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Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH
Before: Shri Rajpal Yadav & Shri Amarjit Singh
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before: Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member ITA No. 1848/Ahd/2016 Assessment Year 2010-11
The DCIT, M/s. Shree Dhain Cen. Cir-2 Auto Transport Vadodara Vs Corp., 49-B, Chetna (Appellant) Kendra, Nr. Golden Chokdi, Baroda PAN: AALFS0662B (Respondent)
Revenue by: Shri/Ms. Aparna Agrawal, CIT-D.R. Assessee by: Shri Mukund Bakshi, A.R. Date of hearing : 19-02-2019 Date of pronouncement : 16-05-2019 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s revenue for A.Y. 2010-11, arises from order of the CIT(A)-12, Ahmedabad dated 18-03-2016, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.
In this case a search action u/s. 132 of the act was carried in the case of the assessee on 11th Feb, 2010 along with Dhain Group of cases.
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Thereafter, the assessee has filed return of income declaring total income of Rs. 2,72,25,380/-. Subsequently, a notice u/s. 143(2) of the act was issued on 3rd June, 2011. During the course of search, various incriminating books of account and documents were found and seized from various premises of the assessee group on the basis of such documents and evidences the assessee has made disclosure of Rs. 2.01crores as unaccounted income. The facts of the case pertaining to the issues in appeal are discussed while adjudicating the two grounds of appeal filed by the revenue as under:-
Ground No. 1 (Restricting the addition to the amount of Rs. 15.75 lacs by the CIT(A) out of total addition made on account of undisclosed income of Rs. 23636431/- by the assessing officer)
During the course of search a loose paper filed containing page no. 1 to 100 was found and seized vide annexure A-12 from the possession of M/s. Dhain Auto Logistics Pvt. Ltd. During assessment the assessing officer observed that reverse of page no. 73 to 84 contained noting of account maintained for the period 12th Sep, 2009 to 7th December, 2009. Vide notice u/s 142(1) of the act dated 24.08.201, the assessee was asked to explain the aforesaid entries. The assessee explained that these were rough working and calculations. To verify the contents of noting summon u/s 131 was issued to Shri Gopesh Singhal who had clarified that these noting represents cumulative total of loan given in respect of Sharaffi business. The assessee filed a detailed submission dated 21st December, 2011 explaining the nature of entries at page no. 73 to 84 of Annexure A-12. Such explanation was reproduced at page no. 3 to 11 of the assessment order. The assessee has explained that pages no. 73 to 84 represent
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cumulative receipts and payments with regard to unaccounted advances given and received back as reproduced at page no. 5 of assessment order. The assessee has also explained that how a maximum amount of advance of Rs. 40 lacs can show accumulated balance over a period of time up to Rs. 1 crore by way of an example. The assesse has also explained that the outstanding advances or investments just a day prior to the search was at Rs. 1.43 cores and it was also explained that this amount was never exceeded more than Rs. 1.47 cores as per backside page no. 73 to 74 of Annexure A- 12. The assessee explained that the purpose of such noting on page no. 74 to 83 was to work out available cash balance after incorporating the cash balance as per rough cash book of Shri Dhain Auto Transport Corporation and Shri Dhain Auto Logistics Pvt. Ltd. two group concerns of the assessee. The assessing officer has not accepted the explanation of the assessee as he was of the view that the entries on the left hand side of these pages of Annexure A-12 represent unaccounted receipts and the entries on the right hand side of the pages represent unaccounted investment/advances. The assessing officer was also of the view that in the statement given u/s. 132(4) by Shri Gopesh Singhal on 12th Feb, 2010 has admitted total unaccounted income of the firm for financial year 2009-10 to the amount of Rs. 2,01,24,195/-,however, no reference was made to the accounts appearing at the above mentioned pages of Annexure A-12. Therefore, the assessing officer observed that the unaccounted income as apparent from the noting on the pages as per annexure A-12 was much more than the unaccounted income undisclosed by the asssessee. The assessing officer observed that on page no. 74 of Annexure A-12 the first entry on 12 Sep, 2009 was the opening balance of Rs. 4,07,06,600/- as the receipts and the other entry on
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the same date on the other side of Rs. 4,05,30,311/- was the amount of investment. He was of the view that assessee had prepared this account from 12th Sep, 2009 with opening balance of investment of Rs. 4,05,30,311/-. The assessing officer has stated that explanation of the assessee was not acceptable as the assessee had not maintained proper books of accounts and there was no complete detail of sharaffi business . The various factors on the basis of which the explanation of the assessee was not accepted by the assessing officer can be summarized as under:- “i) During course of the search, the contents were stated to be rough working and no explanation was offered. ii) Even in the statement of Shri Gopesh Singhal recorded u/s. 132(4) on 12.2.2010, the assessee had admitted a total unaccounted income at Rs. 2,01,24,195/- wherein no reference to the pages of Annexure a/12 was made. iii) The Assessing Officer while referring to the contents of page nos. 74 to 83 as reproduced in the order itself on page nos. 12 & 13 has pointed out that the first entry is made on 12.9.2009 where an opening balance of Rs. 4,07,06,600/- is noted on the receipt side and an amount of Rs, 4,05,30,311/- is noted on the investment side. According to the A.O., the contention of such amount being cumulative balance up to 12.9.2009 is to be rejected for the following reasons: a) There is no document or material for the record of the transaction prior to 12.09.2009 and, therefore, it is very much clear that the amount of investment as on 12.09.2009 is Rs. 4,05,30,311/-. b) The contention of the appellant that the total of investments made on 08.09.2009 is Rs. 1,47,26,005/- which supports that the maximum of investment is such sum on that date and therefore, the investment of Rs. 4,05,30,311/- as on 12.09.2009 is not possible, also requires to be rejected as the notings of page 73 of Annexure A/12 recording the investments of 08.09.2009 shows a receipt of Rs. 1,08,44,743/- on the same date and investment of Rs. 1,47,26,005/-. It is to be inferred that the notings record the receipt and payment of that particular day and not the total of investments as claimed. c) on reference to Page 73 of Annexure A/12 , it can be seen that there is a recording on the receipt side of Rs. 1,08,44,743/- on 08.09.2009 and that there is an advance of Rs. 1,47,26,005/-. Even accepting the explanation of the appellant, it can be seen that the assessee has received the amount of Rs. 1,08,44,743/- on 08.09.2009 indicating that the advance of such amount was made prior to that date which is now received and, therefore, the total of advances as per this document is to be taken at Rs. 2,55,70,748/- and not Rs. 1,47,26,005/- as explained by the assessee. d) The contention that the notings on Page 74 - 85 of A/12 records in the circled figure the day-to-day cash balance available with the assessee is also liable to be rejected as according to the assessee also, there is a difference of Rs. 4178 as per the balance drawn and the physical cash available meaning that the explanation of the assessee is not correct. e) There is no supporting document or material to accept the explanation of the assessee that the balances of advances and receipts are cumulated. iv) The Assessing Officer has further referred to the notings of page no. 13 of Annexure A/1 seized from the residence of Shri Umesh Singhal, partner of the firm. Such document is reproduced on page no. 15 of the assessment order. Referring to such page, the A.O. has pointed out that the
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dates of advances/investments are mentioned on this page. They are made prior to 8.9.2009 but do not appear on page no. 73 of Annexure A/12. v) The assessee has never disclosed any income from sharaffi business in the past and that the particulars of investment noted on different dates are not providing complete picture and the accounts maintained by the assessee as appearing on page nos. 74 to 83 are only and real account of total affair of the undisclosed sharaffi business which has started with an opening balance of Rs. 4,05,30,311/- source of which is not explained. The cumulative advance is Rs. 4,05,30,311/- which is to be held as unexplained investment on 12.9.2009. vi) The Assessing Officer, further referring to page no. 83 of Annexure A/12 has noted that such investment on 7.11.2009 has increased to Rs. 4,38,32,300/-and the difference of the same is Rs. 32,30,120/- (Rs. 4,38,32,300/- minus Rs. 4,05,30,311/-). This difference is also held to be unexplained. It was thus held by the AO that total undisclosed investment/advances of the assessee is Rs. 4,37,60,431/- against which the amount of disclosure is Rs. 2,01,24,000/~ and hence the balance Rs. 2,36,36,431 /- (Rs. 4,37,60,431/- minus Rs. 2,01,24,000/-) is to be added to income.”
Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has partly allowed the appeal of the assessee by restricting the disallowance to the amount of Rs. 15.75 lacs. The detailed findings and relevant part of the decision of ld. CIT(A) is reproduced as under:- “2.3 Before me, the Ld. A.R. has made detailed written submissions, which, in the main, are the reiteration of submission before the AO, discussed supra. The Ld. AR has during the course of hearing, while taking me through the paper book pages 1 to 148, pointed out firstly that detailed written submissions made before the AO, relying on the seized documents themselves available on page no.81 to 141 of the paper book, to contend that the interpretation/inference proposed and adopted by the AO is baseless and contrary to the evidence on record have completely been overlooked and brushed aside by the AO on flimsy grounds. The Ld. AR at the outset, also submitted that the addition is based merely on surmises and conjectures as there is no basis for the interpretation of the seized documents adopted by the AO. The Ld. AR also submitted that on page no.74 to 83 of Annexure A/12, there is absolutely no narration with regard to the nature of transaction represented by any of the entries therein, and therefore, these dumb documents could not have at all been relied upon, much less arbitrarily interpreted, as has been done by the AO. As per the Ld. AR, even if there is complete narration completely exhibiting the nature of transaction, time of transaction and the parties with whom the transactions have taken place available in the seized documents, which obviously is not the case, then also the AO could not have adversely held against the appellant without bringing in corroborative independent evidence to establish that transactions as depicted in the seized documents, in fact took place, as mandated by Gujarat High Court in the case of Maulikkumar K. Shah 307 ITR 137. Similarly, on the AO's action in discarding appellant's explanation, the Ld. AR submitted that the appellant's explanation before the AO to the effect that the seized documents 74 to 83 of A/12 represent cumulative receipts and payment primarily to arrive at unaccounted cash balances has been arbitrarily rejected by the AO without such authority with him in law, particularly without bringing in positive evidence that the explanation is false. Further, the AR submitted that page 65 of Annexure A—r (page 139 of paper book), representing the deployment of unaccounted funds just a day prior to the search supports the explanation offered by the appellant which has completely been overlooked by the AO. In conclusion, the AR also submitted that the Ld. AO has completely contradicted himself in, on the one hand, giving the reduction of disclosed amount of Rs.2.01 crores which included a component only of 26.41 lacs as unaccounted advances and on the other hand, holding that the total amount of Rs.4.37 crores represents unaccounted advances as per the seized records as per
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A/ 12 page 74 to 83, Part of the written submissions, excluding the averments/data available in the assessment order (page no.3 to 11) is reproduced as under: "A search was carried out at the premises of the appellant firm, group concerns and the residences of the partners on 11/02/2010. In the course of search, various documents/incriminating material was found and seized. In the course of search and in the statement recorded u/s. 132(4) on 12.02.2010, the partner of the appellant firm Shri Gopesh Singhal after referring to the incriminating material and the notings thereon, declared an undisclosed income amounting to Rs. 2,01,24,195/-. Shri Gopesh Singhal had admitted to having given advances against cheques of various parties which is out of undisclosed income of the current year (kindly refer to question no. 11 on Page Nos.4 & 5 of the Paper Book). Subsequent thereto, after receiving the photocopies of the seized material and also on verification with the records, the appellant filed a detailed submission to the DDIT vide letter dated 23.04.2010 explaining the details of the disclosure of Rs. 201.24 lakhs and also the manner of its quantification. The copy of such letter is placed at page nos. 6 - 11 of the Paper Book. Based on the above declaration and clarification submitted on 23.04.2010, the appellant furnished its return of income for the year, wherein the amount of Rs. 2,01,24,195/- as disclosed in the course of statement recorded u/s. 132(4) u/as offered as undisclosed income. In the course of assessment proceedings, the appellant was catted upon to explain the contents of the various incriminating materials seized including the ones seized and inventorized at page no. 74 to 83 of Annexure A/12 vide notice u/s. 142(1) dated 24.08.2011. The copy of notice dated 24/08/2011 is enclosed at page nos. 12 - 32 of the Paper Book (kindly refer relevant Page No. 27 of the Paper Book). The appellant, in response to such notice, furnished its explanation vide letter dated 13/10/2011 asunder: Page No, Explanation Backside of Contains the rough working and made by the page 74 to 83 calculations accountant of the assessee group. The copy of the letter dated 13.10.2011 is enclosed at page nos. 33 - 45 of the Paper Book and the relevant submission is at page nos. 41 and 45 of the Paper Book. The appellant, in support of its above explanation also produced the rough cash books maintained for Shri Dhain Auto Logistics Pvt. Ltd. and M/s. Dhain Tyre House to corroborate the fact that the amounts written at page no. 74 to 83 represented the workings based on such rough cash books. The rough cash books as produced before the Ld. A.O. are also produced for the perusal of your kind honour. Not satisfied with the explanation of the appellant, a summons was issued u/s.131 and further detailed explanation dated 21/12/2011 was made to the Ld. A.O. The copy of detailed explanation vide letter dated 21/12/2011 is enclosed at page no. 46 - 60 of the Paper Book (kindly refer Page No. 46 to 54 of the Paper Book). The explanation of the appellant is also reproduced in the assessment order at page nos. 3 to 11 and being relevant is reproduced hereunder: (Not reproduced as available on page 3 to 11 of the assessment order) The Ld. A.O., despite having detailed explanation on record, held that the explanation was unacceptable for the following reasons: i) In the letter dated 13/10/2011, no detailed explanation was given. ii) In the disclosure of the amount of Rs. 2,01,24,195/-, no reference is made to the page nos. 74 to 83 ofAnnexure A/12, in) The conduct of sharaffi business was never admitted and this explanation was made for the first time. The Ld. A.O. further held that the explanation was also not acceptable for the following reasons:
