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2016 (10) TMI 597 - ITAT DELHI

2016 (10) TMI 597 - ITAT DELHI - TMI - Addition on account of cash deposits in bank account - protective addition v/s substantive addition - Held that:- Neither the Ld. AO nor the Ld. CIT(A) have taken care to ascertain the extent to which cash deposits in bank account, totaling ₹ 1,29,74,300/- was included in the sales turnover of the assessee, originally shown by assessee at ₹ 61,00,552/- and changed later to ₹ 2,07,56,738/-. Thus, to that extent, not only the amount is fully .....

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t be converted into substantive addition in the hands of an assessee merely because substantive addition was not made in the hands of another assessee. What has to be seen is whether substantive additions in the hands of the assessee is just and reasonable in the overall facts and circumstances of the case. Further, double taxation of same amount is against basic tenets of taxation. Moreover, neither the Ld. AO nor Ld. CIT(A) have ,in their respective orders adequately dealt with or specifically .....

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ITA No. 1607/Del/2012 - Dated:- 30-8-2016 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI ANADI N. MISHRA, ACCOUNTANT MEMBER For The Appellant : Shri K. Sampath, Adv. For The Respondent : Shri U.C. Dubey, Sr. DR ORDER Per ANADI N. MISHRA, Accountant Member (A) This appeal has been filed by assessee against order dated 17.1.2012 of Ld. CIT(A) - XXVIII, New Delhi. The grounds of appeal are as under: 1. That the Learned Authority below grossly erred in passing the order on erroneous and insufficient gr .....

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-lawful and unjustified taking into consideration the facts of the case apparent on records. (B) The assessee is proprietor of M/s. M. B. Contractor. The assessee filed return of income on 15.12.2008 declaring a total income of ₹ 1,26,207/-. The Ld. AO noticed that the gross receipts declared by the assessee were ₹ 61,00,552/- on which the assessee declared net profit of ₹ 2,05,707/- after claiming expenses of ₹ 58,94,845/-. During assessment proceedings the assessee, vid .....

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was claimed by the assessee to have been purchased from M/s. Sharma Construction. The Ld. AO has also taken note that the entire amount of ₹ 1,29,74,300/- deposited in cash in the bank account of the assessee was withdrawn through cheques drawn in favour of M/s. Sharma Construction. In these facts and circumstances the Ld. AO made a protective addition of the aforesaid amount of ₹ 1,29,74,300/- in the hands of the assessee ; and for substantive enquiry and investigation, information .....

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In the second set of financial statement and computation of income, the assessee declared turnover of ₹ 2,07,56,738/-, net profit of ₹ 4,01,093/- and total income of ₹ 3,24,303/-. The assessee also submitted a tax audit report dated 12.06.2008 whereunder turnover was declared at ₹ 2,07,56,738/- (earlier shown at ₹ 61,00,552/-) and net profit was shown at ₹ 4,01,093/- (earlier shown at ₹ 2,05,707/-). Thus the difference amounting to ₹ 1,46,56,186/- .....

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d. AO noted certain deficiencies and infirmities. Taking note of these deficiencies and infirmities the AO rejected the books of the assessee by applying section 145(3) of I.T. Act and estimated profit of the assessee @ 8% of gross receipts of ₹ 2,07,56,738/- declared by the assessee. Giving the assessee credit for ₹ 4,01,093/- earlier declared by the assessee as net profit, the AO made an addition of ₹ 12,59,446/-. (B.1) Ld. CIT(A) in her impugned order dated 17.01.2012 agreed .....

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appeal against the order of the Ld. CIT(A). (B.2) During appellate proceedings in ITAT the assessee filed detailed paper book. At the time of hearing before us, assessee drew our attention to the contents of this paper book. In particular our attention was drawn to duplicate copies of purchase invoices issued by M/s. Sharma Construction, in respect of the purchases claimed to have been made by the assessee from them. Our attention was also drawn to affidavits of the assessee and of Mr. Ramesh S .....

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80% of purchases (items of furniture) were made from Mr. Ramesh Sharma (Proprietor M/s. Sharma Construction) from the Goa premises of M/s. Sharma Construction which was handling various items of Ginger Hotel Project at Goa ; and that the assessee sold mainly in cash to the customers ; that the sale proceeds were received by the assessee from the customers not in Goa in Delhi ; that cartage on goods sold by assessee were paid by the purchasing customers ; that octroi was not paid and sales tax / .....

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d out from business premises of M/s. Sharma Construction for which the assessee was not paying any charges except security charges to security persons ; that no transportation charges were incurred on account of goods purchased / sold because of same location / premises and on account of transportation charges being met by the purchasers ; that figures of turnover and profit of business were wrongly reported in the return of income on the advice of one Mr. Tiwari who misguided the assessee and f .....

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g the sale conducted under the supervision of the assessee s son, due to clerical mistake or may be due to ignorance of law of Mr. Tiwari or the reason best known to him . The Ld. AR of assesse emphasized that duplicate copies of purchase bills regarding purchases from M/s. Sharma Construction were produced before Ld. AO alongwith copy of ledger account and rejection of book results u/s 145(3) was not warranted. Ld. AR of the assessee also argued that the net profit 8% of turnover adopted by the .....

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the orders of the Ld. CIT(A). He contended that the AO was justified, in rejecting the book results u/s 145(3) of I.T. Act in view of the deficiencies and infirmities highlighted in the assessment order ;that estimation of profit @ 8% of the turnover was a reasonable estimate and that the Ld. CIT(A) was justified in sustaining the addition of ₹ 1,29,74,300/- on substantive basis because as noted by Ld. CIT(A), this amount was not considered for addition in the hands of Mr. Ramesh Sharma (p .....

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enquiry and investigation, information was forwarded by Ld. AO of assessee to Ld. AO of M/s. Sharma Construction (proprietor : Mr. Ramesh Sharma). Ld. CIT(A), before converting this protective addition to substantive addition should have considered inquiries and investigations conducted in the case of Mr. Ramesh Sharma, proprietor of M/s. Sharma Construction. However, she based her decision on a much earlier assessment order dated 16.4.2010 (passed much earlier than assessment order dated 31.12. .....

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