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The DCIT, Circle-9, Surat Versus M/s. B.S.P. Exports

2015 (8) TMI 837 - ITAT AHMEDABAD

Addition on account of excess cash found during survey - CIT(A) deleted the addition - contention of the assessee is that one of the partners entered into the sale agreement and received advance from six parties as cash in part which was utilized for introducing capital into the firm and balance was utilized for improvement of house property of the partners - Held that:- There is no dispute with regard to the fact that one of the partners of the assessee-firm has owned up the excess cash found d .....

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w of ld.CIT(A) that so far as issue of taxability of amount introduced by the partners of firm is concerned, the AO has not made any inquiry to verify the veracity of explanation. The partner of firm claims to be his capital introduced into firmís account. So far as assessee-firm is concerned, it has an explanation although same is subject to further verification on the part of AO. The Revenue has not placed any material suggesting the explanation of assessee being false. Under these facts, we d .....

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chase bill of ₹ 28,09,862/- and accounts were produced on 24/12/2009 when further verification was impossible due to time constraint. The ld.CIT(A) deleted the addition on the ground that the AO has not found any defects in the books of accounts maintained by the assessee. We do not agree with the reasoning of ld.CIT(A), as the AO has recorded that the purchase bill and related accounts were furnished only on 24/12/2009. Therefore, the AO had not examined the accounts and verified the genu .....

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The AO would also verify the genuineness of purchase bill by making necessary inquiry. Needless to say that the AO would grant sufficient opportunity to the assessee. - Decided in favour of revenue for statistical purpose

- I.T.A. No.778/Ahd/2011 - Dated:- 14-8-2015 - SHRI G.D. AGARWAL AND SHRI KUL BHARAT, JJ. For The Appellant : Shri Narendra Singh, Sr.DR For The Respondent : Written submissions ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER : This appeal by the Revenue is directed agai .....

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no mention was made of existence of any evidence by way of Satakhat which is subsequently produced by the assessee only on the date of completion of assessment proceedings. 2. On the facts and in the circumstances of the case and in law ,the Id.CIT (A) has erred in deleting the addition of ₹ 8,98,600/- made on account off unaccounted expenses on houses despite the fact that the addition was made on the basis of documents impounded during the course of survey and was admitted by the assess .....

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4. On the facts and in the circumstances of the case and in law, the Id. CIT (A) has erred in deleting the addition of ₹ 43,35,039/- by accepting the explanations of the assessee on the retractions without appreciating the fact that the assessee firm had filed the explanations/details of such retractions only on 24/12/2009 with the mala-fide intention of preventing the A.O. from making any indepth inquiries as the assessment was getting barred by limitation on 31/12/2009. 5. It is therefo .....

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and on account of unaccounted stock of ₹ 28,09,862/-. Against the said assessment order, the assessee preferred an appeal before the ld.CIT(A), who after considering the submissions of the assessee, allowed the appeal. Aggrieved by the order of the ld.CIT(A), the Revenue is now in appeal before us. 3. No one appeared on behalf of assessee, however written submissions dated 04/08/2014 have been placed on record and it is prayed on behalf of assessee that the appeal may be decided on the ba .....

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counted expenses of ₹ 9,65,000/-. During the course of survey, assessee had disclosed total income of ₹ 70,02,520/-. However, the assessee has disclosed only ₹ 26,67,481/-in his return of income. He submitted that the assessee made retraction of ₹ 43,35,039/- out of total disclosure of ₹ 70,02,520/- vide letter dated 31/10/2007. He submitted that the AO had considered the submissions of the assessee and found that the submissions were not acceptable as the agreement .....

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e has made the following written submissions vide letter dated 04/08/2014:- We ore in receipt of your notice fixing up the hearing dated 22-08-2014 in the subject appellate matter and in response to it, we would like to make following submission for the kind consideration of your honours. 1. The appellant is a partnership firm engaged in the business of manufacturing and trading of diamonds. 2. The year under consideration is A.Y. 2007-2008. 3. The subject submission is filed against the appeal .....

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e appellant during the course of assessment proceedings. Grounds for making the addition Amount (in₹) Cash found to be 'in excess of cash as per the cash book completed upto few days before the date of survey 6,26,577 Unaccounted investment in the residential house property of the partners 8,98,600 Stock found to be in excess of the stock recorded in the books of account of the appellant firm at the time of survey 28,09,862 Total Addition 43,35,039 The learned AO has made the impugned .....

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or thereafter during the course of assessment proceedings. 4. The subject additions and disallowances made by the learned AO was deleted by the Hon ble CIT(A)-V vide order dated 27.01.2010 after considering all the relevant facts of case and documentary evidences submitted by the appellant and allow the appeal in favour of the appellant. A copy of the subject order passed by the Hon ble CIT(A) -V, Surat is enclosed herewith in Annexure-I 5. Further, it is submitted that before making any additi .....

