TaxTMI 
TaxTMI 
2026 (3) TMI 1572
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....stances of the case, the CIT(A) is justified in deleting the addition of Rs. 72,68,465/- on account of unexplained expenditure u/s 69C of the Act on account of shortage of cash at business premises at the time of search without appreciating the facts that during the course of search and seizure action Rs. 51,780/- was found only on physical verification whereas cash balance as per books was Rs. 73,20,245/- for M/s United Engineering work and the assessee failed to reply about shortage of cash at the time of search and further failed to produce bills/vouchers and verification from seized documents during the assessment proceedings regarding claimed expenses. 2. Whether on facts and in circumstances of the case, the CIT(A) is justified in deleting the addition of Rs. 13,00,000/- on account of unexplained and unaccounted cash found at his residence during the search u/s 69A of the Act without appreciating the facts that during the course of search and seizure action, assessee has not mentioned that cash of business was kept at his residence in statement recorded u/s 132 of the Act on oath at his residence premises and further, he has not submitted any evidence that cash found....
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....account of unexplained investment in construction/renovation of house without appreciating the facts that the assessee failed to explain the source of such investment/expenses during the course of search proceedings as well as assessment proceedings. 2. Whether on facts and in circumstances of the case, the CIT(A) is justified in deleting addition of Rs 79,60,022/- out of Rs. 1,48,37,928/- made on account of unexplained investment in construction/ renovation of house without appreciating facts that during the course of search proceedings, documents loose papers related to construction/ renovation of house were seized which are related to FY 2016-17 and the total amounts of investment/ expenses related to construction/renovation of house in the said seized documents are Rs. 1,48,37,928/-. 3. Whether on facts and in circumstances of the case, the CIT(A) is justified in deleting addition of Rs 79,60,022/-out of Rs. 1,48,37,928/- made on account of unexplained investment in house construction/renovation considering the contention of the assessee that expenses of Rs. 33,37,652/-was incurred in FY 2008-09 & 2009-10 without appreciating that assessee has not submitted an....
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....dit was claimed as used for introduction of capital without any explanation. (iii) Whether in facts and circumstances of the case, the CIT(A) is justified in holding that statement recorded u/s 132(4) of the Act cannot be considered as incriminating material when assessee has not made specific disclosure without appreciating the facts that the statement recorded u/s 132(4) of the Act with ascertained unexplained capital introduced in UNS and credit of Rs. 1,75,00,000/- claimed as used for introduction of capital in UNS without any explanation and failure of the assessee to explain its source of investment of new capital in firm till assessment proceedings, shall be considered incriminating material. (iv) The appellant craves leave to add, amend or withdraw any of the ground of appeal during the course of appellant proceeding. iv.) ITA No. 462/Jodh/2024 (Assessment year 2013-14) (1) Whether on facts and in circumstances of the case, the Ld. CIT(A) is justified in deleting the additions of Rs. 1,76,32,000/- on account of surplus on the sale of machinery which is claimed as used for introduction of capital in M/s United Natural Stones (UNS) and addi....
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....or withdraw any of the ground of appeal during the course of appellant proceeding. v.) ITA No. 463/Jodh/2024 (Assessment year 2018-19) (i). Whether on facts and in circumstances of the case, the ld.CIT(A) is justified in deleting the addition of Rs. 13,92.548/- made on account of unexplained expenditure u/s 69C of the Act on account of shortage of cash at business premises at the time of search without appreciating the facts that during the course of search and seizure action, cash was not found on physical verification whereas cash balance as per books was Rs. 13,92,548/- for M/s United Engineers and the assessee failed to reply about shortage of cash at the time of search and further failed to produce bills/vouchers and verification from seized documents during the assessment proceedings regarding claimed expenses. (ii). Whether on facts and in circumstances of the case and the above issue, the Ld.CIT(A) is justified in appreciating the submission of the assessee without supported by any evidences that cash balance of Rs. 13,92,548/- in the books of M/s United Engineers on dated 23.01.2018 was the incorrect figure due to the mistake of accountant. ....
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...., the CIT(A) is justified in deleting the addition of Rs. 1,96,522/- made on account of creditors paid off out of unaccounted sources of income without appreciating the facts that assessee has failed to explain source of payment to these creditors. (ix). Whether on facts and in circumstances of the case, the CIT(A) is justified in deleting the addition of Rs. 39,05,000/- made on account of bogus creditors treating them as unexplained credit without appreciating the facts that assessee failed to produce bills/voucher in support of his claim during the search proceedings and later on regrouped them as unsecured loan but failed to prove creditworthiness of these creditors. (x). The appellant craves leave to add, amend or withdraw any of the ground of appeal during the course of appellant proceeding 3. In cross appeals, the assessee's has taken following grounds - i.) ITA No. 440/Jodh/2024(Assessment year 2013-14):- 1. The impugned order u/s 153A rws 143(3) of the I.T. Act, 1961 dated 27.12.2019 as well as the action taken u/s 153A/143(3) is illegal, bad in law and on the facts of the case for want of jurisdiction and various other reasons or bare....
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....contrary to the provision of law and on facts of the case and hence same may kindly be deleted in full. 5. That the appellant prays your honour indulgences to add, amend or alter of or any of the 5 grounds of the appeal on or before the date of hearing. ii.) ITA No. 441/Jodh/2024 (Assessment year 2014-15) 1. The impugned order u/s 153A rws 143(3) of the I.T. Act, 1961 dated 27.12.2019 as well as the action taken u/s 153A/143(3) is illegal, bad in law and on the facts of the case for want of jurisdiction and various other reasons or bared by limitation and further contrary to the real facts of t1.2 The search action taken u/s 132 of the I.T. Act, 1961 is illegal, bad in law and on the facts of the case for want of jurisdiction and various other reasons, against the provisions and procedures as per law and further contrary to the real facts of the case hence all the consequent notices as well as the subsequent proceedings invalid, illegal, and bad in law hence liable to be quashed. 2. Rs. 19,94,400/-: The ld. CIT(A) has grossly erred in law as well as on the facts of the case in sustaining/confirming the addition of Rs. 19,94,400/- out of Rs. 23,00....
