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TMI Blog2011 (2) TMI 1470X X X X Extracts X X X X X X X X Extracts X X X X ..... to explain why the books produced at the time of hearing were not found during the course of search operation. The Ld. Authorised Representative for the assessee stated that the books were lying with the Accountant of the assessee. On being asked to give the name and address of the Accountant the assessee showed his inability. The assessee was further asked to explain the reason why the books were lying with the Accountant to which the Ld. Authorised Representative for the assessee stated that it was the practice of the assessee to keep the books of account at the residence of the Accountant. This is also to be noted that assessee did not have any computer, nor did he ever pay any remuneration for making entries in the computers. The assessee failed to produce sale bills/cash memos of purchase bills stating that he never issued any sale bill or cash memos. Therefore, the entries made in the computerized cash book were definitely made after the search operations. Since the books of account produced at the time of assessment proceedings are not supported by any bills/vouchers/memos they cannot be relied upon and therefore, books were rejected u/s. 145 of the Income Tax Act, 1961. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the assessee has Constructed S shopping complex consisting of ten shops. On enquiries made by an Income-tax Inspector it was found that the assessee has sold one shop to M/s. Rathi Tyre Services on 12.01.2000 for a consideration of ₹ 71,000/-. The assessee was asked to explain why an addition of ₹ 7,10,000/- (71,000- X 10) should not be made to his total income. In his written submission the assessee stated as under :- "It is not the fact that I have sold our all the 10 shops @ 71,000/- per shop. I have sold one shop to Basant Kumar Karwa for ₹ 71,000/- on 13.01.2000, same has been shown in my personal statement of affairs for 2000-01 assessment year as credit in his name filed alongwith my I.T. return for 2001-02 assessment year. I have sold one more shop to Ranjeet Ice (Dutta) for ₹ 50,000/- on 13.10.2000 which also has been shown as credit in the name of Ranjeet Dutta in my personal balance sheet for 2001-02 assessment year. The third shop has been let on rental basis to Sanjiv Ram @ 500/- p.m. w.e.f. July 2002. The land behind the said shop is vacant and that vacant land along with a temporary shed is let out to one Shyam Sarda @ 2,000/- p.m. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as, shown in the Returns duly filed for this period. In view of this fresh finding the action of the A.O. is confirmed. So far as the admitted undisclosed sales for A.Yr. 2000-01 & 2001-02 (Part), in view of the report submitted by the AO revising the sales for this period, total sales is taken as ₹ 75,93,981/- instead of ₹ 1,52,82,347/- as estimated in the original assessment. Assessment Year Original Revised Sales G. P. Sales G. P. 2000-01 36,08,651 1,44,346 33,35,667 1,33,427 2001-02 1,16,73,696 4,66,947 42,58,314 1,70,333 Total 1,52,82,347 6,11,393 75,93,981 3,03,760 In his report the Ld. AO has submitted that the G.P. rate and N.P. rate as disclosed by the assessee in the assessment years upto A.Y. 1999-2000 are as under :- A.Y. Sale G. P. G.P. Rate Net Profit N.P. Rate 1995-96 35,71,192/- 1,47,191/- 4.12% 40,970/- 1.15% 1996-97 34,98,616/- 1,87,077/- 5.35% 49,549/- 1.41% 1997-98 24,70,380/- 1,24,694/- 5.05% 14,279/- 0.57% 1998-99 24,63,728/- 1,05,267/- 4.27% 33,790/- 1.37% 1999-2000 28,90,672 1,06,188/- 3.67% 64,469/- 2.23% Now so far as the applicability of the GP rate, it is clear from the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts after proper verification. Unfortunately, the same was not done. However, the addition whatever was made is confirmed." I have considered the submissions of the Ld. Authorised Representative for the assessee. Regarding the reliability of the books of accounts, I had already held that books produced before the Assessing Officer were not reliable and can not be taken as genuine. Similarly, in case of the acquisition of land, I do not found any reasons to interfere in the order of the Assessing Officer, as the assessee has already admitted the cost of acquisition of the land was approximately 7.0 lakhs. I have considered the submission of the Ld. Authorised Representative for the assessee. The Assessing Officer was not correct in his approach. As per the Bank statement, this were the deposit started from 1986 and last cash deposit was made in the month of April, 1995. Thereafter, certain interest was credited to her account. Investment which was beyond the block period cannot be treated as income as on 01.01.2001. On the other hand, no material was brought to record to prove that Smt. Kundu had no source of income before her death. Therefore, the Assessing Officer is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take any cognizance of it by opening in his Remand Report that "the assessee at the assessment stage did not explain / clarify his position regarding the sales on the basis of seized books, documents and so the then A.O., in the interest of revenue and to plug the possible escapement of sales worked out the sales which appeared as sales to him in the seized books / documents" - This observation is basically wrong because the sales have been worked out from the documents inventorised during the survey and not from any seized documents. Moreover non-production of the books