SHRIKANT SINGHANIA,JAIPUR, RAJASTHAN vs. ACIT, CENTRAL CIRCLE-4, JPR, JAIPUR, RAJASTHAN

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR

Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh xxu xks;y] ys[kk lnL;] ds le{k
BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI GAGAN GOYAL, AM vk;dj vihy la-@ITA No. 1221 & 1222/JPR/2024
fu/kZkj.k o"kZ@Assessment Year : 2017-18 & 2019-20
Central Circle-4,
Jaipur.
LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AJJPS8943G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri Vijay Goyal, C.A.
jktLo dh vksjls@Revenue by : Shri Gautam Singh Choudhary, JCIT lquokbZ dh rkjh[k@Date of Hearing

: 08/01/2025

mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 17/01/2025

vkns'k@ORDER

PER: DR. S. SEETHALAKSHMI, J.M.

Appeals for A.Y. 2017-18 and A.Y. 2019-20 filed by the assessee against the orders of Commissioner of Income Tax (Appeals) Jaipur-5 [Hereinafter referred to as 'CIT(A)'] dated 05/08/2024for A.Y. 2017-18 and A.Y. 2019-20
which in turn arise from the orders dated 01/09/2021 for these assessment years
Shrikant Singhania vs. ACIT passed u/s 153A and 143(3) of Income Tax Act respectively by the Assistant
Commissioner of Income Tax, Central Circle-4, Jaipur.
2. Since the issues involved in these appeals are almost identical on facts and are almost common, therefore, these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order.
3. The grounds taken by the assessee in each appeal are as under:-

AY 2017-18 (ITA No. 1221/JPR/2024)
1. On the facts, in the circumstances of the case and in law, assessment proceeding u/s 153A of the Act is bad in law, void-ab-initio, and deserves to be annulled for various reasons. The assessment order passed by the ld. assessing Officer is arbitrary, whimsical, capricious, perverse, against the law and principal of natural justice. The Ld. CIT (A) erred in not annulling the assessment proceeding and confirming the action Ld. A.O. as valid.
2. On the facts and in the circumstances of the case, the Ld. CIT (A) erred in confirming the addition of Rs. 37,01,550/- made to the total income of appellant u/s 69C of the Act on account of alleged unexplained purchases and taxed the same u/s 115BBE of the Act. The addition was confirmed without appreciating the fact that the same was made without having any corroborative evidences found from assessee and totally based on surmises, conjectures, suspicion, irrelevant material or no material more so when no such stock/excess stock was found as the result of search.
3. On the facts and circumstances of the case, it is contended that even in case unaccounted purchases are found and corresponding excess stock is not found then only profit rate can be estimated as against addition for the whole amount of alleged unaccounted purchases.
4. On the facts and in the circumstances of the case, it is contended the provisions of section 115BBE cannot be applied to tax the assessee at higher rate.
AY 2019-20 (ITA No. 1222/JPR/2024)
1. On the facts, in the circumstances of the case and in law, the assessment proceeding u/s 143(3) of the Act is bad in law, void-ab-initio, and deserves to be annulled for various reasons. The Assessment order passed by the ld. Assessing
Officer is arbitrary, whimsical, capricious, perverse, against the law and principal of natural justice. The Ld. CIT (A) erred in not annulling the assessment proceeding and confirming the action Ld. A.O. as valid.
2. On the facts and in the circumstances of the case, the order CIT (A) erred in confirming the addition of Rs. 50,270/- made to the total income of appellant on account of alleged unaccounted Sales and taxed the same u/s 115BBE of the Act.
The addition was confirmed without appreciating the fact that the same was made without having any corroborative evidences found from assessee and totally based on surmises, conjectures, suspicion, irrelevant material or no material.
3(a)
On the facts and in the circumstances of the case, the Ld. CIT (A) erred in confirming the addition of Rs. 27,53,711/- made to the total income of appellant u/s 69C of the Act on account of alleged unexplained purchases and taxed the same u/s 115BBE of the Act. The addition was confirmed without appreciating the fact that the same was made without having any corroborative evidences found from assessee and totally based on surmises, conjectures, suspicion, irrelevant material or no material.
3(b)
On the facts and circumstances of the case, it is contended that even in case unaccounted purchases are found and corresponding excess stock is not found then only profit rate can be estimated as against addition for the whole amount of alleged unaccounted purchases.
4. On the facts and in the circumstances of the case, the Ld. CIT (A) erred in confirming the addition of Rs. 16,522/-, out of total addition of Rs. 36,291/- made by Ld. A.O. on account unaccounted profit on alleged short stock of Rs.
2,37,042/- and taxed the same u/s 115BBE of the Act. The addition was confirmed without appreciating the fact that the addition was made on surmises, conjectures and suspicion.
5. On the facts and in the circumstances of the case, it is contended the provisions of section 115BBE cannot be applied to tax the assessee at higher rate.
4. The brief facts of the case are that the assessee is doing business of non - edible oil, soap material and commission agent in the name of M/s S.S. Traders.
The books of accounts of the assessee were audited u/s 44AB of Income Tax Act.
The assessee filed his original ITR u/s 139(1) for A.Y. 2017-18 and A.Y. 2019-20
on 23/09/2017 and 27/10/2019 declaring total income at Rs. 3,57,980/- and Rs.1,87,940/- respectively. The Income Tax department carried out search operations over Shubh Laxmi Group, a leading soap manufacturer in Nagaur and this assessee was also covered for the search in the group as related party. During the course of search over the assessee, statements of assessee, Shri Dinesh Singh
(employee) and Shri Sohan Lal (employee) were recorded by the search party and documents were found and seized. In compliance to notice issued u/s 153A the assessee filed returns u/s 153A declaring the same income as declared in original return filed u/s 139(1). The Assistant Commissioner of Income Tax, Central
Circle-4, Jaipur completed the assessments for these assessment years by making following additions:-
A.Y. 2017-18
1. Addition of Rs. 37,01,550/- was made u/s 69C of IT Act on account of unaccounted purchases on the basis of some images found from the mobile bearing no.
9413342155, which was found from the residence of the assessee.
A.Y. 2019-20
1. Addition of Rs. 50,270/-was made on account of unaccounted sales of Rs.
50,270/- on the basis of some images found from the mobile.
2. Addition of Rs. 27,53,711/- u/s 69C was made on account of unaccounted cash purchases on the basis of some images found from the mobile bearing no. 9413342155, which was found from the residence of the assessee.
3. Addition of Rs. 36,291/- was made on account of estimating the profit at the rate of 15.31% on stock of Rs.2,37,042/- found short.

