LATE SMT. SUDESH CHAWLA L/H SHRI PREM CHAWLA,BHOPAL vs. THE ACIT 1(2), BHOPAL

PER BENCH:

In the above captioned appeals, 21 appeals are at the

instance of respective assessee(s) and are directed against the

respective ordersof Ld. Commissioner of Income Tax(Appeals), (in

short ‘CIT(A)’), Bhopaland Ld. ACIT 1(2), Bhopal as under :- 2

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Name of Assessment Date of Date of Section assessee Year order of order of under CIT(A)_1 ACIT-1(2) which passed Late Smt. 2000-01 to 30.03.2015 19.03.2013 153C Sudesh 2005-06 r.w.s. Chawla and 143(3) 2006-07 143(3) Prem Chawla 2000-01 to 30.03.2015 19.03.2013 153C 2005-06 r.w.s. and 143(3) 2006-07 143(3) Smt. Sarita 2000-01 to 31.03.2015 19.03.2013 153C Chawla 2005-06 r.w.s. and 143(3) 2006-07 143(3)

Revenue’s appeal No.ITA/405/Ind/2015 in the case of Late

Smt. Sudha Chawla for Assessment Year 2006-07 is directed

against the order of Ld. Commissioner of Income Tax(Appeals), (in

short ‘CIT(A)’), Bhopal order dated 30.03.2015.

heard together and are being disposed off by this common order for

the sake of convenience and brevity.

Heir Shri Prem Chawla) raised following grounds of appeal:-

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Assessment Year 2000-01, IT(SS)A No.158/Ind/2015

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.5,86,530/- being 1/10th of the total purchases of Rs.358,65,299/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying and particular item of disallowable nature. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.34,770/- being 1/10th of the total freight&cartage of Rs.3,47,702/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.16,258/- being 1/10th of the total salary& wages of Rs.1,16,580/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.16,258/- being 1/10th of the total salary & wages of Rs.1,16,580/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.3,40,000/- being unexplained cash payment made without accepting the explanation offered by the assessee and without considering the facts properly. 7. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.10,01,000/- made on account of security deposits without considering the explanation offered by the appellant and without considering the facts properly. 8. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 9. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c). 10. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing. Assessment Year 2002-03, IT(SS)A No.160/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside 5

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.7,72,566/- being 1/10th of the total purchases of Rs.77,25,658/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying and particular item of disallowable nature. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.77,721/- being 1/10th of the total freight&cartage of Rs.7,77,209/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.18,025/- being 1/10th of the total salary& wages of Rs.1,80,250/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.34,814/- being 1/10th of the total salary & wages of Rs.3,48,140/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 7. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c). 8. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing.

Assessment Year 2003-04, IT(SS)A No.161/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.9,62,410/- being 1/10th of the total purchases of Rs.96,24,102/- without considering the fact that the entire 6

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group disallowance was made arbitrarily, without any concrete basis and without specifying and particular item of disallowable nature. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.52,590/- being 1/10th of the total freight & cartage of Rs.5,25,895/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.22,067/- being 1/10th of the total salary& wages of Rs.2,20,670/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.33,836/- being 1/10th of the total salary & wages of Rs.3,38,362/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.3,50,000/- made on account of security deposits without considering the explanation offered by the appellant and without considering the facts properly. 7. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 8. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c). 9. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing. Assessment Year 2004-05, IT(SS)A No.162/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.25,46,873/- being 1/10th of the total purchases of Rs.2,54,68,732/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying and particular item of disallowable nature. 7

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.1,12,127/- being 1/10th of the total freight & cartage of Rs.11,21,273/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.28,818/- being 1/10th of the total salary& wages of Rs.2,88,176/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.1,29,087/- being 1/10th of the total salary & wages of Rs.12,90,872/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.14,50,843/- made on account of security deposits without considering the explanation offered by the appellant and without considering the facts properly. 7. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in giving part relied of Rs.2,50,000/- only out of total addition of Rs.12,16,941/- on account of addition in capital account without considering the explanation offered by the appellant and without considering the facts properly 8. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.36,22,085/- being 1/10th of the total purchases of Rs.3,62,20,852/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying and particular item of disallowable nature. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.99,447/- being 1/10th of the total freight & cartage of Rs.9,94,465/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.21,644/- being 1/10th of the total salary& wages of Rs.2,16,443/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.73,865/- being 1/10th of the total salary & wages of Rs.7,38,646/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.16,50,000/- made on account of security deposits without considering the explanation offered by the appellant and without considering the facts properly. 7. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 8. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c). 9. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing. Assessment Year 2006-07, ITA No.441/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.38,69,619/- being 1/10th of the total purchases of Rs.3,86,96,192/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying and particular item of disallowable nature. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.1,35,825/- being 1/10th of the total freight & cartage of Rs.13,58,248/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.42,518/- being 1/10th of the total salary& wages of Rs.4,25,176/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.2,23,260/- being 1/10th of the total salary & wages of Rs.22,32,600/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.14,00,000/- made on account of security deposits without considering the explanation offered by the appellant and without considering the facts properly. 7. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in giving part relied of Rs.38,86,483/- by giving relief of Rs.90,68,460/- only out of total addition of Rs.1,29,54,943/- on account of suppressed sales without considering the explanation offered by the appellant and without considering the facts properly 8. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.24,39,857/- on account of difference in stock as per the Commercial Tax Department and as per the books of account without accepting the explanation offered by the assessee that the stock of the assessee is duly tallied with the excise records and there is no difference as such. 9. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.2,85,709/- on the basis of loose papers on which certain expenses are mentioned without accepting the explanation offered by the assessee that all the expenses mentioned on these loose papers are duly recorded in the books of account for which necessary information was submitted during the course of assessment proceedings.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 10. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 11. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c). 12. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing.

(ii) Revenue has raised following grounds of appeal in the case of late Smt. Sudesh Chawla (Through Legal Heir Shri Prem Chawla); Assessment Year 2006-07, ITA No.405/Ind/2015

On the facts and in the circumstances of the case, the CIT(Appeals) has erred in: 1.Restricting the disallowance of purchase and wages and salary to 10% of total expenses as against the disallowance of 40% of purchase and freight-cartage expenses and disallowance of 33.33% of wages and salary expenses made by the A.O 2.Deleting the addition of Rs.15,32,527/- made by the AO on account of explained capital. 3.Deleting the addition of Rs.90,68,460/- made by the AO on account of suppressed sales. 4.The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date, the appeal is finally heard for disposal.

(iii) Assessee Shri Prem Chawla has raised following grounds of appeal :-

Assessment Year 2000-01, IT(SS)A No.170/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.3,61,730/- being 1/10th of the total purchases of Rs.36,17,299/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying and particular item of disallowable nature. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.13,835/- being 1/10th of the total salary& wages of Rs.1,38,352/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.14,627/- being 1/10th of the total salary& wages of Rs.1,46,273/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.8,74,400/- made on account of security deposits without considering the explanation offered by the appellant and without considering the facts properly. 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 7. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c). 8. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing.

Assessment Year 2001-02, IT(SS)A No.171/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.4,95,333/- being 1/10th of the total purchases of Rs.49,53,330/- without considering the fact that the entire

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group disallowance was made arbitrarily, without any concrete basis and without specifying and particular item of disallowable nature. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.19,700/- being 1/10th of the total salary& wages of Rs.1,97,000/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.19,280/- being 1/10th of the total salary& wages of Rs.1,92,795/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.4,00,000/- made on account of security deposits without considering the explanation offered by the appellant and without considering the facts properly. 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C.

Assessment Year 2002-03, IT(SS)A No.172/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.6,71,606/- being 1/10th of the total purchases of Rs.67,16,065/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying and particular item of disallowable nature. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.126,325/- being 1/10th of the total salary& wages of Rs.2,63,250/- without considering the fact that the 13

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C.

Assessment Year 2003-04, IT(SS)A No.173/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.10,98,148/- being 1/10th of the total purchases of Rs.1,09,81,477/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying and particular item of disallowable nature. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.133,240/- being 1/10th of the total salary& wages of Rs.3,32,400/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.43,031/- being 1/10th of the total salary& wages of Rs.4,30,310/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in giving relief of Rs.4,75,000/-only out of total addition of Rs.6,52,100/- and thereby confirming the addition of Rs.1,77,100/- without considering the explanation offered by the appellant and without considering the facts properly.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 7. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c). 8. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing.

Assessment Year 2004-05, IT(SS)A No.174/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.12,99,114/- being 1/10th of the total purchases of Rs.1,29,91,144/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying and particular item of disallowable nature. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.21,478/- being 1/10th of the total salary& wages of Rs.2,14,778/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.64,076/- being 1/10th of the total salary& wages of Rs.6,40,755/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in giving relief of Rs.16,40,000/- only out of total addition of Rs.18,52,520/- and thereby confirming the addition of Rs.2,12,520/- without considering the explanation offered by the appellant and without considering the facts properly. 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.1,29,200/- being agriculture income treated as income from other sources without considering the explanation offered by the appellant and without considering the facts properly.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 7. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 8. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c). 9. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing.

Assessment Year 2005-06, IT(SS)A No.175/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.25,28,512/- being 1/10th of the total purchases of Rs.2,52,85,121/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying and particular item of disallowable nature. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.52,233/- being 1/10th of the total salary& wages of Rs.5,22,330/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.96,442/- being 1/10th of the total salary & wages of Rs.9,64,416/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.2,95,000/- made on account of security deposits without considering the explanation offered by the appellant and without considering the facts properly. 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in giving relief of Rs.3,01,000/- only out of total addition of Rs.4,00,000/- and thereby confirming the addition of Rs.99,000/- on account of purchase of property. The Ld. CIT(A) further erred in enhancing the addition by Rs.3,38,810/- on account of registration expenses incurred

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group on purchase of property without considering the explanation offered by the appellant. 7. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in giving relief of Rs.5,33,000/- only out of total addition of Rs.7,45,520/- and thereby confirming the addition of Rs.2,12,520/- without considering the explanation offered by the appellant and without considering the facts properly 8. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 9. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c). 10. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing.

Assessment Year 2006-07, ITA No.443/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the addition of Rs.25,42,596/- being 1/10th of the total purchases of Rs.2,54,25,960/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying and particular item of disallowable nature. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.30,223/- being 1/10th of the total salary& wages of Rs.3,02,226/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.2,240,388/- being 1/10th of the total salary & wages of Rs.24,03,875/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.7,80,000/- made on account of

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group unsecured loan without considering the explanation offered by the appellant and without considering the facts properly. 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in giving relied of Rs.1,00,000/- only out of total addition of Rs.2,00,000/- on account of suppressed sales without considering the explanation offered by the appellant and without considering the facts properly

(iv) Assessee Smt. Sarita Chawla has raised following grounds of appeal:- Assessment Year 2000-01, IT(SS)A No.164/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ACIT erred in confirming the addition of Rs.34,800/- on account of income from computer programming without considering the fact that the said addition was made arbitrarily without any concrete basis. 3. That on the facts and in the circumstances of the case, the ACIT erred in confirming the addition of Rs.82,350/- being balance of opening capital without considering the explanation offered by the appellant and without 18

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group considering the fact that the advances were given out of current year’s income only. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c). 6. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing.

Assessment Year 2001-02, IT(SS)A No.165/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ACIT erred in confirming the addition of Rs.36,600/- on account of income from computer programming without considering the fact that the said addition was made arbitrarily without any concrete basis. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c). 5. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing.

Assessment Year 2002-03, IT(SS)A No.166/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 2. That on the facts and in the circumstances of the case, the ACIT erred in confirming the addition of Rs.44,300/- on account of income from computer programming without considering the fact that the said addition was made arbitrarily without any concrete basis. 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c).

Assessment Year 2003-04, IT(SS)A No.167/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ACIT erred in confirming the addition of Rs.34,650/- on account of income from computer programming without considering the fact that the said addition was made arbitrarily without any concrete basis. 3. That on the facts and in the circumstances of the case, the ACIT erred in confirming the addition of Rs.1,99,900/- being unexplained investment in the firm M/s AtulSolvoChemwithout considering the explanation offered by the appellant and without considering the fact that the said transaction is duly reflected in the books of account. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c).

Assessment Year 2004-05, IT(SS)A No.168/Ind/2015

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ACIT erred in giving relied of Rs.2,000/- only out of total addition of Rs.50,640/- on account of income from retail trade without considering the explanation offered by the appellant and without considering the fact that the said addition was made arbitrarily without any basis. 3. That on the facts and in the circumstances of the case, the ACIT erred in confirming the addition of Rs.1,87,500/- being unexplained loan and sundry creditors arbitrarily without considering the explanation offered by the assessee that the said loan is taken in the personal capacity andsundry creditors are for expenses and purchase of material. 4. That on the facts and in the circumstances of the case, the ACIT erred in confirming the addition of Rs.1,51,775/- by treating the agriculture income as income from undisclosed sources without accepting the explanation offered by the assessee that the assessee has taken agriculture land on lease and on the same agriculture activities were done and necessary details regarding lease agreement, details of agriculture produce sale receipts were submitted during the course of assessment proceedings. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c). 7. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing.

Assessment Year 2005-06, IT(SS)A No.169/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside 21

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ld. ACIT erred in confirming the addition of Rs.92,426/- on account of income from computer programming stating that this ground was not raised in first appeal without giving specific finding in the merit of addition. 3. That on the facts and in the circumstances of the case, the Ld. ACIT erred in confirming the addition of Rs.8,73,364/- on account of capital account without accepting the explanation of the assessee that the addition in the capital account is made out of the transfer from personal account and loan taken from relatives for which necessary information was submitted during the course of assessment proceedings. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.5,90,619/- being 1/10th of the total purchases of Rs.59,06,192/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.43,608/- being 1/10th of the total salary& wages of Rs.36,080/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.13,048/- being 1/10th of the total salary & wages of Rs.22,32,600/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature 7. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 8. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c). 9. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing.

Assessment Year 2006-07, ITA No.442/Ind/2015 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside 22

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 2. That on the facts and in the circumstances of the case, the ld. ACIT erred in confirming the addition of Rs.12,14,092/- being 1/10th of the total purchase of Rs.1,21,40,919/- without considering the fact thaqt the entire disallowance was made arbitrarily, without any concrete basis and without specifying anyparticular item of disallowable nature. 3. That on the facts and in the circumstances of the case, the ld. ACIT erred in confirming the addition of Rs.5,094/- being 1/10th of the total purchases of Rs.50,936/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 4. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.95,352/- being 1/10th of the total salary expenses of Rs.9,53,523/- without considering the fact that the entire disallowance was made arbitrarily, without any concrete basis and without specifying any particular item of disallowance nature. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the charging of interest u/s 234A, u/s 234B and u/s 234C. 6. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the initiation of penalty proceedings u/s 271(1)(c). 7. That the appellant craves leave to add, to urge, to alter or to amend any of the ground of appeal on or before the date of hearing.

search u/s 132 of the Act were conducted at the residence of the

assessee(s) on 21.12.2005 at Bhopal. Simultaneously survey

operations u/s 133A of the Act were also carried out on the very

same day at various business concerns of the group. In the instant

appeal 3 assessee(s) are running following business concerns :-

(i) Late Smt. Sudesh Chawla 23

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group (Through L/H Shri Prem Chawla) Partners of M/s Atul Solvo Chemical & Prop. M/s Anand Organics (ii) Shri Prem Chawla Partner of M/s Atul Solvo Chemical, Prop.M/s Anand Paints &Anand Industries (iii) Smt. Sarita Chawla Partnerof Sarita Consultancy& Prop. Anand Coatings 5. In the instant appeals we are dealing with the 3 individuals

named herein above, therefore the partnership firm M/s. Atul Solvo

Chemical is not under consideration. During the course of search

and seizure operations u/s 132 of the Act and during the survey

actions u/s 132(A) of the Act certain documents were found and

seized. In the statement given on 5.1.2006 u/s 132(4) of the Act

Shri Prem Chawla surrendered Rs.9,50,000/- on behalf of his

mother Late Smt. Sudesh Chawla, Rs.12,00,000/- was surrendered

in the name of Shri Prem Chawla and Rs.3,50,000/- was

surrendered in the hands of wife Smt. Sarita Chawla. Consequent 24

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group to search operations assessee(s) furnished returns u/s 153A of the

Act. Assessments were completed u/s 143(3) of the Act after making

additions. Assessee(s) appeal before Ld. CIT(A) was partly allowed.

