SHRI BAJRANG LAL BADAYA,JAIPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX, JAIPUR

PER BHAGCHAND, AM

The appeal filed by the assessee emanates from the order of the ld.

CIT(A)-4, Jaipur dated 25-09-2017 for the Assessment Year 2014-15.

2.1 Brief facts of the case are that the assessee is an individual. A

search and seizure operation u/s 132(1) of the Act was carried out on

20-03-2014. The assessee disclosed the brokerage receipt of Rs. 6.40 lacs.

The cash of Rs. 5,67,300/- was found at the residential premises of the

assessee out of which Rs. 5.00 lacs was seized. The assessee has also

surrendered this amount as unaccounted income. The assessee submitted the return of income on 7-01-2015 declaring taxable income of

Rs. 3,45,940/-. The source of income was salary from M/s. Shankar Lal

Badaya, Brokerage Income, Bank Interest and Profit from sale of plots.

The AO made the addition of Rs. 43,800/- out of various expenses

claimed by the assessee and Rs. 5.00 lacs for unexplained cash found

during the course of search. The assessment was finalized at

Rs. 8,89,740/-. The ld. CIT(A) has confirmed the additions. Now the

assessee is in appeal taking the following grounds.

‘’1. On the facts and in the circumstances of the case, the ld. CIT(A) has factually and legally erred in passing the well-reasoned and logical order. The ld. CIT(A) has passed the appeal order without addressing the points at issue raised in the written submission. Thus the appeal order so passed is bad in law and deserves to be quashed summarily. 2. On the facts and in the circumstances of the case the authorities below have factually and legally erred in making and confirming the addition of Rs. 43,800/- made on account of the disallowance of certain expenses debited to Income and Expenditure A/c without appreciating the facts of the case in right perspective. The addition so made deserves to be deleted.

3.1 In Ground No. 1, the assessee has not raised any specific ground. It

has been simply pleaded that the ld. CIT(A) has factually and legally

erred in not passing well reasoned and logical order, however, it is not

specified how the order of the ld. CIT(A) was not well reasoned and

illogical. No pleadings were made on this ground during the course of

hearing of appeal. No specific point was mentioned which has not been

considered or addressed by the ld. CIT(A). In view of these facts, this

ground is treated as general ground and the same is therefore, dismissed.

4.1 In the Ground No. 2, the assessee has challenged the confirmation

of addition of Rs. 43,800/-. The ld. CIT(A) has dealt with this issue in

para 5 of his order. The assessee has disclosed the brokerage income of

Rs. 6.40 lacs. The assessee has also claimed salary of Rs. 15,000/- per

month which has been claimed to have been paid to Shri Prem Karan.

The assessee has also claimed conveyance expenses of Rs. 27,000/- and

telephone expenses of Rs. 1,000/- per month. The AO disallowed 20% of

the expenses on adhoc basis. The ld. CIT(A) has confirmed the addition

by holding as under:-

‘’5. I have seen the order of the AO and submission in this regard. I find AO is categorically pointed out that no supporting evidences were produced for the expenses claimed. No any regular books of accounts are maintained. Accordingly, the disallowance of 20% of such expenses is justified by the AO. Further the argument of 3 the appellant that no incriminating material is found is not correct as this is a search year and legal ground taken by the appellant is not valid for the search year. Appellant appeal in Ground No. 1 is fails.’’

4.2 We have heard both sides submissions. There is no supporting

evidences regarding claim of these expenses. No regular books of

accounts were maintained. In such a situation, we are of the view that

disallowance of 20% of the expenses is quite reasonable and deserves to

be sustained. Hence, we confirm the order of the ld. CIT(A) by

dismissing the Ground No. 2 of the assessee.

5.1 The Ground No. 3 of the assessee is regarding confirming the

addition of Rs. 5.00 lacs of cash found and seized during the course of

search operation. The assessee has disclosed brokerage income of Rs.

6.40 lacs. However, in the return, the income disclosed was only of Rs.

3,45,940/- by the assessee. The ld. CIT(A) has confirmed the addition by

holding as under:-

‘’7. With regard to Ground No. 1, I have perused the order by the AO and submissions made in this regard. I find no force in the argument of the appellant that unexplained cash of Rs. 5 lakh was included in the gross brokerage shown in the P & L Account. It is pertinent to refer to Q/A 29 recorded during the course of search (refer pg 4 of AO’s order) where in this fact [that cash of Rs. 5 lakh is unexplained] was admitted by the appellant. Nowhere in the statement is it mentioned that such unexplained cash is part of the brokerage income. In fact such cash was not reflected anywhere in the books of accounts. Under the stated facts and circumstances of the case, I am of the view that a plea taken by the appellant is without merit and is rejected. Appellant appeal in Ground No. 2 is dismissed.’’ 4 5.2 We have heard both sides submissions. We have also considered

various other factual aspects. The assessee has disclosed brokerage

income of Rs.6.40 lacs during the course of search operation. However,

while filing return of income, various expenses have been claimed. On

perusal of certain details of expenses, we find that salary has been

claimed of Rs. 15,000/- per month and from the records we noticed that

salary for 11 months have been paid prior to the date of search i.e. 20-03-

2014. Only salary for the month of March has been paid on 30-03-2014

that is after search. Thus no deduction can be given towards salary

expenses from the cash found during the course of search. The assessee

has admitted that this cash is unaccounted in the statement recorded u/s

132(4) of the Act while answering to Question No. 29. The assessee has

disclosed the income of Rs. 3,45,940/- in the return of income. Thus the

assessee had not fully disclosed income earned in period prior to the

search. In any case net income cannot be less than the cash found in

search. Considering this aspect, we find that even after giving benefit of

telescoping for cash available from the brokerage income then also it

shall be more than the income disclosed. The salary of Rs. 1.65 lacs has

been paid prior to the date of search. Considering the totality of the facts 5 and circumstances of the case, at least addition of Rs. 3.15 lacs deserves to be sustained even after giving benefit of telescoping for brokerage income. Thus Ground No. 3 of the assessee is partly allowed. 6.0 In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on 18-05-2018.

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