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Income Tax Appellate Tribunal, “RANCHI” BENCH: RANCHI
Before: Shri Rajesh Kumar & Shri Sonjoy Sarma]
आदेश उ)घोषणा क$ �त&थ For the Appellant/ Shri Devesh Poddar, Advocate �नधा�/रती क$ ओर से For the Respondent/ Shri Sanjay Mukherjee, CITDR राज�व क$ ओर से
ORDER / आदेश
Per Rajesh Kumar, AM: These are the appeals preferred by the revenue and the cross- objection by the assessee against the separate orders of the Ld. Commissioner of Income Tax(Appeals)-3-Patna [hereinafter referred to as ‘Ld.CIT(A)’] dated 09.11.2020, 15.10.2018 & 02.11.2020 for the assessment years 2013-14, 2014-15 & 2015-16 respectively.
First of all we shall take up revenue’s appeal in IT(SS) A No. 1/Ran/2021 for AY 2013-14.
The grounds of appeal raised by the revenue read as under:
That on the fact and the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,68,27,343/- on account of unexplained sundry creditors despite the fact that the assessee had failed to discharge the onus placed upon him u/s 68 of the I.T. Act, 1961. 2. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of expenses of Rs. 2,31,67,556/- claimed under the head ‘Purchases & Payment made for plots, lands & building’ despite the fact that the assessee had failed to discharge the onus cast upon him u/s 37(1) of the I.T. Act, 1961. 3. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,11,03,351/- on account of
3 IT(SS)A No. 1/RAN/2021 IT(SS) No. 5/Ran/2019 ITA No. 8/Ran/2021 C.O Nos. 11 & 12/Ran/2021 AY: 2013-14, 2014-15 & 2015-16 Shri Kamal Bhushan (Legal heir of Smt. Kanchan Arya) unaccounted sales and purchases despite the fact that the assessee had failed to discharge the onus placed upon him u/s 69C of the I.T. Act, 1961. 4. That on the facts and in the circumstances of the case and in law, while deleting the above additions the Ld. CIT(A) has failed to appreciate the fact that the assessee did not discharge the burden of proof on him by submitting any information/clarification sought by the AO. The Ld. CIT(A) accepted explanation or materials or provided by the assessee for the first time before him. The assessee by not co-operating before the AO has avoided all further enquiries and took the benefit of providing explanation best suited on him. The acceptance of the assessee’s explanation provided for the first time before the Ld. CIT(A) has made the function of the AO as of no relevance as Ld. CIT(A) did not even obtain a report from the AO which is in contravention of the provisions of Rule 46A of I.T. Rules, 1962. 5. That the order of the Ld. CIT(A) being erroneous in law and on facts to be vacated and the order of the AO be restored. 6. That the applicant craves leave to add, alter, delete modify the grounds of appeal before the Hon’ble ITAT.
The issue raised in ground no. 1 is against the deletion of addition of Rs. 1,68,27,343/- by ld CIT(A) as made by the AO on account of unexplained sundry creditors u/s 68 of the Act.
Facts in brief are that the assessee is engaged in the business of sale and purchase of land and was searched u/s 132(1) of the Act on 08.05.2014. Accordingly a notice u/s 153A was issued on 06.02.2015 calling upon the assessee to file the return of income within 30 days which was complied with by the assessee by filing return of income on 01.06.2015 disclosing total income of Rs. 59,73,450/-. During the course of assessment proceedings, the AO noted that a sum of Rs. 1,68,27,343/- were the new creditors which came into being during the year and accordingly a show cause notice was issued to prove their identity, creditworthiness of the creditors and genuineness of the transactions which was replied by the assessee. However, despite several opportunities, the assessee did not furnish any details/evidences before the
4 IT(SS)A No. 1/RAN/2021 IT(SS) No. 5/Ran/2019 ITA No. 8/Ran/2021 C.O Nos. 11 & 12/Ran/2021 AY: 2013-14, 2014-15 & 2015-16 Shri Kamal Bhushan (Legal heir of Smt. Kanchan Arya)
AO and finally the AO treated these sundry creditors as unexplained and added to the income of the assessee.