of accounts before the Survey party at the time of survey would not make the account books unreliable or ingenuine so as to be rejected in this manner. (iii) In reply to the question no.8 at the time of Survey regarding the books of accounts, the assessee had categorically stated that the hooks of accounts were lying with the Accountant Sri Bikash Dutta and his address was also furnished vide P. B. Page-94. He also explained the nature of the hooks of accounts. The assessee is a retail dealer of Hardware goods and most of the purchases are local and sales are also local. The assessee himself is completely ignora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of ₹ 7,02,250/- in respect of the land and bricks etc. of the value of ₹ 7,82,700/- and the balance of ₹ 80,450/- was due to be paid. Since the entire investment was from disclosed funds, the assessee himself voluntarised to explain at the time of recording his statement during the course of Survey on 19.12.2000 that he had invested approx. sum of ₹ 7.00,000/- for 16 Kathas of land at Darjeeling More, Shiv Nagar purchased by him in about 1997 or 1998. He had also stated that he had started construction of shops in December, 1999 which was still going on and he had spent approx. ₹ 3.00,000/- up till now vide reply to question no.9 - P. B. Page-94. In the course of the assessment proceedings the assessee showed that the investment in land and the construction of building at Darjeeling More was shown in the accounts of Esskey Enterprises'. It was shown that the investment on 31.03.2000 was of ₹ 6,00,000/- which had increased to ₹ 9.90,000/- during F. Y. 2000-2001 vide Balance sheets of Esskey Enterprises at P. B. Pages-77 & 74. Such addition is apparently outside the scope of undisclosed income as relatable to the search, rather the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .00,000/- paid for the land as also the sum of ₹ 2.90,000/- spent on construction of shops thereon was shown in the accounts of Esskey Enterprises for F. Y's. 1999-2000 and 2000-2001. In the first balance sheet the amount was ₹ 6,00.000/- which increased to ₹ 9,90.000/- in the next year. The said payment was verified by the A.O. also in the course of assessment proceedings meticulously and therefore there was no reason or justification for him to make the addition in this manner. In the letter dtd. 24.12.2002, addressed by the Assessee to the A.O. (VIDE PB. Page-49) this issue was explained with reference to the books of accounts also. The explanation on this point at the said page is reproduced hereunder for the sake of convenience. SK-4 P-39 "The land measuring 16-3 Katha was purchased @ 47,000/- P. Kath. It is vest land of Govt. of W. Bengal. No; Pucca Registered conveyance was made. The Payment was made to the person who was in possession of this land on giving possession thereof to me. Except sum of ₹ 80,450/- full payment was made to him before 19/12/2000 recorded in Cash Book of Esskey Ent. at ₹ 6,00,000/- for 1999-2000 & 2000-2001 F.Y. and at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 71,000/- received on sale of one shop which is recorded in the books of accounts which has been verified by the A.O. from the Statement of affairs of the appellant vide P.B. Page-78. The source of the said sum of ₹ 71,000/- is accepted by the A.O. himself, therefore in any case the addition of ₹ 75,430/- was not justified. Gr. No.5 - Addition of ₹ 10,001/- : - This is on the basis of a seized paper marked SK-4 Page-25, a copy of which is enclosed. This is a receipt issued by one Ujjanu Sangh for donation. The assessee explained that it is a normal practice that this chanda collectors through receipt by saying that they will come later for collecting the donation. The assessee said chanda was actually not paid; therefore the addition is wholly unjustified. Gr. No.6 : - This ground is against not accepting the cash book and ledger produced before the A.O. simply for the reason that they were not found / produced before the survey party. The reason for not producing was explained on the spot itself by a statement of the assessee, but still the survey party did not consider it necessary to look into those papers. Non-production of the books at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n careful perusal of computerized cash book filed, it is evident that the assessee has managed to incorporate all the transactions in the computerized cash book without any evidence in support of the same. Under these circumstances, we are of the view that the revenue authorities are right in rejecting the cash flow statement and other ledger accounts filed by the assessee without corroborative evidences. Since in our view these are prepared to substantiate the claim of the assessee. Therefore, we find no infirmity in the orders of the Ld. CIT(A) to be inferred with. Hence, we confirm the action of the Ld. CIT(A) on account of gross profit, investment in land, investment in building to the extent of ₹ 3.00 lakhs and unexplained expenditure. Regarding contention of the assessee that he has already shown ₹ 71,000/- on account of sale of one shop to Centurian Bank. We are of the considered view that the Assessing Officer has made an addition of ₹ 6,10,000/- on account of investment in building whereas the Ld. CIT(A) has restricted the disallowance to ₹ 3,00,000/- only, hence, there is no double addition of ₹ 70,000/-. Therefore, on account of peak credit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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