another important aspect of the issue. The ld. AR has made an alternative argument without prejudice to its first argument. The assessee contended that if at all, a credit entry in the seized documents is considered as sales made outside regular books of account, then entire sales cannot be added as income, but only net profit from the business should be treated as income of the assessee. The assessee has also made arguments for applying peak credit theory in light of debits and credits contained in very same seize....
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....diture. If you consider debit entry as expenditure, then only net income from said document needs to be taxed. Since, we have already stated in earlier part of this order, credit entry does not depict any income and debit entry does not show any light on expenditure, then the only possible method to determine undisclosed income for the above period is adoption of peak credit theory and in this case, particularly peak credit theory is best method to determine undisclosed income of the assessee. The assessee has filed working of peak credit, which is available in paper book filed for relevant period. The assessee has copied entries contained in seized documents relied upon by the Assessing Officer and recorded date-wise receipts and payments. For the financial year 2015-16 as on 23.03.2015, peak credit works out to Rs.36.25 lakhs, which is net of debit and credit entries recorded in seized document. Therefore, addition is required to be made to the extent of Rs.36.25 lakhs for the assessment year 2015-16. Hence, we direct the Assessing Officer to sustain additions to the extent of Rs.36.25 lakhs for the assessment year 2015-16 towards undisclosed income. The assessee has worked out p....
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.... of account, although nature of said investment is not known to the assessee as well as the Assessing Officer. Therefore, we are of the considered view that either the Assessing Officer has to take one side credit entries and other side debit entries from the pages of the alleged Diary No. SGF XIV to compute real income of the appellant assesses by considering debit side of entries as expenditure incurred for earning said income or else he ought to have adopt peak credit theory to compute real income investment in properties from the receipts and payment sides of the dairy. Thus, in our view, the credit entry does not depict any income/receipt and debit entry does not show any light on expenditure/investment, then the only possible method to determine undisclosed income for the above period is adoption of peak credit theory and in this case, particularly peak credit theory is best method to determine undisclosed income of the assessee. The assessee has filed working of peak credit, as above which is available in paper book filed for relevant period. The assessee has copied date-wise of receipt and payments entries contained in impounded documents for washing of peak credit of Rs. 1....
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....sent special leave petition filed by Appellant - He drew our attention to orders dated February - Leave granted limited to question as to whether in respect of sales which are shown in stock register of. Ltd., there has been double taxation - It is clear from above that leave was granted limited to question as to whether addition made on account of aforesaid sale would amount to double taxation - To put it differently submission of learned Counsel for Appellant is that on the aforesaid sales, which are found in the accounts of Plastic Industries receipts are shown as income on which tax has been paid by During hearing of this appeal, learned Counsel submitted that he can bring satisfactory evidence in support of this plea - Court are of the view that order of authorities below should be sustained but if Appellant is able to prove that tax on income generated from sale of material has been paid by M/s. Ashish Agro P. Ltd. benefit thereof should be extended to Appellant. 23. In the present cases, since the appellant-assessee have made disclosure in survey in two hands of the group (Father and Son), paid taxes and accordingly, files ITR and hence, in our view, the assessee must be ....
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....ly erred in passing a cryptic and non- speaking order. 3. That in the facts and circumstances of the case, the ld. Commissioner of Income Tax (Appeals) gravelly erred in upholding the penalty of Rs. 54,61,000/- imposed by the ld. Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961. 4. That the appellant craves to add, amend or alter any ground of appeal before or at the time of hearing of appeal, with the permission of the Hon'ble Income Tax Appellate Tribunal." 29. The Ld. AR submitted that during survey, the father-son agreed to make disclosure of Rs. 1.60 crores and Rs. 1.40 crores as additional income from their construction business and filed their ITR for AY 2014-15 (survey year) disclosing this additional income. The assessment for that year was completed wherein this disclosure of additional income was accepted with minor addition of Rs. 64,000/- and Rs. 66,000/- respectively in the cases of father and son. The assessee having not preferred any appeal against this quantum assessment for that AY 2014-15, the AO, imposed penalty u/s 271(1)(c) on such additional income disclosed and minor additions which has been confirmed by the CIT(....
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....by the Assessing Officer has also made the appellant culpable and amenable to penal provisions of the Income Tax Act. Hon'ble jurisdictional High Court in the case of Prempal Gandhi v. CIT, [2009] 185 Taxman 64 (Punjab & Haryana) laid down that the defiant taxpayer would not be absolved of penal provisions merely because the return has been correctly filed in response to reassessment notice u/s 148 of Income Tax Act when there was clear concealment. In the present case, it was an admitted concealment which the appellant did not disclose till reassessment proceedings were mounted. The levy of penalty was justified hence the grounds of appeal are dismissed." 30. The Ld. AR contended that the cryptic and non-speaking order passed under section 250(6) by the ld. Commissioner of Income Tax (Appeals), Bathinda in Appeal No. 135-IT/17-18 dated 12.11.2018 is contrary to law and facts of the case and that he gravelly erred in upholding the penalty of Rs. 54,61,000/- imposed by the ld. Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961. The Ld. AR has filed a synopsis on penalty u/s 271(1)(c) that reads as under: "1. The assessee is an individual. His fathe....
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....ecord. We find that penalty has been imposed for merely change of head of income whereas there is no change in the loss figures offered by the assessee in the return of income. The assessee offered the loss under the head capital gains which, in the opinion of Ld. AO, was assessable under the head business income. However, the basic condition viz. furnishing of inaccurate particulars / concealment of particulars of income so as to attract the provisions of Section 271(1)(c) have remained unfulfilled in the present case. Therefore, penalty was not justified and the stand of Ld. CIT(A) was quite fair & logical and hence, the same do not require any interference on our part. " 7.2.5 The fact that the assessee was carrying on business and the surrender is in respect of his business notings is part of reasons recorded by Ld. AO for the year in question. A copy of these reasons are at Pages 09 to 10 of this synopsis. Therefore, it was not a situation of addition u/s 115BBE. Since there was no tax effect involved, the assessee did not prefer appeal for this academic exercise. But for that error on the part of Ld. AO penalty should not have been imposed. 7.2.6 Wh....