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2015 (11) TMI 798 - ITAT MUMBAI

2015 (11) TMI 798 - ITAT MUMBAI - TMI - Additions made u/s 69C - Disallowance of expenses claimed by the assessee - Held that:- Admittedly, these are estimated disallowances made out of expenses that were already claimed in the original return of income filed by the assessee. The assessee has submitted that the assessment years up to 2006-07 fall in the category of concluded assessments, i.e., assessments of those years were not pending on the date of initiation of search. Hence, in our view, th .....

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lt in double assessment, since it is stated that the assessee has not capitalised the above said amount in his books of account. Accordingly, we set aside the orders of Ld CIT(A) in respect of the above said issues in all the years cited above and direct the AO to delete the disallowances, referred above. Hence the net result would be that there is no necessity to make any addition u/s 69C of the Act. Even otherwise, we notice that the assessing officer has made the additions u/s 69C of the Act .....

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onal receipts of earlier years. We also notice that the assessing offer has assessed the net profit on the alleged suppressed professional receipts, meaning thereby, the assessing officer has presumed that the assessee would have suppressed corresponding expenses also. Again it is only a guess work only, unsupported by any material. Similarly, the average daily collection estimated by the AO was also mere guess work. In effect, there is no material available with the AO to show that the assessee .....

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e of search warranting the additional disclosure. The assessee has duly disclosed the income voluntarily offered by him in the returns of income filed in response to the notices issued u/s 153A of the Act. During the course of penalty proceedings also, the assessee has offered the explanation to that effect and the said explanation was not found to be false. During the course of search proceedings, the revenue has noticed/seized all the materials available with the assessee and no incriminating .....

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come and the same has been accepted by the assessing officer. In fact, the assessing officer has proceeded to estimate the professional income of the preceding years on the basis of the above said disclosure. Thus the assessee has complied with all the three conditions specified in sec. 271AAA(2) of the Act and accordingly, the penalty levied by the AO u/s 271AAA(1) of the Act is liable to be deleted.- Decided in favour of assessee. - I.T.A. Nos.711 to 715/Mum/2011, I.T.A. Nos.857 to 862/Mum/201 .....

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ed as ITA 711 to 715 against the orders passed by Ld CIT(A) in the quantum proceedings for the assessment years 2004-05 to 2008-09. The revenue has filed appeals numbered as ITA 857 to 862 for assessment years 2002-03to 2007-08 against the orders passed by Ld CIT(A) in the quantum proceedings. The remaining appeals have been filed by the assessee against the orders passed by Ld CIT(A) against the penalty orders passed by the AO u/s 271(1)(c) for assessment years 2005-06 to 2008-09 and u/s 271AAA .....

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s 133A of the Act. During the course of search operations, cash balance of ₹ 1,13,57,110/- was found as against the book balance of ₹ 9,10,548/-. In the statement recorded from him u/s 132(4) of the Act, he admitted the excess cash balance of ₹ 1,04,68,512/- as his unaccounted income. The assessee agreed to offer a sum of ₹ 1,25,00,000/- (including excess cash balance) as his income for the years stated below:- Assessment year Amount 2005-06 5,00,000 2006-07 5,00,000 2007 .....

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additions relating to disallowance of expenses and also the additions made u/s 69C of the Act. He, however, deleted the additions relating to estimated professional income. Hence both the parties have filed these appeals challenging the orders of Ld CIT(A) on the points decided against each of them. 6. We shall first take up the appeals filed by the assessee. In all these years, the assessee is contesting the disallowances made out of expenses claimed by the assessee. 7. The first item relates t .....

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nder the Act and hence the disallowance of the same was not justified. In this regard, he placed reliance on the decision rendered by the co-ordinate bench of Mumbai Tribunal in the case of Mukesh K Shah (2005)(92 ITD 349). The Ld A.R further submitted that the assessee has offered additional income of about ₹ 20.00 lakhs in order to cover up any other deficiencies. He submitted that the assessee has not capitalized the above said disclosure in his books of account. Accordingly he submitte .....