In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee by observing and holding as under:
“4.3 Appellate finding and decision: The assessee’s first plea is against the addition of Rs. 1,68,27,343/-account of unverified sundry creditors. The assessee in its submission has stated as below:- The first ground raised by the assessee challenges the addition of Rs. 1,68,27,343/- made u/s 68 being the difference/ increase in sundry creditors. It is seen that the assessing officer made the addition u/s 68 stating that the assessee failed to discharge its onus and liability so as to justify the identity, creditworthiness and genuineness of the sundry creditors. On the other hand, the assessee has submitted that all the creditors relates to persons with whom the assessee has business transactions for sale/purchase of land which is supported by the registered deeds and ledgers in some cases where the payment has been repaid back in subsequent year. From the detailed submission of the assessee and the documents submitted in the paper book it is observed that the registered deeds which forms part of assessment records in other years duly mentions the identity of the second party, their mode of transaction etc which is evident to justify that creditors are genuine. The assessing officer has failed to look into the same and carry out any subsequent verification having all documents on record. It is noticed that the assessee at his behest has duly complied with the provisions of section 68 which has been cross checked with the details submitted in the paper book and as such. It is also observed that the assessing officer at time of assessment has failed to look into the submissions of the appellant and for that matter give any categorical finding for making the addition as from the order of assessment it is seen that the addition has simply been made pointing the increase in sundry creditors. As such, considering the submissions of the appellant and verifying the detailed documents submitted (which stands certified to be the records available before assessing officer). I direct the assessing officer to delete the impugned addition of Rs. 1,68,27,343/- as also identical head of addition stands deleted in appellate order for previous and subsequent years. As such, this ground of appeal is allowed.” 7. The Ld. D.R. submitted before the Bench that the Ld. CIT(A) has decided this issue on the basis of such material/evidences which were not before the AO. The Ld. D.R. referred to page no. 22, 23 and 24 of Ld. CIT(A)’s order which had the statement containing the details of impounded documents, page nos., date of transactions, amounts, and some more columns which the ld. D.R. submitted that
5 IT(SS)A No. 1/RAN/2021 IT(SS) No. 5/Ran/2019 ITA No. 8/Ran/2021 C.O Nos. 11 & 12/Ran/2021 AY: 2013-14, 2014-15 & 2015-16 Shri Kamal Bhushan (Legal heir of Smt. Kanchan Arya) were not before the AO and therefore the AO was not given an opportunity to examine these evidences. The Ld. D.R referred item no. 3 at page no. 22 which pertains to seized documents titled BB-26 page no. 50-75, date of transaction 09.03.2013 and amount of Rs. 20,00,000/- which was not disclosed by the assessee in the books of accounts on the ground that the said purchase of land was disputed and hence this was not disclosed in the books of accounts. The Ld. D.R submitted that though the seized materials were before the AO but that was too voluminous which could not have been examined and analyzed without the assistance of the Ld. A.R which were completely lacking in the assessment stage and therefore by relying on the decision of Co-ordinate Bench of Hyderabad in the case of PBS Developers vs. Income Tax Officer, Ward-10(2), Hyderabad reported in [2016] 73 taxmann.com 390 (Hyderabad - Trib.) submitted that the issue may be restored to the file of the Ld. CIT(A).
