Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

ITO, Ward-5 (2) , Surat Versus Shri S.N. Rathi,

2015 (12) TMI 766 - ITAT AHMEDABAD

Income from unaccounted bank accounts and other material found during the course of survey - whether to be assessed in the hands of Shri S.N. Rathi, individual or in the hands of Shri S.N. Rathi, AOP? - Held that:- The concurrent finding of fact recorded by the revenues authorities below on this issue are to the effect that the said benami accounts were neither in the name of AOP nor in the name of any alleged member of the AOP. The Ld. First Appellate Authority has specifically observed that fr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

profit was distributed in a definite ratio among alleged members of AOP. Therefore, taking into consideration the specific objections pointed out by the Assessing Officer (extracted supra) as well as finding of the Commissioner of Income Tax(A), we are of the view that assessee failed to establish the existence of AOP. This line of argument has been taken after the survey during the assessment proceeding. Thus, the income from the 25 benami unaccounted accounts is to be assessed in the hands of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n his orders in all the assessment years. Thus, grounds of appeal of the assessee as well as by the revenue on this issue, in all these assessment years are rejected. The Ld. Assessing Officer shall compute the profit from the benami bank accounts @ 2.45% of the turnover and assessed it in the hands of Shri S.N. Rathi individual.

Suppression of sales/turnover - contentions of the assessee is that except one sale vide BF3/43 for a sum of ₹ 4,335/- all other sales are to its assoc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ers were ultimately travelled to bank accounts of the benami concerns. Thus, it will amount a double addition. As far as addition of ₹ 16,09,314/- in Assessment Year 2005-06 is concerned, it ought to have been deleted on the same analogy. Ld. Commissioner of Income Tax(A), somehow, failed to record any finding on this issue. We find that, foundation of addition is similar, thus, this addition is not sustainable. - Decided in favour of assessee.

Peak investment for seed capital - .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as worked the initial capital by taking a peak deposit and, therefore, to our mind ld. Assessing Officer has rightly made the addition for Assessment Year 2003-04.

As far as Assessment Year 2004-05 is concerned, initial investment of ₹ 1,30,720/- has been worked out. To our mind, no addition can be made in this year because assesse has the benefit of availability of unexplained capital added in Assessment Year 2003-04 at ₹ 4,64,196/- + unexplained income from the benami ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

plained income assessed in the hands of assesse for Assessment Year 2003-04, 2004-05 + additions made on account unexplained investment initially made in Assessment Year 2003-04 has to be granted. Ld. Assessing Officer shall give credit of ₹ 4,64,196/- + ₹ 3,41,942/- i.e. the peak investment and income for Assessment Year 2003-04. He shall further give credit of ₹ 14,53,727/- i.e. the income assessed for Assessment Year 2004-05. After setting these amounts against ₹ 28,57 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce of investment. But over a period of time, the assessee has accumulated sufficient capital which can take care of this investment. In the immediately preceding year, we have noticed the investment of ₹ 28,57,013/-. The benefit of telescoping of this amount will be available to the assessee in Assessment Year 2006-07. This amount is more than the alleged peak investment worked out in this year, therefore, in this year no addition can be upheld

GP addition - CIT(A) deleted the a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has not pointed out any such impossibility in the assessment order. - Decided in favour of assessee

Addition u/s 68 - CIT(A) deleted the addition - Held that:- It emerges from the record that Assessing Officer has taken wrong figure of ₹ 2,50,000/- as credit appearing against the name of Shri Ruresh Paliwal (HUF). From the copy of affidavit considered by Commissioner of Income Tax (Appeals) and copies of the accounts, it reveals that amounts were only 20,000/-. With regard to S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

CIT(A) deleted the addition - Held that:- On due consideration of facts and circumstances, we do not find any error in the order of Ld. Commissioner of Income Tax (Appeals) because this year assessee has not taken fresh loan from the member of Joshi and Paliwal family. The genuineness of the loans was not doubted in earlier years and expenses were allowed. Therefore, no disallowance can be made in this year. - Decided in favour of assessee

Charging interest u/s. 234B and 234C for the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