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....real facts of the case hence the same may kindly be quashed. 2. Rs. 68,77,906/-: The Ld. CIT(A) has grossly erred in law as well as on the facts of the case in sustaining/confirming the addition of Rs. 68,77,906/- out of Rs. 1,48,37,928/- made by the ld. AO on account of alleged unaccounted or unexplained investment from the alleged undisclosed sources in house construction u/s 69 despite the facts that most of the belongs to earlier years and shown in the books and also erred in taxing the income at higher rate or invoking the provision u/s 115BBE. The addition so made by the Ld. AO and partly confirmed by the ld. CIT(A) is also contrary to the real facts of the case and not according to the provision of law hence the same is illegal, bad in law, against the principle of natural justice. The same may kindly be deleted in full. 3. The ld. AO has grossly erred in law as well as on the facts of the case in charging the interest u/s 234A, B,C. The interest so charged is being totally contrary to the provision of law and on facts of the case and hence same may kindly be deleted in full. 4. That the appellant prays your honour indulgences to add, amend or alte....
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.... proceedings invalid, illegal, and bad in law hence liable to be quashed. 2. Rs. 4,92,867/-: The ld. CIT(A) has grossly erred in law as well as on the facts of the case in sustaining/confirming the addition of Rs. 4,92,867/- out of Rs. 9,00,000/- made by the Ld. AO on account of capital introduced in the capital of partnership firm namely United Natural Stone u/s 69 as unexplained investment, also erred in not considering the material, evidence available on record in their true perspective and sense. The Ld. CIT(A) has also erred in confirming the invoking of provisions of Sec. 115BBE. Hence the addition so made by the ld. AO and partly confirmed by the ld. CIT(A) is also contrary to the real facts of the case and not according to the provision of law hence the same is illegal, bad in law, hence the same may kindly be deleted in full. 3. Rs. 1,60,278/-: The ld. CIT(A) has grossly erred in law as well as on the facts of the case insustaining/confirming the addition of Rs. 1,60,278/- made by the Ld. AO on account of foreign currency found at the residence on protective basis(as per order of CITA(A), CIT(A)confirmed as substantive in this year) in this year u/s 69A a....
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....er consideration in ITA No. 436/Jodh/2024. In the case of Deepak Sharma Vs. ACIT Circle 4 (1) (New Delhi) on identical facts in ITA No. 2886/DL/2025 vide order dated 26.03.2025, it has been observed that the tax rates prescribed under Section 115BBE is not applicable for assessment year 2017-18. Hon'ble Madras High Court in the case of Smile finance Ltd. Vs. ACIT (WP) (MAD) 2078 of 2020 and 1742 of 2020 dated 19.11.2024 (MAD) has settled the issue against the department that higher tax rates under Section 115BBE applies to transactions on or after 01.04.2017. Accordingly, the Ld. AR pleaded that these department appeals are not maintainable and would be liable to be dismissed on tax effect. The ld. AR contended on legal issue of the case that there was no incriminate document found during the course of search related to assessment year 2012-13 and 2017-18 in both the cases and hence, no addition can be made in view of the decision of the Hon'ble Supreme Court in the case of Principal CIT vs. Abhisar Bhuildwell P. Ltd. 545 ITR 212 SC. Accordingly, the AR supported the order of ld. CIT(A) where the ld. CIT(A) has followed the order of apex court (supra). The Ld. DR has raised no obje....
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....Rs. 95,00,823/- on account of unexplained expenditure Rs. 72,68,465/- on account of unexplained expenses u/s 69C Rs. 13,00,000/- on account of undisclosed cash u/s 69A Rs. 1,48,37,928/- on account of undisclosed investment Rs. 41,47,965/- on account of unexplained expenditure u/s 69C of the Income Tax Act and Rs. 5,91,000/- on account of unexplained investment u/s 69A of the Income Tax Act, 1961. 11. Being aggrieved with the assessment order, the appellant filed an appeal before the CIT (A) where the Ld. CIT has granted part relief to the assessee. The Ld. CIT(A) has passed a detailed and comprehensive order with respect to each assessment year after considering the facts, remand report of the AO and rejoinder of the assessee to the remand report, where the assessee has filed his comments which were reproduced by Ld. CIT(A) in the impugned order. Being aggrieved with the order of Ld. CIT(A) both the department and assessee are in appeal before the Tribunal. 12. The ground no. 1 and 2 are interrelated to each other where department has challenged deletion of addition of Rs. 72,68,465/- made on account of unexplained expenditure under Section 69C of the Act for shortage of cash....
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....re submitted to the AO during the course of hearing. Hence, sustain the reason given by the AO is not found to be sustainable. The AO stated that some expenses incurred for non business purpose were now added to the books by manipulation. Hence, to that extent books of the assessee are treated as unreliable. However, the AO has not specified such expenses. In the absence of verification and specific findings, the reason given by the AO is not found to be sustainable. The AO stated that Shri Pratap Singh Kanda was examined an oath at his residence by Party B-1 regarding source of cash found at home, he did not mention us that the fact/agreement that the cash belongs to his business concerns. It was only 3-2 mentioned when he was confronted by Party B-2 (office premise) where physical hi cash was found to be short as compared to cash balance as per books. Therefore, our the plea taken by the assessee that the cash found at home is to be set off with shortage of cash at business premises is actually an afterthought and therefore, not tenable in absence of any supporting evidence. This reason given by the AO has two contradictions. The AO is accepting the sta....
