TaxTMI 
TaxTMI 
2025 (3) TMI 1828
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....ncome Tax Act. 2. On the facts and circumstances of the case and in law, the Ld CIT(A) has no justifiable basis in confirming addition of Rs 14, 40,000/to the income of the appellant on account of alleged unaccounted cash purchases made from Yashika group 3. On the facts and circumstances of the case, addition confirmed by Ld CIT(A) is bad in law as no unaccounted purchases in cash have been made from Yashika group, no findings of search action in Yashika group, alleged incriminatory documents found in Yashika group and relied upon confessional sworn statements of Yashika group persons have ever been confronted to the appellant. 4. On the facts and circumstances of the case, the addition confirmed by the Ld CIT (A) is bad in law as material whatsoever found from 3rd party has no corroborative evidence, statement of Sh Rajinder Yadav does not bind the appellant, and various legal submissions made and binding judicial precedents cited before the Ld CIT(A) have not been held to be inapplicable by the Ld CIT(A). 5. On the facts and circumstances of the case, the addition confirmed by the LDCIT(A) under section 69C r.w.s 115BBE of the Act on account o....
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....hers of the group member. He categorically accepted the fact that the group was engaged in unaccounted cash sales of granite blocks and explained how they kept record of these unaccounted transactions. The name of the assessee M/s Akesh Sangemarmar (assessee) was also found in the list of unaccounted cash sales. The ld. AO listed transaction for an amount of Rs. 14,40,000/- as tabulated at page 3 of the assessment order wherein the ld. AO noted that the assessee has purchased that amount of material from Yashika Group. Based on that set of facts a show cause notice proposing to add Rs. 14,40,000/- as bogus purchase vide notice dated 21.02.2024 proposing to treat it as unexplained expenditure as per provision of section 69C of the Act. 3.3 The assessee submitted their reply and stated that they have not made any cash purchases to the tune of of Rs. 14,40,000/- during the financial year 2021-22 from Yashika Group. Further, the assessee cited various Hon'ble High Court's decision in support of his claim. The assessee has cited the decision of Hon'ble Rajasthan High Court in the case of Commissioner of Income Tax-central, Versus Smt. Sunita Dhadda in support of the claim tha....
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....the basis of evidence in his possession regarding unexplained expenditure in the form of unaccounted purchases made from Yashika Group. During the appellant proceedings, the appellant could not substantiate its claim through its written submission. 6. It is a trite law that once the appellant fails to discharge the onus cast on it to explain the source of any expenditure incurred to the satisfaction of the Assessing Officer, the amount may be deemed to be the income of the appellant as per the deeming provisions of sections 69C of the Act. The deeming provisions of the law are attracted in the facts and circumstances of the case whereby the AO is justified to make an addition to the total income of the amount of unaccounted purchases made, as the same was not explained by the appellant. The case laws cited by the appellant have not been found applicable to the facts of case of the appellant. Hence, in the absence of satisfactory explanation, the AO had no option but to make the addition as per provisions of law. In view of the facts and circumstances, I do not find any infirmity in the decision of the AO. Accordingly, the addition of Rs. 14,40,000/- is hereby confirmed. Ab....
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....before the Ld CIT(A) have not been held to be inapplicable by the Ld CIT(A). 5. On the facts and circumstances of the case, the addition confirmed by the LDCIT(A) under section 69C r.w.s 115BBE of the Act on account of alleged cash purchases is absolutely bad in law as purchases are only the expense of the business and never an income of the business." Since all the grounds are inter related, common submission are hereby made in respect of the all the grounds. Ld CIT(A) dismissed the appeal of the assessee in summary manner which is evident from the following observations of the Ld CIT(A); "4.2. During the course of appellate proceedings, the appellant submitted his written submission which was perused but not found to be acceptable in view of the above the merit of the case. Hence, the case is being adjudicated as per the information available on record. 5. The issues were considered. The assessment order, written submission and) relevant provisions of law were carefully perused. From the assessment order, it is clear that a search and seizure operation was conducted in the case of Yashika Group on 08.03.2022. It was noticed in the book....
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....lly recorded that during the assessment proceeding. the appellant denied having entered into any alleged transaction. Despite that the Ld CIT(A) observed that it is a trite law that once the appellant fails to discharge the onus cast on it to explain the source of any expenditure incurred to the satisfaction of the Assessing Officer, the amount may be deemed to be the income of the appellant as per the deeming provisions of sections 69C of the Act. The observations of the Ld CIT(A) are arbitrary and without any basis. Neither the Ld Assessing Officer or the Ld CIT(A) have brought on record any material to substantiate that the appellant has incurred any expenditure source of which is not recorded in the Books of accounts. It is humbly submitted that material whatsoever found from the possession of 3rd party has no evidentiary value in the absence of any corroborative evidence. Jaipur Bench of the Tribunal in the case of M/S. Kamakshi Hospitality Pvt. Ltd. v. The DCIT, 2018, ITA No. 481/JP/2016, ITAT held that "Admission by a person is good evidence in his own case but it is not sufficient and conclusive in case of other person when that person had own interest in ....
