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2016 (12) TMI 747 - ITAT CHANDIGARH

2016 (12) TMI 747 - ITAT CHANDIGARH - TMI - Addition under section 69C - unexplained expenditure - Held that:- Assessing Officer has given ample opportunity to the assessee to explain this issue but no evidence was filed before Assessing Officer at assessment stage. The assessee also failed to explain the relevance of the additional evidence because in the certificate of Secretary, Agriculture Market Produce Committee, Solan, it is nowhere clarified as to how the contents of the same were releva .....

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addition of ₹ 8,11,490/-. This ground of appeal of the assessee to that extent is allowed. - Addition under section 69C - Held that:- In the light of provisions of Section 292C, it is clear that assessee has made purchases of construction material which belong to the business of the assessee and in the absence of any plausible explanation, the authorities below were justified in making the addition under section 69C of the Act. No infirmity have been pointed out in the orders of author .....

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s already surrendered additional income of ₹ 25 lacs in assessment year under appeal and no other reasons have been given by the Assessing Officer for estimating higher profit rate. Therefore, mere low NP rate shown in assessment year under appeal by itself is no ground to make addition of this nature against the assessee. We, therefore, do not justify the orders of authorities below in making and upholding this addition. We, accordingly, set aside the orders of authorities below and delet .....

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e have heard ld. Representatives of both the parties, perused the findings of authorities below and considered the material available on record. The appeals are decided as under. Assessment Year : 2006-07 3. On ground No. 1, assessee challenged the addition of ₹ 8,11,490/- under section 69C of the Act as unexplained expenditure and challenged the order of ld. CIT (Appeals) in not admitting the additional evidence under Rule 46A of the IT Rules. 4. Brief facts are that search operation unde .....

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tten pages and contain the details of payment received on various dates. Scanned copy of these documents are reproduced in the assessment order in para 4. The expenses recorded on these documents are as follows:- i) ₹ 7,65,695/- on the front side of page 21 financial year 2006-07 relevant to assessment year 2007-08) ii) ₹ 8,11,490/- on back side of page 21 financial year 2005-06 relevant to assessment year 2006-07) 5. In the course of assessment proceedings, the assessee was asked to .....

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ers, it appears that the same relate to some fruit/vegetable commission agent as in few cases, trade mark such as G.S.M., B.C.S., R.H.S., J.P.B., B.L.S. etc. have been mentioned by the writer of the document. The assessee has no concern with the document in question. The Assessing Officer considered the reply of the assessee and noted that the assessee has merely stated that said document did not belong to him. The assessee has not brought any material on record in support of the contention. The .....

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iterated the same submissions and also submitted that the seized document did not belong to the assessee. The assessee relied upon decision of ITAT Chandigarh Bench in the case of Jagdamba Rice Mills vs. ACIT 67 TTJ 838 in which it was held that, "Documents seized during search not bearing clear as to whether items were payments or receipts or some other calculations, no addition could be made on the basis of such dumb documents". The assessee also explained that the papers may relate .....

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dence have been produced despite giving opportunity at assessment stage, therefore, additional evidence was rejected. The ld. CIT (Appeals) on merit also confirmed the addition. 8. We have heard ld. Representatives of both the parties. The ld. counsel for the assessee reiterated the submissions made before authorities below and submitted that Assessing Officer has considered the details contained in the seized paper as 'payments received' on various dates and also given notice to the ass .....

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g filed certain documents before Supreme Court for the first time which are of some relevance and required to be looked into by the High Court. Therefore, matter was remanded to the High Court for fresh disposal after accepting the documents filed by the assessee. 8(i) On the other hand, ld. DR submitted that seized documents were supplied to the assessee which have been scrutinized by the assessee but no explanation was filed before the authorities below. Section 292Cwill apply against the asse .....

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as well as mode of receipts. The Assessing Officer, therefore, was of the view that it is unaccounted money received by the assessee from third party, as such it is unaccounted income of the assessee. However, the Assessing Officer while concluding the issue has considered it to be a case of unexplained expenditure incurred by assessee under section 69C of the Act. The whole finding of the Assessing Officer thus, clearly shows that Assessing Officer has passed a contradictory order without anal .....

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nd no addition can be made on the basis of such a dumb document. However, we are of the view that additional evidence submitted before ld. CIT (Appeals) was rightly rejected by the ld. CIT (Appeals). The assessee has failed to explain as to how its case would fall within the parameters of Rule 46A of the IT Rules because assessee has failed to prove that Assessing Officer has refused to admit evidence which should have been admitted by him or that assessee was prevented by sufficient cause from .....

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ion of firms' names instead of writing full name. Since assessee failed to explain as to how the additional evidence was relevant to the matter in issue, we are of the view ld. CIT (Appeals) correctly refused to admit the same at appellate stage. However, considering the totality of the above findings, it is clear that addition is wholly unjustified in the matter. We, therefore, set aside the orders of authorities below and delete the addition of ₹ 8,11,490/-. This ground of appeal of .....

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uction material purchased on 30.02.2006 and 30.04.2006 and payments made by the assessee. The scanned copy reproduced in para 5 of the assessment order. The Assessing Officer asked the assessee to file the information as to who has written these pages, to which concern/projects these documents are related, to reconcile the entries recorded in these documents with regular books of account and furnish the details of cash payment made by him as mentioned in the seized papers alongwith source. The a .....

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the possession of the assessee. The Assessing Officer referred to provisions of Section 292C and noted that since seized documents have been found from the possession of the assessee and the said documents relate to purchase of construction material which are used by the assessee in its business of construction, therefore, mere disowning the document would not absolve the assessee from responsibility and gave notice to the assessee as to why the same be not considered as unexplained expenditure .....

