TMI Blog2013 (5) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... me. In Cross Objection, the assessee is objecting in not holding that the additions made were beyond the scope of assessment made under Section 153A and confirming eh addition of ₹ 6,44,368/- out of the total addition of ₹ 95,23,800/- made by the AO on account of estimated Gross Profit on estimated unaccounted turnover. 4. Since the grounds of the department and assessee are interlinked, therefore, they are disposed of together. 5. Brief facts of the case are that the assessee company engaged in the business of distributor and trading in cement. A search operation under Section 132 was conducted on 5-6-2007 at the residential/business premises of metro group of cases. The assessee was one of the group concern and, therefore, inter alia, covered in search operation. The assessee filed return in response to notice under Section153A declaring total income at ₹ 1,52,67,624/-. This income was declared by the assessee originally also while filing return under Section139(1). The AO noted that certain loose papers were found and seized and they were kept in the file marked as Annexure-A/17 (volume I II) for the period of 15-1-07 to 31-5-07. AO noted that the loose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd suspicion. Further reliance was placed in various case laws mentioned in the order of learned CIT(A) at page 6. It was submitted that it can be seen from the statement of employees and directors that the unaccounted turnover was estimated at ₹ 92 lakhs for the period of four and-a-half months. Therefore, the estimation of turn over of ₹ 92 lakhs or odd cannot be adopted for each month. It was explained that during the course of search action, registers marked as Annexure-A-1 to 15 were found and seized from the premises of the assessee. These registers contain details of total dispatches made by the assessee from the period from August 2005 to September 2005 and from April 2006 to April 2007 (except July, 2006). The registers contain details of dispatches made against which no bills are prepared. The total value of such dispatches is approximately ₹ 98 lakhs for a period of 14 months. Thus, even if everything is assumed against the assessee the unaccounted turnover as per these registers at the highest would work out to approximately ₹ 7 lakhs per month. Details of entries found recorded in the register were also filed. After considering the submission an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the decision in the case of CIT Vs. Anil Kumar Bhatia, decided by the Hon ble Delhi High Court in ITA No.1626/2010 and other connected appeals, vide order dated 7-8-2012. It was submitted that the Hon ble Andhra Pradesh High Court has confirmed that the proceeding under Section153A/153C are valid as the scope of addition can be enhanced during the assessment proceeding. It was further submitted that in this case, the order of the Tribunal has been confirmed by the Hon ble High Court where the estimated income was confirmed by the Tribunal. It was also submitted that the Hon ble High Court has concluded that the AO can take into consideration material other than what was available during search and seizure operation for making an assessment of undisclosed income of assessee. Attention of the Bench was drawn on para 17 22 of the judgments, which was read also. Similarly, relevant para of the order of the Hon ble Delhi High Court was also read by learned DR. It was further submitted that the decision rendered by the Special Bench in the case of All Cargo Global Logistic Ltd. Vs. DCIT, reported in (2012) 137 ITD 287 (Mumbai)(SB), is now no more good law as the Hon ble Delhi High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heavily reliance on the decision of the Hon ble Andhra Pradesh High Court in case of Gopal Lal Bhadruka Vs. DCIT, reported in (2012) 346 ITR 106 (AP). We have gone through this decision and found that in this decision, the Hon ble Andhra Pradesh High Court has held that, as the provisions Chapter XIV-B are not applicable to the proceedings under Section 153A/153C, the AO can take into consideration material other than what was available during search and seizure operation for making an assessment of undisclosed income of assessee. There is no dispute in regard to these findings of the Hon ble Andhra Pradesh High Court. The Special Bench of the Tribunal, constituted at Mumbai, in case of All Cargo Global Logistic Ltd.(supra), has also given similar finding, which are as under :- (a) In assessment that are abated, the Assessing Officer retains the original jurisdiction as well as jurisdiction conferred on him under section 153A for which assessments shall be made for each of the six assessment years separately; (b) In other cases, in addition to the income that has already been assessed, the assessment under section 153A will be made on the basis of incriminating material, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be estimated but not the sale. Before the Hon ble Andhra Pradesh High Court also the issue was not on estimation of sales but the issue was on estimation of on-money on sales. Therefore, facts are totally different from the facts of the case in hand. As stated above, the turn over which was not recorded in the books of account and was found recorded in the dispatch register, that turnover can only be taken for determining undisclosed income on that turnover, therefore, the profit can be estimated but turnover cannot be estimated for the period for which no incriminating document or material was found. Therefore, we found that the decision of the Hon ble Andhra Pradesh High Court does not support the case of the department on the facts of the present case. Similarly, the decision of the Hon ble Delhi High Court in the case of CIT Vs. Anil Kumar Bhatia (supra), also does not support the case of the department on the facts of the present case here before us. Rather the decision of the Special Bench or the decision of the Hon ble Andhra Pradesh High Court supports the case of the assessee as theaddition can be made only on the basis of incriminating material found during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sum of ₹ 1.25 crores including jewellery of ₹ 20 lakhs. Therefore, he reduced the jewellery of ₹ 20 lakhs from the total jewellery of ₹ 1,81,67,568/- and remaining jewellery of ₹ 1,61,67,568/- was added in the hands of the assessee as unexplained jewellery. The AO also noted that certain unaccounted amount was also found totaling to ₹ 50,58,000/- and the same was also added. In this way, the total addition computed by the AO was ₹ 3,38,80,368/-. The assessee has already declared under Section 132(4) at ₹ 3,00,00,000/-. After reducing the amount of ₹ 3 crores, the AO made addition of ₹ 38,80,368/- while completing the assessment for the year under consideration falling in the block period. 16. Assessee preferred appeal before the CIT(A). Learned CIT(A) without going into the detail further found that the total computation of income at ₹ 3,38,80,368/- is not justified because the AO has not taken into consideration the addition of ₹ 95 lakhs or odd, which was made by estimating turnover of the assessee. Therefore, he was of the view that the addition of ₹ 50,58,000/- made on account of cash available w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search was conducted on 5-6-2007, therefore, upto this date, the AO estimated the turn over at ₹ 3,30,00,000/- and applied a GP rate of 4.81% which resulted a profit of ₹ 15,87,500/- and the same was added to the income of the assessee. CIT(A) has confirmed the action of the AO. 22. After considering the submission and perusing the material on record we found that the assessee deserves to succeed in part. We have already given our finding while disposing the appeal for assessment year 2006-07, wherein we have held that the addition can be made only on the basis of incriminating material found during the course of search. Therefore, the estimating the turnover by the AO was not correct. Therefore, following the same reasoning, we direct the AO to recompute the turnover of the assessee on the basis of material found during the course of search and then compute the profit by applying GP rate as applied by him earlier. The assessee should be allowed an opportunity before computing the profit. We order accordingly. Thus, ground raised by the assessee is allowed in part. 23. Now, we will take up the appeal of the assessee listed under ITA No.1875/M/2012, which is i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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