TMI Blog2017 (12) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer to adopt gross profit @ 17.40% as declared by the assessee, as in this year there is an increase in sales. Ground no. 1 and 2 of the assessee’s appeal are allowed. Addition u/s 69A - Held that:- AO made addition on the basis that no confirmation by Shri O.P. Gupta. It is seem that the assessee has filed a copy of Power of Attorney given by Shri O.P. Gupta in favour of the assessee. The assessee has also filed bank’s statements reflecting the debit entry about the money re-paid to Shri O.P. Gupta. It is also noticed that the Assessing Officer has not issued any summon to Shri O.P. Gupta for the purpose of verification the correctness of claim of assessee. In the absence of proper enquiry by the Assessing Officer, in our view, the addition is unjustified. Therefore, after considering the totality of the fact we deem it appropriate to set aside this issue to the file of the Assessing Officer for the purpose of verification afresh. Therefore, these grounds are allowed for statistical purpose. Addition invoking the provisions of section 69A - amount taken by the assessee from his wife - Held that:- It is demonstrated by the assessee that this transaction is dul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the identity of Shri O.P. Gupta on whose behalf the assessee in the capacity of power of attorney holder of Shri O.P. Gupta collected royalty of ₹ 24,00,000/- from different persons for making payment to mining department and also narrating sequence of events which proved beyond doubt the availability of cash amount of ₹ 24,00,000/- with the assessee, had discharged the burden of proof which lay upon him. 5. That sustaining by the learned CIT [A] of the addition of ₹ 5,00,000/- made by the AO u/s. 69A of the I.T. Act in regard to amount of ₹ 5,00,000/- given to the assessee by Shri Vijay Kumar Meena for making on his behalf a DD of ₹ 5,00,000/- to be tendered alongwith application for allotment of liquor shop is most arbitrary, unjust, untenable in law and in the alternative excessive w.r.t. facts and circumstances of the case. 6. That sustaining by the learned CIT [A] of the addition of ₹ 3,00,000/- made by the AO u/s. 69A of the I.T. Act in regard to amount of ₹ 3,00,000/- taken by the assessee from his wife Smt. Sunita Devi is most arbitrary, unjust, untenable in law and in the alternative excessive w.r.t. facts and circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity details of the goods traded are available. In the absence of daily stock records it cannot be ascertained whether whole of the goods purchased during the year have been included in sales or not? Assessing Officer observed that there is a difference in the figure of sales uploaded while filing the ereturn and the figure of sales recorded in the audited books of a/c. Therefore, he was of the view that books of accounts maintained by the assessee are not reliable and the correct profits of business cannot be deduced therefrom and proceeded to estimate the profits. The Assessing Officer adopted 20% of the gross profits against the gross profits of 17.40% declared by the assessee. The assessing Officer further made addition by invoking the provisions of Section 69A of ₹ 24,00,000/-, ₹ 5,00,000/- and ₹ 3,00,000/- in respect of the loans received from Shri O.P. Gupta, Shri Vijay Kumar Meena, Shri Hawa Singh Meena and Smt. Sunita Devi. The Assessing Officer further made addition on account of unexplained cash credit of ₹ 2,40,000/- u/s 68 and made addition of ₹ 1,40,000/- on account of disallowance out of expenses for personal use. Against this, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the Assessing Officer who justified in adopting the past year s results declared by the Assessee. 3.3 We have heard the rival contentions, perused the material available on record. The Assessing Officer rejected the books of accounts and estimated the profit by observing as under:- 3.2 I have considered the averments made by the Ld. A/R. It is a common practice in liquor trade that entire sales are made in cash for which no individual sale bills are issued. The consolidated sale of a day recorded in the cash book does not have particulars of the goods sold Even though purchases have been made from govt. undertaking, sales made by the assessee are not open to verification. On this ground alone various Tribunals and High Courts have held that provision of section 145(3) do apply in liquor cases. The cases relied upon by the Id. A/R are not relating to liquor cases and hence not relevant as far as the case of assessee is concerned. 3.3 As regards legal position on the subject, in the case of Action Electricals vs. DCIT (258 ITR 188), Hon'ble Delhi High Court has observed as under:- We are unable to persuade ourselves to agree with Ld. Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41% on sales of ₹ 1,36,26,368/-. Even those gross profits have not been subjected to scrutiny u/s 143(3) of the I T Act. As per the govt. policy while fixing the M.R.P. of the products, retailers margin is considered at 20% of the sale price by the RSBCL and SGSSM through whom IMFL and CL is supplied to retailers. Considering all the relevant facts the sales of assessee are estimated at ₹ 1,75,00,000/- on which GP rate of 20% is applied to estimate assessee's profits of business. This will provide gross profits of ₹ 35,00,000/- against the declared profits of ₹ 29,52,155/-. The difference of ₹ 5,47,845/- is added to the income of the assessee. This finding of the assessee was affirmed by the Ld. CIT(A). The Ld. CIT(A), has decided this issue by observing as under:- In the present proceedings, the appellant's main submission was that the assessee is bound to purchase IMFL and beer only from Rajasthan State Beverage Corporation Ltd. and the prices are fixed. Further, the retail trade price of the above products is also fixed. As per the excise liquor policy the maximum retail selling price for IMFL and beer