ITO, TIRUNELVELI vs. MANI & CO., SANKARANKOIL

आदेश / O R D E R

PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:

ITA No.1479/Mds/2015 :- 2 -:

Grounds of appeal:

1. The order of the CIT(A) is opposed to law on the facts and in the circumstances of the case.

2. The CIT(A) erred by way of rejecting the material evidence (i.e. computer printout containing month wise sales details for the period from April 2010 to October 2010) found in the assessee’s premises during the course of survey conducted u/s I 33A of the Income Tax Act. 3. The CIT(A) failed to note that the projected sales in a statement of computer printout found during the course of survey is not in round figures and it resembles as actual sales. 4. The CIT(A) erred that the Assessing Officer made the addition solely on the basis of a loose computer printout, which does not display a remote connection to the data available in the books of accounts of the assessee. As per provision of sec.292C of the Act, the documents impounded at the time of survey u/s 133A of the Act may be presumed to be true. As per ITAT’s order, the assessee has to show that the contents of the said documents are not true. Hence, the assessee has the responsibility to prove his submissions that the computer printout of projected sales prepared for bank loan purposes by producing the documents filed with the bank. 5. The CIT(A) failed to note that there will be no necessity of projecting sales pertaining to past months. The explanation of the assessee does not suit the situation. 6. The CIT(A) has also not called for a remand report based on the explanation/rebuttal submitted by the assessee as directed by the Hon’ble ITAT. 7. For these and such other grounds that may be adduced at the time of hearing and it is prayed that the order of the CIT(A) may be set aside and that the Order of Assessing Officer may be restored.

the time of survey and the assessee explained that the sales figures in the computer system were projections prepared for the purpose of bank loan and it was not actual sales. The AO disbelieved the explanation of the assessee and held it as the unaccounted sales of the assessee and estimated the gross profit @22.75% on difference amount of sales of Rs.3,87,72,703/- (Rs.5,74,14,133 – Rs.1,86,41,430) and made the addition of Rs.88,20,790/- to the returned income. The matter went up to the Hon’ble ITAT and the Hon’ble ITAT disposed of the appeal in dated 23.01.2015 remitting the matter back to the file of CIT(A) as under:

“We heard the rival contentions and perused the record. We notice that the impugned addition has been made solely on the basis of a computer printout found at the time of survey. According to the Assessing Officer, the same was available on the computer system and a print out of the same was taken out on 06.11.2009. The sales figures noted therein pertained to the period from April 2009 to October, 2009. Hence, the Ld. DR contended that there will not be any necessity of projecting sales pertaining to past months. Thus, it is seen that the explanation of the assessee does not suit the situation. At the same time, it is also a fact that the survey official did not stumble upon any excess/shortage stock, unaccounted purchases, unaccounted sales, etc., at the time of survey operation. However, before us, both the parties failed to furnish a copy of the computer printout, on the basis of which the impugned addition has been made. We further notice that the Ld.CIT(Appeals) has expressed the view that the burden to prove the contents of the document is placed upon the Assessing Officer. (see. Para 7.2 of CIT(Appeals)’s Order). The said observations are against the provisions of sec. 292C of the Act, wherein it is provided that the documents impounded at the time of survey u/s.133A of the Act may be presumed to be true. In that case, the burden is placed upon the assessee to rebut the said presumption. At the time of hearing, the Ld A.R was specifically asked as to whether the assessee was able to prove his submissions that the computer printout relate to the projected sales prepared for bank purposes by producing the documents filed with the bank, the Ld. AR submitted that he is not having those details”.

3. Consequent to the Order of the ITAT, the Ld.CIT(A) has passed the Order in dated 30/03.2015 and deleted the addition made by the assessing officer. While deleting the addition the Ld.CIT(A) relied on the letter submitted by the A.O on 23.03.2015 which was reproduced by the CIT(A) in his order in paragraph No.12. For the sake of ITA No.1479/Mds/2015 :- 4 -:

convenience we reproduce the relevant paragraphs of the Ld.CIT(A)’s Order in paragraph No.12 and 13 as under:

I submit that apropos to my personal appearance before the Commissioner of Income tax (Appeals)-3, Madurai, on 10.03.2015, and as per directions, I have gone thro. the survey materials relevant to the Assessment Year 2010-11 impounded during Survey u/s.133-A of the Income Tax Act, 1961, 03.03.2010, in the assessee’s case and the Computer Print out in question (purported to be dated 06.11.2009), on the basis of which additions were made by the then Assessing Officer, Ward-1(2), Tirunelveli, in the Assessment Order passed u/s.143(3) of the Income Tax Act, 1961, on 28.03.2013.