Matter thereafter reached before this Tribunal. Vide order dated

31.03.2011 orders of Ld. CIT(A) were set aside and the matter of the

assessment orders in question before us were restored to the file of

Ld. A.O for making assessments afresh after examining the

documents which were submitted for the first time before Ld. CIT(A)

and the Ld. A.O was not given any opportunity to verify the same.

In view of the directions of this Tribunal fresh notices were issued

and the assessments were reframed again after making various

additions. Against the same appeals were filed before Ld. CIT(A)

and the assessee(s) are partly succeeded. Both the assessee and

revenue filed appeals before the Tribunal, however some of the

appeals were dismissed due to low tax effect on account of CBDT

Circular No. 17 of 2019 dated 8th August, 2019. Now all the 3

assessee(s) are in appeal before the Tribunal and Revenue is in

appeal only for Assessment Year 2006-07 in the case of Late Smt.

Sudesh Chawla. 25

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 6. We will first take up common issues and thereafter we will

deal with remaining grounds of each assessee(s) separately.

appeals of the assessee(s) and the same reads as below :-

That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in not giving the clear finding regarding the grounds taken that the set aside assessment was made arbitrarily without following the directions of the Hon'ble I.T.A.T. properly and without considering the fact that regular and proper books of account are maintained and the Hon'ble CIT(A) has allowed the appeal after considering the documents submitted at the time of appellate proceedings and the Hon'ble I.T.A.T. has set aside the assessment only for the reason the all the aforesaid documents were submitted for the first time at the appellant stage only. 8. Prime facie this ground is general in nature and since no

submissions have been made before us with regard to this ground,

we consider the same to be “ground not pressed”. Even otherwise

we have perused the impugned orders of Ld. CIT(A) and find that

the issue raised by the assessee has been duly addressed in the

appellate order in para 5.4 of the impugned order dated 30.3.2015

issued in the case of Late Smt. Sudesh Chawla and similar is the

case of other two assessee(s). Therefore this common Ground No.1

in all the appeals of the 3 assessee(s) are dismissed as not pressed.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 9. Now we take up the common issue relating to disallowance of

purchases and disallowance of other direct and indirect expenses

which have been raised by the following assessee(s)

(i) Late Smt. Sudesh Chawla Assessment Year 2000-01 Ground No. 2,3 & 4 Assessment Years 2001-02 to 2006-07 Ground No. 2,3,4&5 (ii) Revenue’s appeal in the case Of Late Smt. Sudesh Chawla Assessment Year 2006-07 Ground No.1 (iii) Prem Chawla Assessment Year 2000-01 to 2001-02 Ground No.2,3 & 4 Assessment Year 2002-03 Ground No. 2 & 3 Assessment Year 2003-04 Ground No.2,3&4 to Assessment Year 2006-07 (iv) Smt. SaritaC hawla Assessment Year 2005-06 Ground No. 4,5&6 Assessment Year 2006-07 GroundNo.2,3&4 10. On perusal of the above grounds we find that Ld. A.O has

taken a common course of action of disallowance of purchases

disallowance of some direct and indirect expenses. Therefore for

adjudication purpose we will take up the facts of late Smt. Sudesh

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Chawla and shall apply the decisions accordingly on the remaining

two assessee(s) also with regard to these grounds.

proceedings various documents were impounded and some were not

recorded in the regular books of accounts. In the statement of Shri

Prem Chawla admitted that due to lack of information about the

proper head some of the cash vouchers remained to be recorded.

During the assessment proceedings it was claimed that books of

accounts kept in computer were lost. Most of the staff and labour

were working for all the concerns and there were inter mixing of

transactions. Most of the expenses Freight, cartage charges, salary

were paid in cash. Ld. A.O could not verify the purchases. Though

the assessee contended that books of accounts were regularly

maintained and audited and due to reasons beyond his control

computer books could not retrieved. Thereafter the Ld.A.O though

has not disputed the quantum of sales in any of the assessee(s)

except for suppressed sale issue for Assessment Year 2006-07 in

case of Late Smt. Sudesh Chawla has not made any specific

observation about the sales figured and thus accepted the same. 28

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Ld. A.O completed the assessments making disallowance around

33.33% of the purchases and some of the expenses. When the

matter came before Ld. CIT(A) he sustained the disallowances to

10%. Now the assessee is in appeal before the Tribunal against the

additions confirmed by Ld.CIT(A) and Revenue is in appeal for A. Y.

2006-07 against the additions deleted by Ld.CIT(A).

GROUND ON DISALLOWANCE OF PURCHASE, WAGES &SALARY AND SALARY EXPENSES. GROUND NO. 2(A) UNEXPLAINED PURCHASE (Rs.4,65,192/-) AO. PB 4 CIT{A) PB 54{Findings PB 70) ITAT PB 113 Set-aside AO pg. 2 para 5

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group CIT{A) pg. 15-20 para 5.4 A.Y Purchases Purchases Disallowed Total disallowed Deptt. Assessee 2000-01 46,51,915 13,95,575 4,65,192 18,60,766 2001-02 58,65,299 17,59,589 5,86,530 23,46,199 2002-03 77,25,658 23,17,697 7,72,566 30,90,263 2003-04 96,24,102 28,87,230 9,62,410 38.49,640 2004-05 2,54,68,732 76,40,619 25,46,873 1,01,87,492 2005-06 3,62,20,852 78,66,255 36,22,085 1,14,88,340 2006-07 3,86,96,192 1,16,08,857 38,69,619 1,54,78,476 GROUND NO. 3 (A) UNEXPLAINED WAGES (11,519/-) AO. PB 5 CIT{A) PB 74 ITAT PB 113 Set-aside AO pg. 3 para 6 CIT{A) pg. 15-20 para 5.4

A.Y Wages Wages Disallowed Total disallowed Assessee Department 2000-01 1,15,193 11,519 26,878 38,397 2001-02 1,62,580 16,258 37,935 54,193 2002-03 1,80,250 18,025 42,058 60,083 2003-04 2,20,670 22,067 51,489 73,556 2004-05 2,88,176 28,818 79,240 98,058 2005-06 2,16,443 21,644 50,503 72,147 2006-07 4,25,146 42,518 99,197 1,41,715

GROUND NO 4 OF ASSESSEE UNEXPLAINED SALARY (A.Y. 2000-01)

AO. PB 5

CIT(A) PB 75

ITAT PB 113

Set-aside AO pg. 3 para 7

CIT(A) pg. 15-20 para 5.4

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group A.Y Salary Salary Disallowed Total disallowed Assessee Department 2000-01 1,03,110 10,311 24,059 34,370 2001-02 3,16,043 31,604 73,743 1,05,347 2002-03 3,48,140 34,814 81,232 1,16,046 2003-04 3,68,362 33,836 78,951 1,22,787 2004-05 12,90,872 1,29,087 3,01,203 4,30,290 2005-06 7,38,646 73,865 1,72,350 2,46,215 2006-07 22,32,600 2,23,260 5,20,940 7,44,200

FACTS

The addition of Unexplained Purchases, Freight & cartage, wages and salary debited in Trading account and unexplained salary debited in profit &loss account by Id AO are on the basis of following: -

1.Most of the expenses were made in cash. 2.With regard to Freight and cartage - Proper bills and vouchers were not furnished. 3.With regard to salary and wages - name of payee could not be verified. 4.The purchases made in cash were not verifiable

Thus, the Id AO considering the above, disallowed 40 of the purchases and Freight and cartage claimed in A.V. 2000-2001 to 2006-07. With regard to Salary &wages in trading account and Salary debited in profit and loss account, 1/3rd of the total expenses were disallowed. The appellant preferred appeal before Id CIT(A) and filed written submissions.

The Id CIT(A) considering the submissions and facts of the case and also on the basis of the following allegations, contended that the books of accounts were not correct and complete and thus disallowed the expenses at 10% of the total expenses:

A.In earlier assessment, it was stated that books of accounts maintained on computers were lost and could not be retrieved.

B.Sundry Creditors for purchase balance remain unchanged from year to year.

. C. In survey u/s 133A, carried out on 21.12.05 at different business premises of the appellant as well as of family members, all the accounts were maintained at business premises of appellant 31

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group D.LPS-l of 69 pages found and impounded during survey relates to cash voucher of M/s. Anand Organics was not recorded in books of accounts. E.Common pool of labour working for all concern of family members but expenses claimed separately.

Inter-mixing of transactions between the business concerns F. of family members.

Both the department and the assessee are in appeal against the above deletion and confirmation of addition. The following submissions are made:

SUBMISSIONS:-

a.The findings of Id AO may be seen. He has not pointed any specific defect in any expenditure. He states "some" of the vouchers are not properly maintained. The disallowance is ad hoc and without pointing any specific defect. {ReJer AO para5.2,6.2, 7.2)

b.The Id AO/ CIT(A) has not marked any specific vouchers of disallowable nature but summarily disallowed the large sum at the rate of 40 out of purchases. There is no basis of 40 or 10 as made out by Id AO and Id CIT(A).

It is pertinent to submit that the appeal relates to search cases. The time limit for issuance of notice u/s. 143(2) had already elapsed. Thus, the assessment is said to have been completed. It cannot be said that at the time of search the assessment was pending. A non-abated assessment can only be disturbed in respect of incriminating material found as a result of search. This is so held in

CIT vs Kabul Chawla 380 ITR 573 (Del)

CIT vs Gurinder Singh Bawa' 386 ITR 483{Bom.)

In our cases, no incriminating material has been found while making the additions in respect of aforesaid grounds. Whatever

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group incriminating material was found was already offered and tax was paid on same. No other material remains. In the present case, the addition is purely related to general grounds, which could have been a subject matter of regular assessment and not search assessment. Even in regular assessment, no addition can be made on ad hoc basis holding that "some" vouchers are unexplained.

The appellant maintains regular and proper books of account which are audited u/s 44AB of the Act. Auditor's Reports for different years are filed in Paper Book.

PB Ref. A.Y.

2001-02 PB 148-159

2002-03 PB 205-217

2003-04 PB 259-273

2004-05 PB 331-348

2005-06 PB 422-435

2006-07 PB 520-540

The auditor has not pointed out any discrepancies in the books of accounts.

4.The records of the appellant are governed by the Central Excise Laws. The assessee is maintaining the statutory records as prescribed under the said laws ,in RG 21 Part I & Part 11. The invoice prepared by the assessee is an excisable invoice and after preparation duly recorded in all the statutory records.

5.Case law:-

Pr. CIT vs Jagdish S. Patel84 taxmann.com 259 (Guj.)

Vijay Trading Co. 76 taxmann.com 366 (Guj)

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group The court held in above cases that when purchase made by assessee was found to be bogus, not entire amount covered under such purchases but profit element embedded therein would be subject to tax.

6.If the purchases are rejected, the sales would also be reduced. The goods of the appellant are subject to excise. Quantitative details were given with the return of income (alongwith Auditor's report in Form No. 3CD). To illustrative the quantitative data for F.Y. 2001-02 was given at PS 216-217.

7.The Ld. AO has observed that substantive details of expenses in trading and Profit and Loss account has not been filed, whereas the assessee has filed complete ledger accounts of expenses in question, which are as under: -

A.Y. PB Ref.

2001-02 PB 174-188

2002-03 PB 231-246

2003-04 PB 286-303

2004-05 PB 361-403

2005-06 PB 452-497

2006-07 PB 551-608

9.Non-production of books before the Id AO in the first round: - Ld AO in the first round (PB 4, Third para from top) has pointed out that assessee did not file any substantive details as he claimed that books of account maintained on computer have lost and cannot be retried. He made an assessment u/s. 144. However, Id CIT(A) in the first round at PS 48 para (b) has stated in fourth line that books of accounts and other documentswere seized in search.

Thus, the Id CIT(A) was not justified in relying on the findings of the ld AO. Moreover, the order of the Id AO and of the Id CIT(A) in the first round was set-aside by the Hon'ble ITAT for assessment afresh.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 10.The Id CIT(A) referring to one instance of unrecorded transaction in books of Anand Organics (LPS-169 pages), framed similar view for the period of six years covered by sec 153A. The act of drawing inferences, without any basis of evidence is not justified. Moreover, Shri Prem Chawla, who was confronted with the said documents have surrendered Rs.9.5 lakhs as undisclosed income in the hands of the appellant. 11.The disallowance was made simply saying that 'some of the vouchers are not properly maintained and names of the persons to whom amount paid could not be verified'. Thus, the AO has not marked any specific vouchers of disallowable nature but summarily disallowed the large sum of money on the basis of untenable conjectures and sumrises. The case law supporting are:

Dhakeswari Cotton Mills Ltd. Vs. CIT 1954 26 ITR 775 SC

In tax proceedings, addition has to be based on evidences. An addition cannot be made on a mere guess work, presumptions, conjuctures and surmises.

Lalchand Bhagat Ambica Ram Vs. CIT (1959) 371TR 288 (SC);

Umacharan Shaw &Bros. Vs. CIT (1959) 371TR 271 (SC)

Omar Salay Mohamed Sait Vs. CIT (1959) 371TR 151 (SC)

Nai Dunia News &Network Pvt Ltd. 171TJ 289 Trib.lndore

AO made adhoc disallowance for expenses holding that "some" vouchers were not verifiable. HELD, no specific defect is pointed out. 'A' has maintained proper books which has not been rejected. B. ACIT vs.Popular Art Palace (P) Ltd (1995) 82 Taxman 274 (JP.) (MAG)

It was held that since the addition is based on investigation on similar investigation conducted in earlier years and no new evidence was on record. Thus addition merely on past history of the case is not justified. C. Waidhan Engineering & Industries (P) Ltd v JCIT (2015) 60 taxmann.com 440 (Jabalpur – Trib.)

It was held that the fact that some expenditure was supported with self

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group made vouchers, could be a reason enough to reject books of account as a whole by Assessing Officer nor disallowances purely on basis of surmises and conjectures and without pointing out any specific defects in vouchers could be permissible and, consequently, addition to income of assessee made on account of such disallowance, was to be deleted. ACIT vs. Ganpati Enterprises Ltd (2013) 32 taxmann.com 262 (Delhi- Trib.) It was held that where Id AO failed to give details of expenses which were found unverifiable and made an ad hoc disallowance, said disallowance was to be deleted. The addition is purely based on conjunctures and surmises and liable to be deleted. 13. Per contra Ld. Departmental Representative vehemently

argued supporting the order of Ld. A.O and also submitted that the

assessee has failed to produce necessary documents to verify the

genuineness of the purchases and the expenses figure of wages,

freight & cartages and salary. Due to lack of such documents Ld.