The Ld. A.R. on the other hand relying heavily on the order of Ld. CIT(A) by submitting that the assessee is engaged in the business of sale and purchase of land and all the transactions pertaining to purchase and sale were fully disclosed in the annual account of the assessee. The Ld. A.R submitted that the sundry creditors which represented the addition of Rs. 1,68,27,343/- to the sundry creditors during the year were on account of purchases made/advances received from customers against sale of land. The ld. A.R. submitted that all the documents on the basis of which the Ld. CIT(A) adjudicated the appeal in favour of the assessee were also before the AO and thus controverted the contentions raised by the ld DR. The Ld. A.R. referred to the notice issued u/s 142(1) of the Act and the questionnaire attached therewith which ran into 42 pages and submitted that the AO has duly called for all the details/evidences which were duly filed before the AO. The Ld. A.R. further submitted that the AO added this amount without pointing out any discrepancy and defects in documents/evidences submitted before the AO. The Ld. A.R. submitted
6 IT(SS)A No. 1/RAN/2021 IT(SS) No. 5/Ran/2019 ITA No. 8/Ran/2021 C.O Nos. 11 & 12/Ran/2021 AY: 2013-14, 2014-15 & 2015-16 Shri Kamal Bhushan (Legal heir of Smt. Kanchan Arya) that the assessee has filed detailed submissions which is reproduced by the Ld. CIT(A) in para 4.2 at page 7 of the appellate order and continued up to page 12. Therefore the arguments of the Ld. D.R that the materials/evidences were not before the AO is devoid of merit and deserved to be dismissed. The Ld. A.R referred to the solitary item at serial no. 3 page no. 22 of the appellate order which the ld. Counsel admitted to have not disclosed owing to dispute with the party and the amount was 20,00,000/-. The Ld. A.R. made a submission without prejudice that if at all any addition made that may be made by way of percentage of profit and not the entire amount. The Ld. A.R. further submitted that the addition made, if any, may kindly be telescoped and adjusted against the amount surrendered/offered to tax of Rs. 3 crores which was disclosed by the assessee in the return of income over and above the normal income.
Having heard the rival parties and perusing the material on record, we note that in the assessment proceedings, the AO has all the material in the form of seized documents the details thereof are given in the appellate order at page 22 to 24. Besides we note that the AO issued notice u/s 142(1) of the Act along with questionnaire which ran into 42 pages calling for comprehensive details which were duly filed before the AO. The AO however without applying his mind made the addition without giving any reason or pin pointing any defects in the books of account or evidences placed before the AO. We have perused the order of Ld. CIT(A) who has passed a reasoned order after taking into account the detailed arguments, submissions and evidences which were produced by the assessee before the Ld. CIT(A). Needless to say that the said record was also before the AO in the assessment proceedings. Considering these facts and circumstances we are inclined to uphold the order of AO on this issue except item at serial no. 3 at page no. 22 which pertains to seized and impounded documents titled BB-26 with date of transaction 09.03.2013 amounting to Rs. 20,00,000/- which was not disclosed by the assessee on the ground
7 IT(SS)A No. 1/RAN/2021 IT(SS) No. 5/Ran/2019 ITA No. 8/Ran/2021 C.O Nos. 11 & 12/Ran/2021 AY: 2013-14, 2014-15 & 2015-16 Shri Kamal Bhushan (Legal heir of Smt. Kanchan Arya) that the same was disputed. In our opinion the said argument of the assessee cannot be accepted as even if the amount was disputed. Accordingly we are inclined to modify the order of Ld. CIT(A) .In our opinion that the same needs to be added entirely to income of the assessee. We note that the assessee has made disclosure of Rs. 3.00 crores in AY 2014-15 over and above normal income and therefore we direct the AO to set off and telescope this amount against the said disclosure. The ground raised by the revenue is partly allowed as stated hereinabove.
Issue raised in ground no. 2 is against the deletion of Rs. 2,31,67,556/- as made by the AO on account of disallowance of expenses under the head ‘purchases and payments made for plots, lands and buildings.
Facts in brief are that the assessee debited a sum of Rs. 2,29,77,556/- under the head purchases and payments made for plots, lands & building, Rs. 1,00,000/- under the head land leveling expenses and Rs. 90,000/- under the head boundary expenses. The AO called for the details during the course of assessment proceedings along with evidences which according to the AO ,the assessee did not provide and consequently the entire amount, the source of such expenditure remained unexplained, was added to the income of the assessee.
