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2016 (9) TMI 594 - ITAT KOLKATA

2016 (9) TMI 594 - ITAT KOLKATA - TMI - Addition on account of sale of gold/silver jewellery - Held that:- Assessee, in the instant case, failed to produce documents regarding the purchase / possession of silver and gold ornaments. In the absence of supporting evidence, it is inferred that assessee was having undisclosed income which was accounted in the form of sale purchase of gold and silver. We find that there is no substance in the transactions as claimed by assessee. Accordingly, we find n .....

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en doubted by the lower authorities. We understand that if assessee is carrying on his business, there will be several indirect business expenses besides the direct cost. The lower authorities have not doubted the amount of loan which assessee has borrowed for the purpose of his smooth running of business. If we analysis the balance-sheet of assessee we find that loan amount has been utilized exclusive for the business. However, at the same time, we cannot ignore the fact that assessee has faile .....

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sessee’s turnover. - ITA No.1906-1910/Kol /2009 - Dated:- 3-8-2016 - Shri N.V.Vasudevan, Judicial Member and Shri Waseem Ahmed, Accountant Member For The Assessee : Shri Subash Agarwal, Advocate For The Respondent : Shri G. Mallikarjuna, CIT-DR ORDER PER Waseem Ahmed, Accountant Member:- Five appeals filed by assessee are directed against the different orders of Commissioner of Income Tax (Appeals)-Central-I, Kolkata and assessments were framed by ACIT, Central Circle-XX, Kolkata u/s 153A/144 of .....

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s observed that Ld AR has filed additional grounds in all the appeals except ITA No.1910/Kol/2009 which are legal in nature. On the contrary, Ld. DR has raised no objection regarding admission of assessee s additional grounds in all the four appeals, hence the additional grounds are hereby admitted. First we take up ITA No.1906/Kol/2009 AY 99-00. 4. In this appeal various grounds have been raised by assessee as under:- 1. That the ld. CIT(A)erred in law while deciding that if assessment of the r .....

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no such jewelleries were shown. 3. That the Ld. CIT(A) erred in sustaining the addition of ₹ 2,40,000/- made by the Ld. AO considering the gifts of ₹ 80,000/- each received by the appellant from three donors as unexplained which were duly disclosed in the return of income of the appellant. 4. That as the order of the Ld. CIT(A) is devoid of merit, and bad in law, the same should be quashed and your appellant be given such relief(s) as prayed for. 5. That the appellant craves your ld. .....

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similar, therefore, the same are clubbed together and disposed of by way of this common order. 6. The issue raised in these grounds is that whether the assessment completed u/s 143(1) of the Act can be considered in assessment proceedings u/s 153A of the Act without finding any incriminating materials during search. Both Ld. AR and Ld. DR have advanced their arguments on this point of issue at length and submitted various case laws in support of their respective arguments. However, at the end of .....

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assessee in this appeal is that Ld. CIT(A) erred in confirming the action of Assessing Officer by sustaining the addition of ₹2,74,664/- on account of sale of gold/silver jewellery. 8. The facts in brief are that assessee in the present case an individual and had declared his income from business and other source. A search operation was conducted at the residential and business premises of assessee on 09.03.2005 u/s.132 of the Act. Accordingly, a notice was issued upon assessee u/s. 153A o .....

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aments were purchased prior to AY 1981-82. On the sale of ornaments assessee has claimed Long Term Capital Loss after giving the effect of indexation. On query by AO about the details of such purchase of ornament, the assessee failed to give any documentary support in support of his claim except a cash memo demonstrating the sales of ornaments to M/s Junjunwala & Co. of Chadni Chock, Delhi. In the absence of any documentary evidence regarding the possession of old ornaments, the AO has made .....

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e appellant is that the certificate about the disclosure under the VDIS 97 is missing. In the absence of these crucial documents the app s own statement of affair under VDIS 97 as on 31.3.97 is not adequate evidence of the declaration about these assets under the VDIS 97. At the same time the sale bill is good evidence of the sale of silver utensils and gold ornament. It is not necessary to have evidence of traveling to Delhi for the purpose of such sale. Since the appellant is unable to produce .....

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ed reflecting the aforesaid transactions. The ld. AR stated that the transactions of sale purchase of old ornaments were duly disclosed in his return of income. On the other hand, Ld. DR vehemently relied on the order of Authorities Below. 11. We have heard rival contentions and perused the materials available on record. From the foregoing discussion, we find that assessee, in the instant case, failed to produce documents regarding the purchase / possession of silver and gold ornaments. In the a .....

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the addition of ₹ 2.40 lakh on account of unexplained income. 13. During the year, assessee has shown to have received gift of ₹ 2.40 lakh from the following persons:- Sl.No Name of persons Amount (₹) 1 Bhupendra Nath Saha 80,000 2 Parimal Ch. Ghosh 80,000 3 Kamakkhya Pada Saha 80,000 During the course of assessment proceedings, assessee filed to substantiate the claim of gift received from the aforesaid parties. Therefore, AO disallowed the same and added back to the total in .....

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f the gifts of ₹ 80,000/- each from Shri Bhupendra Nath Shah, Smt. Kamkhya pada Sha and Sri Parimal Chandra Ghosh. In my opinion these 3 gifts are justifiably disbelieved. Accordingly ground No. 3 is partly allowed. Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us. 15. We have heard rival contentions and perused the materials available on record. We find that assessee failed to furnish any documents in support of gift received from the above stated parti .....