A.O has rightly made the Ld. A.O to make the disallowance.

placed before us. The common issue raised by the respective

assessee(s) in following grounds relates to disallowance of purchase,

freight & cartages, wages and salary expenditure.

(i) Late Smt. Sudesh Chawla Assessment Year 2000-01 Ground No. 2,3 & 4

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Assessment Years 2001-02 to 2006-07 Ground No. 2,3,4 & 5 (ii) Revenue’s appeal in the case of Late Smt. Sudesh Chawla Assessment Year 2006-07 Ground No.1 (iii) Prem Chawla Assessment Year 2000-01 to 2001-02 Ground No.2,3 & 4 Assessment Year 2002-03 Ground No. 2 & 3 Assessment Year 2003-04 Ground No.2,3 & 4 to Assessment Year 2006-07 (iv) Smt. Sarita Chawla Assessment Year 2005-06 Ground No. 4,5 & 6 Assessment Year 2006-07 GroundNo.2, 3 & 4 15. Since we are taking the basis of the facts of Late Smt. Sudesh

Chawla we observe that Ld. A.O on the basis of documents

impounded during the course of search and survey carried out in

the case of assessee on 21.12.2005 and thereafter on observing that

books of accounts on computer were claimed to be lost, most of the

expenses were incurred in cash and the assessee have failed to

furnish the documentary evidence to prove the genuineness of the

purchases made disallowance of 40% of total purchases made for

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group assessment Year 2001-02 to 2006-07, 40% disallowance freight and

cartage expenditure for Year 2001-02 to 2006-07 and 1/3rd of

disallowance for wages and salary debited in Profit & Loss Account

in the following manner:-

A.Y Disallowance Disallowance Disallowance Disallowance out of out of freight out of wages out of salary purchase & Cartage & salary 2000-01 18,60,766 - 38,397 34,370 2001-02 23,46,199 1,39,080 54,193 1,05,347 2002-03 30,90,263 3,10,883 60,083 1,16,046 2003-04 38,49,640 2,10,358 73,556 1,22,787 2004-05 101,87,492 4,48,509 98,058 4,30,290 2005-06 114,88,340 3,97,786 72,147 2,46,215 2006-07 154,78,476 5,43,299 1,41,715 7,44,200

10% in the following manner:-

Purchases (Rs.) Freight& Cartage Wages & Salary Salary Expenses (Rs.) (Rs.) eRs.) AY. Total Disallow- Total Disallow- Total Disallow- Total Disallow- ance Expenses ance ance Expenses ance Expenses Expenses @10 % @10 % @ 10 % @ 10% 2000-01 46,51,915 4,65,191 - - 1,15,193 11,519 1,03,110 10,311 58,65,299 5,86,530 3,47,702 34,770 1,62,580 16,258 3,16,043 31,604 2001-02 2002-03 77,25,658 7,72,566 7,77,209 77,721 1,80,250 18,025 3,48,140 34,814 2003-04 96,24,102 9,62,410 5,25,895 52,589 2,20,670 22,067 3,38,362 33,836 ~ 2,54,68,732 25,46,873 11,21,273 1,12,127 2,88,176 28,818 12,90,872 . 1,29,089 2004-05 2005-06 3,62,20,852 36,22,085 9,94,465 99,446 2,16,443 21,644 7,38,646 73,S65 38

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group

2006-07 3,86,96,192 38,69,620 13,58,248 1,35,825 4,25,176 42,518 22,32,600 2,23,260 Thus the assessee get following relief in these assessment years.

Particulars Assessment years 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Disallowance 1860766 2346119 3090263 3849640 10187492 11488340 15478476 , by AO Purchases Disallowance 465191 586530 772566 962410 2546873 3622085 3869620 Confirmed .. Relief 1395575 1759589 2317697 2887230 7640619 7866255 11608856 ~ . 139080 310883 . 210358 448509 397786 543299 Disallowance - by AO , ' Freigbt&; 34770 77721 52589 99446 135825 Disallowance - 112127 Cartage Confirmed . 104310 233162 157769 336382 298340 407474 - Relief 38397 54193 60083 73556 98058 72147 141715 Disallowance By AO 11519 16258 18025 22067 28818 21644 42518 Wages & Disallowance "

Salary "Confirmed 26878 37935 42058 51489 69240 50503 99197 Relief . 34370 105347 116046 112787 246215 744200 Disallowance 430290 By AO Disallowance 10311 31604 34814 33836 129089 73865 223260 Salary Expenses Confirmed 27059 73743 81232 78951 301201 172350 520940 Relief

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 17. We observe that the assessee is carrying out the business

activities from past many years. Regular return of income were

filed even before the conducting of search and survey operations.

For most of the years books of accounts were audited. Similar type

of business of manufacturing and sale of industrial solvent and

thinners and sale of paints and thinners is carried out in the name

of other sister concerns.

the lower authorities have not raised any doubts on the

genuineness of sales shown by the assessee for Assessment Year

2000-01 to Assessment Year 2006-07 except for the issue of

suppressed sale which will be dealt by us in the subsequent paras.

The disallowance made by the A.O are not based on any material

evidence gathered during the course of search and survey or during

the assessment proceedings. It is discernable from the records that

the assessee is governed by Central Excise Laws and statutory

records as prescribed under such laws are being maintained for

making sales and purchase. If the Ld. A.O was not able to lay hands

on any documentary evidence to verify the genuineness of the 40

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group purchases, he should have resorted to gather reasonable fair

market value of goods used in similar type of industries by calling

necessary information, but Ld. A.O had not made any such efforts.

Even Ld. A.O has also not made efforts to know about the gross

profit or net profit offered in such type of industries. Ld. A.O has

also not referred to any such precedence of making the

disallowance of purchase and disallowance of these expenditure. In

short it seems that adhoc disallowance of purchase and expenses

have been made for want of verification. Hon'ble Apex Court in the

case of Dhakeshwari Cotton Mills Ltd V/s CIT (1954) 26 ITR 775 has

laid down ratio that “in tax proceedings addition has to be based on

evidences. An addition cannot be made on guesswork,

presumptions, conjectures and surmises”.

v. President Industries [2002J 258 ITR 654 (Guj.) held as under:-

In this case, during the course of survey conducted in the premises of the assessee, excise records were found which disclosed godown sales not disclosed in the books of account of the assessee. The Assessing Officer made addition of undisclosed income of the entire sale proceeds thereof. The Commissioner (Appeals) affirmed the addition b the Appellate 41

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Tribunal found that there was no material toindicate that the assessee made investments outside the books of account to make the alleged sales and held that the entire sale proceeds could hot have been added as undisclosed income of the assessee but the addition could be only of the profits embedded' in the sales. The Tribunal having declined to state a case, the Department applied to the High Court for art order calling for, a reference :

"Held, dismissing the application for reference, that the amount of sales could not represent the income of the assessee who had not disclosed the sales, The sides only represented the price received by the seller of the goods; only the realisation 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 that investment was also not disclosed, only the excess over the cost incurred could be treated as profit, ". 20. In the instant case also the only difficulty pointed out is that

the assessee has failed to produce the record relevant to purchase

and expenses but no further enquiry was made on the basis of

audit report furnished by the assessee, list of sundry creditors filed

therein, extracting information about the net profit and gross profit

rates offered in similar kind of industries in the business, the Ld.

A.O made abnormal disallowance which has resulted in assessing

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group the net profit to abnormal level of 70.70% for Assessment Year

2000-01 and also in the range of 35 to 50% for other assessment

years which by no scale can be acceptable. Ld. CIT(A) has also

resorted to the same pattern but giving partial relief to the assessee

by confirming disallowance to 10%.

following judicial precedence in our considered view the sales

declared by the assessee in the respective returns of income should

be taken as a basis and net profit rate can be applied evenly for all

the years which should be higher than the highest net profit offered

by the assessee(s) in any of the assessment years. We find that the

net profit offered by the assessee for Assessment Year 2001-02 to

Assessment Year 2006-07 is at 0.37%, 1.71%, 1.72%, 2.99%,

1.84%, 0.95% and 1.97% respectively. In the case of another

assessee i.e. Shri Prem Chawla net profit rate offered for

Assessment Year 2001-02 to Assessment Year 2006-07 in the

concern M/s Anand Paints is 2.31%, 3.52%, 1.36%, 1.44%, 1.94%,

1.83% and 2.67% respectively and in case of Smt. Sarita Chawla

Net Profit Rate of 3.2% and 4.9% is offered for Assessment Year 43

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 2005-06 and Assessment Year 2006-07. From perusal of above net

profit rate we find that the net profit rate is ranging from 0.37% to

5% approx. It is also not disputed that during the both rounds

before the lower authorities the reasons best known to the assessee

necessary documentary evidence to prove the genuineness of the

purchases and expenses were not placed and books of accounts

were claimed to be lost when the proceedings were undergoing

before the appellate authorities. The element of “carelessness” on

the part of the assessee cannot be refused. However looking to the

fact that the issues raised before us are in the second round and

the matters pertaining to Assessment Year 2000-01 to Assessment

Year 2006-07 and thus with a view to end litigation, being fair to

both the parties and to meet the end of the justice we are of the

considered view that NET PROFIT RATE OF 5% of the disclosed

turnover in the business concern owned by all the assessee(s) in

the instant appeal before us i.e. in the case of Late Smt. Sudesh

Chawla, Shri Prem Chawla for Assessment Year 2000-01 to

Assessment Year 2006-07 and in the case of Smt. Sarita Chawla for

Assessment Year 2005-06 and Assessment Year 2006-07 shall be 44

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group sufficient to cover up all the discrepancies relating to unverifiable

purchase, freight and cartage, wages &salary and salary expenses.

We accordingly order so and direct the Ld.A.O to compute the net

profit for the above stated assessee(s) @5% of the disclosed turn

over and if in case net profit rate is offered on a higher percentage

i.e. more than 5% the same should be accepted. Our this decision of

applying Net Profit Rate of 5% shall be sufficient to cover up the

disallowance of purchase, freight and cartage, wages & salary and

salary expenses in dispute before us. We thus delete the

disallowance of purchase, freight and cartage, wages and salary and

salary expenses challenged before us in the ground mentioned in

Para 14. In the result respective grounds are partly allowed as per

terms indicated above.

Late Smt. Sudesh Chawla.

Assessment Year 2001-02 ITA No.159/Ind2015 Ground No.6

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 24. Through Ground No.6 assessee has challenged the finding of

Ld. CIT(A) confirming the addition for unexplained cash payment of

Rs.3,40,000/-. Brief facts relating to this ground are that the Ld.

A.O during the course of assessment proceedings u/s 153A of the

Act made addition for cash of Rs. 3,40,000/- towards the payment

made to Reliance Industries Ltd, Mumbai since the corresponding

entries in the cash book cannot be verified. In the first round Ld.

CIT(A) deleted the addition but in the set aside proceedings as per

the direction of Tribunal, Ld. CIT(A confirmed the action of Ld. A.O’s

action making the addition u/s 69 of the Act. Now the assessee is in

appeal before the Tribunal.

transactions with Reliance Industries Ltd and demand drafts are

issued by depositing cash in bank which is verifiable from the

ledger account.

supporting the orders of both the lower authorities.

placed before us. Assessee has challenged the findings of Ld. CIT(A) 46

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group confirming the addition of Rs.3,40,000/- u/s 69 of the Act made by

Ld. A.O for unexplained cash expenditure. We note that the

assessee as well as other group concerns make regular purchases

from Reliance Industries Ltd. In the ledger account, page 189 to

293 of the paper book dated 4.7.2016 shows the regular

transactions between the assessee and Reliance Industries Ltd. In

this ledger account various entries for payment through demand

draft and cash are appearing. Lower authorities have not doubted

the transactions in this ledger account. The additions was made for

sources of cash. The assessee’s financial statement are duly

audited. There is a positive cash balance at the close of the year.

source of cash cannot be doubted which has been used to make

Demand Draft for paying to Reliance Industries Ltd. We therefore

set aside the finding of Ld. CIT(A) and delete the addition of Rs.

3,40,000/- made for unexplained cash payment and allow Ground

No.6 of the assessee’s appeal for Assessment Year 2001-02 vide

appeal No.IT(SS)A No.159/Ind/2015.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 29. Now we take Ground No.7 for Assessment Year 2001-02

wherein the assessee has challenged the finding of Ld. CIT(A)

confirming the addition of Rs.10,01,000/- made on account of

security deposits. Brief facts are that the asssessee received

security deposits of Rs.10,01,000/- from M/s. Kanhaya Agencies,

Raipur. In the second round Ld. A.O has made addition for

unexplained security deposits which has further confirmed by Ld.

CIT(A) and now the matter is in Tribunal before us.

30 Ld. Counsel for the assessee submitted that M/s Kanhaya

Agencies, Raipur is a dealer of the assessee and regular

transactions took place. These deposits were received through

account payee cheque and after adjusting the sales effected by this

dealer remaining amount was repaid back.

supporting the orders of both the lower authorities.

paced before us. Through Ground No.7 assessee has challenged

the addition of Rs. 10,01,000/- made for security deposit received

from M/s Kanhaya Agencies, Raipur. We note that M/s Kanhaya 48

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Agencies, Raipur was appointed as a dealer of Chattisgarh region.

Sales were effected through this dealer on behalf of the assessee.

These facts remain undisputed during both the rounds. Records

also shows that sales worth Rs.7,50,644/- was made by the dealer.

Security deposits were received through account payee cheques in

the bank account of the assessee and remaining amount after

adjusting the cheque is claimed to have paid back. Prime facie we

find no reason to doubt the genuineness of the transactions which

has been carried out during the regular course of business between

the assessee and its dealer since the same have taken place

through account payee cheque and are part of the audited financial

statements. Thus the impugned addition of Rs. 10,01,000/-

deserves to be deleted. Relevant finding of Ld. CIT(A) is set aside

and Ground No.7 of assessee’s appeal for Assessment Year 2001-02

is allowed.

Assessment Year 2003-04 vide IT(SS)A No.161/IND/2015. In this

ground assessee has challenged the addition of Rs, 3,50,000/-

confirmed by Ld. CIT(A) made by Ld. A.O on account of unexplained 49

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group security deposits. Brief facts relating to this ground are that

security deposit of Rs. 3,50,000/- received from M/s Anand

Agencies, Indore was held to be unexplained by Ld. A.O and his

action was confirmed by Ld. CIT(A) and assessee has now

challenged the issue before this Tribunal.

with M/s Anand Agencies, Indore was a part of regular business

transactions between the assessee and the dealer for Indore region

i.e M/s Anand Agencies, Indore. The assessee is carrying out

business transaction consistently with this dealer and therefore the

same should not be doubted.

supporting the orders of both the lower authorities,

placed before us. Through Ground No.6 for Assessment Year 2003-

04 vide IT (SS)A No.161/Ind/2015 addition of Rs. 3,50,000/- made

for unexplained security deposit confirmed by Ld. CIT(A) is in

challenge before us. We note that during the Assessment Year

2003-04 gross turnover of assessee is Rs.1,24,03,360/-. Books of 50

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group accounts maintained by the assessee is verified by the Auditor for

preparing the Tax Audit Report u/s 44AB of the Act. M/s Anand

Agencies, Indore was acting as dealer for Indore region. The

amount of Rs. 3,50,000/- was received as security deposit.

