TaxTMI 
TaxTMI 
2025 (3) TMI 1881
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....te of order and section under which the order of the assessment was passed by the ACIT, Central Circle, Alwar 447/JP/2024 2015-16 15.02.2024 143 r.w.s.153 30.12.2019 448/JP/2024 2016-17 15.02.2024 143 r.w.s.153 30.12.2019 449/JP/2024 2017-18 15.02.2024 143 r.w.s.153 31.12.2019 514/JP/2024 2017-18 15.02.2024 143 r.w.s.153 31.12.2019 2. At the instance of both parties these appeals were heard together and are disposed off with common order. 3.1 The grounds of appeal taken by the assessee in ITA No. 447/JP/2024 for A.Y 2015-16 are as under; "1 The Ld. CIT(A) has erred on facts and in law in upholding the action of AO in treating the P&L A/c of proprietary concern M/s Raja Bricks prepared by the assessee for obtaining the limit from the bank seized during the search as actual P&L A/c and thereby confirming the addition of Rs. 8,75,085/- as undisclosed profit, being difference between the profit as per seized P&L A/c and the declared profit. 2 The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 57,930/- u/s 68 of the Act on account of alleged unaccounted sales on the basis of P....
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....is of Pg 23 of Exhibit 3 ignoring that it is a dumb paper and therefore the presumption that it represents money received against sale of land is misplaced. 3 The Ld. CIT(A) has erred on facts and in law in upholding the action of AO in treating the P&L A/c of proprietary concern M/s Raja Bricks prepared by the assessee for obtaining the limit from the bank seized during the search as actual P&L A/c and thereby confirming the addition of Rs. 12,55,058/- as undisclosed profit, being difference between the profit as per seized P&L A/c and the declared profit. 4 The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 1.20 crores on the basis of lump sum surrender made by the assessee in the statement recorded u/s 132(4) of the Act in respect of M/s Raja Bricks, a proprietary concern of assessee ignoring that when the AO has separately made addition on the basis of seized documents, no addition on the basis of lump sum surrender made by the assessee can be made. 5. The Ld. CIT(A) has erred on facts and in law in taxing the above additions u/s 115BBE @ 60% instead of taxing the same @ 30% by ignoring that section 115BBE substituted by Ta....
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....see on 09/10/2018 requiring the assessee to file a true and correct return of income as prescribed under Rule 12 of the Income Tax Rules, 1962 within 15 days of the service of the said notice. 4.1 The assessee filed its return of income u/s 139 on 30/09/2015 declaring income of Rs. 4,10,650/-. In response to the said notice issued u/s. 153A return declaring an income of Rs. 4,10,650/- was e-filed by the Assessee. The Assessee primarily derives its income from Business, House Property Income and Income from Other Sources. The proceedings of assessment of income were initiated by issuing of notices u/s 143(2) of the Act on 08.08.2019 & 142(1) of the Act on 03-09-2019 and served online on the e-mail of the assessee. Notice u/s 142(1) dated 03-09-2019 was issued to the assessee and information and details pertaining to the case of the Assessee relevant to assessment of his income were called for u/s 142(1) of the Act by means of a questionnaire. 4.2 During the course of assessment proceedings, the assessee vides notice u/s 142(1) dated 03/09/2019 was asked as to submit the reply on the issue as detailed herein below :- "Please refer page no. 30, 31, 58 & 59 of Exhibit-1 ....
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....ated as your unaccounted income and may not be added in your total income for the year under consideration." In response to the notice the A/R of the assessee filed written submission on 18/09/2019. The reply of the assessee was given a thoughtful consideration by the ld. AO. He noted that the document is P&L account of M/s Raja Bricks found and seized during the course of search proceedings. The document depicts much higher profit than that declared in the return of income by the assessee. In this regard, the contention of the assessee is that this is a provisional balance sheet and profit & loss account prepared for taking loans from Kotak Mahindra Bank by inflating the figures of profit in the P&L account. The contention of the assessee was not considered by the ld. AO. It can be presumed that obtaining loan figures could be inflated by the business entity to lure the banking institution. But, it cannot be accepted that the inflated figures are provisional. For obtaining better loan from the banks the inflated profit has to be declared in the return of the income and the Balance Sheet should be inflated accordingly. The assessee failed to prove with supporting document that t....
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....y proper justification, ld. AO can draw inference in respect of these transactions in the relevant years reflecting in the pages. In response to the notice, the A/R of the assessee filed written submission on 24/12/2019. The reply of the assessee has been considered carefully by ld. AO. Ld. AO noted that the page no. 47 is related to sale of garters and sariya. In this regard the justification given by the assessee for the transactions that are said to be related to business transaction of the assessee viz sale of garters, sariya etc, it is noticed that the bills and vouchers produced by the assessee was not matching with the amount mentioned therein nor the name on the bill and that mentioned in the seized documents was also not found matching. The justification given by the assessee is just an afterthought but not found verified from the books of accounts of the assessee. Thus, the plea taken by the assessee was not found acceptable and thereby the addition of Rs. 57,930/- was made u/s 68 r.w.s.115BBE of the Act in the total income of the assessee on account of unaccounted sales mentioned in the parallel books of accounts of the assessee. 4.4 The page no. 29 is related to some....