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....he AO. The Ld. CIT (A) did not appreciate the fact that during the course of search and seizure action assessee has not mentioned that cash of business was kept at his residence in the statement recorded on oath under Section 132(4) of the Act at his residence premises and that the assessee has not submitted any evidence that cash found at the home was related to his business concerned. He pleaded that the additions made by AO may be sustained. 17. Per contra the Ld. AR vehemently supported the impugned order passed by Ld. CIT(A). The Ld. AR contended that there is contradictory observation made by the Ld. AO. Primarily the AO is accepting the content of the statement recorded during the search at its residence and secondly, he is not accepting the statement recorded during the search at the business premises which is self-contradictory. The Ld. AR contended that the Ld. CIT(A) has been justified in observing that merely because the assessee did not mention in the statement recorded at the residence during the search, the cash cannot be treated as unaccounted. It is admitted fact that the cash is belonging to the business of the assessee. The AR has further submitted that AO has....
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....eting the addition made by the AO amounting to Rs. 73,20,245/-, and Rs. 13,00,000/- on account of shortage of cash at business and unexplained cash from the residence respectively. Accordingly, we find no reason to interfere in the order passed by the Ld. CIT(A) on these two issues. Thus, ground no1 & 2 of the department are rejected. 20. In ground no. 3 and 4 department has challenged deletion of the addition of Rs. 2,68,57,357/- Rs. 95,00,823/- on account of sundry creditors shown in the balance sheet as opening balance under Section 68 of the Act. 21. The AO has stated that assessee himself made disclosure of Rs. 1,00,00,000/- during the search. In return of income assessee himself written off creditors to the extent of Rs. 2,68,57,357/- in the P&L account but most of them were set off against the debtors of Rs. 93,56,216/- written off and other losses in P&L account. The AO mention that this disclosure is related to unexplained credit u/s 68 in books of the assessee on which tax has to be charged u/s 115BBE where the same cannot be set off against any other income and further, even for the sake if the same is treated as cessation of liability u/s 41 then also any disclosu....
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....e creditors written off. Only because the assessee admitted that the assessee do not have to pay some of the creditors the same cannot be added u/s 68 of the Income Tax Act. The reason for not making payment is explained as deficiency in material or service which is normal in business transactions. The AO stated that in return of income assessee himself in the P&L account but most of the same was taken set off against the debtors of Rs. 93,56,216/- written off and other losses in P&L account. The AO has not established that the losses of Rs. 93,56,216/- as claimed in the books as received less from Hindustan Zinc are not genuine. Hence, in the absence of any adverse material recorded by the AO in this regard, the claim cannot be disallowed. The AO stated that these are unexplained credit u/s 68 in books of the assessee on which tax has to be charged u/s 115BBE where the same cannot be set off against any other income. The arguments of the AO are not found to be acceptable in view of the explanation furnished by the assessee that these are business creditors to whom payment is made less because of defect in material or service. The AO has not brought any material o....
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.... that the very genuineness of such entries has been doubted, inasmuch as the Assessing Officer has tried to verify the existence of such liabilities from the creditors, however, many were not found at the given address and some of them had categorically denied having any transaction with the assessee. In the opinion of this court, if the existence of such liabilities is doubted, the same could have been disallowed in the year in which it was claimed, or could have been treated as unexplained cash credit in the hands of the assessee under section 68 of the Act in the relevant assessment year, but the same cannot be taxed under section 41(1) of the Act, inasmuch as if the liability itself is not genuine, the question of remission or cessation thereof would not arise. 16. Section 41(1) of the Act can be applied, provided the following conditions are fulfilled: -In the assessment of any assessee, an allowance or deduction has been made in respect of any loss, expenditure or trading liability incurred by him; -any amount is obtained in respect of such loss or expenditure; or any benefit is obtained in respect of such trading liability by way of remission or ce....
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....nt; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (1). (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) and clause (b) of sub-section (1)." As discussed earlier, the section 68 is not applicable on the creditors of earlier years as these are not credited in the current year. The section 115BBE is applicable on the additions made under section 68, section 69, section 69A, section 69B, section 69C or section 69D of the Income Tax Act. Hence, the section 115 BBE is not found to be applicable on the income included by the assessee as cessation of liability u/s 41(1) of the Income Tax Act. In view of the above facts, the addition made to the extent of Rs. 2,68,57,357/- which is written off in books of accounts by the assessee is not found to be sustainable. The assessee explained that out of said creditors Rs. 3,63,58,180/-, the ass....
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....bove discussion, the addition made by the AO of Rs. 3,63,58,180/- is not found to be sustainable and deleted. This ground of appeal is treated as allowed. 23. The Ld. DR for the department submitted that the Ld. CIT(A) was not justified in deleting the addition of Rs. 2,68,57,357/- on account of sundry creditor shown at the balance sheet as opening balance by observing that it cannot be treated as unexplained credits under Section 68 of the Act. The Ld. DR contended that he was not justified in deleting the addition of Rs. 95,00,823 under Section 68 on account of sundry creditors shown at the balance sheet as opening balance without appreciating the fact that assessee has failed to prove genuineness of these creditors and he has submitted only ledgers and not submitting any bills and vouchers and purchase register on account of genuineness of the creditors. The DR has placed reliance on the assessment order. 24. Ld. AR vehemently supported the impugned order. The AR contended that the appellant has established the Identity, Creditworthiness & the genuineness of the loan/ creditors. Therefore, the onus casted upon it has been discharged by the appellant. The AO has no....