In order passed for assessment year 2017-18, the Ld. A.O. made the addition on the basis of his findings in para 9.1.3 to 9.1.5 by holding that:-
"9.1.3 Reply of the assessee has been considered but not found tenable. On verification these entries from books of accounts it was found that same were not recorded in the declared books of accounts. Further, the assessee has admitted in his statement that all these transactions were not recorded in books of account. In this regard, it seems that the assessee paid part payment through RTGS and part has made cash payment. However, the details of transactions written on said pages clearly show that the assessee has made various unaccounted cash transactions. The plea of the assessee that he has not made unaccounted transactions is not acceptable.
9.1.4 Considering this fact, it can be said that the assessee has made the said cash payments out of unaccounted sources. Further these transactions appearing on these pages, the assessee was unable to verify with the books of account. He could not produced any documentary evidence, any ledger for supporting his claim.
9.1.5 Section 69C of IT Act,1961 states-
‘Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the 3 Assessing]
Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year.]
In view of the facts, the assessee has failed to provide source of cash payment of Rs 37,01,550/- incurred for purchasing material during AY 2017-18 and such payments are also not recorded in books of accounts of the assessee. Thus,
Shrikant Singhania vs. ACIT amount of Rs 37,01,550/- is being added as unexplained expenditure to the total income of the assessee for AY 2017-18 as per Section 69C of IT Act.1961 and taxed accordingly."
In computation of sheet, the tax was charged at special rate u/s 115BBE.

In assessment year 2019-20, the Ld. A.O. made the addition of Rs.
27,53,711/- on the basis of almost similar findings in para 9.2.3 of the order.