In the appellate proceedings the Ld. CIT(A) allowed the appeal of the assessee by observing and holding as under:
5.3. Appellate finding and decision: The next issue raised by the assessee is against the addition of Rs. 2,31,67,556/- being the purchases made during the year. The summary of contention of the assessee’s submission is as below:- The second ground of appeal challenges the addition of Rs. 2,31,67,556/- made by addition purchases of Rs. 2,29,77,536/-, land leveling expenses for Rs. 1,00,000/- and boundary expenses for Rs. 90,000/-. The addition for the purchases was made stating that the assessee has failed to prove the identity of the recipient and the genuineness of the transaction whereas on the contrary the assessee has submitted the entire list of purchases
8 IT(SS)A No. 1/RAN/2021 IT(SS) No. 5/Ran/2019 ITA No. 8/Ran/2021 C.O Nos. 11 & 12/Ran/2021 AY: 2013-14, 2014-15 & 2015-16 Shri Kamal Bhushan (Legal heir of Smt. Kanchan Arya)
with a copy of registered deed (which is certified to be document of record before the assessing officer) so as to establish the identity of the recipient and the genuineness of the transaction since the registered deed very well contains the PAN, Aadhar details of both the parties i.e. buyer and the seller and also the details and mode of consideration for the purchase/sale. All such points have not been looked into or examined by the assessing officer. As upheld in the previous and subsequent years and my order in case of the appellant for AY 2015-16, I hold that the assessee has submitted the registered purchase deeds for the entire amount which obviously contains the details of the seller so as to prove its identity, the mode of consideration to establish the genuineness & creditworthiness of transaction. It is also on record that the registered deeds was available with the assessing officer in course of assessment, since the same also forms part of seized material. As such, I decline to accept the contention of assessing officer that the assessee has failed to establish the identity of the recipient and the genuineness of the transaction to make the impugned addition of Rs.2,29,77,556/-. As such, the addition made is fit to be deleted. Further with respect to the addition of Rs. 1,00,000/- being land leveling expenses and Rs. 90,000/- being boundary expenses, I am not inclined to accept the contention of the assessing officer making this addition observing that the assessee failed to give the source of such expenditure considering the book results of the assessee wherein the gross receipts disclosed at Rs. 1,87,85,970/- and gross profit disclosed by the assessee at about 53% which is reasonable enough. As such, considering the book results of the assessee, I direct the assessing officer to delete the addition of Rs. 1,90,000/- made by disallowing the expenses claimed. As such, in totality the addition of Rs. 2,31,67,556/- is deleted. This ground of appeal is allowed.” 13. The Ld. D.R. submitted before the Bench that the Ld. CIT(A) has allowed the appeal of the assessee on this issue on that basis of evidences which were not verified by the AO and therefore that issue may kindly be restored to the file of the Ld. CIT(A).
The Ld. A.R referred to list of purchases deeds ,with complete details of the sellers such as names, addresses, PAN Nos, aadhar nos, which were duly registered in the office of stamp valuation authority and therefore submitted that the findings/observation of AO that the assessee has failed to furnish details of the transactions and prove their identity, creditworthiness of the persons involved and genuineness of the transactions. The Ld. A.R submitted that all these evidences were before the AO and he badly failed to examine the same. On the issue of Rs. 1,00,000/- under the had land leveling expenses and Rs. 90,000/- under the head of
9 IT(SS)A No. 1/RAN/2021 IT(SS) No. 5/Ran/2019 ITA No. 8/Ran/2021 C.O Nos. 11 & 12/Ran/2021 AY: 2013-14, 2014-15 & 2015-16 Shri Kamal Bhushan (Legal heir of Smt. Kanchan Arya) boundary expenses, the ld AR submitted that the Ld. CIT(A) allowed the appeal by holding that the source of expenses are automatically explained when the same is disclosed in the books of accounts. The ld AR contended that the profits of the assessee also stood at 53% which was more than satisfactory. The Ld. A.R. submitted that the Ld. CIT(A) deleted all these additions after taking into account the reply of the assessee with corroborating evidences which is reproduced at page no. 15 and 16 in para no. 5.2 of the appellate order. The Ld. A.R also submitted that the AO has never doubted the sales which have been accepted by the AO. The ld AR argued that, therefore, the purchases cannot be doubted without doubting the sales which has wrongly been done by the AO and not not permissible. The Ld.A.R submitted that considering these facts and circumstances , the ground no. 2of the revenue may kindly be dismissed by upholding the order of CIT(A) on this issue.