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.... wages register or supporting evidences to substantiate the same was submitted. On perusal of ledger of wages expenses it is seen that during the year assessee claim wages expenses of Rs. 89,26,506/- and payment for wages was made of Rs. 93,56,256/- during the year which includes opening outstanding wages of Rs. 13,35,500/- and there was closing outstanding wages were of Rs. 905750/-. Further, it is noticed that as per ledger till 23.01.2018 wages expenses of Rs. 74,94,419/- has been booked which is more than the wages appearing in the books at the time of search of Rs. 36,86,157/- hence, excess wages of Rs. 38,08,262/- has been booked. AR claimed that books were incomplete at the search and most of the payment has been made through banking channels. It is seen that payments were made from both the channels in cash and by bank also. Many of cash payments were made more than Rs. 10,000/- which is again disallowable u/s 40A(3). Wages at least to the extent of Rs 41,47,965/- were paid in cash in violation of section 40A(3). Hence, ledger of wages expense is not reliable and rejected. The AO noted that it cannot be said that the wages expenses can be nil. Therefore, w....
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....ith him. The verifiable evidences were not furnished during assessment proceedings also. The claim of such expenses was not found to be verifiable from independent sources. The assessee failed to furnish verifiable and specific evidences in support of the expenses claimed in the books of accounts. In this case, invoking of section 145(3) of the Income Tax is not required as the AO has not estimated the profit of the assessee. If the AO would have rejected books of accounts by invoking the provision of section 145(3) then the profit of the assessee was required to be estimated. However, the AO has not estimated profit of the assessee and only a limited disallowance is made which is found to be justified on the facts of the case. The argument of the appellant in this regard are not found to be acceptable. It is argued that the Ld. AO at the worst could have estimated the wages expenses by comparing from the earlier years. The Ld. AO presumed that the wages expenses has been made in violation of Sec. 40A(3), while there was no violation of sec. 40A(3), as the payment to a single persons were below the limit as per sec. 40A(3). There is no question of making ....
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....rce of wage payment in cash with explanation and supporting documents. 29. The AR for the assessee supported the impugned order contending that the AO has not established that the source of expenditure was outside books or which is not recorded in the books of accounts by the assessee. Hence, the section 69C is not found to be applicable on this addition. 30. After considering the facts as discussed by the CIT (A) and the provisions of section 69C of the Act, it is noted that the Ld. CIT (A) has appreciated the fact by observing that the AO has not established the facts regarding the source of expenditure was outside the books or the disputed expenditure was not recorded in the books of accounts by the assessee. Therefore, in our considered view, the section 69C would not be applicable for making the said alleged addition. Accordingly, we upheld the decision of the Ld. CIT (A) in deleting the addition made u/s 69C of the Act. Thus, ground No. 5 of the department is rejected. 31. In last issue, the department has challenged the deletion of addition of Rs. 5,91,000/- on account of unexplained expenditure in the form of introduction of capital in M/S United Natural Stones U/s....
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....een submitted that the books of account/ Balance sheet of the assessee for the above year clearly explained the position of investment made in M/s United Natural Stones. All the entries of making payment to M/s United Natural Stones by the assessee and its sources have been verified from the regular books of accounts during the course of assessment proceedings. Copy of relevant pages of bank books showing immediate sources are enclosed. Thus, the said investment of Rs. 5,91,000/- in M/s United Natural Stones made by him is fully explained. The reply of the appellant is considered. Considering the details with regard to sources from the regular books of accounts and copy of relevant pages of bank books showing immediate sources, the explanation of the appellant is found to be ply acceptable. The AO made addition because reply of the AR is found to be vague and not supported by any documentary evidences. On considering the reply of the appellant it is noticed that, the details submitted by the appellant provide sufficient evidence to establish the argument of the appellant. The argument of the AO that assessee has made huge investment in UNS which is not commensurat....
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.... said investment of Rs. 5,91,000/- in M/s United Natural Stones made by the assessee stands fully explained. 35. From the record, it is seen that after considering the reply of the appellant, the Ld. CIT (A) has noticed that, the details submitted by the appellant provide sufficient evidence to establish the contention of the appellant to explain the source of the investment in UNS. The observation of the AO that assessee has made huge investment in UNS which is not commensurate to his income is factually incorrect with respect to the assessment year under consideration. Hence, investment made in UNS stands explained by the appellant with reference to the books of account of the appellant. Since, the appellant has explained the source of capital introduced, the addition made by the AO is not found to be sustainable. Thus, decision of CIT (A) is sustained, and ground No. 5 of department is rejected. ITA No. 463/Jodh/2024 Assessment year 2018-19 36. In ground no. 1 and 2 the department raised the issue, regarding unexplained expenditure of Rs. 13,92,548/- under Section 69C on account of shortage of cash at business premises which is exactly similar on identical facts as disc....
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.... 69 of the Act. 42. During the course of assessment proceedings, the AR for the appellant has claimed that books of accounts were not complete in the case of United Engineering on the date of search and that the stock as per the books of account was reflected at Rs. 1,33,850/- only as 3 purchase bills are of Rs. 25,03,861/- were yet to be entered into the books of accounts and that stock consumed to the extent of Rs. 4,19,655/- were also not entered into the books. Accordingly, the AR has furnished a reconciliation statement of the stock as per the books of account for Rs. 22,18,056/- which was duly tallied with the stock found during the course of search. However, the AO has been not satisfied with the reply of the assessee, stated that during the course of search on 23.01.2018, assessee failed to produce any purchase bills and therefore, the bills was produced by the assessee are not acceptable being treated as afterthought to set off his unaccounted excess stock and accordingly, the AO has made the disputed addition of Rs. 20,78,850/-with respect to the stock of 2 firms of the appellant assessee namely M/S United Engineering Works and M/S United Engineers under the pretext th....