The Ld. CIT(A) in A.Y. 2017-18 and A.Y. 2019-20 confirmed the addition of Rs. 37,01,550/- and Rs. 27,53,711/- respectively made by the A.O. In A.Y.
2017-18 the findings of Ld. CIT(A) are in para 5.2.10 were as under:-
"5.2.10 I have considered the reply of the appellant but I find that the facts mentioned by the appellant are beyond truth. The detailed discussion is as under:
1. During the course of appellate proceedings, the appellant has submitted that the Ld. AO made this addition on the basis of loose sheets recovered from Mobile's Whatsapp massages received of one of his employees (Dinesh Singh) mobile.
4. Further appellate has submitted during the course of appellate proceedings that Sales Tax/VAT/GST Assessment done on the basis of Books of Accounts and no addition were made on the basis of allegation as alleged by Ld.
AO. Similarly, both the firms. comes under Sales Tax/VAT/GST preview therefore compiled all statutory compliances in this regards, got cleaned assessment order from concerning department which are also adding evidentiary value in credibility of the assesse's Books of Accounts and eliminate any suspicious possibility of unaccounted purchase transaction or incomplete records.
The contention of the appellant is not acceptable, the AO has clearly mentioned in the assessment order that on verification these entries from books of accounts it was found that same were not recorded in the declared books of accounts.
Further, the assessee had admitted in his statement that all these transactions were not recorded in books of account. Further during the course of appellate proceedings, the appellate has failed to substantiate his claim with documentary evidences."
5. Further, the additions made by the AO were based on the entries found in the seized material during the search proceedings and the appellant has failed to Shrikant Singhania vs. ACIT verify the same from regular books of account. These undisclosed entries have no relevance with no excess stock or no excess cash found during the search proceedings.
6. Further, appellate has submitted that the AO had made huge addition without following the due procedure of law and AO did not find any defects in the books of accounts and did not reject the result of the books of account and without invoking section 145(3) of the act just made the addition in addition to what result offered by the assessee which is clearly a serious flaw and complete addition should be deleted.
The contention of the appellant is not acceptable, the AO has made addition on the basis of entries found in the seized material during the search proceedings and the appellant had failed to verify the same from regular books of account. These undisclosed entries have no relevance with regular books of accounts maintained by the appellant as the same were not reflecting in the regular books of account maintained by the appellant. In these circumstances, there is no question for invoking the provisions of section 145(3) of the I.T.Act,1961 by the AO.
On the basis of above discussion, it is evident that the appellant has made efforts to refute the entries of data seized from his mobile during the search proceedings and failed to justify the entries from his regular books of accounts. The appellate has made a story only to substantiate his claim for undisclosed expenditure, which is beyond truth and cannot be relied upon without any supporting documents.
In these circumstances, I uphold the addition of Rs.37,01,550/- made by the AO considering the unexplained expenditure to the total income of the assessee as per section 69C of the I.T. Act,1961 and application of provisions of section 115BBE of the I.T. Act,1961. In AY 2019-20, the Ld CIT(A) confirmed the addition on the basis of his findings in para 5.2.14 which are almost to his similar findings in AY 2017-18. 9. The Ld. AR of the assessee filed separate written submissions and paper book for each of the year and disputed the findings of Ld. CIT(A). The ld AR submitted that on the basis of print out of mobile images recovered from the Shrikant Singhania vs. ACIT mobile belonging to an employee Shri Dinesh Singh, no addition can be made in the hands of the assessee on account of unexplained purchases assumed by the Ld.
AO without having any corroborative evidence. The department has carried out intensive search operation and no any document was found to show that the assessee was indulged in unaccounted purchases. The stock was found short which supports this contention of assessee. The mobile belongs to Shri Dinesh Singh in support of which the assessee submitted purchase bill of mobile at paper book page
295-296. The assessee also submitted sworn affidavit of Shri Dinesh Singh at paper book page 300-301 wherein Shri Dinesh Singh affirmed that this mobile pertains to him and impugned images recovered from this mobile have no connection with the business of assessee. Besides this, the assessee filed his affidavit at paper book page 297-299 wherein he submitted that the mobile doesnot belong to him and the impugned images found therein do not connected with the assessee. The Ld. AR submitted that the Ld. CIT (A) has wrongly held that the assessee has not retracted from the statement recorded during the search while the fact remains that the assessee has retracted from the statement by filing the affidavit before the AO. The Ld. AR submitted that Ld. AO has not controverted the contents of the affidavit and the contents of the affidavit were not proved as vague, therefore, the affidavit should be accepted as correct. He relied upon following decisions:-
Mehta Parikh & Co v CIT [1958] 30 ITR 181 (SC)

