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2019 (2) TMI 899 - AT - Income TaxUnaccounted income - Income arising out of the unaccounted sales/ excess stock - Assessment u/s 153A - Held that:- It is the seized material which gives rise to quantification of unaccounted sales and consequently unaccounted income. The seized material in the instant case contains notings in respect to certain unaccounted sales, namely with respect to 59 parties. The assessment order does not bring on record any such seized material which shows sales out of the books corresponding to each and every sale. Since section 153A of the Act gets invoked only with respect to the incriminating material found during the course of the search, clearly extrapolation without any incriminating material would be contrary to the spirit of the section. There are a large number of judicial decision on the issue, including the ones quoted by the Ld. C.I.T(A) which support this view. The objections of the AR with respect to the ownership of the document, the present position of litigation and its consequences in our context, are being discussed later in the Cross Objections of the assessee. But clearly these will not be material for the grounds raised by the department. Hence in the facts and circumstances of the case, we do not find any infirmity in the order of the Ld. CIT(A) on this issue, therefore, we uphold the order of the Ld. CIT(A) and confirm the relief granted by him. - Decided against revenue. Unaccounted income calculated on the basis of unaccounted sales allegedly recorded in the seized documents - Held that:- The papers in question do not belong to M/s Gupta Perfumers P. Ltd. The assertion of M/s Gupta Perfumers P. Ltd. has not been found to be acceptable by the Settlement Commission and Hon’ble Delhi High Court. The papers were found from the assessee’s business premises as well as its Director’s residence. Neither any other party other than M/s Gupta Perfumers P. Ltd. has owned up these papers nor any such reference has been found in the narrations. Therefore the undisclosed sales and consequently the undisclosed income attributable to the assessee appears to be a reasonable decision in the circumstances. Hence the addition is upheld. Status of the income arising out of seized documents - Held that:- What was offered to Settlement Commission and what has been taxed by Assessing Officer in the present Assessment Order before us pertain to the same transactions emanating from the seized documents from the assessee’s premises. Clearly as the matter stands the Assessing Officer has held that the papers belong to the assessee company and hence the undisclosed income arising out of that belongs to assessee’s company on the basis of order of Settlement Commission as upheld by Honable Delhi High Court. We have upheld this position. Nevertheless the fact of the matter is that the issue has not reached finality. The decision of the Hon’ble Supreme Court, as and when it comes, will finally decide the ownership of the documents and hence will take the assessment of the income, so upheld in this order to finality. The ground is therefore disposed of, with the directions to the Assessing Officer to review the status of the income arising out of seized documents, as upheld, once the decision of the Hon'ble Supreme Court is available and realize taxes with respect to the additions upheld, only when the finality of ownership of the documents is put to rest by the decision of the Hon’ble Supreme Court. Unaccounted stock - Held that:- We are inclined to go with the order of the Ld. CIT(A) primarily on the ground that once an inventory is found to be defective, its reliability for estimating the income becomes doubtful. The assessment order does not counter in anyway the assessee’s grievance/objections that there is misreporting /inflation of the quantity and price of various items particularly raw material. This could have been easily done on the basis of of books of accounts available with him. He could have made an attempt to support his valuations, which he did not. Similarly, neither before Ld. CIT(A) nor before us any claim, resubmission or working has been submitted following the assessee’s objections. That being the situation the view taken by the Ld. CIT(A) appears to be reasonable and therefore, the same is upheld and accordingly, the ground no. 3 is rejected.
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