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a) The details of' advances etc. appearing in different pages are maintained in piecemeal and do not represent the total investments of the appellant. b) The explanation with respect to the total of balance lying at office amounting to Rs.1,47,26,005/- on 8.9.2009 included in the total of disclosure of Rs.2,01,24,195/- as mentioned to be noted on the reverse of page no. 74 is actually noted on the reverse of page no. 73. c) The noting of the investment in sharaffi business as on 8.9.2009 referred above represents only the partial account of the sharaffi business and in support of this contention, the Ld. A.O. has pointed out that of the total ofRs. 108.44 lakhs noted on receipt side, the amount of advance / receivables include an amount of Rs. 106.25 lakhs receivable from Shri Umesh, one of the partners leaving only a marginal amount as given to others and, therefore, this amount cannot be said to be representing the total unaccounted sheriff business. To corroborate his contention, the Ld. A.O. has further referred to page no. 13 of Annexure A/1 seized from the residence of Shri Umesh Singhal which is scanned and reproduced in the assessment order at page no. 15 and a copy thereof is placed at page no. 62 of the Paper Book. The appellant respectfully submits that the findings of the Ld. A. O. are contrary to facts as existing on record, or are without affording any opportunity to the appellant as can be demonstrated on the basis of following submissions: i) In the letter dated 13.10.2011 (copy enclosed at page nos. 33 - 45 of the Paper Book), the appellant has explained the content to be rough working and calculations made by the Accountant .of the assessee group. The appellant has enclosed the photocopy of page nos. 73 to 85 ofAnnexure A/12 as placed at page nos. 61 to 75 of the Paper Book and on perusal of the same, your honour would appreciate that the same is certainly a rough working and calculations made by the Accountant. This fact is further corroborated from the perusal of the rough cash book of M/s. Shree Dhain Auto Logistics Put. Ltd. and the appellant firm produced before your honour to show that the daily balances as obtained from the rough cash books of both the concerns are recorded on page nos. 74 !o 83 and therefore, it is in this context the notings were explained to be rough working and calculations. On further enquiry, the appellant has furnished the detailed explanation vide its letter dated 21.12.2011 as discussed above and, therefore, in the humble opinion of the appellant, the mentioning of the fact of rough calculation by the Accountant is not incorrect. ii) The disclosure of amount of Rs. 2,01,24,195/- is based on the contents of various seized material found and seized during the course of search. This material included the recording of the unaccounted advances / loans given out of undisclosed income. The disclosure was made based on the following documents: a) Annexure A/12, Page No. 73 to 85 (copy enclosed at Paper Book Page No. 61 to 75), and Annexure A/4, Page Nos. 1 to 66 (copy enclosed at Paper Book Page No.76 to 140) for arriving at the figure ofRs. 147.13 lakhs which is the difference in cash found physically and cash found to be recorded in books. The difference between the cash available on records and cash actually found almost tallied with the unaccounted advances made prior to the date of search i.e. 11/02/2010 and as recorded on page No. 66 of Annexure A/4 (relevant page no. 139 & 140 of the Paper Book). b) Annexure A/12, Page Nos. 1 to 72 containing the cheques received by the appellant against advances given including the cancelled cheques. The advances outstanding were identified as against cheques at page nos. 10, 52, 53, 62, 63, 64, 65, 66, 67, 68, 69 & 70. The particulars of these cheques is tabulated below: Page No. of Annexure A/12 Name of the person drawn the Amount (Rs.) cheque 10 Super Mewar Transport 22,000 Company
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52 Star Engineering Works 10,000 53 Divyan P. Patni 100,000 62 Excel Transport Service 15,000 63 Chaudhary Transport Co. 300,000 64 Nishu Roadlines 250,000 65 PathanShafi Ahmed 18,000 66 Dave Travels 500,000 67 Delhi Howrah Roadlines Put. 200,000 Ltd. 68 Divyan P. Patni 100,000 69 Prakruti Develpers 1,500,000 70 Garg Transport Co. 850,000 Total 3,865,000 The above fact is confirmed by the partner Shri Gopesh Singhal in the statement recorded u/s. 132(4) and in response to question no. 1 1 (refer page no. 4 & 5 of the Paper Book). It is further submitted that out of the above list, cheques totaling Rs. 38.65 lakhs are already included in the amount of Rs. 147.13 lakhs stated above and is found to be noted on the summary of total advances as on 11.02.2010 as placed at page no. 139 & 140 of the Paper Book. c) A further amount of Rs. 15.51 lakhs was added to cover up for any discrepancy that may be found and is not disclosed against any specific item of investment (refer page no. 4 & 5 of the Paper Book). The appellant submits that no reference was made to page nos. 74 to 83 of Annexure A/12 while quantifying the disclosure of Rs. 201.24 lakhs as these pages did not reflect the recording of any undisclosed investment or income and that any amount included therein was already included in Rs. 201.24 lakhs. It is further submitted that if there was any undisclosed income embedded in these documents, the search party as also the Ld. A.O. would have carried further investigations. The absence thereof indicates that the contents as explained were found to be correct by the search party itself. iii) The allegation of the Ld. A.O. that the conduct of sharaffi business was never admitted is devoid of facts as is evident from the statement of Shri Gopesh Singhal dated 12.02.2010 wherein in response to question no. 11, the appellant has stated to have given unaccounted advance (refer page no. 4 of the paper book). Moreover, vide letter dated 23.04.2010 as submitted to the Ld. Investigating Officer, the appellant has clarified of its carrying out money lending business out of books (refer page no. 8&llof the paper book). It is thus submitted that the allegation of the Ld. A.O. in this respect is incorrect. With respect to the explanation given by the appellant, the same is not found to be acceptable by the Ld. A.O. on various grounds as discussed in para (i), (ii), (Hi) & (a), (b) (c) above and the appellant's submission in rebuttal is furnished herein below:
