TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 264
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....ich was processed u/s 143(1) of the Act. On 06/09/20174 a search action u/s 132 of the Act was carried out on M/s Hussain Builders & Developers, Mr Haji Mohmmad Ilyas a partner of the respondent ['HML'] wherein the residential premises of the assessee was also covered wherein the statement of Mr HML was recorded. 2.2 A simultaneous survey action u/s 133A of the Act on 07/09/2017 at the office/business premises of M/s Hussain Cold Storage, Gulbarga and of M/s Home Spices, Gulbarga were also carried out in which the assessee was a partner, wherein certain incriminating material were found & impounded. Pursuant thereto a statement of the assessee was also recorded. 2.3 The case of the assessee was subjected to scrutiny vide service of notice on 21/09/2018 u/s 143(2) of the Act and consequent assessment u/s 143(3) of the Act was completed wherein the Ld. AO made three additions viz; (i) Rs.1,13,04,286/- towards unexplained cash/special bank notes deposited into HDFC bank & State Bank of Hyderabad bank during demonetization period ['SBN'], (ii) Rs.22,28,530/- towards excess of agricultural income remained unexplained which originally was claimed as exempt by the assessee and (iii)....
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.... vouchers which are primary evidence to consider the correctness of the profit. iv) Appellant craves leave to modify, amend, or revise the above grounds of appeal, if necessary. 3. We have heard the rival party's detailed arguments & submissions and subject to rule 18 of Income Tax Appellate Rules, 1963 perused material placed on records and considered the facts of the case in the light of case law relied by both the parties and settled position of law on the issues of dispute which are forewarned to the respective parties for their rebuttal. 4. Ground No. 01 addition u/s 69A of the Act; 4.1 The issue pertains to addition of unexplained money u/s 69A of the Act. The respondent admittedly deposited SBN into his two bank accounts maintained for his business. As at the opening of demonetization period i.e., 08/11/2016 the assessee had cash balance of Rs.11,12,700/- and Rs.9,84,214/- at Gulbarga/Kalburgi and Solapur branch respectively, whereas from banks reporting it was revealed that the total SBN deposits at Solapur branch during demonetization period were to the tune of Rs.1,10,16,175/-. The Ld. AO when asked the respondent to explain nature & source thereof, the ....
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....encies. The Note no 10 of TAR confirmed the respondent's engagement in trading business but point 35 against quantitative details of principle items of goods traded contrarily reported as 'not applicable'. Likewise, as per such TAR books of account of the respondent were kept & maintained at business premises but at the time of survey thereat the respondent did fail to produce the same for verification. The statement of partner Mr HAL recorded in the course of survey proceedings who confirmed that the said SBN deposits were made by the respondent when confronted for cross examination/verification the respondent neither opted for nor dislodged it. 4.7 In absence of audited books, bills & voucher, the bench directed the respondent to produce necessary & convincing documents pertaining alleged sales from the records of 'Agricultural Produce Market Committee' ['APMC'] where respondent is registered for agri-trading and where such alleged sales claimed to have effected by him. However, except a certification of registration as commission agent, no or much less documents were laid in the course of present proceedings to establish any impugned sales indeed effected & were genuine. In v....
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....verturn the deletion of impugned action of Ld. CIT(A) on this issue and restore the addition in very terms of assessment. The ground no 1 of the appeal thus stands allowed. 5. Ground No. 02 addition on account of partial denial of claim for agricultural income; 5.1 The respondent in its return claimed Rs.24,53,530/- as exempt agricultural income earned by him. In the absence of corroborative evidence pertaining to agricultural operations the Ld. AO disbelieved the rate/quantum of earning. However, based on land holding the Ld. AO restricted the claim of agricultural income to Rs.2,65,000/- computed @10,000/- and balance brought to tax as income out of agricultural source, which the Ld. CIT(A) deleted in tandem in first appeal. 5.2 In contesting the deletion, the Revenue submitted that, out of the total exempt agricultural income of Rs.24,53,530/- claimed to have earned by the assessee, in the absence of details of agricultural operations, vouchers, receipts and invoices for sales & expenditure, Ld. AO holistically considered the issue and restricted the agricultural income based on the land holding of the assessee and crop grown to Rs.2,65,000/- computed @10,000/- per acre....