Rs.1,50,000/- was adjusted against the goods sold and the balance

amount was shown as security deposit in the audited balance

sheet. Prime facie these of transaction looks to be genuine and hard

to disbelieve it looking to the nature of transactions being part and

parcel of business activity. We therefore are of the considered view

that the finding of Ld. CIT(A) deserves to set aside and addition of

Rs. 3,50,000/- deserves to be deleted. We accordingly order so and

allow Ground No.6 raised by the assessee for Assessment Year

2003-04 vide IT (SS)A No.161/Ind/2015,

Assessment Year 2004-05 vide IT (SS)A No.162/Ind/2015 through

which has challenged the finding of Ld. CIT(A) confirming the

addition of Rs. 14,50,843/- made by Ld. AO on account of

unexplained loan from Shri Prem Chawla.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 38. Brief facts relating to this issue are that assessee’s son Shri

Prem Chawla made various payments on behalf of M/s Anand

Organics to various suppliers totaling to Rs.14,50,843/-. Ld. A.O

doubted the genuineness of the transaction and made the addition.

Ld. CIT(A) in the second round confirmed the addition mainly on

account that Shri Prem Chawla accepted the anomalies in the

books of accounts and has surrendered Rs. 9,50,000/- on account

of debtors/creditors. Now the assessee is in appeal before the

Tribunal.

running page 404 and 405 showing the current account of Shri

Prem Chawla in the books of assessee’s sole proprietary concern

M/s Anand Industries. In this account various payments have

been made to suppliers which are claimed to have been made on

behalf of M/s Anand Organics. The details of various suppliers is

placed on record and the outstanding amount of Rs.14,40,500/-

have been shown in the original return of income also.

argued supporting orders of both the lower authorities. 52

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 41. We have heard rival contentions and perused the records

placed before us. Through Ground No.6 for Assessment Year 2004-

05 assessee has challenged the addition of Rs.14,58,348/-

confirmed by the Ld. CIT(A) which was made by the Ld. A.O for

unexplained credit from Shri Prem Chawla at Rs. 14,50,843/-.

The assessee and other family relatives are running various

proprietaryship and partnership concerns which are carrying out

almost similar type of business. When similar type of business is

carrying out under various concerns owned by family members,

another concern’s transactions and payments on behalf of each

other at some point of time for business exigencies is quite normal.

In the instant case some amount of purchases and other expenses

of M/s Anand Organics (Prop. Late Smt. Sudesh Chawla) were paid

by Shri Prem Chawla from his proprietaryship concern M/s Anand

Industries to the following persons:-

Name of supplier to Amount (Rs.)

whom payment was made

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Jindal Polyster Limited 7,35,064

Reliance Industries Ltd 2,66,800

Surat Textile Mills Ltd 1,01,216

Malviya Traders 3,200

Fabrication Work 2,789

Om Plywood 4,639

Cermic World 20,000

Pratap Plywood 23,635

Rashi Insulation 7,783

MP Traders 10,000

Mahaveer Plywood 10,000

Ageco Cables 414

Vidya Corrugator 5,303

Shri Metal Containor 60,000

Total Rs.12,50,843

Polyster Limited by Shri Prem Chawla from his personal account,

thus payment of Rs. 14,58,843/- has been made by Shri Prem 54

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Chawla through his sole proprietaryship was M/s Anand Industries

and his personal account. All these transactions are shown in the

regular books of accounts and were also form part of the audited

balance sheet which were filed with regular return of income before

the search was conducted u/s 132 of the Act.

are of the view that since the identity and creditworthiness of Shri

Prem Chawla is not in doubt and so is the genuineness of the

transaction which have been made in the regular course of

business between the two sister concerns, are of the view that this

addition of Rs.14,50,843/- made for unexplained credit from Shri

Prem Chawla deserves to be deleted. We accordingly order so and

set aside the finding of Ld. CIT(A) and allow Ground No.6 raised by

the assessee for Assessment Year 2004-05 in IT(SS) A No.

162/Ind/2015.

through which the assessee has challenged the finding of Ld. CIT(A)

confirming the addition of Rs.9,66,941/- after giving part relief of

Rs. 2,50,000/- against the addition of Rs. 12,16,941/- was made by 55

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group the Ld. A.O for unexplained addition to the capital account. Brief

facts relating to this ground are that during the financial year 2003-

04 relevant to Assessment Year 2004-05 assessee made some

addition to its capital account in the sole propritaryship concern

M/s Anand Organics which included withdrawal of Rs. 7,00,000/-

from M/s Atul Solvo Chem wherein the assessee has partner

Rs.2,50,000/- from personal account of Late Sudesh Chawla and

Rs.2,04,350/- from agriculture activities. The Ld. A.O was not

satisfied with the source of capital introduced in M/s Anand

Organics and made addition of Rs.12,16,941/-. In the second

round when the matter came up before Ld. CIT(A) he partly allowed

assessee’s ground by giving relief for the capital introduced through

account payee cheque at Rs.2,50,000/- from assessee’s own saving

bank account and confirmed the remaining amount. Now the

assessee is in appeal before the Tribunal against the addition of

Rs.9,66,941/-.

submission submitted that Rs. 7,00,000/- is received from the

partnership firm M/s Atul Solvo Chemicals and the same is 56

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group available from the capital gain of M/s Atul Solvo Chemicals and

thus the same is explained. As regards income from agriculture at

Rs.2,04,350/- it is submitted that the assessee earned agriculture

income and have been shown it in the Income Tax return which was

filed before the date of search and thus the source of capital

introduced in the proprietaryship concern should not have been

doubted by both the lower authorities.

supporting the orders of both the lower authorities.

placed before us. Through Ground No.7 for Assessment Year 2004-

05 assessee has challenged the addition confirmed by Ld. CIT(A) at

Rs.9,66,941/-. The Ld. A.O made the addition for Rs.12,69,941/-

for the unexplained capital addition to the proprietaryship concern

M/s Anand Organics out of which Ld. CIT(A) deleted the addition

for Rs.2,50,000/- being the amount received by cheque from others

in saving bank account and the remaining amount of Rs.9,66,941/-

is not disputed. We observe that out of Rs.9,66,941/- some of

Rs.7,00,000/- relates to the cash withdrawn by the assessee from 57

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group partnership firm M/s. Atul Solvo Chemical. From perusal of the

paper book Page 409 showing the partner’s capital account in the

books of M/s Atul Solvo Chemical which shows that during the year

the assessee has withdrawn Rs.9,47,731.50. Asssessee also made

addition at Rs.1,00,000/- during the year but the opening and

closing balance of the capital account is negative. This was the sole

reason for which the lower authorities have not accepted the capital

introduced at Rs.7,00,000/- made from cash withdrawals from

partnership firm M/s Autul Solvo Chemical. In our view merely for

the reason that there is negative or debit balance of the opening and

closing of the capital account in the books of partnership firm

cannot be estoppels for a partner to withdrawal from partnership

firm. There is no finding on record of the Ld. A.O to have

investigated into the capital account of the partnership firm to

prove any material against the assessee. Thus when the partners

capital account is not in dispute then raising doubt of withdrawals

made in cash (which the partner is allowed to do so) it was not

justified by both the lower authorities to make addition for

Rs.7,00,000/- which in our view is duly explained by assessee 58

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group having its source from the cash withdrawals from the partnership

firm M/s Atul Solvo Chemicals. As regards the income from

agriculture activities at Rs. 2,04,350/- the claim of which have been

denied by both the lower authorities, we observe that only from

Assessment Year 2004-05 the assessee has shown agriculture

income in the regular return of income filed u/s 139 of the Act.

Before us there is no document produced in the form of agriculture

land, proof of agriculture activity being carried out and the basis of

computing the agriculture income. The assessee is only claiming

that agriculture income should be accepted since it has been shown

in the regular Income Tax Return filed before conducting of search

u/s 132 of the Act. We note that the assessee has shown the

agriculture income at Rs. 1,43,800/- for the first time in the Income

Tax Return for Assessment Year 2004-05 filed on 31.10.2004 and

the same amount has been reflected in the return filed in reply to

notice u/s 153A of the Act. But during the course of assessment

proceedings assessee has claimed at Rs. 2,03,450/- is the amount

earned from agriculture activities. We thus find that there is a

mismatch in the claim of the assessee itself. The agriculture income 59

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group shown in the Income Tax return is not matching to the claim made

during the assessment proceedings. Assessee has also not provided

any documentary evidence to support the claim. We are thus

unable to accept the claim of agriculture income of Rs.2,03,450/-.

We therefore in the given facts and circumstances of the case and

discussions above delete the addition of Rs.7,00,000/- out of the

impugned addition of Rs.9,66,941/- and partly allow assessee’s

Ground No.7 sustaining the addition at Rs.2,66,941/-. Thus

ground No.No.7 for Assessment Year 2004-05 in IT(SS)A

No.162/Ind/2015 is partly allowed.

06 in IT(SS)A No.163/Ind/2015 through which the assessee has

challenged the finding of Ld. CIT(A) confirming the addition of

Rs,16,50,000/- made by the Ld. A.O on account of unexplained

security deposits/unsecured loans. Brief facts are that during the

course of assessment proceedings Ld. A.O asked assessee to explain

the unsecured loans/security deposits amounting to

Rs.16,50,000/-. The assessee submitted before Ld. A.O that mostly

the amounts are unsecured loans taken from relatives and other 60

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group parties through account payee cheques and having PAN. Few of the

cash creditors have also been repaid and the loan accounts were

squared off. The Ld. A.O was not satisfied and he confirmed the

addition u/s 68 at Rs. 16,50,000/-. When the matter travelled

before Ld. CIT(A) in second round the assessee again submitted the

detailed submissions with necessary details. Ld. CIT(A) however has

not dealt the alleged creditors in detail as well as individually but

summarily dismissed the assessee’s ground referring to the

statement made by Shri Prem Chawla(Son of the assessee)

surrendering Rs.9,50,000/- u/s 132(4) of the Act on account of

debtors/creditors. Ld. CIT(A) has also mentioned that mere

payment by account payee cheque is not sufficient and the

transactions are not genuine but Ld. CIT(A) failed to bring any

material on record to disapprove the claim of the assessee. Ld.

CIT(A) confirmed the finding of Ld. A.O making the addition of

Rs.16,50,000/- against which assessee is in appeal before the

Tribunal.

written submissions placed on record and the relevant pages of the 61

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group paper boo placed at page 498 to 505 and also submitted that there

were regular transactions of unsecured loans and security deposits.

Few of the loan accounts have been squared off. Ld. CIT(A) erred in

confirming the addition merely referring to the statements of Shri

Prem Chawla u/s 132(4) of the Act and also without appreciating

the fact irregularity found was already surrendered and offered to

tax.

supporting the orders of both the lower authorities.

placed before us. Through Ground No.6 for Assessment Year 2005-

06 assessee has challenged the finding of Ld. CIT(A) confirming the

addition for the unexplained unsecured loan/security deposits

totaling to Rs.16,50,000/- received from following parties:-.

Name Purpose Amount ChitraBalwani Loan 1,00,000/- M/s Anand Agencies, Security Deposit 3,00,000/- Gondia) M/s Anand Agencies, Loan 2,00,000/- Raipur M/s Asian Paint House Security Deposit 40,000/- Smt. SaritaChawla Loan 5,10,000/- M/s Star Hardware, Bhopal Security Deposit 1,00,000/- 62

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Vishal Kumar Raj Kumar Loan 2,00,000/- Sonia Devi Loan 2,00,000/- Total 16,50,000/-

deposits at Rs.3,00,000/-, Rs.40,000/-, Rs.1,00,000/- totaling to

Rs.4,40,000/- received from M/s Anand Agencies, Gondia, M/s

Asian Paint House, Star Hardware, Bhopal are regular security

deposits received on account of appointment as dealers to facilitates

sales. Since the assessee sends goods for sale to all these dealers

and receive the sale consideration on later dates as and when the

goods are sold. The security deposits are kept with the assessee for

security purposes. In case the dealers are removed then the

assessee adjusts the sale against the security deposit. This issue

has been discussed in preceding paras also. We therefore observing

the consistency of the business and the transaction being normally

carried out in the course of business find no reason to doubt the

genuineness of the security deposits received by cheque and duly

appearing in the audited balance sheet for Assessment Year 2005-

06 and the balance carry forward to Assessment Year 2006-07 also.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Therefore the addition for these amounts of security deposits

Rs.4,40,000/- is directed to be deleted.

unsecured loans. Out of this amount Rs.5,10,000/- is loan

received from assessee’s daughter in law Smt. Sarita Chawla. The

identity and genuineness of transaction is not in doubt. As regards

of creditworthiness of Smt. Sarita Chawla is concerned she being

professional having knowledge of computer is having regular source

of income from professional sources, her credibility cannot be

doubted for the loan amount of Rs.5,10,000/- received through the

banking channel which is duly reflected in her balance sheet also.

No addition was thus called for u/s 68 of the Act for the loan of

Rs.5,10,000/- received from Smt. Sarita Chawla. As regards the

unsecured loan of Rs.2,00,000/- each received from Shri Vishal

Kumar Raj Kumar and Sonia Devi, Rs, 1,00,000/- from Smt. Chitra

Balwani and Rs.2,00,000/- from M/s Anand Agencies, Raipur, we

find that in the Tax Audit Report complete details of the

transactions of loan taken from all the four persons are mentioned.

In the Tax Audit Report dated 5.10.2005 it is stated that the loan of 64

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Rs.2,00,000/- taken from Shri Vishal Kumar Raj Kumar and Sonia

Devi have been squared off during the year. Though the loan being

received through account payee cheques and the same are being

squared off during the year or later repaid cannot be the sole basis

to examine the genuineness and creditworthiness of the transaction

but when the details of unsecured loan providers have been placed

before the Ld. A.O the burden to proof shifts on the side of revenue.

The address of all the cash creditors were available on record but

there was no efforts by the revenue to call for information from

these cash creditors. We thus looking to the totality of facts find

merit in the contention of Ld. Counsel for the assessee and hold

that the Ld. A.O was not justified in making addition for

unexplained cash credit u/s 68 of the Act at Rs. 7,00,000/- (Rs.

1,00,000/- from Smt. Chitra Balwani, Rs.2,00,000/- from M/s

Anand Agencies, Raipur and Rs.2,00,000/- each from Shri Vishal

Kumar Raj Kumar and Sonia Devi) ignoring the fact that all the

transactions have been taken place through banking channel,

address of cash creditors were given in Tax Audit Report, loans were

taken before the date of search and the balance sheets were also 65

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group furnished before Ld. A.O and some of the loan were squared off

during the year. We thus in view of above discussion set aside the

finding of Ld. CIT(A) and delete the addition of Rs.16,50,000/- made

on unsecured loans and cash creditors. Ground No.6 of assessee’s

appeal for Assessment Year 2005-06 is allowed.