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(a) The Ld. A.O. has held that the details of advances appearing in different pages are in piecemeal and do not represent the total investments. With respect, the appellant submits and reiterates that page nos. 74 to 83 of Annexure A/12 pertain to period 12.9.2009 (page no. 62 of the Paper Book) to 07.11.2009 (page no. 73 of the Paper Book). The appellant has referred to page no. 73 of Annexure A/12 (copy at page no. 61 of the Paper Book) which is a summary of investments as of 8.9.2009 totalling Rs. 147.26 lakhs. The appellant has also referred to the practice of the appellant in the preparation of the summary of total investments on various occasions and from time to time as evidenced by photocopies placed at page nos. 74 of the Paper Book where a total of Rs. 107.42 lakhs can be seen. Likewise, for the period 14.1.2010 to 11.02.2010, daily summaries are prepared as placed at page nos. 81 to 140 of the Paper Book. The total of investments as on 11.02.2010 (i.e. the day immediately prior to the date of search) is Rs.143.44 lakhs. In the statement prepared as of 11.02.2010, the cheques found as per page nos. 1 to 72 of Annexure A/12 is also included to an extent of Rs. 19.50 lakhs as for the balance cheques the advances could not be given despite the request of intending borrowers. This clarification is given to the investigating party vide letter dated 23.04.2010 (refer page no. 6-11 of the Paper Book as also in the \ assessment proceedings vide letter dated 13.10.2011 wherein on paper book page no. 38 detailed break up is provided and the same is not disputed by the Ld. A.O. as well as the investigating party. The appellant further submits to your honour that when the appellant -is in the practice of keeping record of investment advance to the lowest amount ofRs. 100 also (refer page nos. 61, 74, 82, 84, 88, 90, 92, 94, 96, 98, 100, 102, 106, 108, 110, 112, 114, 116, 118, 120, 122, 128, 130, 134, 138 & 140 of the Paper Book), it is unimaginable and improbable to believe that the appellant's record for the undisclosed investment/income of Rs. 437.60 lakhs as alleged by the Ld. A.O. is not maintained nor found" There is one more aspect to the contentions of the appellant to the effect thai despite a search at all the business and residential premises of the group concerns as well as residents of the partners no asset, investment, valuable was found nor any incriminating material to show the investment of such huge amount was ever evident. (b) The finding of the Ld, A.O. with regard to the noting of the particulars of investments on 8.9.2009 on the reverse of page no. 73 of Annexure A/12 instead of page no. 74 of Annexure A/12 is only clerical error on the part of the appellant and is not really relevant. (c) The Ld. A.O. has while referring to statement of investment as on 8.9.2009 (refer page no. 61 of the paper book) has noted that of the total ofRs. 108.44 lakhs, an amount of Rs. 106.25 lakhs is shown as receivable from. Shri Umesh Singhal and therefore, the explanation of unaccounted sharaffi business is not acceptable and also that such statements reflect only part information. To corroborate this contention, the Ld. A.O. has also referred to page no. 13 of Annexure A/1 which is reproduced in the assessment order and copy of which is enclosed at page no. 141 of the Paper Book. This is to show that the statement of investments is incomplete. The appellant submits that the findings of the Ld. A.O. are without affording any opportunity to the appellant and that such finding can be established to be wrong on the basis of the material available and as discussed hereunder: Referring to page 61 of the Paper Book, being the statement of 8.9.2009, it can be seen that there is a total of Rs. 108.44 lakhs on the receipt side which includes the amount of Rs. 106.25 lakhs as received from Shri Umesh, partner of the appellant firm and on the investment side the total is of Rs. 147.26 lakhs and, therefore, the finding of the Ld. A.O. is primarily incorrect and factually wrong. With regard to the allegation of such statements being in piecemeal as sought to be corroborated by page no. 13 of Annexure A/1 (page no. 141 of the Paper Book), the appellant submits that this is an abstract of the advances recoverable as prepared on some date after 25.11.2010. This abstract is prepared to list out the receivables as also to note the dates on which the advance was given. These advances were either recovered in
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part or in full or continue to remain outstanding till the date of search This averment of the appellant can be explained by referring to the noting of the advances mentioned on page 13 of Annexure A/1 referred above as under: Amount (Rs.) Particulars Date Remarks 2,00,000 C.T.O. 2/6/2009 The amount of advance is reflected in the statement of seized materials as mentioned below: Date Page Numberof paper book. 8.9.61 74 14/1/10 to 11/02/201081 to 140 1,00,000 H.G.R. 16/9/09 Date Page Number of paper book. 14/1/10 to 11/02/201081 to 140 5,00,000 Gourav Logi. 23/9 - Do- 7,50,000 Garg Tpt. - Do- 5,00,000 Atul Dube 9/10/09 - Do- 7,50,000 MFC 5,00,000 3/11 29/11 This advance is recovered back do 2,50,000 not find mention in the statements 4,50,000 Sarparivahan 10/11 Date Paqe Number of paper book. 14/1/10 to 11/02/201081 to 140 2,00,000 Delhi Hawhra 24/11 - Do- 50,000 Harish 25/11 This advance is recovered back do not 25,000 KannuBhai 30/7 find mention in the statements
From the above, it can be seen that the advances given prior to 8.9.2009 and continuing till the date of search are reflected in the statements of total advances/investments found and where such advances are recovered back do not find mention in the statements. This further indicates that not only the statement is complete but also is prepared on a regular basis. From the above submissions and explanation, it can be seen that the addition made by the Ld. A.O. is purely on hypothesis, surmises and conjectures and ignoring the explanation of the appellant while relying on extraneous and irrelevant factors. Your appellant also relies on the proposition that addition based on the rough notings cannot be sustained unless corroborated or proved that the transaction as noted has actually taken place. Reliance is placed on the following decisions: • CJT Vs. Maulikumar K. Shah 3O7ITR 137 (GuJ.) wherein the Hon'ble High Court had held that "notings in the seized diary found from the premises were the only material on the basis of which the Assessing Officer had made the impugned additions. The Assessing Officer had not brought any corroborative material on record to prove that such sales were made and 'on-money' was received by the assessee outside the
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books of account. The Assessing Officer had not examined any purchaser to whom the sales of shops were effected. Onus heavily lay on the revenue to prove with corroborative evidence that the entries in the seized diary actually represented the sales made by the assessee. Such onus had not been discharged by the revenue. Mere entries in the seized material were not sufficient to prove that the assessee had indulged in such a transaction. The inference of the Assessing Officer that the assessee has received 'on-money', was merely based on suspicion and surmises and there was no material whatsoever to support the conclusion of the Assessing Officer that the assessee had in fact received any 'on-money'. The addition as made by the Assessing Officer being based on mere presumptions and assumptions and withoutany corroborative evidence, could not be sustained." • Jagdamba Rice Mills vs, ACIT 67 TTJ 838 (Chd) wherein it was held that addition could not be made on the basis of seized material found during the course of search where the content of the documents are not clear. N. K. Malhan vs. DCIT 91 TTJ 938 (Delhi) wherein it was held that no addition can be made