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....me was considered by the ld. CIT(A) therefore, that part of the facts is not repeated here. 5. Aggrieved by the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: Finding of ld. CIT(A) on the issue of addition of Rs. 8,75,085/- Ground No. 2 5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- In search action page no. 30, 31, 58 & 59 of Exhibit 1 of Annexure was seized which is a P&L A/c of M/s Raja Bricks for the period 01.08.2014 to 31.07.2016. The sales declared in above mentioned pages are not matching with sales as per audited account. The Id. AO therefore held that if inflated profits are shown for obtaining loans from the bank, the same should have been declared in the income tax return filed. Accordingly, the AO made addition for the difference in profit declared at Rs. 8,75,085/- (11565....
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....taking ration of net profit declared in A. Y. 2016-17 & 2017- 18 comes to Rs. 8,75,085/-. In this regard you are required to justify the difference of the said amount of net profit with supporting documentary evidences. In absence on any proper justification/explanation you are asked to show cause as to why the amount of Rs. 8,75,085/- may not be treated as your unaccounted income and may not be added in your total income for the year under consideration." The Ld. AR of the appellant argued that the profit & loss account found in the seized document is prepared for obtaining the bank limit from Kotak Mahindra Bank. These are only estimation and have no relation with the actual profit. The actual figures are duly recorded in the regular books of accounts, He alternatively argued that even if the same is considered as undisclosed profit and taxed than the set off of the same should be allowed against the subsequent investment/expenditure. On perusal of the overall facts, I find that the figures mentioned in the profit & loss account are exact figure and not in round figure. The assessee has also not brought any document to support his contention. As per appellant th....
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....ated difference amount as unexplained investment in stock from undisclosed sources and added same to total income of assessee under section 69B Commissioner (Appeals) deleted impugned addition by referring to a chart indicating stock position as on 28-3-2005 submitted to bank with stock position as per stock register on 28-3-2005 Tribunal held that assessee was bound to explain difference either before Assessing Officer or before Commissioner (Appeals) or before Tribunal and same was not done It taking view that excess stock represented income of assessee from undisclosed sources, set aside order of Commissioner (Appeals) and upheld order of Assessing Officer It was noted that once it was found by Assessing Officer that there was excess stock, in absence of explanation by assessee, conclusion was inescapable that excess stock, if any, was from undisclosed sources Further once assessee's explanation, if any, had not been accepted, resultant position was that there was excess stock undisclosed in books of account and non disclosure was on with a view to suppress income - Whether order of Assessing Officer and that of Tribunal deserved to be affirmed - Held, yes [Para 10] [In favo....
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....able article or thing belong or belongs to such person, (ii) that the contents of such books of account and other documents are true, and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested Further as noted by the Id. AO "The other contention of the assessee is that nothing supporting was found during the course of search proceedings in support of the said P&L account and Balance Sheet. This contention was also not found acceptable as during the course of search proceedings various incriminating documents were found and seized which shows that the assessee was engaged in unaccounted sales. Also, addition on account of unaccounted sales is made in the assessment year 2017-18 & 2018-19 on the basis of documents seized during sea....
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....for. In this regard, Ground No. 2 pertains to different business M/s Raja Bricks and the items traded are also completely different. As noted in the assessment order, the page no. 47 is related to sale of garters and sariya. In this regard the justification given by the assessee for the transactions that are said to be related to business transaction of the assessee viz sale of garters, sariya etc, it is noticed that the bills and vouchers produced by the assessee was not matching with the amount mentioned therein nor the name on the bill and that mentioned in the seized documents was also not found matching. The justification given by the assessee is just an afterthought but not found verified from the books of accounts of the assessee. Appellant has also stated that further AO has made addition u/s 68. This section applies when any sum is found credited in the books of accounts, the source of which is not explained to the satisfaction of the AO. The amount of Rs. 57,930/- is noted on a loose paper. The same can't be equated with the books of accounts. In this regard, once it is held that the appellant had indulged into unaccounted sales it ....
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....; x x On perusal of the overall facts, I find that this paper represents the sales. The Lat. At has not brought on record evidence that this sale is duly recorded in the books of accounts. He has further not brought on record that the expenses related to this sales are not recorded in the books. The appellant has also not furnished the quantitative reconciliation to show that the sale is made out of the accounted purchases. In view of this it is hereby held that the matching purchases were from the unaccounted funds which have not been separately taxed anywhere else and thus taxable under section 69C of the Act and accordingly the entire sale proceeds (unexplained purchases plus the profit earned) are taxable, As discussed in earlier part, once it is held that the appellant had indulged into unaccounted sales it is clear that the sale proceeds are either in the form of unexplained cash taxable u/s 69A or in the fo....