Assessment Year 2006-07 in ITA No.441/Ind/2015 through which

the assessee has challenged the finding of Ld. CIT(A) confirming the

addition of Rs.14,00,000/- made by Ld. A.O on account of

unsecured security deposits. Brief facts relating to this ground are

that during the year assessee took loan of Rs.14,00,000/- from his

son Shri Prem Chawla. Ld. A.O not satisfied with the explanation

given by the assessee that Shri Prem Chawla made payment to M/s

Neptune Bulk from his bank account on behalf of M/s Anand

Industries. Assessee failed to get any relief from Ld. CIT(A) in

second round and now the assessee is in appeal before the

Tribunal.

submission and also the relevant copy of account of Shri Prem 66

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Chawla page No.609 of paper book contending that during March

2006 Shri Prem Chawla made various payments totaling to

Rs.14,00,000/- to the supplier M/s Neptune Bulk for and on behalf

of M/s Anand Organics from his sole proprietoryship concern M/s

Anand Industries. These were genuine business transactions and

no addition u/s 68 of the Act was called for.

argued supporting the orders of both the authorities.

placed before us. The assessee is in appeal through Ground No.6

for Assessment Year 2006-07 challenging the finding of Ld. CIT(A)

confirming the addition of Rs.14,00,000/- made by the Ld. A.O by

treating the loan of Rs.14,00,000/- as unexplained u/s 68 of the

Act. We observe that Shri Prem Chawla son of the assessee is

running two proprietaryship concern M/s Anand Paints and Anand

Industries and is also partner of M/s Atul Solvo Chemicals. In the

instant bunch of appeals Shri Prem Chawla is also one of the

assessee in appeal before this Tribunal. Shri Prem Chawla is

regularly filing return of income and having source of income from 67

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group running business. Books of accounts are audited u/s 44AB of the

Act, In our view the identity and creditworthiness of Shri Prem

Chawla is not in doubt. As regards the genuineness of the

transaction is concerned we find that in the preceding years also

Shri Prem Chawla has been making payments from his sole

proprietorship concern M/s Anand Industries to M/s Anand

Organics of which the assessee (Late Smt. Sudesh Chawla) was the

Proprietor. During Assessment Year 2006-07 similar type of

transaction took place wherein sum of Rs.14,00,000/- was paid to

the supplier of the assesseee M/s Neptune Bulk through the IDBI

Bank account of M/s Anand Industries. Payments of Rs.2,00,000/-

,Rs.1,00,000/-, Rs.3,00,000/-, Rs.2,00,000/-, Rs.2,00,000/-

Rs.1,00,000/- and Rs.3,00,000/- were made on 24.3.2006,

24.03.2006, 29.03.2006, 30.03.2006, 31.03.2006, 31.03.2006, and

31.03.2006. Copy of account of Shri Prem Chawla also asserts

these facts. Looking to the totality of fact we find that both the

lower authorities were not justified in doubting the cash creditor

namely Shri Prem Chawla. Since we are satisfied with the identity

and creditworthiness of Shri Prem Chawla and genuineness of the 68

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group transaction carried out between the assessee and Shri Prem Chawla

no addition is called for u/s 68 of the Act at Rs.14,00,000/- for the

alleged receipt from Shri Prem Chawla. Relevant finding of Ld.

CIT(A) is set aside and Ground No.6 of assessee’s appeal for

Assessment Year 2006-07 is allowed.

Assessment Year 2006-07 and Ground No.3 of Revenue’s appeal in

ITA No.405/Ind/2015. Assessee has challenged the finding of Ld.

CIT(A) who sustained the addition at Rs.38,86,483/- as against the

addition of Rs.1,29,54,943/- made by Ld. A.O on account of

suppressed sales. On the other hand Revenue has challenged the

deletion of addition of Rs.90,68,460/-. Brief facts relating to

addition for suppressed sales are that during the course of

assessment proceedings while examining the records Ld. A.O

observed that in the internal audit report prepared by Daljit Singh

Bhatia Associates figures of sundry debtors were mentioned as on

31.10.2005. On the basis of this figure assessee’s sales were

estimated and addition of suppressed sale at Rs.1,29,54,943/- was

made. In the first round Ld. CIT(A) deleted the addition. In the set 69

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group aside proceedings on the direction of this Tribunal, the Ld. A.O

again asked information. Assessee filed submissions and

contended that quarter ending figures of sundry debtors cannot

betaken as a basis to compute the sales and such estimation is not

based on any accounting principle. Ld. A.O was not satisfied, he

again made addition of Rs.1,29,54,943/-. Assessee preferred

appeal before Ld. CIT(A) and partially succeeded as Ld. CIT(A)

applied gross profit rate of 30% on the alleged unaccounted

suppressed sales of Rs.1,29,54,943/- and sustained the addition at

Rs.38,86,483/-. Now the assessee is in appeal against the addition

sustained at Rs.38,86,483/- and revenue has challenged the action

of Ld. CIT(A) deleting the addition of Rs.90,68,460/-.

submissions submitted that the alleged figures of sundry debtors in

the internal audit report were mere projections and un reconciled

balances and thus should not be compared to the actual figures in

the books of accounts, no enquiry was made from the parties to find

the real balance and the addition is based merely on surmises and

conjectures, regular books of accounts are maintained and are 70

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group audited u/s 44AB of the Act but which were lost shortly after the

Ld. CIT(A) deleted the addition in the first round. Ld. Counsel for

the assessee also submitted that Ld. CIT(A) erred in not sustaining

the addition applying gross profit on the alleged suppressed sales

even when no addition was called for the suppressed sales.

argued supporting the orders of Ld. A.O.

placed before us. Both the assessee and revenue are in appeal

relating to the issue of suppressed sales. Assessee through

GoundNo. 7 has challenged the addition sustained by Ld. CIT(A) at

Rs.38,86,489/- out of 30% of alleged suppressed sales at

Rs.1,29,54,943/- whereas Revenue has challenged the action of the

Ld. CIT(A) deleting the addition of Rs.90,68,460/-.

audit report prepared by Daljit Singh Bhatia Associates, CA for M/s

Anand Organics. This report is placed at page 611 to 620 of the

paper book. On page 611 which is the letter head of the internal

auditor following is mentioned:- 71

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group “with reference to your letter dated 25.11.2005 regarding reconciliation of opening and closing balance of group debtors and group creditors with your records. This is to inform you that as per our verbal discussion we submit internal audit report for the period June 2005 to October 2005 and checked day to day transaction during the above period without reconciling the actual balance of group debtors and creditors before the said date. Thus there is a difference in opening closing balance of group debtors and group creditors with your records”.

Along with the above remarks the internal auditor has

attached some sheets which are closing balance of sundry debtors

during the period 1.4.2005 to 31.10.2005. Ld. A.O while examining

this report was of the view that if the debtors shown in the alleged

report are taken as the basis, sales for the year will be higher than

the sales shown by the assessee. He thus computed the suppressed

sales at Rs.1,29,54,943/-. Ld. CIT(A) however sustained the

addition to 30% of the suppressed sales relying on various

judgments including the Hon’ble High Court of Gujarat in the case

of CIT V/s President Industries (2002) 258 ITR 654 (Guj.).

has computed the suppressed sales on surmises and conjectures

and figure in the report were mere projections and un reconciled 72

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group balance. In the first round Ld. CIT(A) deleted the addition and this

Tribunal later on set aside the issue for afresh adjudication by the

Ld. A.O. After the first round before Ld. CIT(A) books of accounts

were lost.

sheets which are the print outs of tally software (software used to

prepare books of accounts on computer),the list of sundry debtors

attached with the audit report are not prepared in Excel sheet or

typed specially for other purpose which can be termed as projected

list. The print outs taken by the internal auditor are from the tally

software which is showing the balance on the closing date of

31.10.2005 after considering the transactions entered into during

the period commencing 1.4.2005. Therefore this contention of the

assessee that the figures are mere projections have no merits. Apart

from this submission that the addition made by the Ld. A.O are on

estimated basis. Ld. Counsel for the assessee failed to rebut the

fact with parallel working of trade cycle of sundry debtors and its

comparison with the total sales for the year. Though there is no

concrete finding by Ld. A.O but so is the case that assessee has also 73

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group failed to fulfill the burden of proving by showing that there was no

element of suppressed sales, we therefore to meet the end of justice

and being fair to both the parties sustained the addition by applying

net profit of 5% on the alleged suppressed sales of Rs.1,29,54,943/-

and thus sustain the addition to Rs.6,47,747/- and partly allow

Ground No.7of the assessee’s appeal and Ground No.3 of the

revenue’s appeal for Assessment Year 2006-07.

Assessment Year 2006-07 in ITA No.441/Ind/2015 through which

the assessee has challenged the finding of Ld. CIT(A) confirming the

addition of Rs.24,39,857/- on account of difference in stock as per

the Commercial Tax Department and as per the books of accounts.

Brief facts relating to this issue are that during the course of

original assessment proceedings u/s 143(3), the Ld. A.O noticed

that the Commercial Tax Department of the State Government had

conducted a survey at the factory of M/s Anand Organics and at

the residence of Shri Prem Chawla on 15.12.2005. A stock

inventory on physical verification of the stock found at the factory

was prepared by them as on 15.12.2005 as under :- 74

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group (i) Finished Goods Rs. 14,24,200/-

(ii) Raw material & packing material Rs. 32,30,976/-

Total Rs.46,55,176/-

Whereas as per No.344 of BF 44 impounded during the

survey, the stock position of M/s Anand Organics as on 15.12.2005

was recorded as under:-

(i) Finished Goods Rs. 3,65,123/-

(ii) Raw material Rs. 9,46,600/-

(iii)Packing material Rs. 9,03,614/-

Total Rs.22,15,339/-

Thus, there was excess stock found on the date of survey on

15.12.2005 to the extent of Rs.24,39,857/- (Rs.46,55,176 –

Rs.22,15,339). The appellant was asked to explain the difference.

But the AO stated that the appellant did not clarify and explain the

difference. Therefore, the AO made addition of Rs.24,39,857/- on

account of unexplained investment in the excess stock found. The

Ld. CIT(A) had deleted the addition. But the Hon’ble ITAT set aside

the assessment to the file of the A.O. During set aside proceedings

Ld. AO asked the appellant to explain the difference and show 75

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group cause as to why the addition of Rs.24,39,857/- on account of

excess stock should not be made. It was submitted that the

appellant used to prepare sheet of stock to monitor the activity at

the floor level and, therefore, the summary sheet on page 344 of BF

44 was not containing the actual stock. The stock was also kept in

tanks, which was not included in the stock summary. It was also

contended that the stock taken by the Commercial Tax Department

at Rs.46,55,176/- was not taken by scientific approach and based

only on visual estimation. It was submitted that as per excise

records maintained by the appellant, the closing stock as on

15.12.2005 was Rs.43,89,893.63 which was also monitored by

Excise Department. But the Ld. A.O did not accept the submission

of the appellant stating that the appellant could not give

satisfactory explanation and item wise stock was not tallied.

Therefore, the AO made addition of Rs.24,39,857/- on account of

unexplained investment in excess stock found. In the appellate

proceedings before Ld. CIT(A) assessee made following

submissions:-

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 11.3 In appellate proceedings, the appellant submitted as under :-

"It is submitted that in the original assessment addition of Rs.24, 39, 8571- was made being difference in stock as per the Commercial Tax Department and the books of accounts. In this reference, we submits as under:

Sir, the unit of the assessee is an excisable unit and being monitored by the excise department on day to day basis.

The Summary sheet mentioned by the Assessing Officer as Page No. 344 of BF 44 is not a complete stock. The assessee use to prepare this sheet to monitor the activity at shop floor only. The stock being kept at tanks are not included in the said summary sheet. Further whatever the stock recorded in the summary sheet (at Rs.2215339) is not in excess of the stock as per excise records. Therefore no addition being warranted on this ground.

Stock taken by the Commercial tax, department at Rs. 4655176 is' not being taken by scientific approach. It was only a visual estimation, as is evident from the detailed sheet enclosed. As the assessee deals in the chemicals and solvents, the. stock is being taken. by dip method. The approach of commercial tax department was very casual.

As per the Excise records maintained by the assessee closing stock as on 15.12.2005 the stock was Rs. 4389893.63. The said excise records-are being monitored by the excise department on regular interval. Copy of all the relevant documents are enclosed herewith as Annexure-II.

Sir, from above, it is clear that the assessee shown the correct stock which' is tallied with the excise records also and the stock taken by the Commercial Tax Department is the disputed one. Hence, the actual stock shown by the assessee as per books of accounts may kindly be accepted as correct. " However Ld. CIT was not satisfied and confirmed the

addition for excess stock observing as follows:-

11.4 I have carefully considered the submission of the appellant and facts of the

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group case. It is noticed that the Commercial Tax Department had taken proper inventory, item wise and value wise which was duly signed by Shri Prem Chawla, who was looking after the affairs of M/s Anand Organics. Thus, the contention of the appellant that Commercial Tax Department had not properly taken the stock inventory is not found acceptable. The' appellant also could not explain the difference before the Commercial Tax Authorities. They have also impounded certain documents. The appellant also failed to furnish a copy of assessment order made by the Commercial Tax Department after conducting the survey. Page no. 344 of BF 44 was prepared in the normal course of business and was reflecting the position of stock as per books as on 15.12.2005. The appellant also failed to explain the difference with any cogent and un- impeachable evidence and furnished a general explanation. . Since, the appellant failed to satisfactorily explain the excess stock found by the Commercial Tax Department as on 15.12.2005, the AO was justified in making addition of Rs.24,39,857/- on account of unexplained investment in the excess stock found. Hence, the addition ofRs.24,39,8S7/,. is confirmed. 67. Now the assessee is in appeal before the Tribunal.

before Ld. CIT(A) and stressed on the fact that since the assessee is

dealing in excisable goods and monitored by Excise Department on

day to day basis no case of excessive stock should have been made.

He also submitted that the Commercial Tax Department have not

adopted a scientific approach but was merely a visual estimation.

An alternative submission was also made that in any case of

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group investigation in unaccounted stock is explained by the unaccounted

sale of Rs.1,29,54,943/-.

argued supporting the orders of both the lower authorities.

placed before us. Through Ground No.8 for Assessment Year 2006-

07 assessee has challenged the addition for excess stock of

Rs.24,39,857/-. As discussed above that the assessee was

subjected to survey by Commercial Tax Department (In short

‘CTD’). As per the inventory prepared by CTD stock was valued at

Rs.46,55,176/- and stock as per books as on 15.12.2005 was Rs.

22,15,339/-. One of the person looking after the business namely

Shri Prem Chawla accepted the working of CTD showing excess

stock of Rs.24,39,857/-. No documents in the form of sales tax

assessment orders were filed before the lower authorities about the

fate of the survey conducted at assessee’s business premises. Even

before us no information has been filed to show about the fate of

survey proceedings of CTD. Ld. Counsel for the assessee has

mainly referred to the process of physical verification adopted by 79

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group CTD but has not filed any evidence to show that assessee has

challenged the alleged excess stock before the assessing authority

or any other appellate authority of the Commercial Tax Department.