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es and - In total disregard of the justifying, corroborative and true & factual written submissions filed by the appellant during the course of assessment proceedings. 6. In addition to this, we would like to place reliance on the following judgements wherein it has been held that statement recorded u/s. 133A has no evidentiary value. - Paul Methew and Sons Vs. CIT (2003) 263 1TR 101 (Hon ble High Court of Kerala) - CIT vs. S. Khader khan sons (2008) 300 1TR 157 (Hon ble High Court of Madras .....

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he addition by observing as under:- DECISION: 6.1. I have gone through the assessment order and the detailed submissions of the appellant as made above. I do not agree with the reasons given by the A.O. while making addition on account of excess cash found and unaccounted investment made in partners houses, due to the following reasons: i. The A.O. has mentioned that satakhat was not found during the survey nor it was pointed out by the assessee during the survey. In my opinion, this is not a co .....

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ess of evidences like confirmations of the purchase parties, their P.A.N.s etc., produced before him. iii. The A.O. for making addition has given the reason of inordinate delay in filing the evidences. In my opinion, delay in submission of any details or evidences hardly affects in making such judicial decisions. iv. Once the source of cash and source of investments were explained by the appellant i.e. the source being cash belonging to one of the partner Shri Shantilal G.Kakadia, (receipt from .....

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his capital in the firm) and the unaccounted investments in partners houses also stands explained (cash belonging to Shri.Shantilal G.Kakadia invested in partners houses). Accordingly, the additions made on these counts are hereby deleted and the first and second grounds of appeal are allowed. 5.2. We have given our thoughtful consideration to the rival contentions. The contention of the assessee is that one of the partners entered into the sale agreement and received advance from six parties as .....

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laimed that the agreement was executed in individual capacity by the partner in favour of the six parties who gave advance to the partner of the assessee-firm. Admittedly, the AO has not made any enquiry from the parties who has given advances to the partner of the assessee who claimed to have been received advance in cash. The ld.CIT(A) deleted the addition on the basis that the AO has filed to ascertain the genuineness of the agreement. The ld.CIT(A) also observed that there is no legal bar in .....

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lso not in dispute another partner surrendered the same as undisclosed income during the course of survey. Subsequently, the other partner retracted from his statement and claimed that the excess cash found was in fact capital introduced by other partner. The source of excess cash and unexplained expenses, being the advance received, the partner of firm upon entering into agreement to sale of immovable property. We agree with the view of ld.CIT(A) that so far as issue of taxability of amount int .....

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same is hereby upheld. Hence, ground Nos.1 & 2 of the Revenue s appeal are dismissed. 6. The ground No.3 is against deletion of addition of ₹ 28,09,862/-. The ld.Sr.DR submitted that the ld.CIT(A) was not justified in deleting the addition. He submitted that so-called purchase bill was submitted on 24/12/2009. The AO had no time to verify the veracity of purchase bill and even the ld.CIT(A) did not seek any remand report from the AO qua the purchase bill claimed to have not been entere .....

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ade the impugned addition, which is bad in law. In support of this contention, the assessee placed reliance on judgement of Hon ble Apex Court rendered in the case of Sargam Cinema vs. CIT reported at (2011) 241 CTR 179(SC). It is further contended that the impugned addition is made on the basis of survey statement subsequently retracted and without any corroborative and justifying documentary evidences. It is also contended on behalf of the assessee that the statement recorded u/s.133A of the A .....

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by observing as under:- 6.2. So far as addition on account of unaccounted stock of ₹ 28,09,862/- (retracted amount) is concerned the appellant has reasonably been able to explain/justify the retraction made by way of bringing the fact that one of the purchase bills was remained to be accounted for in the books of accounts. The A.O. instead of verifying this claim of the appellant, has emphasized on the other not so significant facts like the purchase bill was not found during the course of .....

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ral bills to reduce its liability. However, the A.O. has not found out any defect in the books of accounts maintained by the appellant in which the transactions related to this purchase bill have duly been recorded. Further the A.O. has not brought any material or corroborative evidence on record which supports and strengthens the decision taken by him. Hence, in view of the various judgments quoted above by the appellant and the explanations offered by the appellant, I hold that the stock up to .....

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28,09,862/- and accounts were produced on 24/12/2009 when further verification was impossible due to time constraint. The ld.CIT(A) deleted the addition on the ground that the AO has not found any defects in the books of accounts maintained by the assessee. We do not agree with the reasoning of ld.CIT(A), as the AO has recorded that the purchase bill and related accounts were furnished only on 24/12/2009. Therefore, the AO had not examined the accounts and verified the genuineness of purchase b .....

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planation in the form of introduction of capital by one of the partners and non-recording of purchase bill into its account. Therefore, it is not the case that the imaginary figure were disclosed by the partner of firm. The only question remains to be examined whether the explanation offered for retracted amount is acceptable. So far as introduction of capital by one of the partners is concerned, that we have already adjudicated in ground numbers 1 & 2(supra). The reliance placed by the asse .....

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