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....e income separately taxed appears to be acceptable. The Ld. AR relied upon the decision of Rajasthan High Court in case of CIT Vs. Tyaryamal Bal Chand 165 ITR 0453 and Supreme Court decision in case of Anantharam Veerasinghaiah & Co. Vs. Commissioner of Income Tax 123 ITR 0457 which supports the case of the assessee. The appellant has also filed cash flow statement. The redrafted cash flow statement of unaccounted incomes on the basis of finding given in this order which is tabulated as under:- Statement indicating cash flow statement for AY 2015-16. Particulars Assessment year 2015-16 Opening balance 0 Income from Raja Bricks 875085 Unaccounted Sales as per page 1 to 53 of Exhibit 3 57930 Total sources 933015 Payment/Utilisation Unexplained Expenditure as per page 1 to 53 of Ex- 3 66000 Temporary Cash Advance 50000 Total utilisation 116000 Net Cash balance available 817015 As per this cash flow statement also the sources are much more than the investment. Accordingly, the set off of the income already taxed is allowed against this addition. Resultantly, the addition of Rs. 66....
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.... Further, the contention of the appellant that the advanced was received back during the same year is without any basis as when the transaction of giving advance is noted in the documents the transaction of recipes back of the same must have also been recorded in the documents. Further there is a presumption in the law regarding the documents under section 132(4A) and 292C of the Act and anything over and above such document if is being claimed by the taxpayer that has to be proven with the strong evidences, Considering the entries in the documents and the law on the issue the claim of the appellant that the advance was received back during the same year is not acceptable and is rejected. However the alternate argument of the appellant that the source of the same is covered out of the unrecorded profit is acceptable. The Ld. AR relied upon the decision of Hon'ble Rajasthan High Court in case of CIT vs. Tyaryamal Bal Chand 165 ITR 0453 and Hon'ble Supreme Court decision in case of Anantharam Veerasinghaiah & Co. Vs. Commissioner of Income Tax 123 ITR 0457 which supports the case of the assessee. The assessee has also filed cash flow statement. The cash fl....
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....7 of the order held that the figures mentioned in P&L A/c are exact figure and not in round figure. It is expected that the appellant would have submitted correct information to the bank. Giving misleading financial result to the bank is against public policy and needs to be curbed. Reliance was placed on the decision of Suraj Bhan Oil (P.) Ltd. Vs. DCIT 446 ITR 539 (MP) and section 292C of the Act. Accordingly, addition made by the AO is confirmed. Submission:- 1. It is submitted that P&L A/c found in the seized document is prepared for obtaining the bank limit from Kotak Mahindra Bank. This P&L A/c is prepared only for obtaining higher loan. The figures noted in this P&L A/c is not in round figure only to demonstrate before the banking authorities that this is the actual turnover/ profit. Further this P&L A/c is not for the FY but till 31st July and therefore no cognizance can be taken for such paper found in search. The search party has not recorded any statement of the assessee during the course of search with reference to this paper. The decision of MP High Court in case of Suraj Bhan Oil (P.) Ltd. Vs. DCIT 446 ITR 539 is with reference to the excess stock de....
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....ion that only gross profit on such sales can be taxed is also rejected for the reason that assessee has not proved that unaccounted sales are made from accounted purchase for which reference was made to the decision of Rajasthan High Court in case of CIT Vs. Bright Future Gems 88 Taxman.com 476 and decision of Gujarat High Court in case of N.K. Industries Ltd. Vs. DCIT 72 Taxman.com 289. Submission:- 1. Pg No.47 of Exhibit 3 records certain transaction of sale of sariya and gartar under the heading 'naresh saini ka hisab'. Both the lower authorities have accepted that it is sales made to Naresh Saini. Hence the entire sale amount of Rs. 57,930/- cannot be added to income. What can be added to income is only the profit on such sale. The Ld. CIT(A) has incorrectly stated that when the purchases in relation to such sale is not taxed u/s 69C, then the sale has to be taxed as such ignoring that when profit from Raja Bricks is already taxed, such profit is the source against the purchase of sariya and gartar sold to Naresh Saini. Hence what can be added is the profit on such sale for which reliance is placed on the following decisions:- CIT Vs. President Indust....
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....profit of the assessee. The Tribunal, however, did not think it appropriate to reduce the rate which was added by the first appellate authority. On appeal, it is held that the total sale could not be regarded as the profit of the assessee. The net profit rate had to be adopted and once it was adopted it could not be said that there was perversity of approach. Agrawal Motors Vs. ACIT 68 ITD 407 (Jab) Addition can be made only of G.P./N.P. on suppressed sales and not entire sale price itself. ITO Vs. Gurubachan Singh J. Juneja 216 ITR 99 (Ahd.) (Trib.) (TM) It was held that value of the cash sales can't be added to the total income as there was no material on record that assessee made investment to make unaccounted sales. Gross profit rate should be applied to the unaccounted sales. This decision is approved by Hon'ble Gujarat High Court reported in 302 ITR 63. 2. The Ld. CIT(A) has not distinguished these cases but relied on the decision of Rajasthan High Court which is with reference to the disallowance of bogus purchases. The case of assessee is not of bogus purchases. Similarly Gujarat High Court decision is in respect of fictitious pu....