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....ould be made, on the basis of presumption raised by section 132(4A), in the hands of the assessee where in the books of another firm, certain figures were found showing the purchase made by the assessee. In Asst. CIT v Kishore Lal Balwani Rai [2007] 17 SOT 380 (Chd.), it has been held that though the diary seized enable the revenue to presume that its contents are true, such presumptions is available only against the person to whom it belongs and this is a rebuttable Presumption. (i) Presumption u/s 132(4A) is not available, when the seized papers is recovered from third party and not from the assessee. Sheth Akshay Pushpavadan v Dy. CIT (2010) 130 TTJ 42 (Ahd UO). (ii) The addition is made by the AO based on third party evidence and not on the basis of any sound evidence collected during the search. A bunch of loose papers were seized from the premises of the third party which indicated the alleged unrecorded sales made to that party by the assessee. Variation in month-wise and other allied enterprises did not indicate that the assessee made any sales to H'. Average yield of the assessee was higher than that in comparable cases. The AO relie....
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....5, 2007-08, 2008-09 well as the commissioner of Income Tax (A) erred in making the addition on the basis of said papers in the hands of assessee. Hence, the entire addition made on the basis of papers found from 'A' (Third party) was to be deleted". B. Prarthana Construction (P) Ltd. Vs. Deputy Commissioner Of Income Tax (2001) 118 Taxman 112 (IT AT- Ahmedabad) (Mag) "It has been held that loose papers and documents seized from premises of third parties and statement recorded at back of assessee without it being afforded opportunity to interrogate said documents and without bringing on record any supporting evidence, could not be made basis for adding undiscloses income in hands of assessee". C. Additional Commissioner of Income Tax Vs. Miss Lata Mangeshkar (1974) ITR 696 (Mumbai) "It has been held that on appreciation of evidence on record, that entries in the ledger of a firm (third party) did not represent assessee's income from undisclosed sources, was finding of the fact not giving rise to any referable question of law. D. Amarjit Singh Bakshi (HUF) Vs. Assistant Commissioner of Income Tax (2003) 86 ITD 13 (Delhi) "It has been held that w....
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....ce is not tenable. The addition made by the AO for Rs. 1,47,30,0001/- is hereby deleted. The ground raised by the appellant is thus allowed." 9. The above observations have been made in the case of Shri Mukesh Garg by the first appellate authority and on this basis; protective addition in the hands of assessee firm has been deleted by the Commissioner of Income Tax (A) in all assessment years under consideration in these appeals. The Commissioner of Income Tax (A), in the present case, finally held that since the substantive additions made in the cases of Shri Mukesh Garg could not sustain, the protective additions made by the Assessing Officer in the hands of assessee partnership firm cannot survive. With these observations, the Commissioner of income Tax (A) has allowed the appeal of the assessee. There is nothing before us to take a different view in this regard. We are unable to see any perversity, infirmity and ambiguity in the impugned order as alleged by the Id. DR. It is a well-settled position of law that when substantive addition has been deleted by the competent statutory authority. then the protective addition made there under and related to the substa....
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....at the appellant has incurred any expenditure source of which is not recorded in the Books of accounts. The addition is made merely on third party statement which were not shared with the assessee and therefore, considering that aspect of the matter and decision of Hon'ble Jurisdictional High Court in case of CIT vs. Smt. Sunit Dhadda in D.B. Income Tax Appeal No. 197/2012 vide order dated 31.07.2017. The appeal of the assessee required to be allowed. 7. Per contra, Ld. DR relied upon the findings recording in the order of Ld. CIT(A) vide in para 6 at page 10 of the order of the ld. CIT(A) wherein ld. CIT(A) recorded a finding that the additions were made under the provisions of Section 69C of the Act and the assessee failed justify reason given by the ld. Assessing Officer, therefore, the addition made should be sustained. 8. We have heard the rival contentions and perused material available on record. Ground no. 1 to 4 raised by the assessee challenges the addition of Rs. 14,40,000/- made u/s. 69C of the Act in the hands of the assessee. Since all the four ground though separate effectively it is for the sole addition of Rs. 14,40,000/- and therefore, we take up that as one....
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....in the ld. AO noted that the assessee has purchased that amount of material from Yashika Group. Based on that set of facts a show cause notice proposing to add Rs. 14,40,000/- as bogus purchase vide notice dated 21.02.2024 proposing to treat it as unexplained expenditure as per provision of section 69C of the Act. The assessee submitted a reply stating that they have not made any cash purchases to the tune of Rs. 14,40,000/- during the financial year 2021-22 from Yashika Group. Reply submitted by the assessee was examined by the ld. AO but was not found acceptable in view of the documents found during the search operation in Yashik group and statement of Shri Rajendra Yadav, Shri Kailash Mehta and others of the Yashika group taken in which they categorically accepted the fact that the group was engaged in unaccounted cash sales of granite blocks and also explained how they kept record of these unaccounted transactions and the name of the assessee was found in the list of unaccounted cash sales and thereby the same was treated as unexplained expenditure u/s 69C of the Income Tax Act. When the matter carried before the ld. CIT(A) he has confirmed the addition by observing as under....
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....he purchase made is partly recorded and partly not [ Because in the search statement it was stated so]. Thus, even at the time of hearing of the appeal it was not made clear as to whether the assessee has made any purchase from the said group if so from which concern and whether the whole purchase is not recorded or part of it was not recorded. Thus, the finding of the lower authority is merely based on the statement and some information recorded in the digital record. The records reveal that even the statement and the information based on which the addition proposed were not shared with the assessee. The bench noted that the whole addition hinges on evidence gathered from third party document or statement. Now the issue is can third party statement or entry in absence of any corroborative evidence despite using ultimate weapon of search, can result in justified addition. The legal provision related to presumption u/s. 132(4A) is applicable to the person from whose possession or control the incriminating material found from third party search but not belonging to the assessee - appellant this presumption cannot be applied to the assessee as there is no search and no incriminating d....