(ii)
Daulat Ram Rawatmull v. CIT (1973) 87 ITR 349 (SC).
(iii)
Shri Nirmal Kumar Kedia V/s DCIT (Vice-Versa) 2019 (6)
TMI 467 - ITAT Jaipur ITA No 124-126/JP/2019 order dated
03-06-2019
(iv)
Hon’ble Jaipur ITAT in the case of Shri Radhey Shyam Mittal
ITA No 420/JP/2012 dated 26.08.2013
(v)
Dilip Kumar Rao Vs CIT (1974) 94 ITR 1 (Bom);
(vi) Malwa Knitting Works Vs CIT (1977) 107 ITR 379, 381 MP
(vii) Sri Krishna Vs CIT (1983) 142 ITR 618 (All).
Ld. AR further submitted that images recovered from mobile are deaf and dumb and most of the images are not properly visible and readable. Most of the images are rough estimation/calculations, undated, unnamed and no proper conclusion can be drawn from these images. These images are incoming images in whatsapp chat. The Ld. AO has quantified the unexplained purchases on the basis of assumption. Further, these chats in whatsapp are received chats neither prepared by the assessee or his employee and were also not snapped by the assessee or his family members or by his employees. Ld. AR draw our attention towards seized page 19 of annexure AS 1 (paper book page 85) which is not properly visible and readable. Further, name of the assessee is not appearing against the payment.
Seized page 20 of annexure AS 1 (paper book page 86) name of Pappuji Jaipur is appearing against payment of Rs. 1,00,000/- shown in the print out of the image.
Seized page 22 (paper book page 88) shows some calculation; not the payment of Rs.28,000/- . Seized page 23 (paper book page 89) is not properly visible and Shrikant Singhania vs. ACIT readable and shows some calculations. Seized page 3 (paper book page 69) shows some calculation and balance Rs. 3,26,124/- and no name of the assessee is appearing .Seized page 4 (paper book page 70) shows RTGS in name of Shivnath and cash in name of Chetan, Rajesh , Kota is appearing. Seized page 5(paper book page 71) also does not show any payment made by the assessee, rather names of Shivnath and Pradesh Roadways are appearing. Therefore, on the basis of these impugned images unexplained purchases in the hands of the assessee cannot be determined and no addition in the hands of the assessee can be made. The Ld. AR relied upon following decisions:-
(i)
Raj Technology Versus DCIT, Central Circle-4 (2), Mumbai and (Vice-
Versa) Reported In 2024 (11) TMI 236 - ITAT MUMBAI.
(ii)
ACIT v. Shanker Nebhumal Uttamchandani” [2024] 161 taxmann.com
536 (Surat-Trib.) [28-02-2024] of Hon'ble ITAT SURAT BENCH
(iii)
Asstt.. CIT v. Shri Manchukonda Shyam [IT Appeal 87 (Viz) of 2020, dated 23-9-2020]
(iv)
A. John kumar v. DCIT CC 1(4) [IT Appeal 3028 (Chny) of 2019, dated
13-5-2022
(v)
Atul Tantia v. Dy. CIT [IT Appeal 492 (Kol.) of 2021, dated 28-3-2023]
(vi)
Designers Points v. ACIT [IT Appeal 2517 (Delhi) of 2022]

