TMI Blog2015 (9) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... tions in purchases and sales. - Decided partly in favour of assessee. Addition of ₹ 1 lakh on adhoc basis out of various expenses as were not fully verifiable with supporting vouchers - Held that:- No infirmity in the above disallowance since the assessee himself by agreeing for addition of ₹ 1 lakh prevented the AO from making further enquiries. Therefore, the CIT(A) was fully justified in not accepting the various additional evidences in the form of bills and vouchers. Merely because books of accounts are duly audited u/s.44AB, the same, in our opinion, is not sufficient to delete the addition especially when the AO had pointed out that the expenses are not supported by proper vouchers and the assessee himself has agreed for addition of ₹ 1 lakh and prevented the AO from making further enquiries. Under these circumstances the order of the CIT(A) is upheld - Decided against assessee. - ITA No.589/PN/2014 - - - Dated:- 26-8-2015 - SHRI R.K. PANDA AND SHRI VIKAS AWASTHY, JJ. For The Assessee Shri S.N. Doshi For The Department Shri.Hitendra Ninave ORDER PER R.K. PANDA, AM : This appeal filed by the assessee is directed against the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed income in shape of undisclosed stock found during the course of search. 6. The AO further noted that during the course of search proceedings at the residence of Shri Mukund Bhattad loose paper Bundle No.4 containing 1 to 154 pages was seized. Unrecorded purchase and sales were also found to be noted on these papers. In the statement of Shri Mukund Bankatlal Bhattad recorded during the course of search action on 17-11-2006 the AO noted that the assessee in his reply to question No.20 21 had stated that the income on purchases and sales on pages 68 to 78 and pages 78 to 88 as well as pages 1 to 22 are credit purchases and credit sales which are not accounted in the books of account. He noted that in reply to Question No.26 the assessee had stated that approximately an amount of ₹ 25 to 30 lakhs has been involved in unaccounted transactions. Further, he has stated that the amounts received towards sales have been reinvested in the purchases and the peak investment in these unaccounted transactions was at ₹ 25 to 30 lakhs. In reply to Question No.29 the assessee had further stated that the investment in these transactions is unaccounted for which he offere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of search the assessee was not in a position to visualize the impact of peak credit on declaration on account of panic condition, therefore, the declaration was not appropriate or correct. It may please be noted that declaration of income on account of peak credit, neither created any tangible asset and found at the time of search nor tangible expenditure found supported by seized material. 9. However, the AO was not satisfied with the explanation given by the assessee. He observed that the explanation of the assessee that the unexplained cash of ₹ 45,00,484/- includes the amount of ₹ 28 lakhs is not correct since the assessee has failed to establish the link between the peak investment in the unaccounted business and the unaccounted cash found. According to him, the proceeds out of the unaccounted sales when received in cash need not necessarily remain with the assessee in cash. The unaccounted business was not a single transaction affair. There was continuous purchase and sales in this business. It is therefore only reasonable to presume that the sale consideration would have been reinvested in the unaccounted business towards fresh purchases. Since t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al presentation with regard to principles of accounting and the circulating effect of cash which may assume various forms from cash in hand, to stocks, sundry debtors, assets or expenditure. However, in absence of any concrete evidence to show that the statement given during the course of statement recorded u/s.132(4) is incorrect, the same cannot be accepted. Distinguishing the various decisions cited before him the Ld.CIT(A) upheld the addition made by the AO. 12. Aggrieved with such order of the CIT(A) the Assessee is in appeal before us. 13. The Ld. Counsel for the assessee strongly opposed the order of the CIT(A). He submitted that the addition of ₹ 28 lakhs needs to be rectified because as per the AO the total debtors emerging out of unaccounted sales and purchases by 2 salesman totaling to ₹ 10,76,176/- are already included in ₹ 28 lakhs, therefore, the AO has observed that addition is not warranted. Since these debtors of ₹ 10,76.176/- are out of the unexplained investment of ₹ 28 lakhs found made in unaccounted sales and purchases, therefore, on reducing these debtors, the addition on account of peak investment in unaccounted sales and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so considered the various decisions cited before us. There is no dispute to the fact that during the course of search excess cash of ₹ 45,05,779/- was found out of which the assessee accepted ₹ 45,00,484/-. Similarly, during the course of search the assessee had also admitted additional income of ₹ 28 lakhs as undisclosed income being peak investment in the unaccounted transactions. The assessee has also surrendered an amount of ₹ 18,11,873/- being entries not recorded in the books of account on account of sundry debtors. We find the AO made addition of ₹ 28 lakhs since the same was not declared by the assessee in the return filed in response to notice u/s.153A although the assessee has declared the cash found during the course of search and the unrecorded sundry debtors and a part of the unaccounted stock in the return of income. We find the CIT(A) confirmed the addition of ₹ 28 lakhs made by the AO on the ground that the assessee could not substantiate with concrete evidence to show that the statement given during the course of search was based on wrong facts. According to the CIT(A) the admission by the assessee during the course of search is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 18,11,873/- declared by assessee on account of unrecorded sundry debtors forms a part of the peak investment of ₹ 28 lakhs in the unaccounted business and therefore the addition of the above amount will amount to double taxation. We therefore are of the considered opinion that out of the addition made by the AO at ₹ 28 lakhs which has been upheld by the CIT(A) only an amount of ₹ 17,23,824/- only can be sustained. 16. It is an admitted fact that after declaring the amount of ₹ 28 lakhs the assessee has not retracted the statement immediately or thereafter. Only in the return filed in response to notice u/s.153A the assessee has not included the same in his total income although he had accepted the cash of ₹ 45,00,484/- and the debtors of ₹ 18,11,873/-. By making a declaration during the course of search the assessee prevented the department from making further enquiries. It has been decided in various decisions that admission by a person is a good piece of evidence because the person making a statement stops the opposite party from making further investigation. A statement recorded u/s.132(4)of the I.T. Act stands on an even stronger ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration to the submission. The appellant himself admits that he had agreed to the addition. In doing so, the appellant had in effect, made a promise which discouraged the AO from making probing inquiries into the veracity of the expenditure claimed. As such, it is not open in my view for the appellant to turn around at the appellate stage and question the addition resulting from his own consent. The additional evidence in the form of bills and vouchers sought to be filed by the appellant are hereby rejected as the same are not found to fall within any of the circumstances mentioned under Rule 46A of the I.T Rules. As such, this part of ground No.1 is also hereby dismissed. 20. We do not find any infirmity in the above since the assessee himself by agreeing for addition of ₹ 1 lakh prevented the AO from making further enquiries. Therefore, the CIT(A) was fully justified in not accepting the various additional evidences in the form of bills and vouchers. Merely because books of accounts are duly audited u/s.44AB, the same, in our opinion, is not sufficient to delete the addition especially when the AO had pointed out that the expenses are not supported by proper vouch ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