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37 ITD 287) which has since been upheld by the Hon ble jurisdictional Bombay High Court. 9. The Ld D.R, on the contrary, submitted that the assessee has admitted additional income for various years in the statement recorded from him u/s 132(4) of the Act. Accordingly he submitted that there were incriminating materials available with the AO and hence the impugned additions were made by him. 10. We heard the parties on this issue and perused the record. Admittedly, these are estimated disallowanc .....

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so merits acceptance, i.e., the assessee has made additional disclosure of about 20.00 lakhs, which is more than enough to cover the above said disallowances. We accept the alternative contentions of the assessee and hence the additions made by the AO, after accepting the additional disclosure of ₹ 20.00 lakhs, would result in double assessment, since it is stated that the assessee has not capitalised the above said amount in his books of account. Accordingly, we set aside the orders of Ld .....

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Rs.16,000 Rs.71,000 Rs.26,380 Rs.1,48,380 2008-09 i)Talwalkar ii)Jewellery Rs.25,000 Rs.1,69,187 Rs.1,94,187 Total Rs.4,49,444 (Addition made is ₹ 22,808/-) 12. We heard the parties on this issue and perused the record. The main contention of the Ld A.R is that the assessee and his wife have drawn sufficient money for personal purposes and they are sufficient to cover up the expenses cited above. Alternatively, the Ld A.R also submitted that the additional disclosure of ₹ 20.00 lakh .....

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00 lakhs was a voluntary offer. We notice that the disallowances of expenses as well as the addition made u/s 69C of the Act formed a small part of the above said amount of ₹ 20.00 lakhs, thus leaving huge balance remaining to be adjusted. Hence, we are of the view that, even if it is assumed that the additions made u/s 69C is required to be sustained, the same should be telescoped against the above said amount of ₹ 20.00 lakhs. This is for the reason that the addition towards source .....

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without examining the claim of availability of sources out of drawings made by the assessee and his wife. Accordingly, we set aside the order of Ld CIT(A) on this issue in all the assessment years referred above and direct the AO to delete the impugned additions. 14. We shall now take up the appeals filed by the revenue. As stated earlier, the assessing officer proceeded to estimate the professional income of the assessee for assessment years 2002-03 to 2007-08. The reasoning given by the AO is .....

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ional collections in the same pattern in the earlier years also. Accordingly, he estimated the average daily collection at ₹ 1,00,000/-, ₹ 90,000/-, ₹ 80,000/-, ₹ 70,000/-, ₹ 60,000/- and ₹ 50,000/- respectively for assessment years 2007-08, 2006-07, 2005-06, 2004-05, 2003-04 and 2002-03. Accordingly the assessing officer worked out the gross receipts. Then the AO worked out the difference between the gross receipts declared by the assessee and that was worked .....

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34.17% 34.95 3 2005-06 ₹ 80,000 per day 240.00 147.99 92.01 29.24% 26.90 4 2004-05 ₹ 70,000 per day 210.00 131.59 78.41 31.57% 24.77 5 2003-04 ₹ 60,000 per day 180.00 108.40 71.60 39.12% 28.00 6 2002-03 ₹ 50,000 per day 150.00 103.12 46.88 37.00% 17.34 The assessing officer made the additions in the respective years as per the workings given above. The Ld CIT(A) deleted the additions in all the years mainly on the reasoning that there is no material to support the infere .....

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d that there is no material in the possession of the AO on the basis of which the AO has worked out extra receipts and extra profits. Whatever books of account and loose sheets were found during the course of search are in the possession of the department, the only addition that could be sustained was in respect of unexplained cash found during the course of search at ₹ 1,13,57,110/-(sic). The appellant has already offered ₹ 1,25,00,000/- for tax as additional income. As per provisio .....

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finding is about certain expenses which were recorded on the loose papers and were not found to be recorded in the books of accounts. 6.5.5 On the basis of the facts narrated above, it is apparent that the ld. AO does not have, in his possession, any material evidence to suggest that cash income of similar nature was earned during the years prior to the year of search, and in any given proportion. Under the circumstances, the presumption has always to be made that the unaccounted income relates .....