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....ed the material placed on record. Vide Ground no. 1 the assessee challenges the finding of the ld. CIT(A) while confirming the addition of Rs. 8,75,085/- being the alleged undisclosed profit being the difference between the profit as per seized profit and loss account and the declared profit of the assessee. The brief facts related to the issue are that page no. 30, 31, 58 & 59 of Exhibit -1 of Annexure seized from the resident of the assessee deals with the profit and loss account of M/s. Raja Bricks, a proprietary concern of the assessee. Ld. AO noted that the sales and profit recorded on these pages does not match with the regular books of account of the assessee and thereby the difference in profit for Rs. 8,75,085/- was determined and added as income of the assessee. In support of the ground so raised by the assessee the ld. AR of the assessee submitted that P&L A/c found in the seized document was prepared for obtaining the bank limit from Kotak Mahindra Bank. This P&L A/c was prepared only for obtaining higher loan. The figures noted in this P&L A/c was not in round figure only to demonstrate before the banking authorities that this is the actual turnover/ profit. Further....
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....ered the alternative plea and thereby grant the set off of profit for Rs. 8,75,085/- against the income disclosed by the assessee. Based on this observation ground no. 1 raised by the assessee is allowed. 8. Vide ground no. 2 assessee challenges the finding of the ld. CIT(A) confirming the addition of Rs. 57,930/- u/s 68 of the Act on account of alleged unaccounted sales on the basis of Pg 47 of Annexure AS-3, the assessee also challenges that the addition for the entire sale amount cannot be made instead the profit earned on alleged unaccounted sales can alternatively be added. The brief facts related to the dispute are that the assessee was asked to refer the page no. 1 to 53 of Exhibit-3 except page -37 (query in this regard raised separately in relevant year) impounded from M/s Gupta Iron Store, assessee's proprietorship concern. These loose papers were found at the business premises of Gupta Iron store. These were handwritten kachi parchis showing various cash transactions relating to their money lending business, property and unaccounted expenses. Since no Books of accounts have been maintained, all these transactions may consider to be unaccounted as proposed and the s....
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....he sales only represented the price received by the seller of the goods; only the realization of the excess over the cost incurred could form part of the profit included in the consideration for the sales. Since there was no finding to the effect that investment by way of incurring the cost in acquiring the goods, which were sold, had been made by the assessee and that investment was also not disclosed, only the excess over the cost incurred could be treated as profit. Accordingly, only profits embedded in sale proceeds can be taxed. Ld. CIT(A) has not distinguished these cases but relied on the decision of Rajasthan High Court which is with reference to the disallowance of bogus purchases. The case of the assessee is not of bogus purchases. Similarly Gujarat High Court decision is in respect of fictitious purchase invoices where the High Court disallowed 25% of such purchases. Hence this decision is also distinguishable on facts. Considering that overall facts we direct the ld. AO to consider the income on the transaction to the extent of the gross profit declared by the assessee in the books of accounts. Based on this observation ground no. 2 raised by the assessee is partly allo....
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....ks and the amount of Rs. 50,000/- was given as temporary advance out of available cash balance with M/s Raja Bricks which were received back after 2-3 months. However, AO rejected the contention of the assessee by stating that the assessee failed to explain the source of advance given to Sh. Kailash Bairwa. Accordingly, he made an addition of Rs. 50,000/- as unexplained expenditure u/s 69C of the Act. Ld. CIT(A) confirmed that view of the ld. AO. The bench noted that it is not under dispute that Shri Kailash Bairwa is staff of M/s Raja Bricks. He was provided temporary advance for which his affidavit was obtained. This affidavit was found in search. The source of such advance is the cash balance available in the books of accounts. Since the advance was retuned back after 2-3 months, the advance given and the amount received back was not recorded in the books of accounts. We note that the assessee has not filed any confirmation and availability of the cash book as on the date of affidavit. Therefore, the ld. AO is directed to examine the employee of the assessee and confirm whether the assessee was having the sufficient balance or not. Based on that verification ld. AO may consider ....
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....emises of the assessee and therefore it is the duty of the assessee to explain the transaction which he failed to do. The presumption u/s 132(4A) and 292C is against the submissions of the appellant. Therefore the payment of Rs. 91,010/- is treated as unexplained investment. Accordingly, the addition in this regard is upheld. This is subject to further discussion in the following para. However the alternate argument of the appellant that set off of the same should be allowed against the income separately taxed appears to be acceptable. The Ld. AR relied upon the decision of Rajasthan High Court in case of CIT Vs. Tyaryamal Bal Chand 165 ITR 0453 and Supreme Court decision in case of Anantharam Veerasinghaiah & Co. Vs. Commissioner of Income Tax 123 ITR 0457 which supports the case of the assessee. The assessee has also filed cash flow statement. The redrafted cash flow statement on the basis of finding given in this order is tabulated as under:- Statement indicating cash flow statement from AY 2015-16 to 2016-17 Particulars Assessment year 2015-16 2016-17 Opening balance 0 817015 Income from Raja Bricks 875085 15550....
