TMI Blog2013 (11) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... ue, and it is validity, if so, would only be with reference thereto, i.e., to the extent it explains or corroborates and/or supports the material/evidence found – consideration is given to the assessee's argument of netting the amount written on the right side, so that its nature could only be a different, i.e., representing out-lays, only to find the same as not acceptable. This is for the reason that it is not possible that such expenditure is incurred only on few (sixteen) days in a year, or even more importantly, not in the regular course - Further-more, the assessee surprisingly does not receive any amount on the said dates, so that it may represent an either or situation. Rather, the expenditure would not only be incurred on the basis of which the amount stands received, but also, where it is not so, there being as afore-noted a time gap between the entries in each row, so that there is no expenditure on all but 16 days during the relevant previous year – Decided in favor of Revenue. - IT Appeal No. 3720 (Mum.) of 2011 - - - Dated:- 15-3-2013 - D. MANMOHAN AND SANJAY ARORA , JJ. For the Appellant : Mrs. Rupinder Brar. For the Respondent : Vijay Mehta and Govind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income filed subsequently on 19.11.2007 (at an income of Rs.8.94 lakhs), the same was selected for being subject to the verification procedure under the Act. Shri Bipin D. Pujara, partner, who had deposed during the survey, was again questioned during the assessment proceedings on 29.12.2009 by the Assessing Officer (A.O.) in respect of the entries in the loose papers and the note pad; the assessee failing to respond to the several opportunities provided earlier by the AO for the purpose. The said entries were explained by him to be receipts from the sundry debtors, which had been written for following up on the customers. However, the names of the customers, i.e., the stated source of the receipts, or if the money had actually been received subsequently from them, and if so, how accounted for, was not revealed. With no other information flowing from the assessee, despite repeated requests and questioning in the matter, the A.O. proceeded on the basis of the material before him. The onus to explain the entries was only on the assessee, and it had abysmally failed to discharge the same. The assessee being a custom house agent, the natural conclusion would be with regard to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw all reasonable inferences from the material gathered during the survey. The retraction was not valid inasmuch as there is no material to show of any influence or coercion being exercised. Reliance was placed by him on the decisions in the case of Hira Singh Co. v. CIT [1998] 230 ITR 791 (HP); Param Anand Builders v. ITO [1996] 59 ITD 29 (Mum); and Hiralal Mangalal v. Dy. CIT [2005] 96 ITD 113(Mum). 4.2 The ld. AR, on the other hand, would submit that the Revenue's case rests on two limbs, both of which do not survive in the instant case. With regard to the material found, the same is only 'numbers', without anything more. How could then these be inferred as being amounts, much less receipts? Further, how could these represent the receipts for the current year? On being queried by the Bench that the two loose sheets bear dates for the current year, he would submit that the same, firstly, is only qua Rs.18.88 lakhs and, secondly, were not in the hand of any partner or any person known to them. The same were, thus, dumb documents. He was further questioned as to how could one have written figures, and not one or two, but in a series, one in each row, over as many as 18 pages, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpt should be made while recording statements to obtain confession as to undisclosed income. The entire income stands assessed on the basis of surmises and conjectures, which is not permissible in law, and for which reliance was placed by him on the decision in the case of Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC). Without prejudice, it was submitted that if at all any addition is to be made, the same should be restricted to 3% of the total gross amount of Rs.214.28 lakhs, being the ratio of the net profit disclosed by the assessee (and accepted by the Revenue from year to year), as against 10%, as assessed by the first appellate authority. This is as, even assuming the same to be gross receipts, it is the only the profit element embedded therein, that could be the suppressed income, and for which the profit rate disclosed by the assessee's regular books of account for the year, as well as in the past, is a reliable guide. 5. We have heard the parties, and perused the material on record as well as the case law cited. 5.1 We may, firstly, determine the nature of the documents found during the survey; the same being claimed by the assessee to be dumb documents an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning to the same as being in respect of a particular date, i.e., to which the corresponding entry pertains. In fact, the assessee's explanation/s, i.e., of the same being with regard to sums recoverable from the debtors or for expenses being required to be incurred, are also with reference to a date/s, so that clearly the entry corresponds to a particular date, itself signifying it to be with reference to some purpose. Further, that these are in sums of money is amply borne out by the entries themselves; the figures in the later pages (PB pgs. 14 -17) being suffixed by letters 'L' and 'T', representing 'lakhs' and 'thousands' respectively. Besides, the assessee's 'explanation', leaves one in no manner of any doubt in this respect. This is as each of the three versions by the assessee in explaining these entries are only in terms of money. Does, one may ask, the assessee claim of it being in terms of quantity, for it to contend of the same as representing a quantity? Rather, the assessee's explanation further reinforces the inference of the documents being not dumb documents, being only qua sums of money having a relation with its business. 5.3 The next question is: What do the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be rejected. 5.4 Coming to the assessee's first and the only surviving explanation, i.e., of the same being of the receipts of its business, the same stands accepted by the Revenue, adding the same on the basis of it representing the assessee's undisclosed income, being not reflected in the regular books of account. Examining the same, we observe that, firstly, being the collection for the day, it need not occur on a daily basis, as we observe a time lapse between different dates. Secondly, it may be across all customers, so that there is no necessity of writing the individual names of the customers from whom the same stand received. Thirdly, the amount is in round figures, which one tends to deal in, while collecting or otherwise dealing in unaccounted money. The said explanation is, thus, plausible. At this juncture, we may clarify that the decision by the hon'ble high court in the case of S. Khader Khan Son (supra) only states of the statement recorded at the time of the survey being not a conclusive piece of evidence. It does not, and cannot; the same being essentially a matter and, consequently, of a finding of fact, state that a statement, where corroborative of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of services rendered, which are also a subject matter of regular booking in accounts, i.e., represents the excess amount charged there-from, so that the entire of it may be income, with the entire expenditure in relation to those services having been already booked in the accounts. However, in the absence of any material to support such hypothesis, the same would only be a conjecture, and nothing more. The argument by the ld. AR of no expenditure or assets having being found during survey assumes relevance and significance in this regard. In other words, the onus to exhibit that the entire of it represents suppressed income was on the Revenue, which it has failed to discharge. The suppression of income could, thus, only be reasonably estimated. Toward this, we find that the estimation of 10% by the ld. CIT(A) as reasonable. The assessee has itself, through its accounts, admitted to charging excess of the expenditure incurred, i.e., for and on behalf of its customers. In fact, the deletion of disallowance of Rs.11.34 lakhs by the ld. CIT(A) on this ground cannot be considered as valid. This is as once the assessee himself admits to having charged in excess, the question th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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