on the basis of dumb document in absence of any corroborative material. • ACIT vs. Satyapal Wasan SDTR 2O2 (Jahalpur) where addition u/s. 69 on the basis of document containing the figure of "22.30" was found to be unjustified as the document did not contain any signature, full name of the parties, nor it showed or indicated whether it was for purchase of asset or payment of liability and in absence of the assessing officer carrying any further enquiry, the presumption u/s.!32(4A) which is rebuttable is not available to the assessing officer. • CJT vs. Girish Chaudhary 163 Taxman 608 (Delhi) wherein it was held that before making an addition the AO has to bring on record that the material found show that there is an undisclosed income. Bansal Strips Put. Ltd. Vs. ACIT 99 ITD 177 (Del.) where the addition made on the basis of notings on loose papers not admitted by the assessee could not be made in absence of the discharging of burden by the A.O. No circumstantial evidence was brought on record nor any nexus was proved and, therefore, the uncorroborated loose paper cannot be taken as a sole basis for determination of undisclosed income as these papers were unsigned and mere entries are not sufficient to fasten the liability on the assessee. S.P. Goyal Vs. DCIT 77 TTJ 1 (Mum.) (TM) where the Tribunal held that loose paper in itself has no intrinsic value and it does not represent a negotiable instrument which can be exchanged for any valuable consideration. In absence of any circumstantial evidence to corroborate the contention of the Department, the addition was to be deleted being made on suspicion, conjectures and surmises. In Rakesh Goyal Vs. ACIT 87 TTJ 151 (Delhi) wherein the Tribunal held a similar view that in absence of any corroborative evidence, the addition on the basis of entry on loose paper was unjustified. ACIT Vs. Shailesh S. Shah 63 ITD 153 (Mum.) - Held that addition cannot be made under substantive provision of the Act without proving the contents of the loose papers. Atul Kumar Jain Vs. DCIT 64 TTJ 786 (Del.) where the addition on the basis of uncorroborated chit of paper was found to be unsustainable where the assessing officer had not examined the assessee nor brought any other material to show that the transaction as recorded was actually carried out by the assessee. 3. The submissions of the appellant were remanded to the Assessing Officer for his comments. In the remand report, the Assessing Officer has reiterated the reasons as recorded in the assessment order and as noted in para 2.1 above. According to the Assessing Officer, the submission of the assessee should not be accepted. In rejoinder, which incorporates the observations and objections of the Ld. AO, the Ld. A.R. has submitted as under: 1 The Ld. A.O. in para 2(A) clause 1 has discussed the basis of additions made which is a reiteration, except for his comment on the factual aspect of no clarification with respect
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to the money lending business being not admitted earlier and that such explanation is being made for the first time. Likewise he has also raised an apprehension with respect to the explanation of the appellant of conducting money lending business, particularly referring to the contents of page No 73 (Annexure A-12) where from the total of Rs. 108.44 lacs as receivables / advance, an amount of Rs. 106.25 lacs represents the amount due from Shri Umesh Singhal as also the contents of page no 13 of annexure A-1 and, therefore, the explanation of the assessee of money lending business is doubtful. The appellant with respect submits that the Ld. A.O. has not appreciated the contents of these pages correctly and, therefore, same may please be referred to as enclosed at Page 61 and 141 respectively. On perusal of page 61 it would be appreciated that there are two columns, one of receipt and the other of payments. The name of Shri Umesh Singhal appears on the receipt side indicating the receipt of Rs.106.25 lacs from Shri Umesh Singhal and not the amount given to him as understood by the Ld. A.O. The Ld. AO himself in para (A)(iii)(b) of page 3 of his remand report has confirmed that the amount of Rs. 106.25 lacs is part of the total of Rs. 108.44 lacs, which is the total of receipts. Therefore, it is respectfully submitted that the findings of the Ld. A.O. in this respect may please be ignored. Likewise on referring to page 13 of Annexure A-l (placed at Page No 141 of the paper book), there is no reference to the name of Shri Umesh Singhal. The Ld. A.O. has contended that the conduct of Sarafi business (money lending) is raised for the first time. This is also incorrect as is evident from the copy of letter dated 23.04.2010 as submitted to the Ld. DDIT placed at Page Nos. 6 to 11 of the paper book, wherein on page 8, the appellant has clarified the conduct of money lending business. The Ld. A.O. has also referred to the statement of the appellant made in the course of search proceedings, wherein an admission of Rs.201 lacs is made by the appellant and according to the Ld. A.O., in the quantification of the income there is no reference to the contents of page No 74 to 83 of Annexure A-12 (copy placed at page No 61 to 75 of paper book). The appellant respectfully submits that the findings of Ld. A.O. in this respect are factually incorrect as reference to page No 73 of Annexure A-12 is made in the submission given to the Ld. DDIT and as also reference to page No 8. In sub para (A) clause (ii) the Ld. A.O. has made a reference to the submission of the appellant, whereas his comments on the submissions are in para (A) (iii), wherein he has contended that the explanation of the appellant with respect to the contents of page No 74 to 83 (page Nos 61 to 75 of paper book) are required to be rejected as a) Page 74 (page No 61 of paper book) begins from 12.09.2009 and prior to that date there is no record available and that the total of investment on 12.09.2009 isofRs.405,30,311/- b) The contention of the appellant that the total investment as on 08.09.2009 as per page No 73 (page No 61 of paper book) is also not acceptable as the quantum of investment on 12.09.2009 is Rs.4,05,30,311/-. According to him page No 73 contains the receipt of Rs. 108,44,743/- and investment of Rs.147,26,005/- which shows that they are the notings of receipt and payments of that date indicating that the amount of Rs.108,44,743/- was made prior to that date and on its receipt the total would work out Rs.255,70,748/-and not Rs.147,26,005/- as contented. c) The contention of the appellant that notings of page No 74 to 83 are included in the total of Rs.201.24 is contradictory. \ According to the Ld. A.O. the addition of Rs. 236.361akhs is rightly made. The appellant respectfully submits that these objections and findings of the Ld. A.O. are incorrect and detailed explanation with corroboration is already made in the detailed submission made to your kind self as also to the Ld. A.O. himself in the course of assessment proceedings vide its letter dated 21.12.2011 placed at page Nos. 46 to 60 of the paper book."