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....ent of the respondent assessee. 5.6 Insofar as the veracity & genuineness of quantum of agricultural income claimed to have earned by the respondent assessee is concerned, we find no fault with the action of the Ld. AO in rejecting the quantum of earnings for assessee's failure to adduce any documents with respect to crops grown, expenditure incurred therefor and sales proceeds realised from such agricultural produce. Per contra the basis founded in deleting the same could hardly be appreciated for approval. 5.7 The restrictive dispute over quantum of agricultural income by the Revenue at the outset goes to prove that Revenue undoubtedly accepted the source of income. However an ad-hoc computation of earnings for restricting exempt agricultural income was found made without considering the (i) soil quality & geographical factors, (ii) crop feasible to be grown & actually grown by the respondent (cropping seasons) (iii) climate condition or weather condition prevailing during season (iv) farming practices is force (v) prevailing market condition for harvest, transport & their sales etc. (price volatility) (vi) input, measurement tools and such other determinative factors etc. ....
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....Act; 6.1 By this ground the Revenue alleges that the Ld. CIT(A)'s action in deleting the addition of Rs.70,43,391/- made by the Ld. AO on account of difference of profit computed @ 10% of total turnover of Rs.8,40,30,739/- as against the profit declared by the respondent assessee. 6.2 The case of the Revenue is that; while directing the deletion of impugned addition, the Ld. CIT(A) turn blind eye to the fact that the books of account and the audited results of the respondent assessee were rejected u/s 145(3) of the Act for non-production and for unsubstantiating them with corroborative evidences when called for and consequential estimation in such cases is founded on the binding judicial precedents. 6.3 It was further alleged by the Revenue that the impugned deletion of estimated profit also badly lacks the rationale, and such action of deletion was without any substance therefore, needs to be set-aside for restoring the addition in very terms of assessment order. In support of restoring the addition, the Ld. DR argued that the assessee's failure to adduce books, bills, invoices and evidential documents for verification lead to rejection of books in terms of section 145(3)....
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.... transactions, sales effected, purchases incurred, stock/inventory records held beyond a doubts forms a substantial part of books/accounts, hence in the absence thereof any determination of income for taxation under the Act would be meaningless. 6.7 In the present case, non-maintenance/production of audited books for whatever reasons, non-production of trading/stock or inventory records, non-production of vouchers, bills and invoices coupled with 'Not applicable' reporting u/c 35(a) in TAR [which was meant for Trading Concerns], formed solitary basis in holding accounts as incorrect or incomplete, which in turn triggered their rejection u/s 145(3) of the Act. 6.8 Since the aforestated records/details forms a significant part of accounts which severally capable of influencing the determination of total income of the assessee for the year under consideration hence the non-maintenance vis-à-vis non-production thereof in our considered view is capable of construing solitarily that accounts of the respondent assessee were substantially incomplete & incorrect, thus valid reason for rejection of books u/s 145(3) of the Act. Further withholding such books of account (if any ma....
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....80 Taxmann.com 889 (All)], 'Jeevan Ram & Sons Vs CST' [2001, Taxmann.com 2011 (All)]. In view of the totally of facts, in the light of judicial precedent cited above, we find no error in Ld. AO's action in estimating the income but in the action of Ld. CIT(A) in vacating it, therefore is set-aside. Now coming to rationale applied in estimating the business profit/income @10% by the Revenue as against @1.62% of turnover of the respondent assessee; 6.11 as we note that, the rationale behind coming to conclusion in computing the net margin of 10% as against 1.62% claimed to have been declared by the respondent assessee, the Ld. AO was displaced with the books in first place as the same intentionally withheld by the respondent. On the other hand, the Ld. CIT(A) deleted the impugned addition on for unreasonableness of margin adopted by the Ld. AO. At this juncture we note that, the estimation of business income was computed with reference to reported turnover which were neither rejected nor claimed so by the respondent, therefore the basis of computation. In result we vacate the action of the Ld. CIT(A) on this score. 6.12 We note that, while doing so the Ld. AO did fail to bri....