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00 2007-08 Rs.10,00,000 2006-07 5,00,000 2005-06 Rs.5,00,000 2002-03 to 2004-05 NIL Total ₹ 1,25,00,000 Evidence of unaccounted income found in one year, cannot be presumed to exist in other years and estimated of unaccounted income based on such presumption cannot be approved. 16. During the course of hearing, the Ld D.R strongly supported the estimation made by the AO. There is no dispute with regard to the fact that the revenue did not unearth any incriminating material, which could sug .....

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re excess cash balance in one year. Hence, in our view also, the assessing officer misguided himself by presuming that the entire undisclosed cash balance represents his professional fee collected during the financial year relevant to the assessment year 2008-09. Hence, in our view, the Ld CIT(A) has rightly concluded that the assessing officer did not bring any material on record to support his case of estimation of professional receipts of earlier years. We also notice that the assessing offer .....

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ubstantiate the estimation made by him. During the course of hearing, the Ld D.R placed reliance on the decision rendered by Hon ble Punjab & Haryana High Court in the case of Ved Prakash Vs. CIT (265 ITR 642) to support the estimation made by the assessing officer. However, we notice that the Hon ble Punjab & Haryana High Court has considered a case, wherein materials were found during the course of search. However, in the instant case, no material relating to suppression of professiona .....

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2005-06 to 2007-08. In the preceding paragraphs, we have deleted the additions made u/s 69C of the Act and hence the penalty levied on those additions is liable to be deleted, since the said additions themselves does not survive. 18. With regard to the penalty levied on the additional income surrendered by the assessee, the Ld A.R submitted that the assessee has offered excess amount of about ₹ 20.00 lakhs voluntarily and the revenue did not seize any material to support the said disclosu .....

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ifference between the returned income and assessed income in sec. 153A proceedings and hence there is no presumption of concealment of income. The Ld A.R submitted that the assessing officer was not justified in law in comparing the income assessed u/s 153A of the Act with the return filed u/s 139 of the Act. In support of this proposition, he placed reliance on the decision rendered by the Delhi bench of Tribunal in the case of Prem Arora Vs. DCIT (2012)(78 DTR(Del)(Trib) 91). 19. The Ld D.R, o .....

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ACIT (2009)(124 TTJ 566). 20. We heard rival contentions and perused the record. We notice that the decision in the case of JRD Stock brokers (P) Ltd (supra) has been rendered in the context of penalty levied u/s 158BFA of the Act. Further, we notice that the assessee therein did not disclose additional income in the return of income filed by it u/s 158BC of the Act. Further it is stated that the undisclosed income was discernible from the seized materials. Where as in the instant case, the pena .....

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as voluntarily offered the same and no material was seized during the course of search warranting the additional disclosure. The assessee has duly disclosed the income voluntarily offered by him in the returns of income filed in response to the notices issued u/s 153A of the Act. During the course of penalty proceedings also, the assessee has offered the explanation to that effect and the said explanation was not found to be false. During the course of search proceedings, the revenue has noticed .....

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officer to delete the penalty levied u/s 271(1)(c) of the Act in all the years under consideration. 23. We shall now take up the appeal filed by the assessee for assessment year 2008-09 against the penalty levied u/s 271AAA of the Act. As noticed earlier, the assessee had offered the excess cash balance of ₹ 1.05 crores as his income for AY 2008-09 out of the cash of ₹ 1.13 crores found during the course of search. Hence the assessing officer levied penalty u/s 271AAA of the Act at 1 .....

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see is seeking immunity from penalty levied u/s 271AAA(1) of the Act on the reasoning that he has complied with the provisions of sec. 271AAA(2) of the Act. As per the provisions of sec. 271AAA(2), penalty u/s 271AAA(1) of the Act is not leviable if the assessee:- (a) in the course of search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income was derived; (b) substantiates the manner in which the undisclosed income was .....

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sed income was derived. The Ld A.R submitted that the assessee has disclosed the undisclosed income in the return of income as his professional income and hence the disclosure so made satisfied the condition of manner in which the undisclosed income was derived . In this regard, he placed reliance on the decision rendered by the Cuttack bench of Tribunal in the case of Ashok Kumar Sharma Vs. DCIT (2012)(149 TTJ (Ctk)(UO) 33), wherein it was held as under:- Undisputedly the assessees have shown t .....

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