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3.1 I have perused the submissions made on behalf of the appellant, assessment order as well as the remand report. As can be seen, the addition is based entirely on the interpretation of and inference drawn from seized papers found during the course of the search, from which no adverse inference has been drawn during the course of the search or during post-search enquiries, and, no questions were put to die appellant regarding these papers. Similarly, apart from the seized documents themselves, there is no other corroborative material brought on record by the AO evidencing particular transactions or detail of parties who have been granted the alleged unaccounted advances by the appellant. The Assessing Officer is of the opinion that the seized documents (74-83 of A/12, PB pg no.62) referred to and relied upon by him represent the summary of unaccounted receipts and investments therefrom made by the appellant which starting with 4,05,30,311/- on page 74 increased to Rs.4,38,32,300/- on page 83. The appellant, on the other hand, and in substance, has submitted that not only the nature of the seized papers is different from what the Ld. AO would want to believe/interpret, such different nature of these seized papers (74-83 of A/12) is evident from other seized papers (1-66 of A/4) depicting latest position of unaccounted funds, which was taken note of by the authorized officer and on the basis of which admission u/s 132(4) was also made. The appellant's explanation about the papers relied upon by the AO is that the papers represent accumulated or grossed up from day to day, and not the total, of the outstanding receipts and investments of unaccounted funds in sarafi business of the appellant, which primarily serves the purpose of recording of unaccounted cash available rather than listing or totalling of unaccounted advances. The addition is primarily supported by the Assessing Officer in his remand report dated 12/08/2014 for the following reasons. I consider it worthwhile to further also record the response in brief of the appellant to AO's basis of addition and arguments for urging me to sustain the same, before me: i) No proper explanation for the contents of the document seized at page nos. 73 to 84 was provided by the appellant during the search proceedings. \ No questions were asked ii) In quantification of the undisclosed income of Rs. 2,01,24,195/-admitted by appellant u/s 132(4). the cognizance of these documents is not taken. No questions were asked iii) The particulars of the contents of various pages containing the affairs of cumulative loans and advances on the dates prior to 12.9.2009 and subsequent thereto (which support appellant's explanation) are not complete records and that they represent only partial particulars. No adverse inference against the appellant can be drawn. Rather, this factor supports appellant's explanation based on documents pertaining to later/sub sequent periods. iv) The explanation of the assessee that the circled amount of Rs. 4,178/-represents the difference of physical cash on daily basis also supports that the explanation of the assessee is incorrect? and This allegation has no basis in law and is conjectural in nature. There is no evidence with AO to even suspect anything wrong in appellant's explanation. v) That there are no supporting documents to corroborate the claim of the assessee. The explanation of the appellant is the primary basis of interpreting the seized documents, and to impose any other meaning on the seized documents, AO must bring the requisite evidence to discard the explanation rather than asking the appellant to support the explanation. Moreover, there is enough corroboration to support the seized documents. 3.2 The appellant/Ld. A.R. during the course of the proceedings before me, has, as summarized above, emphasized that the A.O. did acknowledge the purpose of the notings on page no. 74 to 83 of Annexure A/12, which was to monitor the day to day cash balance available with the assessee. The appellant's explanation is, however, rejected by the AO in view of the fact that there is a day to day difference of Rs. 4,178/- and that such difference is not explained. The Ld. A.R. also emphasized that the explanation of the assessee has to be considered in totality and that such explanation cannot be put to test merely based on the notings as suitable to the Assessing Officer
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without considering the relevance or otherwise thereof. The circled entry on the seized pages relied upon by the AO clearly supports the explanation of the appellant. The Ld. A.R. submitted that the practice of cumulating the figures is explained elaborately and that by referring to various seized papers containing the particulars of total advances on different dates, the appellant has explained that the advances have never exceeded the figure of Rs. 1.47 crores which is visible on 8.9.2009 as per seized paper (Page 61 of the paper book). To further corroborate his claim, the AR has drawn my attention to page nos. 81 to 140 of the Paper Book which are page, nos. 1 to 66 of Annexure A/4. These pages allegedly contain the day to day position of the advances outstanding for the period 14.1.2010 to 11.2.2010. As per these daily summaries, the total of unaccounted investments including unaccounted advances in the name of partners, as on 11.2.2010 i.e. a day immediately prior to the date of search as per A/4 pg 66 is Rs. 143.44 lakhs (page 139 of the paper book). The day to day balances also are in the same range. According to the AR when these documents are considered in totality, they establish the method of noting on page 74 to 83 of A/12 by the appellant and that the total of unaccounted advances/investment at the highest level is Rs. 147.26 lakhs on 8.9.2009 as per A/12 page 61 and certainly there is no evidence to conclude that the amount of Rs,4,38,32,3OO/- is the advance made by the appellant. 3.3 After considering the totality of facts and circumstances, including the complex seized material brought to my attention by the AR and the statement of the appellant u/s 132(4), I do believe that the addition is made by the AO on the basis of conjectural interpretation of seized documents page no.74 to 83 of Annexure A/12. After minutely perusing the Authorities relied upon and cited by the AR, and on totality of facts, I am of the considered opinion that in law, the explanation offered by the appellant with regard to seized documents can be rejected by the AO only if the same is so patently ridiculous, far-fetched or unbelievable that under no circumstance the explanation would hold, and, excepting such ridiculous or unlikely nature of explanation, which, in my considered opinion, is certainly not the case with the explanation offered by the appellant, the assessee's explanation can be disbelieved/rejected only on the ground of positive contrary evidence either seized or brought on record by the AO. True it is that the assessee is supposed to truthfully explain the documents seized from his possession, failing which adverse inference must be drawn. But this proposition entails two aspects. First, there should be "no explanation of the assessee" enabling the AO to draw adverse inference, or alternatively, the explanation should be either patently unacceptable or established by AO to be false. Second, then, and only then, even while drawing adverse inference, such inference has necessarily to be in conformity with, and not in contradiction of, other seized documents and attendant circumstances, while at the same time remaining grounded in fairness and "best judgment" of the AO. On this fundamental principle, the AO's action of making apparently intelligent guess about the nature of entries in documents relied upon by him has no basis in law. What I find is that not only AO has brought no material on record to discard or discredit the appellant's explanation, there are positive evidence in the form of even seized documents, relied upon by the appellant, to support his explanation. Thus, it is my considered opinion that the AO's strong doubt about the truth in appellant's explanation, supported only by logic and conjecture, cannot in law justify the interpretation adopted and consequent addition made by the AO. For making the addition, the evidence, 'and not the suspicion, can be the basis. Moreover, the latest position, just one-day prior to the date of the search (11/2/2010) depicted by seized papers (Pg. 66, Ann A/4 Paper Book Page No. 139) clearly indicate the position of the unaccounted funds which is far-less than what the AO alleges to be existing as advances between 12/9/2009 and 7/11/2009 as per seized documents 74 to 83 of A/12 relied upon by him. In this behalf, agreeing with the Ld. AR, I do not think that the AO can rely on the fact that there is no corroborative evidence submitted by the appellant to support the explanation offered, or that the seized records are not complete records. As such, it is the AO's onus to provide completeness to the incomplete seized records, and incompleteness of seized records in itself and per se cannot obviously be, as rightly pleaded by the AR, the ground for rejecting the explanation of the appellant, and for making addition. On the other hand, the appellant's explanation about the nature of entries relied upon by AO is already supported by other seized documents. It was therefore, incumbent on the AO to bring in and rely on positive evidence rather than on conjectures and surmises garbed under suspicion and mere logic of