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....56/-(133,850+2503861-419655) which is tallied with stock found. The reply/submission of A.R. of the assessee is not found to be acceptable as during course of search i.e. 23.01.2018 no purchase bills were produced by the assessee. Therefore, the bills so produced by the assessee cannot be accepted being an afterthought to set-off his unaccounted excess stock. Further, the assessee her and his accountant had admitted in their statements that books of account are not R maintained properly i.e. genuineness and authenticity of books of accounts is suspicious in nature. In the light of these facts and after giving set-off of Rs. 1,33,850/- as stock of United Engineers as claimed by the assessee, the remaining physical stock of SRs.20,84,206/- (22,18,056- 133,850) is treated as excess stock of United Engineers Prop. Shri Dharamveer Singh Kanda by treating entry of three purchase bills of Rs. 1,025,03,861/- in total and stock consumed of Rs. 4,19,655/- as bogus entry of purchase and stock consumed. In view of the above excess stock of Rs. 20,84,206/- belongs to M/s United Engineers was undisclosed income which is liable to added to the income of M/s 4,20United E....
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....account of unexplained investment in stock under Section 69 without appreciating the fact that assessee has not submitted purchase bill which were not accounted for in the books of account during search proceedings and he has not updated books of account and further the assessee failed to produce stock register. The ld. DR supported the assessment order. 45. Per contra the Ld. AR supported the impugned order contending that lack of proper maintenance of books of accounts can be there if the books are not updated on daily basis as it was in the present case. Merely books are not found to be updated on the date of search, cannot be conclusive evidence to treat a stock found as non genuine. 46. In the present case, the books of account were not held as maintained properly by the AO, as some of the purchase vouchers were yet to be accounted for. In our view, only recording of statement at the time of search that some of the bills were not recorded do not prove that the books of accounts are not authentic or genuine. The lack of proper maintenance of books of accounts can be there if the books are not updated on daily basis. Thus, only reason that books are not found to be updated....
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....secured loan amounting to Rs. 39,05,000/- as unexplained credit and added to return income of the assessee and charged tax rate under Section 115BBE of the Act. 49. The Ld. CIT(A) has deleted the said addition made by the AO by observing as under: The appellant argued that the Ld. AO noted that two creditors namely Bhargav Enterprises Rs. 8,35,490/- and Dharamraj Steel Corporation Rs. 7,85,927/- were not in the list either in the opening creditors or closing creditors and added Rs. 16,21,417/- to the total income of the assessee. In this regard it is submitted that it is the admitted facts the Ld. AO was having the audited balance sheet for AY 2017-18 and already accepted that these are not opening creditors. When there is no opening creditors in the name of Bhargav Enterprises and Dharamraj Steel Corporation, as on 01.04.2017 then there should not be any question of addition of Rs. 16,21,417/- in any case. As there happened some mistake in the data accounting entries Further it is also admitted facts that there were no any bills/vouchers etc were found during the search related to these expenses. When the assessee has not claimed any expenditure on these accounts then ....
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....r AY 2020-21 and ledger account are enclosed. The reason for written off the same in next year's is that the firm's field of expertise relates to the work are over the cement plants and others and particularly the contracts entered with the Tractor India Private Limited and others. As per the formal system of working with the Tractor India Private Limited and others, in any case due to spoor material and service quality resulting into failure to serve necessary service which was promised under the contract, Tractor India Private Limited and others may as per their discretion reduce the amount mentioned under the contract at the time of making the final payment to us. Similarly, in case of failure to serve satisfactory services by us due to poor quality material provided to us by our suppliers, we tend to reduce the amount of payment to be made to our creditors. Thus the assessee has already paid the tax on these creditors in A.Y. 2019-20 before making the assessment and also in A.Y. 2020-21. Thus now taxing the same in this year is double tax of the same expense/sundry creditors/income, As we have already one income cannot be taxed twice which is ....
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....e cannot be taxed twice. In these circumstances, the explanation furnished by the appellant is found to Rs be acceptable. The addition on this amount of Rs. 25,05,361/- is not found to be sustainable. It is argued that the Ld. AO noted that one creditor namely Hindustan Tools Rs. 1,96,522/- was in the list of opening creditors but not in closing creditors and added to the total income of the assessee. In this regard it is submitted that that the Ld. AO was having the audited balance sheet for AY 2017-18 to and already accepted that these are in opening creditors. And the Ld. AO has failed to consider that this amount has already been paid by the assessee during the year though banking channel and accounted for in the books copy of ledger account is enclosed. Hence there was no question becoming in the closing list. Keeping in view of above fact, addition of Rs. 1,96,522/- was made wrongly and is liable to be deleted. In this regard the AO noted that liability was paid off out of unaccounted sources alternatively bogus creditors shown to have been paid out of income. The assessee has furnished evidence that the payment has been made to the credito....
