MANISH RANJAN DCIT CENTRAL CIRCLE-1(2) AHMEDABAD, ASHRAM ROAD vs. PLASTENE INDIA LTD, USMANPURA AHMEDABAD

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ITSSA 22/AHD/2024Status: DisposedITAT Ahmedabad04 September 2024AY 2015-168 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue is squarely covered by the decision of a Co-ordinate Bench in the assessee's own case for AY 2014-15 and 2016-17, which in turn relied on the Hon'ble Gujarat High Court's judgment in CIT vs. President Industries (258 ITR 654). The principle established is that when unaccounted business receipts are discovered, only the profit element embedded in those receipts should be brought to tax, not the entire amount. The Tribunal emphasized that seized documents containing details of both unaccounted cash receipts and payments must be read in their entirety, and it is not permissible to selectively pick portions. Therefore, only the net income, after adjusting unaccounted payments against unaccounted receipts, should be taxed. The Tribunal concurred with the CIT(A)'s deletion of the addition of Rs. 4,00,31,858/- on account of undisclosed cash receipts, as the CIT(A) correctly applied the law by taxing only the net profit element. The appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue is in appeal against the order of the CIT(A) for AY 2015-16, who deleted an addition of Rs. 4,00,31,858/-. This addition was made by the AO on account of undisclosed cash receipts, pursuant to a search and seizure operation under Section 132 of the Act. During the search, digital data from the assessee's Senior Manager's laptop revealed emails containing cash book entries of unaccounted cash receipts and expenses for FYs 2012-13 to 2015-16. The AO accepted the quantification of unaccounted receipts (Rs. 4,00,31,858/-) and payments (Rs. 4,08,19,879/-) after removing duplicates. The AO made an addition of Rs. 4,00,31,858/- on account of undisclosed cash receipts and Rs. 7,88,021/- as unexplained expenditure (excess of payments over receipts). The CIT(A) deleted the addition on account of undisclosed cash receipts, relying on the principle that only the profit element embedded in such receipts should be taxed.

What were the issues?

1. Whether, in law and on facts, the CIT(A) erred in deleting the addition of Rs. 4,00,31,858/- made on account of undisclosed cash receipts, as per Section 143(3) r.w.s. 153A(1)(b) r.w.s. 92CA of the Income Tax Act, 1961. Assessee's Contention: The assessee argued that the issue is covered by the Tribunal's decision in its own case for AY 2014-15 and 2016-17, which followed the Gujarat High Court's decision in CIT vs. President Industries. This precedent held that only the profit element embedded in unaccounted sales should be taxed, not the entire sales amount. Revenue's Contention: The Revenue contended that the CIT(A) erred in deleting the addition of Rs. 4,00,31,858/- made on account of undisclosed cash receipts.

Which sections of the Income-tax Act were involved?

Section 132,Section 143(1),Section 143(3),Section 153A(1)(b),Section 92CA,Section 69C,Section 36(1)(va),Section 292C,Section 132(4A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “ A ” BENCH, AHMEDABAD

Before: SHRI T.R. SENTHIL KUMAR & SHRI MAKARAND V. MAHADEOKAR

For Appellant: Ms. Astha Maniar, AR
For Respondent: Smt. Trupti Patel, Sr.DR
Hearing: 22/08/2024Pronounced: 04/09/2024

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त ( अपील ) / The CIT(A)-11, Ahmedabad 5. �वभागीय ��त�न�ध , आयकर अपील�य अ�धकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाड� फाईल /Guard file.

आदेशानुसार/ BY ORDER,

स�या�पत ��त //True Copy//

सहायक पंजीकार (Asstt. Registrar) आयकर अपील�य अ�धकरण, ITAT, Ahmedabad

1.

Date of dictation (word processed by Hon’ble AM in his laptop) : 02.09.2024 2. Date on which the typed draft is placed before the 02.09.2024/3.9.24 : Dictating Member. 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating : Member for pronouncement. 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the : 04.9.24 Sr.P.S./P.S. 7. Date on which the file goes to the Bench Clerk. : 04.9.24 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar : for signature on the order. 10. Date of Despatch of the Order :

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