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interpretation, for making the addition. Apart from the seized material as conveniently read by AO, there is no positive material used by the AO to justify the addition. There is not even a whisper, leave aside any enquiry/evidence, brought on record by the AO, to demonstrate as to who are the parties, to whom the alleged amounts are advanced, when they are advanced or how even the income invested in alleged unaccounted advance of Rs.4.38 crore is earned. There is absolutely nothing, except of course the figures in the range of Rs. 4.38 crore as "balances", even" in the seized documents themselves to support the finding of the AO. The seized documents are thus dumb in many aspects, and therefore the same can be meaningfully interpreted only either via the explanation offered by the appellant or the positive material to be brought in by the AO, and everything else, in my opinion, is a mere surmise on part of the AO. The AO's theory is otherwise also self-contradictory, as was pointed out by the AR. The AR drew my attention to the "unaccounted advances/unaccounted cash" position as on 11/2/2010 (day just before the search (65 of A/4), and A/1 page 13, available on pages 139-141 of paper-book, and page 61 of paper- book (Back side of 73, 74 of A/12) which clearly depict, inter alia, that amounts are receivable from "Garg" and "Hasmukhbhai". When such receipt is appearing in pages relied upon by the AO (75, 80 of A/12 - PB page nos.62, 68), rather than reducing the outstanding balance, the amounts of receipts increase the LHS figure in the seized document, clearly supporting the explanation of "accumulation" offered by the appellant rather than supporting AO's theory. Had the Ld. AO attempted to fairly consider the submissions of the appellant made before him, and to harmonize his inferences with other notings on the same seized pages and other seized papers (A/ 4), the fallacy of his finding would have become evident to him on over-all appreciation of facts and available evidences. I thus find that none of the factors as listed by the AO either in assessment order or in remand report to reject the explanation of the appellant justifies such rejection. 3.4 In view of discussion as above, I hold that the explanation of appellant regarding "accumulation" of transactions aimed primarily to arrive at cash balances is a sound and viable explanation which also finds support from totality of seized documents themselves. The Ld. AO has therefore erred in rejecting or disbelieving the detailed explanation of the appellant about the seized documents in A/12 (Page No.3 to 11 of assessment order) by relying on irrelevant factors, such irrelevant factors being ambivalent stand of the appellant, absence of reference to seized documents relied upon by AO in statement u/s 132(4), no seizure of documents for period prior to 12/09/2009, and that A/4 documents represent only "partial affairs". I hold secondly that even after wrongly discarding the explanation of the appellant without establishing the falsity therein, the AO's own inference that the "opening balance" represents the total unaccounted funds of the appellant and that further entries on these seized papers represent "receipt and deployment of unaccounted income is also a mere conjecture, surmise and imagination unfounded on any evidence at all. I thirdly hold that neither the seized documents themselves represent unaccounted advances of Rs.4.38 crore, nor is there any corroboration for such a conclusion. Thus and therefore, I unhesitatingly agree with the Ld. AR that these facts are squarely covered by the Jurisdictional HC and other Tribunal Decisions relied upon by the appellant, from which I may re-quote: Maulikkumar KShah (2008) 307ITR 137 (Guj) ............ We find that the notings on the seized diary found from the premises of Kiritbhai K. Shah is the only material on the basis of which the Assessing Officer has made the impugned additions. The Assessing Officer has not brought any corroborative material on record to prove that such sales were made and "on-money" was received by the assessee outside the books of account The Assessing Officer has not examined any purchaser to whom the sales of shops were effected. Onus heavily lay on the Revenue to prove with corroborative evidence that the entries in the seized diary actually represent the sales made by the assessee. Such onus has not been discharged by the Revenue. We are of the considered view that mere entries in the seized material are not sufficient to prove that the assessee has indulged in such a transaction. It is well-settled that if certain documents were found from the possession of the assessee during the course of search operation, burden lies on the assessee to explain the nature of transactions recorded in
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the said seized material. The assessee is duty bound to explain discrepancy, if found, on the basis of seized materials vis-a-vis books of account. But when the assessee furnishes explanation which sought to be supported by evidence, the burden is shifted to the Revenue to establish that the explanation of the assessee is false. In the case ofShri S.K. Gupta v. Deputy CIT [1999] 63 TTJ 532, the Income-tax Appellate Tribunal, Delhi "C" Bench has deleted similar addition made on the basis of some seized paper by accepting the contention of the assessee that the seized papers contain estimates. The Income-tax Appellate Tribunal has observed :"The notings on the piece of paper do not indicate the actual transaction. The paper in question does not indicate that any transaction had ever taken place because it does not contain any information as to what was the nature of transactions. If at all, any such transaction took place for the parties to the transactions, what was the date of transaction, what did the figure noted on the piece of paper represent, and whether in any manner the paper in question has any relevancy to the determination of the income in the hands of the assessee. No evidence has been brought on record to corroborate the allegation that the assessee had entered into any transaction or had earned any income, ......." 3.5 Moreover, the AO has also completely contradicted himself in firstly holding that the amount of Rs.4,38,32,300/- represented unaccounted investment (advances) /receipts of the appellant, and at the same time, allowing the "benefit" of disclosure of Rs.2,01,24,000/~, which includes "unaccounted advances" of only Rs.26.40 lacs (page 10 of paper book). The true fact of the matter on the other hand, as rightly pleaded by the AR, is that page 74 to 83 of A/ 12 are dumb documents which contain no details of specific transactions or persons and hence have absolutely no evidentiary value unless further corroborative, nay, conclusive adverse evidence is brought on record by the AO. The AO has considered his own conjecture and surmise about these pages 74 to 83 of A/ 12 as "conclusive evidence" while baselessly brushing aside appellant's explanation. Such an addition being purely conjectural has no validity as explained by Gujarat High Court in Maulikkumar K. Shah (supra). 3.6 In view of the above, it is held that the addition of Rs. 2,36, 36,43 1/-(4,37,60,431 - 2,01,24,000) as unaccounted advances/investment made by the AO has merit neither in law nor on facts and therefore the same is deleted. 3.7 It is seen however, at the same time, that as per the appellant himself page no. 65 of A/4 represents the latest position of the unaccounted advances/investments made by the appellant. Therefore, while deleting the addition as above, it was incumbent on me to ascertain whether the full effect to this page 65 of A/ 4 available on page no. 139- 140 of the paper book is forming part of the amount brought to tax. The Ld. AR was therefore, during the course of the proceedings, called upon to reconcile how page no, 139 to 141 of the paper book, as per the appellant himself depicting the position of unaccounted funds just a day before the day of the search is reflected in the amounts brought to tax. The submission of the AR was to the effect that as per page no. 139 of the paper book, the amount of Rs. 1 18.53 lacs stands in the name of the partners Shri Umeshji, Gopeshji and as cash with the office as against which the cash to the tune only of Rs.74.89 lacs was found and has been offered for taxation as unaccounted. Similarly, investment in properties at Asoj and peak investment as per Annexure A/ 1 totalling to Rs.95.72 lacs has been offered as unaccounted forming part of total disclosure of 201.24 lacs and thus, the amount of Rs. 118.53 - 74.89 lacs = Rs.43.64 lacs available to partners represented as withdrawn unaccounted as per page no. 139 was available to the partners to explain already disclosed unaccounted investment of Rs.95.72 lacs which is more than unaccounted amount so withdrawn. Thus, as per the submission of the AR, full effect is given or finding expression in the disclosure of Rs.201.24 lacs made by the appellant u/s 132(4) and brought to tax by the AO. After verification of the relevant seized paper and the submission made by the AR, 1 find that apart from the cash as withdrawn by the partners as per page no. 139 of the paper book, the balance advances/investments are to the tune of Rs.24.91 lacs of which only Rs.19.50 lacs appears to be covered in the disclosure. Moreover, as per page no. 141 of the paper book, the total advances in the name of the parties finding mention also on page no. 139 stood at Rs.35.25 lacs. The Ld. AR during the course of proceedings also submitted that no entry to entry co-relation is however possible with the disclosure made though
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at the same time maintaining that no additional amount needs to be brought to tax on the basis of page no. 139 to 141 of the paper book. After considering the totality of the facts and circumstances and after considering the submissions made by the Ld. AR in this behalf, I consider it fair and reasonable to hold that the amount represented by Rs.35.25 - Rs.19.50 lacs = 15.75 lacs, as noted on page no.139 to 141 of the paper book, when viewed in the light of components of disclosure made by the appellant u/s 132(4), does not appear to be satisfactorily explained and the Ld. AR has also been unable to submit an entry to entry reconciliation. Thus, while the amount of addition of Rs.2,36,36,431/- is deleted, on the same facts, an amount of Rs.15.75 lacs is confirmed. Thus, appellant gets net relief of Rs.2,20,60,431/-. Related ground partly succeeds.”
