TaxTMI 
TaxTMI 
2026 (7) TMI 1403
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....tances of the case and in law, the Ld. CIT(A) erred in sustaining addition of Rs. 15,77,729/-, calculated at 3% of aggregate of alleged value of token notes and alleged figures obtained from Whatsapp Chat in the mobile phone of Mr. Shaibaz Khan [i.e. 3% of Rs. 5,22,90,963/- (Rs. 4,70,26,200 + Rs. 55,64,763)]: 1.1. On the facts and circumstances of the case and in law, the Ld. CIT(A), erred in holding Rs. 7,49,975/-, as alleged unaccounted sales, by placing reliance on excel sheet named 'Fina lLala' despite recording the finding that the said sheet did not mention any time range or financial years to which the alleged transactions were related to and without considering that the excel sheet named 'Final Lala' was merely dumb documents having no evidentiary value in absence of corroborative evidence and certificate u/s 65B of Indian Evidence Act,1872. Accordingly, the Ld. CIT(A) erred in extrapolating the alleged information in the said excel sheet to the year under consideration. 1.2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in sustaining addition of Rs. 6,04,345/-, calculated at 3% of alleged value of token notes and allegedfigur....
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.... circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 12,00,000/- u/s 69C of the Act, being alleged salary payment in cash to Mr. Shaibaz Khan, disregarding the fact that during cross-examination on oath before Ld. JAO, Mr. Shaibaz Khan had affirmed that he did not receive any salary in cash or in cheque from the appellant, hence, no addition should have been made in the absence of any other corroborative evidence. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 18,14,596/- u/s 69A of the Act, being aggregate of value of Indian Currency, Foreign Currency and Gold Coin, found and seized during the course of search u/s 132 of the Act, disregarding that the pre-requisites for making such addition u/s 69A of the Act were not fulfilled and therefore, no addition should have been made in the hands of the appellant. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that Ld. JAO's reliance on statements recorded u/s 132(4) of the Act was not misplaced disregarding the affidavit dated 23.01.2023, filed by the appellant before Ld. ....
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....e received cash for freight charges for export through Salalah Port for which no invoices were raised. The Ld. AO proceeded to consider these receipts as unaccounted income of the assessee. Accordingly, the assessee was show-caused during the course of assessment proceedings. 4.3 The assessee opposed any such addition, inter-alia, on the ground that the recorded statement stood retracted vide affidavit dated 23.01.2023. The notings were mere rough jotting of maximum rate that could be charged from customers. The assessee was an exporter and not the transporter who will charge freight for the goods. The exports were generally on FOB basis only. The excel sheet was prepared for noting purposes only. The statement was involuntary and recorded under pressure. Further, all the freight charges were included in the exports bills and actual freight charges as received by the assessee were offered for taxation. The addition was on the basis of loose paper which does not form part of assessee's regular books of accounts and the same could not be considered as cogent evidence without any corroboration thereof. Reference was made to various judicial decisions to support the argument. The as....
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....ed to the assessee but related to independent business being carried out by Mr. Shaibaz Khan as money transfer agent against commission. The assessee did not pay any salary to him for this work nor charged any rent or expenses for using office premises. 5.3 The aforesaid explanation of the assessee stood rejected by Ld. AO. The amount paid under such token aggregated to Rs. 470.26 Lacs. After adjusting the alleged cash freight receipt for Rs. 28.83 Lacs, the remaining amount of Rs. 441.43 Lacs was added to the assessee's income as unexplained expenditure u/s 69C. 6. Unverifiable / Suspicious purchases The assessee made purchases of Rs. 9,69,660/- from M/s Aaravo Reins Wasser Pvt. Ltd. which was a non-filer. In support of the transactions, the assessee furnished purchase invoices, corresponding export invoices, shipping bills, bank statement evidencing payment through banking channels etc. However, Ld. AO estimated profit of 4% on these purchases to make addition of Rs. 38,786/- u/s 69C. However, this addition has already been deleted by Ld. CIT(A) and the same is not the subject matter of assessee's appeal before us. 7. Salary given to Shri Shaibaz Khan for Rs. 12 Lacs ....