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addition made by the Ld. AO estimating the higher profit on surmises and conjectures and ignoring the fact that no evidence of higher profit was found during search and seizure operation. 2. That the Ld. CIT(A) erred in not giving cognizance to the interest factor for net loss from M/s Mukta Bricks though the corresponding loans and their utilization were reflected in the Balance Sheet. 3. That the action of Ld. CIT(A) in upholding the estimation of profit @ 9% on a turnover ₹ 478,350/- in .....

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ional ground of appeal raised now is as follows: For that the addition of items of regular assessment in the proceedings u/s. 153A when no incriminating documents were found in respect of the disallowed amounts in the search proceedings is liable to be deleted. 19. Since the issue in ground No. 1 to 3 is interlinked, these are being taken up together for adjudication. The relevant issue is that Ld. CIT(A) erred in confirming the action of AO by estimating a profit @ 7% on the turnover of ₹ .....

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3,10,398 40.20 8.96 On query by AO, the assessee failed to submit his books of account and other documents in support of loss claimed. The AO further observed that assessee has declared net profit @ 15.1% in AY 99-00 and 8.96% in AY 04-05. Therefore the AO in the absence of any documentary evidence has assumed the profit of assessee @ 12% which is average net profit ratio for AYs 1999-00 and 2004-05. Accordingly, AO disallowed the loss suffered by assessee and worked out the net profit of ͅ .....

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e carefully considered. The written submission do snot state the basis for the claim of interest far higher than the preceding assessment year. At the same time the assessee is not maintaining books of account. Therefore, some estimate of net profit would not be out of place. In my order for assessment 2004-05, the net profit of 9% was held to be reasonable and acceptable. In relation to the absence of proper explanation about increased interest expenditure it is held that net profit rate of 7% .....

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has incurred loss from the brick business and estimating profit from the said business will be hardship to assessee. On the contrary, Ld. DR vehemently relied on the order of Authorities Below. 22. We have heard rival contentions and perused the materials available on record. From the facts of the case, we find that assessee has incurred loss from his brick business on account of interest expenses on unsecured loan for an amount of ₹1,58,833/-. But the lower authorities have estimated the .....

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pose of his smooth running of business. If we analysis the balance-sheet of assessee we find that loan amount has been utilized exclusive for the business. However, at the same time, we cannot ignore the fact that assessee has failed to produce his books of account which was very important aspect for making the scrutiny assessment. We find that assessee has claimed total indirect expense for ₹2,77,086/- which is inclusive of interest element of ₹1,58,833/-. So it means only indirect .....

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n nature and do not require any separate adjudication. 24. Additional ground was not pressed by the assessee. Hence the same is dismissed as not pressed. 25. In the result, assessee s appeal allowed partly. Coming to ITA No.1909-1910/Kol/2009 for AYs 03-04 & 05-06. 26. In both appeals grounds have been raised out of which grounds No.4 & 5 in [ITA No. 1909/Kol/2009] and grounds No. 3 to 5 in [ITA No. 1910/Kol/2009] general in nature and do not require separate adjudication. The other grou .....

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the action of Ld. CIT(A) in upholding the estimation of profit @ 8% on a turnover ₹ 744,200/- instead of 12% estimated by the Ld. AO in place of net loss of ₹ 84,368/- declared in the return of income by the appellant is unwarranted and bad in law. Further assessee raised additional ground in ITA No. 1909/Kol/09:- 2. The additional ground of appeal raised now is as follows- For that the addition of items of regular assessment in the proceedings u/s. 153A when no incriminating docume .....

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- made by the AO by estimating higher profit without any evidence and material. 26. Since we have already discussed same inter-connected issue in ITA No.1907/Kol/2009 for A.Y. 2000-01 in Para 19 to 22 of this order and taking a consistent view we allow both the appeal of assessee in part and AO is directed accordingly. 27. At the time of hearing Ld. AR has not raised additional ground in both the appeals, hence, same dismissed as not pressed. 28. In the result, both the appeal allowed in part. C .....

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ess exceeded the limit of ₹ 40 lakhs. 3. That the action of the Ld. CIT(A) in sustaining the addition made by estimating the income of ₹ 548,698/- @ 8% n gross receipts of ₹ 73,08,728/- from contract business in place of the profit of ₹ 409,505/- @ 5.6% declared by the appellant in the return of income. 4. That the Ld. CIT(A) erred in not giving cognizance to the interest factor for net loss from M/s Mukta Bricks though the corresponding loans and their utilization were r .....

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ermission to add, amend and modify the above grounds on or before the date of hearing of the appeal. Additional ground:- 1. This application of the petitioner/appellant most respectfully prays for admission of the following additional ground of appeal which is purely legal in nature. 2. The additional ground of appeal raised now is as followsITA For that the addition of items of regular assessment in the proceedings u/s. 153A when no incriminating documents were found in respect of the disallowe .....

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of ₹32,89,042/-. However, assessee in his return filed u/s. 153A of the Act has enhanced the turnover by ₹ 40,19,686/- and declared total turnover of ₹73,08,728/-. The assessee has shown his turnover from contractual business and in support of it has furnished payment certificates. During the course of assessment proceedings, AO observed that the audited accounts of assessee do not represent the true & fair picture of the business of assessee. The assessee failed to produce .....

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t actual net profit declared by assessee is 5.6% and accordingly the income was offered to tax. In this case, lower authorities have been guided from the provision of Sec. 44AD of the Act which is applicable to the assessee having turnover up to ₹ 40 lakh. It shows that Legislative is well aware that the small assessee having turnover up to ₹ 40 lakh are having higher profit margin in comparison to the assessee having turnover above ₹ 40 lakh. Therefore, lower authorities erred .....

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