THE ITO, 1(1), BHOPAL vs. M/S. MAHESHWARI ADVERTISING, BHOPAL

आदेश /O R D E R

PER SHRI C.M. GARG, JM

This appeal has been filed by the Revenue against the order of

the learned CIT(A)-31, New Delhi, having concurrent jurisdiction

over the CIT(A)-1, Bhopal, dated 23.12.2015 in First Appeal No.

31/13-14 for the assessment year 2010-11.

ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016 2. The sole effective ground raised by the Revenue–appellant

reads as follows :-

“On the facts and in the circumstances of the case, ld. CIT(A)-31, New Delhi, Camp at Bhopal has erred in –

“Deleting the addition of Rs.45,18,389/- made by A.O. on account of unaccounted sale/receipts which was voluntarily surrendered by the assessee during the course of survey conducted on 24.02.2010”

the business of Advertising agency. The filed the e-return of income

on 29.9.2010 showing total income of Rs. 1,11,60,220/-. Notice

u/s 143(2) of the Act was issued on 7.9.2011 which was duly

served upon the assessee. The Assessing Officer observed that a

survey u/s 133 of the Act was conducted on 24.2.2010 at the

business premises of the assessee firm. During the course of

survey proceedings, the assessee firm surrendered the following

sums as its undisclosed income :-

(i) Excess cash found Rs.39,22,821/- (ii) Unaccounted sale/receipts as per LPS-2 Rs.45,18,389/- Total - Rs.84,41,210/-

However, vide its reply dated 8.1.2013, the assessee firm retracted

from the “surrender of unaccounted sale/receipts” amounting to

ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016

Rs.45,18,389/- on the ground that after the conclusion of survey,

sale bills in respect of “estimated work orders” found during the

course of survey proceedings, were issue and accounted for in the

books of accounts of the assessee firm. The Assessing Officer, on

consideration of the reply of the assessee, observed as under :--

(i) During the course of survey proceedings, statement of Shri

Sunil Maheshwari, partner of the assessee firm, was

recorded on oath on 24.2.2010. In the above statement, Shri

Maheshwari has accepted the fact that the work orders

found during the course of survey were not entered in the

account books of the firm. Further, Shri Maheshwari has

unconditionally accepted the amount involved in the above

work orders at Rs.45,18,389/- as the undisclosed income of

the firm.

(ii) All sale bills pertaining to seized work orders were prepared

on 25.2.2010 i.e. immediately after the conclusion of the

survey. No plausible reason for the same was furnished by

the assessee.

ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016

(iii) As claimed by the assessee, it is maintaining regular books

of accounts on mercantile system of accounting. Further, it is

seen that seized work orders relate to period much older than

the date of survey. Non-inclusion/delayed inclusion of the

huge sales/receipts in account books for a long period makes

it clear that the preparation of sale bills/their accounting in

the books of accounts immediately after the concluion of

survey is only an afterthought. Had the survey been not

conducted in the business premises of the assessee firm, the

huge sale/receipts of Rs.45,18,389/- might never have been

accounted for.

(iv) During the course of survey, excess cash amounting to

Rs.39,22,821/- was found which was unconditionally

accepted and offered for taxation. Finding of such huge

excess/unaccounted cash indicates that the assessee firm is

indulged in the practice of not accounting all its

sales/receipts in its books of accounts. Thus, it is apparent

that the assessee firm has unaccounted sales/receipts.

ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016

(v) It is also seen that the assessee has not furnished the profit

and loss account for the period before the date of survey and

after the date of survey. Further, no reconciliation of the

sale/receipts incorporating the work orders found during the

course of survey proceedings was furnished.

(vi) The assessee has also not furnished the hoarding-wise

receipts and the period displayed thereof”.

On the basis of the above observation, the Assessing Officer added

the amount of Rs. 45,18,389/- to the total income of the assessee

by treating the same as undisclosed income of the assessee.

preferred first appeal before the learned CIT(A). On consideration of

the facts of the case in the light of the submissions of the learned

counsel for the assessee, the learned CIT(A) deleted the addition

made by the Assessing Officer by observing as under :-

“4.3 I have considered the findings recorded by the ld.