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....ssessee during assessment proceedings. The aforesaid transactions were summarized as under: - No. Party Name Amount 1. Vinodbhai, Vandan Garments 9,00,000/- 2. Farrazbhai 5,50,000/- 3. Magan Bhai 3,00,000/- 4. Enjoy Impex 22,00,000/- 5. Chat with Danish 16,14,763/- Total 55,64,763/- 8.3 The assessee stated that the aforesaid transactions were not related to assessee's business but related to angadiya business of Mr. Shaibaz Khan. The assessee had nothing to do with these transactions. Mr. Shaibaz Khan acted as money agent who, at the instruction of the payer, received cash and transferred the cash to the recipient against token as identification of parties. However, Ld. AO rejected the same and made addition of Rs. 55,64,763/- for all these transactions. 9. Undisclosed Income addition for Rs. 18,14,596/- During survey proceedings on assessee on 16.01.2023, following items were found and valued: - No. Item Qty. 1. USD 10070 2. Riyal 4000 3. Indian Rupees 9,16,500/- 4. Gold Coin 10 Grams The above items were valued at Rs. 18,14,596/-. The assessee could not p....
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....range or financial years for which these transactions were related to. The Ld. AO extrapolated the data found in the document to the year under consideration without accounting for the actual volume of exports in this specific year. The total exports to Salalah Port during the period from AYs 2020-21 to 2023-24 were 28,560 cartons. The unaccounted freight charges on 1696 cartons was accordingly spread over various assessment years in proportion to actual cartons exported in these years. The said computation restricted impugned addition to Rs. 7,49,975/- for this year. 11.3 It was further held by Ld. CIT(A) that currency notes as found attached with slips stemmed from same business of garments exports. The amounts mentioned in the slips found with small currency notes were flowing from and resulted out of unaccounted sales of assessee's garment business only. These slips could not be considered to be arising out of angadiya business as stated to be carried out by Shri Shaibaz Khan. At the same time, treating entire gross amount as unexplained expenditure was legally not justified since the nature and source of amounts could clearly be identified as stemming from unaccounted busin....
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....of salary to a key person managing the unrecorded transaction was a logical consequence of business arrangement which stood established by the seized document. Therefore, this addition was confirmed against which the assessee is in further appeal before us. 11.7 On the issue of misc. addition of foreign currency etc., it was held that these items were found from the possession of the assessee at his business premises and the primary onus was on assessee to explain the same. The explanation of the assessee that he acted as custodian for foreign clients was self-serving. The assessee failed to produce any corroborative evidence to substantiate this claim. There was no confirmation letter from Yemeni clients and no documents was seized during search which would indicate such safe custody arrangement. Therefore, the addition of Rs. 18,14,596/- was confirmed against which the assessee is in further appeal before us. Our findings and Adjudication 12. From the facts, it emerges that the assessee is engaged in export of readymade fabric and garments on FOB basis through his proprietorship concern M/s Zeeson. Pursuant to search action on 18.01.2023, impugned assessment has been fra....
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....(258 ITR 654) & the decision of Hon'ble Madhya Pardesh High Court in Manmohan Sadan (304 ITR 52).On the basis of these decisions, it has been held that only profit element embedded in these transactions is to be considered as the income of the assessee. The aggregate of such transactions have been pegged at Rs. 5,22,90,963/- (Rs.4,70,26,200/- plus Rs. 55,64,763/-) on which Ld. CIT(A) has applied GP rate of 3% considering the profitability trend of the assessee as per audited accounts. 14. We are of the considered opinion that all the three issues have been clinched in correct perspective by Ld. CIT(A). It could clearly be seen that the assessee is solely engaged in business activities only and the only source of income is business activities. The assessee does not act as a money changer. Whatever transactions are found recorded, the same stem from unaccounted business receipts only. On these facts, the action of Ld. CIT(A) in making estimation of GP on these transactions could not be faulted with except to the extent of application of GP rate. From profitability trend as per audited accounts, it could be ascertained that the assessee's average GP rate for 5 years is less than 1%....
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...., the assessee, vide his reply dated 16.05.2024 to Ld. AO, demonstrated that it had cash balance of Rs. 2.57 Lacs and another cash balance of Rs. 9,69,908/- was available in the books of Shri Shaibaz Khan which has not been considered by Ld. CIT(A). In the absence of any rebuttal to this fact, the addition, to that extent could not be sustained. With respect to Gold coin of 10 Gram, it was stated by the assessee that this coin received in gift in the year 2022 and the value thereof did not exceed Rs. 50,000/-. There is no fact on record that this coin was purchased by the assessee during this year only. In the absence of any rebuttal to assessee's explanation, the addition, in this respect, could also not be sustained. The remaining addition represents foreign currency of USD 10070 and Riyal 4000 which are stated to be belonging to Shri Abobakar Abdhullah Saif (a Yemeni national) who happen to be assessee's clients. The currency is stated to be kept in safe custody for use during his visits to India as and when required. In support, the assessee had placed on record confirmation of the said party. However, no independent verification of the same has been done by Ld. AO. By fu....