ACIT. CIR.23(2), MUMBAI vs. SHRI MAMTA V. THAKKAR, MUMBAI

In this case, assessee filed its return of income declaring total income of Rs.52,17,339/-. In assessment order, Assessing Officer made various additions, which were deleted by CIT(A).

First issue is with regard to addition of Rs. 70,00,000/- made by the Assessing Officer on account of stock difference declared during the course of survey to Rs.15,58,139/-. In fact, Assessing Officer made addition of Rs.70lacs on account of difference in physical stock which did not find place in return of income. Assessing Officer made addition in question.

Next issue is with regard to addition of Rs.4 lacs in respect of cash. Assessing Officer stated that assessee did not show entry made on 21.02.2007 and 22.02.2007 to show the exact cash balance in hand and so made addition. During appellate proceedings, assessee filed the certified Xerox copy of A.Y. 07-08 [ACIT vs. Mamta V. Thakkar) Page 5 cash book, which actually revealed the banking transactions for the period April 2006 to February 2007. As per that there were withdrawals from the bank on 06.01.2007 of Rs.2 lacs and Rs.50,000/- and the balance as on 20.02.2007 was Rs.4,24,862/-. CIT(A) observed that assessee’s books of accounts were incomplete and not written from January 2007 onwards as found by the survey team in respect of purchases and sales as well. Assessee has submitted that the survey party found cash on hand Rs.4,25,272/-, whereas cash on hand as per books of accounts was Rs.4,24,862/- which has wrongly been worked out by survey part at Rs.24,863/-. This resulted into a difference of Rs.4 lacs which was added in the income of assessee. As books of accounts were audited and this balance was reflected, same could not have been ignored. Since, entries in the books of accounts had not been found wrong as per which the cash balance was reflected at Rs.4,24,862/- as mentioned above, only the difference between this and Rs.4,25,271/- the cash found on the date of survey could be added. The difference between two comes to Rs.409/- which being an negligible sum was rightly avoided by CIT(A). However, same was taken as unaccounted cash and addition to this extent was sustained. Accordingly, CIT(A) gave partial relief to assessee. This reasoned finding of CIT(A) needs no interference from our side. We uphold the same.

Next issue is with regard to additional income of assessee. The total disclosure of Rs.85 Lakhs made during the course of survey was made including Rs.11 lacs. Assessee has earned A.Y. 07-08 [ACIT vs. Mamta V. Thakkar) Page 6 net profit of Rs.52,25,435/- after adjusting the value of closing stock as on 22.02.2007 to Rs.4,50,78,258/-. Hence, the disclosure of Rs.70 lacs on account of unaccounted stock, out of disclosure of Rs.85 lacs made at the time of survey, gets included in the net profit itself. Out of the balance disclosure of Rs. 15 lacs (i.e. Rs.85lakhs - Rs70Lakhs), the disclosure of Rs.4 lacs on account of cash need not to be made as the cash found at the time of survey was almost equal to the cash on hand as per books of account. Assessee should have made a balance disclosure of Rs.11 lacs only on account of unexplained renovation expenditure in the return of income by adding the same to the profit of Rs.51 lacs. However to keep the promise, assessee has shown business income of Rs. l.l5 Crores as against the real income of Rs.62 lacs. The voluntary addition of Rs.63lacs to the profit of Rs.51lacs, which was made to cover the shortfall to declare income of Rs.1.15 Crores, was more than enough to take care of disclosure of unexplained renovation expenditure. No separate addition needed to the income declared by assessee. Assessing officer failed to appreciate these facts and made addition of Rs.11 lacs to the net profit shown. This addition of Rs.11lacs was made to separate additions of closing stock and cash on hand. As per said sheet containing explanation for disclosure, assessee’s income during the year was Rs.51,15,435/-, to purchase peace of mind, assessee claimed to have offered Rs.1.15 Crores as her income at the same time reserving her right to be assessed at the actual income. It is the duty of Assesisng Officer to assess income at correct figure disregarding the fact what assessee ITA No.3337/Mum/11 A.Y. 07-08 [ACIT vs. Mamta V. Thakkar) Page 7 has returned. In fact, it was the case that assessee had returned higher income than her actual income. In view of above, assessee’s income was enhanced due to addition sustained for Rs.15,58,139/- on account of gross profit and Rs.409/- on account of difference in cash the income from business only stood at Rs.78,96,427/- which was more than assessee’s claim of Rs.62lacs. Along with this, assessee was having capital gain. As discussed above, regarding applicability of Rule 8D, Assessing Officer has to look into the corresponding expenses before disallowing the same. In this background, the alternative plea that income actually is only Rs.62 lakhs was rightly dismissed by CIT(A). In view of above, we are not inclined to interfere with the finding of CIT(A) who has held that additional income of assessee should be taken at Rs.63,84,565/- as declared by assessee in her return of income instead of Rs.85 lacs declared during survey action. We uphold the same.

In the result, the appeal filed by Revenue is dismissed.