AOP deserves to be given to the assessee. Therefore, we set aside this issue to the Assessing Officer with direction that ld. Assessing Officer shall re- examine this issue after hearing the assessee. This ground of appeal is allowed for statistical purposes in all the assessment years. - 2037/Ahd/2008, 2038/Ahd/2008, 2039/Ahd/2008, 2673/Ahd/2009, 2807/Ahd/2011, 2808/Ahd/2011, 2809/Ahd/2011. 2402/Ahd/2009, 2548/Ahd/2009, 2549/Ahd/2009, 2843/Ahd/2011, 2652/Ahd/2009, 2653/Ahd/2009 & 2654/Ahd/2009 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessment order etc. The same reads as under:- IN THE CASE OF SHRI SATYANARAYAN U. RATHI Sr. No. ITA No Appellant A.Y. Date of CIT(A) s order Date of AO s order 1 2037/Ahd/2008 Deptt 2003-04 28-03-2008 25-06-2007 2 2807/Ahd/2011 Assessee Do Do Do 3 2038/Ahd/2008 Deptt 2004-05 Do Do 4 2808/Ahd/2011 Assessee Do Do Do 5 2039/Ahd/2008 Deptt. 2005-06 Do Do 6 2809/Ahd/2011 Assessee Do Do Do 7 2673/Ahd/2009 Deptt. 2006-07 08-07-2009 30-12-2008 8 2402/Ahd/2009 Assessee Do Do Do IN THE CASE OF SHRI S. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

how, the issues in each appeal are inter-connected with each other. Shri Satyanarayan U Rathi is running a proprietorship concern in the name and style of Druv Prints. A survey u/s. 133A of the Income Tax Act, 1961 was carried out in Rathi Group of Cases on the 31st January, 2006 at shop no. 1288-90, 1220-21, 4358-60 and 4430-37, Radhakrishna Taxtile Market, Ring Road, Surat. 3. During the course of survey action, inventory of cash, books of account and physical stocks found were prepared. At sh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ronting the Assessee, had proceeded to make protective assessment. He made 38 protective assessments. The list of such protective additions has been placed by the assessee on page 14 of the paper book filed in A.Y. 2005-06. When the AO has confronted the assessee with regard to these unaccounted bank accounts detected during the course of survey, then the assessee took a stand that with the help of these bank accounts the business is being run by 3 brothers namely, Satyanarayan U Rathi, Vinodkum .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

returned by the AOP as it is. 5. The registry has pointed out that appeals of the assessee in Assessment Year 2003-04, 2004-05 and 2005-06 are time barred by 1252 days. In order to explain the delay in fling of the appeals, Shri S.N.U. Rathi has filed an affidavit dated 19th January, 2011. He deposed that income at the time of survey was declared in the hands of Shri S.N.U. Rathi and others (AOP). He filed the return in the status of AOP and offered the income. The Assessing Officer has assessed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ncome Tax(A) in AOP which will take care of the dispute in these cases also. When he changed his counsel for the purpose of handing these matters before ITAT only then he was advised to file appeal against the order of Commissioner of Income Tax(A) passed in his individual cases. Therefore, he filed the appeal. He further contended that there is no deliberate attempt at the end of assessee to make the appeals time barred. Learned counsel for the assessee while taking us through the affidavit con .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

elay of 1252 days. The assessee has not given any plausible reasoning for filing the appeal after expiry of limitation. 6. We have duly considered the rival contentions and gone through the record carefully. The orders of Commissioner of Income Tax(A), in all the assessment years are subject to discussion, in the appeals of revenue. The challenge with regard to additions in the appeals of both parties are common. The asssessee was under an impression that once he has challenged the order of CIT( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

time, because the tax consultant was unable to advise the assessee properly, therefore, after taking into consideration all these facts and circumstances and the issues agitated by the revenue found to be common with the assessees' grounds of appeal, we condone the delay in filing the appeals and proceed to decide them on merit. 7. Dissatisfied with the action of AO, the assessee carried the matter in appeal. It was alleged by the assessee that AO has erred in not accepting his stand that b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted the existence of AOP. The revenue has filed cross appeal and pleaded that Ld. CIT(A) has erred in partly deleting the additions by applying low rate of net profit. Thus in this way, these appeal have arisen. 10. First common issue involved in all these appeals is, whether income from unaccounted bank accounts and other material found during the course of survey is to be assessed in the hands of Shri S.N. Rathi, individual or in the hands of Shri S.N. Rathi, AOP. 11. With the assistance of Ld .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rson and, therefore, the income from such unaccounted accounts and material has been offered in the hands of AOP at 2% of the turnover. For buttressing this stand, it was pleaded that some of the accounts were operated by family members and even by employees. All these three brothers had operated number of benami accounts thus it exhibits that AOP was in existence. 12. Sub-section 31 of section 2 of the Income Tax Act provide the definition of expression "person", it includes I. xxxxxx .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