A.O. as per the assessment order, the submissions made by the

ld. AR and the facts of the case on record. It is seen that in this

case a survey under section 133A was conducted whereby 5

ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016

unaccounted sale/receipts of the order of Rs.45,18,389/- were

detected and income to that extent was surrendered by the

appellant. As per the assessment order the ld. Assessing

Officer made an addition of the same amount stating that the

assessee has retracted the said surrender. The AR before me

has submitted that all the sales bill were prepared on

25.02.2010 immediately after the date of survey to avoid any

future confusion to ensure that such papers have been included

in the income. This also categorically establishes that the

receipts comprised in the seized papers have been duly

considered as income by the assessee. Thus, no adverse

inference could have been drawn from such fact. The appellant

has also submitted various documents in the form of ledger

account, copies of bills and vouchers etc. in support of the claim

that the receipts to the extent of Rs.45,18,389/- were actually

included in the total turnover which was offered to tax. In view

of the above, the action of the ld. A.O. in making the addition on

the ground of retraction by the assessee is clearly on the wrong

footing and amounts to double taxation. Such action cannot be 6

ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016

upheld. I, therefore, direct the ld. A.O. to delete the addition

made. Accordingly, the ground no. 2 is allowed to the

appellant.”

Revenue is in appeal before the Tribunal.

perused the relevant material placed on record of the Tribunal,

inter-alia, impugned assessment order and the first appellate order.

submitted that the surrendered amount of Rs.45,18,389/- on

account of unaccounted sales/receipts was correctly treated as

undisclosed income of the assessee and the same was correctly

added to the total income of the assessee. The learned DR

submitted that during the course of survey proceedings, statement

of Shri Sunil Maheshwari, a partner of the firm, was recorded on

24.2.2010 wherein he has accepted the fact that the work orders

found during the course of survey were not entered in the books of

accounts of the firm and he unconditionally accepted the amount

ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016

involved in the above works order as undisclosed income of the

assessee.

out that the learned CIT(A) in para 4.3 went wrong in appreciating

the facts of the case to hold that the action of the Assessing Officer

in making the addition was on the wrong footing and amounts to

double taxation. The learned DR also pointed out that the learned

CIT(A) was not correct in deleting the addition made by the

Assessing Officer on the basis of voluntary surrender made by the

assessee during the course of survey. Therefore, the impugned

order may be set aside by restoring that of the Assessing Officer.

submitted that the partner of the assessee firm prepared bills on

25.2.2010 immediately after the date of survey to avoid any

confusion to ensure that such amounts/receipts should be

included in the trading receipts of the assessee. The learned

counsel for the assessee vehemtnly pointed out that these receipts

have been duly considered as income of the assessee in the final

books of accounts which were submitted along with the return 8

ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016

before the Assessing Officer. The learned counsel for the assessee

strenuously contended that the assessee submitted various

documents in the form of ledger account, copies of sales bills and

vouchers, etc. in support of the fact that the receipts to the extent

of Rs. 45,18,389/- were actually included in the total turnover

shown by the assessee in the trading results of the assessee which

were also offered to tax. Therefore, if any further addition is made, it

would amount to double taxation and the learned CIT(A) after

correctly appreciating the facts and circumstances of the case, has

granted relief to the assessee which cannot be dismissed.

we observe that the learned CIT(A) has deleted the addition with

confusion recorded in para 4.3 of the first appellate order which has

been reproduced hereinabove in para 4 of his order.

24.2.2010 wherein unaccounted sale receipts or bills of

Rs.45,18,389/- were detected and this amount was surrendered by

Shri Sunil Maheshwari, partner of the assessee firm.

ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016

on the allegation that the assessee has retracted from the surrender

made during the course of survey proceedings. This fact has not

been controverted by the learned DR that the assessee submitted

all the sale bills which were prepared on very next date of survey i.e.

25.2.2010 to ensure that the impugned amount should be included

in the trading results/income of the assessee. When the impugned

amount which was picked up by the Assessing Officer for making

the addition, has been shown as receipt in the accounts of the

assessee and such receipts of Rs.45,18,389/- were actually

included in the total turnover shown by the assessee in the books of

accounts and the same were also offered to tax then in our opinion

the Assessing Officer was not justified in making the addition of the

same amount on the ground of retraction by the assessee. On the

basis of the above noted factual matrix, we are inclined to hold that

the Assessing Officer has prompted to make double addition by

ignoring the fact that the amounts surrendered during the course of

survey have been included by the assessee in the books of accounts

and financial results of the assessee which obviously amounts to 10

ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016

double addition which is not permitted as per the provisions of the

Act. In this situation, the learned CIT(A) was quite correct in

deleting the impugned baseless addition and we are not able to see

any valid reason to interfere with the order of the learned CIT(A) in

this regard and, hence, we uphold the same. Accordingly, the sole

ground of the revenue is dismissed.

The order has been pronounced in open Court on 14th March,

2017.

Sd/- sd/-

लेखा सद�य �या�यक सद�य (O.P.Meena) (C.M. Garg) Accountant Member Judicial Member March 14th, 2017. Dn/