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....e u/s 142(1) dated 03-09-2019 was issued to the assessee and information and details pertaining to the case of the Assessee relevant to assessment of his income were called for u/s 142(1) of the Act by means of a questionnaire. 18. During the course of assessment proceedings, the assessee vides notice u/s 142(1) dated 03/09/2019 was asked as under:- "Please refer page no. 1 to 53 of Exhibit-3 except page -37 (query in this regard raised separately in relevant year) impounded from M/s Gupta Iron Store, your proprietorship concern. These are loose papers were found at the business premise of Gupta Iron store. These are hand written kachi parchis showing various cash transactions relating to their money lending business, property and unaccounted expenses. Since no Books of accounts have been maintained, all these transactions may be considered to be unaccounted. At the time of statements recorded during the search, you stated that these papers are related to his money lending business and sale of property at Plot no 29, Jail ka Chauraha, Alwar whose registry has not been done as yet. During the post search proceedings you are asked to explain these transactions, however no....
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....nnexure seized from his residence. The pages are P&L a/c of M/s Raja Bricks, proprietorship his concern, for the period 01.08.2014 to 31.07.2016. On perusal of the P&L a/c it is noticed that total sales declared on the pages under question for the mentioned period and net profit shown therein are not matching with those declared in his regular books of accounts submitted. During the year under consideration difference of Net profit be calculated for numerical/calculations purpose by taking ration of net profit declared in A.Y 2016-17 & 2017-18 comes to Rs. 16,39,568/-. In this regard the assessee asked to show cause as to why the amount of Rs. 16,39,568/- may not be treated as his unaccounted income and may not be added in his total income for the year under consideration. In response, the Ld. AR of the assessee filed written submission on 18/09/2019. The contention raised in the reply was also not found acceptable as during the course of search proceedings various incriminating documents were found and seized which shows that the assessee was engaged in unaccounted sales. Also, addition on account of unaccounted sales is made in the year under consideration and in the assessment y....
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....ent year under consideration. 23. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds raised before us the relevant finding of the ld. CIT(A) is reiterated here in below: Ground No. 2 5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- I have decided the similar issue in the case of the appellant for the assessment year 2015-16 in the ground of appeal number 3 where the addition made by the Id. AO has been upheld and grounds of appeal have been dismissed. Material facts of the present appeal being pari-materia with the facts of the appeal in the assessment year 2015-16, the findings of the appeal order in the case of assessment year 2015-16 in the ground of appeal number 3 will apply mutatis- mutandis to the present appeal for the assessment year 2017-18 and it is held accordingly. Accordingly, this ground of appeal is hereby dismissed. Ground No. 3 ....
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.... 8.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- I have decided the similar issue in the case of the appellant for the assessment year 2015-16 in the ground of appeal number 2 where the addition made by the Id. AO has been upheld and grounds of appeal have been dismissed. Material facts of the present appeal being pari-materia with the facts of the appeal in the assessment year 2015-16, the findings of the appeal order in the case of assessment year 2015-16 in the ground of appeal number 2 will apply mutatis- mutandis to the present appeal for the assessment year 2017-18 and it is held accordingly. Therefore the AO has correctly treated the profit as per the seized profit & loss account as actual profit and determined the unaccounted profit. However while making the addition AO forget to reduce the declared profit of Rs. 3,84,510/- as reduced in AY 2015-16. Considering these facts the correct addition for unaccounted profit as per thes....
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....ceedings which reveals the undisclosed investments and other transactions alongwith cash of Rs. 63.00 Lacs However, the assessee has not furnished any datewise working of the undisclosed income earned from M/s Raja Bricks. Hence, it cannot be determined whether the aforesaid undisclosed income was available as cash in hand with the assessee on the date of such investments and transactions revealed in loose papers found during the course of search. Further no cash flow has been furnished by the assessee during the course of search and assessment proceedings to substantiate that cash amounting to Rs. 63.00 Lacs was available with assessee as a part of undisclosed income so declared ie. Rs. 1,20,00,000/-. In view of above discussion, it is evident that the assessee has earned undisclosed income amounting to Rs. 1,20,00,000/- from his business concern M/s Raja Bricks and voluntarily surrendered the same in his statements recorded during search proceedings which the assessee failed to disclose in his return filed u/s 153A. Therefore, the same is held as undisclosed income of the assessee and a sum of Rs. 1,20,00,000/- is hereby added to the total income for the period relevant ....
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.... The appellant has not produced any retraction letter. No reconciliation has been filed. Thus the reasons for deviating from the surrender made during the course of search action in the statement recorded during the search are non-existent. Further, regarding the legal principles to examine the validity of the retraction of statement, guidance is taken from the following judgments:- CIT vs. Hotel Meriya [2010] 195 Taxman 459 (Kerala)/(2011) 332 ITR 537 (Kerala) (26.05.2010) x x x x PCIT vs. Shri Roshan Lal Sancheti [IT Appeal No. 47 of 2018, dated 30.10.2018], Hon'ble Rajasthan High Court ....