In alternative submission, the Ld. AR submitted that even if the impugned images are accepted as evidence then also entire purchases cannot be treated as income of the assessee. These impugned purchases are related to business of the Shrikant Singhania vs. ACIT assessee. The department has carried out search and survey operations on the premises of the assessee and no excess stock was found and therefore, if the assessee made the purchases then it was sold out by the assessee and from the sale proceeds the payment of purchases was made. It is apparent from the seized record that the purchases are credit purchases and payments were not made on the single day. In such a case plausible presumption which can be drawn is that the assessee sold such goods and out of sale proceeds the payment of purchases consideration was made. Thus, in such a case due profit embedded in the transaction can only be taxed as income of the assessee. Without establishing the investment in purchases the entire purchases cannot be treated as income of the assessee. He submitted that weighted average G.P. rate is 7.96% for the A.Y. 2014-15, AY 2015-16, AY 2016-
17 and A.Y. 2017-18. Even in A.Y. 2019-20 the Ld. CIT(A) sustained the addition on short stock of Rs. 2,37,042/- by estimating the profit rate of 6.97% which was G.P. rate for A.Y. 2019-20. The Ld. AR relied upon following decisions:-
(i)
Kedia Real Estate LLP ITA No. 127/JP/2019 order dated 03.06.2019
(ii)
Kayakalp Herbal Private Limited ITA No. 633/JP/2016 order dated
25.04.2017
(iii)
Jadau Jewellers & Manufacturing Private Limited ITA No. 446/JP/2016
order dated 28.02.2017,
(iv)
Deputy Commissioner of Income-Tax. Versus Pahar Ganj Grih Nirman
Sahkari Samiti Limited and Others. 005 (10) TMI 237 - ITAT JAIPUR
Other Citation: TTJ 099, 549, order Dated: - October 21, 2005
(v)
Commissioner of Income-tax v. President Industries [2002] 1
24 TAXMAN654 (GUJ.)
Mumbai[2018]99taxmann.com151
(vii) Jyotichand Bhaichand Saraf & Sons (P.) Ltd. v. Deputy
Commissioner of Income-tax, Circle 11 (1) [2012] 26
taxmann.com 239 (Pune)
(viii) Commissioner of Income- tax v. Gurubachhan Singh J.
Juneja [2008] 171 Taxman 406 (Gujarat)
(ix)
Shri Nawal Kishore SoniVs. The ACIT Central Circle – 3
Jaipur, ITANo. 1256, 1257, & 1258/JP/2019, dated
15.09.2020. (x)
Man Mohan Sadani v. Commissioner of Income-tax [2008]
304 ITR 52 (Madhya Pradesh).
(xi)
Shri Lakshmanan v. ITO, Ward - 1(3), Chennai, [2021] 127
taxmann.com 391 (Chennai-Trib.).
(xii)
NishikantT.Patnev.ACIT,Circle-3, [2013] 36 taxmann.com
540 (Pune-Trib.).
(xiii)
G. Raja Gopala Rao v. DCIT, Circle-4 (1), Visakhapatnam,
[2017] 78 taxmann. Com 61 (Visakhapatnam-Trib.)
(xiv) CIT Vs Samir Synthetics Mill (2010) 326 ITR 410 (Guj HC).
(xv)
M/S Bhalchandra Trading P. Ltd. Versus Dy. Cit, Central Circle-6 (2)
Mumbai 2021 (2) TMI 1095 - ITAT Mumbai.