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....Ld. Assessing officer and there were no adverse remarks of the account. Therefore, the transactions entered into by the assessee cannot be doubted. c. The assessee had received the loans from the lender and the lenders are filing return of income regularly. The unsecured loan is genuine and duly supported by documentary evidence. Thus, the assessee submits that the Onus that lay upon him to establish the Identity, Creditworthiness & the genuineness of the loan has already been discharged by him but the Assessing officer has grossly failed to establish that the loans of Rs. 39,05,000/- taken by assessee were not genuine. It is stated that initial Onus is discharged. It is submitted that even assuming, Bay S. 68/69A applies, it is only initial onus, which lay upon the assessee to prove the gen identity and the capacity of the creditor and the genuineness of the transaction and once this initial onus is discharged, it shifts to the AO to rebut/ disprove the same for making a valid addition u/s 68. Kindly refer CIT vs Shree Barkha Synthetics 182 CTR 175 (Raj). The Hon'ble RHC again reiterated the same view in CIT vs. First Point Finance Ltd 286 ITR 477 (R....
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.... consideration, the AO was not justified in making the addition u/s. 68 of the Act. Hence, in our opinion, the liabilities which were not credited in the previous year relevant to the assessment year under consideration, the provisions of the section 68 cannot be applied and the AO is directed to exclude the same from the addition u/s. 68 of the Act after duly verifying the same." In the present case also the liabilities are old, no credit has been made in so far those credits in the books of accounts in the assessment year under consideration, Sec. 68 cannot be applied. Hon'ble High Court Of Gujarat held in case of Dattatray Poultry Breeding Farm (P.) Ltd. v. Assistant Commissioner of Income-tax [2019] 104 taxmann.com 366 (Gujarat)/[2019]263 Taxman 324 (Gujarat)/[2019] 415 ITR 407 (Gujarat)[29-01-2019] as under- "15. From the findings recorded by the Assessing Officer as well as the Tribunal, it appears that the very genuineness of such entries has been doubted, inasmuch as the Assessing Officer has tried to verify the existence of such liabilities from the creditors, however, many were not found at the given address and some of them had categoricall....
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....Tax Act. The taxation u/s 115BBE is applicable for the addition made u/s 68, 69, 69A, 69B, 69 C or 69D of the Income Tax Act. The section 115BBE is reproduced as under- "Tax on Income referred to in section 68 or section 69 or section 69A or section 69B or section 69C or section 69D. 115BBE. (1) Where the total income of an assessee,- (a) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or (b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a), the income-tax payable shall be the aggregate of46 (i) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent, and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i). (2) Notwithstanding anything contained in this Act, Do i....
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....Usha Stud Agrl. Farms Ltd. [2009] 183 Taxman 277/[2008] 301 ITR 384 as rightly relied by the Ld. CIT (A). Again, the three unsecured loans amounting to Rs. 39,05,000/-, were opening balances as these unsecured loans were received by the assessee during the financial year 2012-13 through banking channel. Necessary documents were submitted by the assessee proving the genuineness of the transaction, identity of the lender and their creditworthiness at the time of assessment. Thus, the creditors stand explained. We therefore find no reason to interfere in the decision of the Ld. CIT (A) in deleting the addition of Rs. 16,21,417/- Rs. 1,96,522/-, and Rs. 39,05,000/-. Thus, these three grounds of department are rejected. In ITA No. 462/Jodh/2024 Assessment Year 2013-14 53. The department has challenged that the Ld. CIT(A) was not justified in deleting the addition of Rs. 1,76,32,000/- on account of surplus on sale of machinery which is claimed to the used for introduction of capital in M/S United natural Stones (UNS) and addition of Rs. 1,57,10,000/- on account of unexplained investment in UNS on protective basis by following the judgment of Supreme Court in the case of Principal C....
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.... or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice etc. etc., can authorise the officers referred therein to enter and search any building etc. etc. Such authorised officer under sub- section (4) of Section 132 may during the course of search or seizure examine on oath any person who is found to be in possession or control of any books of account, document, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 or under the Act 1961. Therefore, going by the said provision not only the books, documents etc. etc. that are unearthed during the course of search but a statement made by such person during such examination can also be used in evidence in any proceeding under the Income Tax Act, 1961. Thus viewing the provision in such manner, it is an admitted fact that the Managing Partner of the firms in question has given a voluntary statement to the Assessing Officer that there ....
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....made in an unabated assessment. It is held by Hon'ble Apex Court in the case of Principal Commissioner of Income Tax, Central-3 Versus Abhisar Buildwell P. Ltd [2023] 149 taxmann.com 399 (SC)/[2023] 293 Taxman 141 (SC)/[2023] 454 ITR 212 (SC) [24-04-2023] as under- "14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; case of iii) in case any incriminating material is found/unearthed, even, in unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments.....
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....ered as incriminating in itself, as only time was sought by the appellant for explanation. In our view, under the given facts it was very natural that the assessee might need time to collect supporting documents. The source of investment in different years needs to be supported by documents of that particular year. Hence, seeking time for furnishing detail documentary corroborative evidence would not be by any stretch of imagination constitute an incriminating material, if the details are furnished later on. Our view gets support from the judgement given by various High Courts and as also various judgment on parity of facts has been relied upon by the Ld. CIT (A) in the impugned order to arrive at the decision. The Ld. DR did not controvert the facts or file contrary judgement. Since, there was no incriminating material unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments, in view of the Hon'ble Apex Court Judgement decision in the case of Abhisar Build well P. Ltd. [2023] 149 taxmann.com 399 (SC)/[2023] wherein it is held that in the absence of incriminating material foun....