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....; x x Bachittar Singh vs CIT [2010] 328 ITR 400 (Punjab & Haryana) x x x x CIT vs. Hotel Meriya [2010] 195 Taxman 459 (Kerala)/(2011) 332 ITR 537 (Kerala) [26.05.2010] x x &nb....
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....udgement in Kantilal C. Shah (supra)). Accordingly, this ground of appeal is hereby dismissed." Ground No. 10 13.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The appellant has raised the issue of date of applicability of provisions of Section 115BBE of the Act as amended by second amendment Act by the Taxation Laws (second amendment) Act, 2016 i.e. the rate of 60% of tax. There is no dispute regarding the applicability of section 68/69/69A etc, and section 115BBE of the Act on the merits of the additions. This issue raised by the appellant has been considered in the following judgments. Maruthi Babu Rao Jadav v. ACIT [2021] 430 ITR 504 (Ker.) (WA. No. 984 of 2019) x x &n....
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....ekedar nandu/karigar ka hisab. Both the lower authorities have accepted that it is in respect of sales made. Hence the entire sale amount of Rs. 3,27,370/- cannot be added to income. What can be added to income is only the profit on such sale. The Ld. CIT(A) in AY 2015-16 has incorrectly stated that when the purchases in relation to such sale is not taxed u/s 69C, then the sale has to be taxed as such ignoring that when profit from Raja Bricks is already taxed, such profit is the source against the purchase of sariya and gartar sold to various persons. Hence what can be added is the profit on such sale for which reliance is placed on the following decisions:- CIT Vs. President Industries 258 ITR 654 (Guj.) (HC) The amount of sales could not represent the income of the assessee who had not disclosed the sales. The sales only represented the price received by the seller of the goods; only the realization of the excess over the cost incurred could form part of the profit included in the consideration for the sales. Since there was no finding to the effect that investment by way of incurring the cost in acquiring the goods, which were sold, had been made by the assess....
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.... price itself. ITO Vs. Gurubachan Singh J. Juneja 216 ITR 99 (Ahd.) (Trib.) (TM) It was held that value of the cash sales can't be added to the total income as there was no material on record that assessee made investment to make unaccounted sales. Gross profit rate should be applied to the unaccounted sales. This decision is approved by Hon'ble Gujarat High Court reported in 302 ITR 63. 2. The Ld. CIT(A) has not distinguished these cases but relied on the decision of Rajasthan High Court which is with reference to the disallowance of bogus purchases. The case of assessee is not of bogus purchases. Similarly Gujarat High Court decision is in respect of fictitious purchase invoices where the High Court disallowed 25% of such purchases. Hence this decision is also distinguishable on facts. In view of above, addition confirmed by Ld. CIT(A) be restricted by applying appropriate g.p. rate on sale of Rs. 3,27,370/-. Ground No. 2 The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 90,500/- u/s 68 of the Act on the basis of Pg 23 of Exhibit 3 ignoring that it is a dumb paper and therefore the presumption that it re....
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....zed P&L A/c and the declared profit. AO Pg 11-16 CIT(A) Pg 18-20 The facts & submission of the assessee in respect of this ground is same as Ground No.1 of AY 2015-16 and therefore, the same be considered in deciding this ground. Ground No.4 The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 1.20 crores on the basis of lump sum surrender made by the assessee in the statement recorded u/s 132(4) of the Act in respect of M/s Raja Bricks, a proprietary concern of assessee ignoring that when the AO has separately made addition on the basis of seized documents, no addition on the basis of lump sum surrender made by the assessee can be made. AO Pg 17-23 CIT(A) Pg 28-44 Facts:- 1. The AO observed that the assessee in his statement u/s 132(4) dt. 23.04.2017 surrendered an amount of Rs. 1,20,00,000/- as unaccounted income earned from M/s Raja Bricks for the year under consideration but the same is not disclosed in the return of income. Therefore, relying on the decision of Rajasthan High Court in case of Ravi Mathur and other decisions, he made addition of Rs. 1.20 crores. 2. The ....
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....ase of ACIT Vs. Sandesh Kumar Jain ITA 41/JAB/2020 order dt. 31.10.2022 at Para 4.2 of the order while interpreting the amendment made in section 115BBE which received the assent of President on 15.12.2016 held as under:- 4.2 As regards the assessee's second, without prejudice, argument, i.e., qua non-retrospectivity, we find considerable force therein. Section 1(2) of the Amending Act provides that save as otherwise provided therein, it shall come into force "at once. The same only conveys the intent for, except where a later date is specified, the legislation to take immediate effect, i.e., as soon the assent of the Hon'ble President of India is received, by signing the same. The words "at once convey an urgency, so that the same represents the earliest point of time at which the same is to take effect, i.e., 15/12/2016 itself, and which also explains the same being enacted during the course of the fiscal year, tax rates for which stand already clarified at the beginning of the year per the relevant Finance Act (FA, 2016). The said words "at once would loose significance if the provisions of the Act are to, as stated by the ld. CIT(A), be read as effective 01/04/2017....