order but the facts on vital points are common, therefore, we are taking up the facts basically form assessment year 2003-04. Ld. First Appellate Authority while dealing with these pleas of the assessee, has recorded a finding that assessee failed to provide any evidence regarding the existence of AOP. The Ld. Assessing Officer while rejecting this claim of the assessee and taxing the income from the benami accounts in the hands of Shri S.N. Rathi, individual has assigned mainly following reason .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ant. -The statue of AOP was not mentioned in the bank account opening card. -The shares of profit of the members was also nowhere specified." 13. Before us, learned counsel for the assessee reiterated his contention as were raised before the revenues authorities below. The concurrent finding of fact recorded by the revenues authorities below on this issue are to the effect that the said benami accounts were neither in the name of AOP nor in the name of any alleged member of the AOP. The Ld. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

AOP. They could not produce any evidence to demonstrate that profit was distributed in a definite ratio among alleged members of AOP. Therefore, taking into consideration the specific objections pointed out by the Assessing Officer (extracted supra) as well as finding of the Commissioner of Income Tax(A), we are of the view that assessee failed to establish the existence of AOP. This line of argument has been taken after the survey during the assessment proceeding. Thus, the income from the 25 b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ditions partly deleted by the Commissioner of Income Tax(A). The deletion has been challenged by the revenue in its appeals, whereas confirmation of additions has been challenged by the assessee in his appeals. In order to appreciate all these issues in a more scientific way, we deem it appropriate to take note of all these details. They read as under:- Addition made by AO and Reduction granted by CIT(A) in the case of Satyanarayan U Rati Particulars Asst. Year Asst. Year 2004-05 Asst. Year 2005 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1 9155224 9155224 16096773 16096773 ed income on unaccount ed turnover noticed as per impounded books 3 Unexplain 464196 464196 130720 130720 2857013 2857013 2737624 0 6189553 3451929 ed capital investment 4 Addition 0 0 636836 636836 203452 203452 364402 364402 1204690 1204690 on a/c of low GP 5 Unexplain 0 0 385000 385000 0 0 493375 0 1204690 385000 ed cash credit 6 Disallowa 0 0 16195 16195 10319 10319 0 0 26514 26514 nce out of interest Expenses 8 GP of 0 0 0 0 1609314 0 844225 844225 245353 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2006-07 respectively. Ld. First Appellate Authority has upheld the ocmputionof profit @ 2.45% of the turn-over and granted a relief of ₹ 10,53,740/-, ₹ 44,79,853/- and ₹ 88,77,886/- in Assessment Year 2003-04 to 2006-07. The revenue is impugning the deletion of these amounts in each assessment year. On the other hand, in the cross appeal, assessee is challenging computation of profit @ 2.45% of the turn-over. According to the assessee, the profit rate ought to have been adopte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he turn-over available in the benami bank account in the hands of AOP. The existence of AOP was not accepted by the Assessing Officer and income has been assessed in the hands of Shri S.N. Rathi, individual. The Commissioner of Income Tax(A) has also disbelieved the existence of AOP and upheld the assessment in the hands of Shri S.N. Rathi, individual. The grounds of appeal raised by the asssessee in his appeal, with regard to existence of AOP have been rejected by us in the forgoing paragraphs. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ncome from other sources' shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. (2) The Central Government may notify in the official gazette from time to time accounting standards to be followed by any class of assessees or in respect of any class of income. (3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