Alternate submission of the assessee that the investigation in

unaccounted stock is excessively added by unaccounted sales of

Rs.1,29,54,943/- and it shows that assessee has no material

evidence to rebut the excess stock found by CTD. However the fact

also remains that the assessee is registered with Excise Department

and is also claimed to have maintained regular books. Lower

authorities have not called for such records to find out quantitative

stock shown in those records. While adjudicating the issue of

suppressed sales we sustained the addition of Rs.6,47,747/- @3%

of the alleged suppressed sales amount.

and totality of the facts hold that since we have partly sustained

addition applying Net Profit Rate of 5% on disclosed turnover in

Assessment Year 2000-01 to 2006-07 and also 5% of suppressed

sales for Assessment Year 2006-07 assessee deserves telescoping

benefit and the addition confirmed by us shall be sufficient to cover 80

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group up the addition of excess stock of Rs.24,39,857/-. We accordingly

order so and delete the addition of Rs. 24,39,857/- and allow the

assessee’s Ground No.8 for Assessment Year 2006-07 in ITA

No.441/Ind/2015.

Rs.2,85,709/- made on the basis of loose papers found during the

course of search. Assessee has not challenged the genuineness of

the loose papers and the entries contained therein. Loose papers

shows some expenses incurred by the assessee at Rs.2,85,709/-but

the purpose of expenses and the same being incurred for business

has not been proved at any stage by the assessee. Before us also

assessee has given general statement which is not sufficient to

prove that Rs.2,85,709/- were expenses incurred in the regular

course of business. Since the documents were found during the

course of search the assessee is duty bound to explain the contents

therein with supporting evidences. Since the assessee failed to do so

we find no force in the contention of the assessee and thus confirm

the addition of Rs.2,85,709/- made on the basis of loose papers. In

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group the result Ground No.9 of the assessee for Assessment Yeqr 2006-

07 in ITA No.441/Ind/2019 is dismissed.

Chawla through Legal Heir Shri Prem Chawla in the appeals for

Assessment Years 2000-01 to 2006-07 are consequential, premature and

general in nature relating to the charging of interest u/s 234A, 234B &

234C, initiation of penalty proceedings and thus needs no adjudication..

allowed.

case of assessee Late Smt. Sudesh Chawla for Assessment Year 2006-07

(ITA No.451/Ind/2015) challenging the finding of Ld. CIT(A) deleting

the addition on account of unexplained capital addition made by

Ld. A.O at Rs.15,32,527/-.

the capital account of the assessee at Rs.15,32,527/- which were

claimed to be sale proceeds from sale of equity shares. In the first

round Ld.A.O made addition treating them as unverifiable but Ld.

CIT(A) has allowed and deleted the addition. In the set aside

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group proceedings by this Tribunal again the Ld. A.O called for the

information and similar submissions were made by the assessee

about sale of shares through share broker but same were not

appreciated by the Ld. A.O and again addition of Rs.15,32,527/-

was made. Thereafter assessee preferred appeal before Ld. CIT(A)

and succeeded as Ld. CIT(A) on observing that the assessee has

shown Long Term Capital Gain in the Income Tax Return and sale

consideration of Rs.15,32,527/- was credited to capital account

allowed the claim of assessee and deleted the addition. Now the

revenue is in appeal before the Tribunal.

supporting the order of Ld. A.O.

CIT(A) and also the submissions made before him.

placed before us and carefully gone through it. Revenue has

challenged the finding of Ld. CIT(A) deleting the addition of

Rs.16,52,527/- made by the Ld. A.O for unverifiable capital

addition during the year. We observe that during the year under 83

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group appeal assessee claimed to have received sale consideration of

Rs.15,32,167/- from sale of equity shares through Nirman Share

Broker. Following amounts were received :-

Date Particulars Amount (Rs.) 5.12.2005 Chq No. 000271 10,95,795 20.12.2005 Chq No. 000375 4,00,000/- 27.12.2005 Chq No. 000433 36,372/- Total 15,32,167/-

consideration for sale of equity shares. The entries are reflected in

the bank statement. Ld. CIT(A) has verified with the above stated

amount of sale consideration at Rs.15,32,167/-for which Long Term

Capital Gain u/s 10(38) is claimed exempt by the assessee. Ld.

Departmental Representative failed to bring any contrary material

to disapprove the claim made by the assessee as well as finding of

Ld. CIT(A). We thus find no reasons to interfere in the finding of Ld.

CIT(A) deleting the addition of Rs.15,36,167/-. Accordingly Ground

No.3 of the Revenue for Assessment Year 2006-07 in ITA

No.451/Ind/2015 as dismissed.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 81. In the result Revenue’s appeal for Assessment Year 2006-07 is

partly allowed.

Shri Prem Chawla for Assessment Year 2000-01 to 2006-07.

deposits confirmed by Ld. CIT(A) amounting to Rs.8,74,400/-,

Rs.4,00,000/-, Rs.2,95,000/- and Rs.1,00,000/- pertaining to

Assessment Year 2000-01, 2001-02, 2005-06 and 2006-07 are

raised by the assessee in Ground No.5 (Assessment Year 2000-01),

Ground No.5 (Assessment Year 2001-02), Ground No.5

(Assessment Year 2005-06) and Ground No.6 (Assessment Year

2006-07) respectively.

amount received as security deposit from dealers. Ld. A.O was not

satisfied that the genuineness of the transactions, he thus made the

addition. Assessee failed to get any relief from Ld. CIT9A). Now the

matter is before this Tribunal.

the following written submissions:- 85

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group In the original assessment proceedings, the appellant failed to prove the genuineness of the unsecured loan/security deposits which was received from following persons in the relevant assessment year as under:- A.Y Name Amount Remarks 2000- Security 8,74,400/- 1. Security deposits are received 01 deposit from from customers/dealers to whom 17 parties goods are regularly supplied, the (Refer CIT(A) balance is adjusted in succeeding order Pg no.20- years out of sales. 21) 2. The deposits received are in nature of trading liability and not an unsecured loan 8,74,400 2001- Asha Devi, 2,00,000/- 1. The appellant received security 02 Udaypur deposit were received through account payee cheques and deposited in the bank account of the assessee. 2. This account was settled into account of her concern- New Ramesh paints, Udaypur, against the goods sold in F.Y 2001-02 (PB 188) Krishna 2,00,000/- 1. The appellant received security Agencies, Kota deposit were received through account payee cheques and deposited in the bank account of the assessee. 2. This amount was settled against the goods sold them in F.Y 2001- 02, the account statement is on (PB 190-192) 4,00,000/- 2005- Deep Colour & 2,00,000/- 1. The appellant maintains proper 06 Chemicals, books of accounts, which are Kota 50,000/- audited u/s 44AB of the act. 2. The balance is appearing in the Anand balance sheet also. Agencies, 40,000/- 3. The money is advance received Gondia from M/s Anand Agencies who was acting as dealer of Indore region

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Parvinder 5,000/- Date Amount Singh 21.10.2004 50,000 2,95,000/- 01.11.2004 40,000 2006- Anand 1,00,000/- 1. This amount is appearing in the 07 Agencies, list of sundry creditors and not Indore security deposits. Refer PB 601. 2. There is no fresh addition to the balance, Rs.1,00,000 is appearing in both the schedules as on 31st March 2006 on PB 602 and the schedule as on march 2005 on PB 601.

argued supporting the orders of both the lower authorities.

placed before us. The common issue raised by the assessee named

Shri Prem Chawla for Assessment Years 2000-01, 2001-02, 2005-

06 and 2006-07 relates to addition of unexplained security deposits

confirmed by Ld. CIT(A) at Rs. 8,74,400/, Rs. 4,00,000/-, Rs.

2,95,000/- and Rs. 1,00,000/- respectively. We observe that the

assessee is into the business of paints and thinners and has been

consistently filing Income Tax Returns supported with audited

financial statements as and where applicable. Assessee in the due

course of business appoints dealers in various parts of the country

for the purpose of effecting sale.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 88. For Assessment Year 2000-01 security deposit of

Rs.8,74,400/- has been received from 17 parties who are customers

/dealers and as claimed by the Ld. Counsel for the assessee that

these security deposits are adjusted against the sales in succeeding

years. These deposits are not unsecured loan but trading liability.

The addition made by the Ld. A.O were subsequently confirmed by

Ld. CIT(A) on the basis of general observation without placing any

material on record to support the addition. We find that these

security deposit of Rs.8,74,400/- received from 17 parties were duly

reflected in the balance sheet before the conducting of search and

in absence of any contrary material find no reason to confirm the

addition for unexplained security deposit as in our view these were

received as normal part of business. Thus the addition of

Rs.8,74,400/- for Assessment Year 2000-01 for unexplained

security deposit stands deleted. Ground No.5 for Assessment Year

2000-01 is allowed.

from Asha Devi, Udaypur and Krishna Agencies, Kota during

Assessment Year 2001-02 we note that the security deposits were 88

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group received through account payee cheques. Security deposit of Asha

Devi, Udaypur was settled against the good sold in her concern New

Ramesh Paints, Udaypur during financial year 2001-02 and the

same was the case of Krishna Agencies, Kota. Ledger accounts

placed at page 188, 190, 192 supports these facts. Revenue has

also not placed any contrary evidence against the assessee. We thus

taking a consistent view as discussed in preceding paras find no

reasons to doubt the genuineness of security deposits and relevant

finding of Ld. CIT(A) is set aside and Ground No.5 for Assessment

Year 2001-02 stands allowed.

Assessment Year 2005-06 is concerned the same was received from

following 3 parties :-

(i) Deep Colour& Chemicals, Kota Rs.2,00,000/-

(ii) Anand Agencies, Gondia Rs. 90,000/-

(iii) Parvinder Singh Rs. 5,000/-

achieved gross turnover during the year under appeal at

Rs.3,14,20,001/-which has almost doubled as compared to 89

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group turnover of preceding year. Audit report u/s44AB of the Act stands

duly submitted on due dates and the security deposits are

appearing in the audited balance sheet. Payments have been

received through banking channel and security deposits are

received from the dealers and in case payment is not received or

dealership is cancelled, the security deposit is adjusted against the

sales. The above said transactions have been carried out in normal

course of business and in absence of any documentary evidence to

question the same making addition for unexplained security deposit at Rs. 2,95,000/-by the Ld. A.O and subsequently confirmed by Ld. CIT(A)giving

general remarks is not justified. Thus the addition for unexplained

security at Rs.2,95,000/- stands deleted. Ground No.5 for

Assessment Year 2005-06 is allowed.

Assessment Year 2006-07 this was received from Anand Agencies,

Indore. As appearing in paper book page 601 the alleged amount is

appearing in the list of sundry creditor and not as security deposit.

This amount is not a fresh addition during the year and is the

brought forward balance from Assessment Year 2005-06. Therefore 90

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group no addition was called for this amount of Rs.1,00,000/- and the

same deserves to be deleted. Ground No.6 for Assessment Year

2006-07 is allowed.

capital account at Rs. 1,77,100/-, Rs.2,12,520/- and Rs.2,12,520/-

for Assessment Year 2003-04, 2004-05 and 2005-06 respectively.

Brief facts are that during the course of assessment proceedings Ld.

A.O while examining capital accounts attached with the balance

sheet of the partnership concern come across certain additions

made in the capital account. Assessee made necessary submissions

but the Ld. A.O in the second round again made the additions. In

the appeal before Ld.CIT(A) assessee gave part relief. Now the

assessee is in appeal before the Tribunal.

CIT(A) erred in confirming the addition ignoring the fact that the

impugned amounts was paid from the personal bank account of the

assessee held with Punjab National Bank.

argued supporting the orders of both the lower authorities. 91

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 96. We have heard rival contentions and perused the records

placed before us. Assessee’s common grievance through Ground

No.5 for Assessment Year 2003-04, Ground No.5 for Assessment

Year 2004-05 and Ground No.7 for Assessment Year 2006-07

relates to addition in capital account taken by Ld. CIT(A) at Rs.

1,77,100/-, Rs.2,12,250/- and Rs.2,12,250/- respectively. The

common facts presented before us that all these three amounts

were claimed as transfer by the assessee from his personal saving

bank account held with Punjab National Bank to its sole

proprietaryship concern M/s Anand Industries. Ld. CIT(A) denied

the relief by making general observation that assessee could not

placed any evidence. We however failed to support this observation

of Ld. CIT(A) since details of bank accounts were very much

available before the lower authorities. Transaction has taken place

from one account to another. Assessee is into business since last

many years and consistently offering income. Major amount of

addition made by Ld. A.O stands already deleted by Ld. CIT(A). In

these given facts and circumstances of the case we find no reason

to doubt the creditworthiness of the assessee to transfer the alleged 92

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group amount from his personal bank account to the sole proprieoryship

concern M/s Anand Industries. We accordingly delete the addition

of Rs.1,77,100/- for Assessment Year 2003-04, Rs.2,12,250/- for

Assessment Year 2004-05 and Rs. 2,12,250/- for Assessment Year

2005-06 and allow ground No.5 for Assessment Years 2003-04 and

2004-05 and Ground No.7 for Assessment Year 2005-06.

through which the assessee has challenged the addition of

Rs.1,29,200/- thereby confirming the action of Ld. A.O for denying

the benefit of agriculture income and taxing it as income from other

source. Brief facts relating to this ground are that assessee has

shown to have performed agriculture operation on the agriculture

land taken on lease and have earned net profit of Rs.1,29,200/-

against total sale consideration of Rs.2,96,875/-. Ld. A.O rejected

this claim and taxed the income as income from other source.

When the matter came up before Ld. CIT(A) he has also confirmed

the action of Ld. A.O giving the finding that assessee has not shown

any agriculture income in the past and subsequent year and

looking to the fact that the assessee is running sole proprietoryship 93

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group concern there remains hardly any time to do agriculture activity

and thus claim was rejected. Now the assessee is in appeal before

the Tribunal.

made before the lower authorities and drew our attention to Batai

agreement dated 05.01.2003 and sale bill of Krishi Upaj Mandi to

support the contention that the assessee had earned genuine

income from agriculture at Rs.1,29,200/-.

99.Per contra Ld. Departmental Representative vehemently argued

supporting the orders of both the lower authorities.

placed before us. Through Ground No.6 for Assessment Year 2004-

05 assessee namely Shri Prem Chawla challenged the finding of Ld.

CIT(A) treating the agriculture income at Rs. 1,29,200/- as income

from other source. We observe that Ld. CIT(A) has applied the

probability theory in rejecting the claim by observing that since the

assessee has not shown any agriculture income in the past and in

the subsequent assessment years and the assessee hardly had any

time to carry out the activity since he was running two 94

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group proprietaryship concerns therefore the assessee had made false

claim. We however are not in agreement with this general

probability theory applied by Ld. CIT(A) without examining the

documentary evidence filed by the assessee in the form of Batai

agreement between Shakuni Kumari and the assessee dated

01.05.2003 and the sale bills of Krishi upaj Mandi issued in the

name of assessee. Both the lower authorities have not find any

discrepancy in these documents filed by the assessee. Against the

sale proceeds of Rs.2,96,864/- the income has shown at Rs.