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....erefore even if certain amount is held taxable u/s 69 of the Act, tax rate applicable u/s 115BBE would be 30% and not 60% if such amount is prior to 15.12.2016. 25. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee where the sales evidence considered to be alleged out of book sales only profit portion be taxed and since the ld. AO has made the addition on various loose paper separately the disclosure so made cover all such discrepancies. As regards the relief granted by the ld. CIT(A) he supported the finding of ld. CIT(A). 26. The ld DR is heard who relied on the findings of the lower authorities as favorable to the revenue. As regards the profit and loss account found prepared to submit with the bank loan shows higher profit and therefore the addition based on the profit and loss account to be sustained which is based on the incriminating material found and considering the provision of section 292C the addition made is required to be sustained. As regards the addition for undisclosed sales the assessee found in excess stock in search this shows the assessee is habit of making out of books sales and therefore,....
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....losed by the assessee shall make the addition to that extent. In the result ground no. 2 raised by the assessee is partly allowed. 29. Ground no. 3 raised by the assessee is exactly similar on facts as raised in ITA no. 447/JP/2024 vide ground no. 1. Therefore, it is not imperative to repeat facts and findings given by the bench while dealing with ground no. 3 raised by the assessee in this appeal and therefore, the decision taken by the bench while dealing with ground no. 1 in ITA no. 447/JP/2024 shall apply mutatis mutandis to ground no. 3 raised by the assessee in this appeal. Based on this observation ground no. 3 raised by the assessee is allowed. 30. Ground no. 4 raised by the assessee challenges the finding of the ld. CIT(A) who has confirmed the addition of Rs. 1.20 crores on the basis of lump sum surrender made by the assessee in the statement recorded u/s 132(4) of the Act in respect of M/s Raja Bricks, a proprietary concern of assessee ignoring that when the AO has separately made addition on the basis of seized documents, no addition on the basis of lump sum surrender made by the assessee can be made. On this aspect of the matter the bench noted that the assessee ....
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....sessee has given an amount of Rs. 65,02,600/- to some various persons during the year under consideration. The assessee has filed a general reply for the complete transaction mentioned on the page. But no supporting document was furnished in support of its contention. Even no single details regarding when the plot of NEB that said to be sold, how much money he received from that, where the amount is entered into his books of accounts, the advance given to various persons is mentioned in his books, whether the temporary advance was given in cash or through bank was filed. Therefore, the amount of Rs. 65,02,600/- was considered as unexplained money of the assessee. 36. The ld. AO in the assessment proceeding noted that vide Exhibit AS-11 six original passbook and Exhibit AS-02 containing 3 cheque books of different persons i.e. S/shri Narendra Singh Rajput, Devi Singh, Omprakash, Dinesh Kumar, Hari Nath and Rajesh Kumar, seized from your residence. These exhibits contain original pass books/cheques for 6 different accounts, which have been opened post demonetization. The fact that the original pass books and cheque books were with you itself implies that these accounts were opened....
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....38. Against the assessment order the assessee preferred an appeal wherein the ld. CIT(A) deleted the addition as discussed in his order. Revenue feeling dissatisfied with that finding preferred the present appeal challenging the finding of the ld. CIT(A). The relevant finding of the ld. CIT(A) on the issues raised by the revenue is reproduced herein below: "Ground No.1 4.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO In the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- As per the appellant there is no dispute as to the fact that the assessee has given property advance of Rs. 65,02,600/-. The advance is given out of the income earned from the business as taxed in this year as well as in last two years. Assessee has considered the same while preparing combined cash flow statement. As per this cash flow statement there is shortfall which at the most can be considered as income earned from the business and invested utilised in the advances and has made reference to judgements. ....
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....p; x x As per judgements of Hon'ble Supreme Court in the case of CIT v. M.Ganapathi Mudaliar [1964] 53 ITR 623 (SC)/A. Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC), where the assessee has failed to prove satisfactorily the source and nature of a credit entry in his books, and it is held that the relevant amount is the income of the assessee, it is not necessary for the department to locate its exact source. Referring to the above judgements of Hon'ble Supreme Court, it is held by the Hon'ble ITAT in the case of Navin Shantilal Mehta v. Income-tax Officer, Ward-32 (2) (4), Mumbai (2018) 90 taxmann.com 16 (Mumbai Trib.) as under:- x x &nb....