professions or income from other sources" shall be computed in accordance with the method of accountancy employed by an assessee regularly subject to the sub-section (2) of section 145 of the Act. Sub-section (2) provides that the Central Government may notify in the Official Gazette from time to time the accounting standard required to be followed by any class of assessee in respect of any class of income. Thus, it indicates that income has to be computed in accordance with the method of a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t case is required to point out the defects in the accounts of assessee and require to seek explanation of the assessee qua those defects. If the assessee failed to explain the defects then on the basis of the book results, income cannot be determined appeals and Assessing Officer would compute the income according to his estimation keeping in view the guiding factor for estimating such income. 19. Admittedly, there are no proper books, the details are worked out from unaccounted bank accounts. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the Income-tax Act, 1961. This section reads as under: "Section 144. (1) If any person - (a) Fails to make the return required [under sub-section (1) of section 139] and has not made a return or a revised return under sub- section (4) or sub-section (5) of that section, or (b) Fails to comply with all the terms of a notice issued under sub-section(1) of sec. 142 [or fails to comply with a direction issued under sub-section (2A) of that section ] or (c) Having made a return, fails to comp .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

otice calling upon the assessee to show s\cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment : Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-section (1) of section 142 has been issued prior to the making of an assessment under this section.] (2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

his discretion which should be in consonance with best of his judgment. We are conscious of the fact that in various authoritative pronouncements, it has been propounded that in making a best judgment assessment, the Assessing Officer must not act dishonestly or vindictively or capriciously. He must make, what he honestly believe to be a fair estimate of the proper figure of assessment and for this purpose he must be able to take into consideration, local knowledge, reputation of the assessee ab .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f each assessee. 21. In the light of above, let us take a note of the finding recorded by the Assessing Officer for computing the profit from these accounts at 10% of the turn-over. The finding of Assessing Officer in Assessment Year 2003- 04 read as under: "Why G.P. is considered and not N.P. The benami concerns were created by the assesse to earn unaccounted income and to avoid tax incidence. The assesse had not maintained books of account and details of expenses. The Designated Auditor h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

unaccounted concerns is worked out at ₹ 13956827/-. Unaccounted income of the assessee on this score is worked out at 10% at ₹ 1395682/- and added to the total income of the assessee treating the same as concealed income. Proceedings U/s. 274 r.w.s. 271(1) of the I.T. Act are initiated for levy of penalty u/s. 271(1)(C) of the Act." 22. Contrary to this finding, Ld. First Appellate Authority has upheld the rate required to be applied at 2.45% of the turn-over. The finding of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der consideration in his regular books is 1.07%. Even in the group concerns of the appellant the NP rate achieved is less than 2% i.e. 1.22% in the case of Shivprakash Rathi HUF, 1.35% in the case of Shivprakash Rathi and 2.21% in the case of Satyanarayan Rathi HUF. Regarding the Assessing Officer's allegation that GP rate is to be adopted and not NP rate it is seen that the turnover of the benami concerns is in crores of rupees and it is not possible that all the administrative expenses of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

suggested that average net profit @ 2.45% may be accepted in the case of the appellant, since other assessees engaged in similar line of business, derive similar rate of net profit. Thus, under the circumstances, when the books of accounts were made subject to special audit u/s. 142(2A) of the Act, in order to derive the correct profitability thereof, the profitability as reported in the Special Audit Report u/s. 142(2A) has to be considered and the Assessing Officer cannot ignore the same with .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ditor appointed by the Department is a kind of arbitrator between the Department and the appellant and if the decision of an arbitrator is contested by the Department, the sanctity and credibility of such a special audit would be lost. Therefore, I hold that the Assessing Officer was not justified in adopting the net profit of the appellant @ 10% without any basis instead of @ 2.45% as reported by the Special Auditor u/s 142(2A) of the Act. Accordingly, I hereby direct the Assessing Officer that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d by the Assessing Officer about the assessee from the vicinity which will goad him to just conclusions. The Assessing Officer must not act dishonestly or vindictively. From perusal of the finding of Assessing Officer for adopting the profit rate at 10% in the finding (extracted supra), no reasons are discernable. The Assessing Officer was of the view that expenses must have been debited by the assessee in his regular books of accounts. In other words, the assessee has been doing business in his .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

regular books of accounts. The expenditure to this magnitude cannot be adjusted in the regular books of accounts. The assessee has specifically pointed out that turnover of regular books of accounts would even less than packing expenses in the benami transaction. Therefore, Assessing Officer was not justified in applying GP directly on turn-over for working of the income of assessee. The ld. Assessing Officer has not referred the case of any similarly situated assessee who ought to shown the pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

where profit has been offered at 1.25%, 1.35% and 2.21%. Taking into consideration the comparable cases and the opinion of the special auditor, Ld. First Appellate Authority has upheld the application of profit rate at 2.45%, If we weigh the reasoning assigned by the Ld. First Appellate Authority vis-à-vis that of Assessing Officer in the findings extracted above, then scale would tilt in favour of Ld. First Appellate Authority, because Ld. First Appellate Authority has made reference to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