We have heard the rival submissions and perused the material on record including the impugned order. We note that all the registered purchase deeds along with details of total purchases and sales were before the AO with requisite details such as names of sundry creditors, their PAN nos., who sold the land to the assessee, mode of payments etc. We observe that the AO passed very cryptic order without examining the facts available before the AO. We also note that the Ld. CIT(A) has passed a reasoned order by considering all these aspects by recording a finding on the strength the evidences on records that sundry creditors were genuine. Similarly the expenses disallowed by the AO of Rs. 1,90,000/- were also fully deleted by the Ld. CIT(A) after considering the nature of business of the assessee and profits shown by him by observing that assessee explained the source of expenditure as these are the expenditure booked and accounted for in the books of accounts. Under the facts and circumstances, we do not find any infirmity in the order of Ld. CIT(A) and consequently we dismiss ground no. 2of the revenue by upholding the order of ld. CIT(A) on this issue.
10 IT(SS)A No. 1/RAN/2021 IT(SS) No. 5/Ran/2019 ITA No. 8/Ran/2021 C.O Nos. 11 & 12/Ran/2021 AY: 2013-14, 2014-15 & 2015-16 Shri Kamal Bhushan (Legal heir of Smt. Kanchan Arya) 16. Issue raised in ground no. 3 is against the deletion of addition of Rs. 1,11,03,351/- by Ld. CIT(A) as was added by the AO on account of unaccounted sale and purchases.
Facts in brief are that the AO during the course of assessment proceedings observed on the basis of seized materials that assessee had not disclosed the transactions worth Rs. 1,11,03,351/- in the books of account which comprised of two amounts namely i) Rs. 98,50,250/- relating to undeclared and undisclosed purchases and ii) Rs. 12,53,101/- relating sales not disclosed by the assessee in the books of accounts. Accordingly a show cause notice was issued as to why the same should not be treated as unexplained expenditure u/s 69C of the Act. According to AO, the said amount was not found to be recorded in the books of account. The AO further observed that the amount was also paid in cash which means that the assessee has due knowledge of the said transactions and thus the amount falls u/s 69C of the Act. Finally the AO added the same on the ground that the purchases were made in cash without using any bank channel and constituted unexplained expenditure u/s 69C of the Act in absence of any reply from the assessee. Similarly the AO observed from the seized documents the assessee has not declared some transactions aggregating to Rs. 12,53,101/- which represented the sales made by the assessee. In absence of any details furnished by the assessee, the AO also added the same u/s 69C of the Act thereby making total addition of Rs. 1,11,03,351/-.
In the appellate proceedings the Ld. CIT(A) deleted the addition after taking into consideration the reply of the assessee by holding and observing as under:
Appellate Findings and decision: The next issue raised by the assessee.-is' against the addition of Ri 1,11,03,351/- being the purchases made during the year. The summary o\ contention of the assessee’s submission is as below:-
11 IT(SS)A No. 1/RAN/2021 IT(SS) No. 5/Ran/2019 ITA No. 8/Ran/2021 C.O Nos. 11 & 12/Ran/2021 AY: 2013-14, 2014-15 & 2015-16 Shri Kamal Bhushan (Legal heir of Smt. Kanchan Arya)
The third ground of appeal raised by the appellant is against the addition of Rs. 1,11,03,351/- being accounted purchases for Rs. 98,50,250/- and undisclosed sales of Rs. 12,53,101/-. In totality the addition has been made on basis of various seized document alleging that the same has not been recorded in the books by the assessee. With respect to the addition of Rs. 98,50,250/- being unaccounted purchases, the assessee at very first stage has contended the same to be adouble addition since the same stands disclosed in purchases of the year and was also added by the assessing officer (as disputed above.) To justify its claim that the seized documents reflecting purchases which the assessee claims to have been disclosed, the assessee submitted a detailed table (forming part of its submission) along with copy of registered purchase deeds which stands parallel to the seized document. The contentions of the assessee (as given in the table above) was verified