The Ld. AR further submitted that the Ld. AO has not mentioned in the assessment order levy of tax at higher rate by applying section 115BBE but in computation sheet of tax he charged the tax on addition at special rate u/s 115BBE.
The AO has not issued show cause notice for charging of tax at higher rate which is clear violation of natural justice. He relied upon decision of Suraj Kanwar Devra vs ITO 2(2), Udaipur in ITA No. 50/Jodh/2021 dated 23/11/2021. 10. Per contra, Ld. DR representing revenue heavily relied upon the findings recorded in the order of Ld. AO and that of the Ld. CIT(A).
Therefore, the contention of Ld. AR that these images cannot be used as acceptable evidence, cannot be accepted. However, these images show payments against soap material on various dates and the fact remains that no excess stock was found and in view of these facts and circumstances, the plausible presumption which can be drawn is that the assessee sold such goods out of books and out of the sale proceeds the payment of purchase consideration was made. The seized images also shows that the purchases were on credit and payments were on subsequent various dates . For example, seized page 4 of Exhibit AS 1 (paper book page 70) shows purchases of acid of Rs. 9,88,400/- on 16/04/2018 whereas the payment recorded on 21/04, 25/04, 30/04, 02/05, 16/05, 19/06, 06/08 and 08/08. Similarly, seized page no. 5 (paper book page 71) shows purchases of 02/11/18 and payment is on 06/11, 24/12. Therefore, considering these facts and circumstances, addition for entire purchase value cannot be made and not justified. In such situation only profit
The bench noted that recently the juri ictional Hon’ble Rajasthan High court while dealing the estimation of gross profit on account of bogus purchase while dealing with the case of COMMISSIONER OF INCOME TAX (CENTRAL),
JAIPUR vs. M/S CLARITYGOLD (P) LTD. [100 CCH 0396 Raj HC ] held as under:
4. Facts of the case are that the assessee company derives its income from business of manufacturing of jewellery and in trading of gems stones. The background of search action on the Clarity Group was survey under Section-133A conducted in FY2007-08 by the BCTT Wing of the Investigation Directorate of Jaipur which revealed that Clarity Gold Pvt Ltd. And its sister concerns M/s Marine
Minerals and Herbal Remedies Pvt. Ltd. Jaipur had obtained bogus purchase bills amounting to Rs.13.59 crores from various entry providers, who provided bogus sale bills without supplying the goods mentioned in the bills. After search
(20.05.2009) the case of the assessee was centralized with ACIT, Central Circle-1,
Jaipur, who issued notice under Section-153A to the assessee company on 23.09.2009. In response the return was filed on 28.04.2011, declaring income of Rs.
17,86,470. Assessment was completed at Rs. 98,87,157 through order dated
23.08.2011 passed under Section-143(3) r.w.s.153A by the ACIT, Central Circle-1,
Jaipur.
5. We have heard Mr. Mehta counsel for the appellant and Mr. Gupta counsel for the respondents.
6. Taking into consideration the evidence on record, the Tribunal while considering the matter has totally deleted the amount of addition. In our considered opinion, taking into account the industry which is running the business, the addition which has been made on the bases of GP which has been shown of the identical industry whose case is also heard together. The GP rate of previous years reads as under:-
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2009-10
unaudited
2010-11
Sales
198490
1426903
5466428
68749794
97777586
10306287
1072033
1540384
Stock diff.
144657
5147868
0
71450573
6769267
83951400
83334242
5750095
Total
2129557
1941690
5466428
75894851
1054510
11145801
11553681
2115394
Purchases
181023
1698878
4962283
68670235
9376682
96584379
99103051
1574824
Direct Cost
0
6118276
9962436
1409772
1312092
8607118
10319346
8163403
Total
181023
1760061
5061907
70080007
9507891
97445091
10013498
1956458
Grow
3193228
1816292
4045206
5514844
9466185
14012920
15401828
1589358
G.P.Rate
16.08%
12.72%
7.40%
8.45%
9.68%
13.59%
14.36%
10.31%

Taking into account the average GP rate which will be applied in the present case will be 12 per cent. It is made clear that where ever the profit is more than12
per cent, the same will not be refunded to the assessee but where it is less than 12 per cent, the income will be assessed on the basis of 12 per cent GP.
8. In view of above, all the appeals stand allowed to the aforesaid extent.