@ 10% of the turnover. Taking into consideration the finding of the Commissioner of Income Tax(A), we do not see any reason to interfere in his orders in all the assessment years. Thus, grounds of appeal of the assessee as well as by the revenue on this issue, in all these assessment years are rejected. The Ld. Assessing Officer shall compute the profit from the benami bank accounts @ 2.45% of the turnover and assessed it in the hands of Shri S.N. Rathi individual. 24. The next common grievance .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ition of ₹ 16,09,314/- 25. The brief facts in Assessment Year 2003-04 are that Assessing Officer has worked out suppressed sale/turnover of ₹ 33,55,673/-. These suppressed sales have been worked on the basis of entries found in the loose papers collected during the course of survey. The Assessing Officer has estimated income of ₹ 3,35,567/- computed @ 10% of the turnover. In an identical manner, an addition of ₹ 13,64,801/-, ₹ 52,41,181/- and ₹ 91,55,224/- has .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd added 10% of it on the same logic as adopted in the case of loose paper. 26. Before us, the Ld. Income Tax officer has filed written submission vide letter dated 17th April, 2015. Ld. Departmental Representative has relied on the submissions made by the income tax officer Ward-2(2). He also pointed that it is not necessary that narration available in the loose papers must have been travelled to the bank account. The possibility of set of those transactions in cash without routing through bank .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uring the course of survey have been placed on record. The assesse has pointed out to the Assessing Officer that the transactions available in the loose paper were taken to the bank accounts. The Assessing Officer could not independently establish that alleged transactions collected from these loose papers are separate transactions. He has estimated the income on the basis of entries found in benami bank accounts. He has taken gross amount in those bank accounts as a turnover of the assessee. Ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. The Assessing Officer could not establish that these independent transactions have no connection with the total turnover computed on the basis of bank account. Ld. First Appellate Authority has rightly observed that notings of the sales on the loose papers were ultimately travelled to bank accounts of the benami concerns. Thus, it will amount a double addition. As far as addition of ₹ 16,09,314/- in Assessment Year 2005-06 is concerned, it ought to have been deleted on the same analogy. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n Assessment Years 2003-04 to 2005-06 is common with ground no. 2 of assessee's ground of appeal in Assessment Year 2006-07. The issue in all these grounds is, whether addition account of peak investment for seed capital in achieving the unaccounted turnover is to be made or not? 29. The brief facts of the case are that Assessing Officer has made an addition of ₹ 4,64,196/- in Assessment Year 2003-04 on the ground that assesse must have made some initial investment for achieving a huge .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted fact that assessee has been doing business without disclosing it to the income tax authority. The bank accounts are benami of the assessee. For starting any business, some seed capital will always be required. The assessee has not disclosed initial capital in these accounts. He is bound to disclose the source of initial capital. Ld. Assessing Officer has worked the initial capital by taking a peak deposit and, therefore, to our mind ld. Assessing Officer has rightly made the addition at S .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

xplained investment at ₹ 1,30,720/-, therefore no addition is to be made in Assessment Year 2004-05. 32. As far as Assessment Year 2005-06 is concerned, ld. Assessing Officer has worked unexplained investment of ₹ 28,57,013/-. In principle, we agree with the Assessing Officer that addition on account of unexplained investment for initiating the business has to be made but the telescoping of the unexplained income assessed in the hands of assesse for Assessment Year 2003-04, 2004-05 + .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of peak investment. 33. In Assessment Year 2006-07, Assessing Officer has made addition at ₹ 27,37,624/-. Ld. First Appellate Authority has confirmed this addition. The assessee is in appeal. We agree in principle with the Commissioner of Income Tax(A) that initial investment made by the assessee has to be added as unexplained investment of the assesse. because assessee failed to establish the source of investment. But over a period of time, the assessee has accumulated sufficient capital .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