from the documents in the paper book wherein it was seen that the seized documents were nothing but just the duplicate copy of the registered purchase deeds which already stands disclosed by the assessee in its net purchase of Rs. 2,29,77,556/- during the year. As such, I am in agreement with the contention of the assessee that this addition of Rs. 98,50,250/- amounts to double addition and moreover cannot be said to be unaccounted purchases since parallel purchase deeds have also been furnished which stands duly disclosed by the assessee, as such, I direct the assessing officer to delete the addition of Rs. 98,50,250/-. Further with respect to addition of Rs. 12,53,101/- which the assessing officer has observed to the undisclosed sales based on seized document, the assessee has contended that the seized documents were nothing but simple agreement made on Rs. 10 stamp paper and that relevant sales made has been disclosed in those years. The assessee has given the details in tabular form so that to justify that against the sale agreement, registered deed was executed upon actual sales which were duly disclosed in the relevant year of registry. It is agreed that upon that at initial stage an agreement is signed with a token advance and that the same gets recorded in sale/ purchase upon full consideration and registry and as such, simply on basis of sale agreement addition cannot be made. Further as stated since the assessee has duly established that the sales made upon registered deed duly stands disclosed in the relevant year of registry, this addition of Rs. 12,53,101/- is bound to be deleted and as such, I direct the assessing officer to delete the same. In totality, the addition of Rs. 1,11,03,351/- is deleted. This ground of appeal is allowed.” 19. After hearing the rival contentions and perused the material on record, we find that the AO has made addition on wrong appreciation of facts as we note from the records before us and on the basis of arguments of the assessee during the course of hearing, the amount of so called undisclosed purchases of Rs. 98,50,250/- was already disclosed in the books of accounts and would result in double addition as these purchases were duly accounted in the books of accounts under the head purchases by the assesse. In fact the assesse had entered into purchase /sales agreements with were finally registered and duly shown in the books of accounts however the AO on the basis of agreement to sell/purchase made the addition without
12 IT(SS)A No. 1/RAN/2021 IT(SS) No. 5/Ran/2019 ITA No. 8/Ran/2021 C.O Nos. 11 & 12/Ran/2021 AY: 2013-14, 2014-15 & 2015-16 Shri Kamal Bhushan (Legal heir of Smt. Kanchan Arya) verifying that these transactions were recorded in the books when the purchases/sales were finally registered. We note that the Ld. CIT(A) has recorded a clear cut findings to this effect that these transactions were fully accounted for in the books of accounts as given above. Similarly on the issue of unaccounted sales on the basis of seized documents, we find that the AO’s observation are wrong as the assessee has duly disclosed all the amounts in the respective years and therefore for this reason, we do not find any wrong or anomaly in the order of Ld. CIT(A) and accordingly ground no. 3 of the revenue is dismissed by upholding the order of Ld. CIT(A) on this issue.
In the ground no. 4 the revenue has challenged the order of Ld. CIT(A) on the ground that the order has been passed in contravention of rule 46A not calling for a remand report from the AO during the appellate proceedings on the new evidences.
After hearing rival contention and perusing the material on record, we note that the Ld. CIT(A) has not admitted any new evidences but has appreciated the facts from the documents/impounded material during search and seizure action which were also before the AO in the assessment proceedings and therefore we do not find any merit in the ground raised by the revenue and accordingly ground no. 4 is dismissed.
Now we taken revenue’s appeal in IT(SS)A No. 5/Ran/2019 for AY 2014-15.
Issue raised in ground no. 1 is similar to one as decided by us in ground no.1 in IT(SS)A No. 1/Ran/2021 for AY 2013-14. Therefore our finding on ground no. 1 in IT(SS)A No. 1/Ran/2021 would , mutatis mutandis, apply to ground no. 1 of this appeal as well. Accordingly ground no. 1 raised by the revenue is dismissed.
