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M/s Gardenia India Limited Versus Deputy Commissioner of Income Tax, Central Circle-7, New Delhi

2016 (1) TMI 1029 - ITAT DELHI

Unexplained money - Addition as income from other sources - Held that:- Section 69A is applicable where the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, and the assessee offers no explanation about the nature and source of acquisition, or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer, then the money and the va .....

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e books or documents seized, section 69A cannot be invoked. This provision can be invoked only when unaccounted cash, bullion, jewellery or any other valuable article or thing is found during search or otherwise. We find that it is not the case of A.O. that the assessee has not offered any explanation.

It is also not the case of A.O. that explanation offered by him with "regard to source and acquisition of money is not satisfactory. The nature of receipt is business income being adva .....

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which is taxable and income has to be computed in accordance with the provision of Act and in accordance with the method of accounting regularly followed by assessee. The assessee has been following the percentage of completion method regularly since inception. The A.O. has duly accepted the method even in assessment done u/s 153A. It is a settled law that once the method followed by assessee has been accepted, the income has to be computed in accordance with that regularly followed method. The .....

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dingly, we delete the addition - Decided in favour of assessee - I.T.A. No. 1464/DEL/2014 - Dated:- 1-1-2016 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER For The Assessee : Sh. Amit Goel, Adv. For The Department : Sh. A.K. Saroha, CIT(DR) ORDER PER H.S. SIDHU, JM This appeal by the Assessee is directed against the Order of the Ld. Commissioner of Income Tax (Appeals)-I, New Delhi dated 24.12.2013 pertaining to assessment year 2007-08 on the following grounds:- 1. On t .....

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ommissioner of Income Tax (A) should have held so. The appellant craves leave to add one or more ground of appeal or to alter/ modify the existing ground of appeal or to alter/ modify the existing ground before or at the time of hearing of appeal. The aforesaid grounds are without prejudice to each other. 2. The brief facts of the case are that a search and seizure operation was carried out u/s. 132 of the Income Tax Act, 1961 in the Gardenia Group of cases on 9.9.2010. The assessee was also cov .....

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mpugned order dated 24.12.2013 has dismissed the appeal of the Assessee. 4. Aggrieved, assessee is in appeal before the Tribunal. 5. Ld. Counsel for the assessee has filed a Paper Book containing pages 1 to 13 which contains the Paper Book filed before the Ld. CIT(A) and Also another Paper Book having pages 1 to 69 consisting of various judgments of the Hon ble High Courts and ITAT favouring the assessee s case. 6. On the contrary, Ld. DR relied upon the orders of the authorities below and state .....

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he assessment order and the submissions made. Facts are that during search and seizure incriminating documents indicating unaccounted cash receipts from customers, inflated purchases and other receipts were seized relating to various persons of the appellant group. The appellants, when confronted with the contents of these documents, admitted unaccounted income amounting in all to ₹ 4,78,05,701/-, including the amount of ₹ 2,99,05,70I/- relating to the appellant company for various a .....

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ative figures have been tabulated in the submissions filed by Ld. AR reproduced above. 4.3 Section 69 A reads as under: Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisit .....

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cle is not recorded in the books of account, and the assessee offers no explanation about the nature and source of acquisition, or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer, then the money and the value of the bullion, jewellery Or other valuable article may be deemed to be the income of the assessee for such financial year. For this section to come into operation, the assessee must be found to be the owner of any money, bullion, jewellery or othe .....

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he revenue to invoke section 69A to charge the amount to tax. 4.5 Accordingly, during appeal, the appellant was addressed a letter on 28.11.2013 asking the appellant as to why the unaccounted money received should not be taxed as income from other sources u/s 56 as the business of the appellant did not constitute receiving unaccounted sums of money, which was also contrary to the law. In reply it was submitted that the appellant merely reiterated its earlier osition and submitted as under: " .....

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the amounts received were not accounted for in the books of the appellant. Therefore, the amount was received over and above what was recorded by the appellant in the books. Since the amount was not recorded in the books, it did not form part of the revenue receipt of the appellant. The amount was enjoyed by the appellant upon receipt. Therefore, the amount has to be taxed on receipt basis and not on the basis of POC method. It is also to be noted that regular business, duly accounted for regula .....

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0/- is taxable u/s 56 as income of the appellant under the head 'other sources' for AY 2007 08.The AO is directed accordingly. 7.1 To decide the issue in dipsute, we can gainfully refer the provisions of section 69A hereunder:- Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, mainta .....

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assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, and the assessee offers no explanation about the nature and source of acquisition, or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer, then the money and the value of the bullion, jewellery Or other valuable article may be deemed to be the income of the assessee for .....

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nted cash, bullion, jewellery or any other valuable article or thing is found during search or otherwise. We find that it is not the case of A.O. that the assessee has not offered any explanation. It is also not the case of A.O. that explanation offered by him with "regard to source and acquisition of money is not satisfactory. The nature of receipt is business income being advance against sales and source of receipt is the respective customers. The A.O. is very much satisfied with the natu .....

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