was also fixed by State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r completeness of the account of the assessee. The Assessing Officer may make an assessment in the manner provided under section 144 of the Act. In our view, the Assessing Officer requires to satisfy himself about the correctness and completeness of the accounts. Admittedly, in the present case the assessee is engaged in the business of liquor which is regulated by the concerned Excise Department. The Assessing Officer has not made any enquiry from Excise Department with regard to quantity of liquor sold by the assessee. Moreover, the Assessing officer has not brought any material on record suggesting that the assessee was involved in selling liquor and not recording the same. Since, the purchase and sales are to be notified to State Excise Department as well, the AO has not brought any material suggesting that the State Excise Department has adversely reported about the sale and purchase. Under these undisputed facts, we are of the view that the Assessing Officer was not justified in rejecting the books of accounts. Further, even it is assumed that the books of accounts were not giving true picture of profit. The AO u/s 144 of the Act is under statutory duty to find out the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e value of the bullion, jewellery or other valuable article may be deemed to be the income of assessee of such financial year. 4. That the correct factual position is that the appellant assessee maintains regular books of accounts and the same are audited by a Chartered Accountant and moreover Tax Audit Report forms part of the original paper book at page no.21 to 31 filed by the appellant assessee on 23.5.2017 and amount of ₹ 24,00,000/- mentioned above is duly recorded in the books of accounts maintained by the assessee and is duly reflected in the annexed balance sheet at page no.28 of the paper book. In support of it the assessee has already furnished audited final accounts and Tax Audit Report in the paper book page no.21 to 31. In the liability side of the audited balance sheet which is page 28 of the paper book it is clearly written as under: Royalty collection payable (Mr. O.P. Gupta) ₹ 24,00,000/- 4. That as the above mentioned amount of ₹ 24,00,000/- in the name of Mr. O P Gupta is duly recorded in the books of accounts maintained by the assessee provisions of sec 69A are not at all applicable in assessee's case and as such additions mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready furnished audited filial accounts and Tax Audit Report in the paper book page no.21 to 31. In the liability side of the audited balance sheet which is page 28 of the paper book it is clearly written as receipt for DD ₹ 13,00,000/-. The bifurcation of ₹ 13,00,000/- is as under: i) Vijay Kumar Meena Rs.5,00,000/- ii) Hawa Singh Meena Rs.5,00,000/- iii) Smt.Sunita Devi Rs.3,00,000/- NOTE: Addition of ₹ 5,00,000/- on account of credit of ₹ 5,00,000/- in the name of Hawa Singh Meena stands deleted by the learned CIT[Appeals] and the department is not in appeal against this relief given to the assessee by the learned CIT[A]. 5. That as the above mentioned amount of ₹ 5,00,000/- in the name of Mr. Vijay Kumar Meena is duly recorded in the books of accounts maintained by the assessee provisions of sec 69A are not at all applicable in assessee's case and as such additions made u/s 69A of the IT Act by the AO and sustained by the learned CIT ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ITR-4. It implies that the turnover of liquor shop run by her during the relevant period was not auditable u/s.44AB of the I.T. Act. It is highly unbelievable that a person running a govt. allotted liquor shop does not have turnover of even sixty lac rupees and even does not have a bank account. Since she has not been produced, verification of facts regarding her capacity and genuineness of the transaction could not be carried out. Since availability of cash balance of ₹ 3,00,000/- in her hands has not been proved, the amount of ₹ 3,00,000/- shown in the cash book in her name is held to be unexplained and added to the income of assessee u/s.69A of the I.T. Act. 2. That from reading the above referred para 8.2 of the assessment order the Hon'ble Bench will very kindly note that the A.O. has made addition of ₹ 3,00,000/- to the income of assessee u/s.69A of the I.T. Act. 3. That invoking of provisions of sec.69A of the I.T. Act and making addition u/s.69A of the I.T. Act at ₹ 3,00,000/- are void ab initio and liable to be cancelled particularly on account of the reason that provisions of sec.69A of the I.T. Act can be applied only in thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be cancelled. It is accordingly prayed that above mentioned addition of ₹ 3,00,000/- may please be cancelled. It is respectfully submitted that above mentioned additional written submissions are in addition to be submissions made by the appellant assessee in first written submissions dated 22.05.2017 filed with the paper books on 23.5.2017. It is requested that these written submissions may kindly be taken into consideration along with the first written submissions dated 22.05.2017 filed with the original paper book on 23.05.2017. The inconvenience caused to be Hon ble Bench on account of filing of these additional written submission is regretted. 5.1 Ld. D/R opposed the submissions. 5.2 We have heard the rival contentions, perused the material available on record. It is seem that the addition was made by invoking the provisions of section 69A of the Act. It is demonstrated by the assessee that this transaction is duly reflected in the books of accounts. The assessee has also filed income tax return of Smt. Sunita Devi. Therefore, we are of the view that authorities below were not justified in making the addition. The AO is directed to delete the addition. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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