A careful examination of both shows that there is no resemblance/nexus between figures as reflected in the impounded books and the Computer print out. It appears that the Computer Printout is not in an “Excel” format, but figures that could have been simply typed. There is a sound reasoning for my considered opinion; say,

2. In the computer printout based on which additions were made, such broader details are completely absent, just with name(s) of months and figures in the next column.

5. The implied meaning is that the Assessing Officer made the addition solely on the basis of a loose Computer-printout, which does not display a remote connection to the data available in the books of accounts of the assessee.

In this regard, I solicit the Commissioner’s kind attention to answer given by Shri K.Balasubramanian, Prop Mani & Co, to question No.18 of the Sworn Statement recorded at the time of survey when he was requested to explain for the figure shown in the print out (total amount Rs.5,17,22,046/-), he had answered that “the turnover was a projected one and prepared for obtaining loan from M/s.Indian Bank, Tirunelveli and M/s.Tamil Nadu Mercantile Bank; the actual turnover is what I declared earlier”

4. Aggrieved by the Ld.CIT(A)’s Order, the department is in appeal before us.

ITA No.1479/Mds/2015 :- 5 -:

The Ld.DR argued that the information of month wise sales from April to October, 2009 was found during the course of survey in the computer system of the assessee was prepared on 06.11.2009. The assessee need not take project, the sales for the partial period for the purpose of bank loan and the assessee would take the sales projections for the complete year. The Hon’ble ITAT in their Order’s directed the Ld.CIT(A) to re-examine the issue. The Hon’ble ITAT also viewed that it is the burden of the assessee to show the contents of the information is wrong. In the second round also, the assessee has not furnished any evidence to show that the details written in the computer printout was not relating to the sales for the period of April to October- 2009 and burden has not been discharged as per Sec.292C of the Income Tax Act.

According to the Ld.DR, the addition made by the AO required to be confirmed. On the other hand, the Ld.AR argued that the information was prepared for the purpose of bank loan and at the time of survey itself the assessee has explained the same. The assessee has clarified that loose sheet showing projection of sales was prepared for the purpose of bank loan only. No evidence was found during the survey supporting the unaccounted sales made by the assessee. There was no stock difference and no other loose sheets evidencing sales made outside the books of accounts were found. The department has impounded all the bill books, stock registers, etc., but none of the register/bill books shows that the assessee has indulged in making unaccounted sales, it is unjustified to make addition merely on the basis of simple loose sheet.

ITA No.1479/Mds/2015 :- 6 -:

We have gone through this Tribunal decision and directions issued by the Hon’ble ITAT to the Ld.CIT(A). In the earlier Order, the Hon’ble ITAT has viewed that it is the burden of the assessee to show that the contents of the document are not true as per Sec.29C of Income Tax Act.

From the Order of the Ld.CIT(A), we noticed that the Ld.CIT(A) has called for the Remand Report, and the AO submitted the remand report analyzing the loose sheets and the information available on record and accepted that the information in the computer system was projections but not actual sales. Having accepted that the information in computer system related to the projections but not the sales, the Department should not have filed the appeal. The Ld.AR has filed the paper book enclosing the VAT order disclosing the sales at Rs.3,23,37,125/- and stated that from the impounded material no evidence is available evidencing the unaccounted sales. The A.R further submitted that the loan proposal was submitted to the bank and bank has refused to sanction loan and consequently business of the assessee was also closed and also regretted his inability to submit the evidence regarding the loan proposal submitted to the bank. Since no other information was available and the assessing officer in his letter stated that printout does not display a remote connection to the data available and the turnover declared by the assessee matches with the turnover declared in VAT and the books of ITA No.1479/Mds/2015 :- 7 -: accounts maintained by the assessee, we confirm the order of the Ld.CIT(A) and dismiss the revenue’s appeal.

Order pronounced in the Open Court on 13th January, 2017, at Chennai.