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....vindarajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC), the Revenue is not to find out the source and the assessee is required to explain the source with supporting's. In the present case, in view of the above discussion, the source remains unexplained. Accordingly, the addition in this regard in principle is upheld. This is subject to further discussion in following paragraph. In search papers out of books income earned was found, taxed by AO and also confirmed in the appeal order passed by the undersigned. The assessee has also filed cash flow statement wherein the details of income as per loose papers found were treated as source of funds and investment made out of the same were treated as application of the income. This claim of set off is acceptable as taxing income as well as investment will result in double taxation. The Ld. AR relied upon the decision of Rajasthan High Court in case of CIT Vs. Tyaryamal Bal Chand 165 ITR 0453 and Supreme Court decision in case of Anantharam Veerasinghaiah & Co. Vs. Commissioner of Income Tax 123 ITR 0457 which supports the case of the assessee. However this cash flow statement is revised to the extent of finding given by the u....
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....ssessee is mentioned. This shows that the assessee has deposited the cash in their account and withdrawn subsequently. These are the workers of the assessee. Accordingly, AO made an addition of unaccounted cash at Rs. 6,57,000/- to the total income of the assessee. In this regard relevant part of the assessment order is as under:- "During the course of assessment proceedings, the assessee vides notice u/s 142(1) dated 03/09/2019 was asked as under: "Please refer Exhibit AS-11 containing six original pass books and Exhibit AS-02 containing 3 cheque books of different persons Le. S/Shri Narendra Singh Rajput, Devi Singh, Omprakash, Dinesh Kumar, Hari Nath and Rajesh Kumar, seized from your residence. These exhibits contain original pass books/ cheques for 6 different accounts, which have been opened post demonetization. The fact that the original pass books and cheque books were with you itself implies that these accounts were opened by you to deposit his unaccounted cash. The signed blank cheques clearly imply that the cash deposits are intended to be retrieved on a subsequent date. Exhibit AS- 02 (pages 1-44) is a bunch, of loose papers containin....
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.... in response to the notice u/s 133(6) stated that there is signature of the assessee on back side of the cheque. There is a legal presumption u/s 132(4A) and 2920 of the Act. The onus is on the appellant As per section 168 dealing with unexplained credit and section 69A dealing with unexplained money, the onus is on the appellant. The appellant has merely made self serving statements. The totality of facts and the law, clearly proves that entire cash deposit and withdrawals in the bank account needs to be considered in the hands of the assessee. The addition in assessment order in this regard is upheld, this is however subject to discussion in next paragraph. However the alternate claim of the assessee that claim of subsequent withdrawals from the bank account be allowed appears to be acceptable. The position of the cash deposit and cash withdrawals in these bank accounts are tabulated as under:- Name of account holder Total amount deposit from 09.11.2016 to 30.12.2016 Total amount withdrawal from 09.11.2016 to 31.03.2017 Hari Nath 20000 20000 Rajesh Kumar 20000 20000 Dinesh Kumar 20000 20000 Narendra Singh Rajput 193000 ....
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.... The AO observed that Pg 37 of Exhibit 3 records cash loan of Rs. 1,16,68,100/- falling in AY 2015-16 to 2018-19. Out of it Rs. 65,02,600/- relate to the year under consideration and thus he made addition for the same u/s 68 of the Act. 2. The Ld. CIT(A) held that the amount of Rs. 31,65,500/- stated as relating to AY 2015-16 in fact relate to AY 2017-18 and thus he considered the total amount advanced at Rs. 96,68,100/- (65,02,600+31,65,500) and confirmed the addition for the same. However, he allowed set off of such investment against the undisclosed income assessed during the year and of earlier years as tabulated at Pg 10-11 of the order. 3. It is submitted that both the lower authorities have assessed income of Rs. 1.20 crores in respect of undisclosed income of M/s Raja Bricks for the year under consideration which is much more than the investment of Rs. 65,02,600/- mentioned in the ground of appeal. Therefore, it is incorrect to state that Ld. CIT(A) has deleted the addition on the ground that unaccounted receipt has been taxed earlier. In fact only an amount of Rs. 22,81,048/- has been considered by the Ld. CIT(A) out of the earlier year income which is mu....
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....g 11 & 12 of the order it is held that as per Rule 6DD(g) there is no parameter of the distance of the bank branch from the village where the payment has taken place and there is no requirement to show that the payee must not have bank account. 3. The finding of Ld. CIT(A) is relied upon. Similar addition of Rs. 5,97,200/- made in AY 2016-17 was deleted by Ld. CIT(A) against which department has not filed any appeal, may be due to low tax effect but since assessee has brought on record evidence that his case falls under Rule 6DD(g) which is correctly appreciated by the Ld. CIT(A), the ground of department be dismissed." 41. We have heard the rival contentions and perused the material placed on record. Vide ground no. 1 revenue challenges the finding of the ld. CIT(A) deleting the addition of Rs. 65,02,600/-. The bench noted that ld. AO based on the page 37 of Exhibit 3 wherein recording of cash loan of Rs. 1,16,68,100/- mentioned out of that sum Rs. 65,02,600/- relate to the year under consideration and thus he made addition for the same u/s 68 of the Act. When the addition was challenged before the ld. CIT(A) he held that the amount of Rs. 31,65,500/- stated as relatin....