TaxTMI 
TaxTMI 
TaxTMI 
2008 (4) TMI 341
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.... and there were claims and counter claims leading to exaggerated workings done for making undue claims by the partners inter se. 3. That the learned Assessing Officer and the learned Commissioner (Appeals) failed to appreciate that there was neither any books of account nor any supporting bills, vouchers, etc. or assets to support and substantiate the claim of the department that appellant firm earned unaccounted income of Rs. 2,50,97,550 during the year. 4. That further the learned Commissioner (Appeals) even failed to appreciate that the accounts in the seized documents have been prepared without considering the opening stock of the respective year, whereas closing stock has been considered for arriving at the G.P. and hence his reliance on these rough papers for calculating net profit of the assessee is arbitrary, baseless and unwarranted and thereby confirming assessing officers order. 5. That the order of the learned Commissioner (Appeals) has further erred in confirming arbitrary unwarranted and based on irrelevant material order of assessing officer the said should be quashed and your appellant be given such relief(s) as prayed for. 2. At the time of hearing before us....
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....ent can be considered as belonging to Sri Arun Kumar Goenka and not the assessee, which is a partnership firm. The assessee-firm has a separate place of business where its books of account and documents are kept. Any books of account and documents found from the business premises of the assessee can only be considered as books of account and documents belonging to the assessee, NC. (ii) Even if it is held that the presumption under Section 292C is applicable and the papers are to be considered in the hands of the assessee, the presumption under Section 292C is a rebuttable presumption. If the entirety of the facts of the assessees case is considered, it will lead to the conclusion that the assessee does not have any undisclosed income. Such facts are- (a) The assessee has maintained regular books of account, which are duly audited. (b) Its entire sales and purchases are vouched and verifiable. (c) Search has taken place at the business premises of the assessee and no unaccounted stock, cash or debtors were found. It is impossible to carry on any business outside the books without having any unrecorded stock, cash or debtors. (d) During the course of search of the assessee....
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....Rs. 1,57,39,874 against it is mentioned "NF". It is to be noted that the cash balance is an excessively high and very abnormal and absurd inasmuch as that the cash balance is exceeding the amount of profit for the year of Rs. 69,59,298 shown in page AKG-23. 3. On page AKG-24, there is an item "Share Investment" amounting to Rs. 6,99,000 against which "NF" is mentioned. The said item on page AKG-22 increases to Rs. 21,99,000 whereas no such shares were found during the search, neither in the Demat Accounts nor in Physical form. It is to be noted that there are no investments in shares as per the audited accounts of the assessee in any of the financial years concerned. 4. On analyzing the bifurcated "NF" accounts from pages AKG-23 & AKG-24 one would observe that against purchase cost of Rs. 1,45,52,862,there is a sale of Rs. 1,56,20,143 and stock of Rs. 1,40,07,083 leaving a gross profit of Rs. 1,50,74,364 which happens to be 96.50 per cent of the turnover, which is totally absurd. 5. On page AKG-25 there is no mention against stock that whether it is "NF" or books again the stock as per audited statement of accounts is Rs. 3,56,62,317 which is much higher than the stock mentio....
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....rmal Prints 1,371,030 Loans repaid 3,960,578 Paid for purchases (Net purchases - Creditors outstanding) 17,182,996 Total 22,514,604 Again the net increase in debtors "NF" from financial years 2000-01 to 2001 -02 is Rs. 2,01,45,306 whereas the sales "NF" is Rs. 82,02,754 suggests that the entire sales are made on credit and a huge amount is paid to the debtors by the assessee. 11. On analyzing the bifurcated "NC" accounts from page AKG-29 it can be realized that against a purchase of Rs. 6,75,06,024 there is a closing stock of Rs. 4,16,73,891 and Rs. 2,24,90,335 is gross loss which means a GP margin of (-) 673 per cent. How and why one should continue such business. 12. On page AKG-30 there is an item on assets side "NC Collection" against which it is mentioned "Books", however no such figure is traceable in the audited statements of accounts. 13. On page AKG-30 of NC (Nirmal Collections) Balance Sheet for financial year 2001-02, there is a credit balance of NFPL (Nirmal Fashions (P.) Ltd.) amounting to Rs. 2,91,10,495 whereas there is no such corresponding debit balance on page AKG-22 in the name of NC (Nirmal Collections), which contains balance sheet for financial ....