In this case, the assessee is in the business of non-edible oil and other soap material, therefore, the profit embedded in unexplained purchases should be estimated taking into consideration the GP which has been shown in the identical industry. The past history of the assessee is best guiding factor of trade results.
Hon’ble Rajasthan High Court in the case of CIT Vs Bhawan Va Path
Nirman (Bohra) & Co (No. 1) 258 ITR 431 has held that the past history of the assessee is best guiding factor. Hon’ble ITAT Jaipur Bench in the case of M/s
Asian Construction Co. Vs ITO 34 Taxworld 89 has held that the past history of assesses case is the best reflector of the true trade results. The fact remains that the Ld. CIT (A) estimated the profit on short stock by applying profit rate of 6.97%
and the weighted average rate of GP is 7.96% for A.Y. 2014-15, 2015-16, 2016-17
and 2017-18. Therefore, keeping in mind the doctrine of equity, justice and good conscious business income should be estimated @ 8% on the unexplained
Shrikant Singhania vs. ACIT purchases of Rs. 37,01,550/- and Rs. 27,53,711/- for A.Y. 2017-18 and A.Y. 2019-
20 respectively. Thus, the addition of Rs. 2,96,124/- and Rs. 2,20,297/- is sustained as business income for AY 2017-18 and AY 2019-20 respectively as against addition of Rs. 37,01,550/- and Rs. 27,53,711/- made by AO u/s 69C for AY 2017-
18 and AY 2019-20 respectively. The ground no. 2 to 4 in ITA No. 1221/JPR/2024
AY 2017-18 and ground no. 3(a), 3(b) and 5 in ITA No. 1222/JPR/2024 AY 2019-
20 are partly allowed.
12. Ground no. 2 in AY 2019-20 is in respect addition of Rs. 50,270/- on account of unaccounted sales. The Ld. AO made the addition of Rs. 50,270/- treating the same as cash sales out of the books in the hands of the assessee on the basis of documents found from Shubh Laxmi Group seized as page no. 1 to 3 of Annexure 6. The findings of Ld. AO are in para 9.1.3 to 9.1.5 of assessment order.
The AO in para 9.1.4 of his order mentioned that page no. 1 to 3 of Annexure 6
was seized from Shubh Laxmi Group. Page 1 and 3 shows cash payment of Rs.
3,27,500/- for the period 28/04/17 to 15/06/17 and page no. 2 shows cash payment of Rs. 50,270/- which pertains to AY 2019-20. The Ld. AO further mentioned that the department recovered image from mobile seized as page 26 of AS 1 which shows payment of Rs. 3,27,500/- for the period 28/04/17 to 15/06/17. This shows
Shrikant Singhania vs. ACIT that the assessee has received payment of Rs. 50,270/- during this year on account of sales out of the books.

The CIT(A) confirmed the findings of AO on the basis of reasons mentioned in para 5.2.14. 13. Ld. AR submitted that no any corroborative entry was found from the documents seized from the possession of the assessee to support the addition of Rs.
50,270/- made by the ld AO. Further, the copy of seized paper page 1 to 3 of Annexure 6 from the possession of Shubh Laxmi Group was not provided. Further, at page 6 of assessment order at the bottom of para 9.1.3. he mentioned that he is reproducing the image but it was not reproduced/found in the assessment order also. Further, the AO mentioned that Shri Birendra Taparia proprietor of M/s
Shubh Laxmi Soap Industries has confirmed in his statement dated 24/04/2019 that out of the said 3 pages of Annexure 6, page 1 and 3 are same and belongs to payments of purchases made from the assessee. The Ld. AO neither provided to the assessee copy of the statement of Shri Birendra Taparia nor he reproduced the same in the assessment order although he mentioned in para 9.1.4 of assessment order that he is reproducing the relevant part of the statement. Further, despite of specific request the opportunity of the cross examination of Birendra Taparia was not provided. Further, the addition on account of unexplained purchases and short
We further noted that the AO has not reproduced the relevant part of the statement in the assessment order although he mentioned in para 9.1.4 of assessment order that he is reproducing the relevant part of statement. Further, the AO has made separate addition on account of unaccounted purchases and short stock treating the same as unaccounted sales therefore, the separate addition on account of sales out of the books cannot be made. Therefore, the Ld. AO has not justified in making the Shrikant Singhania vs. ACIT addition of Rs. 50,270/- on account of unaccounted sales. We therefore, set aside the findings of Ld. CIT(A) in this regard and direct the AO to delete the addition of Rs. 50,270/- made by AO. Ground no. 2 raised in assessment year 2019-20 is allowed.
16. Ground no. 4 raised in assessment year 2019-20 was not pressed hence, dismissed as not pressed.

In the result, appeals filed by the assessee for AY 2017-18 and AY 2019-20 are partly allowed.

Order pronounced in the open court on 17/01/2025. ¼ xxu xks;y ½

¼MkWa-,l-lhrky{eh½

(Gagan Goyal)

(Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member

Tk;iqj@Jaipur fnukad@Dated:- 17/01/2025
*Santosh
आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू
1. The Appellant- Shrikant Singhania, Jaipur

सहायक पंजीकार@Aेेजज. त्महपेजतंत