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....of Gurpreet Kaur rejecting the explanation that the said account was received from late Shri Kanwal Nain Singh on account of sale agreement of property. The Ld. CIT(A) has further sustained the higher tax rate by invoking provision of Section 115BBE. 59. The Ld. Counsel for the assessee has submitted that the appellant assessee has filed detailed submissions vide paper book page no. 67 to 87, part of the submissions are reproduced by Ld. CIT(A) on page nol. 4 to 15 of the impugned order. 60. The AR has further submitted that the Ld. CIT(A) has called for remand report from the AO and the rejoinder was submitted by the assessee to the remand report filed by the AO. The Ld. AR has contended that the Ld. CIT(A) was wrong in mentioning that the assessee has admitted unaccounted income in the statement on the issue of incriminating documents as there was no incriminating document found during the course of search and statement recorded under Section 132(4) cannot be considered as an incriminating material without being corroborated with any evidence discovered during the course of search. The AR argued the lower authority has not considered the same in his hands of the appellant a....
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.... Ram Mittal v/s ACIT 105 TTJ 594(Del)(SB) Hence we pray your owner to consider our contention in the interest of natural Justice and delete entire addition. On this preposition we would like to draw your kind attention on the decision of Hon'ble ITAT in the case of Smt. Anjna Sharma v/s ITO in ITA No. 1214/Jp/2019 dt.25.11.2021. where in it has been held "15. After looking and considering all the above facts and details, we have observed and found that from starting the assessee has explained the source of cash Rs. 11,00,000/- from her husband Shri Naveen Sharma of Rs. 8,50,000/- and Rs. 2,50,000/- from her own. As we have noted that the assessee and her husband are regular income tax assessee and filing their return of income since AY 2005- 06. As per record available before us and as per returns of the assessee, the assessee has shown income of Rs. 12.30 lacs and if it is presumed that a female can easily save 50% of her income and 50% can be treated for drawings. According to that she can have source to the extent of Rs. 6.15 lacs thus the source of amount shown by the assessee of purchase of property can be treated explained. Further the husband of the assesse....
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.... in the bank account of Gurpreet Kaur on substantive basis when the same addition on substantive basis made in the hands of Kawal Nain Singh". FACTS: Kindly refer our WS filed before the Ld. CIT(A) available PB 87-94. Further during course of hearing before the Ld. CIT(A) we had filed detailed WS and legal positions and material. However the Ld.CIT(A) has not consider the same and confirmed the additions on wrong footing and wrong interpretation. Vide page 42-50 of the Ld. CIT(A) order. SUBMISSIONS: 1. Firstly we rely upon our WS filed before CIT(A) PB. 87-94 for A.Y. 2013-14 and PB 70-77 for A.Y. 2014-15, which may kindly be considered our WS also before your honor. It is further facts are that during the course of appellate proceeding before the Ld. CIT(A) we filed the details WS (PB 70-77) also vide page 35 to 38 of CIT(A) order. 2. Our Submission on the observation are as under: 2.1 The Ld. CIT(A) stated that the facts on the basis of which retraction is claimed were known to the assessee at the time of search also. The search took place on 23-01-2018. Late ShriKawal Nain Singh passed away on 5-01-2014. Hence, while making a....
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....very well that the person has already expired on 04.01.2014. Further after expire of person their legal heir are entitled as per law and can file the same and in the present case the legal heir (assessee) filed all the details, letter dt.12.03.2018 etc. And when the assessment is being made of the legal heir then how the details furnished by her discarded without bring any adverse documentary evidences. 2.2 The Ld. CIT(A) stated that the assessee cannot escape from the liability to pay tax on the admitted undisclosed income. The assessment of Late Sh. Kanwal Nain Singh does not prove that the amount of cash was received by the assessee is from her father. In fact assessment made in the hands of Late Sh. Kanwal Nain Singh also prove that he was not having explained sources to prove to advance the money claimed to be received by the assessee. Hence, the assessment made in her hand is found to be justified. In the statement recorded u/s 132(4) also the source of money remains unproved. The Ld. CIT(A) has also relied upon on the statements recorded u/s 132(4) dt.09.03.2012. In this regard it is submitted that when it is also admitted facts that from the starting asses....
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....And the addition is liable to be deleted in the hands of assessee. As all the documents and income were related to late Sh. Kawal Nain Singh. As the department has made addition not two places but at three places. 4. Further only on the basis of part statements no addition can be made, when the same has been clarified and retracted immediately Covered by the Hon'ble Raj. High Court: Recently the Hon'ble Raj. High Court in the case of Pr. CIT, Jaipur-2 v/s Sh. Sanjay Chhabra in DBIT No. 22/2021 dated 06.04.2022, the Hon'ble HC held that :- The Tribunal by impugned order has categorically held that the material information received by the Assessing Officer from the investigation wing along with certain statements recorded by DBIT Investigation, Calcutta could not be taken into consideration as that material was not disclosed nor an opportunity was accorded for cross- examination of the Assessee. This finding recorded by the Tribunal cannot be said to be perverse or suffering from any patent illegality. Learned counsel for the Revenue could not satisfy us with reference to any judgment on this aspect that even without disclosing any material to the Assessee and witho....
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.... vs. Mantri Share Brokers (P) Ltd. [2018] 96 taxmann.com 279 (Rajasthan) No section 69B addition in hands of assessee merely on basis of statement of director when there was no other material either in form of cash, bullion, jewellery or document or in any other form to conclude that statement made was supported by some documentary evidence. 6. No new provision cab invoked: Further on page 44 in first para the Ld. CIT(A) has stated that the cash which was admittedly given by the assessee to Mrs. GurpreetKaur Kanda is treated as unexplained money of the assessee. The decision of the AO in this regard is found to be justified and addition is confirmed. However, the addition is confirmed u/s 69. In this regard it is submitted that the Ld. AO has made the addition " as unexplained cash deposit u/s 68 being unexplained cash credit in the books ". Here it is submitted that when it is admittedly that no addition can be made u/s 68. Then how the Ld. CIT(A) made the addition u/s 69, as the Ld. CIT(A) neither can invoke the new provision nor can be invoked without any show cause notice u/s 251(1).which is illegal and invalid because the Ld. CIT(A) cannot invoked the new pro....