Issue raised in ground no. 2 is identical to ground no. 4 in IT(SS)A No. 1/Ran/2021 for AY 2013-14 which has been decided by us. Accordingly our decision on ground no. 4 in IT(SS)A No. 1/Ran/2021 for AY 2013-14 would mutatis
13 IT(SS)A No. 1/RAN/2021 IT(SS) No. 5/Ran/2019 ITA No. 8/Ran/2021 C.O Nos. 11 & 12/Ran/2021 AY: 2013-14, 2014-15 & 2015-16 Shri Kamal Bhushan (Legal heir of Smt. Kanchan Arya) mutandis, apply to this ground as well. Accordingly ground no. 2 raised by the revenue is dismissed.
Issue raised in ground no. 3 is identical to one as decided by us in ground no. 2 in IT(SS)A No. 1/Ran/2021 for AY 2013-14. Following our decision on ground no. 2 in IT(SS)A No. 1/Ran/2021 for AY 2013-14(supra) we dismiss the ground no. 3 raised by the revenue.
Issue raised in ground no. 4 is against the deletion of Rs. 2,93,738/- as made by the AO on account of travelling expenses.
Facts in brief are that during the assessment proceedings the AO observed that the assessee has incurred a sum of Rs. 9,79,129/- under the head travelling and conveyance expenses the details whereof were not produced during the course of assessment proceedings. The AO disallowed the 30% of total expenses by holding the same to be personal expenditure for the want of evidences adduced by the assessee and accordingly added the income of Rs. 2,93,738/- of the assessee .
In the appellate proceedings, the Ld. CIT(A) allowed the appeal by holding that the AO has not given any adverse findings or pointed out any defects in the books of account of the assessee and simply disallowed 30% of total expenses on the ground that the personal element cannot be ruled out. The Ld. CIT(A) also observed that the assessee has incurred such expenditure over the years which appears to be reasonable in view of this size and scale of business of the assessee and finally allowed the appeal of the assessee and following various decision as referred namely State of Orissa vs. Maharaja Shri B.P. Singh Deo reported in [1970] 76 ITR 690 (SC), Karnataka State Forest Industries Corporation Ltd. reported in [1993] 201 ITR 674 (Karnataka-High Court), P. J. Philip vs. State of Kerala [1993] 201 ITR 591 (Kerala-High Court), CST vs. Kutubali Noorjibhai and co. [1975] 36 STC 523 (Bom-
14 IT(SS)A No. 1/RAN/2021 IT(SS) No. 5/Ran/2019 ITA No. 8/Ran/2021 C.O Nos. 11 & 12/Ran/2021 AY: 2013-14, 2014-15 & 2015-16 Shri Kamal Bhushan (Legal heir of Smt. Kanchan Arya) High Court). Finally the Ld. CIT(A) allowed the appeal of the assessee on the ground that no disallowance can be made on the basis of surmises and conjectures.
Having heard rival submissions and perusing the material on record, we note that the AO has not pointed out any specific defects or drawn any adverse inference from the books of accounts. The Ld. CIT(A) has given detailed findings while deleting the addition that no disallowance can be made on the basis of surmises and conjectures which appears to be reasonable under the present circumstances. Accordingly we are inclined to uphold the order of Ld. CIT(A) by dismissing ground no. 4 raised by the revenue.
Now we would adjudicate revenue’s appeal in ITA No. 8/Ran/2021 for AY 2015-16.
Issue raised in ground no. 1, 2 & 4 are identical to one as decided by us in ground no. 2 to 4 in IT(SS)A No. 1/Ran/2021 for AY 2013-14 therefore our decision in IT(SS)A No. 1/Ran/2021 for AY 2013-14 would, mutatis mutandis, apply to the ground as well. Accordingly ground nos. 1, 2 & 4 are dismissed.
Issue raised in ground no. 3 is against the deletion of addition of Rs. 44,17,633/- by the Ld. CIT(A) as made by the AO on account of unexplained cash and jewellery found during search.
Facts in brief are that during the assessment proceedings, the AO noted that the cash amounting to Rs. 17,44,240/- and jewellery worth Rs. 26,73,393/- were found during search which were not disclosed by the assessee either in the books of accounts or in the IT return. Thereafter the AO treated the same as unexplained investments u/s 69B of the Act and added to the income of the assessee.
15 IT(SS)A No. 1/RAN/2021 IT(SS) No. 5/Ran/2019 ITA No. 8/Ran/2021 C.O Nos. 11 & 12/Ran/2021 AY: 2013-14, 2014-15 & 2015-16 Shri Kamal Bhushan (Legal heir of Smt. Kanchan Arya)
In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee by observing and holding as under:
I am in agreement with the submission of the assessee that the cash found during the course of search forms part of cash in hand considering the fact that sales of previous year stands accepted and that during the year assessee has- produced sale deeds representing advance payments made in cash. Further it is also seen that at the year end the cash in hand with the assessee was Rs. 4,68,496/- and advances being Rs. 1,14,17,276/-. A.R. is also produced the returns of income of A.Y 2015-16, showing total .income of Rs. 26,31,590/- and A.Y 2014-15, showing total income of Rs. 1,82,56,780/-. The A.R has mentioned that the cash of Rs. 17,44,240/- has been already included in the returns of income. Further the .cash book of the assessee was also placed on record to justify the same. As such, considering the nature of business ofthe assessee (being in rural areas) and submissions on record, I am of theopinion that the cash found cannot be simply added U/s 69B and as s direct the assessing officer to delete the same. Further with respect to addition of 26,73,393/- being jewellery found on date of search, considering the items marked in specific, I am in agreement with the contention of the assessee that these jewellery cannot be saidto be belonging to the assessee as the same belongs to the ladies of the house. Furthermore even as per the rules, the total jewellery found was less than that prescribed as per the act. As such, there was no basis for the assessing officer to have added the amount of jewellery found (mainly being ladies item such as bangles, payal, jhumka, mangalsutra etc) in hands of the assessee. As such, the addition made of Rs. 26,73,393/- is also directed to be deleted. In totality the addition made for Rs. 44,17,633/- is deleted.” 35. After hearing the rival parties and perusing the material on record including the appellate order we observe that the said cash in hand as found during search was duly disclosed by the assessee in the books of accounts and the Ld. CIT(A) has given a finding of facts to this effect in the appellate order. The Ld. CIT(A) noted that the said amount was duly disclosed by the assessee and allowed the appeal of the assessee. Similarly in respect of jewellery found, the Ld. CIT(A) has given a finding that the said jewellery found in the house of the assessee and the said jewellery was less than prescribed limit. Considering these facts, we are of the view that the addition was rightly deleted by the Ld. CIT(A). We are also conscious of the fact that the assessee has made a disclosure of Rs. 3.00 crores over and abovethe normal income meaning thereby that discrepancy if any would be taken care in the said disclosure. Considering these facts, the appeal of the revenue is dismissed.
16 IT(SS)A No. 1/RAN/2021 IT(SS) No. 5/Ran/2019 ITA No. 8/Ran/2021 C.O Nos. 11 & 12/Ran/2021 AY: 2013-14, 2014-15 & 2015-16 Shri Kamal Bhushan (Legal heir of Smt. Kanchan Arya) 36. The cross-objections No. 11/Ran/2021 A.Y. 2013-14 & 12/Ran/2021A.Y. 2015-16 are filed by the assessee in support of the orders of Ld. CIT(A). Since we have dismissed the appeals of the revenue for these assessment years ,the cross- objections of the assessee become infructuous and are accordingly dismissed.
In the result, the appeals of the revenue and the cross-objections of the assessee are dismissed.
Order is pronounced in the open court on 15th November, 2022
Sd/- Sd/- (Sonjoy Sarma /संजय शमा�) (Rajesh Kumar/राजेश कुमार) Judicial Member/�या�यक सद�य Accountant Member/लेखा सद�य Dated: 15th November, 2022 SB, Sr. PS Copy of the order forwarded to: 1. Appellant- ACIT, Central Circle-1, Ranchi 2. Respondent – Shri Kamal Bhushan (Legal Heir of Smt. Kanchan Arya), Biswanath Bhawan, Sukhdeo Nagar, Behind Uphar Cinema, Hehal, Madhukam, Ranchi-834005. 3. Ld. CIT(A)- 3, Patna 4. Ld. PCIT- , Ranchi 5. DR, Ranchi Bench, Ranchi.