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....TD 85 (Mumbai)(TM); (b) S.K. Gupta vs. Dy. CIT (1998) 62 TTJ (Del) 666; (c) Satnam Singh Chhabra vs. Dy. CIT (2002) 74 TTJ (Lucknow) 976; (d) Chander Mohan Mehta vs. Asstt. CIT (Inv.) (1999) 65 TTJ (Pune) 327 : (1999) 71 ITD 245 (Pune); (e) Atul Kumar Jain vs. Dy. CIT (1999) 64 TTJ (Del) 786; (f) Asstt. CIT vs. Sri Radheshyam Poddar (1992) 41 ITD 449 (Cal); (g) Asstt. CIT vs. Kences Foundation (P) Ltd. (2006) 203 CTR (Mad) 249 : (2007) 289 ITR 509 (Mad); (h) Bimal Kumar Singhania vs. Dy. CIT (2006) 100 TTJ (Kol) 790 : (2007) 15 SOT 2 (Kol)(URO). 5. The learned departmental Representative, on the other hand, relied upon the orders of the authorities below. He stated that the documents were found from the bedroom of Sri Arun Kumar Goenka, who is husband of Smt. Asha Goenka, who is partner in the firm NC. Thus, the document was effectively found from the bedroom of the partner. Sri Arun Kumar Goenka is director in NFPL. Therefore, the documents mentioned as AKG/3 were found from the bedroom of the partner/director of the assessees and it cannot be said that these documents were found from a third party or outsider. The activity of the firm/company is carried out by its ....
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....ted in the purchases. In view of the above, the learned departmental Representative submitted that the order of the assessing officer, which is sustained by the Commissioner (Appeals) should be upheld. 6. In the rejoinder, it is stated by the learned Counsel that before the Settlement Commission the assessee never admitted that these documents belonged to the assessee. On the other hand, the specific argument of the assessees counsel before the Settlement Commission was that these documents cannot be relied upon. The learned Counsel referred to page-7 of the order of the Settlement Commission passed under Section 245D(1) of the Income Tax Act. He also submitted that the income disclosed at Rs. 3 crores by Sri Santosh Kumar Goenka during the course of search and subsequently was the consolidated income on behalf of the entire Nirmal Group searched by the revenue authorities which included the following 10 entities: (i) Sri Arun Kumar Goenka (ii) Sri Santosh Kumar Goenka (iii) Sri Virendra Kumar Goenka (iv) Smt. Suchita Goenka (v) M/s. Nirmal Creations (vi) M/s. Nirmal Emporium (P.) Ltd. (vii) M/s. Nirmal Dyeing & Printing (P) Ltd. (viii) M/s. Nirmal Fashions (P) Ltd....
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.... account, other documents, money, bullion, jewellery or other valuable 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 persons 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. From the above it is evident that Section 292C is a presumptive provision where certain facts are to be presumed by operation of law. However, it is a settled law that such presumptions are rebuttable presumptions. As per Clause (i), it is to be presumed that the books of account or documents belong to the person from whose possession or control these were found. As per Clause (ii) it is to be presumed that the contents of the documents are true. Now the papers were found from the bedroom of Sri Arun K....
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.... by the learned Counsel that all the items of Profit and Loss Account and Balance Sheet prepared on the basis of assessees books of account do not found place in the documents marked as AKG/3. If the presumption of the assessing officer that the document AKG/3 is the consolidated result of the Profit and Loss Account and Balance Sheet of the assessees business which is carried out as per books of account as well as outside the books of account, then necessarily all the Items in the assessees Profit and Loss Account and Balance Sheet prepared on the basis of books of account must found place in the documents marked as AKG/3. Another more significant thing pointed out by the learned Counsel is that in some of the years the closing stock in the assessees books of account is higher than the closing stock in the document AKG/3 of the relevant period. One such example is the seized document AKG/3, page-21 which is the Trading & Profit and Loss Account of NFPL for the year 2001-02 where the closing stock is Rs. 2,25,17,321. However, as per the actual books of account of NFPL for the year 2001-02, the closing stock is Rs. 3,42,74,559. If the loose papers found are the consolidated result o....
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....have already been mentioned by us while considering the assesses contention, It is not necessary to discuss in detail each and every discrepancy of such nature. A few examples given by us above are good enough to draw the inference that the presumption made by the assessing officer while determining the undisclosed income is not correct. Moreover, as we have already mentioned, the presumption under Section 292C is a rebuttable presumption and all the facts are to be considered before drawing an inference of undisclosed income on the basis of loose papers. As per the presumption of the assessing officer, the assessee is carrying on the business of purchase and sale of saree outside the books on large scale which has resulted in the huge income which is not recorded in the assessees books of account every year. However, during the course of search of the assessees premises, no unrecorded stock, cash or other assets were found. The revenue has searched the business premises of the firm/company as well as the residential premises of the partners/directors. Not a single evidence of purchase or sale outside the books is found. In our opinion, it is impossible to carry on business on a hu....