1,29,200/- which is around 43% only.

necessary supporting evidences it was not justified on the part of

the Ld. A.O as well as Ld. CIT(A) to deny the claim without finding

any discrepancy in the evidences placed before them. Therefore the

general observation of Ld. CIT(A) that the assessee not earning any

agriculture income in the past and subsequent year seems to be

hollow and cannot be accepted. Therefore Ground No.6 for

Assessment Year 2004-05 is allowed and the claim of the assessee

of having earned agriculture income of Rs. 1,29,200/- is accepted. 95

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 102. Now we take up Ground No.6 of the assessee for Assessment

Year 2005-06 wherein the findings of Ld. CIT(A) is challenged

confirming the addition of Rs.99,000/- incurred on account of

investment in immoveable property. Brief facts relating to this are

that the assessee made investment in immoveable property during

the year. Apart from the amounts transferred from bank accounts

there was a claim of incurring cash of Rs.99,000/- which was

withdrawn from the proprietaryship concern. Assessee failed to

prove this withdrawal and the action of the Ld. A.O was confirmed

by Ld. CIT(A) for this expenditure in cash for want of source. Now

the assessee has challenged this addition before the Tribunal.

submission submitted that the assessee had made regular cash

withdrawals from the proprietaryship concern M/S Anand

Industries and source of cash withdrawal is from his capital

account only. Reference was made to page 503 of paper book

showing capital account of M/s Anand Industries.

argued supporting the orders of both the lower authorities. 96

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 105. We have heard rival contentions and perused the records

placed before us. Through Ground No.6 assessee has challenged

the addition for unexplained cash withdrawal of Rs.99,000/- for

Assessment Year 2005-06. We observe that the assessee purchased

property at E-3/91, Arera Colony, Bhopal jointly with Smt. Sudesh

Chawla on 30.11.2004. Assessee invested a sum of Rs.30 lakhs.

Out of this purchase consideration Rs.99,000/- was claimed by the

assessee to have been withdrawn in cash from M/s Anand

Industries is in dispute. We have gone through the paper book

page 503 of the assessee’s capital account in the books of M/s

Anand Industries. On perusal of the capital account we find that

after the cash withdrawal totaling to Rs.25,000/- during April, 2004

assessee deposited Rs.90,000/-. Thereafter from May 2004 to till

6th July 2004 total cash withdrawal is Rs.57,000/-. If we fairly

estimate the drawings at Rs. 17000/- for household purposes

assessee would have left over with Rs.40,000/- only.To this extend

the claim of the assessee can be accepted. We accordingly partly

allow Ground No.6 of the assessee’s appeal and confirm the

addition of Rs.59,000/- only. 97

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 106. Now we take up Ground No.5 for Assessment Year 2006-07

during which the assessee has challenged the finding of Ld. CIT(A)

confirming the addition of Rs.7,80,000/- made on account of

unexplained unsecured loan/sundry creditors. Brief facts relating

to this ground are that during the course of assessment

proceedings Ld. A.O asked the assessee to explain the unsecured

loan/sundry creditors totaling to Rs.7,80,000/-. Assessee’s

contention is that these are the credits in the regular course of

business towards advance for goods/security deposit and other

current account transactions. Ld. A.O was not satisfied he made

addition for Rs.7,80,000/-. Assessee filed appeal before Ld. CIT(A)

but failed to succeed. Now the assessee is in appeal before the

Tribunal.

submissions and submitted that details of each transactions are

duly appearing in audited balance sheet. Payments were received

through account payee cheques. Most of the alleged cash creditors

are in the form of security deposit and sundry creditors and

assessee is having regular transactions with these concerns. 98

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Therefore the addition for unexplained cash credit of Rs.7,80,000/-

was not justified.

argued supporting the orders of both the lower authorities.

placed before us. Through Ground No.5 for Assessment Year 2006-

07 finding of Ld. CIT(A) confirmed the addition towards unexplained

cash credit is in dispute. Before us Ld. Counsel for the assessee

giving details of each of the alleged cash creditors in the following

particular form:-

Name of Amount Date Chq. Submissions dealer number Ganpati 30,000 05,01,06 740903 1. The assessee is Traders 60,000 07.01.06 740906 maintaining regular 50,000 23,01,06 740913 books of accounts, 2,00,000 30.01.06 185506 which are also audited u/s 44AB of the Act. 2. The amount is received from the regular dealer, who is regularly purchasing from assessee. 3. The sales to Ganpati Traders amounting to Rs.11,67,344 were made in A.Y 2006-07 4. The payment 99

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group received against sale were Rs.11,42,000 and the balance Rs.25,344/- appearing in list of Debtors on PB 564. 5. The total security deposit amounting to Rs.3,40,000 is shown separately under Annexure-C – Deposits on PB 561. 6. The ledger account of the party showing the receipt of security deposit, as per customary policy through cheque are on PB 603. S,M 2,50,000 26.04.05 209352 1. The assessee is Enterprises, maintaining regular Faridabad books of accounts, which are also audited u/s 44AB of the Act. 2. The amount is received from the regular dealer, who is regularily purchasing from assessee. 3. The sales to S.M. Enterprises amounting to Rs.5,55,839 were made in A.Y 2006-07 4. The payment received against sale were Rs.5,55,839 5. The total security 100

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group deposit amounting to Rs.2,50,000 is shown separetly under Annexure C Deposits on PB 561 6. The ledger account of the party showing the receipt of security deposit, as per customary policy through cheque are on PB 603. Shakti 50,000 18.05.05 900228 1. The total security Traders, 50,000 18.05.05 900229 deposit amounting to Bhopal Rs.1,00,000 is shown separately under Annexure C. Deposits on PB 561. 2. The ledger account of the party showing the receipt of security deposit, as per customary policy through cheque are on PB.605 Pari 25,000 06.04.05’ 111146 1. The total security Traders, 25,000 06.04.05 111141 deposit amounting to Lucknow Rs.50,000 is shown separately under Annexure C. Deposits on PB 561. 2. The ledger account of the party showing the receipt of security deposit, as per customary policy through cheque are on 101

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group PB.605 Krishna 40,000 16.07.05 149600 1. The assessee is enterprises, maintaining regular Haridwar books of accounts, which are also audited u/s 44AB of the Act. 2. The amount is received from the regular dealer, who is regularly purchasing from assessee. 3. The sales to Krishna. Enterprises amounting to Rs.79,145 were made in A.Y 2006-07 4. The payment received against sale were Rs.75,000 5. The total security deposit amounting to Rs.40,000 is shown separetly under Annexure C Deposits on PB 561 6. The ledger account of the party showing the receipt of security deposit, as per customary policy through cheque is on PB 607.

relevant paper book page mentioned here under. Assessee has 102

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group turnover for Assessment Year 2006-07 is 3,28,36,548/-. Financial

statement of both the proprietorship concerns M/s Anand Paints

and M/s Anand Industries are duly audited. Necessary information

are provided in Form 3CD and its annexures attached to the report

u/s 44AB of the Act. As discussed in the preceding paras and facts

remains similar we find that the alleged cash credits are mainly

towards security deposit received from the dealers through banking

channel as per the policy of the assessee’s business. Regular sales

have been effected through these dealers. In case of non receipt of

sale consideration or discontinuing of the dealership the amount is

adjusted against the sales. Almost in all the parties referred in the

list are having regular business transactions of sale/purchase of

goods with the assessee. No further enquiry have been initiated

during both the rounds of proceedings. In these given facts and

circumstances it is not justified to doubt the genuineness of the

cash credits/security deposits/sundry creditors. We therefore direct

the revenue authorities to delete the addition of Rs.7,80,000/-.

Ground No.5 raised by the assessee for Assessment Year 2005-06 is

allowed. 103

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 111. Now we will take up last effective ground No.7 of Shri Prem

Chawla through which the assessee challenged the finding of Ld.

CIT(A) confirming the addition of Rs.3,34,500/- on account of cash

found during the course of search. Brief facts relating to this

ground are that cash of Rs.3,34,500/- was found in the locker in

the name of Smt. Sarita Chawla. In the statement given during the

course of search Smt. Sarita Chawla accepted that she is the owner

of the locker and she also gave bifurcation of source of cash found

in the locker. However during the course of assessment

proceedings Ld. A.O on the basis of statement of the assessee given

on behalf of his wife Smt. Sarita Chawla, surrendered

Rs.3,50,000/- towards income not disclosed in the return of

income, Ld. A.O made the addition in the hands of the assessee.

Assessee failed to get any relief from Ld. CIT(A). Now the assessee

is in appeal before the Tribunal.

the name of Smt. Sarita Chawla. Her statement were taken on

21.12.2005 and in reply to specific question she had stated that

cash lying in bank locker represent Rs.2 lakhs received from 104

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Aandpur Sahib Trust and Rs.51,000/- from her personal savings.

She could not reply for the remaining amount of Rs.83,500/-. Ld.

Counsel for the assessee also submitted that the impugned addition

cannot be made in the hands of the husband when the locker was

in the name of wife who has assessed to tax and has also subjected

to assessment proceedings u/s 153A of the Act.

argued supporting the orders of both the lower authorities.

placed before us. Addition for Rs.3,34,500/- on account of cash

found during the course of search is in dispute before us raised by

the assessee through Ground No.7 challenging the finding of Ld.

CIT(A). It is an undisputed fact that the impugned cash amount of

Rs.3,34,500/- was found in the locker in the name of Smt. Sarita

Chawla. In the primary statement given by her before the search

team on 21.05.2005 in question No.19 she was specifically asked

about the source of cash of Rs.3,34,500/- found in the locker

No.27 owned by her held with State Bank of India, Mahaveer Nagar,

Bhopal. In reply to this question she stated that Rs.2.50 lakhs was 105

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group towards the amount collected for the construction of Ashram from

various persons on behalf of Anandpur Sahib Trust, Rs.51,000/- is

on account of her past savings and for the remaining amount of

Rs.33,500/- she could not explain. The above statement clearly

shows that Smt. Sarita Chawla were very well aware about the cash

found in her locker. She has not stated that the impugned amount

relates to her husband. She is also a regular tax payer earning

professional income and business income. Revenue authorities

have made the impugned addition merely on the basis of statement

given by Shri Prem Chawla. We note that Shri Prem Chawla who

was looking after the business affairs of group concern along with

the family members and company represented and gave statements

towards surrender of certain amount in the name of various

assessee(s).But merely making surrender in the name of other

persons cannot give free hand to revenue authorities to make the

addition in the hands of the persons who has surrendered on behalf

of other persons. When the documentary evidences were available

which in this case are primary statement of Smt. Sarita Chawla

about the source of cash found in her locker, the action of the Ld. 106

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group A.O to make the addition in the hands of the assessee Shri Prem

Chawla was duly unjustified and thus deserves to be deleted. We

therefore set aside the finding of Ld. CIT(A) and allow Ground No.7

of assessee’s appeal for Assessment Year 2006-07.

2000-01 to 2006-07 are consequential, premature and general in

nature which needs no adjudication.

in Appeal SS(A) No.172 to 175/Ind/2015 and ITA No.143/Ind/2015

are partly allowed as per the terms indicated above.

IT(SS) 164 to 169/Ind/2015 in the case of Smt. Sarita Chawla.

2000-01 to 2003-04 the finding of Ld. CIT(A) is challenged for

confirming the addition of Rs. 34,800/-, 36,600/-, Rs.44,300/- and

Rs.34,650/- towards computer programming activity income. Brief

facts relating to this issue are that the assessee disclosed income

from computer programming in the return of income filed for

Assessment Years 2000-01 to 2003-04. As the assessee could not 107

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group provide documentary evidences to explain the source of this income

Ld. A.O estimated it on a higher amount and made the aforesaid

additions. In the second round of assessment on the direction of

this Tribunal these additions were again made and the same were

subsequently confirmed by Ld. CIT(A) against which the assessee is

in appeal before us.

Diploma in computer programming from NIT and provided services

to computer programmers. As the assessee’s income was less than

the limit prescribed u/s 44A of the Act she is not required to

maintain regular books of accounts. The addition made by Ld. A.O

is entirely based on estimation and guess work. No incriminating

material was found during the course of search.

argued supporting the orders of both the lower authorities.

placed before us. Through similar Ground No.2 for Assessment

Years 2000-01 to 2003-04 assessee challenged the addition of

Rs.34,800/-, Rs.36,600/-, Rs.44,300/- and Rs. 34,650/- 108

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group respectively. These additions was made by Ld. A.O estimating the

income from computer programming work on a higher amount than

the amount disclosed by the assessee in her Income Tax Return.

Ld. CIT(A) also confirmed the addition after giving a general finding.

programming from National Institute of Information Technology.

She is well versed with computer programming work. She has been

disclosing this income in the return filed u/s 139 of the Act for

Assessment Years 2000-01 to 2003-04. No incriminating material

was found during the course of search. The addition made by the

Ld. A.O is purely on estimation and guess work. The assessments

are framed u/s 153C r.w.s. 143(3) of the Act. No reference has

been made to any incriminating material which could show that the

assessee has not disclosed correct income from computer

programming work. In these given facts and circumstances of the

case the addition made on estimated basis without considering the

fact that the assessee is a qualified Diploma holder and possessed

professional expertise to earn such income, is not justified and thus

deserves to be deleted. We accordingly allow Ground No.2 in the 109

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group case of Smt. Sarita Chawla in IT(SS) A No.164 to 167 and delete

the addition of Rs.34,800/-, Rs.36,600/-, Rs.44,300/- and Rs.

34,650/- for Assessment Years 2000-01 to 2003-04 respectively.

of Rs.82,350/- is in challenge which was confirmed by Ld. CIT(A).

Ld. A.O made this addition on being not satisfied with the

unexplained opening capital shown in the balance sheet. Ld.

CIT(A) confirmed the addition. Now the assessee is in appeal before

tribunal.

Rs.4300/- was earned on the sundry advances of Rs.82,000/-.

This advance was given out of the opening balance as per regular

returns filed by the assessee prior to search.

argued supporting the orders of both the lower authorities.

placed before us. Through Ground No.3 for Assessment Year 2000-

01 assessee has challenged the action of Ld. CIT(A) confirming the

addition of Rs.82,350/- being opening balance of capital account. 110

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group We observe that on account of search the assessee was also

subjected to scrutiny from Assessment Year 2001-02 to 2006-07.

There is a opening capital balance as on 1.4.2000 which the

assessee has shown in the Income Tax Return filed. Such opening

balance are claimed to be part of accumulated savings from past.

As the assessee could not justify the basis of opening capital she

was subjected to addition. We however are of the considered view

that looking to the fact the assessee being married should have

received gifts from family members and is filing Income Tax Returns

regularly, the accumulation of past saving to the extent of

Rs.82,350/- should not have been doubted. The assessee being a

professional Diploma holder, savings from petty income earned from

profession and other gifts in cash received on ceremonial occasions

seems to have been applied to fetch the income by way of giving

sundry advances for earning interest income. We therefore delete

the addition of Rs.82,350/- and allow Ground No.3 raised for

Assessment Year 2000-01.

through which the assessee has challenged the finding of Ld.CIT(A) 111

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group confirming the addition of unexplained investment in the firm M/s.

Atul Solvo Chem at Rs. 1,99,900/-. During the first round of

assessment proceedings assessee was asked to explain the

investment in M/s Atul Solvo Chem at Rs.1,99,900/-. Assessee

failed to satisfy the Ld. A.O. Ld. A.O made addition of

Rs.1,99,900/-. In the second round also the submissions of the

assessee were not found satisfactory by the Ld. A.O and again the

addition was made. Assessee could not get any relief from Ld.

