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TMI Blog2012 (5) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... re that the assessee-firm is a builder and during this year, a survey action under section 133A of the Act was carried out on March 9, 2005. During the course of survey loose paper, etc., were impounded for further investigation and analysis. The Assessing Officer further noted that after the verification of impounded material and statements recorded, it is found that the assessee-firm's partner Shri Alpeshbhai Gokulbhai Kotadia in his statement dated March 9, 2005 vide reply to question 31 stated that he was declaring undisclosed income of Rs. 1,80,00,000 over and above the firm's regular income for the assessment year 2005-06. The Assessing Officer further noted that while filing the return of income, the firm has not shown its regular income. The Assessing Officer held that there is clear-cut shortage of income declared and finally the returned income and the assessee has not filed any explanation in this regard. The Assessing Officer worked out the regular income should have been 8 per cent. of turnover, i.e., at 8 per cent. of Rs. 2,01,48,210 = Rs. 16,11,857. He added the amount of Rs. 1,80,00,000 declared by the partner of the assessee and from such total, he reduced the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y him that there is no dispute regarding the turnover declared by the assessee in the regular books. Regarding this aspect that amount declared in the course of survey was not added in the income to the extent of Rs. 20,76,537, it was submitted that this allegation is not correct and he submitted that audited accounts are available on pages 1 to 24 of the paper book. He drew our attention to the profit and loss account available on page 16 of the paper book and showed that additional disclosure made was included in the income of the assessee for the present year. Regarding the regular income, it was submitted that the same works out to 2.83 per cent. before deduction on account of interest on partners' capital and partners salary. He further submitted that the books were not rejected by the Assessing Officer and hence, no addition is called for. Regarding the second addition made by the Assessing Officer of Rs. 70,40,000, it was submitted that no addition can be made in the case of the assessee-firm with regard to the capital brought in by the partners and in support of his claim, the learned authorised representative relied on the decision of the hon'ble Gujarat High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive supported the orders of the Assessing Officer and of the learned Commissioner of Income-tax (Appeals). We have considered the rival submissions, perused the material on record and have gone through the orders of the lower authorities. First, we decide the first addition made by the Assessing Officer of Rs. 20,76,537 out of which part relief has been allowed by the learned Commissioner of Income-tax (Appeals) who restricted the addition to Rs: 10,07,410. We find that the Assessing Officer has not rejected the hooks of account and he has estimated the income on the basis that the assessee has failed to comply with the notices. We also find that it is observed by the learned Commissioner of Income-tax (Appeals) on page 3 of his order that in the present case, the assessee has shown net profit at 2.83 per cent. which is also confirmed by the audit report and profit as per books is required to be accepted. He further says that however, the voluntarily disclosed income is only Rs. 1,75,00,000 less by Rs. 5 lakhs to the disclosed amount of Rs. 1,80,00,000. Against this finding of the learned Commissioner of Income-tax (Appeals), it was submitted that no ground has been raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot disputed that the credits in the accounts of the partners were not deposits from the partners. Moreover, it is an admitted position that this was the second year of the firm, and that it was running in loss. It is true that the Income-tax Officer did not accept the explanation given on behalf of the assessee in respect of the new deposits or cash credits in the accounts of the partners. The mere non-acceptance of that explanation does not, however, provide material for finding that the said sum represented income of the assessee-firm. As held by the Allahabad High Court in the case of CIT v. Jaiswal Motor Finance [1983] 141 ITR 706 (All), in the absence of any material to indicate that there were profits of the firm, the amount credited to the partners' accounts could not be assessed in the hands of the firm. Once the partners have owned that the monies deposited in their accounts are their own, the Income-tax Officer is entitled to and may proceed against the partners and assess the same in their hands, if their explanation is not found satisfactory. 14. In the facts and circumstances of the present case, both the Deputy Commissioner of Income-tax (Appeals) and the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation of the Assessing Officer is not correct that details were not furnished before him. In fact, the assessee has furnished party-wise list of all the documents before the Assessing Officer showing duly signed confirmation along with permanent account number, copy of permanent account number card, copy of bank statement, copy of income-tax returns acknowledgment, etc., in respect of all the creditors and it was also pointed out that creditors are assessed to tax for more than four years. In spite of this, we find that no enquiry was made by the Assessing Officer and the addition was made. We also find that this has been disclosed even in the tax audit report that the same were received through account payee cheques. The Assessing Officer has also accepted the same indirectly because no proceedings were initiated for violation of the provisions of section 269SS with regard to the receipt of these loans. When confirmation of all these parties were furnished along with their permanent account number, copy of acknowledgment of income-tax returns, etc., and no enquiry was made by the Assessing Officer, we feel that addition made by the Assessing Officer cannot be sustained because th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the Assessing Officer under section 68 is not sustainable in the light of this decision of the hon'ble Supreme Court and in the light of the facts of the case, since confirmations along with addresses and permanent account numbers were made available by the assessee to the Assessing Officer and no effort was made by the Assessing Officer to pursue the loan creditors. We, therefore, delete this addition also. Now, we find that only one ground raised by the assessee in its original appeal, i.e., I. T. A. No. 3040/Ahd/2008 is left in which the assessee, has challenged the validity of assessment proceedings on the basis that there was no service of notice under section 143(2) within the specified time. Although, this is the claim of the assessee that this notice said to have been issued by the Assessing Officer on June 20, 2006 was never served on the assessee but as per copy of the notice brought on record, there is some signature of some person although no name or date is appearing and hence, it is not coming out whether the same was served on the assessee or not. Here, we would like to observe that as per our decision in the above paragraph we find that none of the add ..... X X X X Extracts X X X X X X X X Extracts X X X X
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