l of revenue. Ground No. 4 and 5 are general grounds of appeals, they do not call for recording of any specific finding, hence rejected. 35. In view of the above discussion, this appeal of the revenue is partly allowed. 36. ITA No. 2038/Ahd/2008(Assessment Year 2004-05), in this year, we have already taken up ground no. 2,4,5,& 6 in the foregoing paragraphs. Ground no. 7 and 8 are general grounds of appeal which do not call for recording of any specific finding, hence they rejected. 37. Grou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Assessing Officer found that assessee has disclosed gross profit at ₹ 8,39,513/- @ 5.69% of the turnover as against GP at @ 11.34% declared in the immediately preceding year. The Assessing Officer was of the view that the GP declared by the assessee is on the lower side, therefore, he applied the GP rate of 10%, and addition of ₹ 6,36,836/- was made to the income of the assessee. 39. On appeal, Ld. Commissioner of Income Tax (Appeals) has deleted the addition. Ld. Commissioner of In .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y the assessee. 40. On consideration of the facts and circumstances, we do not find any error in the order of Commissioner of Income Tax (Appeals), because the Assessing Officer failed to point the defects in the regular books of accounts maintained by the assessee. He simply compared the GP to ealier assessment year and then made the addition. This is not the right course provided u/s. 145(3)/144 of the income tax act. The Assessing Officer can estimate the GP only when it was not possible for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat assessee has received loans of ₹ 1,35,000/- from Om Textile and ₹ 2,50,00/- from Shri Sureshkumar D. Paliwal (HUF). The Assessing Officer has made the addition on account of unexplained cash credit u/s. 68 of the income tax act. The ld. Commissioner of Income Tax (Appeals) has deleted the addition on the ground that assessee has produced confirmation and permanent account no. of these persons. The loan from Shri Paliwal has been taken at ₹ 20,000/- and not 2,50,000/-. Ld. C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y 20,000/-. With regard to Shri Om Textile, assessee has filed confirmation and PAN. Thus, he has explained cash credits appearing in his books of accounts. He has given the name, address of the creditor and also proved the genuineness of the transaction. The creditors are income tax assessee, therefore, their creditworthiness for small amount cannot be doubted. We do not find any error in the finding of Commissioner of Income Tax (Appeals), thus this ground of appeal is rejected. 44. In ground .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

isallowance can be made in this year. On due consideration of facts and circumstances, we do not find any error in the order of Ld. Commissioner of Income Tax (Appeals) because this year assessee has not taken fresh loan from the member of Joshi and Paliwal family. The genuineness of the loans was not doubted in earlier years and expenses were allowed. Therefore, no disallowance can be made in this year. We don't find any error in the order of Ld. Commissioner of Income Tax (Appeals). This g .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

,452/-. The asessee has shown GP at 8.19%. The Assessing Officer after following his order in Assessment Year 2004-05 adopted the GP rate at 10% and made an addition at ₹ 2,03,452/-. On due consideration of facts and circumstances, we are of the view that Assessing Officer failed to point out any specific defects in the regular books of accounts of the assessee, we upheld the order of Commissioner of Income Tax (Appeals) in Assessment Year 2004-05 with regard to acceptance of GP at 5.69% o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the interest expenses. After following his finding in Assessment Year 2004-05, ld. Commissioner of Income Tax (Appeals) has deleted the disallowance. As we have upheld the order of ld. Commissioner of Income Tax (Appeals) in Assessment Year 2004-05 in the foregoing paragraphs, the addition with regard to unsecured loans made in Assessment Year 2004-05 has already been deleted by the Commissioner of Income Tax (Appeals) and we have upheld the order of Commissioner of Income Tax (Appeals), therefo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

inding. In ground no. 4, the grievance of revenue is that the ld. Commissioner of Income Tax (Appeals) has erred in deleting the GP addition at ₹ 3,64,402/-. We find that in the regular books of assessee, assessee has disclosed a GP of 8.19% which was not accepted by the Assessing Officer. He estimated the GP at 10% and made the addition. On appeal, Ld. Commissioner of Income Tax (Appeals) has deleted this addition. In view of our finding recorded in Assessment Year 2004-05, 2005-06 on thi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(AOP) in the hands of assessee (individual) then, he erred in charging interest u/s. 234B and 234C for the fault of advance tax. As observed earlier that assesse has offered the income in the status of AOP from the benami accounts, ld. Assessing Officer did not accept the existence of AOP and treated the income in the hand of assessee in his individual capacity. It is not in dispute that same income cannot be taxed twice in different hands. The moment Assessing Officer has changed status of tax .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version