TMI Blog2018 (6) TMI 1512X X X X Extracts X X X X X X X X Extracts X X X X ..... ave an intrinsic link as submitted by the learned AR that it is only out of the sale amount the receivable from the persons listed on the leaf relating to 1.1.1998 arise. We accept the same and direct the authorities to telescope ₹ 2.44 crores into ₹ 2.60 crores in which event nothing over and above the declaration of ₹ 4 crore is taxable. We accordingly answer Ground No.4 in favour of the assessee. Adjustment of the seized amount against the advance tax liability - Held that:- Allow the credit for the cash seized towards the advance tax payable by the assessee on the date of seized viz. 11.11.2010 as requested by the assessee. See KANISHKA PRINTS (P.) LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE - 2, SURAT [2013 (7) TMI 14 - ITAT AHMEDABAD] - I.T.A. No. 4392/Del/2014 - - - Dated:- 28-6-2018 - Shri G. D. Agrawal, President And Shri K. Narasimha Chary, Judicial Member Appellant by : Shri Ashwani Taneja Respondent by : Shri Ravi Kant Gupta ORDER Per Narasimha K. Chary, JM Challenging the orders of the learned Commissioner of Income-tax (Appeals)-II, New Delhi (for short hereinafter called as the learned CIT(A) ) in Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 2.6 crores outside the books declared in the statement u/s 132(4) also cannot be totally brought to tax because it is only the profit element that constitutes the income and taxable but not the entire sales. Consequently, the learned AO rejected the alternative plea of the assessee that after reducing the profit element at 4%, which comes to ₹ 10.40 lacs from out of ₹ 2.6 crores deceleration, the resultant amount would accommodate the alleged outstanding balance to the tune of ₹ 2.44 crores as on 1.1.1998 and on telescoping the same, nothing could be brought to tax over and over ₹ 4 crores declared by the assessee. 6. Further, learned AO also did not grant the request of the assessee to adjust the seized cash of ₹ 1,29,33,500/- against the advance tax liability for the Assessment Year 2011-12. 7. In the appeal preferred by the assessee, learned CIT(A), by way of impugned order returned a finding that the contention of the assessee that the outstanding balance as on 1.1.1998 basing on the entries of the diary of 1998 cannot be brought to tax is not acceptable because of the statement of the assessee in his statement u/s 132(4), which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ground that the entire sales cannot be brought to tax but only the profit element alone could be the income therefrom. Assessee also challenged the non adjustment of the seized cash from the advance tax. 11. It is the argument of the learned AR that in so far as the addition of ₹ 22 crore is concerned, it is based on the declaration made by the assessee in his statement recorded u/s 132(4) of the Act which the assessee rightly retracted on the ground of mistaken understanding of the fact or law. It is submitted that the entries on the diary of which this amount of ₹ 2.44 crore is calculated belongs to the year 1998 and has nothing to do with the Asstt. Year 2011-12. Learned AR brought to our notice that the entries in the said diary relating to the dates 3rd January to 31st January show the expenditure relating to the petrol, lunch, cash repair, cinema tickets, cost of pens and stationery etc., and if we have a look at the quantum of expenditure unmistakably establishes that those were the expenses relating to the year 1998 only but not certainly to 2011-12 because of the prices of the items involved therein. Basing on this, he submitted that when these entries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initial ground of retraction by the assessee was that the authorized officer coerced the assessee whereas after 1 years the assessee had taken the plea of mistaken understanding of fact or law. There is no possibility of any mistaken understanding, because looking at the diary dates the assessee could have plainly explained that such an entry does not belong to this year and they are of the year 1998 itself. At no point of time earlier to 31.12.2010, the assessee disputed the correctness of the declarations made in his statement u/s 132(4) of the Act. It is only on the advice that the assessee retracted the declaration, which is not acceptable and it does not fit in the statement recorded u/s 132(4) of the Act. 15. We have carefully gone through the record. The entries on the leaf relating to 1.1.1998 in the diary are of a different nature from the remaining entries. There is no dispute that the entries in the remaining leaves made in the ordinary and regular course of business and the prices relating to the expenses are corelated and corroborates the contentions of the assessee. The question is whether the entries shown on the page relating to 1.1.1998 were also made in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he personal knowledge of the assessee. It is always open for the assessee to produce relevant material to show that these entries relate to the Asstt. Year 1998-99 not for 2011-12, in the absence of which we find it difficult to accept the bald denial made by the assessee. We, therefore, are of the considered opinion that the findings of the authorities below on this aspect, do not suffer any illegality or irregularity and they have to be confirmed. We, therefore, dismiss Ground Nos. 1 to 3. 18. Now coming to Ground No.4, it is not in dispute that the declaration of ₹ 2.6 crore by the assessee u/s 132(4) of the Act was on account of sales outside the books. Both the authorities below did not dispute this fact. When the sales are to the tune of ₹ 2.6 crore, we find it difficult to understand as to how the entire sales could be brought to tax. It is also an admitted fact that in respect of this assessment year, the GP rate of the assessee s business of trading in chemicals in the name and style of M/s Samit International at 3.74% was accepted by the AO while passing the assessment order. It is, therefore, quite reasonable to apply the same GP rate on the unaccounted sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hreeji Prints (ITA No 359/Ahd/2012 - order dated 20.4.2012) decided in favour of Assessee by holding as under: It is evident from a bare reading of the aforesaid provisions that the existing liability under the Income-tax can be discharged from the assets or money seized. In the present case, the search operation was conducted on 22-9-2005 and the assessee filed return on 31-5-2006 declaring the seized money as income. In our opinion, if the assessee has declared income, during the year under consideration in that eventuality he is liable to pay advance tax as per law therefore the A.O. is required to find out whether such liability was existing on the date of seizure. If such liability is existing then he is empowered to apply/adjust the money seized in discharge of the existing liability even without any written representation from the assessee. Now coming to the fact of the present case, it is not disputed that the money seized from the premises of Shri Lalit Patel and same was subsequently declared in the return of income filed on 31-5-2006. Hence, it can very well be inferred from the return so filed that the respondent/assessee was required to pay advance tax on such in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst any existing liability under the Income Tax Act. Wealth tax Act, the Expenditure-tax Act, the Gift- tax Act and the Interest tax Act and the amount of liability determined on completion of assessments pursuant to search, including penalty levied or interest payable and in respect of which such person is in default or deemed to be in default. Various courts have taken a view that the term existing liability includes advance tax liability of the assessee, which is not in consonance with the intention of the legislature. The legislative intent behind this provision is to ensure the recovery of outstanding tax/interest/penalty and also to provide for recovery of taxes/ interest /penalty, which may arise subsequent to the assessment pursuant to search. Accordingly, it is proposed to amend the aforesaid section so as to clarify that the existing liability does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII of the Act. This amendment will take effect from 1st June, 2013. (emphasis supplied) 21. The decision in the case of Kanishka Prints P. Ltd (supra) is applicable to the facts of the case. While respectfully fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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