During the course of appellate proceedings before us, the ld. departmental representative has supported the order of the assessing officer. On the other hand, ld. counsel has submitted paper book comprising detail of submissions and documents furnished before the assessing officer and the ld. CIT(A) during the course of assessment and appellate proceedings and contended that it is categorically clear from the findings of CIT(A) substantiated with supporting material that the action of the assessing officer was not justified to make the impugned additions on assumption basis.
We have heard the rival contentions and perused the material on record. A search action u/s. 132 of the act was carried out in the case of the assessee on 11-02-2010 After taking into consideration the impounded material found and seized from the search action, the assessee had disclosed unaccounted income to the amount of Rs. 2,01,24,000/-. However, during the course of assessment proceedings, the assessee observed that the noting mentioned on page no. 74 to 83 of Annexure A/12 pertaining to unaccounted Sharaffi business carried out by the assessee were not considered in the undisclosed income disclosed by the assessee. The assessee explained that the purpose of such noting on page no. 74 to 83 was to work out available cash balance after incorporating the cash balance as per rough cash book of Shri Dhain Auto Transport Corporation and Shri Dhain Auto Logistics Pvt. Ltd. two
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group concerns of the assessee, therefore, rough cash books maintained for Sh. Dhain Auto Logistics Pvt. Ltd. and M/s. Dhain Tyre House Corroborate with rough noting mentioned at page no. 74 to 83 of Annexure A/12. The assessee has also furnished detailed explanation vide its letter dated 21- 12-2011 as elaborated in the findings of the ld. CIT(A) and explained that amount of Rs. 2,01,24,195 was disclosed as unaccounted income after taking in to consideration the contents of various seized material found and seized including page no. 73 to 85 vide annexure A/12. While explaining the contents of these pages, the assessee has explained that left side noting and right side noting on these pages represent of commutative receipts and payments of loans and advances given and received back. The asssessee has explained the details of advances recorded on daily basis for the period 14- 01-2010 till 11-02-2010 as per page no. 1 to 214 of annexure A/4. The assessee had also explained that amount of advances and receipts were recorded on cumulative basis on page 73 to 85 of Annexure A/12 and regarding the contents of the noting on 16-09-2009, 19-09-2009, 16-10- 2009 it was demonstrated that how the commutative receipts have been increased from Rs. 4,07,06,660/- to Rs. 4,10,06,000 on 19-09-2009 etc. The veracity of the explanation was corroborated with the detail of amount refunded by two persons namely Shri Garg and Shri Hasmukhbai reflected in the noting on the impugned seized papers. It was also explained that the advances have never exceeded the figure of Rs. 1.47 crores as reflected on page no. 61 of the paper book produced by the assessee and the ld. CIT(A) in his findings also elaborated that how the advances have never exceeded the figure of Rs. 1.47 crores
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After considering the in depth detailed findings of the ld. CIT(A) as elaborated supra in this order, we observe that assessing officer without any corroborating material made opinion that the assessee had started the sharaffi business with opening balance of its investment of Rs. 4,05,30,311/- and the assessing officer also failed to contravene the submission of the assessee substantiated with related material that impugned amount in the noting was the commutative receipt/payment and such amount of advances was never exceeded Rs. 1.47 crores as elaborated above in the findings of the ld. CIT(A). In the light of the above and considering the findings of the ld. CIT(A), we do not find any substance in the theory of the assessing officer without disproving the falsity in the explanation of the assessee corroborated with the material as per detail incorporated in the findings of the ld. CIT(A). Therefore, we do not find anomalies in the findings of the ld. CIT(A). Accordingly, this ground of appeal of the Revenue is dismissed.
Ground No 2 is against the decision of ld. CIT(A) in deleting the addition of Rs. 12,09,0675/- made by the assessing officer on account of cash balance difference. 7. The assessing officer has discussed this issue on page no. 5 of assessment order. During assessment on verification of Annexure BS/5 the assessing officer observed that pages no. 1 to 59 contained detail of payment advises to various parties and page no. 60 to 1131 were the print outs of cash book for the period from 1st April, 2009 to 31st March, 2009 of Shri Dhan Auto Transport Logistics. On perusal of the these papers, the assessing officer observed that the opening cash balance as on 1st April, 2009 was reflected at Rs. 13,15,413/-, however, on perusal of audited
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balance sheet of M/s. Dhain Auto Transport Corporation for the period ending 31st March, 2009, it was seen that closing balance of cash in hand was only at Rs. 24,738/-. In view of the above, the assessing officer was of the view that against the closing cash balance of Rs. 24,738/- on as 31st March, 2009 there was opening cash balance as on 01-04-2009 shown at Rs. 13,15,413/-. In view of the above facts, the assessing officer stated that assessee was having unaccounted cash in hand at Vapi which was not fully and truly accounted for in the regular books of account of the assessee, therefore, difference of Rs. 1290675/- was added to the total income of the assessee.
Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has deleted the addition stating that the assessee has already made a disclosure of an amount of Rs. 74.89 lacs as unaccounted cash found during including the discrepancy of nearly Rs. 12,90,675/-.
The assessing officer on the basis of Annexure BS/5 seized from the premises of the assessee noticed that there was opening cash balance of Rs. 13,15,413/- as on 1-04-2009. However, it was seen that closing cash balance of Rs. 24,738 was reflected as on 31-03-2009 as per the audited accounts of M/s Shree Dhain Auto Transport Corporation. Therefore, the difference of Rs. 12,90,675/- between opening balance and closing balance was added to the total income of the assessee treating the same as undisclosed income of the assessee. The ld. CIT(A) has deleted this addition considering that assessee has already disclosed an amount of Rs. 74.89 as unaccounted cash found during the course of search. In the light of the
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above facts, we observe that the assessing officer has not substantiated with any relevant material that cash difference of Rs. 12,90,675/- was not covered by the unaccounted cash of Rs. 74.89 disclosed by the assessee during the course of search, therefore, we uphold the finding of the ld. CIT(A). Accordingly, this ground of appeal of the Revenue is also dismissed.
In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on 16-05-2019
Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 16/05/2019 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद