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2020 (9) TMI 1007 - AT - Income TaxAssessment u/s 153A - addition of cash found during the course of search - unexplained advances - as contented Addition was made simply on the basis of disclosure of such income before the settlement commission which was done to meet the compliance of the provisions of Section 245C(1) - HELD THAT:- From the record we found that during the course of search, the assessee has surrendered ₹ 15,89,65,200/-. Yearwise breakup of the income surrendered as given at para 3 of this order hereinabove, we found that in the A.Y. 2008-09 and 2009-10, the A.O. had made addition of ₹ 1.50 lacs and ₹ 2.00 lacs respectively on account of advances surrendered by the assessee. We also found that the detailed finding has been given by the A.O. and the ld. CIT(A) with regard to amount found to have been advanced by the assessee, accordingly, we confirm the addition of ₹ 1.50 lacs in the A.Y. 2008-09 and ₹ 2.00 lacs in the A.Y. 2009-10. Income surrendered by the assessee before the Settlement Commission on account of scrap business - HELD THAT:- CIT(A) in the impugned order given a categorical finding that no evidence was found during the course of search to justify the disclosure of income from scrap business. The A.O. also has not quoted or referred to any document found during search with respect to income from scrap business. No addition could have been made u/s 153A unless the same is linked with the material found during search. In view of these facts, the ld. CIT(A) concluded that the addition made by the A.O. is uncalled and deserves to be deleted. The detailed finding given by the ld. CIT(A) has not been controverted by the ld DR, accordingly, we do not find any reason to interfere in the finding so recorded by the ld. CIT(A) for deleting the addition of ₹ 15.00 lacs made by the A.O. on account of scrap trading. Interest earned on undisclosed advance - HELD THAT:- There is no material on record so as to establish that assessee received interest on the alleged advances. It is the working of the mind of the A.O. that has resulted in addition on account of interest. The interest has been calculated notionally and addition has been made accordingly. Decision of the Ld. CIT(A) is based on many judicial pronouncement and sound law. Therefore, the decision of the Ld. CIT(A) in deleting the addition deserves to be confirmed. Addition on account of interest earned on undisclosed advance was deleted by the ld. CIT(A) by having the same observation to the effect that addition was made by the A.O. by presuming that the assessee had earned interest on advances although no evidence was found during the course of search. After giving detailed finding, the ld. CIT(A) has concluded that no addition could be made simply on the basis of presumption as the presumption, however, strong cannot take the place of evidence. We found that while deleting the impugned addition of notional interest, the ld. CIT(A) has deliberated on various judicial pronouncements as referred to in his order and after applying the proposition of law laid down therein to the facts of instant case and concluded that the addition so made on account of notional interest is not warranted. Addition of unexplained transaction - HELD THAT:- Since the assessment u/s 143 is to be made after hearing such evidences as the assessee may produce and such other evidence as the assessment officer may require is specified points, and after taking into account all relevant material which he has gathered, the A.O. shall make an assessment of the total income. Since the primary onus to tax any income is upon the revenue and since the A.O. failed to bring out any such material for taxing the income of ₹ 4.00 crores, in our considered opinion the same is not sustainable on the facts of the case as also in law. Having examined the seized material, it is not discernible as to how such material demonstrates that the assessee has earned the income of ₹ 4.00 crores. Detailed finding so given by the ld. CIT(A) while deleting addition above has not been controverted by the ld DR by bringing any positive material on record, accordingly, we do not find any reason to interfere in the findings so recorded by the ld. CIT(A) which are as per material on record. Unexplained investment in jewellery - unexplained gold jewellery, diamond and silver items - HELD THAT:- CIT(A) considering the status of the family and traditions has allowed 200 grams for children and thus benefit has been given of 200 grams of gold and remaining 300 grams has been treated as unexplained of the value of ₹ 8,85,000/-. Assessee has disclosed 189.620 carats of gold in wealth tax and IT returns as against 373.620 grams found during search. Thus 184 grams remained to be explained. The assessee had pleaded that considering the status of family, number of family members, traditions in the traditional marwadi family more credit required to be given of the diamond found during search. CIT(A) has given credit of 25% of 184 carats of diamond which remained unexplained. Thus 46 carat of diamond has further been treated as explained and balance 138 carats of diamond of the value of ₹ 37,13,994/- was treated as unexplained. The silver weighing 39 kg has been treated as explained by the Ld. CIT(A) with respect to the status of the family and traditions. CIT(A) has sustained addition of ₹ 97,65,444/- (885000+3713994+5166450 [surrendered by the assessee]) totaling to ₹ 97,65,444/-. A detailed finding has been recorded by the ld. CIT(A) for upholding the addition of ₹ 97,65,444/-. -The detailed findings so recorded by the ld. CIT(A) has not been controverted by the ld AR and the DR by bringing any positive material on record, accordingly, we confirm the order of the ld. CIT(A) for upholding the addition on account of jewellery. Addition of cash found during the course of search - not giving credit to the balances available in the books of accounts of the group - HELD THAT:- The cash available in books are more as against cash found physically. This was so because certain payments were still to be accounted for in the books of accounts. Considering the submission of the assessee the Ld. CIT(A) deleted the addition. The Ld. CIT(A) has held that for small discrepancies in the books of accounts and overwriting the books cannot be rejected unless it is established that discrepancies in overwritings established manipulation and fraud. The Ld. CIT(A) has also correctly that as the cash stood accounted for in the books of accounts, section 69A could not be invoked. A.O. has not made effort to find out the book position of any concern. The same has not been discussed. The A.O. has also referred to report submitted under rule 9 to ITSC and has made the addition on the basis of such report. We observe that the A.O. was precluded in utilizing the report in making addition without furnishing a copy of the same to the assessee for defense and rebuttal. The action of the A.O. is contrary to the established principles of equity and justice - A.O. could not have utilized the report submitted under rule 9 without first furnishing a copy of report to the assessee. This was not done. The assessee does not know the contents of the report submitted under Rule 9 by the CIT to ITSC - No reason to interfere in the order for deleting the addition made by the A.O. u/s 69A of the Act. Undisclosed advances made by the assessee on the basis of seized documents - HELD THAT:- We found that the amount of disclosure made by the assessee on account of income on sale of Arpit Nagar land amount of ₹ 2.43 crores was available with the assessee which was given as advance in the immediate succeeding year i.e. 2012-13. Thus, out of total addition of ₹ 5,68,50,000/- on account of addition for the advances in the A.Y. 2012-13, a set off of ₹ 2.43 crores are required to be allowed. Thus, we confirm the addition on account of loans and advances in the A.Y. 2012-13 to the extent of ₹ 3,25,50,000/- i.e. (5,68,50,000 - 2,43,00,000). We direct accordingly. Addition was made on the basis of other seized documents - HELD THAT:- Income surrendered on the basis of above documents i.e. ₹ 49,24,000/- and ₹ 4,50,000/- in the A.Y. 2012-13 and ₹ 25.00 lacs in the A.Y. 2013-14 which works out to be ₹ 78,74,000/-, deserves to be set off out of addition of ₹ 2.55 crores made in the A.Y. 2013-14 on account of surrender for advances. In nutshell, the addition of ₹ 2.55 crores made in the A.Y. 2013-14 on account of surrender for advances is restricted to ₹ 1,76,26,000/- (2,55,00,000 - 78,74,000). We direct accordingly. Deleting the addition made on account of interest alleged to be earned which was found to be not actually earned by the assessee confirmed.
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