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Income Tax Appellate Tribunal, “A”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD, JM Shri Amarjit D. Nagi
आदेश / O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the Revenue against the order of CIT(A) for the assessment year 2009-10 in the matter of order passed u/s. 143(3) read with Section 153B(1)(b) of the I.T. Act. 2. In this appeal, revenue is aggrieved by the action of the CIT(A) deleting addition made on account of unaccounted sales. 3. At the outset, learned AR placed on record the order of the Tribunal in assessee’s own case for the assessment year 2005-2006 dated 06/10/2016 wherein Tribunal have confirmed the order of CIT(A). CIT(A) deleting the similar addition made on account of unaccounted sales on 2 Shri Amarjit D Nagi the basis of entries made in the diary seized during the course of search action.
4. We had carefully gone through the order of the Tribunal in assessee’s own case for the assessment year 2005-2006, wherein similar addition made on account of entries in the seized diary during course of search was treated as unaccounted sales. The addition so made was deleted by CIT(A), and in an appeal filed by Revenue before the Tribunal, vide its order dated 06/10/206 the Tribunal has confirmed the action of CIT(A) deleting the addition.
Precise observation of the Tribunal was as under:- 3. Facts of the case are that there was a search action under section 132(1) of the Income Tax act, 1961 on Nagi Group on 30.5.2008 to which the assessee was connected. A notice under section 153A was issued on 5.9.2008 and served upon the assessee which was complied by him by filing the return of income on 30.8.2010 declaring an income of Rs.1,30,774/- which was the same as declared by the assessee in the original return filed on 12.12.2005. Thereafter statutory notices u/s 143(2) and 142(1) were issued and served upon the assessee. Certain documents were seized during the course of search proceedings marked as A-2 and A-3 from the residential premises of the Mrs.Chandra A Nagi and Mr. Amarjet Nagi, 1001, A Patliputra, Four Bangalow, Andheri (W), Mumbai. Vide order sheet entry dated 12.11.2010 , the assessee was asked to give page-wise comments on A-2 and A-3 and also asked as to why the amount of entries as contained in these annexure should not be added to the total income of the assessee. The assessee replied to the show cause notice which was rejected by the AO and as a result added interalia a sum of Rs.61,58,704/- on account of unaccounted sales as stated in para 4.1 to 4.3 of the assessment order by framing the assessment under section 143(3) read with section 153A of the Act vide order dated 30.12.2010 by assessing the total income at Rs.77,97,240/-. Aggrieved by the order of AO, the assessee preferred an appeal before the ld. CIT(A) who deleted the addition made by the AO by observing as under : "5.2 I have very carefully considered the matter. I have examined the order of the A.O and the submissions of the appellant. I have also scrutinized the copies of the seized material as are available on record and also considered the paper book submitted by the appellant. The A.O noticed that there are certain financial entries 3 Shri Amarjit D Nagi in the diary seized during the search operations and assuming the same as unaccounted sales in the books of the appellant. The appellant, on its part has submitted detailed working for the purpose of explaining the entries, and has explained that the entries are not actual sales, but or estimates made in pursuant to enquiries made by one of its customers. It also observed from the order of assessment that the entries as seen in the diary have only been assumed by the A.O that it represent sales. The appellant is the business of dealing in paintings and arts -arid interior decoration etc. It quite plausible that the customers would be making enquiries with regard rates, estimated cost of various projects with different permutations and combinations which need to be worked out. Therefore, each and every entry the personal diary of the appellant cannot be the sales of the appellant particularly when there is no evidence of any amount received by the appellant with respect to such entries. The AO has simply relied on the entries made in the diary of the appellant, presuming them to be sales, without bringing any evidence on record. There is no corroborative evidence with the AO to hold that sales have actually taken place, or that any amount in respect of such sales has been actually received by the appellant either through cheque or cash that any expenditure has been incurred by the appellant in this behalf. Hence it is clear that the AO could not substantiate with corroborative evidence that the evidence that the entries made in the diary are not merely estimates but are actual sales. On the contrary, the appellant during the course of appellate proceedings has explained these entries in detail. The appellant, with detailed working of different permutations/ combinations has been able to explain that the entries are merely projections related to sales enquiry and no actual sale has taken place in respect of such entries. There is no evidence to prove otherwise and in the said event it is held that the entries as observed in A2 are but cost estimations for different permutations and combinations. Hence the addition as made the A.O assuming the financial entries as sales not recorded in the books and thereby making additions on unaccounted sales of Rs.1597,783, Rs.13,12,877. Rs.16,72,413/ and Rs.15,75,631/- stand deleted " Aggrieved by the order of AO, the revenue preferred an appeal before us.
The ld. AR submitted before us that the entries seized during the course of search operation did not represent any unaccounted sales as alleged by the AO but only were estimates made in pursuance of enquiries by the customers which was wrongly presumed by the AO to be unaccounted sales. Since the assessee is in the business of dealing in painting ,arts and interior decoration etc he has to work out the estimates as and when there are enquiries from the customers. The ld AR further submitted that no further evidence was found during the course search which corroborate these calculation to be sales of the assessee and 4 Shri Amarjit D Nagi heavily relied on the order of ld.CIT(A) who has taken correct view in the matter by reversing the order of AO.
5. Per contra, the ld. DR submitted before us that the sales entries found in the diary during the course of search action represented uncounted sales and rightly added by the AO to the income of the assessee. The ld. DR prayed for that the order of ld.CIT(A) be set aside and that of AO be restored.
7. We have considered the rival submissions and perused the material placed before us including the orders of the authorities below. The made additions for unaccounted sales on the basis of entries in the diary found during the course of search which was deleted by the CIT(A) as having no basis and corroborating materials after giving detailed findings as given above. We are in agreement of the observations of the ld.CIT(A) that each and every entry in the diary seized during the course of search proceedings could not be treated as unaccounted sales especially when the assessee has duly explained each and every entry in the diary as estimates worked out with respect to various customers'' queries by the assessee as he is in the business of painting, art work and interior decoration work. Moreover, there is no other materials found by the search team which corroborate the entries to be unaccounted sales. Therefore, we are not inclined to interfere with the order of ld.CIT(A) as it does not contain any infirmity of law or facts. Accordingly, we upheld the order of the ld.CIT(A) by dismissing the appeal of the revenue.
In the result, the appeal of the revenue is dismissed.”
We had carefully gone through the order of the Tribunal and found that facts and circumstances during the year under consideration are same, wherein addition was made in respect of entry in the diary seized during the course of very same search as dealt by the Tribunal in its order dated 06/10/2016. Respectfully following the order of the Tribunal, we dismiss the appeal filed by the Revenue.
In the result, appeal of the Revenue is dismissed.