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d his detailed affidavit, copy of which is filed at page 5-6 of the Paper Book in which he has owned up the seized papers and submitted that these documents were inadvertently left in premises of the assessee. The assessee requested that affidavit of Shri Javed Akhtar may be admitted as additional evidence. 12. The ld. CIT (Appeals) noted that the seized papers are hand written and contained the details of construction material purchased but no reply have been filed before Assessing Officer. Aff .....

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s additional evidence. 14. On consideration of the rival submissions, we do not find any justification to interfere with the orders of authorities below. It is not in dispute that seized paper was recovered from possession of the assessee. The Assessing Officer noted that the seized paper contains the details of construction material purchased which is connected with the business activity of the assessee. The assessee did not file any reply before Assessing Officer in response to show cause noti .....

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money, bullion, jewellery or other valuable articles or things belong or belongs to such person, the contents of such books of account and other documents are true and that the signature on every document to be in hand writing of such particular person". The presumption under section 292C is, however, rebuttable. It is, therefore, proved on record that when seized document was found during the course of search from possession of the assessee, that seized document belong to the assessee and .....

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t dated 13.02.2013 before ld. CIT (Appeals). However, assessee failed to explain as to how he remained silent in explaining the issue from the date of search i.e. 11.09.2009 till 13.02.2013. No reasons have been given as to why the affidavit was not obtained earlier and how suddenly Shri Javed Akhtar has come into the picture. His name was never explained before the authorities below. The assessee has not satisfied the conditions of Rule 46A of the IT Rules before ld. CIT (Appeals). The affidavi .....

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fore authorities below. Therefore, the same would not be relevant to the matter in issue and is clearly filed to avoid the payments of legitimate taxes. The ld. CIT (Appeals), therefore, rightly rejected the admission of the affidavit at the appellate stage. 15. Considering the above discussion in the light of provisions of Section 292C, it is clear that assessee has made purchases of construction material which belong to the business of the assessee and in the absence of any plausible explanati .....

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CIT (Appeals) in not admitting additional evidence under Rule 46A of IT Rules which is certificate of the Secretary of Agriculture Produce Market Committee, Solan. The ld. CIT (Appeals) noted that issue is same as has been considered in assessment year 2006-07 and accordingly, dismissed this ground of appeal of the assessee. 18. Ld. Representatives of both the parties submitted that this ground is same as has been considered in assessment year 2006-07 on ground No. 1 on the basis of same seized .....

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has been considered in assessment year 2006-07 and additional evidence is affidavit of Shri Javed Akhtar. The ld. CIT (Appeals), accordingly, dismissed this ground of appeal of the assessee. 19(i) Ld. Representatives of both the parties submitted that this ground is same as has been considered in assessment year 2006-07 on ground No. 2 in which we have dismissed the appeal of the assessee. Following reasons for decision for assessment year 2006-07, we dismiss this ground of appeal of the assess .....

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sing Officer noted that this document is hand written page and contained details of purchases of ₹ 3,26,390/- made by the assessee and for which ₹ 50,000/- was paid in cash on 05.11.2008 and subsequently ₹ 2,76,390/- was also paid in cash. The same is reproduced in para 6 of the assessment order. The Assessing Officer asked for the information from the assessee as to who has written this page, nature of expenses and purpose of expenses and name and address of person to whom pay .....

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ssee has not brought any material on record to explain the seized document in response to the show cause notice issued for making addition under section 69 of the Act. The assessee did not file any explanation before Assessing Officer. Therefore, addition was made under section 69C of the Act. 23. The assessee reiterated same submissions before ld. CIT (Appeals) and also filed affidavit under Rule 46A of the Act of Shri Joginder Behal, copy of which is filed at page 7 of Paper Book in which he o .....

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007-08 (supra), we dismiss this ground of appeal of the assessee. 25. On ground No. 3, assessee challenged the addition of ₹ 18,77,319/- on account of estimation of net profit. Briefly the facts of the case are that Assessing Officer noted NP chart of the assessee for the assessment years 2007-08 to 2010-11 in assessment order and found that the net profit rate of the assessee for assessment year 2010-11 and 2009-10 (after excluding the surrender income of ₹ 25 lacs) comes to 1.80% a .....

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roduced in the assessment order in which the assessee explained that it has commenced its commercial activities during the financial year 2006-07 and the comparison of sales and net profit for financial year 2006-07 to 2009-10 was explained. It was explained that the net profit rate for the financial year 2006-07 is 8.65%, for financial year 2007-08 is 3.15%, financial year 2008-09 is 1.67% and for the financial year 2009-10, it is 1.80%. The reasons for high net profit ratio in the financial ye .....

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ssee has claimed depreciation to the tune of ₹ 4,92,375/- during financial year 2008-09 and ₹ 3,35,188/- during financial year 2009-10. This has resulted in less net profit rate in financial year 2008-09 and 2009-10. In the absence of depreciation in financial year 2008-09 and 2009-10, the net profit ratio would have been 2.78% and 4.85% respectively which is almost same as in earlier years. 25(i) It was further submitted that later on projects of the assessee were at partial complet .....

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on of ₹ 18,77,319/-. 26. The ld. CIT (Appeals) also confirmed the addition and dismissed this ground of appeal of the assessee. 27. After considering rival submissions, we are of the view addition is wholly unjustified. The ld. counsel for the assessee contended that Assessing Officer has not rejected the books of account and no specific defects in maintenance of the books of account have been found. He has, however, admitted that during the course of search, assessee surrendered ₹ 2 .....

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