CIT(A). Now the assessee is in appeal before the Tribunal.

made in M/s Atul Solvo Chem is genuine. M/s. Atul Solvo Chem is

a partnership firm in which the assessee’s husband and mother in

law are partners. Certain payments were made to the suppliers of

M/s Atul Solvo Chem by the assessee. All these transactions were

during the pre search period and have been shown in the balance

sheet of M/s AtulSolvoChem, thus no addition was called for.

argued supporting the orders of both the lower authorities.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 129. We have heard rival contentions and perused the records

placed before us. Through Ground No.3 raised for addition of

Rs.1,99,900/- for unexplained investment by the assessee in the

firm M/s Atul Solvo Chem is in challenge. It is an undisputed fact

that M/s Atul Solvo Chem is a partnership firm which is run by the

family members of the assessee namely her husband, Shri Prem

Chawla and mother in law Late Smt. Sudesh Chawla. M/s Atul

Solvo Chem is regularly assessed to tax. The assessee made

payments through account payee cheques to the two suppliers of

M/s. Atul Solvo Chem namely M/s Mahindra Trading Co and M/s

Neptune, Indore. Ledger account of Smt. Sarita Chawla in the

books of M/s Atul Solvo Chem placed at page 188 of paper book

shows the relevant transactions. The evidence placed before us is

sufficient to explain the investment made in M/s AtulSolvo Chem.

We thus find no justification in the addition of Rs.1,99,900/- made

by the Ld. A.O which deserves to be deleted. We accordingly order

so and set aside the finding of Ld. CIT(A) confirming the addition of

Rs.1,99,900/- and allow Ground No.3 raised for Assessment Year

2003-04. 113

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 130. Now we take up Ground No.2 for Assessment Year 2004-05

relating to disallowance of retail trade expenses. Ld. A.O made

addition by way of estimating income at Rs. 1,75,000/- as against

Rs.1,26,360/- shown by the assessee. Addition of Rs.50,640/- was

made by the Ld. A.O in the first round, this addition was deleted by

Ld. CIT(A). In the set aside proceedings Ld. A.O added the same

suspecting it to be undisclosed income of Shri Prem Chawla

(assessee’s husband). Ld. CIT(A) again gave relief of Rs.2000/- on

account of arithmetic error and confirmed the addition for

Rs.48,640/-. Now the assessee is in appeal before the Tribunal.

filed her return of income u/s 44AF of the Act and has shown as

income at 20% of net sales which is more than the minimum

standards prescribed by the Act. Assessee is not required to

maintain regular books of accounts. No incriminating material

against the assessee was found during the course of search.

supporting the orders of both the lower authorities.

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 133. We have heard rival contentions and perused the records

placed before us. Addition of Rs.48,640/- has been challenged by

the assessee through Ground No.2 for Assessment Year 2004-05 for

alleged estimation of retail trade expenses at Rs.1,26,360/-. The

Ld. A.O estimated income at Rs.1,75,000/-, addition of Rs.50,640/-

was made and Ld. CIT(A) sustained it to Rs.48,640/-.

transaction of sales by the assessee were found. Income has been

offered u/s 44AF of the Act by the assessee showing 20% of net

profit which is higher than the percentage required to be shown u/s

44AF of the Act. Under these given facts estimating the income at

higher amount will tantamount to addition without any basis which

in our view deserves to be deleted. Thus the finding of Ld. CIT(A) is

set aside and the addition for retail trade expenses at Rs.48,640/-

is deleted. Ground No.2 for Assessment Year 2004-05 is allowed.

through which the assessee has challenged the finding of Ld. CIT(A)

confirming the addition for unexplained loans and sundry creditors

at Rs.1,87,500/-. There were certain petty loans of Rs.60,000/- 115

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group from 4 persons at Rs.15000/- each and sundry creditors of

Rs.1,27,500/- shown in the balance sheet filed for Assessment Year

2004-05. Ld. A.O made the addition on being not satisfied with the

explanation given by the assessee being alleged loan and sundry

creditors. Assessee could not find any favour from Ld. CIT(A). Now

the assessee is in appeal before the Tribunal.

submissions placed at paper book at page 9 & 10 contending that

the unsecured loans were taken in the personal capacity and were

returned in subsequent years. Sundry creditors at Rs.1,27,500/-

includes the outstanding expense of Rs.42,500/- and outstanding

purchase of Rs.85,000/-. Assessee has shown the income u/s

44AF of the Act and was not required to maintain books of

accounts.

supporting the orders of both the lower authorities.

placed before us. Assessee has challenged the addition of

Rs.1,87,500/- confirmed by Ld. CIT(A) which was made by Ld. A.O 116

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group towards unexplained loans of sundry creditors. The impugned

amount of Rs.1,75,800/- is towards unsecured loan of Rs.60,000/-

and sundry creditors of Rs.1,27,500/- for which Ld. Counsel for the

assessee has given following submissions;

Name Amount Remarks 1. The Shobha Mohabe 15,000 loans are taken by the Madhu Mohabe 15,000 assessee in her personal capacity is not a business loan. Prabha Mohabe 15,000 2. These loans were returned in the Sangeeta Mohabe 15,000 subsequent years. 3. In the Balance Sheet of the assessee (PAPER BOOK-127), these amounts are duly reflected. 60,000/- 1. In Creditors 1,27,500 the Balance sheet of the assessee (Annexed at PAPER BOOK-127), this amount is shown as Sundry Creditors. 2. This amount comprises of Rs.42,500/- on account of unpaid purchases. 3. That the assessee is not required to maintain books of accounts u/s 44AA Total 1,87,500

by showing net profit as per the provisions of Section 44AF of the

Act applicable to retail trade business. Assessee has shown higher

amount of net profit as per Section 44AF of the Act and since the

assessee is falling under this provisions she was not required to 117

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group maintain regular books of accounts. This claim of the assessee has

not been challenged by the revenue authorities. No incriminating

material was found during the course of search. Assessee made

this claim u/s 44AF of the Act in the return filed prior to the

conduct of search. When the sales effected by the assessee are not

in challenge nor any incriminating material has been found during

the course of search additions made in the proceedings u/s 153C

r.w.s. 143(3) of the Act are uncalled for. Even otherwise unsecured

loans are received by the assessee in personal capacity and is

claimed to have been returned in the subsequent years. The alleged

sundry creditors at Rs.1,27,500/- comprises of outstanding

expenses of Rs.42,500/- and unpaid purchases of Rs.85,000/-

which seems to be genuine as part of business to carry out retail

trade. We thus direct the revenue authorities to delete the addition

of Rs.1,87,500/- and allow ground raised by the assessee for

Assessment Year 2004-05.

through which the assessee has challenged the finding of Ld. CIT(A)

confirming the action of Ld. A.O of treating the agriculture income 118

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group as income from other source. We observe that similar issue came

up before us in the case of assessee’s husband Shri Prem Chawla

and the facts and issues remain the same. The action of the Ld. A.O

confirmed by Ld. CIT(A). Ld. Counsel for the assessee made similar

submission that there was a batai agreement with Shri Ajay Kumar

Sahu dated 1.5.2003 and the sales are evidenced by sale bill of

Krishi Upaj Mandi.

supporting the orders of both the lower authorities.

placed before us. Through Ground No.4 assessee has challenged

the action of Ld. CIT(A) confirming the addition for Rs. 1,51,775/-

treating the claim of agriculture income as income from undisclosed

sources. We observe that the assessee had not shown any

agriculture income prior to Assessment Year 2004-05 and

subsequent to Assessment Year 2005-06 which creates suspicion

about the genuineness of agriculture income shown for Assessment

Year 2004-05. But the evidence placed by the assessee before the

lower authorities and before us clearly spells out that the assessee 119

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group had earned income from agriculture. The batai agreement with Shri

Ajay Kumar Sahu dated 1.5.2003 and sales bills of Krishi Upaj

Mandi, Bairagarh placed at paper book page 131 to 135 supports

the claim by the assessee. In both the rounds of assessment

proceedings no efforts were made by the lower authorities to make

enquiry about the genuineness of the claim of agriculture income

made by the assessee. In these given facts and circumstances

where the claim of the assessee is rejected without conducting

proper enquiry to hold the documents as bogus, the action of the

Ld. A.O of treating the agriculture income as income from other

source is not justified. We thus set aside the finding of Ld. CIT(A)

and allow Ground No.4 raised by the assessee holding that the

assessee had earned income from agriculture at Rs.1,51,775/-

during Assessment Year 2004-05.

Year 2005-06 through which the addition of Rs.94,426/- has been

challenged by the assessee. This addition made by the Ld. A.O on

account of income from computer programming. Ld. CIT(A) has

confirmed this addition stating that since this ground was not 120

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group raised in the first round of appeal assessee cannot claim it in the

second round. Now the assessee is in appeal before the Tribunal.

submissions.

supporting the order of both the lower authorities.

placed before us. Assessee has challenged the addition of

Rs.92,426/- made by Ld. A.O and confirmed by Ld. CIT(A). On

perusal of the written submissions and on going through the

computation of income filed by the assessee along with Income Tax

Return we observe that there was an apparent error made by the

Ld. A.O in understanding the computation of income. We find that

in Profit & Loss account of the business shown by the assessee,

assessee has also shown salary income of Rs.64,000/- and interest

and bank interest of Rs. 28,426/-. While preparing computation of

income assessee has reduced these two incomes from net profit

shown in the Profit & Loss account to arrive at the profit from

business. Salary income of Rs.64,000/- and interest income of 121

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Rs.28,426/- stands duly offered to tax under the head income from

salary and income from other sources in the computation of

income. The copy of the same is fled at page 148 of paper book. We

therefore in the given facts and circumstances of the case find that

the alleged amount of Rs.92,426/- disallowed by the Ld. A.O

treating it as expenses of M/s Sarita Consultancy not allowable is

uncalled for as the alleged amount of Rs.92,426/- comprises of

income from salary and bank interest which are already offered to

tax. Thus we direct the revenue authorities to delete the addition of

Rs.92,426/- and allow Ground No.2 raised by the assessee.

Assessment Year 2005-06 through which the assessee has

challenged the finding of Ld. CIT(A) confirming the action of Ld. A.O

of making addition for unexplained capital account addition at Rs.

8,73,364/-. During the assessment proceedings assessee was

directed to explain the source of the capital addition. Assessee

made submissions which are not found satisfactory. No relief was

given by Ld. CIT(A) and now the assessee is in appeal before the

Tribunal. 122

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 148. Ld. Counsel for the assessee vehemently argued supporting

the written submissions placed at page 14 & 15 of paper book

contending that all the amounts are duly explained which includes

the amount utilized through limits given by State Bank of India,

payments made from M/s Anand Organics ( Proprietory concern of

assessee’s husband) and withdrawal from personal account and

depositing through account payee cheque in M/s Anand Coatings.

supporting the orders of both the lower authorities.

placed before us and carefully gone through the records. Through

Ground No.3 addition of Rs.8,73,364/- is in challenge for

Assessment Year 2005-06. Ld. CIT(A) confirmed the addition made

by Ld. A.O on account of unexplained addition to capital account

during the year. We observe that the assessee runs sole

proprietaryship concern M/s Anand Coatings, this concern was

stated during the year. To run the business assessee transferred

funds towards capital. The alleged amount of Rs.8,73,364/-

majorly includes 3 items totaling to Rs.8,72,000/- for which the Ld. 123

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Counsel for the assessee has again given the particulars in the

chart which is reproduced below:-

A.Y Addition CIT(A) Submission PB ref remarks 2005- 1,80,000 Limit The M/s Anand - 06 utilized appellant Coatings is a from SBI has taken separate overdraft, accounting which entity from the should proprietor. The appear in overdraft was the liability taken in side of the personal balance capacity of the sheet assessee and instead of introduced as a capital capital. account 2,72,000 Paid from The There is a debit Assessee’s Anand appellant balance in the ledger Organics, a failed to name of assessee account in proprietary furnish any in the books of the books of concern of cogent Anand Orgnics. M/s Anand her evidence in Organics is husband. this regard. annexed at PAPER BOOK-160. The receipt was through banking channel. 4,21,000 Withdrawal The source The amount was Capital from Sarita of such introduced by Account of Chawla’s funds in the way of account M/s Anand personal personal payee cheques Coatings for account account of from the relevant and the assessee assessee’s assessment deposited is personal account year in Anand unexplained which is evident annexed at Coatings. . from the Capital PAPER of M/s Anand BOOK-158- 124

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group Coatings. 159. 2006- 5,31,356 Income Accepted The assessee Return filed 07 from sale of the received this u/s 139 shares submission amount on annexed at introduced and deleted account of sale PB187. in Anand the addition of her shares, Computatio Coatings and then n of income introduced as showing capital. The long capital gains term capital is annexed gains arising of at PB-188. such sale is also reflected in the return filed by the assessee.

limits utilized from State Bank of India, Rs.2,72,000/- has been

received from M/s Anand Organics (Prop. Prem Chawla who is the

husband of the assessee) and Rs.4,21,000/- through account payee

cheque on various dates from assessee’s own saving bank account

held with Bank of India. We observe that all the above stated

transactions are appearing in the capital account of Smt. Sarita

Chawla which is part of audited profit & loss account. Balance

sheet of M/s Anand Coatings is duly audited u/s 44AB of the Act.

The alleged addition of Rs.8,72,000/- are of those transactions

which are entered through banking channel. All these details are

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group available before the revenue authorities. No efforts were made to

verify the genuineness of the claim made by the assessee. The

addition has been made by the Ld. A.O on summary basis even

when the assessee passed through the assessment proceedings

twice. Even Ld. CIT(A) has not made any efforts to examine the

transactions. In these given facts and circumstances of the case we

find no reason to disbelieve the claim made by the assessee which

are through banking channel, through her own saving bank

account and some transactions through her huband’s proprietory

concern which is also a part of appeal before us. We thus direct the

revenue authorities to delete the addition of Rs.8,73,364/-. Thus

the finding of Ld. CIT(A) is set aside and Ground No.3 of the

assessee for Assessment Year 2005-06 is allowed.

consequential, premature and general in nature which needs no

adjudication.

2000-01 to 2004-05 is allowed and for Assessment Years 2005-06

and 2006-07 is partly allowed. 126

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group 154. In the result appeals filed by the assessee Late Smt. Sudesh

Chawla (Through Legal Heir Shri Prem Chand Chawla) through

IT(SS)A No.158 to 163/Ind/2015 for Assessment Year 2000-01 to

2005-2006 & ITANo.441/Ind/2015 for Assessment Year 2006-07

and that of Revenue’s Appeal for Assessment Year 2006-07 in ITA,

No.405/Ind/2015 are partly allowed. In the case of Shri Prem

Chawla for all the appeals for Assessment Years 2000-01to 2005-06

in IT(SS)A No.170 to 175/Ind/2015 and for Assessment Year 2006-

2007& ITA. No.443/Ind/2015 are partly allowed & for Smt. Sarita

Chawla in IT(SS)A No.164& 168/Ind/2015 for Assessment Year

2000-01 & 2004-05 are allowed and IT(SS)A No. 169/Ind/2015 for

A.Y. 2005-2006 & ITA. No.442/Ind/2015 for A.Y.2006-07are partly

allowed.

Order was pronounced in the open court on 26 .11.2020.

Sd/- Sd/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER

Indore; �दनांक Dated : 26th November, 2020 /Dev

IT(SS)ANos.158 to 175/Ind/2015 && others Chawla Group

Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Assistant Registrar, Indore