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....), 3. Kanpur Steel Co. Ltd. v/s CIT 32 ITR 56 (All). 4. CIT v/s Kulwant Rai 291 ITR 36(Del). 5. CIT v/s Shalimar Buildwell Pvt Ltd 86 CCH 250(All) where it has been held that the AO made the addition merely on suspicion which was not desirable in the eye of law. 62. It is seen from the record that the same income has been subject to double taxation. After completing the assessment of the assessee and the group, the department has taxed the same income in the hands of Late Sh. Kawal Nain Singh by passing the assessment order in his hands of the same income. It is settled legal position that no income can be taxed twice i.e. once in the hands of the appellant and again in the hands of Late Sh. Kanwal Nain Singh. 63. It is pertinent to mention that on parity of facts, the Ld. CIT(A) has deleted the similar addition in the hands of Smt. Gurpreet Kaur. According to the principle of consistency, he cannot confirm the addition in the hands of the assessee, which is deleted on parity of facts in another case as illegal in the eyes of laws. Further, the aforesaid addition tantamount to double taxation of the same income in two hands which is not permissible ....
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....ign currency worth Rs. 1,60,278/- the AO noted that during the revocation of prohibitory order at residence of the assessee on 09.03,2018 foreign currency of different countries of various denomination was found from the safe of assessee which was valued as Rs. 160,278/- (in INR). The assessee failed to explain the source of the same. During the assessment proceedings AR of the assessee accepted that the foreign currency belongs to assessee Shri Dharamveer Kanda and it was worth Rs. 160,278/- However, AR claimed that it was purchased in FY 2014-15 by the assessee when he went abroad. AR claimed that the same was purchased out of withdrawal made by the assessee in FY 2014-15 from his proprietorship concern. The AO being not satisfied made addition which was confirmed by the Ld. CIT (A) as unexplained money u/s 69A and charged tax u/s 115BBE. 67. Having considered the facts on the issue, we find that the alleged foreign currency was purchased out of withdrawals made during the year which is evidently proved from the financial statement of the assessee submitted before Ld. AO. The assessee has withdrawn Rs. 11,16,362/- during the year under consideration. It is relevant to mention ....
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....l account of Shri Dharmveer Kanda in his proprietorship firm M/S United Engineers has been furnished before the authorities below. It is noted that out of the withdrawal made by Shri Pratap Singh Kanda and Shir Dharmveer Singh Kanda as mentioned as per the details reproduced in the order of the Ld. CIT(A) on page no. 18 and 19, the appellant assessee has met out house construction expenses of Rs. 33,37,652/- during financial year 2008-09 and renovation expense of Rs. 74,57,094/- during the financial year 2015-16, 2016-17, and 2017-18. Meaning thereby source of the investment of the funds incurred in house construction expenses and renovation stands explained. Accordingly, we hold that the order of the learned CIT(A) is perverse to the facts on record on the issue of house construction and renovation expenses. Thus, the addition made by the AO and confirmed by the ld. CIT(A) would be liable to be deleted and this ground of the appeal is allowed. ITA No. 443/Jodh/2024 Assessment year 2018-19 71. The appellant has raised sole issue regarding the confirmation of addition of Rs. 41,47,965/- by the Ld. CIT(A) on account of disallowances made under Section 40A(3) of the Act. 72. ....
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.... a distributor, insisted that cheque payment from a cooperative bank would not do, since the realization takes a longer time-If assessee had not made cash payment, it would have received the recharge vouchers delayed by 4/5 days and thereby would severely affect its business operations-Rigors of s 40A (3) to be lifted-Further the exceptions contained in r 6DD are not exhaustive and that rule must be interpreted liberally-Impugned order set aside-Assessee's appeal allowed. We also draw your kindly attention to the CBDT circular No. 220 dt. 31.05.1977, which also provide that no disallowance can be made under exceptional and unavoidable circumstances. Under these compelling circumstance and ignorance of law it has paid in cash. Therefore the disallowance so made may kindly be deleted in full. The lower authorities have not made any adverse comments on the compelling circumstances as the nature of expense itself proves the circumstances of expense. 4. Genuineness and identity of payment accepted: Further cash payments if any were made on the specific condition put up by the labour/persons. Identity of the labours/persons and genuineness of the t....
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..... 220 dated 31.05.1977, was made. This CBDT circular was introduced with reference to rule 6DD(j). Even after 25.07.1995, when rule 6DD(j) providing for exceptional circumstances was dropped, the reference by Hon'ble High Court denotes its relevance which is reproduced below for ready reference Needless to mention that assessee case is covered in clause (d) of Para 4 of the said CBDT circular. "...7. The respondent/assessee's case is supported by several judgments. The Rajasthan High Court in Smt. Harshila Chordia v. ITO [2008] 298 ITR 349 held as under:- "14. About this clause, many doubts were raised and enquiries were directed to the Board as to what shall constitute exceptional and unavoidable circumstances within the meaning of Clause (j). That led to issuance of Circular by the Board on May 31, 1977 ([1977] 108 ITR (St.) 8), which is published in Taxmann, Vol. 1, 1988 Edition. Significantly paragraph 4 of the aforesaid Circular shows very clearly that all the circumstances in which the conditions laid down in Rule 6DD(j) could be applicable cannot be spelt out. However, some of them which will seem to meet the requirements of the said rule are as fol....